United States v. The J. B. Williams Company, Inc., and Parkson Advertising Agency, Inc.

contending only discovery. passing tling ted the bills him to such Our review knowledge that he' had no us that the Dis- of this record convinces Judge great pains counterfeit. to com- trict went to Act, ply 18 U.S.C. with both the Jencks Noting appellate no other issue Supreme Court judgment merit, of the District Maryland, ruling Brady v. U.S. Court is affirmed. 1194, 10 L.Ed.2d 215 83 S.Ct. (1963).

Appellant that he was also contends subject “unnecessarily sugges-

made procedures

tive” identification contrary

Youngstown Police to the rule Denno,

of 302, v. 388 U.S. 301- Stovall 1967, 18 L.Ed.2d 1199

87 S.Ct.

(1967). A who had witness received one of the counterfeit bills was shown America, UNITED STATES of pictures appellant one of which included Plaintiff-Appellee, and failed to identification. make Thereupon policeman who had been INC., COMPANY, J. B. WILLIAMS talking to the left him in witness Advertising Agency, Parkson room and some moments walked later Inc., Defendants-Appellants. appellant. po- in the hall with theOn No. Docket 73-1624. subsequent liceman’s return to the room was, where witness im- witness Appeals, United States Court of mediately identified the man who had Second Circuit. given walked as the one who had him Argued Dec. the counterfeit. May 2, Decided government upon relies the fact suggestion police that no that the had in custody or Would show or had shown a

suspect was made witness. Over contention, we, course,

and above this clearly in mind the far more suggestive procedure Supreme which the impermissibly suggestive

Court held not Biggers, Neil v. 93 S.Ct. 34 L.Ed.2d 401 was,

Biggers, however, a ha corpus proceeding

beas where the state preceded decision, the Stovall prefer that, we to hold as the Dis Judge found,

trict the witness here had entirely adequate independent source

for his Further, in-court identification.

if there was error in the identification

procedures employed, here it was harm (see

less 52(a), error Rule Federal Rules of Criminal Chapman Procedure and California, 386 (1967))

L.Ed.2d 705 under the facts of appellant case freely where admit- Horsky, Washington, Charles A. D. C.

(John Boudin, Vanderstar, E. Michael Covington C., Burling, Washington, & D. Hughes Pierpoint, Powell & Hubbard Schultz, Reed, Henry New Edward violations, unlike the counsel), the same City, for defendants- York complaint, demanded draft Commission’s appellants. against $500,000 de judgment each for Atty. Hynes, U. M. Asst. S. Patricia answered fendant. defendants Curran, Atty., for (Paul U. S. J. Subsequently, demanded a trial. York, of coun- of New. District Southern summary for the judgment. moved Government plaintiff-appellee. sel), for Judge granted Motley FRIENDLY, FEINBERG Before against $456,000 Williams sum Judges. OAKES, Circuit against $356,000 leave Parkson with apply pay penalties to Parkson to Judge: FRIENDLY, Circuit interest, installments with F. Federal November On Supp. (S.D.N.Y.1973). defend a certificate made Commission Trade appealed. ants Attorney pursuant to General Act, Trade Commission the Federal I. The Facts. letter 56. The Commission’s 15 U.S.C. § began controversy The instant B. The J. believe had reason to stated complaint of a the FTC the issuance Company (Williams) Park- Williams relating to defendants’ December Advertising Agency, (Parkson) Inc. son advertising newspaper and television (i) of penalties under liable Geritol, product. iron and vitamin Act, violation 15 U.S.C. gist complaint was that The advertising gave and desist order for a cease impression that enforcement, granted had Circuit Sixth remedy general was an Geritol effective Cir., FTC, 6 Co. v. B. J. Williams tiredness, strength run loss of or a recommended and F.2d 884 feeling, down in fact it was ef whereas “appro Attorney General institute minority fective of cas small proceedings for recov priate . . . es where these conditions were caused prescribed in penalties ery as of civil deficiency in a in the vita iron or proceed appropriate said section.” pro mins contained ceedings After Geritol. ings com in a draft described unnecessary it is here to which alleged and plaint, 100 violations which detail, the FTC issued a cease and desist sought “[jjudgment against defendants September 28, order on Para 1965. $500,000.” in the total sum graph 1(d), agree which both to be sides order, paragraph be- months later broadest Five the Government alleged gan action; margin.2 complaint forth in the this set Williams and Pipeline 5(Z) Act, Throughout litigation, read: Trans-Alaska 1. Authorization corpora- Any (Nov. 16, (Z) person, partnership, 1973), or Stat. 576 the amendment penalty extended the all tion who violates an order of Commis- clause to Commis- merely be- and after it has sion orders rather and de- sion to cease desist than cease penalty final, orders, in ef- and sist increased maximum come while such order per pay $10,000, empowered fect, forfeit the United to shall violation grant injunctive penalty more than district courts relief civil of not States violation, $5,000 each shall ac- which enforcement of Commission orders. re- be crue to the United States represents directly brought impli- “(d) covered a civil 2. or action which preparation separate violation cation that of such United States. Each use offense, separate or relief such an order shall be a will be beneficial in the treatment except strength, tiredness, of a violation loss of run-down case through neglect feeling, irritability, continuing unless failure nervousness or obey expressly a final order each limits of the Commission advertisement preparation day ne- failure or of continuance of such claim of effectiveness glect persons symptoms separate are due shall offense. be deemed a to those whose year amended, existing deficiency al- one more Late last an preparation, though in the the basic structure the vitamins contained provision existing deficiency unchanged. iron or remained Introduced or to deficiency further, anemia, unless Jackson rider iron Senator to file a and Parkson petitioned of the or rected Williams for review Parkson by January compliance report Act, further 5(c) 15 U. the FTC der under § proceeding, 45(c). In the review S.C. § the order directed that Circuit Sixth report compliance stated The second provision except di for a enforced using company currently recting petitioners de cease only three television commer different representing iron defi from sist (subsequently “AA” termed the ad cials deficiency ciency anemia can be or iron scripts vertisements), of which were self-diagnosed without medical test. report. com submitted with the These supra, FTC, Co. J. B. Williams might viewers that mercials warned entered a modified F.2d at 891. The FTC suffering “iron-poor blood” and from Wil order on November ability to cure iron focused on Geritol’s liams and. Parkson did not seek certiora deficiency. They spoke of Geritol’s ri. “blood-building capac power” and of its your ity power receiving appel- blood build “iron October after report and in compliance report, fast.” also described lants’ the FTC first hearing scripts public compliance. for five other commercials directed cluded hearing (subsequently “BB” adver representative termed the At the viewed longer being tisements), which were Geritol and heard television commercials company argument. Subsequently which the be disseminated but issued an compliance. opinion lieved Williams in which it concluded that report re advertising por- and Parkson included “to continued treat promptly quest population suffering with Commission from meet tion' of the representatives equal portion in order to facilitate tiredness as to that advertising preparation themes. population experience of new tiredness May 8, 1969, deficiency of the FTC’s On the Chief due to iron anemia.” Compliance wrote Williams’ principal Division basis for that conclusion was although would be counsel that “the Commission the television commercials accepting great favorably disposed com dutifully announced that “the had pliance desist cease and majority people order to of tired don’t feel that by J. B. Wil iron-poor discontinuance way absolute blood and Geri- because Company, Inc., BB adver them,” of the help liams tol effect won’t your re last largely with tisements submitted disclaimer was obliterated port AA phrases and the continued use presentation and such visual from many with deletion advertisements “but it is a medical fact that ‘power’.” The people them of all references who have iron- millions of would letter also advised that Williams poor and need Geritol” blood are tired references in its la original) have to eliminate all (emphasis millions or “but beling prevention A tiredness. you iron-poor and could be do have blood later, May counsel wrote week many tired for that who are one of the willing that Williams and Parkson The FTC ad- and need reason Geritol.” although they conditions, accept these en- “in to avoid future vised that BB ad that did not concede either proceedings” and Williams forcement the word immediately vertisements or the use discontinue Parkson should vio “power” in the AA advertisements commer- of the television the broadcast agreed to also lated the order. Counsel provided the Commission or cials labeling all references the omission of di- The Commission also similar ones. preparation (2) persons clearly and for such also discloses advertisement great (1) conspicuously benefit will be of no and that: experience majority persons who Compliance Division stat- symptoms symptoms, 3. The Chief of the caused are not these deficiency that to advise Commis- ed he was instructed of the vi- or more of one foregoing preparation “from sioner Elman dissented tamins contained deficiency anemia; deficiency action.” or iron iron July 16, tiredness, On a member ability prevent al or names sold.” Geritol’s responded, Compliance conceding Division though “that Commis indicating any way pre Divi- the Commission’s Order relates sion’s Opinions believed the Com sion of Scientific On June claims.” ventative acknowledging possessed counsel,4 substan- Femlron and Geritol wrote mission stating tially properties. in- letter, The letter May similar receipt of the ‘AA’ commer dicated that the Commission would con- “of the view status, comply if all Femlron’s with the order sider will cials order, advertising deleted,” ‘power’ Femlron violated references so, report and, if action be taken.” within “what should requesting another formally September re- On 3 the FTC days.5 jected report. compliance The the third compliance report, submit- third Commission concluded that several July 2, 1969, stated that Williams ted on violated Geritol commercials using stop had decided and Parkson cease and order and that Femlron desist than revise rather the AA commercials subject The letter to the order. “power”; the word to eliminate them investigation stated an be made to would removing these process of that “[t]he obtain of violations “for use evidence the air and substitut- from commercials possible proceedings.” enforcement ing commenced them was others during completed promptly and was complaint The draft which the FTC “power” June”; the word Attorney submitted to the General commercials deleted if the AA complaint subsequently he again. In accordance used were to be alleged filed different violations three request, Williams the Commission’s types. through 4 related Counts scripts of commer- television submitted the use several AA commer- promotional materials and other cials cials, “pow- without deletion of the word currently in use. er”, between June 10 and June Treating day’s ground of a dif- Shortly each exhibition a new thereafter unit controversy ferent commercial of viola- advised arose. Counsel sought tion, complaint penal- the draft test-mar- that Williams was Commission totaling $80,000; keting product Femlron. ties under these counts called a new sought complaint Compliance for the the final sum asked Division from copies each defendant. Counts 5-9 relat- of all current formula type advertising ed to commercials of a new proposed materials. submit- compliance report, responded, not- ted in the re- company promptly third “sad-glad” commercials, supple- food ferred to as the Femlron was tonic; drug it did which be- were aired at various times ment, not a does; September 8, vitamins, tween June 2 and as Geritol not contain through iron de- In 7 the for de- to treat Counts 5 unit not intended was supple- termining provide merely constituted a violation ficiency what but 4; through in the was same as in Counts 1 iron for women of mental source suggest- sought penalties child-bearing years. letter for these totaled $220,000 Femlron from each defendant. How- reasons for ed that these ever, complaint cease provisions of the 8 and 9 Counts not within appli- calculating making system the order used a more of severe desist and “any penalties. broadcast, oth- only It counted each on to Geritol cable substantially 2, 3, separate similar viola- June and as a preparation er substantially ; apparently for possessing tion the reason composition or greater severity name was that these commer- properties, under whatever similar Elman and Nicholson dissented. The former received on June 4. The letter was arguing opinion the Com- had filed an Attorney requested for- issued a mission should have 25 the Commission On June penalties. statement, civil Commissioners General to file an action for which mal from “blood-building Helvering Mitchell, v. cials used terms 398-405, power” power,” AA “iron 82 L.Ed. Regis commercials had done. Government United States St. Cf. Paper Co., (2 penalties $45,000 from each demanded 355 F.2d Cir. 1966). Counts defendant these counts. Femlron 11 concerned two different Appellants urge us to overlook Con disseminated commercials that were gress’ express characterization September 2 and dates between various as a “civil” action and to hold sanc the unit of violation October 1. Here imposed in this case criminal be reverted to that used earlier allegedly punitive purpose. cause of its against counts; penalties de- each Congress permissibly While could aggregated $155,000. all fendant For protections undermine constitutional sought penalties thus counts the simply appending label to “civil” $500,000 from each As stated defendant. traditionally provisions, criminal earlier, granted summary judg- court plainly here statute at not of issue against $456,000 ment Williams long In that class. the face of a line of against $356,000 than Parkson. Rather contrary authority, appellants have not here, opinion we summarize court’s penal our directed attention civil rulings will discuss each of in con- its ty provision has been held suffi ap- points nection with the various ciently “criminal” nature to invoke peal raised defendants. protections Sixth Although appellants Amendment.6 in Appellants’ II. Sixth Amendment large judgment sist that size of the Claims. legit entered below could served properly The district re court argument purpose, civil imate jected appellants’ claim that trial fittingly more addressed to the required summary judgment court its dis whether the district abused precluded because an action to recover assessing large penalty, such a cretion penalties 5(Z) of the Federal VIII, part see infra. Trade Commission Act is criminal in na Appellants’ Right Jury ture. III. a Civil Disputed Trial Issues Fact. Congress pro many instances has argue vided, Appellants in the alternative as a sanction for the violation statute, remedy consisting only were entitled to a trial 38(a) preserves penalties forfeitures; civil under F.R.Civ.P. in others by jury provided inviolate “[t]he has the usual criminal sanc fine, both; imprisonment declared Amendment tions of a Seventh given by a provided or as statute Constitution still others it has both crim Congress of the United That claim inal and States.” civil sanctions. When course, if, remedy would, of academic as the characterized the as civil held, triable consequence judgment there were no and the district of a States, Hepner money penalty, United issues fact. Government is Since, supra, 112-115. 213 U.S. at have taken courts following section word. in reasons detailed This seems us the clear opinion, hold there were Hepner States, we tendment 231 of this v. United 474, questions 103, fact and a remand will 29 720 U.S. S.Ct. 53 L.Ed. triable required, (1909); to deal Regan, it is convenient v. U. be States 232 thus United jury 213, (1914), 37, issue here.7 with the civil trial 34 58 L.Ed. 494 S. S.Ct. Burlington Quincy Ry. Chicago, v. & 6. Whatever doubts lower courts have 559, 578, States, 220 U.S. quasi-criminal United had about nature of (1911). 612, 55 L.Ed. 582 early penalty reg- in clauses various railroad statutes, part III, infra, re- ulation see altogether Judge not clear is whether supra, Hepner Motley point States, solved in she v. decided this issue. At one United 422 d reporte plied proceedings only one Apparently there is to enforcement unless squarely pow court has has vested the FTC with a decision where 5(1) only er to make orders but deter question under § faced this , mine States whether have been violated—a FTC Act. In United Hindman position (D.N.J.1960), F.Supp. taken' court 926 was 179 penalty although' approximated in civil a Government it is held that the defendant right 5(1) a in has the dissent. No decision ever suit jury has violated timated In FTC Morton whether he such view. determine 822, Co., 54, when there an FTC order Salt 832, S.Ct. terms question. dispute that 92 L.Ed. while insist a triable is

Against, power to from a Third Commission has dictum this is that decision, v. Vul determine all essential to the issu United States issues Circuit only Co., subject judicial 288 F.2d ance of an order & canized Rubber Plastics denied, (3 Cir.), on a stand n. 2 cert. review substantial evidence 258-259 ard, recognized Supreme 7 L.Ed.2d that Court responsibility Rubber court “the enforcement The Vulcanized grant courts, of sum once a be district court’s Commission order has affirmed a judgment by lapse mary ain come final either or to the Government time ap where, approval, 5(1) court of as the court case U.S.C. §§ adjudicate concerning peals held, questions of fact no issue the or “there was ” Nothing However, dic presented.” in footnote der’s violation . . . was judges er Hindman tum two branded said in Morton Salt to indicate that adjudication was based roneous. The criticism court’s orders, of violations of grounds: (1) proceedings contempt “the sole issue in two that whether appeals Hindman] was in a or in ac- before the court court of [in labeling practice (i) was not the under 21 a district whether or tions court, proscription of the order was to be more trammeled’than within the labeling practice any given other case a court is not whether where “creating adjudication (2) plenary powers an is deceptive,” distin- Hindman, guished did the court from of administrative sue of fact as review exclusively seemingly usurp less, in- the function action—much as was by Congress Federal Trade in the Rubber dic- vested in the Vulcanized dicated tum, the issue to determine Commission the Commission’s determina- misleading labeling practice event a dis- whether a was conclusive. public.” deceptive While the of two trict court and a dictum decision enough itself, judges appeals proposition true first of the court of of another reflecting adversely upon The dis confusion. it are it manifests some circuit agreed fully way, judge scarcely dispositive in Hindman either trict thorough problem examination whether him was before issue thus in order. ques practice in covered the the order tion; that there issue he held as to that can no doubt that There dispute.8 The sec general jury factual was a triable trial “there is a ap- sues proposition when the United States unsound as ond seems “precedents suggests said, F.Supp. court thé Jaffe at Professor appeals Supreme what the district misunderstood and the Court thus Court both states, Appeals He Ju- court had done Hindman. convince the court this circuit analogous Action Administrative instant action is so dicial Control (1965) contempt proceeding : n. civil later, required decide here.” But can or should questioned referring purchasers opinion F.Supp. back 533 n. after thing pro- any case, phrase passage, stated, as the “In meant the same she to this lay question, cus- than better since scribed one. Who court not reach this need dispute of material decide? that no tomer holds infra fact be resolved.” remains to

