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found in a commission especially selected for the purpose, and authorized to employ technical experts as well as lawyers for its guidance. It was doubtless the beliet of Congress that the Commission could perform more satisfactorily than a court the task of making findings of fact in the special field over which it was given jurisdiction.” (Gerard C. Henderson, The Federal Trade Commission, Yale University Press, p. 92).
In thus explaining why Congress had endowed the Commission with the faculty of making, under certain conditions, findings which the courst must respect if they are supported by testimony, Mr. Henderson set forth the basic reason why the committee should reject the O'Hara bill. Questions of law which arise under the Federal Trade Commission Act and the other statutes which the Federal Trade Commission administers have always been subject to determination by the courts. The O Hara bill in essence provides that the courts shall be the trier of facts as well as of the law. It is the wisdom of this move which is at issue in the O'Hara bill.
Appraising the wisdom of this grant of power to the FTC, Gerard C. Henderson concluded :
"Experience with the Sherman law has shown the futility of the attempt to find a strictly legal solution of the problem of monopoly and restraint of trade. The language of the Clayton Act seems to be a recognition of this experience, and the power of enforcement conferred on the Trade Commission strongly suggests the inference that Congress expected the Commission, with the aid and advice of the experts and examiners which it was authorized to employ, to exercise in its enforcement an administrative judgment not necessarily guided by technical legal reasoning, and entitled as such to respect by the courts." Henderson, The Federal Trade Commission, p. 100.
I am glad to take this opportunity to make public acknowledgment of the respect which I have acquired for the work of the staff of the Federal Trade Commission, the Commissioners, the technical staff, and the trial examiners. I believe that their stewardship of the Federal Trade Commission Act entitles them to public credit, not blame. I have not always agreed, of course, with the conclusions that they have reached, but then, too, neither have I found that judges have always held precisely the same point of view as I have thought most beneficial to my client. I have never found their procedure arbitrary, capricious, or vindictive. I wish to pay tribute in particular to the trial examiners on the Commission's staff. Long prior to the enactment of the Administrative Procedure Act, the Commission had set up the Chief Trial Examiner's Division and separated it completely from all other features of the Commission's work. The trial examiners are men of mature judgment and experience whom I have found to be skilled in the art of conducting hearings properly and fairly and insuring that a record is properly made.
In thus expressing my respect for the work of the Federal Trade Commission, I am in the secure position for a lawyer of having the entire Supreme Court on my side. It is easy to cite a number of cases in which the Supreme Court has expressed satisfaction with the expert knowledge of the Commission and its staff as a necessary and integral part of the enforcement of the public policy toward monopoly, fair competition, and price discrimination set forth in the statutes which the Federal Trade Commission administers. In one of its most recent opinions in this regard, Bruce's Juices, Inc. v. American Can Company, the majority of the Supreme Court noted with approval that the "Federal Trade Commission is the appropriate tribunal to hear in the first instance the complicated issues growing out of grievances against a quantity discount practice of a seller" (Bruce's Juices v. American Can Co., 67 S. Ct. 1015, 1016 (1947)). The majority said further: "The economic effects on competition [of quantity discounts) are for the Trade Commission to judge,” and “Until the Commission has determined the question, courts are not given guidance as to what the public interest does require concerning the harm or benefit of these quantity discounts on the ultimate public interests sought to be protected in the act.” The minority opinion in the Bruce's Juice case paid similar tribute to the value of the expert knowledge in complex economic matters of the Federal Trade Commission, declaring:
"It may be granted that the Federal Trade Commission has more technical knowledge and experience in dealing with the complexities of this problem than most courts; and the Commission's judgment would be of inestimable value to any judge called upon to deal with quantity discounts (67 S. Ct. 1015, 1025).
