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United States v. St. Regis Paper Co.

decided: December 16, 1960.


Author: Lumbard

Before LUMBARD, Chief Judge, TUTTLE*fn* and FRIENDLY, Circuit Judges.

LUMBARD, Chief Judge: These are appeals from a judgment of the United States District Court for the Southern District of New York, RYAN, J., in which the court partially enforced nine orders issued by the Federal Trade Commission against the St. Regis Paper Company and seven of its subsidiary corporations directing that special reports be filed and dismissed a claim for statutory penalties brought by the United States against St. Regis. By resolution of January 6, 1959, the Federal Trade Commission instituted an investigation into the acquisition by St. Regis of the stock and/or assets of other corporations engaged in interstate commerce in order to determine whether § 7 of the Clayton Act, 15 U.S.C. § 18, had been violated. On January 9, 1959, the Commission issued orders to St. Regis in New York City and five of its wholly-owned corporations located in various parts of the country.*fn1 These orders allowed the addressees thirty days to respond in writing in a "special report" to questions posed by the Commission and demands for copies of agreements, correspondence, office memoranda, annual reports, schedules, minutes of meetings, accountants' reports, and statistical summaries. St. Regis' motion to vacate the resolution and orders was denied by the Commission on May 6, 1959, and compliance ordered by May 28. On June 4, 1959, the Commission resolved to broaden its investigation to cover the acquisition of two other corporations n.2 [Footnote Omitted] by St. Regis. Orders dated June 8, 1959 allowed St. Regis and the two subsidiaries thirty days to file special reports similar in content to those requested by the earlier directives.

Upon deciding that the material submitted to it did not meet its demands, the Commission filed notices of default against St. Regis and its subsidiaries on June 18 and July 22. The United States then brought suit in the Southern District of New York under § 9 of the Federal Trade Commission Act, 15 U.S.C. § 49, asking that a mandatory injunction issue commanding the corporations to file the special reports as requested and that the statutory penalties provided for by § 10 be assessed at the rate of $200 per day against St. Regis for its failure to respond to the two orders directed to it. The defendant's motion to strike the second demand on the ground that such relief would be unconstitutional was denied, 24 F.R.D. 366 (S.D.N.Y. 1959), and the case went to trial in the district court on both counts. Judge Ryan held that the Commission had the authority under § 6(b) of the Federal Trade Commission Act, 15 U.S.C. § 46(b), to order special reports in connection with pre-complaint investigations of possible violations of the Clayton Act, § 7; that some of the questions posed by the Commission were so vague and uncertain as to be unenforceable; and that the statutory forfeiture could not be invoked to penalize non-compliance with orders which are partially defective. 181 F.Supp. 862 (S.D.N.Y. 1960). The judgment below therefore modified the terms of the original orders insofar as it directed the defendant and its subsidiaries to reply only to those questions held enforceable and dismissed the second count of the government's complaint. The United States appeals from the dismissal, and St. Regis cross-appeals from the part of the judgment granting injunctive relief.


Were we to accept literally the language of § 2 of the Expediting Act, 49 U.S.C. § 45,*fn3 we would be required to dismiss these appeals although both parties urge us to hear them. That statute, as amended, provides in terms that in "every civil action" which the United States brings as a plaintiff in the district courts under the Sherman Act, Interstate Commerce Act, or "any other Acts having a like purpose" thereafter enacted, appeals from final judgments are to "lie only to the Supreme Court." Both of the instant appeals are from a judgment entered in a civil suit instituted by the United States against various corporations under a statute which contains provisions similar in purpose to those of the Sherman Act.*fn4 However, we have construed the language of the statute, which as a result of an amendment of 1948 (62 Stat. 989) relates to "every civil action" instead of to "every suit in equity" as including only suits akin to actions in equity. United States v. New York, N.H. & H.R.R., 276 F.2d 525, 543 (2d Cir. 1959). The statutory penalty sought by the United States in its appeal is, indeed, not at all similar to equitable relief. However, this fact alone is not decisive of the question before us. Since the heart of the issue being litigated is the scope of authority delegated to the Commission by Congress, the request for a forfeiture is but auxiliary to the demand for compliance. Thus, even if we were inclined to allow an appeal from one part of a judgment if an appeal from another part of the same judgment would properly lie only to the Supreme Court, we would not consider alone the appeal of the United States in this case. The unseverability of the issues to be decided requires that they all be determined in one action by the tribunal which is to pass on the basic question presented.

Nonetheless, we feel that a reasonable construction of the Expediting Act grants this court jurisdiction over appeals such as the one now before us. The writ of mandamus authorized by § 9 is, it is true, very much like a mandatory injunction, cf. Miguel v. McCarl, 291 U.S. 442, 452 (1934), particularly since it is addressed not to some public official or body but to a private corporation.*fn5 But it would be unreasonable to hold that the type of relief sought here by the Commission or the kind of determination which is to be made on such petitions for mandamus were deemed important enough by Congress to require a clear path from the district court to the Supreme Court of the United States.

