F. T. C. v. Carter, s. 79-1331
| Decision Date | 28 November 1980 |
| Docket Number | 79-1332,Nos. 79-1331,s. 79-1331 |
| Citation | 636 F.2d 781 |
| Parties | , 1980-81 Trade Cases 63,656 FEDERAL TRADE COMMISSION v. Donald P. CARTER, Post-Keys-Gardner, Inc., Anthony C. Chevins, Cunningham & Walsh, Inc., Paul R. Dooling, William Esty Co., Inc., Clifford Fitzgerald, Dancer-Fitzgerald-Sample, Inc., Charles Hamm, F. William Free & Co., Inc., Robert K. Heimann, American Brands, Inc., William D. Hobbs, R. J. Reynolds Tobacco Co., Robert E. Jacoby, Ted Bates & Co., Inc., Don Johnston, J. Walter Thompson Co., James Jordan, Batten, Barton, Durstine & Osbourn, Inc., Curtis H. Judge, Loew's Theatres, Inc., Stanley H. Katz, LKP International, Ltd. d/b/a Leber Katz Partners, Leo-Arthur Kelmonson, Kenyon & Eckhardt Advertising, Inc., John Kinsella, Leo Burnett Co., Inc., C. I. McCarty, Brown & Williamson Tobacco Corp., Edward H. Meyer, Grey Advertising, Inc., Ross R. Millhiser, Philip Morris, Inc., Charles Moss, Wells, Rich, Green, Inc., Raymond J. Mulligan, Liggett Group, Inc., Thomas K. Myers, Norman, Craig & Kummel, Inc., Edward N. Ney, Young & Rebicam International, Inc., John E. O'Toole, Foote, Cone & Belding, Chester L. Posey, DeGarmo, Inc., Alfred J. Seamon, SSC&B, Inc., Robert B. Zabel, and NW Ayer ABH International, Appellants. FEDERAL TRADE COMMISSION v. Donald P. CARTER et al., B. Blair Vedder and Needham, Harper & Steers, Inc., Appellants. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeals from the United States District Court for the District of Columbia (D.C.Misc. 77-0168).
Martin London and Eugene R. Anderson, New York City, with whom Andrew Kull, New York City, Abe Krash, Philip J. Harter, Paul Daniel, Edmund E. Harvey, John F. Kovin, Harold D. Murry, Jr., Linda Elizabeth Buck, James H. Wallace, Jr., Arthur F. Sampson, III, Washington, D. C., Howard Abrahams, New York City, Elroy H. Wolff, Jamie S. Gorelick, Washington, D. C., Daniel J. O'Neill, Charles K. O'Neill, David H. Carlin, Charles Ballon, New York City, were on the brief, for appellants.
Arthur W. Adelberg, Atty., Federal Trade Commission at the time the brief was filed, Washington, D. C., with whom Gerald P. Norton, Deputy Gen. Counsel, Federal Trade Commission, Washington, D. C., was on the brief, for appellee. Joanne L. Levine, Atty., Federal Trade Commission, Washington, D. C., also entered an appearance for appellee.
Before MacKINNON, ROBB and WILKEY, Circuit Judges.
Opinion for the Court filed by Circuit Judge MacKINNON.
These consolidated appeals are brought by 26 tobacco and advertising corporations, or their parent corporations, and 26 chief executive officers of the corporations. Appellants contest an opinion and order of the Honorable Barrington D. Parker enforcing 26 subpoenas duces tecum issued by the Federal Trade Commission to the 52 respondents in the course of an investigation of cigarette advertising and promotion. We affirm.
Most of the issues raised in this forum were dealt with convincingly in the district court. We find unquestionable Judge Parker's conclusion that the FTC has the statutory authority to initiate an investigation into cigarette advertising, and to issue subpoenas as part of that investigation. We also find no abuse of discretion in his denial of appellants' discovery requests. On the other hand, while we uphold Judge Parker's finding that the Statement of Purpose promulgated by the FTC provides generally sufficient notice, we leave the door open for appellants to raise specific objections to
production of documents that may fall outside the investigation's stated scope. Finally, we decline to dismiss the individual corporate respondents from the suit since we conclude that they are proper parties. Although we are not completely comfortable with the method of service of process practiced by the FTC in this case, we find that it was legally sufficient for the purposes of this enforcement proceeding and within the discretion of the district court to approve.
