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FORD MOTOR CO. v. COLEMAN

September 22, 1975

FORD MOTOR COMPANY, Plaintiff,
v.
WILLIAM T. COLEMAN, SECRETARY OF TRANSPORTATION, JAMES B. GREGORY ADMINISTRATOR OF NHTSA EDWARD H. LEVI ATTORNEY GENERAL OF THE UNITED STATES UNITED STATES OF AMERICA, Defendant



The opinion of the court was delivered by: LEVENTHAL

 Ford Motor Company in this case challenges the constitutionality of §§ 108(a)(1)(D), 109, 152(a) and 155(b) of the 1974 amendments to the National Traffic and Motor Vehicle Safety Act of 1966, (Act), 15 U.S.C. §§ 1397(a)(1)(D), 1398, 1412(a) and 1415(b). It seeks a preliminary injunction in this three-judge district court *fn1" restraining the operation of the statutory penalties for noncompliance with the order of the National Highway and Traffic Safety Administration (NHTSA) to give notification to purchasers of 1968 and 1969 Mustang and Cougar automobiles and to remedy without charge any seat back pivot pin brackets in those cars. *fn2" Ford seeks a tolling of the penalties until it is able to obtain a judicial determination of the validity of the Administrator's underlying premise that seat pin breakage constitutes "a defect which relates to motor vehicle safety" within the meaning of the Act. *fn3" Ford maintains that the provision permitting a penalty of $800,000 for noncompliance creates an in terrorem atmosphere calculated to deter manufacturers from exercising their right to a de novo hearing in district court, and there to require the Government to meet the burden of showing by a preponderance of the evidence, that there exists a safety-related defect. *fn4" Ford objects to its exposure to penalties for (1) the initial noncompliance, asserting that the statutory procedure for obtaining a stay pending the outcome of the de novo district court hearing is constitutionally inadequate because it shifts the burden onto the manufacturer to show that his noncompliance was "reasonable" and that "he is likely to prevail on the merits"; *fn5" and (2) possible future noncompliance with an additional order to give provisional notification, which the Administrator may issue should Ford succeed in staying the operation of the first set of penalties, and which cannot be avoided even if Ford ultimately wins on the merits. *fn6"

 In our view, the proper construction of the Act, taking into account the statutory language, legislative history, and the sound doctrine that calls for interpretation in the light of traditional principles of equity in the federal courts, is consistent with constitutional dictates. In accordance with that construction, and in the exercise of its pendent jurisdiction, this court restrains the operation of the statutory penalties until Ford's motion for a preliminary injunction is ruled on in the Government's enforcement action, which was filed the same day as Ford's complaint, and has been assigned to District Judge Hart as a related case. *fn7" That injunction is in conformance with the Act, not predicated on the Act's unconstitutionality.

 I. STATUTORY FRAMEWORK AND FACTUAL BACKGROUND

 Section 152(b), 15 U.S.C. § 1412(b) empowers the Administrator, as the Secretary of Transportation's delegate, *fn8" to require the manufacturer of a motor vehicle "which contains a defect which relates to motor vehicle safety" to furnish notification of the defect to owners, purchasers and dealers and to remedy it without charge. The determination of a safety-related defect is made on the basis of the Administrator's investigation and after an informal hearing at which the manufacturer has "an opportunity to present data, views and arguments" to show the absence of safety-relatedness. *fn9"

 Noncompliance with a § 152(b) order constitutes a violation under § 108(a)(1)(D), 15 U.S.C. § 1397(a)(1)(D), exposing the manufacturer to a civil penalty under § 109, id. § 1398, not to exceed $1000 for each violation (presumably for each defect-marked motor vehicle) and $800,000 "for any related series of violations." The Secretary determines the amount of the penalty to be sought in light of "the appropriateness of such penalty to the size of the business of the person charged and the gravity of the violation. . . ." *fn10" But it is the court that determines whether a penalty shall be ordered and in what amount.

