Goodyear Tire & Rubber Co. v. FEDERAL TRADE COM'N

• Decision Date: 05 November 1937
• Docket Number: No. 7369.,7369.
• Citation: 92 F.2d 677
• Parties: GOODYEAR TIRE & RUBBER CO. v. FEDERAL TRADE COMMISSION.
• Court: U.S. Court of Appeals — Sixth Circuit

92 F.2d 677 (1937)

GOODYEAR TIRE & RUBBER CO. v. FEDERAL TRADE COMMISSION.

No. 7369.

Circuit Court of Appeals, Sixth Circuit.

November 5, 1937.

Grover Higgins, of Cleveland, Ohio (Newton D. Baker and H. Chapman Rose, of Cleveland, Ohio, on the brief), for petitioner.

Everett F. Haycraft and W. T. Kelley, both of Washington, D. C. (Martin A. Morrison, Pgad B. Morehouse, and James W. Nichol, all of Washington, D. C., on the brief), for respondent.

Before HICKS and SIMONS, Circuit Judges, and HAMILTON, District Judge.

SIMONS, Circuit Judge.

The petitioner is a manufacturer of automobile tires, and by respondent's complaint of September 13, 1933, was charged with violation of section 2 of the Clayton Act (U.S.C.A., title 15, § 13), by discriminating in the price of tires between those sold in interstate commerce to Sears, Roebuck & Co., and those sold to independent Goodyear dealers, with the effect of lessening competition and tending to create a monopoly both in manufacture and distribution. After extended hearings, in which a great volume of testimony was taken, the respondent issued its order directing the petitioner to cease and desist from the condemned practice, whereupon on April 5, 1936, the petitioner filed in this court the present petition for review.

The controversy involves principally a challenged interpretation given by the Commission to section 2 of the Clayton Act. That section declares it to be unlawful to discriminate in price between purchasers of commodities where the effect of such discrimination may be to substantially lessen competition or tend to create a monopoly in any line of commerce, and contains the following proviso: "That nothing herein contained shall prevent discrimination in price between purchasers of commodities on account of differences in the grade, quality, or quantity of the commodity sold, or that makes only due allowance for difference in the cost of selling or transportation, or discrimination in price in the same or different communities made in good faith to meet competition."

The essential dispute in respect to the foregoing proviso is this: The petitioner contends that a discrimination in price is permitted if based upon the quantity of the commodity sold, and that a discrimination in price is also permitted that makes due allowance for difference in the cost of selling or transportation; that since its discrimination in favor of Sears Roebuck was approximately only 7 per cent. over and above a due allowance for difference in cost, it was not an unreasonable discrimination attributable to the great quantity of tires purchased by Sears Roebuck, that its effect did not substantially lessen competition, had no tendency to create monopoly, and so the petitioner did not offend against the statute. The Commission, however, contends that, while the proviso permits discrimination on account of differences in quantity of the commodity sold, such discrimination is limited to the saving in cost of selling or transportation, and that all differences in price beyond such saving threatens competition, tends to monopoly, and so violates the statute.

The cease and desist order was entered on March 5, 1936. On June 19 of the same year the Congress enacted the so-called Robinson-Patman Act (49 Statutes 1526), whereby section 2 of the Clayton Act was amended (15 U.S.C.A. § 13) inter alia to provide "That nothing herein contained shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery, resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered." It is agreed that the Robinson-Patman Act limits differentials to differences in cost on account of quantity, but the petitioner insists that this marks a change in the law, while the respondent contends it is mere clarification. The petitioner stands upon the language of the act and the history of the amendment, pointing among other facts to the Commission's final report on chain store investigation filed December 14, 1934, wherein, in discussion of section 2 of the Clayton Act, it said: "Unless the price discrimination permitted on account of quantity shall make only due allowance therefor, section 2 of the Clayton Act may be readily evaded by making a small difference in quantity the occasion for a large difference in price. If the section is to have any vitality it must either be interpreted and enforced to that effect or it should be amended to that effect," and to reports of congressional committees to the effect that section 2 of the Clayton Act places no limit upon quantity differentials of any kind. The Commission's present view of the meaning of section 2 is that in the respect here indicated it requires neither amendment nor interpretation, for it asserts the proviso to be clear and unambiguous. For reasons presently to be discussed, we find it unnecessary to decide the question thus briefly indicated.

When the case reached the court for argument, we were informed that, when the Robinson-Patman Act became effective, the petitioner at once ceased to manufacture tires for Sears Roebuck under the terms of its existing contract, and shortly thereafter received notice of its cancellation. Since, however, a large stock of tires made under the agreement was on hand and could not at once be liquidated, the parties made a new price arrangement designed to conform to the new law, and advised the Commission of the price basis it was proposed to use. Within the year all transactions between the petitioner and Sears Roebuck ceased and obligations were terminated by mutual releases. These circumstances appearing, the court inquired whether an actual controversy between the parties remained to be decided. The original briefs, except for a note on that of the petitioner, were silent upon the possibly moot character of the controversy. Permission to file supplemental briefs on the point raised was immediately sought and granted, and these have now been carefully considered.

Petitioner and respondent alike urge decision upon the validity of the Commission's order. That they are in agreement upon the presence of an actual controversy is, however, of no importance, since no stipulation of parties or counsel can enlarge the power constitutionally conferred upon the courts. Richardson v. McChesney, 218 U.S. 487, 31 S.Ct. 43, 54 L.Ed. 1121; Lieutenant Stearns v. Wood, 236 U. S. 75, 35 S.Ct. 229, 59 L.Ed. 475; Security Life Insurance Co. v. Prewitt, 200 U.S. 446, 26 S.Ct. 314, 50 L.Ed. 545. It is the duty of the court to determine the limit of its own jurisdiction when any question concerning it presents itself, whether raised by counsel or sua sponte, for we are not empowered to decide moot or abstract propositions, or to declare for the government of future cases principles or rules of law which cannot affect the result as to the things in issue before us. California v. San Pablo & Tulare Railroad Co., 149 U.S. 308, 314, 13 S.Ct. 876, 37 L.Ed. 747; Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 56 S.Ct. 466, 80 L.Ed. 688.

However debatable may have been the validity of the Commission's order based upon its asserted interpretation of the section 2 proviso of the Clayton Act, and upon this we express no opinion, there is no controversy between the parties as to the illegal character of the petitioner's practices under the terms of the Robinson-Patman Act. To the mandate of the latter, the petitioner has bowed. So far as this case is concerned, it accepts without question both its validity and its application. It has consented to the abrogation of a very profitable contract involving millions of units and many millions of dollars, with all the dislocation and reorganization of manufacturing...