The opinion of the court was delivered by: OBERDORFER
On June 8, 1978, the Federal Trade Commission (FTC) petitioned for a court order requiring a French corporation, Compagnie de Saint-Gobain-Pont-a-Mousson (SGPM), to produce documents. The documents were the subject of FTC subpoenas served in 1977 on apparent agents of SGPM in the United States and by registered mail to SGPM's corporate headquarters in Paris.
The subpoenas were issued pursuant to an FTC resolution to use "all compulsory processes available" to it in connection with an investigation of SGPM, CertainTeed Corporation (a subsidiary of SGPM), Owens-Corning Fiberglass Corporation, Johns Manville Corporation and others engaged directly or indirectly in the sale of insulation.
The investigation was to determine, among other things, whether those named were engaging or had engaged in acts or practices violative of Section 5 of the Federal Trade Commission Act, including those relating to licensing of patents, the exchange and availability of technology and know-how, the availability and practice of raw materials and the allocation and distribution of insulation products and textile fiberglass.
On June 9, 1978, Judge Thomas Flannery, as Motions Judge in this District, issued an order to SGPM to show cause before July 14, 1978, why the FTC's petition should not be granted. Judge Flannery's order further directed the Clerk of this Court to serve copies of the FTC petition and supporting documents upon SGPM:
forthwith . . . by any form of mail requiring a signed receipt, in accordance with Fed.R.Civ.P. 4(i)(1)(D), and by the United States Marshal by delivery to Gabriel Aufaure or the individual in charge of the Offices of Saint Gobain, Inc., 551 Fifth Avenue, New York, N.Y. 10017, as agent for respondent. Service shall be deemed to have occurred when either method of service has been effected.
On June 9, 1978, a deputy clerk mailed a copy of the Petition and Order to the following named respondent:
Compagnie De Saint-Gobain-Pont-a-Mousson
A return receipt posted in Paris on June 12, 1978, and filed by the Clerk on June 20, 1978, evidenced respondent's receipt of Judge Flannery's order to show cause.
Judge Flannery's order to show cause was heard by this Court as a motions matter in July, 1978. At that time, SGPM raised objections both to the breadth of the subpoenas and the methods by which they were served. In brief, SGPM asserted that the modes of service the FTC employed were not authorized by statute and, accordingly, that SGPM was not required to comply with the subpoenas. SGPM did not contest jurisdiction of the Court or service of the order to show cause pursuant to Rule 4(i), Fed.R.Civ.P. The Court rejected the challenges to service, focussing instead on the design of a discovery program appropriate to the needs of the FTC and the correlative burden upon SGPM. See FTC v. Texaco, Inc., 180 U.S.App.D.C. 390, 555 F.2d 862 (en banc), cert. denied, 431 U.S. 974, 97 S. Ct. 2940, 53 L. Ed. 2d 1072 (1977). After a further hearing in the form of a conference with counsel, the FTC filed a Statement of Intent that met those SGPM claims of burden that had concerned the Court. Accordingly, on October 2, 1978, the Court found that service of the subpoena was proper and that the subpoena, as modified, was within the authority of the FTC and relevant to its inquiry. Believing that SGPM had received all the relief from burden to which it was entitled and that its protests on the form of service were without merit, the Court denied SGPM's motion for a stay pending appeal. Thereupon, SGPM appealed.
On November 26, 1979, after brief and argument, the Court of Appeals remanded the Order of October 2. FTC v. Compagnie De Saint-Gobain-Pont-a-Mousson, No. 78-2160 (D.C.Cir. Nov. 26, 1979). The Court of Appeals found that three of the four modes of service attempted by the Commission were not effective. Slip Op. at 2 n. 2. In remanding the case, the Court of Appeals directed this Court to consider the effectiveness of the service by registered mailing to SGPM corporate headquarters in Paris. The Court noted that:
Resolution of that issue will involve construction of the relevant authorizing statutes and determination of the congressional intent in enacting them. Relevant in this regard will be whether the construction adopted would be in conformity with general principles of international law, since Congress is customarily presumed, unless a plain intention appears to the contrary, to avoid conflict with such principles as well as the Constitution.
After argument on remand, FTC counsel filed a note from the French Embassy to the State Department, which was transmitted to the FTC through the State Department. The note, dated January 10, 1980, informed the Department of State that:
the transmittal by the FTC of a subpoena directly by mail to a French company (in this case Saint-Gobain-Pont-a-Mousson) is inconsistent with the general principles of international law and constitutes a failure to recognize French sovereignty.
According to the note, "response to certain of the requests from the FTC" could expose SGPM directors to civil and criminal liability and therefore expose them to "judicial proceedings" in France. The note expressed the wish of the French Government that the Department advise the FTC and, presumably, the Court "that the French Government wishes such steps, both in this matter and any others which may subsequently arise, to be taken solely through diplomatic channels."
In carrying out the mandate of the Court of Appeals, this Court has reviewed the relevant authorizing statutes and court decisions relating to the FTC and international law in the context of the events that have transpired in this already protracted matter. This reflection compels the conclusion that neither the framers of the Constitution, who empowered Congress to regulate interstate and foreign commerce, nor the Congress, which authorized the FTC to police it and provided administrative and judicial powers for that purpose, intended to deny the FTC the right to send a subpoena by mail to a foreign corporation suspected, along with its U.S. subsidiary and other major U.S. corporations, of unfair trade practices in violation of the Federal Trade Commission Act. Accordingly, an Order accompanying this Memorandum will reiterate the Court's Order of October 2, 1978, directing its service pursuant to Rule 4(i), Fed.R.Civ.P. The stay imposed on January 14 by the Court of Appeals expires upon the filing of this Order and Memorandum. To permit SGPM a prompt appeal and to enable the Court of Appeals to scrutinize any comment by the Department of State to the French note, or any further comment by the Government of France to the issues addressed herein, the effective date of the Order will be postponed for 30 days.
At the outset, it should be noted that the mandate of the Court of Appeals addresses a narrow issue: whether Section 9 of the Federal Trade Commission Act, 15 U.S.C. § 49, authorizes foreign service of process by registered mail. There is no question that the FTC has the authority to investigate the conduct of foreign corporations affecting the foreign or interstate commerce of the United States or that SGPM, by its conduct, falls within the FTC's jurisdiction. Nor, as the Court of Appeals noted, is there any dispute over the authority of the FTC lawfully to subpoena documents located abroad. Slip Op. at 1. Additionally, ...