Federal Trade Commission v. Dean Foods Company

• Decision Date: 13 June 1966
• Docket Number: No. 970,970
• Citation: 86 S.Ct. 1738,384 U.S. 597,16 L.Ed.2d 802
• Parties: FEDERAL TRADE COMMISSION, Petitioner, v. DEAN FOODS COMPANY et al
• Court: U.S. Supreme Court

384 U.S. 597

86 S.Ct. 1738

16 L.Ed.2d 802

FEDERAL TRADE COMMISSION, Petitioner,

v DEAN FOODS COMPANY et al.

No. 970.

Argued March 28, 1966.

Decided June 13, 1966.

[Syllabus from pages 597-598 intentionally omitted] Solicitor General Thurgood Marshall for petitioner.

Hammond E. Chaffetz, Washington, D.C., for respondents.

Mr. Justice CLARK delivered the opinion of the Court.

At issue here is the power of the Court of Appeals under the All Writs Act, 28 U.S.C. § 1651(a) (1964 ed.), to temporarily enjoin the consummation of a merger that is under attack before the Federal Trade Commission as violative of § 7 of the Clayton Act, as amended, 64 Stat. 1125, 15 U.S.C. § 18 (1964 ed.). This case arose on the application of the Commission for a temporary restraining order and a preliminary injunction against respondents Dean Foods Company and Bowman Dairy Company to maintain the states quo until the Commission determined the legality of their merger. The Commission alleged that it had issued a complaint against respondents under § 7 of the Clayton Act and § 5 of the Federal Trade Commission Act, 38 Stat. 719, as amended, 52 Stat. 111, 15 U.S.C. § 45 (1964 ed.), and that from the facts underlying the complaint 'it is probable that the Federal Trade Commission will enter an order finding a violation of these laws.' The petition stated that there was a 'compelling' need for preliminary relief since the 'acquisition itself will split Bowman in two—Dean will acquire fixed assets, receivables and good will; Bowman will retain all cash, government and other marketable securities, and some real estate investments' for distribution to its stockholders.¹ In addition, it was alleged that Dean planned to dispose of most of Bowman's retail milk routes, certain of its plants and equipment, and to consolidate the remaining assets. The Commission thus argued that if the merger were allowed to be completed, 'Bowman as an entity will no longer exist,' and that it 'will be 'extremely difficult and very probably impos- sible" to restore Bowman as 'a viable independent' company if the merger were subsequently ruled illegal. In other words, consummation of the agreement would 'prevent the Commission from devising, or render it extremely difficult for the Commission to devise, any effective remedy after its decision on the merits.' As grounds for issuance of an extraordinary writ, the Commission asserted that the Court of Appeals 'will, in effect, be deprived of its appellate jurisdiction (over final Commission orders) and of the opportunity to enter a meaningful final order of its own in respect to this acquisition, since the res in custodia legis Bowman—will have vanished.'

The Court of Appeals entered a temporary restraining order against respondents, as prayed. On the hearing for a preliminary injunction, however, it dissolved the temporary restraining order and dismissed the petition for the reasons that 'no cease and desist order has been entered by the Commission relative to the subject matter in the case at bar and * * * we now hold that the Commission did not have authority to institute this proceeding in this court * * *.' In its final judgment the Court of Appeals supported its refusal to grant relief at the request of the Commission by reference to the fact that:

'in the 84th Congress and in the 89th Congress bills sponsored by the said Commission were introduced, which bills if enacted into law would have conferred upon the Commission such authority as it is attempting to exercise in the case now before this court, but that said measures were not enacted into law and Congress has not provided otherwise for bestowing this authority upon said Commission.' 356 F.2d 481, 482.

A few hours after the Court of Appeals entered its order on January 19, 1966, the contract was closed and Dean acquired legal title to Bowman's operating assets. Upon application by the Solicitor General on behalf of the Commission, Mr. Justice Clark, after consulting the other members of this Court, entered a preliminary injunction on January 24, 1966, restraining respondents from making any material changes with respect to Bowman's corporate structure or the assets purchased. This order provided that Dean might sell Bowman's retail home delivery routes upon terms and conditions acceptable to the Commission, but that any milk supplied by Dean to the purchasers of the routes must continue to be delivered under the Bowman label and from former Bowman plants. We granted certiorari on February 18, 1966, 383 U.S. 901, 86 S.Ct. 716, 15 L.Ed.2d 844, and expedited consideration of this case. We conclude that the Court of Appeals erred and reverse its judgment.

I.

