F. T. C. v. Manager, Retail Credit Co., Miami Beach Branch Office

• Decision Date: 28 February 1975
• Docket Number: No. 73-1844,73-1844
• Parties: FEDERAL TRADE COMMISSION, Appellant, v. MANAGER, RETAIL CREDIT COMPANY, MIAMI BRANCH OFFICE, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 988

515 F.2d 988

169 U.S.App.D.C. 271

FEDERAL TRADE COMMISSION, Appellant, v. MANAGER, RETAIL CREDIT COMPANY, MIAMI BRANCH OFFICE, Appellee.

No. 73-1844.

United States Court of Appeals District of Columbia Circuit.

Argued Sept. 13, 1974.

Decided Feb. 28, 1975.

James P. Timony, Atty., F.T.C., with whom Harold H. Titus, Jr., U. S. Atty., at the time the brief was filed, and Harold D. Rhynedance, Jr., Asst. Gen. Counsel, F.T.C., were on the brief for appellant.

Edward J. Schmuck, Washington, D. C., with whom Francis M. Gregory, Jr., and Stephen S. Cowen, Washington, D. C., were on the brief, for appellee.

Before BAZELON, Chief Judge, and ROBINSON and MacKINNON, Circuit Judges.

MacKINNON, Circuit Judge:

The Federal Trade Commission (FTC) applied to the District Court for enforcement of an administrative subpoena duces tecum requiring the Retail Credit Company (Retail) to produce documentary evidence for a Commission investigation of the practices of certain consumer reporting agencies under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq. Following a trial the District Court ruled that the FTC, like other Government agencies seeking consumer credit reports regulated by the FCRA, must obtain a court order or the permission of affected consumers in order to compel disclosure of the documents. ¹ Because we conclude that the FTC has special statutory power incident to its role as enforcer of the FCRA, we reverse.

I

In 1970 Congress appended to the Consumer Credit Protection Act, 15 U.S.C. § 1601 et seq., a number of provisions collectively known as the Fair Credit Reporting Act. Section 602 of the FCRA recognized that "(c)onsumer reporting agencies have assumed a vital role in assembling and evaluating consumer credit and other information on consumers" and affirmed the "need to insure that (such) agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer's right to privacy." The congressional prescription was a comprehensive series of restrictions on the disclosure and use of credit information assembled by consumer reporting agencies. Section 604 identifies three instances in which reporting agencies may furnish credit reports: (1) in response to an appropriate court order; (2) by permission of consumers whose credit ratings are documented in the reports sought; and (3) to a person with a legitimate business interest in the information. ² Section 608 allows disclosure of limited portions of the reports essentially identifying information to governmental agencies unable to qualify under any of the subsections of section 604. ³ The Act attaches special restrictions to the preparation and disclosure of investigative consumer reports ⁴ and requires that an agency apprise a consumer who makes an appropriate request of the nature and substance of information in his file, the sources of the data, and the identity of parties to whom it is released. ⁵

Section 621 sets forth an elaborate scheme for administrative enforcement of the FCRA. Subsection (a) imposes upon the Federal Trade Commission the responsibility for enforcing compliance with the requirements of the FCRA with respect to the preponderance of consumer reporting agencies and affirms the Commission's right to use its customary procedural, investigative and enforcement powers. ⁶ Subsection (b) commits enforcement obligations to specified Government agencies where enumerated institutions or statutes are involved. ⁷ Though each of the agencies listed in (b) is authorized to use all authority conferred on it by law to enforce the FCRA in its respective province, none wields powers as comprehensive as that of the FTC.

On April 1, 1972, as part of an ongoing investigation of the practices of certain consumer reporting agencies, the FTC issued a subpoena duces tecum to the Manager of the Miami Branch Office of the Retail Credit Company. ⁸ The company assembles and sells data bearing on an individual's credit rating, fitness for employment, and qualifications for insurance, including personal information on character, reputation, and life style. Specification 7 of the subpoena requested production of the complete files of all consumers who since January 1 had directed the Miami Branch Office to release information in their files. Specification 9 sought the complete files of all individuals investigated by four named credit investigators during certain periods of time. Retail complied with the entirety of the subpoena save specifications 7 and 9; in a letter dated May 8, 1972, the company explained that the disclosures requested in those paragraphs would violate both section 604 of the Fair Credit Reporting Act and the rights of privacy of those consumers whose reports the Commission was seeking. ⁹

The FTC petitioned the District Court for an order compelling compliance with its subpoena and for a declaration, pursuant to 28 U.S.C. § 2201 (1959), that section 621 of the FCRA permits voluntary compliance with Commission requests for the production of consumer reports. Retail Credit counterclaimed for a declaration that the Act forbids distribution of consumer reports unless the request is supported by court order or consumer authorization. Because the FTC managed to obtain some of Retail's consumer reports distributed to insurance companies after the initial pleadings were filed, Retail amended its counterclaim to include a request for a declaration that no person or organization could release its reports unless the requirements of section 604 were followed.

