Atlantic Richfield Company filed suit in federal district court seeking declaratory and injunctive relief against the enforcement of investigatory subpoenas duces tecum issued by the Federal Trade Commission to Atlantic and three other oil-company members of a joint venture engaged in offshore oil production. The district court denied Atlantic all relief.
Atlantic Richfield Company v. F.T.C.,
As part of a general investigation into the energy industry, the FTC issued the challenged subpoenas seeking the production of certain documents from the participants in the joint venture known as CAGC and comprised of Continental Oil Company, Atlantic, Getty Oil Company, and Cities Service Company. All four companies sought to quash the subpoenas before the Commission on the grounds that they were overly broad and irrelevant to the investigation and that the Commission’s procedural rules for considering motions to quash were improper. Atlantic urged the additional ground that the documents sought might improperly be used in an FTC antitrust adjudicative proceeding already pending against Atlantic and seven other large oil companies accused of monopolizing the crude-oil refining business. In the Matter of Exxon Corporation, et al., FTC Docket No. 8934. None of the other members of CAGC were respondents in the adjudicative proceeding. The Commission denied all motions to quash.
Thereupon Atlantic filed this action, naming the FTC and the other CAGC members as defendants, seeking a declaration that the investigative subpoenas served upon Atlantic and its joint venturers were invalid and unenforceable. Atlantic also asked the court to enjoin the FTC from enforcing the subpoenas and the oil-company defendants from voluntarily complying with them. Alternatively, Atlantic sought a declaration and injunction prohibiting the FTC adjudicative staff in the Exxon proceeding from having access to any documents or information produced in compliance with the investigatory subpoenas.
The substantive basis of Atlantic’s challenge to the subpoenas was that any disclosure of the subpoenaed material to the FTC complaint staff in the Exxon proceeding *648 would infringe upon Atlantic’s procedural rights to a fair hearing in the pending adjudicative action in violation of the due process clause of the Constitution, the Administrative Procedure Act, and the FTC’s Rules of Practice and Procedure. 1
Because the oil-company defendants had agreed with Atlantic that they would not voluntarily produce any subpoenaed materials, the district court dismissed them for lack of sufficient adverseness and a justiciable controversy between them and Atlantic. Acknowledging the limited propriety of pre-enforcement judicial review of agency action, the court looked to the standards established in
Abbott Laboratories
v.
Gardner,
We find it unnecessary to consider the merits of Atlantic’s due process and other procedural claims and hold that denial of all injunctive and declaratory relief is proper because Atlantic has an adequate remedy at law and will suffer no undue hardship from our withholding judicial consideration at this juncture in the FTC’s proceedings. For our holding we rely primarily on the cases of
Reisman v. Caplin,
In Reisman, the Internal Revenue Service had issued an administrative summons to the accounting firm of Peat, Marwick, Mitchell & Co. seeking production of the financial records of taxpayers Martin and Allyn Bromley. The taxpayers’ attorneys, who had supplied the records to the accounting firm, filed suit for declaratory and injunctive relief against IRS and the accountants, opposing production of the documents on the grounds that they constituted the attorneys’ work product and that their production would amount to an illegal seizure or forcing the Bromleys to incriminate themselves. The Supreme Court held that the attorneys’ complaint should be dismissed for want of equity because they had an adequate remedy at law through challenges to the summons in any proceeding instituted for its enforcement.
The Court noted that an IRS summons is not self-executing; the Service has no power to compel compliance or to impose sanctions for noncompliance. To enforce its summons the IRS must proceed under section 7402(b) of the Internal Revenue Code and seek enforcement from a district court. Because the summoned party — and other interested parties through intervention— could raise any constitutional or other objections to the summons in the enforcement proceeding, the Court found pre-enforcement injunctive or declaratory relief unwarranted, explaining in detail the adequacy of the legal remedy:
Any enforcement action under this section would be an adversary proceeding affording a judicial determination of the challenges to the summons and giving complete protection to the witness. In *649 such a proceeding only a refusal to comply with an order of a district judge subjects the witness to contempt proceedings. * # # * Hs *
Furthermore, we hold that in any of these procedures before either the district judge or the United States Commissioner, the witness may challenge the summons on any appropriate ground. This would include . . . the defenses that the material is sought for the improper purpose of obtaining evidence for use in a criminal prosecution. ... In addition, third parties might intervene to protect their interests, or in the event the taxpayer is not a party to the summons before the hearing officers, he, too, may intervene. * * * * * *
Nor would there be a difference should the witness indicate — as had Peat, Mar-wick, Mitchell & Co. — that he would voluntarily turn the papers over to the Commissioner. If this be true, either the taxpayer or any affected party might restrain compliance, as the Commissioner suggests, until compliance is ordered by a court of competent jurisdiction. This relief was not sought here. Had it been, the Commissioner would have had to proceed for compliance, in which event the petitioners or the Bromleys might have intervened and asserted their claims.
