Federal Trade Commission v. Standard Oil Company of California

Decision Date15 December 1980
Docket NumberNo. 79-900,79-900
Citation101 S.Ct. 488,66 L.Ed.2d 416,449 U.S. 232
PartiesFEDERAL TRADE COMMISSION et al., Petitioners, v. STANDARD OIL COMPANY OF CALIFORNIA
CourtU.S. Supreme Court
Syllabus

The Federal Trade Commission (FTC) issued a complaint against respondent and several other major oil companies, alleging that the FTC had "reason to believe" that the companies were violating § 5 of the Federal Trade Commission Act (Act), which prohibits unfair methods of competition or unfair or deceptive acts or practices in commerce. While adjudication of the complaint before an Administrative Law Judge was still pending, respondent, having unsuccessfully sought to have the FTC withdraw the complaint, brought an action in Federal District Court, alleging that the FTC had issued its complaint without having "reason to believe" that respondent was violating the Act, and seeking an order declaring the complaint unlawful and requiring that it be withdrawn. The District Court dismissed the action. The Court of Appeals reversed, holding that the District Court could inquire whether the FTC in fact had made the determination that it had reason to believe that respondent was violating the Act, and that the issuance of the complaint was "final agency action" under § 10(c) of the Administrative Procedure Act (APA)

Held : The FTC's issuance of its complaint was not "final agency action" under § 10(c) of the APA and hence was not judicially reviewable before the conclusion of the administrative adjudication. Pp. 238-246.

(a) The issuance of the complaint was not a definitive ruling of regulation and had no legal force or practical effect upon respondent's daily business other than the disruptions that accompany any major litigation. Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681, distinguished. Immediate judicial review would serve neither efficiency nor enforcement of the Act. Pp. 239-243.

(b) Although respondent, by requesting the FTC to withdraw its complaint and awaiting the FTC's refusal to do so, may have exhausted its administrative remedy as to the averment of a "reason to believe," the FTC's refusal to withdraw the complaint does not render the complaint a "definitive" action. Such refusal does not augment the complaint's legal force or practical effect on respondent, nor does it diminish the concern for efficiency and enforcement of the Act. P. 243.

(c) The expense and disruption in defending itself, even if substantial, does not constitute irreparable injury to respondent. P. 244.

(d) Respondent's challenge to the FTC's complaint will not become "insulated" from judicial review if it is not reviewed before the FTC's adjudication concludes, since under the APA a court of appeals reviewing a cease-and-desist order has the power to review alleged unlawfulness in the issuance of an agency complaint, assuming that the issuance of the complaint is not "committed to agency discretion by law." Pp. 244-245.

(e) Since issuance of the complaint averring "reason to believe" is a step toward, and will merge in, the FTC's decision on the merits, the claim of illegality in issuance of the complaint is not subject to judicial review as a "collateral" order. Cohen v. Beneficial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528, distinguished. Pp. 246.

9 Cir., 596 F.2d 1381, reversed and remanded.

Sol. Gen. Wade H. McCree, Jr., Washington, D. C., for petitioners.

George A. Sears, San Francisco, Cal., for respondent.

Justice POWELL delivered the opinion of the Court.

This case presents the question whether the issuance of a complaint by the Federal Trade Commission is "final agency action" subject to judicial review before administrative adjudication concludes.

I

On July 18, 1973, the Federal Trade Commission issued and served upon eight major oil companies, including Standard Oil Company of California (Socal),1 a complaint averring that the Commission had "reason to believe" that the companies were violating § 5 of the Federal Trade Commission Act, 38 Stat. 719, as amended, 15 U.S.C. § 45,2 and stating the Commission's charges in that respect.3 The Commission issued the complaint under authority of § 5(b) of the Act, 15 U.S.C. § 45(b), which provides:

"Whenever the Commission shall have reason to believe that any . . . person, partnership, or corporation has been or is using any unfair method of competition or unfair or deceptive act or practice in or affecting commerce, and if it shall appear to the Commission that a proceeding by it in respect thereof would be to the interest of the public, it shall issue and serve upon such person, partnership, or corporation a complaint stating its charges in that respect and containing a notice of a hearing. . . ."

