Genuine Parts Company v. FTC, 30884.
| Decision Date | 21 July 1971 |
| Docket Number | No. 30884.,30884. |
| Citation | 445 F.2d 1382 |
| Parties | GENUINE PARTS COMPANY, Plaintiff-Appellant-Cross Appellee, v. FEDERAL TRADE COMMISSION et al., Defendants-Appellees-Cross Appellants. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Alex P. Gaines, John K. Train, III, Atlanta, Ga., John H. Brebbia, Washington, D. C., for appellant; Alston, Miller & Gaines, Atlanta, Ga., of counsel.
John W. Stokes, Jr., U. S. Atty., Atlanta, Ga., Charles C. Moore, Jr., Federal Trade Commission, Washington, D. C., Alan S. Rosenthal, Raymond D. Battocchi, Attys., Dept. of Justice, Washington, D. C., L. Patrick Gray, III, Asst. Atty. Gen., for appellees; Joseph Martin, Jr., Gen. Counsel, Harold D. Rhynedance, Jr., Asst. Gen. Counsel, of counsel.
Before GEWIN, BELL and MORGAN, Circuit Judges.
This is an appeal from an order of the District Court for the Northern District of Georgia directing the appellant Genuine Parts Company to comply with an Order to File a Special Report issued by the Federal Trade Commission (hereafter, the Commission or the F.T.C.) pursuant to a resolution of the Commission, dated December 18, 1967, authorizing a non-public investigation of Genuine Parts under Section 6 of the Federal Trade Commission Act, 15 U.S.C. § 46 (1963) (hereafter, the Act),1 to determine whether there was reason to believe Genuine Parts had violated the antitrust laws in making certain acquisitions and corporate mergers. The district court's opinion is reported at 313 F. Supp. 855. The district court later amended its order and stayed the accrual of the penalties imposed for failure to respond to a special report order within thirty days after notice of default, under Section 10 of the Act, 15 U.S.C. § 50 (1963),2 "pending final outcome of any appeal which may be taken from this order" and staying the judgment pending appeal insofar as it represents a judgment for enforcement of the Commission's order. The Commission cross-appeals from this portion of the order.
Genuine Parts is the largest warehouse distributor of automotive parts in the country, with annual sales in 1967 in excess of $204,000,000. It operates 35 warehouse distributor outlets in 22 states. A warehouse distributor such as Genuine Parts purchases automotive parts from manufacturers and then resells them to jobbers. Jobbers in turn stock a smaller inventory of parts and resell them to repair garages and service stations for use in maintenance or repair work for the ultimate consumer. Genuine Parts also operated 185 jobber stores or outlets scattered among the states in which its warehouses were located and rebuilt a limited number of types of automotive parts at three other locations.
The order to file a special report here in question was issued by the F.T.C. on December 28, 1967, in conjunction with an investigation of the automotive parts industry and was served on Genuine Parts on January 2, 1968. Genuine Parts was required to file its answer with the Commission within 90 days after the date of issuance. The order contains about sixty questions divided into eight specifications, numbered I to VIII.3 These specifications are further broken down into lettered questions. On March 27, 1968, Genuine Parts filed a report with the F.T.C. in which it responded to nineteen of the sixty questions, offered to respond to two other questions if they would be received in camera and treated as confidential. Genuine Parts offered no response4 to the remaining thirty-nine questions, notwithstanding the preface of the F.T.C. order, which provided:
* * *"
Instead of giving any explanation for its failure to respond to these questions, it stated in its report:
Genuine Parts Company respectfully refuses to respond to certain items of the Order on grounds, among others, that response to these items would be unduly burdensome; that the information sought by such items is irrelevant; and that the Order, insofar as it contains said items to which no response is made, is beyond the Commission\'s authority.
There were no specific objections in the report to any of the thirty-nine unanswered questions. At a conference with Commission representative on April 2, 1968, counsel for Genuine Parts informed the officials present that Genuine Parts would provide responses to the unanswered questions of the order only when ordered to do so by court order.