Finding that the remedy specified by Congress works no injustice and suffers no constitutional invalidity, we remit the parties to the comprehensive procedure of the Code, which provides full opportunity for judicial review before any coercive sanctions may be imposed.
The similarity of the facts and relief sought in
Reisman
and in the instant case— as well as the similarity between IRS and FTC subpoena and enforcement procedures — convinces us that the holding and reasoning of
Reisman
control our conclusion here that pre-enforcement relief from the subpoenas issued to Atlantic and the other CAGC members is inappropriate. The legal remedies outlined in
Reisman
seem entirely adequate to protect Atlantic from the anticipated harm. Like the IRS summons considered in
Reisman,
FTC subpoenas are not self-executing and may only be enforced by a district court.
3
Atlantic may raise all its due process and regulatory procedural objections in any enforcement proceeding brought against it. Additionally, it may intervene and raise objections as a party “affected by a disclosure,”
Reisman,
We thus conclude that Atlantic had an adequate remedy at law through FTC enforcement actions and suffered no undue hardship in being remitted to that remedy by the district court’s denial of relief. In so deciding we act in accordance with the principle that “where Congress has provided an adequate procedure for judicial review of administrative action, that procedure must be followed.”
Frito-Lay, Inc. v. F.T.C.,
*650
Moreover, in assessing the propriety of declaratory relief from the FTC’s actions, we find that Atlantic failed to establish in the court below a present need for such relief under the governing standards set forth in the
Abbott Laboratories
cases, which defined the availability of declaratory action in terms of “ripeness” for review. In
Toilet Goods Association v. Gardner, supra,
the Court explained that a determination of ripeness called for a twofold inquiry: “first to determine whether the issues tendered are appropriate for judicial resolution, and second to assess the hardship to the parties if judicial relief is denied ■ t that stage.”
Thus, under standards applicable to preenforcement remedies, both injunctive and declaratory, we find that Atlantic had an adequate remedy at law and suffered no undue hardship from the district court’s denial of all relief.
The prompt and proper resolution of this appeal has been somewhat complicated by events which have occurred since Atlantic filed the instant action. After the court below had denied Atlantic’s request for relief and Atlantic had appealed to this court, the FTC instituted enforcement actions against Atlantic and the other CAGC participants in the United States District Court for the District of Columbia. Atlantic’s motion to stay all the D.C. enforcement proceedings pending resolution of the instant case was denied. In the action against it, Atlantic submitted an extensive answer and counterclaim raising its procedural objections. Apparently Atlantic did not exercise its right to intervene in the enforcement actions against the other CAGC members. Without further proceedings and without hearing or oral arguments, the D.C. district court granted the FTC petitions for enforcement of the subpoenas against Atlantic, Continental, Getty, and Cities Service, filing no findings of fact or conclusions of law. Only Atlantic has appealed the order of enforcement, and that appeal is currently pending in the D.C. Circuit Court of Appeals. Motions to stay enforcement were denied, and Atlantic and its three joint venturers have all submitted documents to the FTC called for by the subpoenas.
We agree with Atlantic that the compliance — not yet certified as complete— has not entirely mooted this appeal, because Atlantic may still be afforded some relief by an order to protect it from further disclosure, to require return of the subpoenaed documents, or to segregate them from the FTC adjudicative staff in the
Exxon
proceeding.
