Federal Trade Commission v. Ruberoid Company/Dissent Jackson

by Robert H. Jackson

United States Supreme Court

343 U.S. 470

Federal Trade Commission  v.  Ruberoid Company

 Argued: March 31, April 1, 1952. --- Decided: May 26, 1952

Mr. Justice JACKSON, dissenting in No. 504.

The Federal Trade Commission, in July of 1943, instituted before itself a proceeding against petitioner on a charge of discriminating in price between customers in violation of subsection (a) of § 2 of the Clayton Act as amended by the Robinson-Patman Act, approved June 19, 1936, 15 U.S.C. § 13(a), 15 U.S.C.A. § 13(a).

Several violations were proved and admitted to have occurred in 1941. No serious opposition was offered to an order to cease and desist from such discriminations, but petitioner did object to being ordered to cease types of violations it never had begun and asked that any order include a clause to the effect that it did not forbid the price differentials between customers which are expressly allowed by statute.

However, the Commission refused to include such a provision as 'unnecessary to assure respondent (petition here) its full legal rights.' It also rejected the specific and limited order recommended by its Examiner and substituted a sweeping general order to 'cease and desist from discriminating in price: By selling such products of like grade and quality to any purchaser at prices lower than those granted other purchasers who in fact compete with the favored purchaser in the resale or distribution of such products.' It wrote no opinion and gave only the most cryptic reasons in its findings. ^[1]

On proceedings for review, petitioner attacked this order for its indeterminateness and its prohibition of differentials allowed by statute. The Court of Appeals, however, affirmed, saying:

'We sympathize with the petitioner's position and can realize the difficulties of conducting business under such general prohibitions. Nevertheless we are convinced that the cause of the trouble is the Act itself, which is vague and general in its wording and which cannot be translated with assurance into any detailed set of guiding yardsticks.' ^[2]

This appraisal of the result of almost ten years of litigation exposes a grave deficiency either in the Act itself or in the administrative process by which it has been applied. Admitting that the statute is 'vague and general in its wording,' it does not follow that a cease and desist order implementing it should be. I think such an outcome of administrative proceedings is not acceptable. We would rectify and advance the administrative process, which has become an indispensable adjunct to modern government, by returning this case to the Commission to perform its most useful function in administering an admittedly complicated Act.

If the Court of Appeals were correct, it would mean that the intercession of the administrative process between the Congress and the Court does nothing either to define petitioner's duties and liabilities or to impose sanctions. Congress might as well have declared, in these comprehensive terms, a duty not to discriminate and provided for prosecution of violations in the courts. That, of course, would impose on the courts the task of determining the meaning and application of the law to the facts. But that is just the task that this order imposes upon the courts in event of a contempt proceeding. The courts have derived no more detailed 'guiding yardsticks' from the Commission than from Congress. On the contrary, the ultimate enforcement is further confused by the administrative proceeding, because it winds up with an order which literally forbids what the Act expressly allows and thus adds to the difficulty of eventual sanctions should they become necessary.

If the unsound result here were an isolated example of malaise in the administrative scheme, its tolerance by the Court would be less troubling, though no less wrong. But I think its decision may encourage a deterioration of the administrative process of which this case is symptomatic and which invites invasion of the independent agency administrative field by executive agencies. Other symptoms, betokening the same basic confusion, are the numerous occasions when administrative findings are inadequate for purposes of review and recent instances in which part of the government appears before us fighting another part-usually a wholly executive-controlled agency attacking one of the independent administrative agencies-the Departments of Agriculture, Secretary of Agriculture v. United States (jurisdiction noted 72 S.Ct. 1042), and Justice, United States v. Interstate Commerce Commission, 337 U.S. 426, 69 S.Ct. 1410, 93 L.Ed. 1451, against the Interstate Commerce Commission, the Department of Justice against the Maritime Commission, Far East Conference v. United States, 342 U.S. 570, 72 S.Ct. 492, the Secretary of the Interior against the Federal Power Commission, United States ex rel. Chapman v. Federal Power Commission (certiorari granted 343 U.S. 941, 72 S.Ct. 1034). Abstract propositions may not solve concrete cases, but, when basic confusion is responsible for a particular result, resort to the fundamental principles which determine the position of the administrative process in our system may help to illuminate the shortcomings of that result.

The Act, like many regulatory measures, sketches a general outline which contemplates its completion and clarification by the administrative process before court review or enforcement.

