United States v. Morton Salt, 338 U.S. 632 (1950)

United States v. Morton Salt

Argued December 14, 1949
Decided February 6, 1950 *
338 U.S. 632

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Syllabus

Under § 5 of the Federal Trade Commission Act, the Commission ordered respondent corporations and others to cease and desist from certain trade practices. The Court of Appeals affirmed the order with modifications, and commanded compliance. The decree directed that reports of compliance be filed with the Commission within 90 days, reserved jurisdiction to enter further orders to enforce compliance, and provided that it was without prejudice to the right of the Government to prosecute suits to recover civil penalties for violations of the order and to initiate contempt proceedings for violations of the decree. Reports of compliance were filed and accepted. Under § 6(a) and (b) of the Act and its own Rule of Practice No. XXVI, the Commission subsequently ordered respondents to file special reports to show continuing compliance with the decree.

Held:

1. This order did not invade the jurisdiction of the Court of Appeals. Pp. 638-643.

(a) The Commission’s continuing duty to prevent unfair methods of competition and unfair or deceptive acts or practices in commerce is not suspended or exhausted as to any violator whose guilt is once established. Pp. 638-639.

(b) Although the Commission’s cease and desist order was merged in the court’s decree, the court neither assumed to itself nor denied to the Commission that agency’s duty to inform itself and to protect commerce against continued or renewed unlawful practice. P. 641.

(c) When investigative and accusatory duties are delegated by statute to an administrative body like the Commission, it may take steps to inform itself as to whether there is probable violation of the law without first making charges that there are such violations. Pp. 641-643.

(d) The Commission’s order for special reports was not made in the name of the court or in reliance upon judicial powers, but in reliance upon its own law-enforcing powers. P. 643.

2. The order did not violate § 3(a) of the Administrative Procedure Act. Respondents were put on notice of the possibility of the issuance of such orders by the Commission’s Rule XXVI, together with its Statement of Organization, Procedures, and Functions, which meet the requirements of that section. Pp. 644-647.

3. The Commission’s authority under § 6 of the Act to require special reports of corporations includes special reports of the manner in which they are complying with decrees enforcing cease and desist orders under § 5. Pp. 647-651.

(a) That this use of the Commission’s power under § 6 is novel and unprecedented in Commission practice does not require a different result, since power granted to governmental agencies is not forfeited by nonuser. Pp. 647-648.

(b) The language of § 6 is clearly broad enough to authorize the issuance of the order here in question. Pp. 648-649.

(c) The use of information obtained in special reports under § 6 is not limited to support of general economic surveys for the President, the Congress, or the Attorney General. It may also be used in determining whether there has been proper compliance with the court’s decree under § 5. Pp. 649-650.

(d) The special reports required by the order were of the kind which the Commission is authorized by § 6 to require. P. 650.

(e) The fact that § 5 applies to individuals, partnerships, and corporations, while §§ 6(b) and 10 apply only to corporations, does not require a different result. Pp. 650-651.

4. The Commission’s order does not contravene the Fourth Amendment’s proscription of unreasonable searches and seizures or the due process clause of the Fifth Amendment. Pp. 651-654.

(a) Law-enforcing agencies have a legitimate right to satisfy themselves that corporate behavior is consistent with the law and the public interest. P. 652.

(b) If the inquiry is within the authority of the agency, the demand is not too indefinite, and the information sought is reasonably relevant, it does not exceed the investigatory power of the Commission. P. 652.

(c) On its face, the Commission’s order did not transgress these bounds. Pp. 652-653.

(d) Before the courts will hold an order of the Commission seeking information reports arbitrarily excessive, they may expect the supplicant to have made reasonable efforts before the Commission itself to obtain reasonable conditions, and petitioners made no such efforts in this case. Pp. 653-654.

(e) This decision is not to be understood as holding such orders exempt from judicial examination or as extending a license to exact as reports what would not reasonably be comprehended within that term as used by Congress in the context of the Act. P. 654.

174 F.2d 703, reversed.

The District Court dismissed suits by the United States under §§ 9 and 10 of the Federal Trade Commission Act to compel respondents to comply with an order of the Federal Trade Commission requiring them to file special reports, and to recover penalties for noncompliance. 80 F.Supp. 419. The Court of Appeals affirmed. 174 F.2d 703. This Court granted certiorari. 338 U.S. 857. Reversed, p. 654.