An adjudication of the complaint's charges began soon thereafter before an Administrative Law Judge, and is still pending.

On May 1, 1975, Socal filed a complaint against the Commission in the District Court for the Northern District of California, alleging that the Commission had issued its complaint without having "reason to believe" that Socal was violating the Act.4 Socal sought an order declaring that the issuance of the complaint was unlawful and requiring that the complaint be withdrawn. Socal had sought this relief from the Commission and been denied.5 In support of its allegation and request, Socal recited a series of events that preceded the issuance of the complaint and several events that followed. In Socal's estimation, the only inference to be drawn from these events was that the Commission lacked sufficient evidence when it issued the complaint to warrant a belief that Socal was violating the Act.

The gist of Socal's recitation of events preceding the issuance of the complaint is that political pressure for a public explanation of the gasoline shortages of 1973 forced the Commission to issue a complaint against the major oil companies despite insufficient investigation. The series of events began on May 31, 1973. As of that day, the Commission had not examined any employees, documents, or books of Socal's, although the Commission had announced in December 1971, that it intended to investigate possible violations of the Federal Trade Commission Act in the petroleum industry.

On May 31, Senator Henry M. Jackson, then Chairman of the Senate Interior and Insular Affairs Committee and of the Permanent Investigation Subcommittee of the Senate Committee of Government Operations, requested the Commission "to prepare a report within thirty days regarding the relationship between the structure of the petroleum industry and related industries and the current and prospective shortages of petroleum products." Immediately the Commission subpoenaed three Socal officers to testify before it, and they did so in late June. This examination was the Commission's only inquiry as to Socal's books and records, and the only interview of a Socal officer, prior to the issuance of the complaint.6 On July 6, the Commission sent to Senator Jackson a "Preliminary Federal Trade Commission Staff Report on Its Investigation of the Petroleum Industry," requesting that the report not be made public because it had not yet "been evaluated or approved by the Commission." On July 9, Senator Jackson informed the Commission by letter that he intended to publish the report as a congressional committee reprint unless the Commission explained by July 13 why public release of the report would be improper. The Commission responded on July 11 that public release of the report, which the Commission characterized as "an internal staff memorandum," would be "inconsistent with [the Commission's] duty to proceed judiciously and responsibly in determining what, if any, action should be taken on the basis of the staff investigation." On July 13, Senator Jackson released the report for publica- tion by the Senate Committee on Interior and Insular Affairs. On July 18, the Commission issued its complaint.

The subsequent events recited by Socal in its complaint were intended to confirm that the Commission lacked sufficient evidence before issuing its complaint to determine that it had reason to believe that Socal was violating the Act. One subsequent event was the issuance on August 27 of a report by the Office of Energy Advisor of the Department of the Treasury, concluding that the Commission's staff report was wrong in implying that the major oil companies had contrived the gasoline shortages. The report recommended that the complaint be withdrawn. A second event was Senator Jackson's statement in January 1974, at the conclusion of congressional hearings about the shortages, that he had found no "hard evidence" that the oil companies had created shortages. In addition to these expressions of doubt about the allegations of the Commission's complaint, Socal recounted the several failures of the Commission's complaint counsel in the adjudication to comply with orders of the administrative law judge to identify the witnesses and documents on which the Commission intended to rely. The complaint counsel admitted that most of the evidence and witnesses the Commission hoped to introduce were yet to be secured through discovery, and he moved to relax the Commission's procedural rules for adjudication in order to allow such extensive discovery. In certifying this motion to the Commission, the Administrative Law Judge recommended "withdrawal of this case from adjudication-that is, dismissal without prejudice-so that it may be more fully investigated." The Commission denied the complaint counsel's motion and declined to follow the Administrative Law Judge's recommendations.

The District Court dismissed Socal's complaint on the ground that "a review of preliminary decisions made by administrative agencies, except under most unusual circumstances, would be productive of nothing more than chaos." The Court of Appeals for the Ninth Circuit reversed. 596 F.2d 1381 (1979). It held the...

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