Bristol-Myers Company v. FTC, 304

• Decision Date: 10 November 1972
• Docket Number: No. 304,Docket 72-1969.,304
• Citation: 469 F.2d 1116
• Parties: BRISTOL-MYERS COMPANY, Plaintiff-Appellant, v. The FEDERAL TRADE COMMISSION et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

469 F.2d 1116 (1972)

BRISTOL-MYERS COMPANY, Plaintiff-Appellant, v. The FEDERAL TRADE COMMISSION et al., Defendants-Appellees.

No. 304, Docket 72-1969.

United States Court of Appeals, Second Circuit.

Argued October 30, 1972.

Decided November 10, 1972.

Gilbert H. Weil, New York City (Weil, Lee & Bergin, New York City, on brief), for plaintiff-appellant.

Christopher Roosevelt, Asst. U. S. Atty. (Whitney North Seymour, Jr., U. S. Atty., S. D. N. Y., William R. Bronner, Asst. U. S. Atty., Harold D. Rhynedance, Jr., Asst. Gen. Counsel, Federal Trade Commission, Alvin L. Berman, Atty., Washington, D. C., on brief), for defendants-appellees.

Before LUMBARD, FEINBERG and MANSFIELD, Circuit Judges.

FEINBERG, Circuit Judge:

Bristol-Myers Company appeals from an order of the United States District Court for the Southern District of New York, Arnold Bauman, J., dismissing a complaint which sought to compel the Federal Trade Commission to issue certain subpoenas allegedly required by 5 U.S.C. § 555(d).¹ We hold that the district court properly refused to grant the relief requested, and we affirm.

The factual background is not disputed. In April 1972, the Commission notified Bristol-Myers of its intention to issue a formal complaint charging the company with having employed unfair or deceptive acts or practices in commerce, in violation of sections 5 and 12 of the Federal Trade Commission Act, 15 U.S.C. §§ 45, 52. Specifically, the proposed complaint alleged deceptive advertising for three Bristol-Myers analgesics — Bufferin, Excedrin, and Excedrin PM.² Following a suggestion from the Commission, Bristol-Myers availed itself of the opportunity, authorized by statute³ and afforded by Commission rule,⁴ to negotiate a mutually satisfactory consent order agreement. Although the time apparently contemplated in the rule for consent negotiations is 30 days, Bristol-Myers received extensions beyond this limit. After negotiations had commenced, Bristol-Myers petitioned the Commission to make subpoenas available to the company during these informal negotiations in order to facilitate the gathering of evidence relevant to the Commission's proposed remedy. The Commission denied the request on June 26, 1972, and Bristol-Myers brought this action in the district court on June 29.

We believe that the claim is asserted prematurely and was properly dismissed for failure to exhaust administrative remedies. Judicial review of Federal Trade Commission proceedings is governed by section 45(c) of Title 15, United States Code, which limits the power of review to final cease and desist orders and which makes review available in the courts of appeals. Section 10(c) of the Administrative Procedure Act, 5 U.S.C. § 704, provides:

Agency action made reviewable by statute . . . is subject to judicial review. A preliminary, procedural, or intermediate agency action or ruling not directly reviewable is subject to review on the review of the final agency action.

If formal adjudicative procedures subsequently result in a cease and desist order directed against Bristol-Myers, it seems clear that on review by this or any other court of appeals the company will have an opportunity to press the claim that it was entitled by statute to subpoenas during the informal negotiating process.⁵ See Frito-Lay, Inc. v. FTC, 380 F.2d 8 (5th Cir. 1967); cf. Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 49-50, 58 S.Ct. 459, 82 L. Ed. 638 (1938).

Of course, the administrative exhaustion doctrine is less an inflexible command than a general guideline, see, e. g., McKart v. United States, 395 U.S. 185, 89 S.Ct. 1657, 23 L.Ed.2d 194 (1969); where "an immediate appeal is necessary to give realistic protection to the claimed right," L. Jaffe, Judicial Control of Administrative Action 429 (1965), a court may properly carve an exception to the doctrine. Only rarely, however, will "preliminary or procedural . . . agency action" threaten so irreparable an injury as to justify interlocutory resort to corrective judicial process, see Texaco, Inc. v. FTC, 301 F.2d 662 (5th Cir.) (per curiam), cert. denied, 371 U.S. 822, 83 S.Ct. 40, 9 L. Ed.2d 62 (1962); and Bristol-Myers has failed to persuade us that judicial intervention would here be appropriate.⁶ Although the company may have to litigate the issues raised by the proposed complaint, it concedes that this is an inadequate basis for seeking judicial redress at this juncture. Myers v. Bethlehem Shipbuilding Corp., supra, 303 U.S. at 51-52, 58 S.Ct. 459. Moreover, as the Commission points out, it is by no means clear that a formal complaint will ever issue on the basis of the present investigation. It is still less certain that a cease and desist order will be entered following formal adjudication⁷ — during which, in any event, the company will have access to the precise investigatory tools it now seeks.

