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any decision of any court, lower Federal court, or Supreme Court, which purports to sustain the Commission's findings of fact upon the scintilla-of-evidence rule. On the contrary, sir, in the Consolidated Edison case and the Columbia Enameling Co. case, the Supreme Court repudiated that very rule.
Let me give in paraphrases the language in the Columbia Enameling opinion of Mr. Chief Justice Stone. He said, following the Consolidated Edison principle, that there must be substantial evidence, meaning sufficient relevant evidence to convince a reasonable mind as adequate to support a conclusion; that it would not be enough to have a mere scintilla of evidence. If there was just a scintilla of evidence then, as would be the case if the trial were to a jury, the court would be entitled to direct a verdict for the defendant.
There is a vast difference between the scintilla-of-evidence rule and the substantial-evidence rule, and there is some difference, another range of difference, between the substantial-evidence rule and preponderance-of-evidence rule.
I say, with an effort to be fair and objective on this, that I would not be terribly disturbed if the preponderance-of-evidence rule were written into the statute. I do not think that with the Administrative Procedure Act as it now stands we need that. I think the Federal Trade Commission's statement of policy and its amended rules of practice in practical effect take care of it anyway. I venture to say, that on review of the records made by the Commission, we would find that in most instances there would not even be any reasonable difference of view as to the existence of a preponderance of the evidence to support the findings of fact of the Commission. There are those who, of course, believe that the substantial-evidence rule accomplishes the protection of the rights of the respondent to a sufficient degree. I think that those who feel that the preponderance-of-evidence rule ought to be written into the statute are not going to place upon the Commission a greater burden, or at the most a much greater burden, than it now has, because it sustains its findings of fact in precisely that manner in most instances.
Mr. O'HARA. Mr. Chairman.
Mr. O'HARA. Dean, I presume you were not here this morning when I read the letter from Dean Roscoe Pound.
Mr. OPPENHEIM. No, sir; I was not able to be present this morning.
Mr. O'HARA. Would you permit me to read it to you? You recognize Dean Pound as somewhat of an authority?
Mr. OPPENHEIM. I am always glad to hear Dean Pound's name mentioned in any proceeding of a committee of Congress.
Mr. O'HARA. If I may, I will read it. First let me say on the record when I drew up this bill, after some considerable labor, I sent a copy of it to Dean Pound and his letter is in reply to my letter, after he had made a study of the bill. Let me read it to you, sir. It is dated the 16th of July 1947.
Mr. Reporter, it will not be necessary for you to put this into the record again.
(Whereupon, Mr. O'Hara read the letter above referred to, which appears earlier in the hearings.)
Mr. O'Hara. Do you have any comments to make on Dean Pound's observations, which are somewhat different from yours, of course!
Mr. OPPENHEIM. It goes without saying that I have great respect for the scholarship and the distinguished achievements of Dean Roscoe Pound.
I am rather surprised that he was willing to word his letter in the exact language which you have read, although I do realize
Mr. O'HARA. Well, are you questioning that that is not his language? The reporter has the original letter.
Mr. OPPENHEIM. No; I say I am rather surprised that he expressed himself in those words. I do not question, of course, the authenticity of the letter.
But, I realize that in its general tenor it follows to some extent the tenor of some of his articles in the American Bar Association Journal.
Now, I respectfully differ with the dean's reactions to the work of the administrative agencies, and with particular reference to the Federal Trade Commission.
I have not found from my observation of the Commission's work in Washington, by attendance upon hearings of trial examiners and arguments before the Commission, that hearsay constitutes a basis for the trial examiner's report on the findings of fact or in the Commission's ultimate decision as to those facts. Indeed, I am reminded again of the warning that was issued by the Supreme Court in the Consolidated Edison case, I believe, that a record made up of hearsay evidence or substantially of hearsay evidence would not be sustained by the courts.
The Commission in my opinion has adhered to the common-law rules of evidence even though it is not under a mandate so to do. Just as in the case of the National Labor Relations Board, the Commission is free to depart, if fairness so dictates, from the common-law rules of evidence. However, I do not believe, as Dean Pound seems to believe, that the Commission has ever violated the standard of admissibility of evidence based on the principles of relevancy, materiality, and probative value.
