FTC v. J. Weingarten, Inc.

• Decision Date: 14 September 1964
• Docket Number: No. 20732.,20732.
• Parties: The FEDERAL TRADE COMMISSION et al., Appellants, v. J. WEINGARTEN, INC., Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

336 F.2d 687 (1964)

The FEDERAL TRADE COMMISSION et al., Appellants, v. J. WEINGARTEN, INC., Appellee.

No. 20732.

United States Court of Appeals Fifth Circuit.

September 14, 1964.

Sherman L. Cohn, J. F. Bishop, Attys., Dept. of Justice, J. B. Truly, Asst. Gen. Counsel, Harold D. Rhynedance, Jr., Atty., F.T.C., Washington, D. C., for appellants.

Edward F. Howrey, Washington, D. C., Austin C. Wilson, Houston, Tex., Gilbert T. Adams, Beaumont, Tex., Leon Jaworski, of Fulbright, Crooker, Freeman, Bates & Jaworski, Houston, Tex., Harold F. Baker, Robert W. Steele, of Howrey, Simon, Baker & Murchison, Washington, D. C., for appellee.

Before BROWN, WISDOM and BELL, Circuit Judges.

JOHN R. BROWN, Circuit Judge.

The question here is whether the District Court sitting in Texas erred in enjoining proceedings taking place in Washington, D. C. pursuant to a remand order of the Federal Trade Commission. This presents questions of jurisdiction and, assuming jurisdiction, whether an injunction was proper in light of the facts of this particular case.

Sometime in 1955, the Commission began an investigation relating, among other things, to a possible violation by Weingarten of § 5 of the Federal Trade Commission Act.¹ The investigation culminated in the filing on January 5, 1960, of a complaint alleging that Weingarten had violated § 5 by the inducement or receipt of promotional allowances from suppliers which it knew were granted in violation of § 2(d) of the Clayton Act,² because the allowances had not been made available on proportionally equal terms to competitors of Weingarten selling the suppliers' products.³ On the same day, the Commission instituted proceedings against eight suppliers who were alleged to have given the unlawful allowances to Weingarten.⁴ After what all concede were the usual administrative preliminaries, hearings on the Weingarten complaint began on June 30, 1960.⁵ After full hearings terminating in the spring of 1961, the parties filed briefs, proposed findings of fact and conclusions of law, and presented oral argument to the Hearing Examiner. On May 1, 1962, the Examiner issued his initial decision finding that the charge against Weingarten here involved had been established.⁶ Weingarten gave notice on May 22 of its intention to appeal the initial decision to the Commission, and after extensions of time for filing briefs had been granted to both Weingarten and Complaint Counsel, the matter was submitted on oral argument on October 23, 1962. Five months later, on March 25, 1962, the Commission entered the order enjoined by the District Court which remanded the case for further, but limited, hearing before the Examiner.

The gist of the Commission's opinion and order of March 25 was that the initial decision could not stand because of certain defects in proof and certain procedural defects in the fact findings of the Examiner's initial decision.

The District Judge held that by virtue of the remand, the Commission had violated the command of § 6(a) of the Administrative Procedure Act⁷ to "proceed with reasonable dispatch to conclude any matter presented to it." Consequently he enjoined the Commission and the Hearing Examiner from proceeding with the remand. He did not tell the Commission what disposition to make of the Weingarten complaint, but he did order that the Commission dispose of it on its own with no remand to an Examiner, and that it be finally disposed of within 30 days. Its motion for stay pending appeal having been denied, the Commission dismissed the complaint without prejudice to its being reopened in the event the litigation in this Court was concluded in its favor.

I.

The Commission contends at the outset that the District Court was without jurisdiction to interfere with the orderly course of the administrative proceedings.⁸ Urging that the statutory appeal to the Court of Appeals provided in § 5 (c)⁹ of the Federal Trade Commission Act is exclusive,¹⁰ the Commission asserts that it constitutes a plain, speedy, and adequate remedy at law which bars an injunction suit.¹¹ Weingarten, on the other hand, contends that the remedy provided by § 5(c) is inadequate to protect its right to a disposition with reasonable dispatch and that jurisdiction was properly invoked pursuant to decisions like Leedom v. Kyne, 1958, 358 U.S. 184, 79 S.Ct. 180, 3 L.Ed.2d 210; McCulloch v. Sociedad Nacional, 1963, 372 U.S. 10, 83 S.Ct. 671, 9 L.Ed.2d 547; Amos Treat & Co. v. SEC, 113 U.S.App.D.C. 489, 1962, 306 F.2d 260; and Deering Milliken, Inc. v. Johnston, 4 Cir., 1961, 295 F.2d 856.

