Source: http://openjurist.org/343/us/470
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Matched Legal Cases: ['§ 2', '§ 2', '§ 13', '§ 13', '§ 13', '§ 13', '§ 47', '§ 47', '§ 13', '§ 13', '§ 13', '§ 13', '§ 21', '§ 21', '§ 45', '§ 45', '§ 45', '§ 45', '§ 21', '§ 21', '§ 21', '§ 21', '§ 1', '§ 1', '§ 13', '§ 13', '§ 201', '§ 201', '§ 201', '§ 201', '§ 251', '§ 251']

343 US 470 Federal Trade Commission v. Ruberoid Co Ruberoid Co | OpenJurist
343 U.S. 470 - Federal Trade Commission v. Ruberoid Co Ruberoid Co Homethe United States Reports343 U.S.
343 US 470 Federal Trade Commission v. Ruberoid Co Ruberoid Co 343 U.S. 470
72 S.Ct. 800
96 L.Ed. 1081
Argued March 31, April 1, 1952.
[Syllabus from pages 470-471 intentionally omitted]
Ruberoid is one of the nation's largest manufacturers of asphalt and asbestos roofing materials and allied products. The Commission found that Ruberoid, in a number of specific instances, had discriminated among customers in the prices charged them for roofing materials. Further finding that the effect of those discriminations 'may be substantially to lessen competition in the line of commerce in which (those customers) are engaged, and to injure, destroy, or prevent competition between (those customers),'1 the Commission held that the discriminations were violations of § 2(a) of the Clayton Act, as amended by the Robinson-Patman Act.2 46 F.T.C. 379. Ruberoid was ordered to:
'By selling such products of like grade and quality to any purchaser at prices lower than those granted other purchasers who in fact compete with the favored purchaser in the resale or distribution of such products.'3
We first consider the contentions of Ruberoid, which are mainly attacks upon the breadth of the order. Orders of the Federal Trade Commission are not intended to impose criminal punishment or exact compensatory damages for past acts, but to prevent illegal practices in the future. In carrying out this function the Commission is not limited to prohibiting the illegal practice in the precise form in which it is found to have existed in the past. If the Commission is to attain the objectives Congress envisioned, it cannot be required to confine its road block to the narrow lane the transgressor has traveled; it must be allowed effectively to close all roads to the prohibited goal, so that its order may not be by-passed with impunity.4 Moreover, '(t) he Commission has wide discretion in its choice of a remedy deemed adequate to cope with the unlawful practices' disclosed. Jacob Siegel Co. v. Federal Trade Comm., 1946, 327 U.S. 608, 611, 66 S.Ct. 758, 759, 90 L.Ed. 888. Congress placed the primary responsibility for fashioning such orders upon the Commission, and Congress expected the Commission to exercise a special competence in formulating remedies to deal with problems in the general sphere of competitive practices.5 Therefore we have said that 'the courts will not interfere except where the remedy selected has no reasonable relation to the unlawful practices found to exist.' Id., 327 U.S. at page 613, 66 S.Ct. at page 760.
In the light of these principles, we examine the specific objections of Ruberoid to the order in this case. First, it is argued that the order went too far in prohibiting all price differentials between competing purchasers, although only differentials of 5% Or more were found. But the Commission found that very small differences in price were material factors in competition among Ruberoid's customers, and Ruberoid offered no evidence to the contrary. In this state of the record the Commission was not required to limit its prohibition to the specific differential shown to have been adopted in past violations of the statute.6 In the absence of any indication that a lesser discrimination might not affect competition there was no need to afford an escape clause through which the seller might frustrate the whole purpose of the proceedings and the order by limiting future discrimination to something less than 5%.7
The roofing material customers of Ruberoid may be classified as wholesalers, retailers, and roofing contractors or applicators.8 The discriminations found by the Commission were in sales to retailers and applicators. The Commission held that there was insufficient evidence in the record to establish discrimination among wholesalers, as such. Ruberoid contends that the order should have been similarly limited to sales to retailers and applicators. But there was ample evidence that Ruberoid's classification of its customers did not follow real functional differences. Thus some purchasers which Ruberoid designated as 'wholesalers' and to which Ruberoid allowed extra discounts in fact competed with other purchasers as applicators. And the Commission found that some purchasers operated as both wholesalers and applicators. So finding, the Commissioner disregarded these ambiguous labels, which might be used to cloak discriminatory discounts to favored customers, and stated its order in terms of 'purchasers who in fact compete.' Thus stated, we think the order is understandable, reasonably related to the facts shown by the evidence, and within the broad discretion which the Commission possesses in determining remedies.
