The opinion of the court was delivered by: FLANNERY
This matter arises before the court in a number of consolidated enforcement and preenforcement cases. These actions concern the Federal Trade Commission's information-gathering activities in connection with the Line of Business Program (LB) and the Corporate Patterns Report Survey (CPR). The consolidated cases include the FTC's enforcement action against various corporations that have failed to comply with Commission orders requiring them to file the 1974 Form LB,
the FTC's enforcement action against various corporations that have failed to comply with Commission orders requiring them to file CPR forms,
preenforcement actions concerning the LB Program filed against the FTC, certain FTC Commissioners, and the Comptroller General by a number of companies in the District of Delaware later transferred to this court, preenforcement actions concerning the CPR Survey filed against the FTC, certain FTC Commissioners, and the Comptroller General by a number of companies in the District of Delaware later transferred to this court, and similar actions concerning the LB Program and the CPR Survey originally filed in the Southern District of New York and later transferred to this court.
Pursuant to this court's order of July 30, 1976, the parties have completed the filing of and opposition to all motions that should be decided by the court at this time. In addition, the parties have submitted outlines detailing the discovery or evidentiary hearings they believe necessary before the court can rule on the merits of a claim or defense. In light of the volume of the pleadings in this case,
the court could not hope to grapple with all the pending motions at one time. Accordingly, the court held an oral hearing on four pending motions on January 7, 1977: the corporate parties' motion to dismiss the LB and CPR enforcement actions, the FTC's motion to dismiss the LB and CPR preenforcement actions, the Comptroller General's motion to dismiss the LB and CPR preenforcement actions, and the FTC's motion for a more definite statement of counterclaims. Each motion is discussed in turn, and an appropriate order follows this memorandum opinion.
I. Corporate Parties' Motion to Dismiss
The corporate parties move to dismiss the enforcement actions concerning the LB and CPR orders for lack of jurisdiction. The corporate parties proffer three basic arguments in support of their motion: (1) the FTC can obtain mandatory relief only through a civil action pursuant to the Federal Rules of Civil Procedure, and the court thus has no matter pending; (2) the FTC must bring any enforcement claims against preenforcement plaintiffs as compulsory counterclaims; and (3) the court does not have personal jurisdiction over several respondents in the enforcement proceeding. For the reasons set forth below, the court must deny or defer the corporate parties' motion to dismiss.
A. Civil Action v. Summary Procedure
The corporate parties contend that the FTC can obtain relief in the enforcement proceedings only through institution of a normal civil action pursuant to the Federal Rules of Civil Procedure. The FTC has not followed the usual complaint-summons-service procedure for institution of a civil suit; instead the Commission has employed a petition-show cause order approach, purportedly under the authority of section 9 of the Federal Trade Commission Act.
Its goal is a mandamus remedy under that section. The corporate parties' argument on the ability of the FTC to obtain a mandamus remedy in a special reports order case under section 9 is a simple one. They contend that Rule 81(b) of the Federal Rules of Civil Procedure,5 abolishing the writ of mandamus, must control over any inconsistent practice under section 9 predating the adoption of the Rules. Indeed, section 1 of the Rules Enabling Act, 28 U.S.C. § 2072, provides that all "laws in conflict with such rules shall be of no further force or effect. . . ."
The corporate parties concede that the FTC may obtain summary enforcement of its subpoena orders. They contend, however, that Rule 81 contemplates separate treatment for subpoena order enforcement. Indeed, Rule 81(a)(3) leaves some discretion in the court in subpoena cases.
The corporate parties admit that a court has the "discretion to be flexible" in the application of the Rules to subpoena enforcement cases. They note that the Rules contain no similar allowance rendering the application of the Rules discretionary when mandamus relief is sought, however; the express authorization of Rule 81(a)(3) renders subpoena cases inapposite to the mandamus cases facing the court here. Again, the corporate parties have presented a logical argument,
but there exist a number of cases purporting to apply a summary procedure in mandamus cases as well as subpoena cases.
Courts began to grapple with the question of summary mandamus procedures in enforcement of FTC orders in the case of United States v. Associated Merchandising Corp., 256 F. Supp. 318 (S.D. N.Y. 1966). The court in Associated Merchandising considered the FTC's attempt to enforce an order "directing respondents to produce certain documents by way of pretrial discovery" in a pending FTC proceeding. In response to the companies' contention that the FTC could enforce the orders only by commencing a plenary civil action, the court stated:
As a general rule, district courts do not issue directions in the nature of mandamus except in aid of jurisdiction already acquired. . . . However, where the Court was able to discover a congressional authorization for use of a writ of mandamus, it approved the issuance upon a petition of a peremptory writ. By Section 49, Congress has expressly conferred jurisdiction to issue a writ of mandamus. Therefore, it seems clear that Congress has expressly authorized the court to proceed summarily to enforce orders of the Federal Trade Commission for the production of documents.
