Court Opinion

ID: 9482548
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:54:01.480288+00
Date Added: 2024-06-11T17:49:04.061419
License: Public Domain

*473RYAN, Circuit Judge,
concurring in part and dissenting in part.
In my view, the Federal Trade Commission’s decision should be affirmed in its entirety. Although I will discuss my disagreement with the majority opinion in some detail, I note at the outset two overriding and related concerns.
I.
First, the scope of our review of the FTC’s determinations in this ease is very limited. “[Findings of the Commission as to the facts, if supported by evidence, shall be conclusive.” 15 U.S.C. § 45(c). The court “must accept the Commission’s findings of fact if they are supported by ‘such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.’ ” FTC v. Indiana Fed’n of Dentists, 476 U.S. 447, 454, 106 S.Ct. 2009, 2015, 90 L.Ed.2d 445 (1986) (quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 458, 95 L.Ed. 456 (1951)). Legal conclusions are “for the courts to resolve,” but courts must give “some deference” to the Commission’s interpretation of the statute it is charged with enforcing. Indiana Fed’n of Dentists, 476 U.S. at 454, 106 S.Ct. at 2015. Thus, we properly ask only whether the FTC’s interpretation is “reasonable, consistent, and persuasive.” Whiteside v. Secretary of Health & Human Services, 834 F.2d 1289, 1292 (6th Cir.1987). Respectfully, I do not believe the majority opinion satisfactorily adheres to these standards for review.
My second concern is that the majority opinion fails to offer any valid reasons for rejecting the FTC’s factual findings and legal conclusions.
While I agree with the majority’s conclusion that the nonstatutory labor exemption from the antitrust laws does not apply to the agreement among the dealers to restrict their hours of operation, I do not agree with the analysis employed in the rest of the opinion or with the order remanding the case to the FTC to essentially do once again what it has already done. In my view, the FTC’s decision is well-reasoned and correct. I would affirm it in its entirety. Therefore, I concur in part I of the majority opinion and in the result in part III, and respectfully dissent from parts II and IV of the opinion.
II.
In part II, the majority orders a remand to the FTC for the “limited purpose[]” of determining whether individual dealers might be able to take refuge under the nonstatutory labor exemption as the result of their “direct negotiations and collective bargaining with salesperson employees or their representatives.....” On remand, the Commission is to “consider carefully the record and the AU findings regarding any individual dealers who may be entitled to claim an exemption under the circumstances of bona fide collective bargaining with a union for shorter showroom hours or as a direct result of union directed violence and force for shorter showroom hours.” I can conceive of no reason, indeed no lawful basis, to order remand on this question since it is readily apparent that the FTC has already considered, and rejected, the dealers’ position on this factual issue.
In addition to finding that the dealers’ agreement to restrict hours was not protected by the nonstatutory labor exemption, the FTC found that collective bargaining agreements signed by a few dealers, which also restricted hours of operation, were also not protected:
[TJhese agreements ... did not establish bargained-for showroom hours. The agreements merely incorporated, by means of maintenance of standards provisions, the pre-existing hours reductions orchestrated by DADA. Thus, those agreements did not memorialize hours limitations negotiated between dealers and employees; they simply perpetuated the results of earlier collusion.
In determining whether the nonstatutory labor exemption applied, the FTC used the correct legal analysis as “[t]he important question is whether bona fide bargaining took place such that the policies in favor of *474such bargaining should take precedence over antitrust concerns.” Zimmerman v. National Football League, 632 F.Supp. 398, 408 (D.D.C.1986); see also Mackey v. National Football League, 543 F.2d 606, 614 (8th Cir.1976), cert. dismissed, 434 U.S. 801, 98 S.Ct. 28, 54 L.Ed.2d 59 (1977). Bona fide bargaining does not occur where one party unilaterally imposes a provision on a weaker party or where the agreement merely incorporates a preexisting rule. See Mackey, 543 F.2d at 613, 615-16.
In this case, the FTC found as a fact that the agreement on hours had not been reached through bona fide negotiations but instead was merely the incorporation of the preexisting collusion. This factual finding that the “maintenance of standards” provisions were not the result of arm’s length negotiations should be determinative. 15 U.S.C. § 45(c). The majority opinion, however, states:
It is not clear to us under the factual findings whether under these several separate collective bargaining agreements there was bona fide negotiation and effectual limitation of showroom hours. That the agreement on showroom operating hours was not reached through bona fide negotiations and was rather a part of pre-existing collusion is a legal conclusion, not a factual finding, as to the “few” dealers who signed or entered into union contracts dealing with hours of operation_ If ... direct negotiations and collective bargaining with salesperson employees or their representatives, by any petitioner actually brought about additional or different limits on showroom hours of operation, any such dealer or dealers may well be able to claim a nonstatutory labor exemption.