This section of the Act admittedly is complicated and vague in itself and even more so in its context. Indeed, the Court of Appeals seems to have thought it almost beyond understanding. By the Act, nothing is commanded to be done or omitted unconditionally, and no conduct or omission is per se punishable. The commercial discriminations which it forbids are those only which meet three statutory conditions and survive the test of five statutory provisos. To determine which of its overlapping and conflicting policies shall govern a particular case involves inquiry into grades and qualities of goods, discriminations and their economic effects on interstate commerce, competition between customers, the economic effect of price differentials to lessen competition or tend to create a monopoly, allowance for differences in cost of manufacturing sale or delivery and good faith in meeting of the price, services or facilities of competitors.

This Act exemplifies the complexity of the modern lawmaking task and a common technique for regulatory legislation. It is typical of instances where the Congress cannot itself make every choice between possible lines of policy. It must legislate in generalities and delegate the final detailed choices to some authority with considerable latitude to conform its orders to administrative as well as legislative policies.

The large importance that policy and expertise were expected to play in reducing this Act to 'guiding yardsticks' is evidenced by the fact that authority to enforce the section is not confided to a single body for all industries but is dispersed among four administrative agencies which deal with special types of commerce besides the Federal Trade Commission. ^[3]

A seller may violate this section of the Act without guilty knowledge or intent and may unwittingly subject himself to a cease and desist order. But neither violation of the Act nor of the order will call for criminal sanctions; neither is even enforceable on behalf of the United States by injunction until after an administrative proceeding has resulted in a cease and desist order and it has been reviewed and affirmed, if review be sought, by the Court of Appeals. Only an enforcement order issued from the court carries public sanctions, ^[4] and its violation is punishable as a contempt.

Thus Congress, in this Act, has refrained from imposition of an unconditional duty directly enforceable by the government through civil or criminal proceedings in court, as it has in the Sherman Anti-Trust Act and the Wilson Tariff Act of 1894. ^[5] It has carefully kept such cases as this out of the courts and has shielded a violator from any penalty until the administrative tribunal hands down a definitive order. The difference is accented by another section of the Robinson-Patman Act which does make participation by any person in specified transactions which discriminate 'to his knowledge' a criminal violation judicially punishable. ^[6]

It may help clarify the proper administrative function in such cases to think of the legislation as unfinished law which the administrative body must complete before it is ready for application. ^[7] In a very real sense the legislation does not bring to a close the making of the law. The Congress is not able or willing to finish the task of prescribing a positive and precise legal right or duty by eliminating all further choice between policies, expediences or conflicting guides, and so leaves the rounding out of its command to another, smaller and specialized agency.

It is characteristic of such legislation that it does not undertake to declare an end result in particular cases but rather undertakes to control the processes in the administrator's mind by which he shall reach results. Because Congress cannot predetermine the weight and effect of the presence or absence of all of the competing considerations or conditions which should influence decisions regulating modern business, it attempts no more than to indicate generally the outside limits of the ultimate result and to set out matters about which the administrator must think when he is determining what within those confines the compulsion in a particular case is to be.

Such legislation does not confer on any of the parties in interest the right to a particular result, nor even to what we might think ought to be the correct one, but it gives them the right to a process for determining these rights and duties. Montana-Dakota Utilities Co. v. Northwestern Public Service Co., 341 U.S. 246, 251, 71 S.Ct. 692, 695, 95 L.Ed. 912; Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 194, 195, 61 S.Ct. 845, 852, 853, 85 L.Ed. 1271.

Such legislation represents inchoate law in the sense that it does not lay down rules which call for immediate compliance on pain of punishment by judicial process. The intervention of another authority must mature and perfect an effective rule of conduct before one is subject to coercion. The statute, in order to rule any individual case, requires an additional exercise of discretion and that last touch of selection which neither the primary legislator nor the reviewing court can supply. The only reason for the intervention of an administrative body is to exercise a grant of unexpended legislative power to weigh what the legislature wants weighed, to reduce conflicting abstract policies to a concrete net remainder of duty or right. Then, and then only, do we have a completed expression of the legislative will, in an administrative order which we may call a sort of secondary legislation, ready to be enforced by the courts.

The constitutional independence of the administrative tribunal presupposes that it will perform the function of completing unfinished law.

The rise of administrative bodies probably has been the most significant legal trend of the last century and perhaps more values today are affected by their decisions than by those of all the courts, review of administrative decisions apart. They also have begun to have important consequences on personal rights. Cf. United States v. Spector, 343 U.S. 169, 72 S.Ct. 591. They have become a veritable fourth branch of the Government, which has deranged our three-branch legal theories much as the concept of a fourth dimension unsettles our three-dimensional thinking.

Courts have differed in assigning a place to these seemingly necessary bodies in our constitutional system. Administrative agencies have been called quasi-legislative, quasi-executive or quasi-judicial, as the occasion required, in order to validate their functions within the separation-of-powers scheme of the Constitution. The mere retreat to the qualifying 'quasi' is implicit with confession that all recognized classifications have broken down, and 'quasi' is a smooth cover which we draw over our confusion as we might use a counterpane to conceal a disordered bed.