On May 11, 1976, the FTC launched an investigation into the methods of advertising and promotion utilized by the cigarette industry. The Commission issued an authorizing resolution that identified the nature and scope of the investigation as follows:
To fulfill its obligation to report to the Congress pursuant to Section 8(b) of the Federal Cigarette Labelling and Advertising Act, as amended, 1 and to gather and compile information and make reports to the Congress as authorized by Section 6 of the Federal Trade Commission Act; 2 and to determine whether persons, partnerships, or corporations engaged in the manufacture, advertising, promotion, offering for sale, sale, or distribution of cigarettes may have been or may be engaged in the use of unfair or deceptive acts or practices, in or affecting commerce, in the advertising, promotion, offering for sale, sale, or distribution of cigarettes in violation of Section 5 of the Federal Trade Commission Act. 3 (Footnotes added.)
The following day, May 12, 1976, the Commission issued 28 subpoenas, 4 addressed to the chief executive officer of each corporate entity. 5 As they have been subsequently modified by agreement of the parties, 6 the subpoenas require production of documents or verified statements relating to: 1) respondents' corporate organizations and structure; 2) information prepared by or for respondents since January 1, 1964, concerning "consumers' or potential consumers' attitudes towards, beliefs about, perceptions or understanding of, or behavior relating to, cigarettes", and since January 2, 1971, cigarette advertising; 3) cigarette advertisements prepared by or for respondents since January 2, 1971, whether or not disseminated.
In September of 1976, the companies filed motions to quash or limit the subpoenas pursuant to the Commission's Rules of On June 24, 1977, the respondents brought an action against the FTC in the district court of the Southern District of New York to declare the subpoenas invalid and enjoin enforcement. They also moved in the district court of Washington, D. C. for transfer. This motion was first denied, then assigned to another judge and granted, and then finally decided by a panel of this court, which vacated the transfer order. The respondents doggedly renewed their transfer motion before Judge Parker, but he denied it in his opinion, 464 F.Supp. at 637. Judge Parker's opinion ordered full enforcement of the FTC's subpoenas issued to those respondents bringing this appeal.
Practice, 16 C.F.R. § 6217(b). The Commission substantially denied the motions; following the respondents' failure to comply, the Commission filed a petition for enforcement in the court below.
Appellants' first claim, that the FTC lacks statutory authority to conduct an industry-wide investigation of the cigarette industry, raises old arguments that we had presumed were laid to rest by the Supreme Court's decision in United States v. Morton Salt Co., 338 U.S. 632, 70 S.Ct. 357, 94 L.Ed. 401 (1950). In Morton, the Commission ordered a company to file special reports to show compliance with the terms of a decree issued under section 5 of the FTC Act, 15 U.S.C. § 45, which makes unlawful unfair or deceptive acts or practices. The company argued that the Commission's section 6 investigatory authority could be used only in support of general economic surveys, as had been the practice under the Commission's predecessor agency, the Bureau of Corporations, and that section 6 investigatory power could not be used in aid of section 5 proceedings. The Supreme Court rejected this claim:
While we find a good deal which would warrant our concluding that § 6 was framed with the pre-existing antitrust laws in mind, and in the expectation that the information procured would be chiefly useful in reports to the President, the Congress, or the Attorney General, we find nothing that would deny its use for any purpose within the duties of the Commission, including a § 5 proceeding. (emphasis added).
338 U.S. at 649, 70 S.Ct. at 367.
The breadth of section 6, subsections (a) and (f), is reflected in its terms:
The Commission shall also have power
(a) To gather and compile information concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any person, partnership, or corporation engaged in or whose business affects commerce, excepting banks, savings and loan institutions described in section 57a(f)(3) of this title, and common carriers subject to the Act to regulate commerce, and its relation to other persons, partnerships, and corporations. (As amended by P.L. 96-37 (1979)).
(f) To make public from time to time such portions of the information obtained by it hereunder, except trade secrets and names of customers, as it shall deem expedient in the public interest; and to make annual and special reports to the Congress and to submit therewith recommendations for additional legislation; and to provide for the publication of its reports and decisions in such form and manner as may be best adapted for public information and use.
