Court Opinion

ID: 9450278
Source: CourtListenerOpinion
Date Created: 2023-08-04 16:41:08.52392+00
Date Added: 2024-06-11T17:32:14.247405
License: Public Domain

WASHINGTON, Circuit Judge
(concurring in part and dissenting in part):
I agree with the majority that Chairman Dixon’s conduct disqualified him from participating in the Commission’s order, and that the order must be set aside for that reason. I would not, however, dismiss the entire proceeding, ei*764ther on the merits or because of the Commission’s delays. I would remand for further consideration of the ease by the Commission, without the participation of Chairman Dixon, and on a basis which I will outline later on.
I.
With reference to Chairman Dixon’s conduct, I would add only this. Federal Trade Commissioners, like other adjudicators, are entitled to hold and express views on the laws they are charged with enforcing and applying. They “do not stand aloof on * * * chill and distant heights; and we shall not help the cause of truth by acting and speaking as if they do.” 1 We do not equate impartiality with utter indifference. A judge does not deny litigants a fair hearing by sitting in a case “after he had expressed an opinion as to whether certain types of conduct were prohibited by law.”2 We do not expect a Trade Commissioner to be neutral on anti-monopoly policies.
A fair hearing is denied, however, if the administrative judge, prior to examining the evidence and findings, has indicated his belief that named individuals or firms are violating the statute, and the “guilt” or “innocence” of such parties depends on certain factual findings which are in dispute. Once an adjudicator has taken a position apparently inconsistent with an ability to judge the facts fairly,, subsequent protestations of open-mindedness on his part cannot restore a presumption of impartiality. Whether justice was in fact done is not the issue; an administrative hearing “must be attended, not only with every element of fairness but with the very appearance of complete fairness.” 3 We must presume-that a fair hearing was denied 4 if a disinterested observer would have reason to-believe that the Commissioner had “in some measure adjudged the facts * * of a particular case in advance of hearing it.” 5
Chairman Dixon’s speech leaves a clear impression that his belief that petitioners had violated the Act was far stronger than the “reason to believe” which justifies the issuance of a complaint. Indeed, his speech suggests not only a substantial conviction that Texaco and Goodrich are violating the Act but an implied promise to support the petroleum retailers in their struggle against alleged abuses by their suppliers. An independent observer could fairly conclude that Chairman Dixon was in some measurepre-committed to a determination adverse to petitioners. We must therefore-—at the least — vacate the Commission’s order and remand to the Commission for a de novo consideration of the record and the arguments without the participation of Chairman Dixon.6
*765II. The Absence of Renewable Findings.
The Commission’s decision consisted of an assertion that the “other evidence of record7 amply supports the conclusions and the order of the Hearing Examiner. The legal principles relevant to this decision need not be reexamined here because they are set forth at length in the opinions of the Commission in Goodyear Tire & Rubber Co. * * * and Firestone Tire & Rubber Co. * * ”
Section 8(b) of the Administrative Procedure Act, 5 U.S.C. § 1007(b) (1958), provides in part that all decisions “shall * * * include a statement of (1) findings and conclusions, as well as the reasons or basis therefor, upon all the material issues of fact, law, or discretion presented on the record * * Recently, the Supreme Court set aside an order of the Interstate Commerce Commission, partly on the ground that—
“There are no findings and no analysis here to justify the choice made, no indication of the basis on which the Commission exercised its expert discretion. We are not prepared to and the Administrative Procedure Act will not permit us to accept such adjudicatory practice.” 8