Finally, Ruberoid complains that the order enjoins lawful acts by failing to except from its prohibitions differentials which merely make allowance for differences in cost of manufacture, sale or delivery, or which are mede in good faith to meet an equally low price of a competitor. Differences in price satisfying either of these tests are permitted by the terms of the Act.9 It is argued that the Commission has radically broadened its prohibitory powers through failure to include these provisos in the order. We do not think so because we think the provisos are necessarily implicit in every order issued under the authority of the Act, just as if the order set them out in extenso. Although previous Commission orders have included these provisos, they gained no force by that inclusion. Their absence cannot preclude the seller from differentiating in price in a new competitive situation involving different circumstances where it can justify the discrimination in accordance with the statutory provisos. Nor is the seller required to seek modification of the order each time, for example, that a competitor's price reduction requires it either to lower its price in good faith to meet the lower competing price or to lose a fleeting sales opportunity. On the other hand, the implied inclusion of the provisos in the order does not shift from the seller the burden of proof of justification.10 Neither does recognition of the implicit availability of these defenses allow the seller to relitigate issues already settled by prior proceedings before the Commission which resulted in an order that was affirmed in the courts. If questions of justification, claimed upon the basis of facts relating to costs or meeting competition, have once been finally decided against the seller, it cannot again interpose the same defense upon substantially similar facts when the Commission seeks to show that its order has been violated.11 The same result follows where the evidence supporting the defense, although not produced in the previous proceedings, was then available to the seller. In short the seller, in contesting enforcement or contempt proceedings, may plead only those facts constituting statutory justification which it has not had a previous opportunity to present.
The sole question presented by the Commission's petition concerns the lower court's holding, with one dissent, that the Commission could not 'obtain a decree directing enforcement of an order issued under the Clayton Act in the absence of showing that a violation of the order has occurred or is imminent'.12 The pertinent parts of the Act provide:
'The jurisdiction of the circuit court of appeals of the United States to enforce, set aside, or modify orders of the commission * * * shall be exclusive.'13
The Commission argues, first, that the provision authorizing it to apply for enforcement 'if such person fails or neglects to obey such order' is merely 'a Congressional directive to the Commission as to the circumstances under which it may go into court to seek enforcement,' which does not amount to a prerequisite to the court's granting of enforcement.14 We cannot subscribe to this argument, which disregards the unequivocal language of the statute and its consistent interpretation over the thirty-eight-year period of its existence.15 Congress, in 1938, amended similar language in the Federal Trade Commission Act, so that the reviewing court is now plainly required, upon affirmance, to enforce an order based upon violation of that Act.16 The Commission has repeatedly sought similar amendment of the Clayton Act provisions involved in this case.17 We will not now achieve the same result by reinterpretation in the face of Congress' failure to pass the bills thus brought before it.18 Effective enforcement of the Clayton Act by the Commission may be handicapped by the present provisions, but that is a question of policy for Congress.
Alternatively, the Commission argues that, even though disobedience of the order is a condition to enforcement upon the application of the Commission, there is no such condition where the order comes before the court upon petition for review by the affected party. This argument begins with the difference in language between the statutory paragraphs providing for review at the instance of the respective parties, but consideration of the section as a whole convinces us that the most that can be said for the argument is that the section is ambiguous. We think the statutory prerequisite to enforcement applies when the Commission seeks enforcement by cross-petition after review has been set in motion by the party subject to the order as well as when the Commission makes the original application.19 There is no reason why one who has complied with the order, but who seeks to have it reviewed and modified or set aside, should be placed in a worse position than one who does not exercise that right. We doubt that Congress intended its requirement for enforcement to depend entirely upon which party goes to court first.
The Federal Trade Commission, in July of 1943, instituted before itself a proceeding against petitioner on a charge of discriminating in price between customers in violation of subsection (a) of § 2 of the Clayton Act as amended by the Robinson-Patman Act, approved June 19, 1936, 15 U.S.C. § 13(a), 15 U.S.C.A. § 13(a).
