Gamble-Skogmo, Inc. v. Federal Trade Commission

• Decision Date: 25 February 1954
• Docket Number: No. 14657.,14657.
• Citation: 211 F.2d 106
• Parties: GAMBLE-SKOGMO, Inc., et al. v. FEDERAL TRADE COMMISSION.
• Court: U.S. Court of Appeals — Eighth Circuit

211 F.2d 106 (1954)

GAMBLE-SKOGMO, Inc., et al. v. FEDERAL TRADE COMMISSION.

No. 14657.

United States Court of Appeals Eighth Circuit.

February 25, 1954.

COPYRIGHT MATERIAL OMITTED

W. P. Berghuis, Minneapolis, Minn., for petitioners.

J. B. Truly, Attorney, Federal Trade Commission, Washington, D. C. (W. T. Kelley, General Counsel, and Robert B. Dawkins, Asst. General Counsel, Federal Trade Commission, Washington, D. C., on the brief), for respondent.

Before SANBORN, WOODROUGH and JOHNSEN, Circuit Judges.

JOHNSEN, Circuit Judge.

The Federal Trade Commission, in proceedings under 15 U.S.C.A. §§ 21 and 45(b), found that Gamble-Skogmo, Inc., its officers and its directors had been violating section 3 of the Clayton Act, 15 U.S.C.A. § 14,¹ and section 5(a) of the Federal Trade Commission Act, 15 U.S.C.A. § 45(a),² and entered cease and desist orders conforming to its findings. The corporation, its officers and its directors have petitioned for review of these orders.

The first count in the Commission's complaint had charged in substance that the corporation, under the direction of its officers and its directors,³ in its business as a wholesale distributor, was engaged in making sales and contracts for the sale, in interstate commerce, of goods, wares and merchandise, consisting of automobile supplies, electrical appliances, sporting goods, paints, ready-to-wear clothing, and the various other items distributed by it,⁴ to its numerous retail dealers,⁵ upon the condition, agreement and understanding that such dealers should not purchase merchandise from any other distributor, and with this having the effect, in the line of commerce in which the corporation was engaged, that competition might be and had been substantially lessened⁶ and that a monopoly was being tended to be created.

The second count of the complaint charged in substance that the imposing of such a condition, agreement and understanding by the corporation upon its dealers, for exclusive requirements purchasing by them, constituted an unfair trade practice and method of competition in commerce, as did also the attempts of the corporation to police and enforce such condition, agreement and understanding, by the holding of dealers' meetings at which the company's policy of requiring exclusive handling of its goods was emphasized and the possibility of reprisal declared; by the sending out of fieldmen to check dealers' stocks for outside merchandise, to report to the corporation the amount of such merchandise carried, to advise any such dealers to get rid of their outside merchandise, and to threaten them with a cancellation of their contracts and the inability thereafter to obtain further goods from the corporation; by the paying of a bonus to dealers whose cooperation with the corporation in exclusive requirements purchasing was deemed by it to be satisfactory and the reducing or denying of such a bonus to dealers who were purchasing outside goods; and by engaging in making cancellation of various dealers' contracts for the sole reason that they were carrying merchandise of other distributors.