I cannot understand why Dean Pound would make as broad a generalization as he has made. Moreover, I am not at all certain that a reading of the appellate court reports can, in and of itself give anyone an intimate picture of the record in these Federal Trade Commission proceedings. I have examined numerous transcripts of testimony in Federal Trade Commission cases. I realize that the trial examiners of the Federal Trade Commission, just as the Commissioners themselves, are subject to errors of judgment as all human beings are, and that the Federal Trade Commission, as a governmental institution, is no less susceptible to errors of judgment than any tribunal, be it an administrative agency or court; but I am clear in my own mind that the Federal Trade Commission has generally adhered to standards of proof that are well known in the courts of law and that its findings of fact generally are sustained by evidence that would be in conformity with the accepted rules for admission and exclusion of evidence. In fact, sometimes I hear the criticism that the Federal Trade Commission is too much of a stickler on the admission and exclusion of evidence; that the trial examiners are sometimes even more severe in their rulings of evidence than would be the case perhaps in some courts of law.
Mr. O'HARA. May I call your attention to Phelps-Dodge Refining et al. v. The Federal Trade Commission. I do not have the Federal
. court citation, but the language of the court memorandum which I have before me states this:
It is true that Gunther's memorandum is hearsay; but it is persuasive hearsay, and the Commission is not bound to follow the strict rules of evidence which prevail in courts of law.
Do you recognize that!
Mr. OPPENHEIM. I recognize that that is something that can happen and does happen in some instances in the Federal Trade Commission proceedings, because
Mr. O'HARA. Do you think it should happen?
Mr. OPPENHEIM. In my mind, the Commission is authorized to relax the rules of evidence, common law rules of evidence and has done so in some instances, and I think that hearsay when it is not more than a fragment in a record; when it is not a substantial part of the record, is not in and of itself an evil thing.
Mr. O'HARA. Well, Dean, you know that generally the circuit courts of appeals have generally held that if there is any evidence to sustain the findings of the Federal Trade Commission that they will, almost without question, sustain it, even though the evidence is very small. Is that a fair statement, or is it not?
Mr. OPPENHEIM. Well, I would say if generalizations were made about it, that since 1934, as a result of the warning of the Supreme Court in the Algoma Lumber Co. case, the circuit courts of appeals cannot pick and choose from among conflicting inferences or from among the evidence, and cannot substitute their judgment for that of the Commission. No doubt since then there has been a more liberal judicial attitude in the application of the substantial evidence rule.
I think the courts have responded to the mandate that the findings of fact of the Commission shall be conclusive if supported by substantial evidence and I think in some instances, the courts have perhaps been a little too liberal in that regard; but I do not believe you will find that on judicial review, the courts have actually disregarded, let us say, a weight of the evidence on the other side on the theory that what remains is substantial.
I have seen that said, but I doubt whether you will find a record where that sort of an appraisal of the evidence in the record would be sustained.
Mr. O'HARA. Are you an advocate of the theory that the administrative bureaus in a quasi-judicial capacity, where they act as prosecutor and judge and jury, is a good sound theory of law?
Mr. OPPENHEIM. I am not. And I am glad to place myself on record in saying that the separation of functions is something which all of us should, on principle, seek to achieve.
Mr. O'HARA. Well, has that been done under the Administrative Procedure Act in the Federal Trade Commission? Has there been a separation of functions?
Mr. OPPENHEIM. Well, I said in my statement that the Commission has taken affirmative steps; in fact, had taken.
Mr. O'HARA. Please show what the difference now is in the trial of cases where it acts as judge, prosecutor, and jury at the same time. Please tell us what they are.
Mr. OPPENHEIM. I will be glad to do that, sir, if you will concede to me one thing, namely, that all of us would have tremendous difficulty, I suppose, in trying to find out just what are quasi-judicial functions as distinguished from other functions.
I understand that the witnesses from the Commission's staff intend to present to this committee a very detailed comparison of the old rules of practice and policy statement and the ones now in force.
Mr. O'HARA. What I am asking you to do is to tell us what actually happens, that you know of. You are an expert on this subject.
Mr. OPPENHEIM. This is what I believe can be safely said. In the rules of practice, for example, with regard to trial examiners and the hearings in adversary proceedings—rules XIV and XV-and I call attention also to rules XX, XXI, and XXII of the Commission's revised rules of practice-in all of those instances you will find certain specific changes that were made to conform to the Administrative Procedure Act of 1946. I believe you will also find that before those changes were made the Commission had already
Mr. O'HARA (interposing). Now, Dean, will you tell what they are?