 Enforcement takes place in the context of either an action under § 110(a), 15 U.S.C. § 1399(a), to restrain a violation of the § 152(b) order or under § 109 to collect a civil penalty with respect to such violation. The enforcement action is to be brought by the Government in the district court for the District of Columbia or for a judicial district in the state of incorporation of the manufacturer. Section 155(a), id. § 1415 requires expedited consideration and consolidation of "all actions . . . brought with respect to the same order," in accordance with the order of the court in which the first action is brought. During the pendency of an action relating to a § 152(b) order, the Secretary may, under § 155(b), id. § 1415(b), order the manufacturer to issue provisional notification of the existence of the defect. *fn11"

 The district court in such an action may hold the manufacturer liable for noncompliance with the § 152(b) order only upon finding, after a de novo hearing, *fn12" that the Secretary has established by a preponderance of the evidence the existence of a defect which relates to motor vehicle safety. Moreover, § 155(c)(1), id. § 1415(c)(1), authorizes the court to " restrain the enforcement of such an order only if it determines, (A) that the failure to furnish notification is reasonable, and (B) that the manufacturer has demonstrated that he is likely to prevail on the merits." Liability for noncompliance with a § 155(b) provisional notification order, however, attaches regardless of the validity of the underlying § 152(b) determination, and no similar stay pendente lite procedure is set forth in the Act. *fn13"

 In the case before the court, the Administrator notified Ford on March 13, 1975, that investigation indicated "that the front inboard seat back pivot arm pin bracket on 1968-69 Mustang and Cougars is subject to failure which can result in loss of vehicle control, accident or injury." *fn14" Ford was given an opportunity to present arguments and data in rebuttal, and rebuttal was presented on April 22, 1975. On August 12, 1975, Ford received notification of the Administrator's final determination that seat back pivot pin bracket breakage constitutes a safety-related defect, accompanied by a § 152(b) order to furnish notification and to remedy without charge. On August 18, 1975, Ford filed its complaint in district court, and applied for a temporary restraining order, preliminary injunction and convocation of a three-judge district court. The same day, the Government filed its enforcement action in the district court. Judge Hart granted the temporary restraining order. This three-judge court was duly convened. At argument, this court continued the restraint against enforcement of the penalty provisions pending further order of the court.

 II. JURISDICTION

 The Government's brief contended that this court does not have jurisdiction to hear Ford's constitutional challenge because § 155(c)(1) provides the exclusive means for obtaining a stay of the penalties provision -- as a motion in the Government's enforcement action. *fn15" This jurisdictional contention was abandoned at oral argument, *fn16" and is without merit.

 Under Ford's theory, the § 155(c)(1) stay procedure comes too late because the penalties for noncompliance have already worked their chilling effect on the right to seek judicial review of the order, and is constitutionally inadequate also because it places the burden of establishing a right to equitable relief on Ford, rather than require the Government to convince the court of the need for coercing immediate compliance. The challenge here is to the constitutional adequacy of the § 155(c)(1) stay in the context of civil penalties accruing immediately upon noncompliance. The jurisdictional objection would foreclose effective judicial consideration of Ford's constitutional objections. Ford is entitled to three-judge court review of the constitutionality of the statutory scheme as a whole.

 Moreover, this Act does not embody a Congressional direction confining judicial jurisdiction to enforcement proceedings. Section 155(a)(1) of the statute, 15 U.S.C. § 1415(a)(1), expressly provides for consolidation of "all actions (including enforcement actions) brought with respect to the same order under" § 152(b). The stay procedure itself is not restricted in terms to enforcement actions. *fn17" Even if the § 155(c)(1) stay procedure were restricted to enforcement actions, in the absence of language unmistakably withdrawing all equitable jurisdiction outside of the enforcement proceeding *fn18" this court would have inherent power to do equity in the face of an unconstitutional statute. But rather than legislate such withdrawal, Congress was willing to permit even pre-enforcement review of § 152(b) orders, expressly leaving the question to the courts. *fn19" These provisions fall short of the "clear and convincing" congressional intent required before a statute will be construed to restrict access to judicial review, *fn20" here of the penalty scheme as a whole.

 III. THE PENALTY SCHEME

 Ford's basic claim is that the penalty scheme is calculated to deter it from exercising its right to judicial review, by putting it to the Hobson's choice of either submitting to what it considers an erroneous agency determination based on informal procedures or challenging the order in the courts at the risk of a penalty of $800,000. *fn21" Ford argues that due process requires a tolling period during which it can secure a complete judicial review of the validity of the Government's order, and only upon a final judgment in the Government's favor should Ford's liability for noncompliance begin to run.

 We do not take up Ford's further objection to the provisional notification provision, as exacerbating the chilling effect of the penalty scheme by exposing Ford to liability for noncompliance even if the underlying agency determination is ultimately deemed unlawful. The Administrator has not ordered provisional notification in this case. In the absence of agency implementation of this section of the Act, we have no basis for determining its reach, let alone for measuring it against the command of the Constitution. The Administrator may view his authority to order provision notification as limited to emergency situations -- where the defect can be correlated with a significant incidence of highway accident and injury. *fn22" The mere possibility that the Administrator might exercise that power in this case is too speculative to warrant judicial consideration at this juncture.


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