The majority is correct that “if” arm’s length negotiations on hours occurred, such activity would be protected. It fails, however, to suggest any reason why the FTC’s finding that no such arm’s length negotiations occurred should not be accepted and, indeed, binding. The Commission specifically found that while the provisions “effectively prohibited some individual dealers from extending their hours of operation ... [they] did not have the effect of requiring dealers to close on Saturday unless they were already doing so when the contract was signed.” Thus, the Commission found that any agreement between individual dealers and their employees or any union to reduce or restrict the hours of operation merely incorporated the preexisting agreement the dealers reached among themselves and was not the result of bona fide bargaining. That is a finding of fact, and it is supported in the evidence. Indeed, the majority does not hold that the FTC’s finding in this matter is not supported by substantial evidence. Rather, the dealers are simply given another chance on remand to litigate an issue already decided by the Commission and supported by evidence in the record. For this reason, I respectfully dissent from part II of the majority opinion remanding this action to the FTC for reconsideration on the question of whether individual dealers may be able to claim antitrust immunity under the nonstatutory labor exemption.
III.
I also disagree, for two reasons, with the majority’s analysis in part III holding that the Commission erred in employing a per se analysis instead of the rule of reason. First, the FTC did not use a per se analysis in analyzing whether petitioners’ conduct resulted in a restraint of trade. Second, I do not agree that the Commission should have conducted a full rule of reason analysis in this case.
In deciding which analysis to employ, the FTC observed that in recent cases, Indiana Fed’n of Dentists, 476 U.S. 447, 106 S.Ct. 2009; NCAA v. Board of Regents, 468 U.S. 85, 104 S.Ct. 2948, 82 L.Ed.2d 70 (1984); and Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1, 99 S.Ct. 1551, 60 L.Ed.2d 1 (1979), the Supreme Court, instead of applying the per se label to restraints which arguably fit within the traditional per se analysis, considered the competitive justifications for the restraints without employing the full market analysis necessary for a rule of reason analysis. The FTC thus concluded that “BMI, NCAA, and IFD, read together, suggest that the per se rule *475and the rule of reason are converging.” The FTC, quoting Massachusetts Board of Registration in Optometry, FTC Docket No. 9195, slip op. at 12-13 (June 13, 1988), summarized the three-step inquiry it believed was mandated by the converging rules:
First, we ask whether the restraint is “inherently suspect.” In other words, is the practice the kind that appears likely, absent an efficiency justification, to “restrict competition and reduce output”? For example, horizontal price-fixing and market division are inherently suspect because they are likely to raise price by reducing output. If the restraint is not inherently suspect, then the traditional rule of reason, with attendant issues of market definition and power, must be employed. But if it is inherently suspect, we must pose a second question: Is there a plausible efficiency justification for the practice? That is, does the practice seem capable of creating or enhancing competition (e.g., by reducing the costs of producing or marketing the product, creating a new product, or improving the operation of the market)? Such an efficiency defense is plausible if it cannot be rejected without extensive factual inquiry. If it is not plausible, then the restraint can be quickly condemned. But if the efficiency justification is plausible, further inquiry — a third inquiry — is needed to determine whether the justification is really valid. If it is, it must be assessed under the full balancing test of the rule of reason. But if the justification is, on examination, not valid, then the practice is unreasonable and unlawful under the rule of reason without further inquiry — there are no likely benefits to offset the threat to competition.
The FTC explained that it used this analysis because it “focus[es] on the economic realities and substantive concerns about competition that ultimately must govern our decisions.” The FTC then found, under the first inquiry, that the agreement was inherently suspect as a limitation on output and, under the second inquiry, that there were no plausible efficiency justifications for the agreement. Finding the restriction invalid under the second inquiry, the FTC did not reach the third inquiry’s full-blown economic analysis.
Although the result reached by this analysis is the same as would have been reached under the per se rule — the agreement was found illegal without resort to full economic analysis — the FTC did not use a per se analysis. Under a per se analysis, the agreement would have been invalid without any consideration of its pro-competitive effects. The FTC, however, did consider the efficiency justifications offered by the respondents before concluding that the ágreement had an anticompetitive effect.