Mr. OPPENHEIM. Yes. For example, with respect to the trial examiner's recommended decision in adversary proceedings, rule XXII
The CHAIRMAN. What page?
Mr. OPPENHEIM. I am reading from the rules of practice of the Federal Trade Commission in a pamphlet entitled, "Rules, Policy, Organization, and Acts.”
The CHAIRMAN. What page?
You will find and I am not mentioning that as the only rule, but in relation to the others, such as rules XIV, XV, XX, and XXIthat today the trial examiner has in the first instance broader powers than he had before; that he is more independent in the exercise of his functions than he was before, and as we know, will be under civil service as well; and that in exercising his functions under the rules, he can file a recommended decision and can make findings of fact and recommend conclusions of law and an appropriate order on the basis of which the respondent, as well as the attorney for the Commission, may take exceptions.
Ås another example, at the close of the proceeding or the reception of evidence, the trial examiner may fix a time for consideration of the proposed findings and conclusions of the parties and a hearing may be granted on them, as I understand it. If I am incorrect I will be corrected, I am sure, by the witnesses for the Commission. That is an oral argument before the trial examiner as to the correctness of the findings and the conclusions proposed by the parties.
And, the Commission's rules further specifically provide for a separation of the prosecuting and investigatory, and the quasi-judicial functions, by pointing out in various places how that separation is to be accomplished.
The CHAIRMAN. May I interrupt for just a moment. You point out what the rules now provide for. What were the rules in those respective instances before the adoption of these rules?
Mr. OPPENHEIM. Well, as I understand it, there will be a comparative chart which will be available to the committee for you to compare the old and the new revisions. It would be rather difficult for me, without the aid of the text of the old rules to point out specifically the exact variances in the language. I do not think that anyone could be expected to remember, from memory, exactly that.
The CHAIRMAN. You are reading from the book that we all have before us. What we are trying to ascertain is to what extent has the Administrative Procedure Act, as passed by Congress, changed this situation as it previously existed.
Mr. OPPENHEIM. Well, I can do that at various places, sir. For example, if you will look at rule XIV, as to trial examiners, although as I
say I cannot keep in mind the old rule, I am quite sure that the powers of the trial examiner, the authority now vested in the trial examiner, as indicated on page 12, of rule XIV
The CHAIRMAN. There has just been handed to us a prepared pamphlet of Federal Trade Commission Rules of Practice, as amended, to conform to the Administrative Procedure Act which sets forth what the old rule was and what the new rule is, and I assume by studying that the committee can get an answer to my question.
Mr. OPPENHEIM. Yes; I am perfectly certain you will find in the new rules various additions and changes which were made to conform to the Administrative Procedure Act, which were not in the old rules, and old policy statement.
The CHAIRMAN. Well, this helps very greatly. This gives us the answer, probably, we are seeking.
Mr. O'HARA. Dean, one short question and then I am through. You agreed with me that you did not like the theory of the prosecutor and the judge and the jury all being in one agency. Where have the rule: administrative procedure—where under the rules of the Administrative Procedure Act has it been changed in the Federal Trade Commission?
Mr. OPPENHEIM. Well, by the internal separation of the functions as provided in the new rules of practice. That, as I say, is accomplished, when you look at the rules governing the hearings before the trial examiner, beginning with rule XIV and taking it through rule XXII.
Mr. O'HARA. I can read the book, but I am asking you frankly what happens. What has happened down there which has changed it since the Administrative Procedure Act was enacted ?
Mr. OPPENHEIM. Exactly this, that in a real sense the trial examiner of the Federal Trade Commission today is not subject to the will of the Commission in the sense that he might have been said to have been subject formerly. As Justice Holmes said, a power over a man's subsistence is a power over his will.
Now, I think that with the improvements that have been made by internal separation of functions and with the effort that is now being made in cooperation with the Civil Service Commission to give the trial examiner an independent status, that it can hardly be said that a trial examiner is not free and independent to act as a trial judge, substantially as a trial judge would act in a Federal district court.
Mr. O'HARA. Dean, who formulates the complaints against the respondents?
Mr. OPPENHEIM. I know what you are driving toward, Mr. Congressman; but I want to say in—
The CHAIRMAN. If you know what he is asking, will you answer, please?