15 U.S.C. § 46.
Section 9 of the Act, 15 U.S.C. § 49, renders operational the Commission's investigative authority by granting it the power to subpoena evidence and witnesses. The section provides:
For the purpose of (this Act) the Commission, or its duly authorized agent or agents, shall at all reasonable times have access to, for the purpose of examination, and the right to copy any documentary evidence of any person, partnership, or corporation being investigated or proceeded against; and the Commission shall have power to require by subpoena the The FTC cites sections 6 and 9 as its statutory authority for initiating this investigation, and for issuing subpoenas in pursuance thereof. While appellants attempt to convince the court that we should not give a blanket...
To continue reading
Request your trial
-
State v. AT&T Inc.
...to enforce an administrative subpoena is sharply limited ....").41 Morton Salt , 338 U.S. at 652, 70 S.Ct. 357.42 F.T.C. v. Carter , 636 F.2d 781, 788 (D.C. Cir. 1980) (quoting Texaco, Inc. , 555 F.2d at 877 n.32 ).43 Powell , 379 U.S. at 49, 85 S.Ct. 248.44 Id. at 57, 85 S.Ct. 248.45 Id. a......
-
In re Grand Jury Investigation of Possible Violations of 18 U.S.C. § 1956 and 50 U.S.C. § 1705
..." and thus "must be accepted." FTC v. Invention Submission Corp. , 965 F.2d 1086, 1089 (D.C. Cir. 1992) (quoting FTC v. Carter , 636 F.2d 781, 787–88 (D.C. Cir. 1980) ).12 That the USA Patriot Act authorizes access to a large array of records is unsurprising. Even before the terrorist attac......
-
Gray Panthers v. Schweiker, 79-1603
...Bureau Study, Beneficiary Appeals Study, at 2 (1977); J.A. 94.48 Mem.Op. at 11; J.A. 210.49 See Federal Trade Comm. v. Carter, 636 F.2d 781 at 791 (D.C.Cir.1980) (Wilkey, J., concurring).50 Though the Secretary pointed to, and the district court cited, the invitation on the form notice to t......
-
Consumer Fin. Prot. Bureau v. Accrediting Council for Indep. Colls. & Sch.
...purpose makes it impossible to apply the other prongs of the Morton Salt test." Sealed Case , 42 F.3d at 1418 ; cf. FTC v. Carter , 636 F.2d 781, 788 (D.C. Cir. 1980) ("The Commission ... allowed our examination of the relevance of their subpoena requests[ ] by identifying the specific cond......
-
Civil Government Enforcement
...the 243. See, e.g., FTC v. American Tobacco Co., 264 U.S. 298, 306 (1924); Mt. Olympus Fin., 2000 U.S. App. LEXIS 6915; FTC v. Carter, 636 F.2d 781 (D.C. Cir. 1980); Knoll Assocs. v. FTC, 397 F.2d 530 (7th Cir. 1968). See generally FTC OPERATING MANUAL, supra note 221, § 3.3.6.7. 244. See, ......
-
Table of Cases
...435 F.3d 767 (7th Cir. 2006), 1099 Carrols Dev. Corp.; United States v., 454 F. Supp. 1215 (N.D.N.Y. 1978), 440, 770, 773 Carter; FTC v., 636 F.2d 781 (D.C. Cir. 1980), 721 Carter Prods. v. Colgate-Palmolive Co., 164 F. Supp. 503 (D. Md. 1958), aff ’ d, 269 F.2d 299 (4th Cir. 1959), 728, 12......
-
Nonreportable Transactions, Bankruptcy, and Hostile Transactions
...Moreover, courts will accept the FTC’s appraisal of relevancy “so long as it is not ‘obviously wrong.’” Id . (quoting FTC v. Carter, 636 F.2d 781, 787-88 (D.C. Cir. 1980)); FTC v. Stanley H. Kaplan Educ. Ctr., 433 F. Supp. 989, 994 (D. Mass. 1977) (emphasizing the “presumption of administra......
-
Chapter VI. Differences in the Process for Nonreportable Transactions
...(1993). The courts will accept the FTC’s appraisal of relevancy “so long as it is not ‘obviously wrong.’” Id . ( quoting FTC v. Carter, 636 F.2d 781, 787-88 (D.C. Cir. 1980)); FTC v. Stanley H. Kaplan Educ. Ctr., Ltd., 433 F. Supp. 989 (D. Mass. 1977). 39. See Gen. Atomics v. U.S. Nuclear R......