American Optometric Ass'n v. F.T.C.
| Decision Date | 06 February 1980 |
| Docket Number | 78-1687,78-1696,Nos. 78-1461,78-1514,78-1693,78-1695,78-1841 and 78-1872,s. 78-1461 |
| Citation | 626 F.2d 896 |
| Parties | , 1980-1 Trade Cases 63,165 AMERICAN OPTOMETRIC ASSOCIATION, Petitioner, v. FEDERAL TRADE COMMISSION, Respondent. AMERICAN MEDICAL ASSOCIATION, Petitioner, v. FEDERAL TRADE COMMISSION, Respondent. The STATE OF TEXAS, Petitioner, v. FEDERAL TRADE COMMISSION, Respondent, State of North Carolina, Commonwealth of Pennsylvania, Intervenors. STATE OF OKLAHOMA ex rel. The BOARD OF EXAMINERS IN OPTOMETRY, Petitioner, v. FEDERAL TRADE COMMISSION, Respondent, State of North Carolina, Commonwealth of Pennsylvania, State of Tennessee, Intervenors. STATE OF NEBRASKA, Petitioner, v. FEDERAL TRADE COMMISSION, Respondent, State of North Carolina, Commonwealth of Pennsylvania, State of Tennessee, Intervenors. STATE OF INDIANA, Petitioner, v. FEDERAL TRADE COMMISSION, Respondent, State of North Carolina, Commonwealth of Pennsylvania, State of Tennessee, Intervenors. The STATE OF WYOMING, Acting By and Through the WYOMING BOARD OF EXAMINERS IN OPTOMETRY, Petitioner, v. FEDERAL TRADE COMMISSION, Respondent. COMMONWEALTH OF KENTUCKY, Petitioner, v. FEDERAL TRADE COMMISSION, Respondent. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Edward A. Groobert, Washington, D. C., with whom Ellis Lyons, Bennett Boskey and Thomas S. Moore, Washington, D. C., were on brief, for petitioner in No. 78-1461.
Susan J. Dasher, Asst. Atty. Gen., State of Texas, Austin, Tex., with whom John L. Hill, Atty. Gen., and P. M. Schenkkan, Sp. Asst. Atty. Gen., State of Texas, Austin, Tex., were on brief, for petitioner in No. 78-1687.
H. Lee Schmidt, Asst. Atty. Gen., State of Oklahoma, Oklahoma City, Okl., was on brief, for petitioners in No. 78-1693.
Paul Douglas, Atty. Gen., and Melvin K. Kammerlohr, Asst. Atty. Gen., State of Nebraska, Lincoln, Neb., were on brief, for petitioner in Nos. 78-1695 and 78-1696.
Donald B. Bogard, Indianapolis, Ind., Chief Counsel for the Atty. Gen., State of Indiana, was on brief, for petitioner in No. 78-1696.
Michael H. Schilling, Asst. Atty. Gen., State of Wyoming, Cheyenne, Wyo., was on brief, for petitioner in No. 78-1841.
Mark F. Armstrong, Asst. Atty. Gen., State of Kentucky, Frankfort, Ky., was on brief, for petitioner in No. 78-1872.
Newton N. Minow, Chicago, Ill., with whom Jack R. Bierig, Chicago, Ill. and Lee M. Mitchell, Washington, D. C., were on brief, for petitioner in No. 78-1514.
Terry S. Latanich, Atty., F. T. C., Washington, D. C., with whom Michael N. Sohn, Gen. Counsel, David M. Fitzgerald and Jane P. Schlaifer, Attys., F. T. C., Washington, D. C., were on brief, for respondents.
Rufus L. Edmisten, Atty. Gen., David S. Crump and Howard A. Kramer, Asst. Attys. Gen., Raleigh, N. C., were on brief, for intervenor, State of North Carolina, in Nos. 78-1687, 78-1693, 78-1695 and 78-1696.
John L. Shearburn, Deputy Atty. Gen., State of Pennsylvania, Harrisburg, Pa., was on brief, for intervenor in Nos. 78-1687, 78-1693, 78-1695, 78-1696.
William M. Barrick, Asst. Atty. Gen., State of Tennessee, Nashville, Tenn., was on brief, for intervenor in Nos. 78-1692, 78-1695, 78-1696.
Thomas L. Boeder, Senior Asst. Atty. Gen., State of Washington, Seattle, Wash., was on brief, for State of Washington, amicus curiae urging the Court to set aside and void the Federal Trade Commission ruling in No. 78-1461.
Donald O. Meserve and Paul E. Sherman, Albany, N. Y., were on brief, for amicus curiae, the Board of Regents of the State of New York, urging the Court to declare 16 C.F.R. Part 456 void and in excess of the Federal Trade Commission's statutory authority in Nos. 78-1461, 78-1514, 78-1687, 78-1693, 78-1695, 78-1696, 78-1841 and 78-1872.
Donald S. Dawson and M. Joseph Stoutenburgh, Washington, D. C., were on brief, for Opticians Association of America, amicus curiae urging the denial of petition in Nos. 78-1461, 78-1514, 78-1687, 78-1693, 78-1685, 78-1696, 78-1841 and 78-1872.