Though the majority never concedes the existence of the three-prong “merged” analysis, I believe that this approach is a sensible one. As the Supreme Court observed, “there is often no bright line separating per se from Rule of Reason analysis.” NCAA, 468 U.S. at 104 n. 26, 104 S.Ct. at 2962 n. 26. Under both rules, “the essential inquiry remains’the same — whether or not the challenged restraint enhances competition.” Id. at 104, 104 S.Ct. at 2961. The merged approach, which recognizes this essential similarity, makes sense because it allows consideration of the economic and efficiency justifications of traditionally per se illegal practices, without the often unnecessary, cumbersome and complicated analysis of the rule of reason. The Supreme Court has recognized that a full rule of reason analysis may not be necessary where the anticompetitive effect is obvious. Indiana Fed’n of Dentists, 476 U.S. at 459-60, 106 S.Ct. at 2018-19; NCAA, 468 U.S. at 109, 104 S.Ct. at 2964; National Soc’y of Professional Eng’rs v. United States, 435 U.S. 679, 692, 98 S.Ct. 1355, 1365, 55 L.Ed.2d 637 (1978). If the justification for the horizontal restraint in dispute is clearly implausible, condemnation of the practice should not be delayed until, under the rule of reason approach, “all aspects of definition, market power, intent, and net competitive effect have been analyzed — a process that many consider to be the antitrust equivalent to Chi*476nese water torture.” Massachusetts Board, slip op. at 10-11. The FTC found that the hours of operation agreement reduced output and that the respondents offered no plausible economic justification for this agreement. It is eminently sensible that the FTC ended its inquiry there instead of engaging in a rule of reason analysis described by the Supreme Court as “ ‘an incredibly complicated and prolonged economic investigation into the entire history of the industry involved, as well as related industries ... an inquiry so often wholly fruitless when undertaken.’ ” BMI, 441 U.S. at 8 n. 11, 99 S.Ct. at 1556 n. 11 (quoting Northern Pac. Ry. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 517, 2 L.Ed.2d 545 (1958)).
I also disagree with that portion of part III of the majority opinion wherein the issue of the economic analysis and classification of the dealers’ agreement to restrict on the hours of operation is discussed. The FTC, under the first step of the three-prong analysis, concluded that the agreement to restrict hours of operation was inherently suspect as a limitation on output. The majority rejects this conclusion:
It may be, as stated in another part of the Commission’s opinion, that agreed reduction of showroom operating hours is a limitation upon “a form of competition among dealers,” but that is not quite the same thing as a limit upon production or output. The analysis made by the Commission for the proposition resulting in its conclusion of limitation of output and anticompetitive effect is based upon Mass Bd. of Registration in Optometry, DICT # 9195 (F.T.C. June 13,1988). The Commission’s equation of limited hours and reduction in “output” carried over to its analysis of petitioners’ claims of operating efficiency in respect to reducing showroom hours....
Based on what it stated was a “common sense approach,” the Commission found limitation of showroom hours to be inherently suspect. It found that a car dealer was “a provider of sales and support services,” and that its “output” is not measured in terms of units sold. (Footnote omitted.) While this might force customers to shift their shopping hours, the commission makes no reference to nearby or suburban car dealers available to many customers not a part of petitioners’ association. Citing Robert Bork from The Antitrust Paradox (1978), the Commission leaps to the conclusion “there is no economic difference between an agreement to limit shopping hours and an agreement to increase price.” ... Unlike this example cited, there is no showing in this case, and the Commission can claim no reliance on a showing of higher prices or profit margins achieved by petitioners compared to other dealers similarly situated.
I disagree with the majority opinion because I find the FTC’s reasoning persuasive, and because the majority fails to give any reasons for rejecting the FTC’s conclusion.
The FTC first used common sense, an appropriate basis for agency decisionmak-ing, Indiana Fed’n of Dentists, 476 U.S. at 456, 106 S.Ct. at 2016, to show that a mandatory reduction in hours was a limitation on output:
A consumer may consider any number of factors in deciding where to shop, including price, selection, location, reputation, and service, but surely one of those factors is whether the business provides hours that are convenient to the consumer’s schedule. If several competitors are identical in all respects except the business hours they offer, the consumer will choose which ones to patronize on the basis of that difference; the consumer is unlikely to remain indifferent.