423 penalty, though trial, collect a though even even silent,9 the statute is right jury statute is silent on the of both penalty where the amount of the trial,” Moore, 5 Federal Practice 38.- was subject fixed ¶ and where it was [1], (1971 31 ed.). at see, 232-33 lead court, g., the discretion of the e. At supporting proposition case chison, Topeka this Ry. & Santa Fe v. United Hepner States, supra, v. States, United 213 (8 1910) (28-hour U.S. 178 F. 12 Cir. 115, at law); where the Court had no Connolly States, difficul v. United 149 F. ty concluding in an (9 1945) action to col (penalty 2d 666 Cir. under 25 $1,000 penalty lect a 179); assessed for a vio Jepson, U.S.C. United v. States Immigration lation of Act, the Alien F.Supp. 983, (D.N.J.1950) 90 984-986 was, course, defendant (Emergency “[t]he 1942); entitled Price Control Act of jury to have a Friedland, summoned.” See also F.Supp. United v. 94 States Regan, United supra, States v. (D.Conn.1950) (Housing U.S. 232 721 and Rent 43-44, at 1947); Act of United States ex rel. Rod riguez Weekly Publications, v. 9 F.R.D. Many cases, arising under a broad (S.D.N.Y.1949) 179 (qui tam range action to of other civil and forfei statutory penalty making recover provisions, ture have reached the same against Government).10 false claim Sarah, 391, conclusion. In The 8 Wheat. Nothing contrary was determined 391, 21 U.S. 5 L.Ed. 644 Jones, 901, in Wirtz v. 340 F.2d 904- goods Court held that when were seized (5 1965), 905 land, Cir. which the Govern statutory libel of information court, speaking ment There the relies. entitled jury the defendant to a trial. through Anderson, our brother held consistently Court has held since that, despite decisions that suits em occurring then that forfeitures on land ployees Secretary at Labor law, entitling civil actions at 16(b) request parties (c) their under jury to a unless it was waived. for mini Fair Labor Standards Act United Winchester, States v. 99 U.S. wages pay mum 372, and overtime entailed 374, 25 (1878); L.Ed. 479 443 Cans right jury trial, a different result Egg of Frozen States, Product v. United Secretary of Labor ensued when the 172, 183, 226 (1912); 57 L.Ed. 174 sued under “to restrain violations Hendry 17 Moore, C. J. 133, Co. v. 318 U.S. including title, 153, section 15 this (1943). 87 L.Ed. 663 Similarly, statutory section penalties case violations actions right have been held to entail a 15(a)(2) title the restraint this adoption contrary 9. The cases since the of the Feder court au There is some district generally Emergency al thority Rules do not discuss whether Price Control right provision Arielly, accrues under F. F.R.D. v. 8 Act of Creedon 38(a) Housing relating (W.D.N.Y.1948), R.Civ.P. to the Seventh and the 268 provision relating Amendment or v. States Rent Act of United light ; (D.Mass.1949) F.Supp. statute. Shaughnessy, This set is natural 175 86 principle “although F.Supp. 957, Friedman, tled a federal stat v. 89 United States may provide express 1950). However, ute (S.D.Iowa terms for a these cases jury trial, action, reasoning create a cause of been them have and the behind essentially legal, right Moore, sharply criticized, with an attendant Federal see 5 by jury.” Moore, 128.2, [7], See 5 Federal Practice at 38.37 ¶¶ Practice 38.11 ¶ 8.12, (1971). [1], at 128.25 & n. 10 Tanimura v. at & nn. 13: 307-08 3 1952) imply (9 ; States, event the courts an intention to Cir. United 195 F.2d 329 jury trial, (8 Damsky Zavatt, Woods, allow see v. Cir. Leimer v. 196 F.2d 828 (2 F.Supp. 1961). Hart, 1952) F.2d ; Cir. v. United States Stry (E.D.Va.1949) ; v. United States (D.Mass.1949); mish, F.Supp. 10. Several of Unit these cases were cited (D.Minn. Damsky Zavatt, supra, Mesna, 289 F.2d ed v. 11 F.R.D. States Holding support Co., proposition 1950) ; cf. Porter Warner 395, 401-402, “The L. trial exists in actions the United States in a simi- where it would Ed. 1332 private parties.” lar action between language legis withholding payment Court found the of minimum of ambiguous, history compensation wages found lative statute overtime employees un held the mandate be due to Seventh the court to having Congress applicable. squarely chapter.” Amendment Ad der this adjudications a trial ministrative as have intentions to made its distinguisha backpay that NLRB entirely clear, are court stated awards ble, wrote, re not Court adminis does because Amendment Seventh “[t]he quire compe proceedings “jury Congress most trative trials would be to blunt compli concept insuring general incompatible with the whole tent means adjudication key the Act and would administrative substantially a section ance with signifi [agen equity of a interfere with the depriving the courts cy’s] statutory power.” role in the part scheme.” inherent of their cant district assigned than the When the court rather 189, Loether, 415 U.S. Curtis agency adjudicative re 260, 42 U L.Ed.2d S.Ct. sponsibility, however, and there is “ob Supreme (1974), the .S.L.W. viously justification for no functional gave scope to recently broad Court jury right, jury denying the a trial trial for jury in actions to a trial entitlement if must be available the action involves rights provided the enforcement twentieth-century rights typically and remedies of the sort The Court statutes. enforced in an action at law.” Amendment Seventh there held damages under being seriously applies § dis actions for Not able Act, Rights statutory 42 U. pute that a 1968 Civil an action to recover 812 of the right reasoning generally a carries the S.C. § generally to actions jury trial, jury attaches trial Government seeks dis rights, statutory tinguish enforcing “if stat 5(0 an action under because § remedies, rights legal penalties creates collected for violation ute damages in in an action enforceable but of an an statute ordinary The stat agency.12 of law.” courts administrative ground is common provided that there ute trial would have relief, grant may required sought court appropriate, been if the “[t]he FTC had an any permanent contempt deems order of civil Sixth temporary re injunction, temporary argues Circuit.13 The Government order, straining order, or other 5(0 simply provide was intended an damages plaintiff actual award alternative means of enforcement and punitive dam $1,000 not more than should not thus be read invoke differ rea ages, together costs with court procedures.14 probably ent A short and Although the attorney fees.” sonable if in sufficient would answer be that position support our Commission”], 1 1. further Still terms of such order of the Supreme decision Court’s 5(Z) applies equally found a FTC because when Realty, 416 through Pernell v. Southall order becomes effective failure (1974). party aggrieved 40 L.Ed.2d S.Ct. review. 94 Court noted seek Congress could while Very likely 13. in a also be true disputes “to landlord-tenant entrust chosen to contempt proceeding unless the for criminal pro agency,” it instead an administrative imprisonment sought of more Government brought disputes should vided that those six than months. See Cheff Schnacken- accordingly, actions”; ordinary civil “as berg, 373, 86 16 L.Ed.2d required held, Amendment the Seventh Court demand. available wry expression provides We cannot forbear Act the FTC Section the Government’s statement amusement just such a “civil action.” require Govern- “that did not way bring proceeding put than “order the al- rather it this ment before We 45(c) ready court”, the ex- [“To Court see 15 U.S.C. overburdened Sixth Circuit Appeals.” af- the order of Commission a loss to understand tent We are at thereupon firmed, judicial any way issue shall lessened the court loads were how commanding bringing proceeding obedience own order the Governfaent’s authorizing provision a civil suit the chief law complement was devised to Government, procedure officer of the contempt power, circuit court’s which always thought which had previously been entail had been the sole means of (cid:127) Congress jury trial, remedying had party violations. If (assuming arguen- sought wished to it withhold review of the Commission’s order could), Congress do that appeals would have in the court of and the order there, said and not so unmistakable terms was enforced the Commission any left remedy this as a secret be discovered subsequent could seek to vi- many years very least, through At the later. olation of the order either con- require tempt proceedings such a would evidence conclusion before court that legislative history through enforced the order or action an 5(i) procedure recovery penalty. intended the for of the civil If the § contempt pro- party be the same ceeding. in a civil as did not order contest the seek- study development ing appeals, A of the review the court penalty provision any remedy the civil in the FTC Commission’s sole civil suggests just opposite. through Act subsequent violation would be penalty action. part of the Section Wheeler- 1938, 111, Lea Act of which Stat. underwent a The Wheeler-Lea bill original Trade amended the Federal it was fi- number of false starts before nally version, The Wheeler- Commission Act 1914. The first enacted mainly Cong., Sess., at extend Lea Act was directed which was 74th 1st S. ing authority reach the Commission’s contained introduced germ deceptive practices wheth all unfair and did noth- ultimate Act—it they anticompetitive ef er or not had an the FTC’s authori- more than extend overruling fect, thereby deceptive prac- ty restrictive to include unfair given interpretation affecting commerce, to the act in or tices Co., adversely competi- Raladam or not affected In ad L.Ed. 1324 calen- on the Senate tion. That bill died dition, year, added a By amendments had the 1938 next the bill dar. grown size, provisions intended make approximately final number They many proce- effective. the FTC’s orders more with the addition provided be ap an FTC order would to enact- that survived dural revisions Cong., after review and bill, come final either 74th That ment. S. proval appeals penal- or after the a court of (1936), a civil 2d contained Sess. seeking expired, roughly ulti- ty time for 5(g); review had one similar clause longer enacted, although penalties mately the Commission required prove a second violation fixed set as smaller and were were much obtaining judicial According provision, enforcement aft- before to that sums. addition, the Wheeler-Lea its order. had become er the Commission’s reviewing empowered Act of the order would violation final subject pendente pre injunction penalty lite issue to “a the offender public, 5(c); vent harm to it es offense and $25 for each $500 penalties continues, day violation tablished criminal which shall ac- for each of cumstances, limited cir re- the statute under certain the United States crue to brought by 14(a); and it enabled in a civil action covered passing Commission to cause the institution After the Sen- United States.” ate, Cong.Rec. 4, 1936), (May an action to recover a civil violation of the final or Commission’s in the House Interstate the bill died ders, 5(Z), penalty Foreign Two civil Commerce Committee. §§ required great many already Circuit, with the which must have which was familiar being study by busy judge proceeded without hours district case and could have many ap- obliged difficult has demanded more a court of to consider most quite

peals presented. questions “overburdened” the Sixth here inadvertently bills, who violated businessmen companion H.R. and successor willing if to conform (1936), and but were Cong., the law 2d Sess. 74th pointed (1937), out them their violation was by Cong., 1st 75th Sess. H.R. Finally, paral- the Commission. “The man died committee. also good intentions,” Representative Lea re- proposed, H.R. bill was lel House penalized marked, “should before Cong., con- not be Sess. 1st 75th very mis- he had a chance to correct his language fi- to that similar tained Cong.Rec. in the adopted, provided take.” debate, Representative Later nally variable penalties. Lea commented For viola- fixed rather than impose penal- proposal penalty a civil order, the final the clause tion of a directly ty required the statute for violation of a viola- in that would have bill practical way “is to deal with pay not the United to “forfeit and tor destroy going penalty businessmen. This of not than civil more States a principal of Federal virtue more than for each and $50 $1000 procedure, which continues, Commission day Trade failure shall such give may a chance the honest businessman United States accrue by adjust brought harass- difference without in his a civil action recovered bringing court, with him into This died him United bill also States.” expense proceed- Finally, spon- involved in in committee. ings.” Cong.Rec. Representa- Cong., 75th 1st sors introduced S. view, 83 Sess., ultimately similar tive Halleck was of a enact- the bill that was Cong.Rec. 401: ed. The first version of ever, how- S. penalty contained earlier civil language very fact that broad penalty providing for flat clause a $500 used indicate statute] should [in penalty per day and an additional $25 me, us, to all it seems to that we violation of Commission orders. See every crim- not in case inflict a should S.Rep.No. 221, Cong., 75th 1st Sess. penalty penalty civil inal objected, (1937). The House Committee upon any person hap- who fine $3000 considering apparently penalty too pens unintentionally act. to violate the small, version, and substituted its own my idea the committee had H.R.Rep.No.1613, Cong., 75th 1st Sess. drafting penalty in mind when this proposal, Under House fact, I clear- which think is clause penalty $5000, but maximum would be people ly evident, that honest business penalties if the court could lower assess honestly operate trying who are con- circumstances warranted. The inadvertently and within law adopted ference committee the House’s provisions of Cer- violate this bill. comment, H.Rep.No. version without pros- tainly people should those Cong., 3d 75th Sess. ecuted, Federal court and hauled into that form S. 1077became law. immediately subjected to the criminal urged prosecution here some. 5(i) principal debate about oc- nothing any indi Representatives We see curred House utilizing that, Representa- the historic reme sponsor, cate dy between the bill’s penalty Representative for violations Lea, Kenney, of a civil tive including orders, that had urging orders amended who was that the bill be having af Cong. been without penalties, become final to include additional court, Congress intended Represen- (Jan. 12, 1938). firmed Rec. 405-06 any remedy strip tradition Kenney’s of its proposal pro- tative would have including accoutrements, penalty al vided for a flat civil $3000 fairly disputed issues trial of imposed anyone violating validity not, course, to advertising Repre- section of the Act. fact— of violation. to the fact objected but as penalty the order Lea sentative to such a fixed Congress gravitated between small clog the on the it would basis penalty, large maximum penalties punishing courts and that would risk apparently any thought without that the file with the Commission the informa- difference would have effect required 15(d) of the Act. procedure to be followed enforcement Since it that, is incontrovertible If Hepner actions.15 there is a word cases, line of who issuer years legislative sug history three liability denied would be entitled to a gesting procedure penal under this trial, this affords further evidence ty statute should differ from that which that the framers of the Wheeler-Lea recognized governmental had been proposing any- amendments were not forfeiture thing suits for over a 5(1). different under much A % century, we have not found it. 5(Z) older and more detailed model for § penalty provision was the civil conclusion did not Hepburn 16(8), Act of 49 U.S.C. § change practice intend a in established which added to the Interstate Commerce is fortified another bit of evidence. provision language strikingly Act a reports debates, In both the and the (l): similar to 5§ sponsors repre- of the Wheeler-Lea bill Any carrier, any officer, representa- penalty provision sented that the civil tive, agent carrier a provision was modeled on a similar in neglects knowingly who to fails Stockyards the Packers and ofAct obey any provi- order made under the Rep. Cong.2d 1705, See S. 74th No. Sess. 3, 13, ti- or 15 of this sions sections 1613, (1936); Rep. 7 H.R. No. 75th tle forfeit to the States shall United Cong. Cong.Rec. (1937); 4 1st 80 Sess. $5,000 for each offense. sum of (1936) Wheeler); Cong. (Sen. 6594 83 sep- Every a distinct violation shall be (1938) (Rep. pro- Reece). Rec. 397 The offense, and in of a con- arate case Stockyards vision in the Packers and tinuing day violation each shall be clearly isAct criminal and would thus separate deemed a offense. jury ensure the defendant of a trial on 16(9), Although argues following section, demand. The 49 U.S.C. the dissent § provides pay- that the forfeiture shall be the reference to the Packers and “gen- States, Stockyards only able to United and “shall be Act constitutes a recoverable in in the name of eral a civil suit reference to the fact that criminal in United States.” While sanctions were included the Wheeler- 16(8) jury Amendments,” trial under not to Lea peatedly was re- seems that section § arisen, 5(1). applying In have courts similar civil cited as a model for § contempora- addition, sponsors penalty provisions in other referred to a regulation provision” Ex- statutes have “similar in the neous railroad Securities 5(Z) change granted jury ques- 1934, trials even Act of without which § Cong.Rec. (1938) tioning availability. See, e.g., modeled, their 397 83 Reece). Atchison, Topeka (Rep. Despite ar- v. the dissent’s United States & gument (8 Ry., 1908) to the Santa Fe 163 F. 517 Cir. that the reference Securi- Act); Atchison, Exchange general (Safety Appliance ties re- To- Act was 78y(b), peka Ry. States, provisions, 15 & Fe v. United view U.S.C. Santa § 1910) (28-hour law); clearly (8 irrelevant as to 178 F. 12 Cir. these would be so compel Ry., the reference v. Great Northern a conclusion that United States (7 provision, 630, Cir.1915) penalty 220 F. 136 C.C.A. 238 was rather to the civil 1936, 78ff(b), (Hours Law); 15 added in es- of Service United States U.S.C. § tablishing day statutory pen- City Ry., per F. v. 202 a Kansas Southern $100 835, (8 1913) alty failed 121 C.C.A. 136 Cir. issuer of stock who distinguish ever, replaced attempts 15. The demonstrates Government penalty Hepner States, supra, proposed on the fixed with a variable v. United ground penalty provision penalty, give in a fixed while one it involved 5(1) permits § judge flexibility, requirement deter- the district more not to avoid the statutory proper penalty up jury mine of a trial. legislative background, maximum. how- 428 Law); (Hours Act United States FTC could be tried to of Service amending (9 Similarly, 5(i) Ry., jury. 657 Pacific 293 F. v. Northern year, supra, Congress Appliance Act). (Safety note 1924) last see Cir. gave time, no indication it had in- that at a before ever is hard believe decision, penalty provision Hepner tended the civil when the courts concluding deny jury having difficulty when the fact of trial viola- actually fairly disputed. provisions tion was penalty were not nature, see Johnson criminal argues that accord dissent Co., 462, 54 C. 117 Pacific F. Southern jury inappropriate trial would be (8 1902), other rev’d on Cir. C.A. 508 citing 5(1) proceeding, in a one of the grounds, 49 L. 196 25 U.S. S.Ct. three referred to a footnote factors Atchison, Topeka (1904); & Ed. 363 Bernhard, n. Ross 538 States, Ry. F. Fe v. United Santa 733, 738, 24 L.Ed.2d S.Ct. (7 1909); v. Illi Cir. United States (1970), practical limi “the abilities R., (W.D. R. F. nois Central argument juries.” tations is that Cir.), rev’d, (6 Ky.1907), F. allowing disputed issues denied, 214 cert. according ap fact would interfere with L.Ed. 1066 civil propriate deter deference to the FTC’s provision Interstate mination that a violation had occurred. deprive intended to Commerce Act was recognized prin Reference is made Sixth the defendant his weight ciple given that much right trial but Amendment judgment framing reme well. Amendment his Seventh e.g., orders, dial FTC v. National Lead provision Hepburn Indeed, Co., 419, 429, 502, 352 77 1 L. U.S. S.Ct. reparation of Act the enforcement Colgate-Pal (1957); Ed.2d 438 v. gone Congress 16(2), orders, had § 374, 385, Co., molive 380 U.S. S.Ct. 85 prima the order than render further 1035, (1965), principle 13 L.Ed.2d 904 de- in where the an action evidence facie which, course, way unique of is in no trial, right clearly jury had fendant see, Phelps Dodge agency, e.g., sustaining opinion made and the NLRB, Corp. 177, 198, v. S. 313 61 U.S. extremely the Court would doubtful 845, (1941); 85 L.Ed. Ameri Ct. 1271 approved anything See more drastic. Light SEC, Power & U. can v. 329 Co. R.R., Lehigh Valley 236 Meeker v. 115, 118, 90, 133, S. 67 91 L.Ed. S.Ct. 328, 412, 644 430-431, 59 35 L.Ed. (1946); Bottling Seven-up NLRB v. (1915). 344, Co., 346-350, 287, 344 U.S. 73 S.Ct. (1953); 97 L.Ed. 377 NLRB v. J. H. congressional Subsequent enactments Manufacturing Co., Rutter-Rex 396 U.S. light problem. no