Alan G. Perkins, Sacramento, Cal., was on brief, for California Optometric Association, amicus curiae urging the Court to set aside and vacate the Federal Trade Commission ruling in No. 78-1461.
Robert B. Gillan, Los Angeles, Cal., was on brief, for California Commission on Aging, Mountain Plains Congress of Senior Organizations and Gray Panthers, amicus curiae urging affirmance in No. 78-1461.
Before McGOWAN and WALD, Circuit Judges, and PENN, * District Judge, United States District Court for the District of Columbia.
Opinion for the court filed by Circuit Judge McGOWAN.
Pursuant to its authority under the Magnuson-Moss Act, the Federal Trade Commission has issued a rule which dramatically curtails the ability of states and professional associations to restrict or burden the advertising of eye examinations or of ophthalmic goods and services. The Act provides that interested persons may secure judicial review of such a rule from this court by filing a petition within sixty days after the rule is promulgated. 15 U.S.C. § 57a(e)(1)(A). The American Optometric Association, the American Medical Association, and the states of Indiana, Nebraska, Texas, Oklahoma, Wyoming, North Carolina, Kentucky, Tennessee, and Pennsylvania have filed timely petitions or have become intervenors. 1
Because we conclude that the Supreme Court's decision in Bates v. State Bar of Arizona, 433 U.S. 350, 97 S.Ct. 2691, 53 L.Ed.2d 810 has worked changes which, after the rule was promulgated, altered the very nature of the case, we remand all but one of the sections of the rule for further consideration by the Commission.
On January 4, 1975, the Magnuson-Moss Warranty Federal Trade Commission Improvement Act became law. Title I of that Act, with which we are here only peripherally concerned, sets detailed and extensive standards for warranties and for remedies for breach of warranty. Title II, which is the basis for the rule contested here, was enacted to "codify the Commission's authority to make substantive rules for unfair or deceptive acts or practices in or affecting commerce." S.Rep.No.93-1408, 93rd Cong., 2d Sess. 31 (1974), U.S.Code Cong. & Admin.News 1974 pp. 7702, 7763. That rule-making authority is granted and defined at 15 U.S.C. § 57a (1976) as follows:
(a)(1) The Commission may prescribe
(A) interpretive rules and general statements of policy with respect to unfair or deceptive acts or practices in or affecting commerce (within the meaning of section 45(a)(1) of this title), and
(B) rules which define with specificity acts or practices which are unfair or deceptive acts or practices in or affecting commerce (within the meaning of section 45(a)(1) of this title). Rules under this subparagraph may include requirements prescribed for the purpose of preventing such acts or practices.
(2) The Commission shall have no authority under this subchapter, other than its authority under this section, to prescribe any rule with respect to unfair or deceptive acts or practices in or affecting commerce (within the meaning of section 45(a)(1) of this title.) The preceding sentence shall not affect any authority of the Commission to prescribe rules (including interpretive rules), and general statements of policy, with respect to unfair methods of competition in or affecting commerce.
The statute describes with some care the rule-making procedures which are to be used. They are essentially an elaboration of the informal rule-making procedures embodied in section 553 of the Administrative Procedure Act:
(b) When prescribing a rule under subsection (a)(1)(B) of this section, the Commission shall proceed in accordance with section 553 of title 5 (), and shall also (1) publish a notice of proposed rulemaking stating with particularity the reason for the proposed rule; (2) allow interested persons to submit written data, views, and arguments, and make all such submissions publicly available; (3) provide an opportunity for an informal hearing in accordance with subsection (c) of this section; and (4) promulgate, if appropriate, a final rule based on the matter in the rulemaking record (as defined in subsection (e)(1)(B) of this section), together with a statement of basis and purpose.
15 U.S.C. § 57a(b) (1976).
In conducting these informal hearings, the Commission is instructed to permit interested persons not only to present oral and written evidence, but, where appropriate in resolving disputed issues of material fact, to allow such persons to present rebuttal submissions and conduct cross-examinations. 15 U.S.C. § 57a(c) (1976).
On September 16, 1975, the Commission instructed its staff to inquire "into the adequacy of information disclosure in the retail ophthalmic market." Federal Trade Commission (Bureau of Consumer Protection), Staff Report on Advertising of Ophthalmic Goods and Services and Proposed Trade Regulation Rule 16 C.F.R. Part 456 at 1 (1977) (hereinafter Staff Report). On January 16, 1976, after the staff had conducted research and surveyed the opinions of interested parties, the Commission, pursuant to its authority under the Magnuson-Moss Act, proposed a trade regulation rule. Then, over approximately four months, more than one hundred comments were received. These were supplemented with thirty-two days of hearings in five cities. After another comment period, the presiding officer for the proposed rule and the Commission's staff submitted analyses of the rulemaking record. A third comment period was followed by an opportunity for consumer and industry groups to address the Commissioners themselves.
From these investigations, the Commission concluded that, because state laws and the by-laws of state and national associations of optometrists and ophthalmologists have prohibited or restricted advertising...
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