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FTC v. MANAGER

April 23, 1973

FEDERAL TRADE COMMISSION, Petitioner,
v.
MANAGER, RETAIL CREDIT COMPANY, MIAMI BRANCH OFFICE, Respondent


Charles R. Richey, District Judge.


The opinion of the court was delivered by: RICHEY

Charles R. Richey, District Judge.

 This cause came before the Court for trial without a jury on Petitioner's verified "Petition for an Order Requiring Respondent to Appear and Produce Documentary Evidence in an Investigation Being Conducted by the Federal Trade Commission, and for Declaratory Relief," and on Respondent's Counterclaim for Declaratory Relief and Motion to Dismiss for Failure to Join Indispensable Parties. For the reasons developed below, the Court has determined that the declaratory relief sought by Petitioner should be denied, the declaratory relief sought by Respondent granted in part and Respondent's Motion to Dismiss denied.

 I. Background

 Acting pursuant to the authority granted by section 9 of the Federal Trade Commission Act, 15 U.S.C. § 49, and to its resolution dated January 18, 1972, the Federal Trade Commission, Petitioner herein, has been conducting an investigation of the acts and practices of certain consumer reporting agencies, including Respondent Retail Credit Company, to determine whether there is a violation of the provisions of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., and section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45.

 Specifications 7 and 9 of the subpoena issued to Respondent sought the production of its consumer reports. Generally, specification 7 sought the complete files of all consumers who have contacted the Miami Branch Office of Retail Credit Company for disclosure of the information in their files since January 1, 1972, and specification 9 sought the complete files of all individuals investigated by four named credit investigators during specified periods of time ranging from six days to one month.

 By letter dated May 8, 1972, to the Assistant Director for Consumer Credit and Special Programs, Bureau of Consumer Protection, Federal Trade Commission, the Retail Credit Company, by its counsel, furnished some of the information and documents sought by the subpoena, but refused to comply with specifications 7 and 9, which called for its consumer reports. As stated in the letter, the primary reasons for which Respondent refused to comply with these specifications were that it believed such compliance would violate section 604 of the Fair Credit Reporting Act, 15 U.S.C. § 1681b, and would violate the rights of privacy of the consumers whose reports would be revealed. *fn1"

 In the face of this denial, the Federal Trade Commission filed in this Court its petition seeking both an order requiring Respondent to comply with specifications 7 and 9 of the subpoena duces tecum, and a declaratory judgment that consumer reporting agencies are entitled to furnish consumer reports to the Commission irrespective of the requirements of section 604 of the Fair Credit Reporting Act. Respondent then filed a counterclaim seeking a declaratory judgment that the Commission may not receive consumer reports from Respondent other than pursuant to the terms of the Fair Credit Reporting Act, and that any consumers whose reports were sought by the Commission were indispensable parties to this litigation. It further moved to dismiss the action on the grounds that there had been a failure to join as indispensable parties the consumers whose reports were being sought.

 II. Issues

 The following issues are before the Court for decision. First, whether section 621(a) of the Fair Credit Reporting Act, 15 U.S.C. § 1681s(a), authorizes the Federal Trade Commission to obtain consumer reports from consumer reporting agencies without the written permission of the consumer or a court order as required by section 604 of the Fair Credit Reporting Act? Second, whether section 621(a) of the Fair Credit Reporting Act, 15 U.S.C. § 1681s(a), authorizes the Federal Trade Commission to obtain consumer reports from sources other than consumer reporting agencies? Third, whether Rule 19 of the Federal Rules of Civil Procedure and section 604 of the Fair Credit Reporting Act require that this action be dismissed for Petitioner's failure to join the affected consumers as indispensable parties?

 III. Discussion

 A. The Terms of the Fair Credit Reporting Act Prevent the Federal Trade Commission from Obtaining a Consumer Report from Respondent Other Than Pursuant to an Order of a Court Having Jurisdiction to Issue Such an Order, or Pursuant to the ...


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