have shed more 417, 24 90 S.Ct. L.Ed.2d Congress extended stream- In 1959 mechanism lined enforcement response point Clayton The first In revis- Act. FTC Act to Congress ing Clayton Act, footnote in v. Bernhard Ross 11 of the § argument part applying an of the Wheeler-Lea the model followed right jury letter, Amendment includ- Seventh amendments almost recognized penalty it had not been provision, be- trial where which civil merger equity— (i). ease of law and in the before As 15 U.S.C. came § suggestion type Congress apparently 5(1), did not a that a statute of § uniformly carry ques- jury held expressly been trial had confront jury although should tion, Bea- now States v. in United Co., F.Supp. it. A to eliminate second construed trice Foods (8 practical (D.Minn.1972), aff’d, abilities that while “the 493 F.2d present juries” may prob 1974), Judge to as- limitations of Neville seemed Cir. accounting, complex disputes penalty lems in action sume that factual Queen Wood, Clayton Dairy proceedings Act under both see placed 8 L.Ed.2d 44 the usual substantial evidence estimating damages 5(c) dealing rule in Act, awarded in of the FTC injunction judicial lieu of the with orders, an intricate se review of it made suit, provision 5(1) curities similar see Crane Co. v. American with re Standard, spect Inc., determining 490 F.2d at 343-345 fact viola (2 1973), problems tion. Cir. those do not arise when the is asked to deter This court’s statement in United only mine whether a television commer Regis Paper Co., supra, States v. St. cial repre has made various forbidden duty F.2d at and re- “[t]he any event, sentations. the “limita sponsibility determining what bus- juries” tions one of three fac practices purview iness fall within the tors footnote, mentioned and the determining Section 5 and for others, two merger custom before the cease and desist to elimi- orders issued equity, law and remedy “the anti-competitive nate effects sought,” point strongly here toward practices complied those have been trial. A third answer to the dissent delegated solely or violated was argument proves much; its too FTC,” must' read in context. many present actions under could discussing court was there the division elementary questions, most factual authority between the Commission such as whether the defendant did or Attorney General, and the not the divi- charged did not (e.g., commit the acts if authority sion of the Commis- between defendants here contended that a televi judiciary. sion The next sen- and the sion station had broadcast commercials opinion tence makes this abun- disapproval.) in the face of their These dantly clear: very juries issues are the sort which objective While one traditionally called on to resolve.16 But amendment, including Wheeler-Lea failing argument the fundamental 5(1), to “streamline” -Section required is that has not defer enforcing procedure for the Commis- agency’s ence claim that orders, no- it is sion’s cease and desist violated, Dell, has been NLRB F. Congress by pro- where indicated that (5 1962) (Tuttle, 2d 867 Cir. Chief viding enforcement a civil Judge); indeed, contempt proceedings in procedure re- intended to transfer claiming agency the burden on an a vio sponsibility interpreting and in- for lation is not the burden usual in civil vestigating orders violations of such demonstrating cases but that of a viola Attorney General. convincing evidence,” “clear and saying that Teamsters, NLRB v. court was not 282, Local 428 F.2d The 994, (2 judge 1970); well as 1001-1002 Cir. NLRB v. was to be FTC 825, parte Operating Engineers, prosecutor Local ex de 430 F.2d or even that its 1225, (3 1970), entitled to 1229-1230 Cir. de of violation was cert. termination nied, weight adjudication proceeding 401 U.S. 91 28 be S.Ct. L. in an (1971). Congress proceedings Ed.2d 326 While of fore a court.17 Initiation judge recognize 16. upon The district seemed to the court sued are before tisements questions undisputed.” factual 354 such as these would and dissemination is their jury. 5(1) However, F.Supp. call a for She cited two when there § cases 533 n. at 7. Maryland ju right jury trial, from the District of in to all which a it extends is a empanelled, simply fact, questions ries liad been United States v. kinds of of (D.Md. Corp., Americana Civ.No. 10858 some. 1960) ; Safety United States v. Fire De vices, (D.Md.1962). support Civ.No. 13254 She dis the dis 17. fail see for We what tinguished cases, ground Holloway v. those on the can in either sent be found “they question (D.C. Corp., Bristol-Meyers involved the factual what of F.2d 986 485 representations Farmington oral 1973), were made em Prods. Dowel Cir. Co. ployees being (1 companies Mfg. Co., of sued. 421 F.2d 61 Cir. v. Forster Here, contrast, Holloway, 1970). the actual adver- refused to In the court 430 right give jury although, 5(1) a trial does Commis of under § course, request there force would not have when fair a it a dis-

sion’s being pute contempt. petition the fact That over of violation. so, difficulty practical in hav we see no The IV. Existence Triable jury com what television decide Issues Fact. task for which mercials mean —a above, As noted defendants’ judges. experience more than most jury trial under F.R.Civ.P. Jaffe, Perhaps supra note 8. See 38(a) consequence would be without Congress to allow would be wiser if, held, this case as the district court impose penalties for violations presented the Government’s no suit tria subject judicial orders, limited ble issues fact.19 Determination review, cas done in other some question requires Immigration consideration es, see, e.g., 271 of the § presented 1321,18 the nature of the issues and Act, Nationality 8 U.S.C. § proofs submitted. predecessors held valid of which were Navigation Co. v. Strana Steam Oceanic are two dif- issues somewhat L.Ed. han, 29 214 U.S. types. ferent One is whether com- Lloyd (1909), Societa Sabaudo question violated cease mercials Elting, 53 S.Ct. desist order. other is (1932). is decisive What L.Ed. Femlron was within of the or- the reach open, that, avenue known with that der, “any applied prepa- other having just Supreme Court and with substantially composi- ration similar provision the National sustained substantially possessing tion or similar authorizing properties, Act of 1935 Labor Relations name or under whatever pay, NLRB back to award NLRB names held district sold.” Corp., questions law, F.Supp. Laughlin both to be & Steel Jones 1, 48, 81 L.Ed. 893 enacting actuality inquiries course took a in both two-step process determining volve a uniformly entail held to had been — Act, (i) ; private right imply Health Natural enforce U.S.C. action to Pipeline Act, Safety deceptive practices Gas U.S.C. sections unfair or virtually discus- no There is the FTC Act. 19. Since hold several we of the counts 5(1), nothing in the court’s §of sion opinion presented fact, triable issues of we would be suggests read the Act should summary bound to reverse the award of suit. civil to bar judgment even if re trial were not passage in which to a The dissent refers quired, Moore, Practice, Federal ¶ see 56.02 Judge the “substantive Leventhal notes that [7], at 2040 The difference would inextricably prohibitions the statute simply judge. be that the trial to a would be provisions defining the intertwined with There that under FJt.Civ.P. powers FTC, is] which [the duties 56, in a whether trial or a trial to the charged enforcement,” at F.2d 485 with its court, summary party judg opposing excerpt 989, nothing ei- in that we see evidentiary right ment hearing motion has full suggest or in that ther alone context genuine all issues of material vio- that a defendant FTC’s conclusion trial, if fact. In a bench this means should a final and desist order lated cease party opposing summary judgment raises weight 5(1) proceed- given controlling in a § any questions, triable fact he has quoted excerpt ing. Similarly, from expert testimony to adduce the live wit 75, case, Farmington at 421 F.2d Dowel opponent’s nesses and his wit cross-examine principle simply settled recites the rely nesses on the af rather than to have col- cannot in suit a civil defendant laterally opposition fidavits submitted in sum underlying validity attack the mary Klune, judgment Colby motion. v. principle we order —a and desist cease (2 1949) Hycon 872, ; F.2d Manufacturing 873-874 Cir. many accept despite con- unqualifiedly Sons, & Co. v. H. Koch trary in the intimations dissent. (9 denied, Cir.), 353, F.2d cert. (1955) ; 99 L.Ed. 1278 Act, Hanley Chrysler Corp., F.2d Motors Mammal Protection also Marine See Safety (10 1970). Occupational 1375(a) ; Cir. 16 U.S.C. means, concededly prevent what order only a task —it could serve iron de- court, deciding ficiency “therapeu- for the whether Geritol —while product remedy accused commercials or come tic”—it could a current deficien- cy. however, within the order as construed. we differences, so As These are not Artvale, Rugby significant determining said Inc. v. Fabrics whether (2 Corp., 1966), subject 363 F.2d Cir. Femlron is to the order. The seeking approach very argument common to di- “[t]he that Femlron is too mild syndrome chotomize all decisions as either ‘law’ to treat the for which Geritol simplistic.” ‘fact’ too In major See also re is intended demonstrates that the Hygrade Envelope Corp., products 366 F.2d difference between the two (2 1966). dosage. 588 Cir. merely different stance one of It would be part of the two issues here stems in senseless hold that the defendants can respect from the fact simply by avoid the Commission’s order dispute process relabeling. commercials there ing concern- of dilution and meaning order; purpose the com- determining For the whether clearly violation, mercials would be in Femlron' within the reach of the or- required der, for lack of the affirmative the defendants’ affidavits were thus proportion inapposite. as to statement the small anything, If the lower con- people deficiency, who suffer from iron centration of iron in Femlron would they conveyed impression any if suggesting render commercials (or if Geritol Femlron within the or- it will relieve even tiredness more mis- der) generally leading would be beneficial than similar Geritol commercials. tiredness, agree relief of etc. That issue thus We with the district court that de- involved less and Femlron issue fendants’ claim that Femlron was not genuine more of what a court can determine bet- within the order raised no issue jury, perhaps only ter than a appropriately about fact and was decided satisfactory distinguishing criterion for the Government’s favor on its motion Traynor, J., summary “law” from judgment. “fact.” See dis- senting Loper Morrison, 23 Cal.2d hand, On other while we 611-612, 145 P.2d 6-7 agree premise with the court’s that the showing FTC did not have the burden of determining commercials, the accused if within applied Femlron, the court was order, deceptive, were false and we justified giving reading a broad unable see how this leads to preparation the words “or other [of conclusion, F.Supp. that: substantially composition similar or] Once the Commission establishes possessing substantially proper similar that a cease and desist order inis ef ties,” F.Supp. at 531. The order particular fect and that a advertise light interpreted prin must be of its ment has been disseminated which al cipal purpose, namely, prevent legedly order, violates that it is for company prod representing from the court to determine as a matter of overcoming problems uct useful law whether the oral visual arising and/or from insufficient iron challenged content of the advertise blood will be efficacious when the same scope pro ment falls within the symptoms entirely are due to different hibitions in the order. causes. The order is to be construed as end, general an instrument to that not as a The rule that when the mean pharmacopoeia. undisputed is fairly that or effect of words or acts is Femlron disputed, does not contain the vitamins is the trier of present facts, in Geritol it hearing and that contains to be decided after all substantially Through Washington less iron. evidence, their material Post Co. experts’ urged affidavits, Chaloner, the defendants 290, 293, v. 250 U.S. differences, 448, that because of (libel); these Fem (1919) L.Ed. 63 987 Albert only “supplemental” lron was of value Co., Dickinson Co. v. Mellos Peanut 179

432 “sad-glad” commercials; 5-9, (likelihood (7 1950) Counts 265, 269 Cir. F.2d sought commercials, 8 9 confusion). with Counts as district court The sub-group F.Supp. by saying, of their at because use this 354 to counter 10-11, “power”; analogous 11, word Counts issue was that n. 535 writing in a Femlron Our considera interpretation of a commercials. light tion of action, these must be conducted which is considered contract Colgate- court, citing 4 the admonition in v. law for the issue of an 393, 374, Co., Contracts, 616, particularly Williston, Palmolive 380 U.S. 85 S. 1961). (1965) However, 1035, 1047, (3d we ed. Ct. 13 L.Ed.2d 904 : at 648-649 Co., Meyers pointed out Selznick respondents subsequent in their If 1966), (2 aft Cir. F.2d 221-223 373 attempt to come close commercials referring passage in very this Wil er misrepresentation as the to the line of liston, formulation “the traditional that they may permits, order Commission’s authorities, goes considerably beyond the intending specifically to do so without In the federal courts.”20 at least proscribed the area this cross into addition, Contracts the Restatement However, it does seem order. (Tent. (Second) Draft No. require that one who delib- “unfair rejects posi 1970), March absolute erately goes perilously to an area close taken Williston states proscribed shall take the conduct integrated written even the case may the line.” he cross risk that interpretation agreement, is to be deter Boyce Lines, United Motor Inc. v. depends by the trier of fact if it mined States, 340 S.Ct. [72 credibility on the of extrinsic evidence 329, 331, L.Ed. 367]. among infer or on a choice reasonable In ences to drawn therefrom. May its letters of 8 and event, interpretation television it June indicated that the Commission subject on which a commercials not a nothing wrong AA com found jurors judge much than can do so better except each of them twice mercials inevitably should be taken issue “power.” The first use used word them one of from law. Neither midway through in a statement which, judge, an issue if triable to a en that “Geritol-iron each commercial summary judgment, un lends itself carrying your fast ters bloodstream less, course, the evidence would war blood-building power every part of Sartor rant directed verdict. coming See body.” second, your at the Corp., 321 Arkansas Natural Gas commercials, was in the state end of the 620, 624, L.Ed. power in “iron ment builds Geritol (1944); Empire Electronics Co. v. Unit your seems The latter claim blood.” (2 States, ed 311 F.2d Cir. innocent; apparently Geritol rather 1962); Manufacturers Mutual American combating blood, iron-poor effective Insurance Co. v. American Broadcast does not cease desist ing-Paramount Inc., Theatres, 388 F.2d advertising prevent this. Williams from (2 1967); Moore, Feder Cir. “iron builds The remark Geritol [2], [10], al 56.04 Practice 56.02 ¶¶ rep power” in is so far from a the blood 56.15. generally effec resentation remedy Com tive tiredness commercials, which we viewed objections counsel,21 score seem presence mission’s divided can be groups: 1-4, rather baseless. Both Government three the AA into Counts obviously appli- have no well considerations Such 20. The traditional formulation juries and, viewing illiteracy commer- of television cation been founded on the later, inability cials. to understand their many complex vocabulary characteristic scripts Representative Weiner, will he found S. written instruments. See court, F.Supp. opinion Jury of the district Law —Fact Distinc- Trial and the Civil tion, 536-543. Calif.L.Rev. Corp., heavily v. Petroleum more Abrams Occidental relied court below and the 1971), remark, (2 F.2d 165-166 Cir. that Geritol-iron 450 earlier on the nom., County “blood-building power” to ev- aff’d Kern Land sub Co. carried its Corp., body. ery The district Occidental Petroleum part of the F.Supp. stated, L.Ed.2d “[t]o your preferable power think it say we leave that Geritol builds equivalent judge to the trial whether or not to di the effective blood- is you.” power light saying a verdict on these builds rect counts that Geritol presented. conceiva- inference the evidence that will this While certainly ble, not one that a it is through Counts 5 7 involve compelled set- to draw. would be commercial entitled “Vacation” summary judg- on a motion tled that Counts 8 and 9 a commercial entitled the inference ment a court must draw appellants have “Two Women.” The party opposing favorable to the the- most their termed these two commercials motion, Diebold, Inc., United States “sad-glad” series. The common theme is 8 L.Ed.2d 176 of woman who is “sad” because Inc., (1962); Airlines, v. Eastern Cali having discovered, apparently from a 1971). (2 Cir. 442 F.2d 71-72 kind, medical examination of some only To our minds the criticism “iron-poor she has blood.” is told She fairly be of the “blood- that can building made not be sad on account but that, power” phrase taken glad Geritol, can rem convey alone, not with it did sufficient deficiency. edy sequence later A “blood-building clarity that Geritol’s “glad.” shows her to be power” was limited cases of iron defi found that these The district court However, ciency. proper no more de violated cease and commercials to take one commercial out line of a 539-541, order, F.Supp. on the sist spoken context than it is with other following basis: or written utterance. whole theme may convey to smile viewers commercials was Her AA that Geritol longer remedy happiness “iron-poor blood,” that she no could her and the definitely iron-poor con- potency blood, certainly but claim of would almost something veys It shows well. else as be taken in that sense.22 serious good spirits her look respect and makes her stronger Counts 1-4 thus implica- summary judgment and healthier. is not whether in fa simply be- proper, that she was sad vor of tion is the Government was blood, iron-poor be- not, had clearly cause we think it she but whether feeling as a run-down cause she was the Government is entitled to them fact. Now she smil- However, result of that ing submitted to a at all.23 simply has iron- because she summary defendants not move for did blood, feels but because better judgment although rich she and, on these counts consequence. Thanks to Geritol. as a it, we could nevertheless direct see expressly agreement without concession 22. We see no basis for the district court’s F.Supp. conclusion, that use and the FTC’s assertion at 537: so. make it speaks did not was a violation word While the advertisement person’s cells, use 'of Williams’ continued Whether transformation of a blood neg- strongly deliberate implies a few weeks was word for advertisement ligent, viola- paleness, fact of have the it is entitled to same transformation from deformity tribunal. a neutral determined weakness to red-blooded- shapeliness ness, strength will take above, the commercials indicated As j)lace i)erson himself. phrases “blood- and 9 include Counts power.” building Our dis- power” and “iron 23. The Government makes much of the fact slogans in reference conveyed objections these cussion the FTC had applicable equally later “power” 1-4 is Counts use of the word and that defend- agreed counts. them. But ants had to delete 434 begin inference, defendant accrue until the not possible is a

