General Electric Co. v. Federal Trade Commission

• Decision Date: 23 March 1976
• Docket Number: 75-CV-566.,No. 75-CV-562,75-CV-562
• Citation: 411 F. Supp. 1004
• Parties: GENERAL ELECTRIC COMPANY, Plaintiff, v. FEDERAL TRADE COMMISSION et al., Defendants. INGERSOLL-RAND COMPANY, Plaintiff, v. FEDERAL TRADE COMMISSION et al., Defendants.
• Court: U.S. District Court — Northern District of New York

411 F. Supp. 1004

GENERAL ELECTRIC COMPANY, Plaintiff, v. FEDERAL TRADE COMMISSION et al., Defendants.

INGERSOLL-RAND COMPANY, Plaintiff, v. FEDERAL TRADE COMMISSION et al., Defendants.

Nos. 75-CV-562, 75-CV-566.

United States District Court, N. D. New York.

March 23, 1976.

Weil, Gotshal & Manges, New York City, for plaintiff, General Elec. Co.; Mark A. Jacoby, Roland C. Radice, Schenectady, N. Y., of counsel.

DiFabio & Couch, P. C., Albany, N. Y., for plaintiff, Ingersoll-Rand Co.; Martin J. Neville, Joseph W. Burns, Burns, Van Kirk, Greene & Kafer, New York City, of counsel.

Robert J. Lewis, Gen. Counsel, Gerald P. Norton, Deputy Gen. Counsel, Gerald Harwood, Asst. Gen. Counsel, Washington, D. C., for defendant, F. T. C. and Commissioners; Warren S. Grimes, Edward Eitches, Washington, D. C., of counsel.

James M. Sullivan, Jr., U. S. Atty., N. D. N. Y., Syracuse, N. Y., for defendant, Elmer B. Staats, Comptroller Gen.; Richard K. Hughes, Asst. U. S. Atty., Albany, N. Y., of counsel.

MEMORANDUM-DECISION and ORDER

JAMES T. FOLEY, Chief Judge.

This litigation involves seriously contested issues of jurisdiction, venue and administrative law. The importance of their resolution is evident not only from the vigorous and voluminous submissions of the parties, but also from the point of view of closely related actions in two other federal district courts, as well as the proceeding brought by the defendant Federal Trade Commission (hereinafter "FTC") pursuant to Section 9 of the Federal Trade Commission Act, 15 U.S.C. §§ 41 et seq. in the District of Columbia. (hereinafter "enforcement proceeding"). See Emerson Electric Co. v. F.T.C., Civ. No. 75-1173 (E.D.Mo., filed December 29, 1975); Westinghouse Electric Corp. v. F.T.C., No. C-1-75-418 (S.D.Ohio, filed November 18, 1975); and F.T.C. v. Emerson Electric Co., et al., Misc. No. 76-0002 (D.D.C., filed January 6, 1976).

The common and central issue in this litigation and in those previously mentioned is the legality of a proposal by the FTC to gather information about the manufacturing and sale of large electrical equipment which is produced by these electrical manufacturing companies. The study, which consists of data gathering, involves the distribution of a form composed of detailed questions and is called the "Economic Report on the Electrical Equipment Manufacturing Industry"; it is known as the Form "EEM". The articulated purpose of the FTC for gathering this data is to obtain information about certain equipment lines manufactured by plaintiffs and other electrical manufacturing companies and to use this information to empirically test the effectiveness of so-called "conduct remedies", e. g., fines, imprisonment, injunctions and treble damages, on the behavior of companies before and after certain anti-trust actions conducted in the 1960's against some of the large electrical equipment manufacturers.

The idea of the EEM questionnaire began on July 24, 1973 with the drafting of a "pretest" Form EEM. This was to be used to test the general feasibility and practicality of the EEM concept. However, it is the final draft of EEM which is at issue and being challenged in this action. See Exhibit N2.

The submissions in this action have been voluminous and many of the same documents have been presented by the various parties to this action. Therefore, the exhibits submitted under the affidavit of Norman F. Heyl, Regulatory Reports Review Officer in the United States General Accounting Office, will be used as they are denominated therein to avoid confusion. This presentation of documents is complete and well organized for reference. Documents submitted by other parties and referred to herein will be so designated.

On June 27, 1975, the FTC pursuant to its procedures see 16 C.F.R. § 2.12 approved and adopted this final Form EEM and ordered approximately forty-four major electric manufacturers to complete it; this order included the plaintiffs herein, the General Electric Company and the Ingersoll-Rand Company (hereinafter "GE" and "I-R" respectively). It is important to note that the pretest version of Form EEM was submitted to six manufacturers concerning its feasibility. However, after the motion was filed by GE with the FTC to quash that order for use of the form, the proposal to use pretest Form EEM was discontinued.

