Adams v. FTC
| Decision Date | 24 November 1961 |
| Docket Number | No. 16745,16747.,16745 |
| Parties | Elmer C. ADAMS, Sr., and Adams Dairy Company, Elmer C. Adams, Jr., and Adams Dairy, Inc., Appellants, v. FEDERAL TRADE COMMISSION, Appellee. FEDERAL TRADE COMMISSION, Appellant, v. Elmer C. ADAMS, Sr., and Adams Dairy Company, Elmer C. Adams, Jr., and Adams Dairy, Inc., Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Alvin L. Berman, Atty., Federal Trade Commission, Washington, D. C., for Federal
Trade Commission and James McI. Henderson, Gen. Counsel, Federal Trade Commission, Washington, D. C., and Alan B. Hobbes, Asst. Gen. Counsel and Charles D. Gerlinger, Atty., Federal Trade Commission, Washington, D. C., on the brief.
John J. Hasburgh, Kansas City, Mo., for Adams Dairy Co., Elmer C. Adams, Sr., and others, Hillix, Hall, Hasburgh, Brown & Hoffhaus, and James C. Wilson, Kansas City, Mo., on the brief.
Before SANBORN, MATTHES and RIDGE, Circuit Judges.
These are cross appeals from an order of the United States District Court for the Western District of Missouri entered in connection with proceedings pending before the Federal Trade Commission.
Pursuant to the provisions of the Federal Trade Commission Act (38 Stat. 717, 15 U.S.C.A. § 41 et seq., 52 Stat. 111), the Federal Trade Commission, on September 24, 1959, issued complaints as follows: In Commission Docket No. 7596 against Adams Dairy Company, Adams Dairy, Inc. and The Kroger Company; in Commission Docket No. 7597 against Adams Dairy Company, Adams Dairy, Inc. and Safeway Stores, Inc.; and in Commission Docket No. 7598 against Adams Dairy Company, Adams Dairy, Inc. and The Great Atlantic and Pacific Tea Company, Inc.1 The complaints are similar, each alleging that Adams and one of the grocery corporations, Kroger, Safeway or A & P, have maintained and effectuated a conspiracy, combination, agreement and understanding in the sale and distribution of dairy products in restraint of trade, in violation of § 5 of the Act.2 The practices, acts and conduct of the respondents relied upon in part in furtherance of the conspiracy are alleged in more detail and will be elaborated on in considering Commission's appeal in No. 16,747.
On February 18, 1960, the hearing examiner assigned to conduct the hearing issued six administrative subpoenas ad testificandum and duces tecum. Three were issued to Adams, Sr. and ADC and three were issued to Adams, Jr. and ADI. While the subpoenas are similar as to documentary material called for, there are differences, and during consideration of the appeal in No. 16,747, additional reference will be made of such differences as far as may be necessary to resolution of the questions presented therein. Motions to quash the subpoenas were filed by Adams, Sr., Adams, Jr. and Adams, and were overruled by the hearing examiner and the Commission denied an appeal from his ruling. On September 12, 1960, at Kansas City, Missouri, the examiner was advised that Adams, Sr. and Adams, Jr. would not comply with the subpoenas. On September 12, 1960, the Commission applied to the United States District Court for an order to compel attendance of witnesses and production of documents at times and places to be fixed by the hearing examiner.3 An order to show cause was issued by the district court and thereafter respondents in said proceeding (Adams, Sr. and Adams, Jr. and Adams) filed returns alleging, inter alia, that the subpoenas were invalid because they were not issued pursuant to a lawful complaint.
