Hunt Foods and Industries, Inc. v. FTC

• Decision Date: 20 January 1961
• Docket Number: No. 16751.,16751.
• Citation: 286 F.2d 803
• Parties: HUNT FOODS AND INDUSTRIES, INC., Appellant, v. FEDERAL TRADE COMMISSION, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

286 F.2d 803 (1961)

HUNT FOODS AND INDUSTRIES, INC., Appellant, v. FEDERAL TRADE COMMISSION, Appellee.

No. 16751.

United States Court of Appeals Ninth Circuit.

December 15, 1960.

As Amended on Denial of Rehearing January 20, 1961.

COPYRIGHT MATERIAL OMITTED

Bert W. Levit, Victor B. Levit, Long & Levit, San Francisco, Cal., for appellant.

Daniel J. McCauley, Jr., Gen. Counsel, Alan B. Hobbes, Asst. Gen. Counsel, Carleton A. Harkrader, Washington, D. C., Atty., for Federal Trade Commission.

Before CHAMBERS, HAMLEY and HAMLIN, Circuit Judges.

HAMLEY, Circuit Judge.

Hunt Foods and Industries, Inc., appeals from a district court order enforcing a subpoena duces tecum issued by the Federal Trade Commission. The district court order was issued pursuant to an opinion reported in Federal Trade Commission v. Hunt Foods and Industries, Inc., 178 F.Supp. 448.

Prior to the issuance of the subpoena the Commission instituted an investigation (Federal Trade Commission File No. 5810044) to determine whether Hunt or its predecessors were violating section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C.A. § 45, or section 2 (a) and (d) of the Clayton Act, as amended, 15 U.S.C.A. § 13(a) (d).¹

In the course of this investigation the Commission issued and thereafter served upon Hunt by registered mail the subpoena in question. By this subpoena Hunt was directed to appear before named attorney-examiners of the Commission at Hunt's place of business in Fullerton, California, on an indicated date. The company was directed to there testify and produce certain specified books, papers and documents relating to the investigation.² On the return day of the subpoena Hunt appeared by its secretary accompanied by an attorney and "upon advice of counsel" advised the Commission representatives that it declined to comply with the subpoena.

Thereafter the Commission, proceeding under section 9 of the Federal Trade Commission Act, 15 U.S.C.A. § 49, filed an application in the district court for enforcement of its subpoena. On that day an order was entered by the court directing Hunt to show cause why the application should not be granted. A return was made thereto and after a hearing and the filing of an "undertaking" by the Commission, to be discussed below, the order under review enforcing the subpoena was entered.

Hunt contests the district court order on several grounds. One of these is that the subpoena is invalid because the Commission is without authority to issue an investigational subpoena prior to the issuance of a complaint. No complaint has been issued in this administrative proceeding.

Under section 11 of the Clayton Act, as amended, 15 U.S.C.A. § 21, it is made the duty of the Commission to enforce compliance with various sections of that act including section 2, 15 U.S.C.A. § 13. Compliance is to be obtained by means of a complaint proceeding. The second paragraph of section 11 provides that a complaint is to be filed whenever the Commission "shall have reason to believe" that a person is or has been violating section 2 and other indicated sections.

The Commission cannot have "reason to believe" unless it is in possession of facts warranting such a belief. It thus becomes the duty of the Commission to ascertain the relevant facts. Section 3 of the Federal Trade Commission Act authorizes the Commission to "prosecute any inquiry necessary to its duties." It follows that the Commission is authorized to conduct an investigation to determine whether there is a probability that Hunt has violated sections 2(a) and (d) of the Clayton Act, as amended, 15 U.S. C.A. § 13(a) (d). This is one of the specific purposes of the instant investigation.

Under section 5(a) of the Federal Trade Commission Act, as amended, 15 U.S.C.A. § 45(a), the Commission is empowered and directed to prevent persons, partnerships or corporations (with exceptions not here material) from using unfair methods of competition in commerce and unfair or deceptive acts or practices in commerce. Under section 5(b) the Commission is authorized to institute complaint proceedings, but only when it "shall have reason to believe" that violations of section 5 have occurred or are occurring.

As in the case of complaint proceedings involving sections 2 and 11 of the Clayton Act, discussed above, it thus becomes the duty of the Commission to ascertain the facts. We noted above that section 3 of the Federal Trade Commission empowers the Commission to prosecute any inquiry necessary to its duties. It follows that the Commission is authorized to conduct an investigation to determine whether Hunt has violated section 5(a) of the Federal Trade Commission Act. This is the second specific purpose of the instant investigation.