At trial Commission witnesses testified to the need for prompt access to consumer reports in investigations of reporting agencies' compliance with the FCRA. Retail responded that the language of the statute did not allow disclosure by administrative subpoena, that the procedures which the Act specified were adequate for the Commission's task, and that the privacy considerations which had prompted passage of the FCRA militated against any unauthorized or unnecessary disclosure. On April 23, 1973, the District Court entered an order denying the Commission's power to compel production of Retail's consumer reports by administrative subpoena. Instead the court treated the FTC petition as an application for a court order under section 604 of the FCRA and proceeded to grant the application, subject to Commission notification, by mail and publication, of the consumers whose reports were sought, in order to afford them an opportunity to refuse disclosure. Because the court denied the FTC direct access to Retail's consumer reports, it similarly disapproved the agency's efforts to secure the reports from third parties who had purchased them for legitimate business purposes, and forbad that line of attack in the future.

II

The Fair Credit Reporting Act speaks with apparent ambiguity of the FTC's power to obtain consumer reports from reporting agencies. Section 604 establishes a seemingly exclusive catalogue of the instances in which reports may be disclosed "A consumer reporting agency may furnish a consumer report under the following circumstances and no other" and includes in the list disclosure by court order, with consumer permission, and for a legitimate business purpose. Section 608 also specifically authorizes disclosure of limited identifying information to Government agencies and thus creates no real exception to the general prohibition of section 604.

On the other hand, section 621(a), the provision for administrative enforcement of the FCRA, grants the Commission "such procedural, investigative, and enforcement powers, including the power . . . to require . . . the production of documents, and the appearance of witnesses as though the applicable terms and conditions of the Federal Trade Commission Act were part of this title." (Emphasis added.) The inclusive language of the relevant portion of the Federal Trade Commission Act, 15 U.S.C. § 49, applicable to enforcement of the FCRA mutatis mutandis, indicates that the investigative powers of the Commission are broad enough to include the subpoena of consumer reports:

(F)or the purposes of this Act the Commission . . . shall at all reasonable times have access to, for the purpose of examination, and the right to copy any documentary evidence of any corporation being investigated or proceeded against; and the commission shall have the power to require by subpoena the attendance and testimony of witnesses and the production of all such documentary evidence relating to any matter under investigation. . . . (Emphasis added.)

The Commission's plenary power to secure information bearing on authorized agency inquiries is well established by judicial decision. United States v. Morton Salt Co., 338 U.S. 632, 652-53, 70 S.Ct. 357, 94 L.Ed. 401 (1950); Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 199-201, 216-17, 66 S.Ct. 494, 90 L.Ed. 614 (1946); Adams v. FTC, 296 F.2d 861, 866 (8th Cir. 1961), cert. denied, 369 U.S. 864, 82 S.Ct. 1029, 8 L.Ed.2d 83 (1962); FTC v. Green, 252 F.Supp. 153 (S.D.N.Y.1966). Cf. FTC v. Browning, 140 U.S.App.D.C. 292, 295 n. 7, 435 F.2d 96, 99 n. 7 (1970). Claims of secrecy of subpoenaed information have generally proved no barrier to discovery by the FTC. FTC v. Tuttle, 244 F.2d 605 (2d Cir.), cert. denied, 354 U.S. 925, 77 S.Ct. 1379, 1 L.Ed.2d 1436 (1957); FTC v. Cooper, CCH 1962 Trade Cases, P 70, 353 (S.D.N.Y.). As Justice Jackson remarked in Morton Salt, supra, interpreting the precise statute that is here incorporated by reference, "(w)hen investigative and accusatory duties are delegated by statute to an administrative body, it, too, may take steps to inform itself as to whether there is probable violation of the law." 338 U.S. at 643, 70 S.Ct. at 364. "The only power that is involved here is the power to get information from those who best can give it and who are most interested in not doing so." 338 U.S. at 642, 70 S.Ct. at 364.

To interpret...