Since the case comes to us from a dismissal on jurisdictional grounds we must take the allegations of the Commission's application for a preliminary injunction as true. We need not detail the facts further than to say that Dean and Bowman were substantial competitors in the sale of packaged milk in the Chicago area, one of the largest markets in the United States for packaged milk. On November 2, 1965, attorneys for Dean and Bowman met with representatives of the Commission to discuss a proposal by Dean to purchase all of Bowman's plants and equipment, the Bowman name, all customer and supplier lists together with the benefit of their relationships, and various other assets, all of which were situated in the Chicago area. Bowman would consequently cease doing a dairy business there. It was emphasized that the inquiry was merely to ascertain the views of the staff of the Commission and not to secure a formal advisory opinion. After investigation, on December 3, 1965, the Commission's staff advised Dean's counsel that it believed the acquisition would raise serious questions under the antitrust laws, and that on the basis of existing information the staff would recommend that the Commission issue a complaint against the acquisition if consummated. After further meetings, Dean's counsel informed the Commission's staff on December 14, 1965, that the agreement had been signed. A week later the Commission issued a formal complaint charging that the agreement violated § 7 of the Clayton Act and § 5 of the Federal Trade Commission Act.

It appears that at the time of the merger Dean was the third or fourth largest distributor of packaged milk in the Chicago area; Bowman was at least the second largest in that market; and together they enjoyed approximately 23% of the sales of packaged milk in the same area, while the four largest dairy companies had a 43% share thereof. Affidavits attached to the Commission's application alleged that between 1954 and 1965 the number of packaged milk sellers in the Chicago market had declined from 107 to 57, and that in the four months prior to the filing of the complaint four more firms had been eliminated by acquisitions. From these statistics it was concluded that the effect of Dean's acquisition of Bowman would be to substantially lessen competition. We place in the margin the Commission's summation of its complaint.²

II.

The All Writs Act, 28 U.S.C. § 1651(a), empowers the federal courts to 'issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.' The exercise of this power 'is in the nature of appellate jurisidiction' where directed to an inferior court, Ex parte Crane, 5 Pet. 190, 193, 8 L.Ed. 92 (1832) (Marshall, C.J.), and extends to the potential jurisdiction of the appellate court where an appeal is not then pending but may be later perfected. Cf. Ex parte Bradstreet, 7 Pet. 634, 8 L.Ed. 810 (1833) (Marshall, C.J.). These holdings by Chief Justice Marshall are elaborated in a long line of cases, including McClellan v. Carland, 217 U.S. 268, 30 S.Ct. 501, 54 L.Ed. 762 (1910), where Mr. Justice Day held: '(w)e think it the true rule that where a case is within the appellate jurisdiction of the higher court a writ * * * may isse in aid of the appellate jurisdiction which might otherwise be defeated * * *.' At 280, 30 S.Ct. at 504. And in Roche v. Evaporated Milk Assn., 319 U.S. 21, 63 S.Ct. 938, 87 L.Ed. 1185 (1943), Chief Justice Stone stated that the authority of the appellate court 'is not confined to the issuance of writs in aid of a jurisdiction already acquired by appeal but extends to those cases which are within its appellate jurisdiction although no appeal has been per- fected.' At 25, 63 S.Ct. at 941. Likewise, decisions of this Court 'have recognized a limited judicial power to preserve the court's jurisdiction or maintain the status quo by injunction pending review of an agency's action through the prescribed statutory channels. * * * Such power has been deemed merely incidental to the courts' jurisdiction to review final agency action * * *.' Arrow Transp. Co. v. Southern R. Co., 372 U.S. 658, 671, n. 22, 83 S.Ct. 984, 10 L.Ed.2d 52 (1963). There the Court cited such authority as Scripps-Howard Radio, Inc. v. Federal Communications Comm'n, 316 U.S. 4, 62 S.Ct. 875, 86 L.Ed. 1229 (1942); West India Fruit & S.S. Co. v. Seatrain Lines, Inc., 170 F.2d 775 (C.A.2d Cir. 1948); and Board of Governors of Federal Reserve System v. Transamerica Corp., 184 F.2d 311 (C.A.9th Cir.), cert. denied, 340 U.S. 883, 71 S.Ct. 197, 95 L.Ed. 641 (1950).

Section 11(c) of the Clayton Act, as amended, 73 Stat. 243, 15 U.S.C. § 21(c), gives exclusive jurisdiction to review final orders by the Commission against illegal mergers, on application of '(a)ny person required by such order * * * to cease and desist from any such violation,' to the courts of appeals 'for any circuit within which such violation occurred or within which such person resides or carries on business.' This grant includes the traditional power to issue injunctions to preserve the status quo while administrative proceedings are in progress and prevent impairment of the effective exercise of appellate jurisdiction. Cf. ...