If after judicial review authorized by 15 U.S.C. § 45(c), a court of appeals agrees with the statutory claim here urged, we fail to see why the company would not receive adequate relief from an order remanding the case to allow informal negotiations to be reopened, if then desired. The company claims in effect that by that time the Commission will be so set in its views that realistic negotiation will be impossible. We do not agree. The company itself points out that the Commission has been attempting for "more than a decade" to rule unlawful the advertising claims involved here. Yet the company apparently assumes that it is still worthwhile to negotiate with the Commission, because that is the very purpose of the relief now sought. More to the point, we do not believe that the Commission will fail to follow in good faith an order of a court of appeals requiring reopening of informal negotiations, assuming arguendo that such an occasion might arise. Finally, negotiations at that time might be more, rather than less, fruitful: They would be based upon complete knowledge of the opponent's case, and the prospect of a second, subsequent judicial review of the merits of a contested order would provide an additional incentive to compromise.

Application of the exhaustion doctrine makes it unnecessary to resolve the merits of the company's statutory claim to subpoenas. My brothers, in their concurring opinions, go on to decide that issue, but it seems more appropriate to me to postpone full consideration of that claim until review of a final cease and desist order, should one eventuate. Cf. K. Davis, Administrative Law Treatise § 20.02, at 649 (1970 Supp.). This by no means indicates that I disagree with Judge Mansfield's persuasive analysis; I simply do not believe that we should reach the merits at this stage of the proceeding.

Finally, we have the impression that the company has not been unaware of the benefits of the delay in the administrative proceeding caused by the action in the district court and by this appeal. At oral argument, one member of the panel felt sufficiently positive about the company's intent to delay to raise the appropriateness of taxing double costs on appeal. Fed.R.App.P. 38. Our failure to do so should not be taken as an encouragement to further attempts to prolong the administrative proceedings through efforts to obtain premature judicial review. The mandate shall issue forthwith.

Judgment affirmed.

LUMBARD, Circuit Judge (concurring):

I concur in Judge Mansfield's separate concurring opinion insofar as it reaches and resolves the merits of this dispute.

MANSFIELD, Circuit Judge (concurring):

I concur in the majority opinion. However, I would also reject on the merits Bristol-Myers' statutory claim to issuance of subpoenas during informal negotiations. While a cease and desist order may not issue, history indicates the probability of such issuance and if past delay is any criterion this will inevitably be followed by a further appeal, at which time another panel will be required once more to review the same record and arguments in order to resolve the issue. Rather than countenance such shuffling back and forth, with its consequent duplication and waste, I would decide it now.

As the majority opinion indicates, fn. 5, Bristol-Myers' statutory claim is labyrinthian. Reduced to simplest terms the claim is that at an informal negotiating stage it is a "party" as that term is used in the subpoena statute, 5 U.S.C. § 555 and defined in 5 U.S.C. § 551, i. e., a "person" named in an "agency proceeding". The latter term is claimed to be a step in "adjudication", which is defined as an "agency process for the formulation of an order", 5 U.S.C. § 551(7). An "order", in turn, is defined as a "final disposition", 5 U.S.C. § 551(6). Since an informal negotiation can result in the issuance of an order, Bristol-Myers contends that it is a "party" within the meaning of 5 U.S.C. § 555(d).

The fatal defect in this tortuous syllogistic reasoning is that informal negotiations under 5 U.S.C. § 554(c) are not adjudicative in nature. See The Seeburg Corp. v. FTC, 8 F.T.C. Stat. & Dec. 393 (E.D.Tenn.1966), aff'd., 425 F. 2d 124 (6th Cir.), cert. denied, 400 U.S. 866, 91 S.Ct. 104, 27 L.Ed.2d 105...