256 F. Supp. at 321. The corporate parties' attempt to discount this case (and indeed cite it as the genesis of later courts' confusion) on the ground that, although the court spoke of mandamus, it was really simply a subpoena enforcement action. As such, in the corporate parties' view, it was subject to the undisputed Rule 81(a)(3) exception, although the court mistakenly cited Rule 81(b). The FTC draws a distinction between a subpoena and an order to produce documents,
but fails to explain any essential distinction or significance to any such difference.
Later cases have shed some light on the issue allegedly confused in Associated Merchandising. In Federal Trade Commission v. Sherry,9 Judge Robinson of this court, citing Associated Merchandising with approval, held that administrative subpoenas are enforceable by way of summary proceeding under the discretionary authority of Rule 81(a)(3). The corporate parties distinguish this case as another subpoena enforcement case. In Federal Trade Commission v. Jorgensen,10 Judge Gasch of this court rejected an argument, in the context of an FTC subpoena and order requiring access to particular files, that the FTC could not enforce its subpoena by way of a summary proceeding. The court cited nine cases to support its conclusion that "[a] summary proceeding suffices." Slip opinion, at 2 n. 2. While the corporate parties distinguish this case and all but one of the cases cited therein as subpoena enforcement cases, the court in Jorgensen twice referred to the action as involving a subpoena and order. Slip opinion, at 1, n. 1. Finally, in Emerson Electric Co. v. Federal Trade Commission,11 Judge Pratt of this court considered a claim similar to that made by the corporate parties in this case and rejected it as being "devoid of merit."
In one notable case cited by the parties, this issue was present but, so far as the court can determine, was not briefed, argued, or considered. In United States v. Litton Industries, Inc.,12 the Ninth Circuit considered FTC orders to file special reports and subpoenas duces tecum concerning the effects of corporate mergers. The court suggested that an enforcement proceeding pursuant to section 9 of the FTC Act was proper, without comment on the form that proceeding should take.
The corporate parties' job in attempting to blunt the weight of judicial authority on this question is an unenviable one. They have asked the court to ignore a unanimous string of cases allowing a summary procedure on the grounds that these cases concerned inapposite subpoena enforcement, did not adequately consider the issue, or were just plain wrong. This court does not read these cases as unconvincedly as do the corporate parties. There is no debate that this issue was at least brought to the court's attention in Jorgensen, and that the court treated it as a disputed issue. Similarly, the court enforced the FTC's orders in Associated Merchandising under the mandamus provisions of section 9 irrespective of whether it was in fact a subpoena that the FTC sought to enforce. That court explicitly considered the relationship between a mandamus under section 9 and Rule 81(b). That conclusion was cited with approval by the court in Sherry. See 1969 TRADE CASES at 87,455. The same challenge made by the corporate parties here was considered and rejected by the court in Emerson Electric. In all, the court finds a respectable amount of authority for the proposition that the FTC can proceed in mandamus enforcement actions by way of summary proceeding.
Moreover, the logic of the corporate parties' Rule 81(b) argument is hardly airtight. The rule merely substituted a motion or action practice for the existing writ practice. The corporate parties candidly admit that before 1946, the date the subpoena exception sentence was added to Rule 81(a)(3), the Rules were considered to have only limited application to enforcement proceedings, which were not plenary in nature. 7 J. Moore, Federal Practice Par. 81.06, at 81-84 (2d ed. 1975). There exists as much a logical basis to assume that Congress, in amending the rule concerning subpoena enforcement, desired to leave existing practice in other enforcement actions unchanged as there is to assume that Congress by its silence meant to subject all enforcement proceedings to the full panoply of Rules requirements. Authority exists for the proposition that an action seeking relief in the nature of mandamus may be commenced by motion or petition when there is no pending action. 7 J. Moore, supra Par. 81.07, at 81-96 (citing Associated Merchandising and Sherry). The court on the whole finds the corporate parties' argument ingenious, well-briefed, and well-argued, but nevertheless lacking in merit.
As a practical matter, the debate on this question is a tempest brewed in a rather small teapot. Even if the court accepted the corporate parties' contention that the FTC had to commence a normal plenary civil action under the Rules, that conclusion simply would force the FTC to file a complaint and begin again. The ensuing delay makes little sense to the court: the FTC has filed a petition instead of a complaint and has proceeded by show cause order rather than summons. The corporate parties point to no prejudice flowing from this procedure and, indeed, appear to recognize that the two have operated in this case as functional if not legal equivalents. In fact, the corporate parties offered to accept the petitions as complaints if the court makes "clear that the filing of a complaint was essential to the Commission's request for relief." Respondents' Reply Memorandum, at 5-6. The court declines, for the reasons stated above, to accept the condition to the corporate parties' concession.