However, the Commission refused to include such a provision as 'unnecessary to assure respondent (petition here) its full legal rights.' It also rejected the specific and limited order recommended by its Examiner and substituted a sweeping general order to 'cease and desist from discriminating in price: By selling such products of like grade and quality to any purchaser at prices lower than those granted other purchasers who in fact compete with the favored purchaser in the resale or distribution of such products.' It wrote no opinion and gave only the most cryptic reasons in its findings.1
'We sympathize with the petitioner's position and can realize the difficulties of conducting business under such general prohibitions. Nevertheless we are convinced that the cause of the trouble is the Act itself, which is vague and general in its wording and which cannot be translated with assurance into any detailed set of guiding yardsticks.'2
If the unsound result here were an isolated example of malaise in the administrative scheme, its tolerance by the Court would be less troubling, though no less wrong. But I think its decision may encourage a deterioration of the administrative process of which this case is symptomatic and which invites invasion of the independent agency administrative field by executive agencies. Other symptoms, betokening the same basic confusion, are the numerous occasions when administrative findings are inadequate for purposes of review and recent instances in which part of the government appears before us fighting another part—usually a wholly executive-controlled agency attacking one of the independent administrative agencies—the Departments of Agriculture, Secretary of Agriculture v. United States (jurisdiction noted 72 S.Ct. 1042), and Justice, United States v. Interstate Commerce Commission, 337 U.S. 426, 69 S.Ct. 1410, 93 L.Ed. 1451, against the Interstate Commerce Commission, the Department of Justice against the Maritime Commission, Far East Conference v. United States, 342 U.S. 570, 72 S.Ct. 492, the Secretary of the Interior against the Federal Power Commission, United States ex rel. Chapman v. Federal Power Commission (certiorari granted 343 U.S. 941, 72 S.Ct. 1034). Abstract propositions may not solve concrete cases, but, when basic confusion is responsible for a particular result, resort to the fundamental principles which determine the position of the administrative process in our system may help to illuminate the shortcomings of that result.
The large importance that policy and expertise were expected to play in reducing this Act to 'guiding yardsticks' is evidenced by the fact that authority to enforce the section is not confided to a single body for all industries but is dispersed among four administrative agencies which deal with special types of commerce besides the Federal Trade Commission.3
A seller may violate this section of the Act without guilty knowledge or intent and may unwittingly subject himself to a cease and desist order. But neither violation of the Act nor of the order will call for criminal sanctions; neither is even enforceable on behalf of the United States by injunction until after an administrative proceeding has resulted in a cease and desist order and it has been reviewed and affirmed, if review be sought, by the Court of Appeals. Only an enforcement order issued from the court carries public sanctions,4 and its violation is punishable as a contempt.
Thus Congress, in this Act, has refrained from imposition of an unconditional duty directly enforceable by the government through civil or criminal proceedings in court, as it has in the Sherman Anti-Trust Act and the Wilson Tariff Act of 1894.5 It has carefully kept such cases as this out of the courts and has shielded a violator from any penalty until the administrative tribunal hands down a definitive order. The difference is accented by another section of the Robinson-Patman Act which does make participation by any person in specified transactions which discriminate 'to his knowledge' a criminal violation judicially punishable.6
It may help clarify the proper administrative function in such cases to think of the legislation as unfinished law which the administrative body must complete before it is ready for application.7 In a very real sense the legislation does not bring to a close the making of the law. The Congress is not able or willing to finish the task of prescribing a positive and precise legal right or duty by eliminating all further choice between policies, expediences or conflicting guides, and so leaves the rounding out of its command to another, smaller and specialized agency.
When Congress enacts a statute that is complete in policy aspects and ready to be executed as law, Congress has recognized that enforcement is only an executive function and has yielded that duty to wholly executive agencies, even though determination of fact questions was necessary.8 Examples of the creation of such rights and obligations are patent, revenue and customs laws. Only where the law is not yet clear of policy elements and therefore not ready for mere executive enforcement is it withdrawn from the executive department and confided to independent tribunals. If the tribunal to which such discretion is delegated does nothing but promulgate as its own decision the generalities of its statutory charter, the rationale for placing it beyond executive control is gone.
