609 F.2d 743 (5th Cir. 1980), 78-2932, F. T. C. v. Turner

Docket Nº:78-2932.
Citation:609 F.2d 743
Party Name:FEDERAL TRADE COMMISSION, Petitioner-Appellant, v. Glenn W. TURNER, Respondent-Appellee.
Case Date:January 09, 1980
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

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609 F.2d 743 (5th Cir. 1980)



Glenn W. TURNER, Respondent-Appellee.

No. 78-2932.

United States Court of Appeals, Fifth Circuit

January 9, 1980

Denis E. Hynes, W. Dennis Cross, Gerald P. Norton, Federal Trade Commission, Washington, D. C., for petitioner-appellant.

Nichols & Tatich, Philip Tatich, Orlando, Fla., for respondent-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before BROWN, CHARLES CLARK and VANCE, Circuit Judges.

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VANCE, Circuit Judge:

This case raises the question of the power of the Federal Trade Commission (F.T.C.) to use an investigational subpoena to ascertain whether the subject of a cease and desist order has sufficient financial resources to make worthwhile a civil damage action for consumer redress. We hold that the F.T.C.'s otherwise broad investigatory powers do not extend far enough to justify our enforcing such an investigational subpoena.

On November 18, 1975, the F.T.C. issued a cease and desist order against Glenn W. Turner and others. Koscot Interplanetary, Inc., 86 F.T.C. 1106 (1975), Aff'd sub nom. Turner v. F.T.C., 188 U.S.App.D.C. 438, 580 F.2d 701 (D.C.Cir.1978). On May 17, 1977, 1 the F.T.C. authorized the use of compulsory processes to obtain information as to the "availability of assets from which injury to consumers or others may be redressed." The F.T.C. acknowledges that this information was to be used in deciding whether to bring a civil action against Turner and other persons, pursuant to § 19(a)(2) of the Federal Trade Commission Improvement Act, 15 U.S.C. § 57b(a)(2) (the Act). 2 In the course of its investigations, the F.T.C. issued a subpoena duces tecum to Turner directing him to produce various documents disclosing the state of his and his family's finances. Turner moved to quash the subpoena arguing that the F.T.C.'s demand constituted impermissible pretrial discovery and exceeded the scope of the F.T.C.'s investigational authority. The F.T.C. rejected Turner's contentions and denied his motion. Turner then informed the F.T.C. that he refused to furnish the subpoenaed information.

On April 14, 1978, the F.T.C. petitioned the district court for an order requiring Turner to comply with the investigative subpoena. The district court denied the petition, holding that the Act did not grant the F.T.C. authority "to inquire into a subject's wealth prior to instituting a civil damage action against him." The F.T.C. then appealed to this court.

The Federal Trade Commission Act, 15 U.S.C. §§ 41-46, 47-58, gives the F.T.C. broad investigatory powers to promote fair trade practices. Under 15 U.S.C. § 46(a), it has explicit authority "To gather and compile information concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any person . . . engaged in or whose business affects commerce." To facilitate such investigations, 15 U.S.C. § 49 empowers the F.T.C. "to require by subpoena the attendance and testimony of witnesses and the production of all documentary evidence relating to any matter under investigation." The F.T.C. may obtain the information it seeks as long as "the inquiry is within the authority of the agency, the demand is not too indefinite and the information sought is reasonably relevant." United States v. Morton Salt Co., 338 U.S. 632, 652, 70 S.Ct. 357, 369, 94 L.Ed. 401 (1950). See e. g., Genuine Parts Co. v. F.T.C., 445 F.2d 1382, 1391 (5th Cir. 1971); F.T.C. v. Texaco, Inc., 180 U.S.App.D.C. 390, 400, 555 F.2d 862, 872 (D.C.Cir.), Cert. denied, 431 U.S. 974, 97 S.Ct. 2940, 53 L.Ed.2d 1072 (1977); Midwest Growers Cooperative Corp. v. Kirkemo, 533 F.2d 455, 461 (9th Cir. 1976).

To fulfill its public responsibility of preventing unfair commercial practices, the F.T.C. must institute proceedings, issue orders, and insure compliance with its decrees. United States v. Morton Salt Co., 338 U.S. at 640, 70 S.Ct. 357; 15 U.S.C. § 45. In order to carry out these duties, Congress

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has given the F.T.C. the authority to conduct investigations to determine whether the law is being violated:

Even if one were to regard the request for information . . . as caused by nothing more than official curiosity, nevertheless law-enforcing agencies have a legitimate right to satisfy themselves that corporate behavior is consistent with the law and the public interest.

