FTC v. Markin

• Decision Date: 10 December 1974
• Docket Number: No. K 74-268 CA.,K 74-268 CA.
• Citation: 391 F. Supp. 865
• Parties: FEDERAL TRADE COMMISSION, Petitioner, v. David R. MARKIN, President and Checker Motors Corporation, Respondents.
• Court: U.S. District Court — Western District of Michigan

391 F. Supp. 865

FEDERAL TRADE COMMISSION, Petitioner, v. David R. MARKIN, President and Checker Motors Corporation, Respondents.

No. K 74-268 CA.

United States District Court, W. D. Michigan.

December 10, 1974.

Robert Greene, Asst. U. S. Atty., Grand Rapids, Mich., Robert E. Duncan, Federal Trade Commission, Washington, D. C., for petitioner.

Lee A. Freeman, Jr., Chicago, Ill., Alfred J. Gemrich, Kalamazoo, Mich., for respondents.

OPINION ON PETITION FOR ENFORCEMENT OF SUBPOENA DUCES TECUM

MILES, District Judge.

This is a proceeding initiated by the Federal Trade Commission pursuant to Section 9 of the Federal Trade Commission Act 15 U.S.C. § 49¹ to enforce an administrative subpoena duces tecum which was issued on March 19, 1973 in furtherance of an investigatory resolution dated January 3, 1973. The resolution, the full text of which is set forth in the margin,² seeks:

"To determine whether or not the activities and practices by Checker Motors Corporation, Checker Taxi Cab Company, Inc., Yellow Cab Company, Inc. (Chicago), or others in connection with the regulation, ownership, and operation of taxi services, in commerce, are conducted in an unfair manner for the purpose or with the effect of restraining or foreclosing competition, in violation of Section 5 of the Federal Trade Commission Act (15 U.S.C. 45)."

The subpoena at issue, containing 29 specifications, requests the originals or verified copies of numerous types of corporate documentation which purportedly relate to the operation and policies of respondent corporation and its subsidiaries and affiliates in the Chicago area. Respondents have consistently asserted their right to contest this subpoena, both before the Commission and this Court, and at oral argument on this matter, and contend that we are precluded from enforcing the subpoena, or in the alternative, that even if we are not so precluded, the specifications of this subpoena are such that this Court cannot properly enforce them. Citing United States v Yellow Cab, 332 U.S. 218, 67 S.Ct. 1560, 91 L.Ed. 2010 (1947) and United States v. Yellow Cab, 338 U. S. 338, 70 S.Ct. 177, 94 L.Ed. 150 (1949) as being res judicata here, respondents strenuously argue that we are prohibited from enforcing this subpoena. The two cases referred to above involved allegations that the respondents herein, along with a number of others, conspired to restrain trade in violation of Sections 1 and 2 of the Sherman Anti-Trust Act in the purchase and use of taxicabs in Chicago, Pittsburgh, New York City and Minneapolis. The cases involved suits by the United States alleging that the respondents herein, along with a number of other companies, conspired to restrain and monopolize interstate trade in violation of § 1 and § 2 of the Sherman Anti-Trust Act through their methods of selling taxicabs in Chicago, New York, Minneapolis and New York City, and in their operation of taxicab companies in those same cities. In the first case, the Supreme Court reversed and remanded the District Court's finding that the complaint failed to state a claim upon which relief could be granted. The second case upheld the District Court's holding after a trial on remand that the United States had failed to sustain its burden of proof with respect to the alleged anti-trust violations.

More specifically, in the first Yellow Cab case, the court held that although the government's allegations with respect to the purchase of taxicabs and the transportation of interstate passengers between railroad stations in Chicago did state a claim under the Sherman Act, the government's allegations with respect to the transportation of interstate passengers to and from stations did not, concluding that:

". . . such transportation is too unrelated to interstate commerce to constitute a part thereof within the meaning of the Sherman Act. These taxicabs, in transporting passengers and their luggage to and from Chicago railroad stations, admittedly cross no state lines; by ordinance, their service is confined to transportation `between any two points within the corporate limits of the city.' . . . In short, their relationship to interstate transit is only casual and incidental." 332 U.S. 230, 231, 67 S.Ct. 1566.

It is this holding that respondents would have us apply here with the result the current line of investigation by the FTC is barred as having been authoritatively handled in a prior litigation.