Following submission of the administrative subpoena enforcement proceedings to the district court, the hearing examiner scheduled a hearing for February 6, 1961, in Kansas City, Missouri. The Commission's counsel advised appellants in No. 16,745 that, among others, employees of Safeway, apparently officials of that company, would be questioned regarding operations of Safeway and the relationship which such officials have had with Adams. An unsuccessful attempt was made to secure cancellation of the hearing and thereupon Adams filed a motion in the United States District Court for the Western District of Missouri to stay the proceeding scheduled for February 6, 1961. The basis for this motion was that the Commission was seeking the same information from Safeway employees that it sought to obtain from Adams, Sr., Adams, Jr. and Adams by the subpoenas under attack, before the district court had determined whether the subpoenas should be enforced. The court issued an order to show cause and an order staying the hearing until the further order of the court. On March 27, 1961, the district court issued its order granting in part and denying in part the petition of the Commission for enforcement of the subpoenas and denying the motion to stay further proceedings. These appeals are from this order. The hearing examiner on March 31, 1961, scheduled another hearing for April 17, 1961, in Kansas City, Missouri. Appellants in No. 16,745 were advised that the subject matter of the hearing scheduled for that date was the same as that stated for the hearing previously set for February 6, 1961. Again Adams requested that the hearing be continued and when the request was denied, motions were filed in this court on April 14, 1961, for an order to stay further proceedings by the Commission. Upon consideration of the motions, we directed that the Commission show cause on or before April 24, 1961, why the hearing scheduled for April 17, 1961, would not have the operation and effect of depriving Adams of their rights on appeal as well as also circumventing the benefits and rights accruing to them under the parts of the order from which the Commission had appealed issued in the district court on March 27, 1961. We also directed that the hearing scheduled for April 17, 1961, be stayed until the disposition of the matter on the show cause order. After a hearing on April 24, 1961, this court, on May 16, 1961, entered an order denying the motion of Adams to stay or postpone the Commission's taking of evidence and testimony from Safeway and vacating the temporary stay or postponement theretofore granted.
Is the district court vested with jurisdiction to consider and adjudicate the sufficiency of the original complaints filed by the Commission in the proceedings pending before that agency? That is the sole question presented for determination in this appeal. Appellants concede that the Commission was authorized under § 5 of the Act to institute and prosecute proceedings for the purpose of determining whether there has been a restraint of trade as proscibed by § 1 of the Sherman Act, 15 U.S.C.A. § 1. But they contend that the district court is authorized to test the sufficiency of the complaint for the purpose of determining whether it forms a basis for the issuance of subpoenas. The Commission's position is that this is a function within the exclusive jurisdiction of the Commission and, upon review, within the exclusive jurisdiction of this court.
The district court sustained the Commission, stating in its order of March 27, 1961: 4
Section 5(b) of the Act, 15 U.S.C.A. § 45(b), authorizes the Commission to issue complaints, conduct proceedings, hold hearings, resolve issues, and to enter appropriate orders. Section 5(c), 15 U.S.C.A. § 45(c), provides for a review of the proceedings before the Commission by the appropriate United States Court of Appeals, and § 5(d), 15 U.S.C.A. § 45(d), provides: "The jurisdiction of the court of appeals of the United States to affirm, enforce, modify, or set aside orders of the Commission shall be exclusive." The Act does not expressly, or by implication, confer upon district courts authority to interfere with proceedings properly and lawfully instituted. Not only is there no statutory support for the contention advanced by appellants, but such a concept is contrary to the deep-rooted principle that parties must exhaust their administrative remedies before they can properly and successfully enlist the aid of courts. Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 58 S.Ct. 459, 82 L.Ed. 638; Newport News Shipbuilding & Drydock Co. v. Schauffler, 303 U.S. 54, 58 S.Ct. 466, 82 L.Ed. 646; cf. Federal Power Commission v. Metropolitan Edison Co., 304 U.S. 375, 58 S.Ct. 963, 82 L.Ed. 1408; Rochester Telephone Corp. v. United States, 307 U.S. 125, 129, 130, 59 S.Ct. 754, 83 L.Ed. 1147; United States v. Illinois Central R. R. Co., 244 U.S. 82, 37 S.Ct. 584, 61 L.Ed. 1007. See also note in 51 Harvard Law Review, p. 1251, Primary Jurisdiction — Effect of Administrative Remedies on the Jurisdiction of Courts. In Myers v. Bethlehem Shipbuilding Corp., supra, a leading case on the subject of exhaustion of administrative remedies, the Supreme Court, speaking through Mr. Justice Brandeis, stated, 303 U.S. at pp. 51-52, 58 S.Ct. at pages 464:
In Chamber of Commerce of Minneapolis v. Federal Trade Commission, 8 Cir., 280 F. 45, 48, we considered the question, and stated at p. 48:
"It is our judgment that neither the District Court nor this court has power under the act to interfere with the investigation and inquiry of the Commission, involving the taking of testimony and the finding of facts essential...
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