Additional investigative power is conferred under section 6(a) of the Federal Trade Commission Act, 15 U.S.C.A. § 46(a). That subsection authorizes the Commission to investigate the organization, business, conduct, practices and management of any corporation engaged in interstate commerce, with exceptions not here material, and its relation to other corporations, individuals, associations and partnerships.

Neither with regard to section 3 investigations nor section 6(a) investigations is a complaint proceeding a pre-requisite. As previously indicated, the propriety of conducting an investigation prior to the filing of a complaint is to be implied from the use of the words "shall have reason to believe" in section 11 of the Clayton Act and section 5(b) of the Federal Trade Commission Act.

The first paragraph of section 9 of the Federal Trade Commission Act, 15 U.S.C.A. § 49, provides that for the purposes of that act "the commission shall have power to require by subpoena the attendance and testimony of witnesses and the production of all such documentary evidence relating to any matter under investigation." The Commission's subpoena power under section 9 of the Federal Trade Commission Act is not limited to proceedings under that act, but also extends to proceedings under the Clayton Act. Federal Trade Commission v. Tuttle, 2 Cir., 244 F.2d 605, 610; Federal Trade Commission v. Reed, 7 Cir., 243 F.2d 308.

Hunt does not question the scope of section 3 of the Federal Trade Commission Act, as analyzed above, in authorizing pre-complaint investigations. It does, however, contend that section 6(a) is ambiguous.

Section 6(a) is said to be ambiguous with respect to the inclusion of investigations of suspected antitrust violations. Such ambiguity, it is contended, arises from the fact that section 6(a) does not make express reference to suspected antitrust violations. It also arises, we are told, because in section 6(a) such words as "investigate," "conduct" and "practices" appear in context with other words which, according to Hunt, connote investigations of a statistical and economic nature or investigations concerning business structures and routine commercial procedures.

We find no such ambiguity. An investigation of a suspected antitrust violation pertains to "the organization, business, conduct, practices, and management" of a corporation, and to "its relation to other corporations and to individuals, associations, and partnerships." Since the scope of the investigations described in section 6(a) is broad enough to include suspected antitrust violations, failure to make specific reference to such violations does not introduce an ambiguity in that regard. Nor does the fact that section 6(a) is also broad enough to authorize investigations of a statistical and economic nature or investigations relating to business structure and routine commercial practices render ambiguous the otherwise clear application of that section to investigations of suspected antitrust violations.

In further support of its contention that section 6(a) does not authorize investigations of suspected antitrust violations, Hunt points to subsections (c), (d) and (e) of the same section. Subsection (c) empowers the Commission to investigate compliance with existing antitrust decrees. Under subsection (d) the Commission is empowered to investigate and report the facts relating to any alleged antitrust violations when the President or either house of Congress so directs. Subsection (e) empowers the Commission upon the application of the Attorney General to investigate and make corrective recommendations for the adjustment of the business of any corporation alleged to be violating the antitrust laws. Hunt argues that under the doctrine of "expressio unius est exclusio alterius" this express enumeration in subsections (c), (d) and (e) of instances in which the Commission is empowered to investigate antitrust violations creates a strong inference that Congress did not intend to confer such power in subsection (a).

The rule of express mention and implied exclusion may be resorted to as an aid in the construction of a statute where there is no plainer internal evidence of congressional intent. It can never, however, operate to override clear and contrary evidence of congressional intent. Neuberger v. Commissioner, 311 U.S. 83, 88, 61 S.Ct. 97, 85 L.Ed. 58.³

In our view clear evidence of contrary congressional intent is to be found in section 6 itself. Subsection (a) of section 6 is general enough to authorize investigations of possible antitrust law violations before or after a complaint has been filed. But it does not clearly include the power to investigate the measure of compliance with antitrust decrees. Subsection (c) therefore expressly confers the latter power. Subsection (a) authorizes investigations of possible antitrust violations instituted by the Commission upon its own initiative. Subsections (d) and (e) place the additional duties upon the Commission to conduct investigations upon the direction of the President or houses of Congress, or upon the application of the Attorney General.

It is therefore apparent that the purpose intended to be served by subsec...