Under 15 U.S.C. § 45 as it stood before being amended in 1938, 52 Stat. 111, the Federal Trade Commission, to make its order final, was required to bring enforcement proceedings in the Court of Appeals upon learning that the order had been violated, and until 1959 all cease-and-desist orders issued by administrative agencies pursuant to § 11 of the Clayton Act, 15 U.S.C. § 21, had to be enforced in the same way. See 73 Stat. 243 (1959). Appeals from cease-and-desist orders of the Commission under 15 U.S.C. §§ 21(g), 45(g) are still taken to the Court of Appeals. Thus, were we to hold that the mandamus provision of § 9 brings actions for the enforcement of preliminary requests for information within § 2 of the Expediting Act, we would be conceding greater significance to the early investigatory stages of a Clayton Act proceeding than to the final determination of the enforcing agency. Furthermore, it is only because the Federal Trade Commission Act delegates to the Attorney General, rather than to the Commission, the authority to seek mandamus for compliance with the Commission's orders that the conditions of the Expediting Act, which requires that the United States be plaintiff, is met in this case. The analogue to this provision appeared, as well, in the Interstate Commerce Act of 1887, § 20(9), now 49 U.S.C. § 20(9). That § 2 of the Expediting Act has not been interpreted to cover these mandamus suits is indicated by United States v. Munson S.S. Line, 33 F.2d 211 (D. Md. 1929), aff'd, 37 F.2d 681 (4th Cir. 1930), aff'd, 283 U.S. 43 (1931), in which a suit by the Attorney General under § 20(9) was heard first in the district court, then appealed to the Circuit Court of Appeals for the Fourth Circuit, and finally heard on certiorari in the Supreme Court with no discussion whatsoever of the jurisdictional question. In light of the policy objectives of the Expediting Act, we conclude that these proceedings were not to be brought into the class of those entitled to accelerated review merely because the Attorney General had the sole authority to seek their enforcement. Accordingly, we hold that these appeals are properly before this court.


The information requested by the Commission was to be submitted in "special reports" pursuant to § 6(b) of the Federal Trade Commission Act, 15 U.S.C. § 46(b), which is set forth in the margin.*fn6 St. Regis contends that the Commission's authority to require special reports under § 6(b) does not extend to antitrust investigations but is limited to discovery of unfair competitive practices under § 5 of the Act and violations of court or agency decrees entered under that section.

In United States v. Morton Salt Co., 338 U.S. 632 (1950), the Supreme Court upheld a Commission order requiring corporations to file reports showing how they had complied with an earlier order of the Commission. The respondent corporation in that case contended that § 6(b) could be used only in aid of the Commission's power to compile information for general economic surveys under §§ 6(a) and 6(f) and was independent of the enforcement procedures set forth in § 5. The court rejected this contention and held that § 6 could be used for "any purpose within the duties of the Commission, including a § 5 proceeding." 338 U.S. at 649. Since § 5 "minimally * * * registers violations of the Clayton and Sherman Acts," Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 609 (1953), the § 6 powers are available to the Commission in precomplaint antitrust proceedings as well.

The respondents here maintain, however, that the statement in Morton Salt, insofar as it authorizes antitrust investigations, should be read as referring to §§ 6(c), (d), and (e) which explicitly delegate to the Federal Trade Commission the following duties: at the behest of the Attorney General to investigate compliance with antitrust decrees; upon the direction of the President or either House of Congress to investigate alleged violations of the antitrust acts; and upon application by the Attorney General to recommend readjustments in the business of any corporation alleged to be violating the antitrust acts. These investigations, when carried out by the use of the usual discovery tools provided for in § 9, it is argued, constitute the limit of the Commission's authority with regard to the antitrust acts. The legislative history of the statute, as well as reasonable statutory construction, belie these contentions.

It is clear from the House and Senate reports that the purpose of § 6 was to give the Commission the powers with respect to investigating and reporting on antitrust matters that were previously committed to the Bureau of Corporations in the Department of Commerce. In the form first passed by the House*fn7 § 3 of the Act expressly transferred these functions, and § 9 required corporations of a minimum size to furnish annual and special reports and such information, statements, and records relating to organization, financial condition, and relation to other corporations as the Commission would require. Section 16 then gave the Commission subpoena powers identical to those given to the Interstate Commerce Commission by the Act of 1887. The report accompanying the Committee draft of the bill, H.R. Rep. No. 533, 63d Cong., 2d Sess. (1914), said that while the investigative powers which had been given to the Bureau of Corporations had been extensive, "there was a failure specifically to require the regular gathering of certain most important kinds of information through the medium of annual reports from industrial corporations engaged in interstate commerce." Id. at 2. The report requirement, together with a $100-a-day penalty for default, was therefore incorporated into the then § 9. The Senate, in proposing an entirely new draft,*fn8 authorized the Commission in its § 3(b) to require corporations to furnish information and records concerning their business and their relations to other corporations and to produce for examination all papers relating to the commerce in which the corporations under inquiry were engaged. In addition, § 3(c) authorized the Commission to require annual and special reports, and § 8 gave it the investigative powers possessed by the Interstate Commerce Commission. These powers of investigation were said to be "not greatly in excess of those possessed and for years exercised by the Bureau of Corporations." S. Rep. No. 597, 63d Cong., 2d Sess. 12 (1914). Thus, both versions agreed in giving the Commission power to investigate by requiring annual and special reports as well as by ordering records to be produced.

In conference, however, these powers were merged into §§ 6(a) and 6(b), and the subpoena ...

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