While it is true that both the United States and all the respondents herein were also parties to the Yellow Cab cases and that the issues both there and here bear some relationship, it must be emphasized that the Yellow Cab decisions arose under a different statute than that guiding us here. More importantly, however, the Court in the first Yellow Cab decision specifically limited its decision therein in a way directly in point to the situation now facing this Court:

"We do not mean to establish any absolute rule that local taxicab service to and from railroad stations is completely beyond the reach of federal power or even beyond the scope of the Sherman Act . . .

Likewise, we are not to be understood in this case as deciding that all conspiracies among local cab drivers are so unrelated to interstate commerce as to fall outside the federal ken. A conspiracy to burden or eliminate transportation of passengers to and from a railroad station where interstate journeys begin and end might have sufficient effect upon interstate commerce to justify the imposition of the Sherman Act or other federal laws resting on the commerce power of Congress." 332 U.S. 232, 233, 67 S.Ct. 1568.

We have in this case, coming almost 30 years after the Yellow Cab decisions, precisely the potential for change which the Supreme Court contemplated therein. In addition, in analyzing a similar res judicata argument, the Second Circuit has stated:

"In any event, new violations will support new proceedings dealing with different periods of time, as least where there is no indication of harassment by the Commission. See F.T.C. v. Raladam Co., 1942, 316 U.S. 149, 62 S.Ct. 966, 86 L.Ed. 1336; 2 Davis Administrative Law Treatise 570-71 (1958); cf. Grandview Dairy, Inc. v Jones, 2 Cir., 157 F.2d 5, certiorari denied, 1946, 329 U.S. 787, 67 S.Ct. 355, 91 L.Ed. 675." Exposition Press v. F.T. C., 295 F.2d 869, 872 (2 Cir. 1961).

Nor do any of the respondents contest the Commission's broad power to conduct investigations. (See 15 U.S.C. § 45 and Memorandum in Opposition, p. 10).

For these reasons, we conclude that the Yellow Cab cases are not jurisdictionally dispositive of the present litigation and that we are therefore required to proceed to a direct consideration of the issues raised by the government's petition for enforcement of its subpoena.

Respondents also argue that we should confront the jurisdictional issues here through a consideration of whether the subject matter of this investigation is sufficiently "in commerce" under § 5 of the Act to justify this investigation. A careful study of the cases, however, would seem to lead the Court to a different procedure. In Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 66 S.Ct. 494, 90 L.Ed. 614 (1945), the Supreme Court considered the propriety of a subpoena issued by the Department of Labor under § 9 and § 11(a) of the Fair Labor Standards Act (which incorporates § 9 of the Federal Trade Commission Act). After a survey of the cases up to that time, the Court stated:

"Without attempt to summarize or accurately distinguish all of the cases, the fair distillation, in so far as they apply merely to the production of corporate records and papers in response to a subpoena or order authorized by law and safeguarded by judicial sanction, seems to be that the Fifth Amendment affords no protection by virtue of the self-incrimination provision, whether for the corporation or for its officers; and the Fourth, if applicable, at the most guards against abuse only by way of too much indefiniteness or breadth in the things required to be `particularly described,' if also the inquiry is one the demanding agency is authorized by law to make and the materials specified are relevant. The gist of the protection is in the requirement, expressed in terms, that the disclosure sought shall not be unreasonable. As this has taken form in the decisions, the following specific results have been worked out. It is not necessary, as in the case of a warrant, that a specific charge or complaint of violation of law be pending or that the order be made pursuant to one. It is enough that the investigation be for a lawfully authorized purpose, within the power of Congress to command. This has been ruled most often perhaps in relation to grand jury investigations, but also frequently in respect to general or statistical investigations authorized by Congress." 327 U.S. 208, 209, 66 S.Ct. 505.

The Court then applied these principles to the subpoena, and concluded at p. 213-214, 66 S.Ct. at p. 508:

"On the other hand, petitioners' view, if accepted, would stop much if not all of investigation in the public interest at the threshold of inquiry and, in the case of the Administrator, is designed avowedly to do so. This would render substantially impossible his effective discharge of the duties of investigation and enforcement which Congress has placed upon him. And if his functions could be thus blocked, so might others of equal importance.

We think, therefore, that the courts of appeals were correct in the view that Congress has authorized the Administrator, rather than the District Courts in the first instance to determine the question of coverage in the preliminary investigation of possibly existing violations; in doing so to exercise his subpoena power for securing evidence upon that question, by seeking the production of petitioners relevant books, records and papers; and, in case of refusal to obey his subpoena, issued according to the statute's

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