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FTC v. CARTER

January 25, 1979

FEDERAL TRADE COMMISSION, Petitioner,
v.
Donald P. CARTER et al., Respondents



The opinion of the court was delivered by: PARKER

The Federal Trade Commission (FTC or Commission) brings this summary proceeding pursuant to § 9 of the Federal Trade Commission Act (Act), 15 U.S.C. § 49. The FTC petitions for enforcement of 28 subpoenas Duces tecum issued to 56 respondents, including the six major American cigarette manufacturers, their advertising agencies, two tobacco research corporations, and the chief executive officers of each, *fn1" all in connection with an industry-wide pre-complaint investigation of cigarette advertising and promotion.

 Regarding this investigation as preparatory to the alleged Commission goal of banning all cigarette advertising, the respondents oppose the petition on both procedural and substantive grounds. They have filed a virtual battery of objections, transforming this summary matter into another of a long series of proceedings seeking to restrict the FTC's investigatory efforts.

 Recent cases have been resolved by this Circuit uniformly in favor of the Commission. See e.g., SEC v. Arthur Young & Co., 190 U.S. App. D.C. 37, 584 F.2d 1018 (1978), Cert. denied, 439 U.S. 1071, 99 S. Ct. 841, 59 L. Ed. 2d 37 (1979); In re: FTC Line of Business Report Litigation, 193 U.S. App. D.C. 300, 595 F.2d 685 (1978); FTC v. Texaco, Inc., 180 U.S. App. D.C. 390, 555 F.2d 862 (1977), Cert. denied, 431 U.S. 974, 97 S. Ct. 2940, 53 L. Ed. 2d 1072 (1977). Applying these clear precedents to the particular facts of this litigation, the Court denies the respondents' procedural objections and will enter an order enforcing the subpoenas in their entirety.

 BACKGROUND

 On May 11, 1976, the FTC authorized an investigation of the methods of advertising and promotion employed by the cigarette industry. The Resolution Directing Use of Compulsory Process in Nonpublic Investigation identifies the nature and scope of the investigation as follows:

 
To fulfill its obligation to report to the Congress pursuant to Section 8(b) of the Federal Cigarette Labeling and Advertising Act, as amended, *fn2" and to gather and compile information make reports to the Congress as authorized by Section 6 of the Federal Trade Commission Act; *fn3" and to determine whether persons, partnerships, or corporations engaged in the manufacture, advertising, promotion, offering for sale, sale, or distribution of cigarettes may have been or may be engaged in the use of unfair or deceptive acts or practices, in or affecting commerce; in the advertising, promotion, offering for sale, sale, or distribution of cigarettes in violation of Section 5 of the Federal Trade Commission Act. *fn4" (Footnotes added.)

 As authority for the investigation, the Commission depends on §§ 6, 9, and 10 of the Act, 15 U.S.C. §§ 46, 49, 50; and FTC Procedures and Rules of Practice, 16 C.F.R. § 1.1 Et seq.

 On May 12, the Commission issued the 28 subpoenas at issue here. The subpoenas, as modified following discussion between the parties, require production of documents or, in some instances, verified written statements, relating to: 1) respondents' corporate organization and structure; 2) information prepared by or for respondents since January 1, 1964, concerning "consumers' or potential consumers' attitudes towards, beliefs about, perceptions or understanding of, or behavior relating to, cigarettes" and, since January 2, 1971, cigarette advertising; 3) cigarette advertisements prepared by or for respondents since January 2, 1971, whether or not disseminated.

 In the fall of 1976, respondents moved to quash or limit the subpoenas, raising many of the objections raised in this proceeding, and requested a protective order to guard the confidentiality of the subpoenaed documents and data. On May 17, 1977, the Commission substantially denied the motion, rejected the protective order request, and ordered full compliance by June 27.

 On June 24, 1977, respondents commenced an action against the FTC in the United States District Court for the Southern District of New York to declare the subpoenas invalid and enjoin enforcement. American Brands, Inc. v. FTC, 77 Civ. 3096. Later, on July 28, 1977, the Commission filed with this Court a Petition for Enforcement, and an order to show cause immediately followed. The New York action has been stayed pending termination of this proceeding.

 THE PROCEDURAL ISSUES

 Initially before the Court are several procedural motions filed by respondents, including: 1) motion to transfer this proceeding to the Southern District of New York; 2) motion to dismiss the corporate officers as respondents; 3) motion to dismiss certain respondents for lack of In personam jurisdiction; 4) motion for limited discovery; and 5) motion to dismiss due to the failure of the FTC to comply with Rules 3, 4 and 13(a) of the Federal Rules of Civil Procedure. The Court will consider the motions seriatim, denying them all.

 1. Motion to Transfer Under § 1404(a)

 Section 1404(a) of Title 28, United States Code, provides:

 
For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.

 Respondents argue that since the majority of the companies involved here are based in New York and perform substantial amounts, if not all, of their business there, the "center of gravity" of this proceeding is the Southern District of New York. The FTC objects to transfer on several grounds.

 The Court initially notes that in a summary proceeding such as this testimony from parties or witnesses is rarely necessary, See transcript of May 3, 1978, hearing at 44; FTC v. MacArthur, 532 F.2d 1135, 1141-43 (7th Cir. 1976). This of course eliminates a significant convenience factor involved in § 1404(a) determinations. In addition, enforcement proceedings normally require only the presence of counsel, due to the limited inquiry involved, See FTC v. Texaco, Inc., supra ; and, even if the convenience of counsel were a proper consideration, it would not weigh in favor of transfer in this proceeding, since counsel are in large part from this district.

 A further and most important consideration is the additional delay attendant to transfer. Although this is a summary proceeding, it has been pending since July, 1977. Further delay, for whatever reason, must be supported by compelling reasons. Respondents present no such justification, and in view of likely delay resulting from transfer to New York, *fn5" transfer of this matter is singularly inappropriate.

 Respondents have failed to make a sufficient showing of inconvenience to parties or witnesses or that transfer would ...


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