Then, too, we look to administrative findings, not to reconsider their justification, but to learn whether the parties have had the process of determination to which the statute has entitled them and whether the Commission has thought about—or at least has written about—all factors which Congress directed it to consider in translating unfinished legislation into a 'detailed set of guiding yardsticks' that becomes law of the case for parties and courts.9
Returning to this case, I cannot find that ten years of litigation have served any useful purpose whatever. No doubt it is administratively convenient to blanket an industry under a comprehensive prohibition in bulk—an undiscriminating prohibition of discrimination. But this not only fails to give the precision and concreteness of legal duties to the abstract policies of the Act, it really promulgates an inaccurate partial paraphrase of its indeterminate generalities. Instead of completing the legislation by an order which will clarify the petitioner's duty, it confounds confusion by literally ordering it to cease what the statute permits it to do.
38 Stat. 730, as amended, 49 Stat. 1526, 15 U.S.C. § 13, 15 U.S.C.A. § 13.
Federal Trade Comm. v. Morton Salt Co., 1948, 334 U.S. 37, 51—52, 68 S.Ct. 822, 830, 831, 92 L.Ed. 1196; cf. International Salt Co. v. United States, 1947, 332 U.S. 392, 398—400, 68 S.Ct. 12, 16—17, 92 L.Ed. 20.
Federal Trade Comm. v. Cement Institute, 1948, 333 U.S. 683, 726—727, 68 S.Ct. 793, 815—816, 92 L.Ed. 1009; 38 Stat. 722, 15 U.S.C. § 47, 15 U.S.C.A. § 47.
Federal Trade Comm. v. Morton Salt Co., 1948, 334 U.S. 37, 51—52, 68 S.Ct. 822, 830, 831, 92 L.Ed. 1196; cf. National Labor Relations Board v. Express Publishing Co., 1941, 312 U.S. 426, 436 437, 61 S.Ct. 693, 699—700, 85 L.Ed. 930.
'True, the Commission did not merely prohibit future discounts, rebates, and allowances in the exact mathematical percentages previously utilized by respondent. Had the order done no more than that, respondent could have continued substantially the same unlawful practices despite the order, by simply altering the discount percentages and the quantities of salt to which the percentages applied.' Federal Trade Comm. v. Morton Salt Co., 1948, 334 U.S. 37, 52—53, 68 S.Ct. 822, 831, 92 L.Ed. 1196. The discussion following these words in the Morton Salt case, of certain aspects of the order in question there, manifestly affords no support to Ruberoid's contention here. Id., 334 U.S. at pages 53—54, 68 S.Ct. at pages 831, 832.
Ruberoid suggests a fourth category of purchasers manufacturers—and contends that the order is too broad in that it prohibits discrimination in sales to that group, e.g., in sales of shingles to competing manufacturers of prefabricated houses. We need not consider whether such an order would be too broad because we do not think the order here applies to such sales. By its terms, the order covers only sales to those competitively engaged 'in the resale or distribution of such products (i.e., 'asbestos or asphalt roofing materials'),' and not sales to those who use roofing materials in the fabrication of wholly new and different products.
'(N)othing herein contained shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered * * *.' 49 Stat. 1526, 15 U.S.C. § 13(a), 15 U.S.C.A. § 13(a). '(N)othing herein contained shall prevent a seller rebutting the prima-facie case thus made by showing that his lower price * * * was made in good faith to meet an equally low price of a competitor * * *.' 49 Stat. 1526, 15 U.S.C. § 13(b), 15 U.S.C.A. § 13(b), Standard Oil Co. v. Federal Trade Comm., 1951, 340 U.S. 231, 71 S.Ct. 240, 95 L.Ed. 239. Ruberoid does not complain of the omission from the order of the statutory provisos relating to the seller's right to select its own customers and to price changes in response to changing conditions affecting the market for, or the marketability of, the goods concerned. Hence we do not deal with those defenses here.
Cf. Federal Trade Comm. v. Morton Salt Co., 1948, 334 U.S. 37, 44—45, 68 S.Ct. 822, 827, 92 L.Ed. 1196, cost justification; Federal Trade Comm. v. A. E. Staley Mfg. Co., 1945, 324 U.S. 746, 65 S.Ct. 971, 89 L.Ed. 1338, meeting-competition justification.
