Ruberoid Co. v. Federal Trade Commission, 149

• Decision Date: 04 June 1951
• Docket Number: Docket 21667.,No. 149,149
• Citation: 189 F.2d 893
• Parties: RUBEROID CO. v. FEDERAL TRADE COMMISSION.
• Court: U.S. Court of Appeals — Second Circuit

189 F.2d 893 (1951)

RUBEROID CO. v. FEDERAL TRADE COMMISSION.

No. 149, Docket 21667.

United States Court of Appeals, Second Circuit.

Argued April 4, 1951.

Decided June 4, 1951.

Mandate Amended August 14, 1951.

Cyrus Austin, of New York City (Austin & Malkan, of New York City, on the brief), for petitioner.

Jno. W. Carter, Jr., Atty., Federal Trade Commission, of Washington, D. C. (W. T. Kelley, Gen. Counsel, and James W. Cassedy, Asst. Gen. Counsel, Federal Trade Commission, of Washington, D. C., on the brief), for respondent.

Before L. HAND, AUGUSTUS N. HAND and CLARK, Circuit Judges.

CLARK, Circuit Judge.

On a proceeding to review an order of the Federal Trade Commission, petitioner Ruberoid Co. prays that the order be set aside, or in the alternative modified in some four respects. The order was issued upon a complaint charging petitioner with violation of § 2(a) of the Clayton Act, as amended by the Robinson-Patman Price Discrimination Act, 15 U.S.C.A. § 13(a). It directed petitioner to cease and desist from price discrimination in the sale of asbestos or asphalt roofing materials "by selling such products of like grade and quality to any purchaser at prices lower than those granted other purchasers who in fact compete with the favored purchaser in the resale or distribution of such products."

The order was issued after hearings, wherein counsel for the Commission produced evidence showing that petitioner had granted discounts or price differentials of from 5% to 7½% of list price to certain of its customers. Petitioner classified its customers into three groups: wholesalers, retailers, and applicators, the last being roofing contractors who applied petitioner's products on their contract jobs for which they were paid as a whole. The Commission found active competition for the resale of petitioner's products, as well as the price discrimination noted, among the roofing contractors or applicators and the retailers. As to wholesalers, there was sharp disagreement among counsel as to whether the record established any discrimination there. The Commission noted this, and went on to hold the evidence insufficient to establish such discrimination, but pointed out "that the particular designations given purchasers are not always controlling as indicating the functions actually performed by such purchasers. For example, one purchaser, although engaged primarily as a roofing contractor or applicator, sold quantities of the products to other applicators. And another purchaser, although classified by respondent as a wholesaler, also functioned as an applicator." In a conclusion challenged here, it then said that the particular designations applied to the various purchasers were unimportant, the controlling factor being the establishing of price discriminations among purchasers who were in fact competing with one another in the resale of petitioner's products. So, it continued: The corrective action "should be sufficiently comprehensive to stop the discriminations, irrespective of the designations applied to the purchasers."

At the hearings petitioner presented no evidence contesting the price discrimination found by the Commission and does not seriously contest the issuance of some form of order against it. It does, however, vigorously attack the order for its generality and for the particular prohibitions discussed below. We sympathize with the petitioner's position and can realize the difficulties of conducting business under such general prohibitions. Nevertheless we are convinced that the cause of the trouble is the Act itself, which is vague and general in its wording and which cannot be translated with assurance into any detailed set of guiding yardsticks. Compare Standard Oil Co. v. F. T. C., 340 U.S. 231, 249, 253, 71 S.Ct. 240. In formulating its orders, the Commission has tried from time to time to develop a plan; but one of its latest attempts, that in Federal Trade Commission v. Morton Salt Co., 334 U.S. 37, 68 S.Ct. 822, 92 L.Ed. 1196, resulted in such failure that it is now attempting a new course, which "merely represents another milestone" in its efforts to establish a fair and just interpretation of this difficult Act. We are not justified in ordering the Commission to undertake an illusory certainty which will not stand up in the process of review.

Petitioner's requested modifications are that the order be reframed to prohibit only differentials between purchasers of roofing materials competing in the resale thereof as applicators or retailers; to exempt differentials of less than 2½% between retailers; to contain a proviso excepting a discount for differences in petitioner's costs of manufacture, sale, or delivery, i. e., a quantity or other discount permitted under the Act itself; and to contain a proviso excluding from its prohibition differentials made in good faith to meet competition, again as permitted in the Act itself. The first two provisions, petitioner claims, are required by the evidence. The last two, involving exceptions in the Act itself, it claims to be necessary lest it either be held in contempt for lawful acts or bear the burden of showing legality.

Parenthetically we should point out that under the Morton Salt case, explicitly following our own decision in Samuel H. Moss, Inc. v. F. T. C., 2 Cir., 148 F.2d 378, certiorari denied 326 U.S. 734, 66 S.Ct. 44, 90 L.Ed. 438, the burden of proving that a seller comes within one of the Act's exceptions is placed upon the one who claims it. Furthermore, under both the wording of the particular order and the law itself, no contempt can be found for legally permissible acts. If there were any doubt about this, both the...