The perfect example is the Federal Trade Commission itself. By the doctrine that it exercises legislative discretions as to policy in completing and perfecting the legislative process, it has escaped executive domination on the one hand and been exempted in large measure from judicial review on the other. If all it has to do is to order the literal statute faithfully executed, it would exercise a function confided exclusively to the President and would be subject to his control. Cf. Myers v. United States, 272 U.S. 52, 47 S.Ct. 21, 71 L.Ed. 160; U.S.C.onst., Art. II, §§ 1, 3. This Court saved it from executive domination only by recourse to the doctrine that 'In administering the provisions of the statute in respect of 'unfair methods of competition,' that is to say, in filling in and administering the details embodied by that general standard, the commission acts in part quasi legislatively and in part quasi judicially.' Humphrey's Executor v. United States, 295 U.S. 602, 628, 55 S.Ct. 869, 874, 79 L.Ed. 1611.

When Congress enacts a statute that is complete in policy aspects and ready to be executed as law, Congress has recognized that enforcement is only an executive function and has yielded that duty to wholly executive agencies, even though determination of fact questions was necessary. ^[8] Examples of the creation of such rights and obligations are patent, revenue and customs laws. Only where the law is not yet clear of policy elements and therefore not ready for mere executive enforcement is it withdrawn from the executive department and confided to independent tribunals. If the tribunal to which such discretion is delegated does nothing but promulgate as its own decision the generalities of its statutory charter, the rationale for placing it beyond executive control is gone.

The quasi-legislative function of filling in blank spaces in regulatory legislation and reconciling conflicting policy standards must neither be passed on to the courts nor assumed by them.

That the work of a Commission in translating an abstract statute into a concrete cease and desist order in large measure escapes judicial review because of its legislative character is an axiom of administrative law, as the Court's decision herein shows. In delegating the function of filling out the legislative will in particular cases, Congress must not leave the statute too empty of meaning. Courts look to its standards to see whether the Commission's result is within the prescribed terms of reference, whether the secondary legislation properly derives from the primary legislation.

Then, too, we look to administrative findings, not to reconsider their justification, but to learn whether the parties have had the process of determination to which the statute has entitled them and whether the Commission has thought about-or at least has written about-all factors which Congress directed it to consider in translating unfinished legislation into a 'detailed set of guiding yardsticks' that becomes law of the case for parties and courts. ^[9]

However, a determination by an independent agency, with 'quasi-legislative' discretion in its armory, has a much larger immunity from judicial review than does a determination by a purely executive agency. The court, in review of a case under the tax law or the patent law, where the legislative function has been exhausted and policy considerations are settled in the Acts themselves, follows the same mental operation as the executive officer. On the facts, there results an obligation to pay tax, or there is a right to a patent. The court can deduce these legal rights or obligations from the statute in the same manner as the executive officer. Hence, review of such executive decisions proceeds with no more deference to the administrative judgment than to a decision of a lower court.

Very different, however, is the review of the 'quasi-legislative' decision. There the right or liability of the parties is not determined by mere application of statute to the facts. The right or obligation results not merely from the abstract expression of the will of Congress in the statute, but from the Commission's completion and concretization of that will in its order. Cf. Montana-Dakota Utilities Co. v. Northwestern Public Service Co., supra, 341 U.S. 251, 71 S.Ct. 695; Phelps Dodge Corp. v. National Labor Relations Board, supra.

On review, the Court does not decide whether the correct determination has been reached. So far as the Court is concerned, a wide range of results may be equally correct. In review of such a decision, the Court does not at all follow the same mental processes as the Commission did in making it, for the judicial function excludes (in theory, at least) the policy-making or legislative element, which rightfully influences the Commission's judgment but over which judicial power does not extend. Since it is difficult for a court to determine from the record where quasi-legislative policy making has stopped and quasi-judicial application of policy has begun, the entire process escapes very penetrating scrutiny. Cf. Federal Power Commission v. Hope Natural Gas Co., 320 U.S. 591, 64 S.Ct. 281, 88 L.Ed. 333.

Courts are no better equipped to handle policy questions and no more empowered to exercise legislative discretion on contempt proceedings than on review proceedings. It is plain that, if the scheme of regulating complicated enterprises through unfinished legislation is to be just and effective, we must insist that the legislative function be performed and exhausted by the administrative body before the case is passed on to the courts.

This proceeding should be remanded for a more definitive and circumscribed order.