While given not in he is notice that has been must We by the means one. although compliance had a reasonable thought and has had we confess bring compliance. into himself time inference script demand the not did the viewing on court, is based Continental This contention by the district drawn Dixon, F.Supp. Baking contrary, Co. might To so. well do by (D.Del.1968), statement a 1959 defendants viewing to believe led us drawing General Counsel FTC's Assistant may have succeeded well House Committee subcommittee Wheth- the order demanded. distinction quoted Judiciary which we on deter- they or not is for did er Co., Regis Paper su- v. St. United States mine. 695-696, a remark pra, and F.2d at different conclusion reach a We during by the course Dixon Chairman 11, relat respect 10 and to Counts with hearing appellants’ first com- Here ing commercials. the Femlron pliance report. sufficiently disclose scripts not did deficiency not anemia iron nothing 5(Z) in rea findWe § women; in fact present in most by require action son that would healthy young many wom “that claimed every The statements case. FTC reserves,” a vice iron little or no have en and Counsel the Assistant General had the one Commission similar Dixon, literally, would if read Chairman respect to the com properly found public with a statement at variance be by compli in the first mercials submitted Commission, F.R. report. commercials The Femlron ance obligation that the of firms risk even “some women noted that then becoming liability penalties comply arises, tired,” followed anemic incurred, date of on the effective suggestion “main to take Femlron suspended de the orders and is you prevent iron supply need to tain the compli pending the submission of ferred shortage.” plain implication of the Very reports or action thereon. ance portion audio of the commercial that, likely all that was meant was reme an effective thus that Femlron is good practice, the ordi matter FTC dy vi anemia—a clear for tiredness and narily induce would make some effort to addition, olation the order. invoking heavy compliance before scripts for commercials Femlron 5(Z). re Defendants sanctions prior each directed that taking woman consideration; a full measure ceived depicted as a Femlron should indeed, step of took rare Mother”; pictured at “Tired the woman according hearing argument them a of the commercial is directed to end report. Accept compliance first viewing display a “Vital Look.” Our position would se ance verely defendants’ producers of the convinced us that the apply hamper the Commission well in commercial had succeeded all too advertising generally, 5(i) to cases “tired-vigorous” capturing the forbidden every non-compli since determination dichotomy. We therefore sustain ance could be countered with some change grant summary judgment on these advertising. Both the counts. Eighth recently have and Ninth Circuits required held that the Commission is Requirement V. Notice. give bringing notice before suit for continuity, In the interest of we penalties. v. Bea civil United States argu- postponed of certain consideration (8 Co., F.2d 1259 Cir. trice Foods lack defendants on the score of ments 1974); Berkley, No. United States non-compliance advance notice of 1973), (9 Sept. cert. de 73-1070 Cir. giving delay such notice. nied, argu fur Defendants Appellants’ extreme L.Ed.2d 558 most nev- penalties 5(Z) the Commission ther contend that ment is that do knowingly daily actually penal AA com- commission to let er stated giving the cease ties violative accrue without would be notice the mercials position “pow- if commission’s at the earliest order the word rea and desist They difficulty scripts. sonable time.” in also The lies in er” were left knowing when 6 let- that occurs. It is that June unde claim Commission’s courts, unacquainted compli- ter, request sirable for for with the with its a third lay workload, report, allowing Commission’s should read as down ance necessarily appellants lines that would a be arbi reasonable time remove trary. Although perhaps “power” from AA commer- a case will the word broadcasting they arise which so extreme as to demand that were at the cials judicial present intervention, May However, the 8 letter ade- time. particularly since, conveyed one.25 quately This is true as view Commission’s hold, we that unsatis- now Commission could have the AA commercials were larger penalties factory long they demanded even than it contained refer- “power.” ences The 6 letter did. June

formally appellants assured that $5,000-a-day VI. The Limitation. safely could the AA com- broadcast “power,” mercials without word but As indicated statement way it in no undercut the effect of the facts, for of the most counts the Com May informing appellants letter mission considered all the broadcasts “power” that the word met with had particular particular a on commercial a disapproval. Commission single day violation; to constitute a for charged however, Relying Counts 8 that on dictum United separate each broadcast of the commer Baking Co., States ITT Continental separate Appel a (D.Colo. cial violation. Aug. 2, 1971) was No. C-1220 object (Winner, lants to both calculat J.), methods of remanded, aff’d and $5,000 (10 violations, and insist a granted, 1973), F.2d Cir. cert. day maximum, regardless of the was 40 L.Ed.2d number of different commercials defendants contend as an day. on number of broadcasts position alternative to the extreme rejected, any liability we have language statute, The note because, Counts 5-9 should be limited argues posi- supra, against defendants’ although compliance report the third Although penalty tion. maximum July 7, 1969, was filed on Williams doubled, has since been the version ef- given response September was until complaint filed fect at time the was 5, despite the imposed penalty $5,000 fact letter re a each vio- “for ceived on prepared that date separate lation” and added that “[e]ach July early August. the staff sep- violation such an shall abe Appellants “day” further concept contend that offense.” arate en- liability on only Counts dealing should tered in a clause with the be limited because Commission never situation where a defendant commanded e responded to th submission of do some affirmative act failed September anything Femlron Appellants commercials on say, do at all. with agree Judge We force, Winner that “it some it is anomalous a permit would seem ignores unreasonable to mandatory who a defendant or- far estopped A more extreme case is United States Commission was to assert Greetings Corp., F.Supp. practice v. American defendant’s violation (N.D.Ohio 1958), opinion order, aff’d on be- Commission’s cease and desist it stat- low, (6 1959). 272 F.2d 945 Cir. There the ed that were “cer- Commission’s actions years tainly Commission remained silent four for to be as- circumstance considered compliance certaining after penalty defendant filed re- his the amount of the port suing penalties statutory imposed before for re- violation of the Order.” lating report. to conduct described in the assessed a nominal Although the court did not hold that that violation. expenses provide prof- shall liable for erational der Commission year. only $5,000 day $10,000 one who affirma- it of some Parkson’s tively liquid in 30 different assets as of June violates the order day might' put only $66,098, furniture, places on the be held at same that, improvements as de- fixtures and $310,369. $150,000. The answer leasehold point, next re- veloped in the good sense of the lied held that district court Parkson Attorney making its certification must treated as nevertheless be an enti- failing that, on the discre- and, General ty separate from so rul- Williams. prevent an out- of the court ing, it relied on letter of § rageous result. provides “[a~\ny person, part- nership, corporation or who violates an Against Penalties Double VII. order of the to cease and Commission Williams and Parkson. (em- desist after phasis has become final” object, independent on two Defendants supplied) be liable shall for duplicate pen- grounds, to the statutory penalties award and the fact that the against Williams Parkson. alties the order Sixth Circuit had affirmed as defendants, F.Supp. to both 354 at 546. opinion accompanying In the order, initial cease and desist way courts have is not the dealt This Parkson, said of 68 F.T.C. at 536 FTC problem legally whether with the two (1965), practicality 2 “in it is Wil n. separate corporate re entities should be advertising division. liams’ completely Parkson is garded we said in as one. As Bowater owned stockholders of Patterson, 369, v. 303 F.2d S.S. Co. 372- advertising Geritol is Williams 95 denied, (2 Cir.), 860, cert. 371 U.S. president percent of its business. The citing (1962), 9 L.Ed.2d 98 vice-president Parkson is also the and many cases: advertising director of Williams.” An subsidiary corporation Whether a is to uncontradicted affidavit chief ex separate entity be considered a “can- alleged of Williams ecutive companies the two asked, answered, vacuo,” not be principal had the same offi Entity Corporate Latty, The as a Sol- cers; that Parkson acted as the adver Legal Problems, vent of Mich.L. tising division of Williams neither (1936); Rev. issues in sought significant any nor had business light each case must be resolved in the company; other and that he had policy underlying applicable advertising authority final over for all legal rule, whether statute or com- products. similarly Williams’ A uncon mon law. tradicted affidavit Williams’ and rejected thereWe the contention that a Parkson’s chief financial officer ex steamship company under common own- plained the raison d’etre Parkson and ership operation with a timber was not the business relations between the two engaged in the latter business and hence companies as follows: media offer was outside the ambit of Norris- advertising agencies, independ Act, LaGuardia gard 29 U.S.C. in re- wholly-owned, price ent less 15% dispute op- to a between timber direct-purchasing sponsor. than a Wil employees. erator and its We said: liams created Parkson obtain this price. However, Assuming, may, lower plaintiff instead of retain as we ing part or all the discount as would Newfoundland Bowater’s had suf- independent agency, solely independence regarded, “Parkson acts ficient agent an litigation, of Williams and sepa- as a conduit contract or tort payment advertising parent, rate both Williams’ from ultimate expenditures Company, Paper Ltd., media.” The officer Bowater pays added that Williams other, Parkson an from each see Bartle v. Home amount op- Cooperative, Inc., sufficient to cover Parkson’s Owners 309 N.Y. Alternatively, that, (1955), N.E.2d it does we hold un ought case,

not follow that be so re- der the circumstances garded application requested only judg of the Norris- where the FTC against Act. ment LaGuardia both “in the defendants to $500,000,” Attorney sum of tal Gen did not think meant We authority eral was without to seek that policies of that act “to be defeated against amount each under the fair im integrated fragmentation of an busi- plications of our decision United congeries corporate into a enti- ness Regis Paper Co., supra, States St. ties, might properly however much these F.2d 688. The Government seeks to dis respected purposes.” for other Still tinguish Regis St. on the basis that al Douglas’ more instructive Mr. Justice though requested there action opinion Artware, Inc., in NLRB Deena Attorney General, see 355 F.2d at 398, 402-404, all, n. had made no certificate at holding 4 L.Ed.2d in an statute, and that 15 U.S.C. § proceeding enforcement the Board was certifying speaks of “the facts” and not group “sepa- entitled to show that a sought. respects the relief This St. corporations they ap- rate not what Regis holding rejects reasoning but pear be, that in truth di- are but supported that it. The thrust departments ‘single visions or of a en- ” majority’s decision, 695-698, F.2d at terprise.’ Congress placed had was that the task The same considerations which al- determining penalties when and what lowed the Labor Board in Deena to treat sought should be and not in FTC nominally as one what were several here Attorney General.26 The draft com require decreeing penalties that in a plaint by forwarded in this case nominally court should treat as one what Attorney FTC General shows that beings are two. It is human who cause seriously the Commission took re its orders, violations of cease and desist concerning sponsibilities amount of suggests no one that contem- penalty, by assessing notably penal plates separate against penalty every only ties for each individual broadcast person offending who had a hand in the in Counts 9 and 10. On the Govern commercials. intended What theory Attorney ment’s General single penalty persons acting was a from liberty apply would have been at single under control. Under the district counts, method to the other as to which theory, court’s if Williams had had five the Commission had chosen more le Parksons, operating each in a different charging day nient course of each region, sextuple there could have been a single broadcasting as a violation. This penalty every practical what sense plainly view is at odds with the ration by single corporation. was conduct Regis. Again, ale of St. the Chairman’s Naturally, a case of violation a manu- opinion letter referred of Com independent advertising facturer and an missioner that Elman agency defendants present ques- would a different tion. “should be held liable for all violations propriate proceedings brought 26. The recent to be amendments to the enforce- provisions provisions gone ment the enforcement of the of such of the Act have ; placing responsibility even section or subsection further for en- (b) compliance requirements after forcement with the Commission’s hands. Sec- appro- Act, 5(m), tion 16 of the section itself cause such has been U.S.C. priate proceedings brought. provide: amended to provides 5(m), addition, Whenever Section another new the Federal Trade Commission through appear any person, that its reason to Commission can believe that partnership, corporation attorneys own where the circumstances liable to penalty requires represented under statute be section 14 or under subsec- (Z) Attorney Attorney General, Act, if section 5 of this it shall— it notifies (a) certify gives Attorney proposed him General of its the facts to the Gen- action eral, duty ap- days whose it shall be to to take the action instead. cause disregard and desist after it least reckless to cease at prohibitions29 31, 1967, the broadcast on December became final proceeding limit “amount should be the commercials Counts 5-7 that the penal gross negligence scope ed to seek civil bordered ed in but should recklessness;” Femlron advertisement.” On ad ties for each Attorney 10 and view General vertisements 11 “were Counts Government’s although line, disregard” order, of the free to take wilful F.Supp. majority had decided of our of the Commission 552-553. view holding summary judgment a lesser amount serve Attorney only proper purposes Act. If the it is on Counts 10 hearing either of these not take as to these could denial of General although Regis us, could St. he is now courses—and counts before authority to see he fail what if the should not—we the issue arise demand had to double the Commission’s find on other counts for the Government $500,OOO.27 after a trial. appears there While Request Evidentiary an VIII. authority point, on the we would Hearing on the Amount of think it that the court accord desirable the Penalties. hearing evidentiary on the amount of disputing reasonably Not determination if this is and sea the sonably requested penalties the amount of within the maxi either the defend mum is committed to the informed dis ants or the Government. As recognized, judge,28 cretion the district see Unit size below Baking Co., penalty ed States v. ITT Continental should based a number (10 good 1973), appel including 485 F.2d Cir. the or bad faith 21 factors injury pub defendants, lants contend evidentiary hearing entitled to an the to the the ability pay. lic, on relevant and the defendants’ to good subjects F.Supp. as their faith belief that 354 at 548. See United States Batting Corp., v. 1961 the commercials did not violate Universal Wool accused degree 70,168 (S.D.N.Y.1961); Trade the order and the of harm caused Cases ¶ Corp., by any They argue 212 F. did. with United v. Vitasafe that force States hearing (S.D.N.Y.1962); indispensa Supp. United that such a was an 397 findings Co., preliminary v. 1962 to the court’s States Chemical ble Wilson broadcasting (W.D.Pa.1962), ¶ 70,478 in Trade of the commercials Cases 1963); aff’d, (3 Unit Counts 1-4 and 8-9 revealed “a total F.2d 133 Cir. 319 good Textiles, Inc., respect lack of faith with ed v. H. M. Prince States (S.D.N.Y.1966); F.Supp. dissemination of these advertisements 262 389 and, order, Bostic, supra, F. 336 if not wilful violations of the v. United States Appellants judgment dispute 27. that assess- claim that the en need to There is no judge penalties rather tered below current was “enormous ment of judgments reported jury. standards.” While most than the 5(Z) smaller, under § have been much see 3 judge Regulation 9701.40, this, Rptr. added CCH Trade with ¶ Not content only slightly $50,000 less assessments excess of are not un “were these violations See, egregious g., had disseminat- known. e. Ameri if defendants United v. than States upon Corp., Regulation very Rptr. relied cana ed the advertisements 3 CCH Trade originally 9701.40, 17,483-3 (D.Md.1965) the or- ($100,- issued ¶ the FTC it when light 000) ; F.Supp. Bostic, of our der.” at 552. United States F. 354 336 Supp. opinion (D.S.C.), Counts advertisements belief the AA aff’d on below, (4 1972), 1—4 been submittable 473 F.2d de would have cert. Cir. nied, barely, all, the commercials if at and that L.Ed.2d fact, disputable (1973) ($80,000) ; issue of An raised a Counts 8-9 United States corp Services, F.Supp. this, Inc., well, as the characteriza- National as we consider clearly (S.D.N.Y.1973) quoted ($204,200). erro- in the text neous. range Supp. culminating proceedings at 1321. The enormous in the order penalties to the district court which was available finalized review an- after appeals. They ap- case other in the usual civil renders circuit court of importance pear significant practical the court of critical me for all purposes ignore adequate on the have information issues extensive administra- assessing penal proceedings, informal, tive considered formal and disposed subsequent judicial ty. upholding re However, we are order, during judgments case on course of which verse solely proceedings because additional 10 and advertiser Counts given ample hearing. opportunity modify These commercials denial of a comply its “new” have clear violations commercials so as to been outstanding Geritol, respect with the in- with order but if made chose mitigating only possible circum stead —in defiance and the Commission’s warnings very least to skirt could be defendants’ belief stance —at edge Although My it. the order’s terms. Femlron not within col- contrary leagues give weight whatsoever on notice of Commission’s long-re- view, proceeded say appellants broad Commission’s —I product for their new strained —certification of facts viola- cast commercials transgressed Attorney General, unquestionably re tion to after a requirements proceedings, disclosure decade administrative strictions prescribed statutory court had a considerable accordance with the order. The dispute procedure. Their construction of information about amount congressional purpose pulls Femlron, like the teeth of and it does seem over evidentiary hearing would an enforcement enacted to en- ly statute that an compliance judicially-re- produced any sure different result. have rendering order, viewed cease and desist against judgments Williams statute as ineffective soft rubber affirmed; all are 10 and 11 Counts dentures. against are set judgments Parkson against aside; I judgments Williams cannot believe could conceivably through have intended to make so reversed and on Counts 1 easy to evade Trade Commission orders. cause remanded colleagues only. my against I do believe that Williams these counts statutory and overlooked the scheme costs. No statutory pur- hence misconstrued Judge (dissenting): regrettably pose; so, OAKES, I have done Circuit legislative think, support without My respect. col- I with all dissent history or, exception one minor dis- with today, importance leagues’ to decision among circuit, in its credited own and Trade Commission the Federal underlying judicial authorities. Their deceptive American advertisers would-be escapes me. Hence this dis- rationale appellate level. generally, at an is a first sent. subject They to advertiser hold of the Feder- final order a reviewed and TO TRIAL. I. THE “RIGHT” A JURY and desist cease al Trade Commission only point departure examina deception entitled from appellants question whether jury, on the tion of plenary trial, with a one right plenary, jury un to a trial vio- have a has been question whether the order 38(a), preserves (see by note der which Fed.R.Civ.P. a “new” commercial lated by right jury as declared infra). They of trial “[t]he this decision reach by pro- only lengthy Amendment Con despite Seventh administrative .,” U.S.C. every step § . is 15 stitution . which ad- ceedings, at 45(l),1 penalty provision adversarily, participated the civil vertiser corporation Any person, partnership, amendment, or section recent tlxis Prior an order of the Commission who violates read as follows: respect brought jury trial [with § this ac- which the Government Secondly, 45(i)] with (cid:127)" (cid:127) (cid:127) in isola- it is not to be viewed tion. But exception, sub separate one that a case tion, and statuto- as if it were some subjected sequently to severe criticism ry entity. it must be examined Rather appeals,3 no case its own circuit court of Federal Trade in the of the context among part taking many of the III whole, cited care Commission Act as majority opinion that, in an action statutory under- holds and to note the scheme brought by concerning to recover congressional policies United States lying penalties advertising the valid civil for violation of deceptive control of agency, an administrative implementa- and the determine the role right jury defendant has a to a trial 4,5(1). from tion function of Aside § statutory general a matter of constitutional goal seeking to divine good Thirdly, perhaps impor legislative and law. most purpose, are three there tantly, we determine must force consideration reasons that recognition right plenary, to a played (l) in the overall role 45§ by Congress. tend to en would subvert regulatory devised scheme statutory major- tire structure first of these is stated charged regula “Congress ap- FTC has been ity’s opinion as follows: advertising.4 deceptive parently expressly tion of false and did not confront ceedings portion of that constitute a critical fi- to cease and nal, after it has become desist Regard- part effect, IIA record. See is in shall while such order infra. highly taken, pay less of what view is it seems a civ- forfeit and to the United States incorpo- Congress $5,000 would have doubtful il than of not more clearly equitable remedies violation, rated what are each which shall accrue 45(1) proceeding increase the § into in a United be recovered States power brought by district deal with offenders court’s civil action United States. (Í) separate if carried § had realized that an order Each violation of such Indeed, separate offense, except with it the to a trial. shall be a injunctive power through continuing inclusion of the case of a violation support obey lends the Government’s neglect amended failure or a final order of argument injunctive penalties day civil the Commission each of continuance neglect relief are in fact alternate remedies. of such failure be deemed shall separate offense. as to con- 2. The absence of direct evidence amended, recently This Act of section was gressional intent leads to the conclusion 16, 1973, 93-153, Nov. Pub.L.No. intent ensuring 591-592, purpose Stat. for the pur- by examining the be ascertained must “prompt laws the enforcement of the objectives poses [Feder- the FTCA 408(b), Commission administers.” Id. at as a whole Act] al Trade Commission Although legisla- 87 Stat. 591. there is no e., objective criteria, the rele- i. terms of history amendatory particular tive on this supposes, inquiry “how, [the vant legislative one Act, Congress expressing clearly its dis- * * * ap- scheme] speed satisfaction with both the force interpreter.” pear to a ‘reasonable’ being which FTC orders were enforced. Congress Paper Co., Regis 355 v. United States St. There is some that indication Bishin, 1966), 688, (2d quoting F.2d 693 Cir. 45(1) eq- proceedings essentially viewed § as Statutory Essay in An The Law Finders: by importing proceedings uitable into those (1965). 1, Interpretation, 3 38 S.Cal.L.Rev. power mandatory injunctive the re- to issue accompanying in- text also note 28 and See pow- equitable relief,” lief “and further this States, fra; F.2d 284 Holbrook v. United by er to be Of exercised the district courts. 1960) (“a significant 747, (9th con- 752 Cir. course, previously grant- such be relief could comparison be- . . is sideration by granting appeals ed the court of enforce- consid- each such tween the results to which order, ment of the in this cease and desist lead”). eration would Circuit, case the Sixth so must assume we Hindman, F.Supp. 926 v. 179 3. States United Congress lodge this had some reason to (D.N.J.1960), v. in States criticized United power in same in § the district courts Co., F.2d 288 Plastics Vulcanized Rubber & proceedings. denied, Cir.), 257, (3d 368 cert. 258-259 n. 2 possible One viewed view is that (1961). 26 7 L.Ed.2d 82 S.Ct. U.S. 45(1) proceeding be the record in a § point terms, simplest is by the 4. Reduced to its more a district court amenable to review given pro- the is of 12 if a court or because of the nature of the informal

