Winn-Dixie Stores, Inc. v. FTC

• Decision Date: 17 May 1974
• Docket Number: No. 73-863-Civ-J-S.,73-863-Civ-J-S.
• Citation: 377 F. Supp. 773
• Parties: WINN-DIXIE STORES, INC., Plaintiff, v. FEDERAL TRADE COMMISSION, Defendants.
• Court: U.S. District Court — Middle District of Florida

377 F. Supp. 773

WINN-DIXIE STORES, INC., Plaintiff, v. FEDERAL TRADE COMMISSION, Defendants.

No. 73-863-Civ-J-S.

United States District Court, M. D. Florida, Jacksonville Division.

May 17, 1974.

J. Shepard Bryan, Jr., Winn-Dixie Stores, Inc., Jacksonville, Fla., and James F. Rill, John Hardin Young, Washington, D. C., for plaintiff.

Calvin J. Collier, Gen. Counsel, Gerald Harwood, Acting Asst. Gen. Counsel, Karl H. Buschmann, Atty., Federal Trade Commission, Washington, D. C., John L. Briggs, U. S. Atty., John J. Daley, Jr., Asst. U. S. Atty., Jacksonville, Fla., John R. Fleder, Atty., U. S. Dept. of Justice, Washington, D. C., for defendants.

ORDER AND INJUNCTION

CHARLES R. SCOTT, District Judge.

This case involves a consent order entered by the defendant Federal Trade Commission (sometimes hereinafter Commission and sometimes FTC), against plaintiff Winn-Dixie Stores, Inc. (W-D), in 1966, and the effect to be accorded the terms of the order and the agreement upon which it was based.

Plaintiff has asked this Court (a) preliminarily and permanently to enjoin defendants from enforcing certain portions of the modified cease and desist order entered against Winn-Dixie, 73 F. T.C. 1056 (1968); (b) to order defendants to reopen the proceeding which led to the order and modify the order so as to make it conform to the order entered against one of Winn-Dixie's competitors, The Kroger Company, 79 F.T.C. 636 (1971); and (c) to declare certain of defendants' actions to be arbitrary, capricious and unlawful.

Pursuant to the provisions of Rule 65(a)(2) plaintiff moved that the hearing on the application for preliminary injunction be consolidated with trial on the merits and that the trial be advanced. Defendants consented to this procedure, and all parties presented their cases on the merits at the time of the hearing on the application for preliminary injunction. Therefore, the Court finds it appropriate to consider the case on its merits at this time.

I. FACTS

Following an investigation by the FTC of several acquisitions made by Winn-Dixie which the Commission had reason to believe violated Section 7 of the Clayton Act, as amended, the Commission, pursuant to its consent order procedure (16 C.F.R. § 2.31 et seq.) accepted an agreement, dated July 26, 1966, between W-D and counsel for the Federal Trade Commission. Pursuant to the agreement, the Commission, on September 14, 1966, simultaneously issued its complaint and final order to cease and desist, whereby W-D agreed, inter alia, not to make any acquisition, directly or indirectly, of any retail food or grocery stores in the United States without prior approval of the Commission. 70 F.T.C. 611-19 (1966). Among other things, that order provides,

It is ordered, That for ten (10) years from the effective date of this Order, respondent shall not, without prior approval of the Federal Trade Commission, make any acquisitions, directly or indirectly, of any retail food or grocery stores in the United States.

The agreement further contains two provisions relevant to the instant controversy.

First, it contains a "most favored nation" clause which in substance provides that the Commission, upon application by Winn-Dixie, shall reopen the proceeding to modify the order if it is found to be more restrictive than an order or Rule subsequently issued involving mergers or acquisitions by a grocery chain.

Second, the agreement also states that Winn-Dixie "waives: . . . (c) All rights to seek judicial review or otherwise to challenge or contest the validity of the Order entered into pursuant to this Agreement".

Since the entry of the original order, Winn-Dixie has filed with the Commission three separate requests for reopening of the proceeding to modify the order. On February 17, 1967, it sought a modification on the basis of the FTC's "Enforcement Policy With Respect to Mergers in the Food Distribution Industries", which the Commission by order and opinion of April 17, 1967, denied.

On February 21, 1968, Winn-Dixie again requested a reopening of the proceeding to modify the order. The Commission by order of June 24, 1968, reopened the proceeding and modified the above order because it found its order entered against the Grand Union Company (hereinafter called Grand Union) to be less restrictive. 73 F.T.C. 1050 (June 21, 1968). This modified order is now in force against W-D.

On May 3, 1972, Winn-Dixie petitioned the Commission to reopen the proceeding and further modify the cease and desist order outstanding against Winn-Dixie to conform to an order entered by the FTC against The Kroger Company, which order Winn-Dixie alleged to be less restrictive than the modified order against Winn-Dixie. The request was opposed by the Federal Trade Commission.

