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ENFORCE v. WALTHAM WATCH CO.

January 13, 1959

Application to Enforce an Administrative Subpoena Duces Tecum of the FEDERAL TRADE COMMISSION, Petitioner,
v.
WALTHAM WATCH COMPANY, a corporation, Respondent



The opinion of the court was delivered by: BRYAN

This is an application by the Federal Trade Commission, pursuant to Section 9 of the Federal Trade Commission Act, 15 U.S.C.A. § 49, to enforce an administrative subpoena duces tecum issued by the Commission and served upon the respondent.

The subpoena, issued on April 24, 1958 and served on April 28, required the respondent Waltham to appear before 'Miss Charlotte Maskey, Attorney and Examiner for the Federal Trade Commission at Room 511C, United States Court House, Foley Square, in the City of New York, New York, on the 8th day of May, 1958 * * * to testify in connection with the F.T.C.'s investigation (No. 5823282) to determine whether or not Waltham Watch Company has been using false and misleading advertising or has engaged in other deceptive acts or practices violative of Section 5 of the F.T.C. Act (15 U.S.C.A. § 45) in connection with the sale or offering for sale of watches'. It was issued after a request by letter for the data sought had proved ineffective.

 The subpoena contained seven specifications of books, papers and documents to be produced which may be roughly classified as follows:

 (1) Advertising and sales promotional material; (2) price lists, tags, tickets, labels, bulletins and directives; (3) specimen copies of guarantees on watches and correspondence and records relating to Waltham's performance of such guarantees; (4) diagrams, reports and other records describing the functioning, performance and construction of watches represented by Waltham as 'shockproof', 'shock-protected', 'waterproof' or 'water-protected'; (5) diagrams and specifications as to the composition of watch cases and records of tests disclosing such composition; (6) invoices and other records showing sales of watches and net sales prices to customers; and (7) contracts and agreements between Waltham and Hallmark, Inc.

 All specifications except 6 cover the period July 1, 1957 through March 31, 1958. Specification 6 covers the period December 1, 1957 through January 31, 1958.

 On May 5, 1958 Waltham filed with the Commission a motion to quash the subpoena. The Commission denied the motion on May 7, 1958 without hearing or argument.

 On May 8, 1958 Waltham appeared by attorney before Examiner Maskey and stated on the record that it refused to comply with the subpoena upon the same grounds on which it now resists its enforcement. As a result the Commission petitioned this court for an order of enforcement.

 The Federal Trade Commission Act confers broad powers on the Commission to prevent unfair and deceptive acts and practices in Interstate Commerce which are made unlawful. Section 5, 15 U.S.C.A. § 45(a). In the exercise of its powers the Commission 'may, by one or more of its members, or by such examiners as it may designate, prosecute any inquiry necessary to its duties in any part of the United States'. Section 3, 15 U.S.C.A. § 43. It has power 'to gather and compile information concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any corporation engaged in commerce * * *'. Section 6, 15 U.S.C.A. § 46.

 The Commission is given the authority to require, by compulsory process, the attendance and testimony of witnesses relating to any matter under investigation. The Commission, or its agents, have the 'right to copy and documentary evidence of any corporation being investigated or proceeded against' and may 'require by subpoena the attendance and testimony of witnesses and the production of all such documentary evidence relating to any matter under investigation'. Section 9, 15 U.S.C.A. § 49.

 In the event of disobedience to a subpoena the Commission is authorized to apply to the United States Courts for its enforcement (Section 9, 15 U.S.C.A. 49) as it has done here.

 The Commission asserts that the subpoena duces tecum directed to Waltham was fully authorized by the Act, was properly issued in pursuance of an investigation which it was lawfully empowered to conduct, calls for production of adequately specified documents relevant to such inquiry, and that therefore it should be enforced by the court. See Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 66 S. Ct. 494, 90 L. Ed. 614; United States v. Morton Salt Co., 338 U.S. 632, 70 S. Ct. 357, 94 L. Ed. 401; Federal Trade Commission v. Crafts, 355 U.S. 9, 78 S. Ct. 33, 2 L. Ed. 2d 23, reversing Crafts v. Federal Trade Commission, 9 Cir., 244 F.2d 882; Federal Trade Commission v. Scientific Living, Inc., D.C.M.D.Pa., 150 F.Supp. 495, appeal dismissed August 12, 1957, Id., 3 Cir., 254 F.2d 598, certiorari denied 358 U.S. 940, 79 S. Ct. 98; Federal Trade Commission v. Hallmark, Inc., D.C.N.D.Ill., 170 F.Supp. 24.

 Waltham, on the other hand, urges that the subpoena is invalid and should not be enforced for four separate reasons each of which bears some discussion.

 1. Waltham contends that the subpoena served upon it is invalid because it was made returnable before the representative of the Commission investigating the alleged violations referred to in the subpoena and not before an independent hearing examiner as defined by the Administrative Procedure Act.

 This contention fails to recognize the distinction between the investigative and adjudicative ...


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