441 applied by attempts circuit of opinion to inter ute to be the courts majority The appeals findings pret in a statuto is (Z) if it existed “[t]he 45 as § facts, reject ap supported as to if Commission ry I would vacuum. by evidence, Supreme Id.6 relying shall be conclusive.” proach, on the Court’s party in If evi task inter either desires to adduce “our recent statement that single provisions of a dence in addition to that in preting separate adduced application may hearings, give harmo be made to ‘the most Act the Act is grants meaning possible’ appeals which, nious, if it comprehensive court legislative policy application, light orders evidence in taken FTC.7 court purpose.”5 before appeals affirming, then a decree enters Statutory and Adminis- Scheme modifying setting A. The or aside the FTC or Proceedings. trative enforcing der and order ex to the tent affirmed. the Su Certiorari FTC re- Under U.S.C. 15 § preme is available under 28 U.S.C. Court making sponsible the initial determi- engaging may § any party nation that be deceptive practices in com- unfair in or us, In the case now before the above Briefly, if the FTC deems merce. procedures were followed and culminated 45(b) proceeding be to “would by the enforcement review public,” party in the interest of the Appeals, Sixth Court of Circuit notice, question hear- with a is served modification, the FTC order di some ings held, and if the FTC deter- against appellants rected here. hearings that a violation original against mines from the complaint appellants report occurred, make a has “it shall 1962; issued December writing find- shall state its granting enforcement was court order ings issue . . August as to the facts shall 11, 1967, more than entered 4% party] [requiring FTC, an order years Co. v. later. J. B. Williams using such (6th 1967) (Williams cease and desist from method 381 F.2d 884 Cir. practice.” competition I). represented or such act I in Williams short 45(b). judicial way 15 U.S.C. Under U.S.C. § review culmination 45(c), any party subject to such a cease of an administra extended sanction may order then obtain review process desist com found Geritol tive had appeals. in court of 5 & violation mercials to §§ review the stat- standard of set forth Act.8 of the Federal Trade Commission power 480, 488, Finanz-Korp., to decide de novo the wheth- v. Uebersee given e., deceptive, er a i. advertisement L.Ed. “meaning commercials,” Brief for generally held bind been This Appellants FTC, at in- at then the least appeals evi “substantial court of concerned, deceptive advertising sofar as FTC, Pfizer & Co. v. rule. Charles dence” major stripped function (6th denied, Cir.), cert. 401 F.2d 574 regulatory presently performed by it 22 L.Ed.2d deciding what what is and scheme — FTC, (1968) ; Montgomery Ward & Co. deceptive advertising. note See infra. (7th 1967). 379 F.2d 666 Cir. urged upon Other considerations us modify findings Government, need for 7. “The stream- Commission findings, procedures facts, lined make new commented on Paper Co., Regis evidence so taken of the additional United reason States St. 45(c). important, F.2d nub . are also . . .” U.S.C. problem remains whether opinion purports majority 8. III of the Part hand, judge on the the one ór a on question 11 com- the to the whether decide other, pass specific adver- to on whether subjects ac- are the mercials which deceptive tisements the Federal with- and desist order the cease tion violated Trade Commission Act. passing to the reference as a out so much gave Weinberger Hynson, order 5. that Regardless decision that & Dun- Sixth Circuit Westcott ning, 2469, imprimatur judiciary. 609, 631-632, the U.S. correctly 2484, Judge Motley (1973), quoting defined 37 L.Ed.2d 207 Clark cease and order desist cials before us in 1-4 counts and includ- After granted ap by scripts court of ed enforcement for what us before are the only peals, thereafter, commercials, and can the FTC “BB” counts 5-9. The penal report and, compliance to force or exact FTC studied this move without case, holding hearings noncomplianee. In this as after consultation but ties points majority opinion appellants’ out the FTC between the FTC staff and representatives, by appellants appellants followed the administra advised and 3.61, might steps procedure, C.F.R. where letter of to what be taken tive compliance order, viz., desist of a cease and achieve issuance with the after deleting reports “power” compliance are submitted all to in references FTC, May By and to the it reviews “AA” commercials. letter dated by appellants 1969, accepted proceedings 15, appellants reports to or institutes agreed compliance. first re Commission’s to such conditions and enforce 23, 1968, “power.” remove resulted the word October The viola- on port hearing alleged public calling tions of a further counts 1-4 be- occurred 10, 1969, 1969, 20, on November tween FTC which was held June and June 1968, appellants than 14, determined more three which was weeks after agreed advertising stop had appellants’ not using to them. “sad-glad” compliance and desist with the cease commercials referred to moving FTC, than counts 5-7 rather were used from and after order.9 way 14, 1969, compliance (by "June immediately and to force were sub- before noncompli penalize injunction) mitted to or to the Commission in the third compliance report 1969; way (by 7, filed on of an action under June ance appellants gave appellants request 45(1)), amounted did from what not advice warning chance,” a fair Commission as to whether use a “second to noncompliance compliance. would neces would constitute 8- future Counts “sad-glad” 9 are the FTC.10 more drastic moves commercials sitate based 1968, “power,” which also published on an use the word and December required opinion these disseminated submission between June compliance report. and That re June over two weeks a second after 31, 1969, May 15, January appellants. letter port, submitted counts, 10-11, As appellants, “AA” to counts dealt commer- Femlron something spent ceptive, function, more it has be faulted court’s she cannot public interpretation a decade and enormous resources than her statement that “correct do, requires in the well be that the FTC the order the court to consider proceed plain language, courts future will be forced resort but relevant possible. quickly frequently ings and as more as the FTC the Sixth Circuit’s before way appear There would no other well.” v. J. B. decision as United States appel who, Co., F.Supp. (S.D.N. deal with those advertisers Williams Y.1973) here, (Williams II). in can at best be described lants transigent. help suppose One cannot specific are not Those advertisements courts, see the burdens on the federal Findings subject action, but of this Friendly, A Gener H. Federal Jurisdiction: concerning Opinion them is most of the FTC ex al II will be further View Part controversy may present relevant, since Judge multiple review acerbated with the properly be considered in administra- propose. Friendly’s opinion Wein Cf. part II tive vacuum. See infra. Pharmaceuticals, Inc., berger v. Bentex 645, 653, questioned L.Ed. its own hesita- While the litigation (1973) leg- deluge date, 2d 235 : “The at a tion on this later drugs history OTC if ‘me-too’ indicates that would follow islative drugs hearings Congress disputes had de to receive novo the FTC desired between manu inure the interests of re- courts would and advertisers to be worked out without drugs, possible. but not If facturers merchants sort court action where public FTC, require the interests outcome of this is to case ” protect years go proceedings, al- . . . See . after 11 before a anxious quoted Chapman judge prove either, novo, Rep. so the remarks of de that certain are false and de- text note commercials infra. use did even know of but could the Commission have used the word “flout- appeared advertising it until ed” —the cease Femlron and desist order television; probably expected could the Commission to in on network do so July future, step necessary the the Com took staff advised the first 3, 1969, penalties September noneompli- to exact mission itself such rejecting compliance report, step not, third ance. This the as seems to be suggested by subject majority opinion, to the order. that Femlron was the merely a procedures that after These indicate the of a submission “draft com- plaint” by rubber-stamp ap- enforced desist order has been the cease and FTC for by plays appeals, proval prosecution by Attorney a the FTC the court of the key determining was, own role its General. rather a certification seeking by and in previously order been violated has found the FTC of facts violation, Attorney and its sanctions such transmitted General, the duty practice appro- fol “whose it sound administrative shall be to cause gives deceptive priate previously brought proceedings lowed here for the subject 45(I)].” out who is an advertiser11 enforcement [of 15 U.S.C. § opportunity standing ample importance procedure 56. The order of this good functioning regulatory faith com the demonstrate his belated of the entire given pliance subject scheme with the Act. Even some has been the of extensive by appellants secure consideration unasserted this court in United declaratory Regis way Paper Co., of a a narrow review States St. F.2d specific judgment (2d 1966). There, opin- as to whether a- com Cir. in an compliance rejecting Attorney ion mercial with such the that is claim the beyond bring order,12 dispute that the General could it seems himself construing having expertise under FTC is its action without had to use applying alleged the the it to “new” of an violation order certified facts advertising.13 FTC, to him it so. care- Here indeed did went legislative majority fully sparse opinion into both his- To extent that tory policy supporting judicial judgment is a reasons substitution only expertise, conclusion that that exercise FTC administrative statutory power proceedings unsupportable. to initiate is 45(1). opinion replete 28, 1969, ap- FTC, On November agency’s numerous references ap- parently point this that convinced at expertise determining involved in wheth- pellants did not both had violated —it attempt in an support modified extent evidence to is substantial [T] here change comply finding with the order. that most of the Commission might bring single in a word commercial people de- are not because iron tired so compliance might leave anemia, into ficiency commercial failure to disclose and the noncompliance. prior misleading What state its because is false and fact changes might have, “new” impression ever effect the advertisement creates commer feeling is different from the commercial caused some- tired subjects of were immediate thing cials cure. which Geritol can obviously yet order, cease and I, desist F.2d Williams at required start Commission cannot be held that 12. At one court has least again. proceedings The cease all over report rejection compliance of a FTC’s therefore, regarded must, bo desist declaratory judgment subject review interpreted flexible instrument petitioner, action, risk of be flouted a manner it cannot stay oth- review to who cannot use changes do commercials in the form of jeopardize public’s in se- erwise interest de of the false or not affect substance curing penalties. possible Floersheim conveyed by impression ceptive com those (D.D.C.1972). Weinburger, F.Supp. 950 Co., U. v. Ruberoid See mercials. 96 L.Ed. S. here to 13. The “new” is used describe term elementary. subject This commercials been which have cease order but and desist 444 violated,