The mere citation of earlier opinions does not provide a sufficient basis to understand and evaluate the Commission’s decision on the facts of this case. There are a variety of facts and findings relief on by the Commission in the Goodyear and Firestone cases which cannot be readily assumed here. For example, on the issue of coercion, in Goodyear the-Commission found that “Atlantic dealers-have been orally advised by sales officials of the oil company that their continued status as Atlantic dealers and. lessees will be in jeopardy if they do not. purchase sufficient quantities of sponsored TBA.”9 In Firestone the Commission pointed to internal memoranda, of the Shell Oil Company to support the conclusion of coercion. In both cases the Commission purported to make an examination of the competitive effects of' the sales commission plan, saying, “Determination of illegality in this context, requires an evaluation of competitive effects resulting from respondents’ use of' the sales commission method of distributing TBA,”10 and, in pursuing an alternative theory of a tie-in arrangement,, purported to make findings on Atlantic’s- and Shell’s economic power in the “tying” commodity.
Also to be noted is the fact that on the-same day that the Commission decided. Goodyear and Firestone — March 9, 1961 —it considered this case, and did not. affirm the findings of actual coercion but remanded to the Examiner for the taking of further evidence on “competitive effects” :
“[T]he record in this case does not contain sufficient market data to enable the Commission to assess the competitive effects of the sales commission method of distributing TBA employed by these respondents.”11 (Emphasis supplied.)
*766On April 15, 1963, the Commission, reviewing the Hearing Examiner’s remand decision, affirmed his conclusions of a statutory violation, even though it excluded from consideration any new evidence adduced on the remand, and cited the Goodyear and Firestone cases, even though the Commission had previously declined to find a violation on this record, when it remanded simultaneously with its formulation and application of legal theories in the companion cases. The one Commissioner who had participated in the earlier decisions and was on the Commission on April 15, 1963, dissented from the decision rendered on that date.
These considerations indicate, not that the evidence, as a whole, fails to support .a finding of a Section 5 violation under a proper interpretation of that section, hut that the Commission failed to perform its function of articulating the facts and spelling out its theories. The Commission’s decision falls short of the .standards required for judicial review, for we are unable to discern with a fair degree of certainty the facts or the theories relied on below.12 Under the circumstances, we should express no •opinion on the merits.
In my view, we should hold simply that a court must know why a Commission acted in order to fulfill the function of judicial review (Secretary of Agriculture v. United States, 347 U.S. 645, 74 S.Ct. 826, 98 L.Ed. 1015 (1954)), and that businessmen and other parties subject to administrative regulation are entitled to an explanation of their duties .and obligations. Thus, even in the absence of the disqualification issue, we would — in my view — find it necessary to remand for a proper opinion. See Radio Station KFH Co. v. Federal Communications Commission, 101 U.S.App.D.C. 164, 247 F.2d 570 (1957).
For the reasons given, I would set .aside the Commission’s order but would pass neither on the merits nor on other issues argued by the parties. The Commission could then be required to produce a new opinion within a reasonable time, such as sixty days, meeting the standard for judicial review.
III.
Though, as I have indicated, I do not think we should pass on the merits, the majority has done so. Under the circumstances, I am constrained to say that in my view the majority’s conclusion that the record does not contain sufficient evidence to support a finding of a Section 5 violation is very doubtful. The crucial failing, in the court’s view, is the lack of evidence to establish that Texaco has sufficient economic power over its dealers to compel them to handle Goodrich tires exclusively. I submit that under the antitrust laws, Texaco’s relationship to its dealers must probably be deemed inherently coercive. See, e. g., Simpson v. Union Oil Company of California, 377 U.S. 13, 84 S.Ct. 1051, 12 L.Ed.2d 98 (1964) ; Standard Oil Company of California v. United States, 337 U.S. 293, 69 S.Ct. 1051, 93 L.Ed. 1371 (opinion for the Court per Frankfurter, J.), 323 (concurring