FTC v. Browning, 23381.

• Decision Date: 09 October 1970
• Docket Number: No. 23381.,23381.
• Citation: 435 F.2d 96
• Parties: FEDERAL TRADE COMMISSION v. Ralph L. BROWNING, Executive Vice President of Lehigh Portland Cement Company, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

435 F.2d 96 (1970)

FEDERAL TRADE COMMISSION v. Ralph L. BROWNING, Executive Vice President of Lehigh Portland Cement Company, Appellant.

No. 23381.

United States Court of Appeals, District of Columbia Circuit.

Argued April 20, 1970.

Decided October 9, 1970.

Mr. Ronald J. Wilson, Washington, D. C., for appellant.

Mr. Donald L. Horowitz, Atty., Department of Justice, for appellee. Messrs. Thomas A. Flannery, U. S. Atty., Morton Hollander and Leonard Schaitman, Attys., Department of Justice, were on the brief, for appellee.

Before BAZELON, Chief Judge, and LEVENTHAL and WILKEY, Circuit Judges.

WILKEY, Circuit Judge:

Appellant Browning is the Executive Vice-President of Lehigh Portland Cement Company, with his residence and principal place of business in Allentown, Pennsylvania. On this appeal he seeks reversal of a District Court order enforcing a Federal Trade Commission subpoena which had required him to produce certain books and records of Lehigh.¹ The subpoena was issued pursuant to the Commission's discovery rules² in a proceeding charging Lehigh with violations of Section 5 of the Federal Trade Commission Act³ and Section 7 of the Clayton Act⁴ by its acquisitions of five ready-mixed concrete firms in Florida, Virginia and Kentucky.

Appellant first contends that the District Court lacked personal jurisdiction to enforce the subpoena. In the enforcement suit appellant was not served with process within the District of Columbia, but rather was served by mail at his office in Allentown, Pennsylvania.

I.

Rule 4(f) of the Federal Rules of Civil Procedure normally limits the geographical area where a district court's process can be served to the territorial limits of the state in which the district court sits, except that extraterritorial service of process is proper "when authorized by a statute of the United States."⁵ We are in complete agreement with the reasons set forth by the District Court in the instant case for its holding that Section 9 of the Federal Trade Commission Act is such a statute,⁶ and think the reasons well stated:

The language of Section 9 is significantly different from the ostensibly similar language of Section 310 of the Transportation Act of 1920, which authorized the Railroad Labor Board to enforce its subpoenas in "any District Court of the United States." The Supreme Court held that "by the phrase `any District Court of the United States\' Congress meant any such court `of competent jurisdiction,\'" and the Court therefore concluded that Section 310 was merely a venue statute. Robertson v. Railroad Labor Board, 268 U. S. 619, 627 45 S.Ct. 621, 69 L.Ed. 1119 (1925). Section 9 of the Federal Trade Commission Act, on the other hand, gives to "any of the district courts of the United States within the jurisdiction of which such inquiry is carried on" the authority to enforce subpoenas of Federal Trade Commission inquiries. 15 U.S.C. § 49 (1964). (Emphasis added.) This language must be interpreted as a special grant of jurisdiction, not merely venue to that court or those courts sitting in the district or districts in which the inquiry is being conducted. "The provision restricting the place of suit operates pro tanto to displace" the general rule that a suit can only be brought where a defendant is domiciled or happens to be present, "and amply authorizes the Circuit or District Court in the district wherein the action is required to be brought to obtain jurisdiction of the persons of the defendants through service upon them of its process in whatever district they may be found." United States v. Congress Construction Co., 222 U.S. 199, 203-204 32 S.Ct. 44, 56 L.Ed. 163 (1911). * * * To interpret Section 9 as simply a venue statute would be to restrict the place of suit to a particular district and yet to deprive the court in that district of the power to obtain personal jurisdiction of a respondent, absent the fortuitous circumstance of that respondent voluntarily entering the district where the inquiry is being conducted.