See, e.g., F.T.C. v. Browning,
Atlantic urges that the D.C. district court failed to afford it the requisite adversary enforcement proceeding and to give proper considerations to its various procedural objections, 5 so that Atlantic’s remedy at law- — to raise its challenges in the en *651 forcement actions — was, in fact and effect, entirely inadequate. This de facto insufficiency of its legal remedy, argues Atlantic, precludes us from now denying extra-enforcement relief on the ground that an adequate remedy at law exists or that Atlantic will suffer no hardship from our denial. We do not agree. Even if the D.C. district court failed, as Atlantic alleges, to grant the required adversary hearing in which Atlantic could adequately raise and argue its procedural objections to the subpoenas, we are unwilling to assume that any default by the district court will not be properly remedied on appeal by the D.C. Circuit.
Furthermore, Atlantic may still enforce all of its due process protections in the
Exxon
adjudicative proceeding itself and in an appeal from any adverse decision. If the FTC acts improperly or illegally in obtaining evidence for the adjudicative proceeding with investigatory subpoenas, Atlantic should be entitled to have any evidence so obtained — as well as its “fruits”— excluded from the proceeding or to obtain a reversal of any adverse judgment founded upon improperly admitted “tainted” evidence.
See, e.g., Knoll Associates, Inc. v. F.T.C.,
Guided by Reisman and Abbott Laboratories, we remain convinced that Atlantic’s objections to the FTC’s use of investigatory subpoenas to obtain information allegedly material to the Exxon adjudicative action should be resolved in the FTC enforcement and adjudicative proceedings and any appeals therefrom.
Atlantic additionally challenges the procedural propriety of the district court’s entry of final judgment, arguing that the court improperly disposed of the entire case on a mere application for preliminary injunction. Although F.R.Civ.P. 65(a)(2) provides a mechanism for consolidating the hearing on preliminary injunction with trial on the merits,
6
Atlantic claims that the court never ordered or gave notice of consolidation so that Atlantic was precluded from adequately developing and presenting its case for final adjudication. Even if we accept as true Atlantic’s allegation that it had no notice that the court would rule on the merits, we need not find error in the district court’s entry of final judgment unless Atlantic shows prejudice from the lack of notice. In
Eli Lilly and Company v. Generix Drug Sales, Inc.,
[Sjurprise alone is not a sufficient basis for appellate reversal; appellant must also show that the procedures followed resulted in prejudice, i.e., that the lack of notice caused the complaining party to withhold certain proof which would show his entitlement to relief on the merits.
Atlantic has pointed to no evidence or allegations which it would have developed at a hearing below that could alter our determination that Atlantic’s proper remedies lie in the FTC enforcement and adjudicative actions. We do not approve the procedure employed here to decide the merits in a preliminary proceeding without affording clear notice and full hearings to the parties. Nevertheless, after careful consideration of Atlantic’s allegations and arguments we find that Atlantic suffered no prejudice.
The district court’s denial of all injunctive and declaratory relief is AFFIRMED.
Notes
. Atlantic’s objections and arguments are set forth more fully in the district court’s opinion, Atlantic Richfield Company v. F.T.C., supra.
. Although thus reaching the merits of a part of Atlantic’s claim, the district court observed in a footnote, “The Court still is of the opinion that the case is probably not ripe for review . .”
. 15 U.S.C. § 49.
. As part of an investigation of yeast producers, the FTC had subpoenaed information about Anheuser-Busch’s yeast-manufacturing business. Anheuser-Busch filed suit in federal court seeking injunctive and declaratory relief from enforcement of the subpoena. The Eighth Circuit Court of Appeals affirmed the district court’s dismissal of the action, holding that Reisman governed and that Anheuser-Busch had an adequate legal remedy in the enforce *650 ment proceeding. The Eighth Circuit viewed the provisions of the Internal Revenue Code construed in Reisman and the enforcement provisions of the Federal Trade Commission Act as in pari materia. We find the reasoning and result of Anheuser-Busch persuasive and applicable to the case before us.
. It is well established that enforcement proceedings must constitute an adversary hearing affording an adequate opportunity to raise all objections to an administrative subpoena.
E.g., Reisman v. Caplin, supra; United States v. Powell,
. F.R.Civ.P. 65(a)(2) provides:
Before or after the commencement of the hearing of an application for a preliminary injunction, the court may order the trial of the action on the merits to be advanced and consolidated with hearing of the application.