opinion of Jackson, J.) (1949); Federal Trade Commission v. Motion Picture Advertising Service Co., 344 U.S. 392, at 402, 73 S.Ct. 361, 97 L.Ed. 426 (1953) (Frankfurter, J., in dissent, explaining his opinion in Standard Stations, supra); Osborn v. Sinclair Refining Co., 286 F.2d 832 (4th Cir. 1961); United States v. Sun Oil Co., 176 F.Supp. 715, 719-20 (E.D.Pa.1959) ; Schwing Motor Co. v. Hudson Sales Corp., 138 F.Supp. 899 (D.Md.1956); United States v. General Motors Corp., 121 F.2d 376, 398 (7th Cir.), cert. denied, 314 U.S. 618, 62 S.Ct. 105, 86 L.Ed. 497 (1941). See, also, the recent opinion of the Seventh Circuit in Goodyear Tire & Rubber Co. v. Federal Trade Commission, 331 F.2d 394 (1964). See, generally, S.Rep.No.2073, 84th Cong., 2d Sess. (1956); H.R.Rep.No. *7672850, 84th Cong., 2d Sess. (1956), U.S. Code Cong, and Adm.News 1956, p. 4596, relating to the Automobile Dealers’ Franchise Act, 70 Stat. 1125, 15 U.S.C. § 1221 et seq.
Evidence which might tend to show coercive power in this case includes (a) one year leases and sales agreements, terminable at the year’s end upon 10 days’ notice; (b) substantial contractual control by Texaco over the use, maintenance and appearance of stations (the obligations imposed by Texaco, in addition to being evidence of Texaco’s bargaining power, are means by which Texaco could prematurely terminate the lease through enforcement of one of those obligations, under cancellation provisions) ; (c) high personal investments by the lessees in their stations; (d) close dealer supervision by Texaco salesmen; (e) Goodrich’s manifest understanding that Texaco controls its dealers (e. g., Goodrich’s books refer to the dealers as “oil company controlled dealers”) ; (f) testimony of competing TBA suppliers that Texaco dealers felt they risked reprisal if they did not carry sponsored TBA, and (g) testimony of former Texaco dealers of the existence of a pattern of coercive conduct throughout their tenure. Other evidence in the record that Texaco imposed a course of purchasing behavior on the dealers may be summarized by quoting from page 51 of Bespondent’s brief:
“ * * * the services performed by Texaco pursuant to its contracts include: Stressing the importance of TBA to prospective dealers and recommending BFG and Firestone; giving advance notice of dealer selection to BFG or Firestone and introducing new dealers to their salesmen; assisting new dealers with adequate TBA inventories; encouraging its salesmen to write sponsored TBA orders without awaiting formal dealer request; calling on dealers with BFG or Firestone salesmen (‘double teaming’); conducting frequent dealer meetings and training courses, with active BFG and Firestone participation; arranging for and participating in BFG and Firestone advertising and promotions; and permitting sponsored TBA purchases on its credit cards. Texaco training schools are conducted at company-owned service stations where only BFG or Firestone TBA is used. This can only solidify the dealer’s ‘choice’ of sponsored TBA.”
Thus, I suggest that it may well be the record as a whole would support findings of both the existence and the utilization of coercive economic power by Texaco over its dealers. Were we reviewing the Hearing Examiner’s findings, and formulating the appropriate-legal theory in the first instance, I suggest that we might also properly conclude-that there was sufficient evidence of anti-competitive effect to warrant finding a. violation under a tie-in theory.13 But. *768in the first instance it is the Commission, not this court, which must indicate what facts and what legal theories constrained it to find a violation. We could of course ■select those legal doctrines appearing in the cases cited in the Commission’s opinion — Goodyear and Firestone — and those facts in the record before the Hearing Examiner, which would sustain the Commission’s conclusions, and then affirm. But aside from the fact that such an approach would be less than faithful to file appropriate institutional /relationship between this court and the Commission, it would not be possible in this case because of Chairman Dixon’s disqualifying conduct.
The delays in this case are serious.14 ’ But I would not terminate the proceed- , ings because of them. The public inter- ’ est in effective competition should not lightly be subordinated to Texaco’s interest in speedy adjudication.