As one who has tried both Robinson-Patman Act cases and Federal Trade Commission cases, I know that Federal Trade Commission cases raise just as difficult questions of fact as those which arose in the Bruce's Juices case. If the objections to the Commission's powers under the Federal Trade Commission have any weight then, the objections are equally applicable to the other enforcement activities of the Commission under the other statutes it administers—the Clayton Act, the Robinson-Patman Act, and the Wool Products Labeling Act. The O'Hara bill singles out one particular statute enforced by one particular agency and seeks to reverse the entire history of administrative law to reach that one statute. The concern with the Federal Trade Commission Act is so open and unconcealed as to make one wonder whether this legislation has its genesis in real concern with the workings of the Federal Trade Commission in general or whether it does not, in fact, reflect irritation at the fact that the Federal Trade Commission Act in particular is being efficiently enforced by the Federal Trade Commission.
At this point I would like to express my agreement with the proposals made by Commissioner Lowell B. Mason for improvement of the procedures of the Federal Trade Commission. Commissioner Mason has suggested the present methods of administering the antitrust laws be changed so that all the activities of governmental agencies engaged in antitrust work may be coordinated. I agree with him that the administrative process may be simplified and shortened by providing cooperative means for eliminating, by simultaneous and industry-wide action, those acts and practices which are prohibited by the antitrust laws of the United States. Increased use of the trade practice conference method along the lines proposed by Commissioner Mason will go far toward removing the criticism of the Federal Trade Commission which are inherent in the O'Hara bill.
Administrative law is not a static thing, but is part of the living tissue of contemporary law. I believe that we have a historical precedent in the growth of the law merchant. The law merchant evolved from the administrative practice of the guilds of medieval days and crystallized into rules of fair trade and fair play what was regarded as the best business practice of the day. The trade practice conference approach suggested by Commissioner Mason can do the same thing for us today. It can raise the plane of competition in modern-day business just as the law merchant imposed the collective will of the organized business communty on those who sought to gain selfish advantages by using unfair methods of competition. Commissioner Mason's proposals can be of immeasurable service in eliminating the infractions of mercantile law which are far better remedied by cooperative agreement and education of the business community than by lengthy litigation directed at single companies. In this way the solution for imperfect administrative processes will be found by improvement of the administrative process, not by the shotgun technique of abandonment of the administrative process.
In addition to my concern over the harm which would be done the entire body of administrative law by adoption of such a fundamental rejection of the basic concept of the relationship between the administrative agency and the courts, I am opposed to the O'Hara bill because of the difficulties it would put in the way of effective enforcement of the Federal Trade Commission Act. The O'Hara bill would divide the enforcement activities of the Government in the field of unfair trade practices and control of monopoly in the face of the rapidly increasing concentration of economic power. The facts of the growth of monopoly have been placed before the Congress in many reports, notably the report, United States Versus Economic Concentration and Monopoly, House Committee on Small Business, Pursuant to House Resolution 64, Seventy-ninth Congress. The reports of the Temporary National Economic Committee provide a treasure house of economic data showing the problems faced by the country because of the trend toward concentration of economic power. The O'Hara bill would make it far easier for this trend to continue.
The courts are overburdened with work now and should not be required to undertake the difficult task of sitting as triers of the facts on complex problems of fact now decided by the Federal Trade Commission. They do not have the specialized training necessary to give proper evaluation to these facts. Moreover, granting them the power to try facts, as well as law, will necessarily mean that the question of the national policy toward curbing unfair methods of competition will become vague and inconclusive. Different tests will be applied by different judges in the host of different judicial jurisdictions. Each district court, each circuit court of appeals, will decide for itself whether or not a complicated set of facts constitutes a violation of the statutory prohibition against unfair methods of competition. Conflict of opinion will necessarily arise; com. panies doing an interstate business will not know what the relevant law is; the interest of the public will suffer. Those who profit by deception of the public will be the only beneficiaries of emasculating the Federal Trade Commission Act to take away the power of the Federal Trade Commission to decide facts in the light of the judgment of those who have made a specialty of detecting violations of the law, and can devote their entire energies and time to such complex determinations.
It is my juilgment that the present Federal Trade Commission Act actually gives the respondent more protection than the O'Hara bill seeks to give. By law, the Federal Trade Commission may do no more than enter an order requiring the respondent “to cease and desist from using such method of competition or such act or practice” (Federal Trade Commission Act, sec. 5 (b)). The O'Hara bill enlarges the scope of the possible punishment for violation of the Federal Trade Commission to a degree which I find vague and positively dangerous. The court is permitted to enter "such order, in the nature of a permanent injunction, as it shall deem appropriate" (H. R. 3871, sec. 2 (c)). Speaking as an attorney who must defend the legitimate interests of his clients, I find that this confers on nonexpert judges a greater power than Congress has yet found wise or necessary.