38 Stat. 735, as amended, 15 U.S.C. § 21, 15 U.S.C.A. § 21.
'To the extent that the order of the Commission is affirmed, the court shall thereupon issue its own order commanding obedience to the terms of such order of the Commission.' 52 Stat. 113, 15 U.S.C. § 45(c), 15 U.S.C.A. § 45(c). Unless the party subject to an order issued under the provisions of the Federal Trade Commission Act files a petition for review within sixty days, the order becomes final and its violation punishable. 52 Stat. 113—114, 15 U.S.C. § 45(g) and (l), 15 U.S.C.A. § 45(g, l).
E.g., F.T.C. Ann.Rep. 7—8 (1951); F.T.C. Ann.Rep. 12 (1948); F.T.C. Ann.Rep. 13 (1947); F.T.C. Ann.Rep. 12 (1946).
15 U.S.C. § 21, 15 U.S.C.A. § 21, vests enforcement in the Interstate Commerce Commission where applicable to certain regulated common carriers; in the Federal Communications Commission as to wire and radio communications; Civil Aeronautics Board as to air carriers; Federal Reserve Board as to banks, etc., and Federal Trade Commission as to all other types of commerce.
15 U.S.C. § 21, 15 U.S.C.A. § 21.
15 U.S.C. §§ 1—4, 8, 9, 15 U.S.C.A. §§ 1—4, 8, 9.
15 U.S.C. § 13(a), 15 U.S.C.A. § 13(a).
Lord Chancellor Herschell has employed a different but effective figure. 'The truth is,' said he, 'the legislation is a skeleton piece of legislation left to be filled up in all its substantial and material particulars by the action of rules to be made by the Board of Trade. * * * it was the intention of the Legislature having expressed the general object, and having provided the necessary penalty, to leave the subordinate legislation, so to speak, to be carried out by the Board of Trade.' Institute of Patent Agents v. Lockwood, (1894) A.C. 347, 356—357.
The legislative history of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., 29 U.S.C.A. § 201 et seq., exemplifies the choice which Congress must make between itself completing the legislation, and delegating the completion to an administrative agency. H.R.Rep. No. 2738, 75th Cong., 3d Sess., sets forth a summary of both the House Bill and the Senate Bill. The Senate Bill provided for the creation of a Labor Standards Board composed of five members, which was empowered to declare from time to time, for such occupations as
The House Bill, on the other hand, itself laid down the minimum wage and maximum hour requirements, id., 22—23, and gave to the Secretary of Labor discretion only to determine which industries were within the terms of the law, plus the power to investigate compliance with the law. Id., at 23. The Act as ultimately adopted followed the House Bill; although there was created the office of Administrator of the Wage and Hour Division in the Department of Labor, the Administrator was given discretion only in minor matters relating to the applicability of the congressional standards. 52 Stat. 1060, 29 U.S.C. § 201 et seq., 29 U.S.C.A. § 201 et seq.
The Administration favored the plan of delegating legislative discretion to an independent administrative body to apply general standards to concrete cases. See testimony of Secretary of Labor Frances Perkins, Joint Hearings before the Senate Committee on Educations and Labor and the House Committee on Labor on S. 2475 and H.R. 7200, 75th Cong., 1st Sess. 178. However, the attempt of Congress itself to complete this complex law for enforcement by the Executive, through the courts, not only flooded the courts with litigation, but the courts' interpretation of the Act contrary to the policy which Congress thought it had indicated had disastrous consequences. 61 Stat. 84, 29 U.S.C. § 251 et seq., 29 U.S.C.A. § 251 et seq.
If the independent agencies could realize how much trustworthiness judges give to workmanlike findings and opinions and how their causes are prejudiced on review by slipshod, imprecise findings and failure to elucidate by opinion the process by which ultimate determinations have been reached, their work and their score on review would doubtless improve. See Henderson, The Federal Trade Commission, c. VI, p. 327. See also Commission on Organization of the Executive Branch of the Government, Task Force Report on Regulatory Commissions (App. N.) pp. 129—130.