. Cardozo, The Nature of the Judicial Process 168 (1921).

. Federal Trade Commission v. Cement Institute, 333 U.S. 683, at 703, 68 S.Ct. 793, 92 L.Ed. 1010 (1948).

. Amos Treat & Co. v. Securities and Exchange Commission, 113 U.S.App.D.C. 100, 107, 306 F.2d 260, 267 (1962).

. “[J]ustice must satisfy the appearance of justice.” Offutt y. United States, 348 U.S. 11, 14, 75 S.Ct. 11, 13, 99 L.Ed. 11 (1954).

. Gilligan, Will and Co. v. Securities and Exchange Commission, 267 F.2d 461, 469 (2d Cir. 1959). In that case the Securities and Exchange Commission, three days after commencing adjudicatory proceedings, bad issued a press release,, stating that the parties involved had violated the relevant Act. The Second Circuit, in dicta, strongly disapproved of the-Commission’s behavior, but held that petitioners had waived their right to object by failing to make a timely motion,

. Federal Trade Commission v. Cement Institute, supra, is to be distinguished on the grounds that (a) the disqualification of the entire Commission, which-was there sought, would have effectively precluded any enforcement of the Act against the respondent (the “necessity doctrine”) and (b) the opinion does not indicate that the Commissioners had expressed a focussed bias against the respondent, rather a general “policy” bias against basing point systems.

. That is, exclusive of certain evidence adduced in the remand proceeding, which petitioners claimed was improperly admitted, and which the Commission in fact stated that it would not consider.

. Burlington Truck Lines v. United States, 371 U.S. 156, 167, 83 S.Ct. 239, 245, 9 L.Ed.2d 207 (1962).

. 58 F.T.C. 309, 342 (1961).

. Firestone, 58 F.T.C. 371, 408 (1961); Goodyear, supra, at 365. E.g., Shell accounted for about 5% of the total gasoline sold at retail in the United States in 1955, 58 F.T.C. at 407; Firestone accounted for 15.3% and Goodyear 21.4% of total replacement tire sales at consumer level in 1954. 58 F.T.C. at 409.

. In Goodyear and Firestone the Commission considered such “competitive effects” as division of markets between manufacturers, foreclosure of battery and accessory manufacturers, foreclosure of smaller tire manufacturers, restraint on expansion of smaller tire manufacturers’ distribution systems, foreclosure of wholesalers, presumption in favor of wholesalers selling sponsored products, and the impact on wholesalers who also sell at retail.

. See, e.g., Interstate Commerce Commission v. Mechling, 330 U.S. 567, 67 S.Ct 894, 91 L.Ed. 1102 (1947); Connecticut Light & Power Co. v. Federal Power Commission, 324 U.S. 515, 532, 65 S.Ct. 749, 89 L.Ed. 1150 (1945).

. On the appropriate test of anti-competitive effect necessary to sustain a finding that a tie-in violates Section 1 of the Sherman Act (which generally puts a more stringent burden on the Government than does Section 5 of the FTC Act), see e.g., Northern Pacific Railway Co. v. United States, 356 U.S. 1 at 5-6, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958). The percentage of the gasoline station market for TBA controlled by Texaco, on any reading of the record, certainly affects a “not insubstantial” amount of interstate commerce. See International Salt Co. v. United States, 332 U.S. 392, 68 S.Ct. 12, 92 L.Ed. 20 (1947), and Brown Shoe Co. v. United States, 370 U.S. 294, 330, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962).
On utilization of a tie-in theory under circumstances similar to those of the instant case, see Osborn v. Sinclair Refining Co., supra, 286 F.2d 832 (4th Cir. 1961). The fact that Texaco’s power and practices resulted in something less-than exclusive dealer use of sponsored. TBA would not seem to require a different result. Id. at 838-39. See, also,, the decision of the Seventh Circuit, in an appeal from a parallel decision of the-Federal Trade Commission relied on below, Goodyear Tire & Rubber Co. v. Federal Trade Commission, 331 F.2d 394 (1964).

. See, generally, Note, Judicial Acceleration of the Administrative Process: The Right to Relief from Unduly Pro-traded Proceedings, 72 Yale L.J. 574 (1963).