By Order of November 6, 1972, the Commission, in response to Winn-Dixie's request of June 20, 1972, agreed to hear oral argument concerning Winn-Dixie's request for further modification. On March 28, 1973, oral argument was heard before the Commission, and on May 30, 1973, an order was issued, accompanied by an opinion, denying reopening and modification. This lawsuit then was commenced.

II. JURISDICTION

At the outset the Court is faced with the perennial threshold question of whether or not it has jurisdiction to hear and determine the controversy. Defendants have moved to dismiss the complaint for lack of jurisdiction in this Court on the theory that there can be no judicial review of the FTC's denial of Winn-Dixie's motion to reopen and modify the existing consent order. In the alternative, the FTC argues that, even if there is judicial review of the Commission action, the proper forum for such review is the court of appeals rather than the district court.

This Court finds that the Commission's failure to reopen and modify the Winn-Dixie order to conform it to an allegedly less restrictive order of a competitor is reviewable in the district court under the Administrative Procedure Act (APA), 5 U.S.C. § 701 et seq., under the Court's general equity powers, and under the standards established in Abbott Laboratories v. Gardner, 387 U. S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), and Air Line Pilots Assoc. Int'l. v. Federal Aviation Administration, 446 F.2d 236 (5th Cir. 1971).

The APA expressly provides for judicial review of administrative action which is arbitrary, capricious or an abuse of discretion. 5 U.S.C. §§ 701-706. Section 703 of the APA provides for review of agency action (a) in a court specified by statute, or (b) in any court of competent jurisdiction. Furthermore, access to judicial review must be liberally granted. Chicago v. United States, 396 U.S. 162, 90 S.Ct. 309, 24 L. Ed.2d 340 (1969); Brownell v. WeShung, 352 U.S. 180, 77 S.Ct. 252, 1 L. Ed.2d 225 (1956); Shaughnessy v. Pedreiro, 349 U.S. 48, 75 S.Ct. 591, 99 L.Ed. 868 (1955); Heikkila v. Barber, 345 U. S. 229, 73 S.Ct. 603, 97 L.Ed. 972 (1953); United States v. Interstate Commerce Commission, 337 U.S. 426, 69 S.Ct. 1410, 93 L.Ed. 1451 (1949).

In Abbott Laboratories, supra, the government argued, as it does here, that since the statute (in that case the Federal Food, Drug and Cosmetic Act; in this case the Federal Trade Commission Act) includes a specific procedure for review, other types of review are excluded. The court rejected that assertion, holding that the district court had jurisdiction to review the agency action and grant injunctive relief where it is appropriate. The court further held that, ". . . only upon a showing of `clear and convincing evidence' of a contrary legislative intent should the courts restrict access to judicial review". 387 U.S. 136 at 141.

In Air Line Pilots Assoc. Int'l v. FAA, supra, the Court of Appeals for the Fifth Circuit concluded that reviewability was determined by meeting the two-prong test developed in Abbott Laboratories, supra, of "`whether the issues tendered are appropriate for judicial resolution'" and "`whether hardship would result to the parties if judicial relief were denied'". 446 F.2d 236, 241. In the instant case Winn-Dixie meets the reviewability test developed in Abbott Laboratories and Air Line Pilots Association. Plaintiff's challenge to the Commission's failure to reopen and modify the order against W-D is ready and appropriate for judicial resolution, and no alternative means of resolving the dispute is available. Therefore, for the reasons outlined herein, the Court holds that the Commission's order of denial is subject to and appropriate for judicial review.

The second prong of the Abbott Laboratories test is also met because Winn-Dixie will suffer hardship and be irreparably injured if judicial review is denied, since the Commission's denial of reopening and modifying the order places W-D at a distinct disadvantage to competitors.

It is apparent to the Court that the provision of the original consent order whereby Winn-Dixie waives judicial review applies only to review of the substantive terms of that original order and not to subsequent causes of action arising out of the Commission's breach of the agreement contained in that order. Winn-Dixie seeks review of the breach of the agreement to modify and does not seek review of the substantive terms of the consent order as originally entered.

While it is a general rule of administrative law that an administrator's denial of a motion to reopen a proceeding for the purpose of modifying a Commission order is not subject to judicial review, Securities and Exchange Commission v. Louisiana Public Service Commission, 353 U.S. 368, 77 S.Ct. 855, 1 L.Ed.2d 897 (1957); Martin Marietta Corp. v. FTC, 376 F.2d 430 (7th Cir. 1967), in this case the order itself contemplates reopening if and when another grocery chain receives more favorable treatment from the FTC. See, e. g., Ford Motor Co. v. United States, 335 U. S. 303, 69 S.Ct. 93, 93 L.Ed. 24 (1948); Chrysler Corp. v. United States, 316 U. S. 556, 62 S.Ct. 1146, 86 L.Ed. 1668 (1942)...