On July 26, 1968, about four months after the partial response to the special report order had been filed with the F.T. C., and Genuine Parts still not having replied to any of the unanswered questions, the Commission served upon it a notice of default, informing Genuine Parts that it was in default in failing to provide much of the information required by the December 28, 1967, order, and that if its failure continued it would become subject to a penalty of $100 for each day after the thirtieth day of the notice of default.5 The notice specified each of the unanswered questions and then noted that Genuine Parts' answers to some of the other questions might be deficient in specified respects.
On August 14, 1968, Genuine Parts brought this action for declaratory and injunctive relief. By its complaint, Genuine Parts alleged that the Commission's order to file a special report constituted a denial of due process by requiring responses that were oppressive, unreasonably burdensome, irrelevant and beyond the scope and purpose of the investigation the Commission had undertaken, and sought a declaration that it need not comply with provisions of the Order and that any action the Commission might take to impose the statutory penalty of Section 10 would be illegal. Genuine Parts also sought what it termed a preliminary injunction to prevent the accrual of the penalty pending the resolution of the matter.
On August 21, 1968, a hearing was held before the district court on the preliminary injunction, and, although neither the court nor the F.T.C. had been apprised of Genuine Parts' specific objections to the unanswered questions, the court entered an order "that no statutory penalties shall accrue under the provisions of Section 10 of the * * Act pending further order of this Court". Specific objections to the unanswered questions were first filed with the F.T.C. and the court on September 18, 1968. Upon suggestion of the district court, negotiations were entered into between the F.T.C. and counsel for Genuine Parts. These negotiations, however, proved fruitless and the F.T.C. filed a counterclaim seeking enforcement of its order of November 13, 1968.
The matter was set for hearing before the district court on January 6, 1969. At the hearing, however, Genuine Parts stated its intention to amend its complaint and file a motion for discovery. Genuine Parts was given until March 3rd to file its motion for discovery. The stated reason for the motion for discovery was to determine whether the F.T.C.'s actions toward Genuine Parts had shifted from the "investigative to the adjudicative stage". Genuine Parts based its belief that the mode of the proceeding before the Commission had shifted on an article in the October, 1968 issue of Motor Age, a trade magazine, which reported an interview with Mr. Paul Teetor, the F.T.C. counsel in charge of the Genuine Parts investigation, and stated that "cases * * * have been prepared" against four firms, including Genuine Parts, and that these firms were "caught in the Commission's web". In response to this motion, the F.T.C. filed three affidavits, one from Mr. Teetor and the two others from members of the F.T.C. staff involved in the Genuine Parts investigation, stating that the F.T.C. had not made a decision to issue a complaint against Genuine Parts and that no complaint had been prepared or drafted by any member of the F.T.C. staff.
On May 8, 1968, the district court denied the motion of Genuine Parts for discovery, stating that it saw "no way in which the depositions requested by Genuine Parts could be relevant to the constitutionality of the `Order to File Special Report' which is the subject matter of the complaint", and that the time for such discovery would be after the Commission filed a complaint in an adjudicative proceeding. Genuine Parts filed a motion to amend this order or for the allowance of an interlocutory appeal under 28 U.S.C. § 1292(b). The F.T.C. opposed the motion to amend and filed a motion for summary judgment. The motion to amend was denied on August 7, 1969, and on November 4, 1969, a hearing was held on the merits of the order to file a special report.
On May 21, 1970, the district court entered a final order on the issues raised by the complaint. In summary, the final order held that Genuine Parts did not have to comply with the order to the extent that the underlying records necessary to respond to some of the questions were no longer in existence; defined certain disputed words and phrases used in the order; and ordered the remaining unanswered questions to be answered, either precisely as they had been presented by the F.T.C. or on the terms stated in the order.
On June 1, 1970, Genuine Parts filed a motion to alter or amend the May 21st order so as to delay the answers to certain questions until the F.T.C. had received other responses and demonstrated a need for the additional responses to the satisfaction of the district court; to enjoin the accrual of statutory penalties pending the exhaustion of appellate relief; and, insofar as the order constituted a judgment on the F.T.C. counterclaim for enforcement, that such judgment be stayed pending resolution of all appellate proceedings and subsequent ...
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