F. T. C. v. Markin

• Decision Date: 05 March 1976
• Docket Number: No. 75-1443,75-1443
• Citation: 532 F.2d 541
• Parties: 1976-1 Trade Cases 60,752 FEDERAL TRADE COMMISSION, Appellee, v. David R. MARKIN, President of Checker Motors Corporation, and Checker Motors Corporation, Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 541

532 F.2d 541

1976-1 Trade Cases 60,752

FEDERAL TRADE COMMISSION, Appellee, v. David R. MARKIN, President of Checker Motors Corporation, and Checker Motors Corporation, Appellants.

No. 75-1443.

United States Court of Appeals, Sixth Circuit.

Argued Dec. 9, 1975.

Decided March 5, 1976.

Lee A. Freeman, Freeman, Freeman & Salzman, Lee A. Freeman, Jr. John F. Kinney, Chicago, Ill., Alfred J. Gemrich, Gemrich, Moser, Dombrowski, Bowser & Miller, Kalamazoo, Mich., for appellants.

Frank S. Spies, U. S. Atty., Grand Rapids, Mich., John R. Fleder, U. S. Dept. of Justice, Gerald Harwood, Robert E. Duncan, Barry R. Rubin, Federal Trade Commission, Washington, D. C., for appellee.

Before MILLER and ENGEL, Circuit Judges, and CHURCHILL, ^* District Judge.

PER CURIAM.

Respondents appeal from an order of the district court enforcing with slight modifications a subpoena duces tecum issued by the Federal Trade Commission in March 1973. The subpoena called for the production of a broad range of documents and was issued to further an investigation initiated by an FTC resolution of January 3, 1973. The resolution authorized the FTC's Chicago regional office to determine whether appellants' activities in connection with the ownership, operation, and regulation of taxicab service in commerce were being conducted in an unfair manner with the purpose or effect of restraining competition in violation of § 5 of the Federal Trade Commission Act.

It is urged by the Commission that its investigation will involve inquiry into a number of possible violations of the Federal Trade Commission Act. The investigation is expected to show, according to the Commission, that Checker Motors controls Yellow Cab Corporation of Chicago or Checker Taxi Company, Inc., and operates taxicabs in the Chicago area; that Checker along with others, has conspired to restrain competition in the market for replacement vehicles, parts, supplies, and services; and that Checker has participated in disseminating false and misleading earnings claims in commerce with the result of deceiving drivers and employees who rely upon these claims when applying for jobs, and may have therefore placed competitors at an unfair competitive disadvantage.

Negotiations were instituted over Checker's objections to the subpoena. When these negotiations failed, Checker filed with the FTC a motion to quash the subpoena which was untimely denied. The Commission then filed a petition for enforcement of the subpoena in the district court, thus initiating the present litigation.

Appellants' primary contention on this appeal is that the principles of res judicata and collateral estoppel preclude FTC from conducting its proposed investigation. They argue that the parties and issues in this proceeding are the same parties and issues involved in the Yellow Cab decisions, United States v. Yellow Cab Co., 332 U.S. 218, 67 S.Ct. 1560, 91 L.Ed. 2010 (1947), and United States v. Yellow Cab Co., 80 F.Supp. 936 (N.D.Ill.1948), aff'd, 338 U.S. 338, 70 S.Ct. 177, 94 L.Ed. 150 (1949). The Yellow Cab complaint alleged various violations of the Sherman Act which the Supreme Court considered in three parts: (1) allegations of a conspiracy to restrain taxicab service to and from railroad stations in Chicago, (2) allegations of a conspiracy to restrain the sale of taxicabs, replacement parts and accessories in Chicago and several other cities and to excude all manufacturers other than Checker Motors from these markets, and (3) allegations of a conspiracy to prevent competition for exclusive contracts to transfer interstate passengers between Chicago railroad stations.

As to the first category, the Supreme Court affirmed the district court's dismissal of the charge, finding that local taxicab service in Chicago conveying interstate passengers between local railroad stations was not an integral part of interstate commerce and that, therefore, a restraint on this local service, without more, would not violate the Sherman Act. The Court then determined that the claims of a conspiracy to restrain competition in the market for the sale of vehicles, replacement parts and accessories did involve interstate commerce and constituted, if established by proof, violations of the Sherman Act. On remand, the district court after trial dismissed the latter charge on the ground that the evidence did not establish the government's theory. United States v. Yellow Cab Co., 80 F.Supp. 936 (N.D.Ill.1948). The Supreme Court affirmed, 338 U.S. 338, 70 S.Ct. 177, 94 L.Ed. 150 (1949). In its initial consideration of the case the Supreme Court also found that the allegations of a conspiracy to prevent competition in contracts to transfer interstate passengers between railroad stations charged a Sherman Act violation.

Respondents argue that the Supreme Court's finding in Yellow Cab that local taxicab services in Chicago do not affect interstate commerce precludes investigation by the Commission of anticompetitive conduct in the operation of local taxicab service in Chicago. Similarly, respondents contend that the district court's finding on remand, affirmed by the Supreme Court, that the alleged conspiracy to restrain competition in the market for the sale of vehicles and replacement parts and accessories had not been established by proof, precludes re-investigation of that issue.

The district court in a carefully reasoned opinion found that enforcement of the subpoena duces tecum in the present investigative proceeding is not barred by the rulings in the Yellow Cab cases on the theory of res judicata or collateral estoppel. F.T.C. v. Markin, 391 F.Supp. 865 (W.D.Mich.1974). We agree with its findings and conclusions and will add only a few comments. Generally, a question of agency coverage or jurisdiction should be judicially reviewed pursuant to 5 U.S.C. § 706 only after agency action has been completed. If such a question is presented for review prior to a final agency decision, a court normally should not interrupt the administrative process to decide the issue. Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 58 S.Ct. 459, 82 L.Ed. 638 (1938). Accord, FPC v. Arkansas Power and Light Co., 330 U.S. 802, 67 S.Ct. 963, 91 L.Ed. 1261 (1947), reversing per curiam, 81 U.S.App.D.C. 178, 156 F.2d 821 (1946); Macauley v. Waterman Steamship Corp., 327 U.S. 540, 543-45, 66 S.Ct. 712, 713-14, 90 L.Ed. 839, 841-42 (1945). Rather, the court should defer to agency expertise and "let the agency develop the necessary factual background upon which decisions should be based." McKart v. United States, 395 U.S. 185, 193-94, 89 S.Ct. 1657, 1662, 23 L.Ed.2d 194, 203 (1965).

The doctrine of Myers, supra, was specifically applied by the Supreme Court in Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 211-14, 66 S.Ct. 494, 506-08, 90 L.Ed. 614, 631-32 (1946), to deny to a litigant the right to assert a question of jurisdiction or coverage as a defense in a subpoena enforcement proceeding. See also FTC v. Crafts, 355 U.S. 9, 78 S.Ct. 33, 2 L.Ed.2d 23 (1957), reversing per curiam, 244 F.2d 882 (9th...