The FTC’s analysis makes sense when applied to the new car market. Each line dealership sells identical cars. A consumer will patronize a particular dealership because it offers the manufacturer’s product, the car, in a better package. That package, which may include a better price, better service on the car, and greater convenience in purchasing the car through extended hours, is the dealer’s product. Moreover, these common sense observations are supported by case law. In Local *477Union No. 189, Amalgamated Meat Cutters v. Jewel Tea Co., 381 U.S. 676, 692, 85 S.Ct. 1596, 1603, 14 L.Ed.2d 640 (1965), the Supreme Court recognized that limitations on hours of operation are an “obvious restraint on the product market.” Other courts have agreed that limiting hours eliminates one form of competition. Jetro Cash & Carry Enter., Inc. v. Food Distribution Ctr., 569 F.Supp. 1404, 1415 (E.D.Pa.1983); Leech v. Highland Memorial Cemetery, 489 F.Supp. 65, 68 (E.D.Tenn.1980).
Economic theory also supports the FTC’s conclusion that restricting hours restricts the product market:
We presume that consumers allocate their time in the manner they think is most efficient or beneficial to them. By completely eliminating certain shopping hours, the respondents’ agreement forces consumers to shift their car shopping to hours they otherwise would not have chosen for that activity. The forced restructuring of their schedules raises the opportunity cost to consumers of car shopping. This increase in costs encourages consumers to spend less time comparing prices, features, and service, and thereby reduces pressure on dealers to provide the prices, features, and services consumers desire. And even if the amount of time spent shopping remains unchanged, the restriction reduces efficiency, since without it consumers could reorganize their activities in a way that would increase their overall satisfaction.
Former Circuit Judge Robert Bork agreed with this characterization when he compared an agreement among car dealerships to raise prices by $200 and an agreement by dealers to close on Sundays. Although some courts would traditionally be more likely to condemn the price fixing agreement, Judge Bork points out that the two are indistinguishable:
Both are limitations upon competition whose sole purpose is to increase the dealers’ income by restricting output. The output in one case is the number of cars sold (which will decrease with the raised price); the output in the other case is the provision of convenience of shopping to consumers (which will decrease with the Sunday closing).... From the consumers’ point of view such agreements are ... indistinguishable. Consumers who lose the convenience of shopping on Sunday are deprived of something that is as much an economic good as is money. There is no acceptable way for a judge to decide that a restriction in the offering of a convenience is any less objectionable than a restriction in the number of automobiles sold.
Bork, The Antitrust Paradox 85-86 (1978). I find this economic analysis, upon which the FTC could properly rely, Indiana Fed’n of Dentists, 476 U.S. at 456, 106 S.Ct. at 2016, convincing.
Finally, and most importantly, the record supports the FTC’s position. The FTC quotes letters from DADA to dealers showing that the “respondents expected the hours restriction to benefit them by limiting comparison shopping.” One letter from a DADA executive informed a dealer that the evening closing hours were popular with dealers because “with fewer shopping hours, the public can devote less time to shopping, and consequently forcing down prices.” Another letter stated that “the line groups with 100% cooperation have found that this program minimizes shopping by prospective buyers.” In addition to the letters, the FTC noted that dealers consistently fought the DADA evening closing program and that the dealerships of no other metropolitan area were closed on Saturdays. The FTC concluded that “[t]he former factor suggests that some dealers in Detroit see a competitive advantage in keeping longer hours than their rivals, and the latter suggests that in cities where there is no agreement to keep showrooms closed, competitive forces lead dealers to keep them open.”
Questions concerning the competitive effects of a policy are factual. Hospital Corp. of America v. FTC, 807 F.2d 1381, 1386 (7th Cir.1986), cert. denied, 481 U.S. 1038, 107 S.Ct. 1975, 95 L.Ed.2d 815 (1987). These factual findings of the FTC, supported by “such relevant evidence as a *478reasonable mind might accept as adequate to support a conclusion,” Universal Camera, 340 U.S. at 477, 71 S.Ct. at 458, should have been determinative of the issue that the dealers expected to restrict output by limiting hours of operation. 15 U.S.C. § 45(c).
In the end, the majority, while “not agreeing] in all respects with the Commission’s rationale,” grudgingly admits that there was no error “in the Commission’s conclusion that hours of operation in this business is a means of competition, and that such limitation may be an unreasonable restraint of trade.” Because common sense, economic theory, and the record support the FTC’s conclusion that the dealers’ agreement to restrict their hours of operation was an inherently suspect limitation on output, I disagree with the majority’s rejection of that conclusion as well as their unnecessary resort to a rule of reason analysis.
IV.
My final area of disagreement involves part IV of the majority opinion, where it is “suggested” that the FTC “consider giving dealers an option to maintain showroom hours for at least an average of ten and a half hours a day during weekdays, coupled with operation on Saturdays for some minimum additional time” and “consider further whether 30 days is sufficient time to investigate a complaint, have a minimal hearing, and record the findings before expelling a purported violator.”