Although we recognize that the grant of jurisdiction in Leedom-type cases is a narrow one, Boire v. Greyhound Corp., 1964, 376 U.S. 473, 84 S.Ct. 894, 11 L.Ed.2d 849, 854, we think we should not express any opinion in this area of jurisdiction when it is not necessary to a disposition of the case. Assuming, without deciding, that the District Court had jurisdiction to enjoin the remand proceedings, we conclude that the order did not violate the command of § 6(a) to proceed with reasonable dispatch, nor were the proceedings otherwise defective as claimed. Consequently, the District Court erroneously enjoined the Commission and its staff from proceeding under it.

II.

Weingarten builds its argument that § 6(a) has been violated by charging (1) that the Commission is guilty of unexcused delay in the disposition of the administrative proceedings and (2) that the remand was an attempt by a biased Commission to implement an arbitrary prejudgment that Weingarten had violated the Act.

With respect to delay, Weingarten's claim rests on the simple contention that as a matter of law the Commission is not proceeding with dispatch when a complaint pends for some 2 and ½ years before a Hearing Examiner and 11 months thereafter before the whole Commission. Absent proof of the normal time necessary to dispose of a similar proceeding or of facts tending to show a dilatory attitude on the part of the Commission or its staff — matters totally undeveloped on this record — we are unable to say that a Judge can so hold. So far as this record shows, this case not only proceeded at a rate comparable to that normally experienced in cases of its kind, it also proceeded at a rate satisfactory to Weingarten. This record is barren of any suggestion that Weingarten at any time between January 5, 1960, the date the complaint was filed, and March 25, 1963, the date the Commission entered its order of remand, ever complained about the pace of the proceedings. The record does reveal that extensions of time for filing briefs before the full Commission were granted to both Weingarten and Complaint Counsel, and doubtless other extensions at other stages were granted to both parties.

Of course the Supreme Court and all Courts in a supervisory role are concerned with delay. It has recently had occasion to deplore the "nigh interminable" delay in connection with some administrative agency proceedings. FPC v. Hunt, 1964, 376 U.S. 515, 84 S.Ct. 861, 11 L.Ed.2d 878, 886. And we are the first to emphasize that agencies must exert the greatest resourceful, imaginative ingenuity in devising procedures which in a day of ever-expanding dockets will permit the regulatory process to function properly with reasonable dispatch. Hill v. FPC, 5 Cir., 1964, 335 F.2d 355 1964. But we think it would be the extremely rare case where a Court would be justified in holding — as Weingarten urges us to do here — that the passage of time and nothing more presents an occasion for the peremptory intervention of an outside¹² Court in the conduct of an agency's adjudicative proceedings. This is certainly not such a case, and the decision of the District Judge, insofar as it rests on this foundation, is clearly wrong and cannot stand.¹³

The other contention with respect to the asserted denial of the § 6(a) right to a disposition with reasonable dispatch must be considered in light of the Commission's established power of remand for further hearing before an examiner. Weingarten concedes, as it must, that the Commission has the power to remand a case for the taking of additional evidence.¹⁴ But, says Weingarten, the Commission violates the command of § 6(a) because its purpose in the subsequent proceedings is to implement the Commission's arbitrary prejudgment of Weingarten's guilt even though the proceeding to adjudge that, legally and factually, has not yet been concluded.

The basis of the charge is this. The Commission, with candor, held in its March 25, 1963, order that it could not enter a cease and desist order against Weingarten on the administrative record as then developed. The reasons were two-fold. First, the Commission agreed with Weingarten that the record did not then contain evidence qualitatively sufficient to establish that at the time of the solicitation and receipt by Weingarten of promotional allowances from the suppliers, other customers of such supplier were competing with Weingarten in the distribution of goods of like grade and quality sold by such supplier. Second, the Commission found that the initial decision of the Hearing Examiner did not conform to the requirement of both the Administrative Procedure Act and the Commission's Rules that the reasons or basis for findings and conclusions upon all material issues of fact, law or discretion presented on the record be stated.¹⁵

Noting that Weingarten did not question that element 1 of the violation¹⁶ was made out, the Commission made this observation about element 2:

"Proof sufficient to establish the second criteria should not be difficult to adduce, since it involves merely a showing of the exact identity of the products purchased by the respondent from a supplier who granted it an allegedly discriminatory promotional allowance and the same showing for any of respondent\'s competitors who did not receive the allowance."

The Commission then remarked that the 10 witnesses relied upon by Complaint ...