er one of its orders has been provisions self emasculates the following passage stands out: the Act. relinquish jurisdiction At- Regis To to the opinion The soundness of the St. torney recently of a after issuance has General been deci- reinforced would most Appeals desist order sion of and the Court of cease for the unrealistic, Holloway alone Commission District of Columbia in scope Bristol-Myers its orders Corp., and knows 485 F.2d 986 (1973). There, plaintiffs “provided pri- with staffs to institute been proceedings asserted a right up to follow and decrees vate of action to enforce 15 U.S.C. ” police 45(a), 52(a)(1) existing . . 54(a), their obedience. . and §§ and by implication statutory from the Co., Regis Paper v. St. States United rejecting right implied scheme. In quot- (emphasis added), at F.2d Judge Leventhal addressed himself to part v. Morton Salt United States in inseparability of the dual functions Co., 70 S.Ct. determining of the in whether vio- Again, (1950). L.Ed. acting lations had as occurred well as in duty responsibility capacity: for deter- and enforcement The “the substan- mining prohibitions . . . whether cease tive are inex- statute tricably eliminate provisions issued to intertwined de- orders with desist fining anti-competitive power special- effects [certain] and duties of a complied or body practices have been ized administrative charged [the FTC] delegated solely to the violated with its ...” enforcement. (footnote omitted). Id. at FTC. See also Co., FTC Ruberoid added.) (emphasis This Id. 96 L.Ed. 1081 As majori- not, in the quote as intimated pointed Regis, out this court in St. being support ty opinion, used to might what would be meat to the FTC proposition “that the FTC was to be poison Attorney well be to the General. prosecutor.” The fact judge as well as 355 F.2d at certification of requires the FTC that 15 U.S.C. § Attorney Commission facts through Attorney proceed General General is and of itself determina- itself conclu- a fact certification is after tion of violation of the cease desist neither to be sole sive that the FTC is order. prosecutor. majority’s judge nor having 45(Í) Section been invoked parte” reference to “ex determinations possible as one of this ease three means inexplicable, given violation is securing compliance with the cease case, of this facts which—before order, statutory and desist scheme penalty action was initiated —there was has run full course. The what argument public hearing and a full right might plenary to a compliance report, the first well as treated, 45(i) I exist under cannot be meetings parties numerous between repeat, considering ques- without exchange correspondence weight must tion what be accorded reports. compliance the second and third found the FTC and “facts” certi- And, contrary to the assertion that Attorney fied to the General agency’s violation determination of U.S.C. § weight adjudica- “not in an entitled to any gen- court,” Appellants proceeding do not claim clear- here before right Regis ly emerges opinion all dis- eralized to a trial on the St. acknowledged expertise puted arise issues “fact” that the FTC “compliance” phase interpreting did arise own orders given weight 11-plus years of administrative 45(Í) some action. these Rather, appel- underlying majority judicial proceedings. premise weight jury trial on two that no to a is to be accorded lants claim appellants choose to charac- FTC’s of it- issues which certification of facts given meaning (1) of whether advertisement is “de- terize factual: meaning ceptive.” (2) the commercials applied “properties” to the the word “expertise” The case law is un- product in counts 10—11. Femlron equivocal is and so voluminous it ultimately majority concedes necessary only point. to illustrate legal question purely question a latter is As the of District Columbia of Court province of court be that was Appeals recently stated, my view, for reasons low to resolve. developed The Commission has a fund below, appear in mak the court that will knowledge probable of as to the im- give great should that determination pact purchasers upon particular ad- agency’s own views on deference vertising representations, in re- question question. re The narrow years cent has been active in the evo- appellants entitled mains whether lution of new and innovative remedies (indeed jury trial) to a trial de novo advertising to correct false and to “meaning” commerc on the 11 deceptive undo the effects trade ials.14 practices. “Meaning" Holloway Expertise Bristol-Myers Corp., and the B. v. 485 F. Supreme 2d at 998-999.16 The Commercials. Court pre had earlier stated its view on this performed principal function question: cise of the de administration FTC statutory advertising ceptive provisions necessarily This scheme gives Federal Trade Act is Commission an influential Commission advertising interpreting role in ac 5 determination what U.S.C. [15 § § tually applying is and in violates that Act. FTC the facts of 45] making arising responsible poli particular unprec- also broader cases out of cy may spectrum Moreover, affect the whole edented situations. as an agency advertising,15 the one area in administrative deals expertise continually area, which its has never been seri with cases determining ously posi- questioned a better is Commission is often proc opinion position majority appellants’ such a due As the at opinion 16 assert footnote Corp. Motley’s suggests, Judge deprivation. v. Wein below ess CIBA Cf. 2495, acknowledge berger, 640, 644, seems to certain factual 412 U.S. (“Cases questions arising compliance (1973) 2498, out of 37 L.Ed.2d 230 phase proceedings might, in- formal admin in some arise where there has been no drug’ stances, require is the ‘new trial. a factual istrative determination of Such question might date, sue, being a district on how first then, however, tendered to be on what many occasions, District was transmit- court. Even commercial awaiting hand, general public might stay ted of an well violation Court appropriate order. way if in no determination Even these issues—which administrative meaning question”). This resemble the issue of the the threshold very appellants make no the commercials —were “the sort which us because before juries traditionally resolve,” called on to such claim. Judge Friendly’s opinion 25, it would not Bristol-Myers Holloway generally 15. See v. delegate mean that did not 1973) Corp., (D.C.Cir. ; United 485 F.2d 986 responsibility determining Regis Paper Co., supra. v. States St. “facts,” subject only lack of to review for supporting FTC, substantial § evidence. 5 278 U.S.C. See also Niresk Indus. Inc. 706(2) (E). denied, (7th Cir.), cert. F.2d 341-342 process might While due mandate L.Ed.2d 104 S.Ct. completely (1960) ; Prods., FTC, such facts not be determined a F. Inc. Carter parte basis, compliance phase (9th denied, ew proceedings Cir.), 2d 884, 361 U.S. cert. were not so conducted. As dis- L.Ed.2d body regulation cussed in the supra, of this dissent at note 7 also See the enormous amount why opinions, deceptive advertising there is no reason a district of “guides” 45(1) proceeding court grant could not industries. and rules in dozens of 15.1-15.427; a motion to relevant adduce additional Parts 16 C.F.R. C.F.R. FTC, party in evidence before the should a 17-253. “sparse,” are courts to Regis than determine United States v. St. Pa- “deceptive” practice per Co., 355 F.2d at and it is con- meaning within the Act. This ceded all that neither the it- statute frequently Court legislative stated that self nor history make given judgment Commission’s direct ques- reference to the great weight reviewing courts. tion. In such a situation we should be especially doubly This true admonition aware of Justice admo- Jackson’s respect allegedly deceptive Schwegmann ad- with vertising nition Brothers v. Cal- finding vi- a 5 Corp., since vert Distillers heavily 745, 751, rests so on 71 olation this 95 L.Ed. 1035 field pragmatic judgment. and that “to select casual from statements inference debates, always distinguished floor not Colgate-Palmolive Co., 380 FTC v. accuracy, for candor or as a basis for 374, 385, L.Ed.2d making up Congress our minds what law added). (emphasis (1965) intended enact is to to our- substitute Congress There no of I am selves for the reason which in one of im- its suddenly portant expertise to that this functions.” aware been once an order has be discarded I do draw the same as inferences reviewed, majority the as made majority my does from examination Viewing Trade the Federal does.17 legislative history of the as is available whole, integrated Act as Commission guide The us. Wheeler-Lea Amend way supra, Con see note 2 gress of ments 1938 to the Federal Trade agree it, simply cannot I viewed history Commission Act had a tortured of information ac storehouse congressional compro of inaction and gathered experience quired, and thoroughly mise which has been recount ad effect of question of the on the FTC Holloway generally ed See elsewhere. “meaning consumers, of vertising Bristol-Myers Corp., 485 F.2d 992- at disregarded, or commercials,” be is to appears members that some 994. disre Congress it intended be up passage of Congress successfully held owing might to the garded, what be— advocacy the final bill their strenuous adver greediness of an intransigence or regula position of the that control en point most critical tiser —the advertising deceptive be should tion of penalizing those process, tire placed jurisdiction of within the Congress as defy ofwill would who Drug The Administration. Food and expressed in the Act.18 prevailed, eventually opponents, who FTC, argument as that the made History. Legislative C. body, in a better “quasi-judicial” previously category referred This court position with this to deal 45(i) history legislative as of § practices.19 passing opinion Cong., reference H.it.Itep.No.1613, makes 1st Sess. 17. Their 75th findings “weight” added) (1937) (emphasis accorded : orders, framing in- remedial as an violations Commission Federal Trade exper- why attempt explain pro- body, quasi-judicial has a dependent, makes no proceeding. {l) handle multitu- § in a tise irrelevant calculated cedure better advertising types its do and to dinous majority says that “While 18. The greater and satis- confidence to the work placed rule in evidence usual substantial any purely public ad- than faction Act, 5(c) 45(c)] the FTC [15 U.S.C. body. with work carries Its ministrative orders, judicial dealing review searching in- combined elements 5(1) provision U. [15 in § made similar prevention procedure, orderly vestigation, (Í)]-” un- had § 45 But review S.C. cases, penalization minor rather than Act. Procedure der Administrative judicial essential and that fairness Weinberger Ben- U.S.C. 706. See §§ public. by the of confidence enlistment Pharmaceuticals, Inc., at 653- tex gamut Amendments, now Section of all the claims he can provi- 45(1), plausibly one of product, U.S.C. make for his he can adopted change cease desist then composition, sions make pat orders more effective. Prior ent-medicine manufacturers so adoption Amendments, frequently enforce- repeat proc done, again.21 ment could of a cease and desist order over ess and over pre- proceedings, after new had Cong.Rec. hearings, sumably had been full-blown points during At two the House de the order ascertain whether instituted to bate, made, brief comments were al purposes had been violated. One though directly referring pro- 5(J) was to streamline the new § question, light that cast some cedure follows: question why there was need in place complex regulatory the first for a Commissioner order of regulate prevent deceptive pro scheme definitely final as become advertising. Representative Sirovich, opera vided in Section 5 and become relatively early debate, transgressions made ref with tive as to further pub gullible erence to American proceedings “the out of new the initiation Cong.Rec. (1938). lic.” 394 Later required 83 as violation now after the debate, Representative the Coffee reiter occurs.20 prior statement and fortified this ated H.R.Rep.No. 1613, Cong., 75th 1st Sess. by gullible people.” to “the reference (1937). proceedings,” These at “new Congress, in these remarks at 416. Id. Representative least of mind supremely that the aware dicate, was represented Chapman, of a frustration average un was often American citizen proc- purposes the of the administrative from the true the false able to discern very ess of the the ad- because nature of pitches of subjected to the sales when vertising beast: might advertising industry. One of group the classification within even Advertising copy frequently is judges.22 If “gullible” this be federal us changed good as a matter advertis- certainly permissible to draw true, it is ing technique. By the time the not have would the inference injunction cease-and-desist order or an Congress considered been advertiser, aas becomes effective the pur implement the to tool most useful change copy. course, matter of will his Commission Trade poses of Federal process He indefi- can continue this tEe directly Congress considered had running any Act nitely what- without risk penalty, run question.23 when has ever of he “streamlining” exercise bitrary, capricious or unlawful 20. A when occurred similar 706(2) (A). language Congress adopted § § 5 U.S.C. function. governs 21(1), now § into 15 which U.S.C. logic discussed, ma- Clayton of the in- See of the Act. As will be enforcement 23. compel probably reex- position jority’s fra. Supreme decision Court’s amination applicable clearly statement to This is Corp., Laughlin Steel & in NLRB v. Jones “proper- disposition court’s of the Femlron 615, 48, 81 L.Ed. 57 S.Ct. 301 U.S. question. ties” pay (jury (1937) denied back majori- recently nothing support case), Cur- reaffirmed I was know of which expe- ty’s jurors Loether, assertion that “have more tis judges” when comes L.Ed.2d U.S.L.W. rience than most “decep- Laughlin, (1974). Court deciding & Jones commercial at a suit suspect, analysis is not I instant case I “The tive.” In the final said: a suit. Congress insists, in the nature law or common believe greater com- expertise proceeding to the de- is one unknown and wherewithal statutory proceeding. Re- gulli- question is a cide that “the mon law. than American payment employee public,” subject always ar- ble to review instatement legisla- injunctions, temporary only sue and 15 other U.S.C. “clue” 78y(a) respect history time from a refer- derives brief tive § appeals. S.Rep.No. Cong., 1st 221, 75th the civil the fact that ence to pertinent part, provi- (1937), in similar Sess. 7 is mere provision based on was Stockyards ly reprint S.Rep.No. 1705, Act and thus in the Packers sions Exchange 78ff(b) Act adds no reference to 15 U.S.C. § 1921 and the Securities question. See, g., S.Rep.No. 74th or otherwise clarifies e. of 1934. standing provision None the sources Cong., 2d Sess. clearly proposition considered former,' 7 U.S.C. § (Í) patterned relevance the Securities has no § and therefore criminal Exchange general refer- Act of 1934 make reference here, as it is seen unless majority’s 78ff(b) ; they' refer sanctions § criminal fact ence to 78y(a) (b).24 to 15 U.S.C. Wheeler-Lea included is some There Amendments. Reasoning D. to Other provision the Securities Reference to what Statutes. to, and being referred Exchange Act was legislative the Wheeler-Lea purpose, paucity Given histo- for what reports and debate. ry bearing us, in their on the issue before one is lawmakers Cong., 1st Sess. tempted by analogy H.R.Rep.No. 75th reason other ref- clearly statutory provisions indicates like” “look Exchange ofAct 45(1). foregoing has, Securities But as the I erence 78y(a), which hope, clear, by analogy 15 U.S.C. made reason provisión general dangerous statutory nothing more than best where a or orders penalty provision adopted part decisions review, as judicial integral subjected complex regulatory to to a are SEC (referred 78ff(b) by Congress scheme opposed § to U.S.C. formulated with refer- majority opinion). objectives mind, by certain and at worst the to Exchange ofAct looking to one’s “own the Securities heart for his deci- to ence gen- simply a opposed “seeking have been sion” thus to to divine incorporated conflicting confused, features to out of the often reference eral Amendments. aspirations Wheeler-Lea half-conscious lie which the into House reference behind a statute some resultant of those Specifically, provi- aof goes keeping inclusion forces with what Report to was con- ap- Cox, unless making sciously contemplated.” final orders PTC A. Hand sion period. 60-day Interpretation Statutes, Neither and the of pealed within Wheeler, 80 (1947). Senator Harv.L.Rev. of remarks Rep- of (1936), nor those Cong.Rec. 6594 analogy to the Interstate Com- Cong.Rec. 397 Reece, 83 resentative penalty section, merce Act 49 U.S.C. § majority, by upon (1938), relied 16(8), majority opinion drawn provision any specific to reference make persuasive. me seems not in to the least Exchange ofAct the Securities provision This is to said be “almost cer- Cong., 2d Sess. 1705, 74th S.Rep.No. tainly” In 7, 45(1). “the true for If model” § made specific (1936), reference so, course, might this were one have grant- respect to 78y(b) expected with leg- some in the 15 U.S.C. reference it § is- power history 45(1), giv- appeals especially islative § the courts imposed jury requirements be entitled to section would trial —a lost are time ap- question remedies far I never that so know has statute violation readily litigated apparent The conten- that been propriate enforcement. to its —it e., question jury, is with- i. be Amendment decided the Seventh required to be certain documents 48—49. out merit.” 78o(d) been had fact § filed U.S.C. any prior filed, arguendo, reference find- Assuming, involve SEC does not that ings 78ff(b), as- or infor- made as the result formal § in fact to 15 U.S.C. hearings. arguendo, suming, of that mal that a violator apparently history en reference inaccurate more than two-decade shown a Stockyards provisions effectively being Act of to enforce unable Exchange Clayton 1921 and the Act of the limited Securities with means Act Nevertheless, Cong., S.Rep.No. 1934. 16(8) two features of 86th 1st § available. detailing prominently: (1959). most stand out Sess. 2 Without existing, first, procedures whether the then enforcement specific say under that section trial obtains one of the it to suffice objections litigated procedure has never been either decid- to the earlier ed; second, language 16(8) is order of the court’s § that “enforcement sufficiently subsequent con itself different from that of in a secured must be proof 45(1) any analogy requires without proceeding, render tempt § which significance. respondent activities new order.” court’s H.R. have violated contemporaneous As for “other rail- Cong., 1st Sess. Rep.No. 86th regulation statutes,” road to which the Admin.News, Cong. & U.S.Code majority including refers, perhaps although Congress, p. 1805 16(2), U.S.C. with deals civil di issue did not confront complaints by persons against carriers thought hardly to have rectly, be can in reference to ICC order ungainly substitute, for an wanted to system payment only thing money, neces- review, hearings sary new say good what or was agency require the procedure that would probably for the railroads has little or de try novo whole case in effect nothing decep- to do control of jury. Now Chief aor a court advertising before Judge tive the FTC. cap the First Circuit Coffin language itself, 16(8) As essence of § I take tured what differs, alia, inter section “Congress has (Í) he 21 when said requires knowingly an ICC order provided Commission that a final Not violated. does unimpeachable Jus basis can requirement, Supreme against a defend Department suit tice flatly specific Court said intent order, with of such ant for violation requisite is not a to violation of an violation.” up for each to $5000 fines order issued the FTC in a false ad- Farmington Fors Co. v. Products Dowel vertising Colgate-Palmo- case. FTC v. Manufacturing Co., Cir., 421 F.2d 1 ter Co., live 380 at 393. It seems evi- U.S. point is that here 61, (1970). The 75 provisions govern- dent ing the that final, one is the FTC once an plums ICC orders are while here we already had subject order has to such an different, sweet, have if a less fruit. on notice “day in court” and his analogy, neglected subject completely by One violations that thereafter majority, explored interposi the remains to be the penalties without severe theoretically hearings which least trials should at be renewed previously more fruitful because involves the in- been issues corporation assumption 45(1) unsupported as an enforcement § decided.25 The Clayton tool proceedings. v. Act States in United This court district the provision, (I), F.Supp. 104, now Co., 15 U.S.C. 21 111 as its Beatrice Foods 344 legislative history shows, (8th patterned aff’d, 332 (D.Minn.1972), was 490 F.2d 45(1) after jury because is available 1974), the FTC had trial Cir. subject only If agency discretion, a modified commercial to review is within the or- der, capriciously arbitrarily, “deceptiveness” issue of its if exercised or abuse or “meaning” 701, already litigated contrary has 5 §§ been to law. U.S.C. before or Weinberger, though precise Corp. even 412 FTC commer- CIBA Cf. 640, (1973). actually prior 2495, cial was never L.Ed.2d before the FTC 93 S.Ct. compliance phase proceedings. supra note the text at See also note 10 question supra. Whether within the order is a in the first instance exercise of fact, surprisingly, Hindman court’s Not of material is an issue where there Indeed, categorically rejected, holding albeit question. was control does not appeals dictum, by own affirming judgment the its the Beatrice in Eighth & v. Vulcanized Rubber paid lower United States heed to the Circuit 2n. Co., 258-259 regarding jury and Plastics F.2d a court’s dicta (3d light Cir.), cert. 368 U.S. denied, in much same examined § (1961). re After 45(1), 490 7 L.Ed.2d S.Ct. examines dissent as this counting presented clearly such the facts as Very there F.2d 332. “stay its court, Hindman the Third Circuit said court could district an issue holding court’s Hindman thereof determination pending a hand” by Corp. v. Wein agency. CIBA Cf. erroneous, since the sole issue be- was 644, 93 berger, 412 U.S. was the court whether fore labeling (1973). 37 L.Ed.2d pro- practice was within the scription the order Precedent, and, Paren- E. Judicial labeling practice deceptive. was Constitutionality. thetically, creating Moreover, an issue . only one case stated, there As Hindman, of fact the court did a trial ob- held that exclusively usurp the function 45(1). In an action under § tains in vested in the Federal Hindman, F.Supp. United States Trade Commission to determine the (D.N.J.1960), labeling practice issue of whether FTC whether prohibiting order issued deceptive misleading public. “cus- of the label the use la- cover tom-made” sufficient added.) (Emphasis the text Vul As bel, “custom-tailored,” subsequently clear, canized makes the court there adopted the defendant. for use concerning “sole its statement based upon totally premise fallacious which reading the court” before on its issue arrived at its conclusion district court Co., Morton FTC v. Salt required was as trial was 92 L.Ed. 1196 follows: petition for writ of certiorari principle we must in mind the bear Supreme Court, Vulcanized conceded meaning given that representations application Mr. that to be the correct [presumably as these language in Black’s Morton Justice both “custom-made” “custom-tai- argued Sait,25abut nevertheless meaning is not lored”] passed labeling had never on the by experts, would be attached to them “rubber-resin”; rather, Vul combs .its average man who would insisted, the order went canized purchase likely ques- the articles or “hard rub combs labeled “rubber” representa- tion and to whom those ber.” tions are thus made. Although the Circuit remarks Third a non at 927-928. The statement is Id. respect to the Hindman case and a with sequitur place: in the first while jury may “dictum,” trial rele- is lay- question deceptiveness of relates vant the Government consider being expertise deceived, men is on what summary judg- there had been awarded deceptive Beyond important. this, ac- by court, ment the district which award cording court, to the Hindman neither was affirmed certiorari denied. “expert” testimony expertise of nor the Thus, appellants would cer- what here plays the FTC role itself whatsoever tainly a “factual” dis- characterize as determining in what are advertisements by pute was as a matter law resolved deceptive. or are not One is forced to passed on that is- all the thought courts wonder what the district court though sue, in even character- to do. Vulcanized FTC was business 25a. Brief at for Petitioner

451 involving 4597, dispute, the mean ized the one 94 at S.Ct. Court order, distinguish one.26 then as a factual an went Block v. Hirsh, 458, 135, 256 U.S. L. S.Ct. course, is, series of cases There a upon Ed. 865 a heavi case relied majority, heavily relied on "leading” ly by denying right the lower in a told we are of which one trial, following jury way: to a States, Hepner v. United 213 U.S. (1909). 53 L.Ed. merely Block v. Hirsh stands for jury generally trials hold cases These principle that the Amendment S^enth penalties for civil actions available generally inapplicable in adminis my to- In view are or forfeitures. proceedings, jury trative where trials tally them inapposite in none for incompatible would be concept with whole proceeding prior there a culminating administrative adjudica of administrative upheld judicially ad- in a tion. See Loether, Curtis v. order, violation ministrative at 194 [94 S.Ct. 1005]. See also NL issue; all them which was Laughlin Corp., RB v. Jones & Steel statute was question of a of violation 301 U.S. 1 S.Ct. 81 L.Ed. [57 being ini- and ab tried for the first time (1937). 893] however, Here, appellants were tio. U.S.L.W. at at 1733. S.Ct. up- long FTC, ago turn found pointed out Court that under the Ap- held Court Circuit Sixth statutory operative scheme in the Dis- engaged peals review, in de- Columbia, trict administrative advertising; ceptive agency was a involved either as slightly fact- “new,” ever so whether a changed adjudicator, dispute or as an each finder reach is within commercial coming courts, fresh to the Court order, de- there was not whether said “We assume that Seventh advertising ceptive first instance. Amendment would not be bar to con- a a Any inwas intimation gressional delegate effort” to the resolu- “opting” Act Federal Trade Commission disputes such an administra- Hepner principle” me strikes for “the agency right tive without a as, wholly soph- sophisticated, however being granted. at U.S.L.W. istical. majority opinion 94 S.Ct. at 1733. The by the Su discussion The most recent support” in this case finds “further right by jury preme to trial Court of holding on the seventh amendment Pernell to be found in civil cases is stating issue in the Pernell decision Realty, 416 Southall “provides 45(i) just U.S.L.W. L.Ed.2d ” ‘civil action.’ with Consistent oversim- Pernell, held the Court plification application Hep- possession real an action recover however, issue, ner line eases to this brought Col property in the District of ignores majority the 45(0 the fact that § pursuant 16-1501 to D.C.Code § umbia is not isolated “civil action” trial under entailed the provision provision but rather is con- Court amendment. the seventh complex ceived embedded long that ac it “has assumed stated that statutory very scheme that is the foun- land, like actions tions to recover agency’s dation of an administrative damages property, ac person to a jury.” power. Id. tions at law triable many give any right weight indeed, Jaffe, in fessor Professor who is so fails to — all, things in us he does not the rest of not mention —whatever administra- like proceedings, informal, up agrees Hindman, asking better tive “Who formal or led with Jaffe, lay L. to the the FTC’s certification of facts than a customer decide?” Attorney Action Administrative the itself. Judicial of General or certification Control (1965). saw, This in like Hindman is what Vulcanized 319 n. 237 But court good pro- agree. my colleagues here, and with it I court and