Such a construction would be contrary to the congressional purpose to endow the Commission with broad powers of investigation and the authority to compel "attendance and testimony of witnesses and the production of * * * documentary evidence relating to any matter under investigation * * * from any place in the United States at any designated place of hearing."⁷ Here, the designated place of hearing is Washington, D. C., which is thus necessarily a place where the "inquiry is carried on."⁸ In our view, by granting the power to enforce subpoenas only to those district courts "within the jurisdiction of which such inquiry is carried on," Section 9 so limits the place of suit for enforcement of Federal Trade Commission subpoenas as to require an implied grant of authority for extra-territorial service of process in order to effectuate the purpose of the regulatory scheme.⁹

As a practical matter, we must consider that in any major Commission proceeding subpoenas duces tecum are issued to many witnesses in various parts of the country. In this case, as a good example, the Government is attempting to enforce thirteen subpoenas against third party witnesses located in seven different judicial districts. The legal questions involved are identical in most of these, and this normally would be expected to be true. It makes for uniformity in the application of the law and economy of judicial administration to center the enforcement proceedings in a single court.

While not conclusive, the legislative history of the Act further tends to buttress this view. The year prior to the statute's enactment, during consideration of proposed legislation to establish the Commission, it was suggested to Congress that judicial enforcement of Commission subpoenas be in "any district court of the United States in the jurisdiction of which such person may be found or shall have been directed by such subpoena to appear."¹⁰ Congress, however, did not adopt this proposal, but instead, when the Act was passed the following year, vested jurisdiction in the district court in which the Commission's "inquiry is carried on."

Subsequently, in 1936 the Chairman of the Federal Trade Commission requested an amendment to Section 9 in order that jurisdiction to enforce Commission subpoenas be vested in "any of the District Courts of the United States within the jurisdiction of which such inquiry is carried on or in which the corporation or person guilty of contumacy or refusal to obey resides or carries on business or is found."¹¹ The Chairman explained that:

Under the present act, the jurisdiction is confined to the district court of the district in which the Commission\'s inquiry is being carried on. This amendment is to the convenience both of the Commission and members of the public who may be subpoenaed. The Commission hearing to which the witness has been subpoenaed may be in a district remote from his residence. Under the amendment the Commission may bring the proceeding to force his attendance, in the district court of the district of his residence.¹²

Congress, however, declined to accede to this request. Although the proposed amendment was again incorporated in a Senate Bill the following year, the proposed change to Section 9, together with certain other changes, were deleted prior to passage, the responsible committee noting that "there was no pressing need for them at this time."¹³

We therefore hold that the District Court had personal jurisdiction over appellant and properly denied appellant's motion to dismiss the enforcement petition.

II.

Appellant further complains, first, that he was improperly denied discovery in the enforcement proceeding, and, second, that the trial court erred in enforcing the subpoena because, aside from the issue of personal jurisdiction, the subpoena was issued in violation of the Commission's own rules and should therefore have been held unenforceable. As we shall develop later, appellant's claim for discovery necessarily depends upon the validity of his grounds for resisting enforcement of the subpoena. We therefore deal first with the question of whether the subpoena was enforceable.

Initially, we note that, as stated by the court in Adams v. Federal Trade Commission:¹⁴

There is general unanimity among the courts that a subpoena meets the requirement of enforcement if the inquiry is (1) within the authority of the agency; (2) the demand is not too indefinite, and (3) the information sought is reasonably relevant.

Appellant does not dispute that the information sought here was relevant to the proceedings, nor that it was specified with sufficient definiteness; nor does he claim that the Commission is without general authority to require production of information of this nature. What appellant does claim is that while the Commission could have required production of the materials sought here in a pre-complaint investigation, it could not, as it has interpreted its own rules, seek such information via post-complaint discovery procedures.¹⁵ Appellant cites the Commission's 1967 ruling in All-State Industries of North Carolina, Inc.,¹⁶ which set forth the Commission's view that an order to produce documents, made after the issuance of a complaint in an adjudicative proceeding, which is "overly broad" and "basically investigative in nature," is, "outside the scope of the Commission's intended discovery processes."¹⁷ Under All-State, appellant claims, if a subpoena issued subsequent to a complaint seeks information of a type normally sought via pre-complaint investigation, then the subpoena is overly broad and hence unenforceable.

We cannot agree with appellant's argument on this point for two reasons. First, the All-State opinion itself does not support appellant's contention that the Commission's rules give him an unqualified right to withhold information if such data is of a type that normally would be obtained prior to issuance of a complaint....