The courts of appeals are permitted to “affirm, enforce, modify, or set aside orders of the Commission....” 15 U.S.C. § 45(d). In examining an FTC remedy, however, a court’s review is limited and “extends no further than to ascertain whether the Commission made an allowable judgment in its choice of the remedy.” Jacob Siegel Co. v. FTC, 327 U.S. 608, 612, 66 S.Ct. 758, 759, 90 L.Ed. 888 (1946). “[T]he courts will not interfere except where the remedy selected has no reasonable relation to the unlawful practices found to exist.” Id. at 613, 66 S.Ct. at 760.
In my view, the FTC’s order that the dealers stay open for sixty-four hours per week for a one-year period is “reasonably related” to the unlawful hours of operation agreement. The sixty-four hours per week requirement arose from the FTC’s effort not to burden the respondents with inflexible and inefficient requirements, such as complaint counsel’s recommendation of specified mandatory hours of operation, while addressing complaint counsel’s concerns that without affirmative relief,
there is no realistic prospect of restoring showroom hours competition to the Detroit market. Dealers individually will decide to remain closed for fear of reprisals if they try to extend hours. Only if many dealers are open at the same time, making enforcement of the restriction difficult or impossible, will the fear of being singled out for enforcement be overcome.
The FTC’s order governed only the total number of hours, “restoring the benefits the market would provide consumers absent the respondents’ restraint of trade— more convenient shopping and additional leisure time — without forcing dealers to remain open at specifically-mandated hours that may be less beneficial to them than other currently unused hours.” The choice of sixty-four hours is reasonable as that figure reflects the average of weekly hours in other Midwestern metropolitan areas where free competition exists.
After observing that the courts will not interfere with an agency-ordered remedy except where the remedy selected has no reasonable relation to the unlawful practices found to exist, the majority promptly interferes with the FTC’s hours-of-operation remedy, asking the FTC to consider another proposed option. The problem is that while the majority “questions” whether the FTC’s chosen remedy is reasonably related to the dealers’ agreement to restrict hours, it fails to find any error requiring this court to modify or set aside the order.
The cases cited by the majority to support the ordered remand involve overly broad or vague Commission orders in mat*479ters of false advertising or deceptive trade practices and do not support its intrusion on the proper province of the FTC in this case. The court in Porter & Dietsch, Inc. v. FTC, 605 F.2d 294, 308 (7th Cir.1979), cert. denied, 445 U.S. 950, 100 S.Ct. 1597, 63 L.Ed.2d 784 (1980), addressed the faulty application of a remedy to the facts of a ease; Trans World Accounts, Inc. v. FTC, 594 F.2d 212, 216-17 (9th Cir.1979), involved a failure by the FTC to fashion a clear and precise remedy; and in Beneficial Corp. v. FTC, 542 F.2d 611, 618-20 (3d Cir.1976), cert. denied, 430 U.S. 983, 97 S.Ct. 1679, 52 L.Ed.2d 377 (1977), the court was concerned with an overly broad prior restraint of speech violative of the first amendment. None of those concerns is present in this case. Moreover, in each of these cases the court found specific errors in the FTC order and, therefore, remedied the erroneous portion of the order or remanded the case for clarification or other specific action by the Commission.
The majority opinion, on the other hand, finds no error, factual or legal, in the FTC order requiring the maintenance of sixty-four hours of showroom operation per week and merely suggests an alternative approach for the Commission to “consider” on remand. There is no warrant for disagreeing with the FTC on this issue when no finding is made that the Commission’s decision or order was erroneous. To the extent that the majority finds no fault with the Commission’s findings, but nevertheless remands this matter for reconsideration of the ordered remedies with the suggestion that the court has a better idea, it acts beyond its judicial authority.
For these same reasons, I also disagree with the majority’s direction to the FTC to consider whether thirty days is sufficient time to investigate a complaint and conduct a hearing. Again, there is no finding of error, no finding of abuse of discretion, and no finding of the lack of substantial evidence. The FTC apparently found thirty days to be sufficient time for these matters. We have no authority — as distinguished from “power” — to question the FTC’s decision in this regard or to direct the Commission to “rethink” this matter. It is not the task of this court to instruct the FTC on how to carry out its mission. We sit for the limited purpose of reviewing the legality of the Commission’s actions, not to advise it on “fairer” results or procedures. For these reasons, I strongly but respectfully dissent from part IV of the majority opinion.
V.
In conclusion, I would enforce the FTC’s order in its entirety because the Commission’s findings of fact are supported by substantial evidence and its conclusions of law are not erroneous.