Court Opinion

ID: 9446463
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:54:37.978316+00
Date Added: 2024-06-11T17:30:39.227526
License: Public Domain

On Rehearing By The Court En Banc
Before DUFFY, Chief Judge, FINNEGAN, SCHNACKENBERG, HASTINGS and PARKINSON, Circuit Judges, on rehearing by the court en banc.
PARKINSON, Circuit Judge.
These proceedings originated in this court on a petition to set aside an order of the Secretary of Agriculture revoking the registration of G. II. Miller and Company as a futures commission merchant and Gilbert H. Miller as a floor broker and denying all trading privileges to the other petitioners for periods ranging from sixty days to one year and to cancel all sanctions imposed. There were fifteen petitioners in all.
A panel consisting of Judge Major, a former chief judge now retired but voluntarily rendering meritorious service as a member of this court, and Judge Schnackenberg, an able circuit judge in active service, and the writer of this opinion heard the case and handed down a written opinion denying the petition.
Two of the fifteen petitioners, G. H. Miller and Company and Gilbert H. Miller, filed a petition for rehearing wherein they asserted that Miller was in fact a damaging participant to the alleged manipulative scheme but if not at the most “[a]n objective analysis we submit will place Miller in the category of the lowest participant” and implored this court to reduce the penalties because they were “excessive” submitting an order as to them for entry as follows:
“The registration of G. H. Miller and Company as a futures commission merchant and the registration of Gilbert II. Miller as a floor broker is suspended for a period of six months from the effective date of this order.
With the effective date of this order G. H. Miller and Company and Gilbert H. Miller, directly or indirectly, shall be prohibited from trading speculatively on any contract market for a period of one year. During that period futures contracts may be executed providing they are clearly bona fide hedges against the cash commodity actually possessed by G. H. Miller and Company or Gilbert H. Miller and all contract markets shall refuse to said G. H. Miller and Company and Gilbert H. Miller the right to so trade speculatively on their exchanges for a period of one year.”
On Millers’ petition for rehearing Judge Schnackenberg, being of the opinion that the “penalties imposed by the Secretary are too harsh”, and Judge Major, believing “that the penalties imposed in this matter are too severe”, the court ordered the penalty as to Millers reduced. The writer of this opinion dissented. The order was practically verbatim with the submitted form of order hereinabove set out. It reads as follows:
“The registration of G. II. Miller and Company as a futures commission merchant is suspended for six months and the registration of Gilbert H. Miller as a floor broker is suspended for a period of six months, and both of said petitioners are prohibited, directly or indirectly, from trading speculatively on any contract market for a period of one year, and during said one year period futures contracts may be executed providing they are clearly bona fide hedges against the cash *296commodity actually possessed by G. H. Miller and Company or Gilbert H. Miller, and all contract markets shall refuse to said G. H. Miller and Company and Gilbert H. Miller the right to so trade speculatively on their exchanges for a period of one year.”
In order to resolve the question as to the proper function of the Court of Appeals in proceedings to set aside an order of an administrative agency fixing a penalty within the statutory limits we granted a rehearing before the full court en banc.
Section 6(b) of the Commodity Exchange Act, Title 7 U.S.C.A. § 9 provides that the Secretary of Agriculture may suspend, for a period not to exceed six months, or revoke, the registration of a futures commission merchant or a floor broker registered under the Act who violates any provision thereof. Accordingly the penalties fixed in the order did not exceed and were within the limits of the statute.
In Great Western Food Distributors v. Brannan, 7 Cir., 1953, 201 F.2d 476, 484, involving an order fixing penalties under the Commodity Exchange Act, we held that “we have nothing to do with the question of severity of the penalty.”
In National Lead Company v. Federal Trade Commission, 7 Cir., 1955, 227 F.2d 825, we ordered stricken from a general cease and desist order of the Commission a provision directing each respondent individually to cease and desist from adopting the same or a similar system of pricing for the purpose of “matching” the prices of competitors. The Supreme Court reversed, 352 U.S. 419, 77 S.Ct. 502, 1 L.Ed.2d 438, and restored the stricken provision.
In Moog Industries, Inc., v. Federal Trade Commission (Federal Trade Commission v. C. E. Niehoff & Co.), 1958, 355 U.S. 411, 78 S.Ct. 377, 379, 2 L.Ed.2d 370, the Supreme Court reversed this court which had changed a forthwith cease and desist order so that it took effect at a future time. It held that “it is ordinarily not for courts to modify ancillary features of a valid Commission order.”
In Arrow Metal Products Corporation v. Federal Trade Commission, 3 Cir., 1957, 249 F.2d 83, 85, the Third Circuit, under similar circumstances as here, correctly defines the function of the Court of Appeals in the following language:
“The petitioners complain that the cease and desist order is too drastic and that some other manner of preventing deception, if any, should be adopted. But the matter of shaping a remedy is for the Commission. Our function is simply, in the words of the Supreme Court, to find whether the Commission has made ‘an allowable judgment in its choice of the remedy.’ Jacob Siegel Co. v. Federal Trade Commission, 1946, 327 U.S. 608, 612, 66 S.Ct. 758, 760, 90 L.Ed. 888.”
It is, therefore, clear to us that if the order of an administrative agency finding a violation of a statutory provision is valid and the penalty fixed for the violation is within the limits of the statute the agency has made an allowable judgment in its choice of the remedy and ordinarily the Court of Appeals has no right to change the penalty because the agency might have imposed a different penalty.
The petitioners Miller insist that the penalty here is more severe than any penalty imposed upon any other violator of the Act and cite cases where a lesser penalty was affixed. We are not impressed by such a specious argument.
The very most which can be said for the position of the petitioners Miller is that the penalty must have some “reasonable relation to the unlawful practices found to exist”. Federal Trade Commission v. National Lead Co., 1957, 352 U.S. 419, 429, 77 S.Ct. 502, 509, 1 L.Ed.2d 438. This court, in Daniels v. United States, 7 Cir., 1957, 242 F.2d 39, 42, held that “[t]he Administrative decision as to the remedy should be sustained unless the remedy selected has no *297reasonable relation to the practice found to exist.”
The Judicial Officer concluded from his findings of fact, adequately supported by a preponderance of the evidence, that “[t]he violations of sections 6(b) and 9 of the act found herein are of serious and far-reaching consequences.” He also concluded that Miller “was obviously the captain of the ‘team’ that effectuated what he described to Morris Weinger as the ‘deal’ in which he was sorry to find Weinger caught.”
In the application of the rule that Courts of Appeal must sustain the remedy selected by an administrative agency unless it has no reasonable relation to the practice found to exist we find in this record no lack of reasonableness in the penalty imposed upon Millers. To the contrary the record establishes a direct relation between the penalty and the violation. To paraphrase the language of the Supreme Court in Board of Trade of City of Chicago v. Olsen, 1923, 262 U.S. 1, 39, 43 S.Ct. 470, 67 L.Ed. 839, manipulations of egg futures for speculative profit, though not carried to the extent of a corner or complete monopoly, exert a vicious influence and produce abnormal and disturbing temporary fluctuations of prices that are not responsive to actual supply and demand and discourage not only justifiable hedging but disturb the normal flow of actual consignments. Here the petitioners, with Miller as the prime factor, did corner the egg market on the Chicago Mercantile Exchange in December, 1952. The penalties affixed were certainly commensurate with the violation and in their imposition the Secretary of Agriculture did not abuse his discretion.
The order herein entered on February 26, 1958 is vacated and set aside.
The petition to set aside the order of the respondent Secretary of Agriculture issued through the Judicial Officer on September 26, 1956 is denied.