F.T.C. v. Tarriff

• Citation: 584 F.3d 1088
• Decision Date: 23 October 2009
• Docket Number: No. 08-5205.,08-5205.
• Parties: FEDERAL TRADE COMMISSION, Appellee v. Scott TARRIFF, et al., Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

584 F.3d 1088

FEDERAL TRADE COMMISSION, Appellee v. Scott TARRIFF, et al., Appellants.

No. 08-5205.

United States Court of Appeals, District of Columbia Circuit.

Argued October 8, 2009.

Decided October 23, 2009.

Appeal from the United States District Court for the District of Columbia (No. 1:08-mc-00217).

Eric Grannon argued the cause for appellants. With him on the briefs was J. Mark Gidley. Christopher M. Curran entered an appearance.

Lawrence DeMille-Wagman, Assistant General Counsel, Federal Trade Commission, argued the cause for appellee. With him on the briefs were Willard K. Tom, General Counsel, and John F. Daly, Deputy General Counsel.

Before: SENTELLE, Chief Judge; TATEL, Circuit Judge; and WILLIAMS, Senior Circuit Judge.

SENTELLE, Chief Judge:

Scott Tarriff and others (collectively "appellants") appeal from an order of the district court granting a petition to enforce subpoenas ad testificandum issued to pharmaceutical company officers in the course of an ongoing Federal Trade Commission law enforcement investigation into agreements among companies suspected of unlawfully delaying entry of lower cost generic versions of a drug. Appellants' sole basis for asserting the invalidity of the subpoenas is that the FTC proposed to record the testimony, not only by the stenographic method mandated in the Commission's rules, but also by videotape. Finding this objection to be utterly without merit, the district court granted the petition for enforcement of the subpoenas. We agree and affirm.

* * *

In an ongoing investigation, the Commission seeks to determine whether agreements among Unimed Pharmaceuticals, Inc., Laboratories Besins Iscovesco, and Solvay Pharmaceuticals, Inc., or any other agreements, unlawfully delayed entry of a lower cost generic version of a drug called AndroGel in violation of section 5 of the FTC Act, 15 U.S.C. § 45. See FTC v. Tarriff, 557 F.Supp.2d 92, 93 (D.D.C.2008). The FTC issued subpoenas ad testificandum for corporate officials, including appellants herein. The Commission's rules of practice governing investigative hearings provide for stenographic recording, and the first round of subpoenas referenced stenographic recording of the testimony adduced under the subpoenas. Thereafter, the Commission on February 13, 2008, issued the amended subpoenas before us in the current litigation, which provided for sound and visual recording in addition to stenographic recording of the testimony. Appellants objected on the basis that the rules of the FTC do not provide for recording by other than stenographic means. The Commission rejected the objection. Some of the subpoenaed witnesses notified the Commission of their intention not to comply with the subpoenas. The Commission brought the instant action for enforcement in the district court. The district court granted the petition and ordered the subpoenas enforced. Appellants filed the appeal now before us.¹

Appellants' objection to the subpoenas relies solely on the proposition that the rule of the Commission, by mandating that "[investigational] hearings shall be stenographically reported and a transcript thereof shall be made a part of the record of the investigation," 16 C.F.R. § 2.8(b), somehow precludes the possibility that the Commission could record the proceedings by other methods as well. Lest we be misunderstood, the Commission does not propose to use video methods of transcription instead of stenographic transcription, but only in addition thereto. Nor do appellants argue that the taking of the videographic transcription is in any fashion inconsistent with, or the cause of any interference with, stenographic transcription mandated by the rule. Instead, respondents rest solely on the novel proposition that somehow the use of the word "shall" in the rule not only requires that the stenographic transcription be prepared, but also precludes the Commission from doing anything else in the way of transcription.