The corporation denied all of the Commission's charges against it. It contended that it had not contracted to sell or made sales to its dealers upon the condition, agreement or understanding that the dealer was required to purchase exclusively from the corporation and could not handle other distributors' goods; that it equally had no such policy as a matter of practice in the incidental or collateral relationships which it had with its dealer stores; that, while it endeavored to sell its dealers all of their merchandise needs, this was done on the basis of showing them the possibilities and advantages of its goods as a store line and without any threats or other coercion against them, either express or implied; that the purpose of the dealers' meetings which it held was to stimulate interest and activity among them, and further ties on their part to the corporation and its officers by the opportunity afforded for personal contact and acquaintanceship, but at none of these meetings had the corporation or its officers assumed to declare or intimate that the dealers would have to handle Gamble merchandise exclusively or else they would be subject to reprisal; that the fieldmen which the corporation sent out did not have any authority to make agreements or contracts with a dealer, or to impose any condition upon or exact any promise from him, or to make any threat against him because of his handling of outside goods, and if any such acts ever had been done by a fieldman it was without authority, sanction or knowledge on the part of the corporation; that the bonus payments which the corporation for a time had made to dealers in appreciation of and reward for their cooperativeness in purchasing its goods were not an unfair trade practice, in that they were in nowise coercive, nor did they affect competition, either as between the individual dealers, all of whom were located in separate towns, or in relation to the public generally, whose purchase price from a dealer was in no way related to whether the dealer was or was not a recipient of the small bonuses paid (¾% to 1% of the amount of goods purchased by such dealer during the year) and, in any event, the making of any such bonus payments had been terminated by the corporation more than a year and a half prior to the present proceedings; and, finally, that the corporation had not made cancellations of dealers' contracts because of the purchasing of outside merchandise but had only made cancellations (comparatively few in actual number) in situations where a dealer was failing relatively to do such a fair share or volume of business in the corporation's products, as the community afforded a reasonable opportunity for obtaining, and as the corporation legitimately and competitively had a right to expect, or where the dealer was one who demanded special favors or considerations in obtaining merchandise or was of the type with whom smooth relations were not capable of being generally maintained, so that the corporation did not care to do business with him or to have him held out to the general public as an authorized Gamble store dealer.

The first attack which here is made upon the Commission's orders is that the Commission failed to accord to the corporation the processes of hearing and determination to which it legally was entitled in the existing situation. The contention rests upon the facts that the trial examiner, before whom all of the testimony in the case had been taken, and who had had the matter duly submitted to him on briefs and oral argument, was thereafter, because of his having reached the age of 70 years and being eligible for an annuity and having thus become subject to being automatically retired under the provisions of 5 U.S.C.A. § 715 of the Civil Service Retirement Act, treated by the Commission as being legally unavailable for further official duty in the proceeding; that the Commission thereupon made designation of a substitute trial examiner (a man 76 years of age, but who did not yet have the number of years of service required to entitle him to a retirement annuity) for the purpose of having him prepare a recommended decision in the case and make findings and conclusions on the basis of the evidence taken by the initial trial examiner; that the Commission denied a motion on the part of the corporation to disqualify the substitute trial examiner and to continue the employment and status of the initial trial examiner to the extent of permitting him to make his findings, conclusions and recommended decision in the situation, which, it was asserted, he was willing and able to do; that the Commission also denied an alternative motion by the corporation to strike the evidence and record in the case and to require the substitute trial examiner to engage in a de novo hearing, in order that he thus would have the opportunity to see and hear the numerous opposing witnesses involved and be able to evaluate their credibility upon this basis, in his resolution of the many material and disputed questions of fact which it was necessary for him to determine; and that the substitute trial examiner was permitted to make findings and conclusions and prepare a recommended decision (which the Commission substantially followed) upon a cold-print reading of the record made before the initial trial examiner, a choosing in controlling measure between the testimony of the conflicting witnesses from such a reading, and a crediting of one as against another, without having seen or heard any of them testify.

The corporation argues that we should go the length of holding that the Commission's action, in refusing to exercise its powers to continue the employment and status of the initial trial examiner until he had prepared a recommended decision, amounted in the situation to legal arbitrariness and to a violation of due process.

Under 5 U.S.C.A. § 715(a) and (b), the initial trial examiner, having reached the age of 70 years, having completed 15 years of service, and having been given 60 days notice of the date prescribed by law for his retirement, was "automatically separated" by the statute itself from his service and position with the Commission and was not "eligible again to appointment to any appointive office, position, or employment under the government * * * unless the appointing authority determines that he is possessed of special qualifications".

Although the initial trial examiner thus, as a matter of law, had been separated from his service, position and status with the Commission, he was immediately reemployed by it in his previous capacity for two brief and successive intervals of one month and of 15 days respectively. The Commission thereafter, however, took no further steps with respect to him, and the short, fixed period for which he was reemployed accordingly ran out, and his connection...