452 uphold congressional pow- 189, Loether, 94 These cases 415 U.S. v. In Curtis statutory 260, enforcement of er to entrust rights 1005, 42 L.Ed.2d U.S.L.W. 39 S.Ct. argu process rejected to an administrative (1974), an the Court specialized equity brought free from court of damage un action ment that a Rights Amend- the strictures of Seventh Act the Civil der 812 of Congress provides 3612, ment. But when 1968, not 42 U.S.C. statutory rights timely in for enforcement of jury if the defendant to a tried requested ordinary plain- civil action in the district an tried. that it sobe obviously courts, heavily where there is cas- on two Curtis relifed tiff in es, denying Laughlin justification Steel & v. Jones NLRB for functional jury right, jury 615, 1, trial a trial must Corp., 57 S.Ct. 81 L.Ed. 301 U.S. Landy, available if the action involves 382 (1937), Katchen 893 rights typi- and remedies of the sort L.Ed.2d 391 15 86 S.Ct. U.S. cally support enforced in action law. an at her claim that applicable amendment was seventh (footnote (emphasis added) Id. omit In & of action. Jones to her language ted) emphasized is above . The Laughlin, supra, had note the Court 23 apparently to one of the a reference pay upheld in an the award back three mining to deter factors listed as critical rejecting proceeding, a seventh NLRB “legal” nature of issue claim; Katchen, amendment Bernhard, Mr. Justice White Ross v. upheld seventh amendment Court over a 24 n. 396 U.S. grant Bankruptcy claim Act’s thing (1970). If L.Ed.2d 729 one summary jurisdiction ac- in a trustee’s out from above stands the discussion compel a tion to a claimant surrender legislative history (i), it is 45§ commenting preference. In voidable Congress thought that its constituents Curtis, writing Marshall, Mr. Justice for “gullible” protect sufficiently Court, & a unanimous stated that Jones advertising, deceptive from them FTC, Laughlin “quasi-judicial” as a administra proposition stands for the agency, exper tive alone would have the generally inap- Seventh Amendment is adjudi tise and resources define and deceptive proceedings, plicable in administrative cate ing. advertis what is or is jury incompati- where trials would be any aspect of the If FTC’s role concept ble with the whole adminis- statutory clear scheme is made adjudication trative and would sub- 1938, it the cases decided since stantially [agen- with FTC, posi only interfere FTC, a cy’s] statutory role in the scheme. decep question tion to deal heavily advertising which “rests so at at tive S.Ct. U.S.L.W. judgment.” added). pragmatic (emphasis inference and Mr. Marshall Justice pre Laugh- Indeed, case it is the law this then commented on both Jones & Circuit, writing viously Katchen, determined the Sixth lin and jury Colgate-Palmolive Co., a would be to decide FTC V. purposes, has, practical 374, 385, 1035, 1043, taken for all L.Ed.2d 904 litigation, jury years hearings, meetings, majority’s statement full-fledged judicial jury review, inadequacy discussion is not a factor “when hearings, plus correspondence, and more a television asked to determine whether expertise, rep unquestioned application agency commercial has made various forbidden treasury, great public expense surprising. all at Co. v. resentations” Crane appel (2d Standard, Inc., to see to decide. is most difficult F.2d 332 American jury plenary 1973), considering trial as claim lants’ Cir. Standard delay anything than “the tactics of other should be accorded Supreme procrastination” damages Court an “intri amount recoverable opin Judge Friendly’s case, hallmark of another tells us have been the cate” securities regulatory industry’s efforts to thwart ion for stated that “It would Weinberger agency. efficacy See appropriate another think hard to of tasks less ” Dunning, Hynson, performance & Westcott F.2d . . . . appropriate” 626-627. task 344. One such “less jury question, I, trial F.2d at with the fact Williams Congress directly required a random never to “take has addressed FTC is meaning question. sample and this It would not to determine the be amiss to proceed On the with the impact advertisements.” words of of the Professor Llewellyn jury mind: what meaning, issue would finding other than a “random” sam Congress Here directly [where did not pling? question passing consider a a stat argument ute that many years] two has been on made that for books quest properly in footnote 10 of is not “other” factors listed pre- originally for the Bernhard, supra, e., “the sense Ross v. i. intended statute, merger remedy sought origi “the the sense custom” and nally strongly put sought,” “point it, into are said here but rather for quarried sense the former it which can be light toward trial.” As for out of it in necessary only of the to reiterate new situation.28 § complex (l) part and is one of a This “situation” is “new” regulatory that, happens, scheme it so sense that no case has ever it addressed contemporaneously enacted almost directly question weight self what merger equity in with the law is to be accorded the FTC’s determina Thus, the federal courts. the stark fact tion that its cease and desist order has “pre-merger” is that there is no custom nothing been violated. I view it as more practice to which we can look for question less than the traditional guidance. “remedy sought,” As to seope-of-revew what the is and on what recently penalty, raised here it is a civil by Congress record it tois be based.29 $10,000 to a maximum previously noted, violation, supra, As per purpose see note 8 serves Judge Motley punishing defy stated that her considera- those who would the or- plain was to question be based on the lan- ders of the FTC. The guage meaning is, order, of the cease and desist commercials con- enforcing Sixth clusion, novo, Circuit’s decision trial de order, proceedings jury. “relevant ques- court or before eminently the FTC.” This is sound as a tion which entrusted to an ad- starting point. What, process however, are “rel- ministrative and where there is proceedings justification evant denying before the FTC”? functional type right. 45(l) pro- On what record is a As such the sev- ceeding brought in apply. enth amendment does not district court NLRB proceed Laughlin Corp., supra. ? v. Jones & Steel Loether, supra. See Curtis v. proceedings include, Relevant course, generated the record in the ad- II. CONSIDERATION OF THE process ministrative which led the en- ELEVEN COUNTS. order, forcement of the cease and desist A. The Function the District Court. modified, by Sixth Circuit. opinion incomplete importance This if I of this record cannot be did not overemphasized, delineate what I believe to be the because I have re- precise played by length function to be the dis- counted at some both the FTC penalty proceeding trict in a appellants litigated, albeit in admin- 45(1). Although argued proceedings, very questions could be istrative underlying administrative law that are now before this court in the tests, incorporated now Adminis- form of modified commercials. This might trative Procedure Act, already in- subjected be read record been 45(1), confronted, we as with the “substantial evidence” review in the Llewellyn, see, g., 28. K. Davis, The Common Law As to which e. Tradition K. Admin —Deciding Appeals (1960), quoted 30; istrative Law chs. 29 & §§ U.S.C. Farmington Dowel Prods. Co. v. Forster Mfg. Co., (1st 1970). 421 F.2d Cir. Circuit, may whose binds shall take the risk he decision Sixth cross implications the of the line.”30 future consideration and the reach cease that record passage I°take this to the indicate tradi- and desist order. tional standard for both review the appellate district and courts courts in a (and the district But also before great 45(J) proceeding: § deference is appeal) the us on are hence before to stage be accorded the at this FTC proceed- records of the administrative proceedings. in the As Mr. Chief Jus- generated ings subsequent to that were clear, process tice Warren made due pro- These Circuit Sixth decision. rights subject of those to cease de- ceedings during “compliance” phase largely protected by sist orders are findings hearings, public consisted of compliance procedures themselves. 380 meetings correspondence, FTC, be- U.S. at 394 n. 22. & representatives tween of the FTC and type This of deference has been the appellants, of facts certification subject very Supreme recent Court Attorney General Camp Pitts, consideration 411 U.S. along with transmittal of draft com- 36 L.Ed.2d 106 plaint. pro- It said these (1973). Comp There a decision of the ceedings are, informal, balance, on as troller procedures31 on based informal hearing opposed proce- the formal thought by appeals the court of 45(c). pre- for in dures called viously As § require de novo review the district adoption discussed relative to reversing, Supreme court. Court 21(i), of 15 feature of U.S.C. one § § held tnat the review not to be de delay 45(0 expense avoid upon novo but rather the informal ad proceedings of further after a formal compiled below, ministrative record cease and order final. desist has become on review such a record was to be justice point, At that must be swift as “arbitrary, capricious” standard just. point well as This is nowhere bet- of 5 (A) U.S.C. not on § expressed ter than Mr. Chief Justice “substantial evidence” test of 5 U.S.C. § Warren, writing for the Court FTC v. 706(2) (E) appropriate “which is when Colgate-Palmolive Co.: reviewing findings hearing made on a respondents [subject If to a final ” record. . . . Id. at 141-142.32 their cease and desist subse- order] The Court went hold the dis quent attempt commercials to come as power trict court had the “to obtain misrepresentation close to line of through from agency, either affida permits, Commission’s testimony, vits such additional ex specifically may without intend- planation agency reasons for pro- do so into the area cross may prove decision necessary.” Id. However, scribed this order. it at 143. require does not seem “unfair Camp controlling, While is not goes deliberately perilously one who point way.33 serves to If the proscribed dis close to area of conduct Parh, that, Boyce 393, quoting Court made clear 30. 380 U.S. at Motor Act, Administrative States, Procedure de novo re- Lines. Inc. v. United view authorized “when the action is S.Ct. L.Ed. 367 adjudicatory agency in nature and the fact- procedures 31. The there unlike finding procedures inadequate . . . during phase compliance those used when [or] issues that were not before Compare 4.12(d) this case. 12 C.F.R. agency proceeding are raised in a to enforce (1967) 5.4, and 12 C.F.R. 16 C.F.R. nonadjudicatory agency (em- Id. action.” Paper Regis § 3.61 and United States v. St. phasis added). Co., 355 F.2d at 697. argued Camp might irrele- Nothing reference, Camp Court’s review vant here because in Citizens to U.S. at decision Proce- there is based on the Administrative Volpe, 401 Preserve Overton Park v. inappropriate dure Act and would be 402, 415, 28 L.Ed.2d 136 contrary. In Overton appellants (Z) proceeding, after seek to have introduced in a triet court recognize hear such a at reviewing it and trial to that the before the record tempt nothing inade argument, is more than one to se the record deems hearings any cure purpose, is no rea formal which have there been quate for Congress. by Appellants de a motion denied why entertain could not son it mand, alia, party the FTC inter “in which its by remand to a trial either necessary to witnesses could be and facts and heard [sic] the to adduce opportuni pass it those facts.34 which would have the [sic] on the FTC ty already explicitly to procedure cross-examine Government witness a is Such taking positions.” contrary appeals ini es Brief for on the court of to available Appellants the review, to at 23. is difficult to see no violence and we do tial proceeding any by “quarrying” out of how such a statutory be scheme thing only equivalent Indeed, the than to formal less flexible tool. it this doing hearings, presuma judge perceive so albeit for not before a can reason we bly possessing expertise subject de no whatsoever. a cease and to is that'those thought provided might rightly for formal could have sist order nauseum; bring hearings plenary or ab initio to such trials ad have the burden H.R.Rep.No. it did under not do so. See the facts to attention during Cong., (1937).35 compliance 75th 1st the Sess. 16 C.F.R. 3.61 procedure. Appellate B. The Function the Court. of any If remained as whether doubt Taking position question the that the required or the district court below was these 11 commercials violated empowered plenary question trial on the to hold a the cease and desist order is a appellants plenary questions assert as to which be decided without trial trial, judge plenary briefly jury, the or I address both to question type perform of at look to the evidence of what function we one need import Trade here confined to determination into the Federal Commis Review gen concepts the entire sion of review that are of whether substantial evidence on Act supports applicability. any “borrow . . . the Commis- eral While record great Report Compli- response ing” necessity the be done with sion’s must care, why response said be done that cannot he I cannot so see reason it ance clearly wrong. arbitrary long anti or result is consistent with have been as the (emphasis added). purposes Trade Federal Id. at 957 furthers Floersheim, Moreover, if violations it based on the Commission Act. action sprang judicata? that action res Administrative Procedure Act would not Minerva; into life rather full-blown like Corp. supra; 34. CIBA See note cf. struc was the an extensive embodiment of Weinburger, 412 at 644. ture of administrative law which the courts purpose Appellants constructing, al the true been elaborate on commentators had suggesting plenary by inconsistency, of this beit with some confusion and stage previously noted, obligation has an at for several decades. Government As present “experts proceedings accompanying supra, in ad- see at in the vertising, note text jurisdic surveys viewers, poll or sam- or least one federal court asserted ple Appellants at 37. evidence.” Brief for the Administrative Procedure Passing Act, law this case FTC’s U.S.C. to review the fact any obligation rejection compliance report at FTC is under no of a submitted I, sample,” party subject Williams a “random desist time take to a valid cease and Weinburger, trial en- am F. I struck order. Floersheim v. 881 F.2d at jurisdiction by appellants Supp. the statement visioned That court took question deciding majority FTC is basis that an order of the “may compliance phase make “forbid- 11 commercials have the whether these sued easy representations supplemental one a rather den” effect of a and Desist Cease jury. quite appropriate petitioner for a all and Order after without benefit something judicial Maybe my Passing question saw brethren review.” Id. not, I validity I but we did asser viewed that of the district court’s commercials expertise my impressed by jurisdiction, noteworthy lack tion of is still subject meaning deceptiveness. sharply in a the court restricted its review (l) proceeding: symptoms to an persons are due whose questions of appellate toAs level. existing deficiency court, vitamins [of by the district law decided , powers also the Geritol . . . appeals full iron] can exercise court of affirmatively must the con- advertisements soundness as to the of review great negative that a disclose fact the extent To reached. clusions experience persons majority who district questions decided experience symptoms do not these implicate the discretion have a vitamin them because g., of amount court, e. great deficiency; obligation that to iron assessed, our is for experiencing people majority these of the district decision defer of symptoms, no bene- will be has been Geritol that discretion of court unless require- Closely arbitrarily capriciously ex- related this to or abused or fit. requirement of further ercised, as ment is the to be at least deference such say, of, advertise- criminal that Geritol great a Order case in the as representing that from youthful ments refrain where offender of sentence generally symptoms reliable See are required stated. are reasons deficiency. Kaylor, of iron F.2d 1133 indications States United 1974) (en banc). (2d Cir. omitted) (footnotes at 886-887 381 F.2d added). (emphasis The Circuit’s Sixth Circuit and the Sixth Order C. explained use of the decision that Decision. symp- “symptoms” included the word parts Having pertinent of out the set tiredness, strength, run- toms of loss below,36 it order the cease desist feeling, or irrit- down nervousness quote some be amiss to ability. at 886 n. 3. Id. summary length Circuit’s the Sixth beyond dispute that in the here course, order, by which, of this that court, no before this 11 commercials (cid:127) bound: purported to make even commercial requires by required The Commission’s Order disclosure affirmative reading adver- that not must the Geritol Circuit’s order and the Sixth expressly point, limited to those tisements be At is obvious that this order.37 alia, Appellants prohibited, preparation, 36. inter contained the vitamins existing deficiency from: or to or of iron Disseminating causing deficiency anemia, further, to be dis- or unless iron by clearly seminated means of the United States discloses advertisement also by any commerce, great conspicuously (1) mails or means in the that: experience majority persons “commerce” is defined the Federal such who any Act, symptoms, symptoms Trade Commission advertisement are not caused these by deficiency vi- or more of the of one (b) by by represents directly preparation im- which or or in the tamins contained plication general- deficiency preparation anemia; deficiency that or iron iron ly remedy tiredness, preparation (2) persons effective for loss such for strength, feeling, benefit; or run-down nervousness will be of no irritability; directly by represents (e) im- or which (c) by represents directly strength, plication tiredness, im- which or loss of that plication preparation feeling, is an effec- irritabili- or run-down ty nervousness remedy strength, tiredness, generally tive for loss of iron indications of reliable feeling, deficiency deficiency run-down or anemia nervousness irritabili- or iron ty minority per- more than small experiencing symptoms; Co., sons such B. FTC No. re J. Williams (d) represents directly 1967) (modified (Nov. 24, im- cease which order plication desist). preparation the use of such will be beneficial or relief the treatment tiredness, strength, Appellants’ loss of run-down affirmative disclo- use feeling, people sure, majority irritability, great nervousness or unless “The of tired way poor- expressly such advertisement limits because of iron don’t feel them,” preparation help blood, claim in com- of effectiveness of the and Geritol won’t persons symptoms prior be- those whose are due mercials run the 11 commercials existing rejected deficiency to an as insufficient of one or more of fore this court was plication upon preparation gen- a course appellants embarked erally would, probability, remedy tiredness, in all effective of action which line,” bring strength, see feeling loss them “close run-down [r] ” violating supra, precise . text at note 30 court, they instead decided as it below, order than had was for the court appellants re disclosures is whether affirmative make the came so close Cir the line quired the order and the Sixth as to warrant deference to the course, opinion.38 such FTC’s conclusion Of cuit line was duly crossed, “directly right, by implication.” had been their its determination FTC of warned Counts 1-4 involve commercials de that, disclo absent affirmative to ensure nominated the “AA” commercials. sures, not even could the commercials pertinent portion of the commercial “tiredness” inference refer is the basis count one is set out symptom.39 The absence margin;40 Government’s ar sharpen focus on disclosures serves gument centers on the itself, inclusion of the for the words phrases power” “iron by “directly “blood-build- im- representation or bade interpretation F.2d at 888. Given opinion this by handed down in an the FTC order, fairly adoption Co., it can said that be In re B. Williams 1968. J. December strategy totally ignored of a 1968). (Dec. 2, the “main That deci- No. 8547 FTC necessarily challenge thrust” subject here, of the order would incur but is to sion is not greater noncompliance phase risk of radi- part compliance unless record changes ap- cal were made not appropriately below the court before but appeal. the substance of the com- X>earance this court on and is before mercials themselves. affirmative 38. described The Sixth Circuit Co., being provisions 39. “main See re J. B. Williams No. disclosure (Dec. 2, 1968) I, order, 7. Williams the FTC’s thrust” of stage are follows: text of this as. commercial 40. The directions (O.C.): LIBRARY, Hello, I’m Ted 1. IN MACK: 1. TED MACK MS ON blood-stream been Mack. Your NEXT LIGHT TO STANDING your Look! You called lifeline. BOX. iron-poor cells like could have blood SWITCH, HE FLIPS LIGHTING number, pale, . . . these bad- few UP HALF OF SHADOW LEFT ly shaped. BAD TO SHOW BLOOD BOX AND TITLE: “IRON- CELLS BEFORE GERI- POOR BLOOD TOL.” so, take build 2. If that’s Geritol FILM 2. TO CLIP OF DISSOLVE . . . better more blood cells IN “RICH” “POOR” & CELLS. shaped . iron . . rich SEQUENCE THIS WE WILL USE . . like these. . FILM THE OF BLOOD OUR FRAMES AND 3. CELLS way finer, more effective There’s no 3. MACK 3. CUT BACK TO SHOW iron-rich, than red blood build BY LIGHT STANDING BOX. with Geritol. TAB- HOLDS BOTTLE OF UP LETS. your blood- BOTTLES, 4. enters Geritol-iron 4. CUT TO TWO BACK carrying its fast blood-build- stream TO MACK. every part your ing power body. or two table- Just Geritol tablets IN 5. THE TITLE: “TWICE IRON 5. liquid spoons contain of Geritol LIVER.” A POUND OF CALF’S pound of in a calf’s twice the iron liver. power iron Take builds TI- Geritol. SHOT. TO BOTTLES CUT really your Geritol blood TLE: POWER BUILDS IRON fast! works! FAST. given unthinking credulous, who, power.” Appellants no and the analyze prior making purchases, stop do by dissemina tice the FTC governed by appear tion of it was the too often are these commercials general opinion impressions.” Aron commer ances and of the FTC that these berg FTC, (7th order F.2d Cir. cials violated the cease and desist 1942). applied in a compliance be in standard would proceeding “pow direct review is whether with the order if reference might acceding reasonably drawn an inference er” were deleted. Instead general discontinuing by. public, opinion by some the com members this litigate general attempting mercials, all members of the or either by majority public.44 issue,41 appellants public the risk that or assumed posi judges jurors interpretation in a their cease Neither nor of the FTC’s second-guess prevail opinion over tion to the FTC’s and desist order would very question. interpretation Again, on this the standard of that agency applied whether had framed it. that should be here is finding by FTC, mem that some appellate court we sit as an Unless general public draw bers would try novo, us on before de arbitrary inference, majority not, counts 1-442 is capricious.45 it, the inference concerning face, drawn drawn the district On its the inference “power” either the district court below is unassailable the use of the word likely” relationship “one that a standard. “most “power” compelled to draw.” As the word as used would be between being likely,” it the context of these and the the inference the “most commercials practice unqualified inbe condemned refer clear that such a standard “tiredness,” etc., the to in and idea that ence the cease direct conflict the protect clearly supports “the vast mul desist order the district functions to ignorant, the court’s titude the conclusion on these counts.46 which includes above, supra. in 41. onstrated assumptions the text neither of these notes 12 & See Supreme is true. The Court in 2-4 42. involved counts The commercials recently has had to comment on the occasion appendices in the district are set out flexibility use of the sum increased of the II, F.Supp. opinion, at court Williams mary procedure involving judgment in a case 554-556; between those similarities where review of an administrative decision in three commercials and the commercial no obtained. Weinbur See they can be considered count 1 are such that ger Hynson, Dunning, 412 v. U. Westcott & applies analysis the same that at 621-622. S. key “power” The is the count 1. word of all four. discussion “finding” Again, 45. that this fact completely hearings after not made formal your say power in 43. builds “To that Geritol appellants make an ar- irrelevant unless can saying equivalent of blood is the effective gument that such denial rises the level of you.” power at Id. that builds Geritol process, as to violation of constitutional due 537. supra. see which note 14 might argument we do be made that The relating majority’s opinion rule 46. The at footnote violence the standard perfunctorily summary judgment asser- draw “the FTC’s a court must states that that party [power] a vi- that use of this word favorable to the inference most majority’s motion, opposing ...” ref- did make it so olation negation agency argu- complete put amounts to erence this rule seems to phase argument compliance expertise But this ment those terms. judg- assumptions proceedings a substitution of that and is based the erroneous given question 45(1) proceeding fact. law and been a mixed ment on court a § reasoning, likely” authority in- dissatisfied with the draw the “most If a court is sup- agency it, place Gov- and that or lack of port tendered ference in the first pro- only findings prevail show, informal its motion where ernment must produce ceedings summary judgment, been utilized to rea- that no other power might record, to demand has the be drawn. As dem- that court sonable inferences many response that The involve commercials common-sense Counts 5-9 “sad-glad” appellants commer- viewers to the term the advertisements —that 5-7, is that a wife is not sad because of the In counts the theme cials. knowledge iron-poor she that woman has made “sad” because she has been blood, “iron-poor but because of the has discovered that she has effects taking having Geritol, same this condition has had and is blood.” After glad. suddenly Appel- on her. woman becomes “sad-glad” argued lants below Having Id.47 introduced into these com essentially play theme was to “basic very symp by implication mercials interest,” human emotion” and “human subject toms that were the of the cease and that there were inferences order, appellants’ argument and desist “tired- drawn between “sadness” or the commercials are without ness,” court, emphasiz- etc. The district der border on the frivolous.48 commercials, the visual effect of The commercials are the sub stated the commercials jects of counts are of 8-9 same easily perceived as a contrast “sad-glad” motif as those counts 5-7 feeling and run-down between weak additionally involve use feeling lively. wife, who “power.” held, word The district court dreary perhaps looks run-down doubt, and there can be no these beginning of her “sad” state clearly violated the order. commercials energetic advertisements, looks II, F.Supp. See Williams at 543.49 gives smile at the when she a broad commercials involved counts end of the advertisements. present questions. 10-11 two distinct Williams, F.Supp. United States first is whether Femlron II). (Williams (S.D.N.Y.1973) scope comes within the of the order as properly points “any preparation pos- out The district other . . . sessing substantially properties, similar required knowledge experience such further evidence as is mate of and responsibili- execution court’s limited matters. Camp Pitts, supra. ties. See Appellants’ thought claim acceptable “sad-glad” theme would quite light in PTC is curious of the PTC’s “iron-poor blood,” 47. as an abstract To have prior decision, supra, see note 39 proposition, seem to have little or way point went out of its out that the might meaning be condition other than that employed by technique “before-and-after” thought by layman suffering from it to the appellants in violation was considered to be symptomatic through ex- his life the affect pression finding App. of the order. at 58-59. This This is not of that condition. challenged l>y appellants, has never l>een say might people not be “sad” some is one that be taken into considera- should merely been attached to because a label had by the district court and this court a examination them as the result of medical judging came to close how these commercials way only (which presumably one the Even the “border line” of the order. PTO “condition”). of one’s would be made aware by engaged ma- the de the novo review apt say layman’s the focus is It is to jority December, 1968, the decision is rele- underlying symptoms condi- the of the vant. As itself. tion rather than on the condition ' said, physician respect majority 5-9, . 49. has “The been With to counts the posi- prestige argues of his need to exert the full conclusion of the the district asymptomatic represents only possible individual to tion to induce an court “a inference by only Supra a alter his . . or to follow [but] habits no means the one.” therapeutic program throughout opin- logic majority the rest of 3180. the Under Principles ion, supra, Internal ids life.” Harrison’s as an advertiser would discussed (6tli 1970). goes always escape penalties without a Medicine 7 ed. for violation of saying questions on the view- if of effect cease and desist order plausible more than one subjected deceptive ing public long adver- a inference could be drawn from given tising by particular argument re- advertiser best This is untena- commercial. by inti- of its ble. solved the PTC on the basis good-faith application agency names I under whatever name or sold.” ex- pertise during compliance phase would affirm district court’s conclu- good-faith reasoning proceedings, application sion as well as its point, this directly by challenged II, F.Supp. appel- not here at 531- Williams lants, closely 532, adding only has worked with the comment that advertising effect, marketing Femlron, Geritol for over a dec- If ade. conclusion reach of order was strat- its as infer- evade the egy Represent- “power” specifically by ence to be from drawn the word addressed during any respect Chapman entitled over less than oth- ative debate during carry- ers makes Amendments in 1938. course Wheeler-Lea assigned supra. tasks, accompanying only out its this can See note 22 text because that decision was made join majority I Thus consequence hearings, as of formal agreement the Femlron commer- said, Congress but has been intended cials violated the order. com- these this the case. That juxta- mercials, a “tired mother” was “leeway” proce- to establish such posed against the “vital look” of wom- beyond dispute. dures is Weinber- Cf. Femlron, an who took and to visual this ger Hynson, Dunning, Westcott & counterpoint comment, was added 37 L.Ed.2d see, “You ing some women even risk becom- FTC, press re- only anemic and I tired.” would add 25, 1969, clear, lease June makes “tired-vigorous” dichotomy that the seen throughout at that time and had been clearly by majority opinion so in the compliance unanimously phase lay Femlron seems to commercials this “power” view that the use of the word very observer to be the of ef- same sort violated the order. The dissent “sad-glad” fect created motif expressed by within the FTC was Com- the commercials in counts 5-9. There is Elman, joined by missioner Commission- perhaps degree difference Nicholson, er colleagues who criticized his three dichotomy success with which the extraordinary for their ef- drawn, impression visual encourage compliance voluntary forts Femlron need even commercials instituting proceed- rather than have been fortified the “tired” lan- ings compliance. App. to force at 104- guage bring these commercials within nothing It is other than unan- order, my as in view the view of imous view of the commissioners of the the FTC. majority FTC that overturns The conclusions would I reach are suggesting appellants may be enti- identical to those reached the district judgment summary tled to on counts 1- give apparently court which weight did not pure simple judicial This finding to the FTC’s usurpation proc- of the administrative commercials violated the order. But as ess. above, I have reiterated ignoring, as the majority does, expertise of the FTC III. NOTICE. stage only at a that can be labeled as process Appellants critical in the arguments enforcement runs make two con- cerning regulatory (1) counter to the penalties entire scheme notice: under put forth subject Federal Trade do not one Commis- accrue until Particularly sion Act. respect with by to to an order has been notified “power” the word 1-4, compliance as used in FTC that counts he is not in doubt, the benefit of the any, were until there time reasonable has been allotted go bring would have to light compliance; with the to (2) FTC himself into history appellants’ liability of adver- on counts 5-11 should be tising. This is not because the limited FTC is because the either failed FTC to judge the sole of question, respond delayed response it to the sub- not; is assuming it is because, appellants rather of missions to FTC in in- of the commercials the order the Federal Trade with Commis- connection automatically up by sion in those counts. backed volved Cong. when it final.” becomes argument on the The first is based added). (1938) (emphasis Rec. 392 Baking v. language Co. of Continental by of on statement record Fed.Reg. this (D. Dixon, F.Supp. 287-288 (1968), question, 33 is stay penal Del.1968) (application for of (Z) clearly consistent with and the 45§ (Z) it was where denied), under 45 ties legislative history section. (Z) penalties could said that Appellants’ made a “find until the FTC other notice claim—that not accrue finding, ing” noncompliance respond delayed to the FTC failed re- indicating noncompliance, by sponse appellants extent to submissions alleged FTC, thereby exposing ap- viola communicated somehow any greater penalties pellants there reasoned that tor. The court than subject interpretation conceivably would raise “serious have been other through process.” jumped hoop Id. at questions of 288. had due the FTC their might questions” quickly my be more these “serious view frivolous. What —is appellants’ place ponder, agency but the is left to seeks on the bur- one argument warning leading subject of non den of here is that advertiser compliance required through the “breadth cease and desist order is the mine- attempts Brief for orders.” field that advertiser’s Commission’s laid Appellants at 40. read the little as it worth. order is allegation Taken as an faith bad course, But, Circuit Sixth part unsupported FTC, very “is not un- found that this agree majority I that we vague fairly duly apprises the Peti- need not comment on what measures required them.” tioners of what is remedy might district court take This hold- I, F.2d at 891. Williams delay situation, such a as where dispositive appellants’ is itself years generally four occurred. See claim; there no author- constitutional Greetings United States American standing proposition ity that due for the Corp., F.Supp. (N.D.Ohio 1958), thought requires process or could be opinion below, aff’d 272 F.2d 945 Certainly require notice. additional (6th Cir.1959). rights must contest the if civil constitutionality advocates injunc- Finally, appellants’ temporary puts of a notice light argument enjoining demonstration its true recollect as their it, disobeying repeat through majority does—I before need not courts Birmingham, City here—the facts of administrative Walker following proceedings 18 L.Ed.2d 1210 Sixth Circuit’s argued hardly petition here denial to review the cease it can engage appellants’ in activ- order which had final and desist become constitution, ity protected i. 1A su- on December 1967. See Part misleading regret pra. e., only pro- My false and dissemination of these greater ceedings requires majority advertising, constitu- treated protection. with the notice con- tional connection argument tentions. Appellants’ based on statu- grounds tory equally merit. without IV. PENALTIES. legislative history (Z) re- of § n agree 45(Z) purpose majority