The final Form EEM, in issue here, was submitted on October 17, 1974, to the Government Accounting Office (GAO) pursuant to the Federal Reports Act, 44 U.S.C. §§ 3501-3512 (Supp. IV) for the mandated approval by the Comptroller General. The Comptroller General must determine, under § 3512, whether any governmental agency form (1) avoids duplication of effort in gathering information which might be already possessed by other independent regulatory agencies and (2) minimizes the compliance burden on business enterprises and other persons. Such screening, of course, designed for these worthy purposes, is an important legislative provision. See 44 U.S.C. § 3512(b)(1) and (2). Significantly, this review by the Comptroller General is not the ultimate determinant of forms used by the agency because:

the independent regulatory agency shall make the final determination as to the necessity of the information in carrying out its statutory responsibilities and whether to collect such information.

44 U.S.C. § 3512(d).

Although this review by the Comptroller General must be normally completed within forty-five days, extensions were agreed to by the GAO and the FTC concerning Form EEM. See Exhibit D. The decision by the Comptroller General is one committed to his discretion as the statute characterizes his response to the agency as "advice."

Certain changes were made in Form EEM pursuant to suggestions by the GAO and certain electrical companies, including GE. Form EEM was then advised to be in compliance with the Federal Reports Act by letter from the GAO dated May 23, 1975, with the suggestion made therein that the FTC and the companies subject to complying with Form EEM meet to discuss and resolve some of the problems in providing data which, in some instances, would be up to twenty years old. See Exhibit M. Although some meetings were held, no mutual resolutions were forthcoming.

The plaintiffs herein were served with an order to comply with Form EEM in approximately June and July of 1975. The completed EEM was supposed to be filed with the FTC in or around September 1975. Both plaintiffs filed motions before the FTC to quash this order on July 18, 1975 on the grounds that Form EEM was burdensome, duplicative and violative of privileges of confidentiality; these motions were denied by the FTC on October 23, 1975.

The Form EEM was completed by twenty-seven companies and eleven companies were dropped because they did not manufacture equipment related to the survey. Four companies have not complied with the order, those being GE and I-R, plaintiffs herein, and the plaintiffs who have commenced the two other federal court actions mentioned previously. The statutory enforcement proceeding pursuant to Section 9 of the Federal Trade Commission Act was timely commenced against these four electrical companies by the FTC on January 6, 1976 in the District of Columbia. This was four days after the last deadline for submission of EEM by the Emerson Electric Co. on January 2, 1976. It is important to point out that although authority exists for the imposition of penalties against these companies that have failed to file EEM within the allotted time, the FTC has not engaged the procedure to obtain such penalties, seeking instead to use the judicial review procedure of Section 9 of the Federal Trade Commission Act. See also Section 10, 15 U.S.C. § 50.

On November 20, 1975, GE commenced one of the instant actions in this District Court (75-CV-562) and on November 24, 1975, I-R commenced the other separate one (75-CV-566). Both these actions were commenced well before the final deadline for the filing of Form EEM by the Emerson Electric Co., one of the companies served with Form EEM, and thus before the FTC could reasonably have commenced an enforcement proceeding against all those companies who would not be in compliance. Both of the instant actions are largely identical and the plaintiffs have adopted a common strategy and indeed relied upon each others papers and other submissions and oral argument to a considerable degree. With the exception of a venue question effecting only I-R, discussed infra, this decision will not differentiate among the legal challenges made in the two actions.

The complaint is brought pursuant to numerous jurisdictional statutes. However, it is not the availability of jurisdiction which is at issue but rather whether jurisdiction should be exercised in these actions. Statutes relied upon as cited in the complaint and relevant to the decision here are: the Federal Trade Commission Act, 15 U.S.C. §§ 41 et seq., the Federal Reports Act, 44 U.S.C. §§ 3501 et seq., the Administrative Procedure Act, 5 U.S.C. §§ 551 et seq., the jurisdictional statutes alleged are: 28 U.S.C. §§ 1331, 1337, 1361, and the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202. The substantive claims made are that: (1) the Form EEM is burdensome, vague and ambiguous in violation of the United States Constitution and statutes; (2) Form EEM was promulgated outside the authority of the FTC; (3) the Comptroller General and Government Accounting Office failed to carry out statutory duties in relation to Form EEM, especially pursuant to the Federal Reports Act; (4) the FTC failed to follow the proper rule making procedure mandated by the Administrative Procedure Act; (5) the Form EEM violated confidential privileges; and (6) Form EEM failed to comply with regulations promulgated under the Budget and Accounting Procedure Act of 1950, 31 U.S.C. § 18b. The relief of declaratory judgment and a permanent injunction are sought essentially to void Form EEM and prohibit its...