Returning to this case, I cannot find that ten years of litigation have served any useful purpose whatever. No doubt it is administratively convenient to blanket an industry under a comprehensive prohibition in bulk-an undiscriminating prohibition of discrimination. But this not only fails to give the precision and concreteness of legal duties to the abstract policies of the Act, it really promulgates an inaccurate partial paraphrase of its indeterminate generalities. Instead of completing the legislation by an order which will clarify the petitioner's duty, it confounds confusion by literally ordering it to cease what the statute permits it to do.

This Court and the court below defer solution of the problems inherent in such an order, on the theory that if petitioner offends again there may be an enforcement order, and if it then offends again there may be a contempt proceeding and that will be time enough for the court to decide what the order against the background of the Act really means. While I think this less than justice, I am not greatly concerned about what the Court's decision does to this individual petitioner, for whom I foresee no danger more serious than endless litigation. But I am concerned about what it does to administrative law.

To leave definition of the duties created by an order to a contempt proceeding is for the courts to end where they should begin. Injunctions are issued to be obeyed, even when justification to issue them may be debatable. United States v. United Mine Workers of America, 330 U.S. 258, 289 et seq., 307, 67 S.Ct. 677, 693, 702, 91 L.Ed. 884. But in this case issues that seem far from frivolous as to what is forbidden are reserved for determination when punishment for disobedience is sought. The Court holds that some modifications are 'implicit' in this order. Why should they not be made explicit? Why approve an order whose literal terms we know go beyond the authorization, on the theory that its excesses may be retracted if ever it needs enforcement? Why invite judicial indulgence toward violation by failure to be specific, positive and concrete?

It does not impress me as lawyerly practice to leave to a contempt proceeding the clarification of the reciprocal effects of this Act and order, and determination of the effect of statutory provisos which are then to be read into the order. The courts cannot and should not assume that function. It is, by our own doctrine, a legislative or 'quasi-legislative' function, and the courts cannot take over the discretionary functions of the Commission which should enter into its determinations. Plainly this order is not in shape to enforce and does not become so by the Court's affirmance.

This proceeding should be remanded to the Commission with directions to make its order specific and concrete, to specify the types of discount which are forbidden and reserve to petitioner the rights which the statute allows it, unless they are deemed lost, forfeited or impaired by the violations, in which case any limitation should be set forth. The Commission should, in short, in the light of its own policy and the record, translate this Act into a 'set of guiding yardsticks,' admittedly now lacking. If that cannot be done, there should be no judicial approval for an order to cease and desist from we don't know what.

If that were done, I should be included to accept the Government's argument that, along with affirmance, enforcement may be ordered. I see no real sense, when the case is already before the Court and is approved, in requiring one more violation before its obedience will be made mandatory on pain of contempt. But, as this order stands, I am not surprised that enforcement should be left to some later generation of judges.

Notes

1. A comprehensive study has pointed out the early failure of this Commission (and it applies as well to others) to clarify and develop the law and thereby avoid litigation by careful published opinions. Henderson, The Federal Trade Commission 334.
2. Ruberoid Co. v. Federal Trade Commission, 2 Cir., 189 F.2d 893, 894.
3. 15 U.S.C. § 21, 15 U.S.C.A. § 21, vests enforcement in the Interstate Commerce Commission where applicable to certain regulated common carriers; in the Federal Communications Commission as to wire and radio communications; Civil Aeronautics Board as to air carriers; Federal Reserve Board as to banks, etc., and Federal Trade Commission as to all other types of commerce.
4. 15 U.S.C. § 21, 15 U.S.C.A. § 21.
5. 15 U.S.C. §§ 1-4, 8, 9, 15 U.S.C.A. §§ 1-4, 8, 9.
6. 15 U.S.C. § 13(a), 15 U.S.C.A. § 13(a).
7. For emphasis and appreciation of this concept of American administrative law and of the function of the administrative tribunal as we have evolved it, I am indebted to an unpublished treatise by Dr. Robert F. Weissenstein, whose Viennese and European background, education and practice gave him a perspective attained with difficulty by us who are so accustomed to our own process.
8. The legislative history of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., 29 U.S.C.A. § 201 et seq., exemplifies the choice which Congress must make between itself completing the legislation, and delegating the completion to an administrative agency. H.R.Rep. No. 2738, 75th Cong., 3d Sess., sets forth a summary of both the House Bill and the Senate Bill. The Senate Bill provided for the creation of a Labor Standards Board composed of five members, which was empowered to declare from time to time, for such occupations as
9. If the independent agencies could realize how much trustworthiness judges give to workmanlike findings and opinions and how their causes are prejudiced on review by slipshod, imprecise findings and failure to elucidate by opinion the process by which ultimate determinations have been reached, their work and their score on review would doubtless improve. See Henderson, The Federal Trade Commission, c. VI, p. 327. See also Commission on Organization of the Executive Branch of the Government, Task Force Report on Regulatory Commissions (App. N.) pp. 129-130.