United States v. Morton Salt Co., 338 U.S. at 652, 70 S.Ct. at 369. Thus an investigation may be instituted to discover and to produce evidence on the basis of which charges may be brought in the F.T.C.'s discretion. Genuine Parts Co. v. F.T.C., 445 F.2d at 1388 (quoting Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 201, 66 S.Ct. 494, 90 L.Ed. 614 (1946)).

The F.T.C. errs, however, in failing to distinguish investigations seeking information concerning wrongs done consumers from investigations into the practicality of pursuing a remedy for those wrongs. The amount of Turner's assets is not relevant to an inquiry into whether a violation of the law exists.

The relevance of an F.T.C. subpoena request is measured against the purpose and scope of its investigation. F.T.C. v. Texaco, Inc., 555 F.2d at 874. The F.T.C. contends that Turner's wealth is germane because its investigation was instituted to determine the practical feasibility of a consumer redress action against Turner. The F.T.C., however, was not given the authority to conduct this sort of investigation before commencing a civil action for damages.

In bringing a consumer redress action for damages, a power recently conferred by 15 U.S.C. § 57b(a)(2), the F.T.C. assumes a different litigative posture than the one it occupies in performing its administrative and quasi-judicial functions. In cases brought under 15 U.S.C. § 57b(a)(2), the F.T.C. is a civil plaintiff seeking damages to redress the injuries of individual consumers rather than a watchdog protecting the general public from unfair trade practices. Absent a specific congressional mandate or a clearly discernible statutory implication, we will not find that the F.T.C. has the claimed investigative authority in its new role. No provision in 15 U.S.C. § 57b broadens the agency's investigatory authority to include an inquiry into a prospective defendant's assets for the purpose of determining the practical feasibility of instituting a damage action.

Information about the financial status of a putative defendant would be interesting to any person or agency considering a civil suit for damages. Under most circumstances, however, a private plaintiff may not discover an opponent's assets until after a judgment against the opponent has been rendered. Sanderson v. Winner, 507 F.2d 477, 479-80 (10th Cir. 1974), Cert. denied, 421 U.S. 914, 95 S.Ct. 1573, 43 L.Ed.2d 780 (1975); Cf. Fed.R.Civ.P. 69(a) (discovery in aid of judgment). 3 Turner's financial status, like the financial status of most putative defendants, is not relevant to any issue that will be raised in the contemplated lawsuit.

In determining another agency's right to judicial enforcement of a subpoena duces tecum issued pursuant to an investigation conducted under 15 U.S.C. §§ 49, 50, the Supreme Court explained,

(T)he basic compromise has been worked out in a manner to secure the public interest and at the same time to guard the private ones affected against the only abuses from which protection rightfully may be claimed. The latter are not identical with those protected against invasion by actual search and seizure, nor are

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the threatened abuses the same. They are rather the interests of men to be free from officious intermeddling, whether because irrelevant to any lawful purpose or because unauthorized by law, concerning matters which on proper occasion and within lawfully conferred authority of broad limits are subject to public examination in the public interest.

Oklahoma Press Publishing Co. v. Walling, 327 U.S. at 213, 66 S.Ct. at 508. Because the subpoenaed information in this case is not reasonably relevant to any authorized F.T.C. inquiry, the public need for this information does not justify the pretrial invasion of Turner's privacy. We therefore affirm the district court's decision not to enforce the subpoena.


JOHN R. BROWN, Circuit Judge, dissenting:

Today, in a seemingly simple and straightforward opinion, this Court truncates the authority of the Federal Trade Commission to inquire into the assets of a prospective defendant in a consumer redress action. In so doing, this Court misreads the recently enacted Federal Trade Commission Improvements Act and denies the Commission a vital and meaningful method of successfully, faithfully serving the public interest.

In this case, the Commission sought to make an informed and intelligent decision as to whether to prosecute a civil action for consumer redress against Glenn Turner. Turner had already been found in violation of § 5 of the FTC Act, 15 U.S.C.A. § 45(b), and was subject to a cease and desist order. In a subsequent proceeding, now the matter before us, the Commission subpoenaed Turner to ascertain his financial resources. This information was sought to obtain material relevant to the appropriateness of the Commission commencing a civil action for consumer redress against Turner including, particularly, information as to the availability of assets from which consumer injury might be redressed. 1 When Turner refused to comply with the subpoena, the Commission sought to enforce it. The District Court and, now, this Court refused enforcement.

While the Court concedes the statutory mandate of the Commission to ferret out improper business practices and its broad investigatory power, the Court seems to make two basic points which persuade it to rule otherwise. First, the Court says that the information sought is not...

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