Like the district court, we are unconvinced "that the word `shall' expresses not only a mandatory direction, but also a limiting principle." FTC v. Tarriff, 557 F.Supp.2d at 94. It is fixed law that words of statutes or regulations must be given their "ordinary, contemporary, common meaning." Williams v. Taylor, 529 U.S. 420, 431, 120 S.Ct. 1479, 146 L.Ed.2d 435 (2000) (citations omitted). It is also fixed usage that "shall" means something on the order of "must" or "will." See, e.g., Black's Law Dictionary 1407 (8th ed. 2004) (defining "shall" as "has a duty to; more broadly, is required to"). We know of no usage, nor do appellants bring forward any, that suggests that the use of "shall" mandating one act implies a corresponding "shall not" forbidding other acts not inconsistent with the mandated performance. Borrowing from the Commission's litigation documents, the district court noted an illustrative example of "shall" in common parlance: A direction to a teenage son that he "shall" clean his room does not thereby forbid him from taking out the trash, walking the dog, or going to school. Appellants are without contra example.

Appellants offer as authority for their novel proposition the Supreme Court decision in National Association of Home Builders v. Defenders of Wildlife, 551 U.S. 644, 127 S.Ct. 2518, 168 L.Ed.2d 467 (2007), which they assert "held that a provision's use of `shall' as a directive `does not just set forth minimum requirements.... The provision operates as a ceiling as well as a floor.'" (Emphasis in original.) It is indeed true that the high court used the language appellants quote to us, 551 U.S. at 663, 127 S.Ct. 2518, but not in a context remotely supporting appellants' construction of the Commission's rule. In National Association of Home Builders, the Supreme Court was construing § 402(b) of the Federal Water Pollution Control Act, 33 U.S.C. § 1342(b), which mandates that the Environmental Protection Agency (EPA) "shall approve" transfer of certain permitting authority to a state upon a showing that the state has met nine specified criteria. In attempting to reconcile that statute with § 7(a)(2) of the Endangered Species Act, the Ninth Circuit held that the EPA must also require the completion of another criterion before transferring the permitting authority. See Defenders of Wildlife v. USEPA, 420 F.3d 946 (9th Cir.2005). It was in the context of reversing the Ninth Circuit's imposition of an additional criterion into the triggering mechanism for the mandatory performance of a duty created by the word "shall" in the statute that the Supreme Court described the statutory mandate as "operating as a ceiling as well as a floor." 551 U.S. at 646, 127 S.Ct. 2518. Contrary to appellants' argument, the Supreme Court's use of "ceiling" and "floor" had nothing to do with the possibility that the agency, in carrying out the statutory mandate, might do some other act, as well as that mandated by the statute. The floor and ceiling referred to by the Supreme Court had to do with the triggering mechanism of the mandate, not the carrying out of the mandate once triggered. In other words, once the nine statutory criteria were accomplished, the floor of necessity was met, and neither the agency nor the Ninth Circuit could erect a higher ceiling that would prevent the mandate from operating. Nonetheless, so far as we know, the EPA could do other things while transferring the permitting authority. It could, for example, send a nice congratulatory note to the state receiving the authority, thank the governor for the state's efforts, or create a videographic transcription of its meetings. Appellants' argument, that the Supreme Court's decision is somehow authority for the proposition that the term "shall" is a mandate not only to do one thing but to cease and refrain from doing all others, borders on sophistry.

Appellants also rely on Beverly Health and Rehabilitation Services, Inc. v. NLRB, 317 F.3d 316 (D.C.Cir.2003), which, if anything, has less to do with the current controversy than National Association of Home Builders. In that case, this court reversed the decision of the NLRB approving the unilateral extension of a strike deadline notice by a union. The statute mandated that a strike notice state "the date and time that such action will commence" and allowed that a "notice, once given, may be extended by the written agreement of both parties." 29 U.S.C. § 158(g). Unsurprisingly, we held that this language precluded the NLRB's approval of the unilateral extension by the union. Unconvincingly, appellants...