veals that section one and I that § they imposition to render orders final so that the was as written allows of a for might operative (now $5,000 $10,000) penalty further “become as to “for each ” transgressions. being H.R.Rep. . . . with a violation” each violation No.1613, Cong., “separate argue Appellants 1st 75th Sess. 6 offense.” debate, Representative “day language In floor Lea stat- that continuance” making (Z) provided penalties imposa- ed that “for to should be read limit regard- reasoning any given $5,000 day of the district court to that ble on many complaint many the draft “was or in how intended times of how less Attorney during [merely] to facilitate that Gen places is run a commercial F.Supp. II, appellants point that un- eral’s task.” Williams out day. The agree holding, subject I that manda- at 546. thus can ex one to a FTC this der lodged pertise and in tory would be discretion were of the Commission order day per penalties only $5,000 this decision seek limited to a liable ap- one, $500,000, and decision should disobedience, like that whereas for given is, here, in dif- force that the to that an order pellant, who violates might against day appel sum places tal both on the assessable same ferent $500,000.50 $150,000 penalties. I am subject lants in agreement majority complete in Because district court’s was point “Con- when it that on this states against $456,000 B. J. Williams for gress good on the sense relied $356,000, affirm Parkson for I would so making its certification in pertains of it B. much to J. Williams. failing Attorney and, that, General then would be whether prevent the court the discretion remaining Parkson is liable outrageous . an result.” $44,000. corporations have, These two 1962, represented directly from since themselves as conclusion flows This statutory separate import scheme entities before FTC and be- majority su- particularly 15 U.S.C. discussed fore Sixth Circuit. disposi- pra. pierce corporate pro- is also relevant to our would veil (1) immunity. appellants’ vide Parkson with I claims would by doing “certifica- not. The reason so is limited for not is not Government merely the FTC this case to collect- because B. was tion” of J. Williams seek- penalties ing advertising per $500,000 maximum avoid cent penalties (taken (2) agency as- fee form of a dis- against by appellants agency both because count media from sessable essentially price paid by sponsor). they constitute the same enti- Rather ty (¿). purposes it to me seems well that was within the exercise of FTC discretion on the question, on the the first based As for appellants’ basis of the conduct course supra, interpretation of 15 U.S.C. § charge responsibility. Parkson with proposition no answer to the there wholly-owned agen- captive, Its role as a by the is bound Government cy was to work out the violative adver- $500,000 penal certification of a FTC’s tising. “pitch” worked out would figure so more, if ty, no patent —like medicine sales- Regis reading My Pa of St. certified. gone years by imply man of a lot and — per Co., supra, requires almost say meaning convey thereby little and supported Holloway v. result and deceptively appealing hopefully while Bristol-Myers Corp., supra. The dis leaving holding bag law enforcement then, pute, centers on whether such changes pitch little in the at the last figure The certi in fact certified. moment. ethics of the While the inde- 296-301, itself, App. at letter fication pendent advertising agencies of Madison figures except penalties indicated necessarily Avenue rival those complaint sub to a draft reference Calpumia, particularly when comes Attorney the FTC the Gen mitted big account, keeping customer’s one clearly eral, limited the certifi but suppose fear, their would “Judgment against defendants cation to personal (or situation, Pai’kson’s $500,000.” App. sum the total accept liability corporate) think result coun- I do not have to we regard logic majority’s in this no other reliance on certification Tlie beyond my capacity to follow. majority re- stated commissioners of moderation to the client sel dealing “the end of these the their belief that result in with Commission’s straint negotiations compliance the the ces- will be was none since Here there order. advertising captive deceptive just “agency” slave. sation Geri- is not ” App. Corp. . . . Schenley tol. at 102. v. United Distillers inference be drawn from institu- States, the (2) Supreme under tion of this action L.Ed. 181 majority Of FTC the three-member said: Court that ascribed to the statement above on corporate disre- entities be While 25, 1969, objec- the vehement June over they garded im- are made the where Elman, joined tion of Commissioner legis- avoiding a clear plement for Nicholson, longer saw Commissioner not disre- will purpose, lative exhibiting “good appellants’ efforts as garded in de- those control have where 28, 1969, faith” November when the liberately adopted corporate form Attorney facts to certification of advantages and in its order to secure place. Indeed, took General a review legislative no violence where case, relevant in in- documents treating corpo- purpose is done cluding but limited not to that state- entity separate legal person. a rate as findings opinion ment, the issued corporate a ar- who has created One 2, 1968, the FTC on December rangement, means of chosen itself, letter of certification leave no carrying purposes, out his business patience that the doubt FTC exercised a disregard- the choice of does appellants history toward that in entity corporate in order must administrative law be rather re- obligations the stat- avoid which markable. lays protection upon ute it for public. Agreeing majority’s with state- subject de- ment the district function to the cease and court’s Parkson respect penalties the order. is limited to order. It violated sist prevention my “outrageous escape responsibility of an re- should —in sult,” sup- only $44,000 there not one scintilla of view to extent —for port proffered by ap- Nor is it evidence violation. an answer pellants hearing might say in a not have taken that J. B. Williams possibly employed any agency; could affect the here. we are not here outcome holding hypothetical so, But even were this not to deal exercises. that the riving exercised discretion ar- FTC figure $500,000 at the indicates THE HEARING. V. EVIDENTIARY pass that it is the is to appel- question upon first on the instance evidentiary hearing sub- lants appellants now seek an eviden- alleged “good jects their faith such as tiary hearing in the district court. did not vio- belief” that the commercials Who, FTC, posi- better than the inis open my view as late order is tion to determine the extent to which question may ad- counts. The all “good appellants exercise faith”? In a ways: first, dressed two case, proper one, and this is not the dis- hearing any right to such there is power trict court has the to order fur- second, law; so, if is the matter of what ther evidence to be adduced before the hearing? appropriate for such a forum FTC, and to review the conclu- FTC’s “arbitrary capricious” sion penalties The FTC’s decision seek Judge standard. As Leventhal said against appellants constituted a decision Holloway Bristol-Myers supra, Corp., appellants had not exercised there are good attempts comply faith in frequent legislative desist In its with the cease and order. references history released on June statement the Wheeler-Lea Amend- [of to the Trade Commission’s ex- merits] dealing pertise in commercial

practices, its abilities to act as a buff- securing voluntary compliance

er in

through proceedings, and its informal determining when sound discretion measures were

formal enforcement necessary. omitted) (em (footnote at 995

485 F.2d

phasis added).51 B.

I affirm as J. Williams Co., modify, modi- I and as Inc. would judgment against

fied, Park- affirm Advertising Agency, Inc. son America,

UNITED STATES Plaintiff-Appellee, MARTINEZ,

John Defendant- Appellant.

No. 73-1740. Appeals,

United States Court of

Sixth Circuit.

Argued Dec.

Decided June special expertise ject-matter may directly, 51. While the FTC’s without the benefit of inhibiting not be raised as a FTC consideration. barrier judicial Holloway Bristol-Myers Corp., . . . review ... does 485 F.2d at (footnote omitted) (emphasis added). and should inhibit the notion that a cowrt injected pertinent into the sub-

Case Details

Case Name: United States v. The J. B. Williams Company, Inc., and Parkson Advertising Agency, Inc.

Court Name: Court of Appeals for the Second Circuit

Date Published: May 2, 1974

Citation: 498 F.2d 414

Docket Number: 236, Docket 73-1624

Court Abbreviation: 2d Cir.