Moreover, when an injunction is sought to enforce sections 5 and 12 of the Federal Trade Commission Act, respondents now have a protection in the terms of section 13 (b) (1) and (2), where it is provided that a court may exclude from operation of a restraining order or injunction the particular current copies of a newspaper, magazine, periodical, or other publication published at regular intervals where application of the injunction woud delay beyond the regular date delivery of the issue containing the false advertisement. This protection is completely wiped out by the terms of the O'Hara bill since section 13 (b) (1) and (2) of the present act are omitted from the bill.
III. ADMINISTRATIVE PROCEDURE ACT REPUDIATED BY O'HARA BILL
I would be the last one in the world to contend that there is not room for improvement in the work of the Federal Trade Commission and the other administrative agencies. I think that improvement is manifest and that Congress laid down the proper approach when it enacted the Administrative Procedure Act, approved June 11, 1946. That act resulted from many years of discussion by the organized bar and follows what I consider a constructive and wholesome approach. Instead of rejecting the commingling of legislative, investigatory, quasi-judicial, and executive powers in one administrative agency, the Administrative Procedure Act recognized that this commingling had come into being to meet deeply felt administrative and legal means. The Administrative Procedure Act constitutes an effort to frame an outline of minimum basic essentials in the administrative process. The Federal Trade Commission and the other administrative agencies came into being because it was hoped that they would be more expert and expeditious than the courts. The aim sought was desirable; the danger of the approach taken by the O'Hara bill is that it seeks to correct dissatisfaction felt by some regarding the work of the Federal Trade Commission by crippling and emasculating the agency. In place of the constructive approach taken by Congress in the Administrative Procedure Act which improves the administration of justice by prescribing fair administrative procedure, the O'Hara bill rejects the years of consideration of the merits of the administrative process which were reflected in the Administrative Procedure Act and proceeds on the theory that justice may be had only in the regular courts.
I venture to say that the O'Hara bill is a call for a return to the outmoded and long-dead past. The solution for improvement of administrative agencies is not abolishing the characteristics which give life and vitality to the administrative agency but correcting any inefficiencies which impede the satisfactory working of administrative law. The Administrative Procedure Act represents the proper and constructive manner of achieving this most desirable result. It should be given a fair opportunity. The many months of thoughtful consideration of the entire problem of the proper relationship of the regulatory agencies to the courts given by the House and Senate Judiciary Committees should not be lightly cast aside. Experience may show that the Administrative Procedure Act should be modified or strengthened. The wisdom of achieving reforms in administrative procedure through the Administrative Procedure Act seems to me obvious. I am dubious, however, about the wisdom of ignoring the legal learning which is reflected in the Administrative Procedure Act and substituting instead the bludgeon tactics which are characteristic of the O'Hara bill.
Here, for example, is the viewpoint of Justice Harlan F. Stone:
“Looking back over the fifty years which have passed since the establishment of the Interstate Commerce Commission, no one can now seriously doubt the possibility of establishing an administrative system which can be made to satisfy and harmonize the requirements of due process and the common-law ideal of supremacy of law, on the one hand, and the demand, on the other, that Government be afforded a needed means to function, freed from the necessity of strict conformity to the traditional procedure of the courts.
"We still get the reverberations of these early fulminations in renewed alarms at our growing administrative bureaucracy and the new depotism of boards and commissions. So far as these nostalgic yearnings for an era that has passed would encourage us to stay the tide of needed reform, they are destined to share the fate of the obstacles which Coke and his colleagues sought to place in the way of the extension of the beneficient sway of equity” (50 Harvard Law Review 4, 16, 17).
The O'Hara bill is, in fact, an effort to wipe out the benefits of the quasijudicial administrative agency in an effort to cure real or fancied defects in the working of the agency. It stems from the apparent belief that justice may be achieved only by application of judicial rules of procedure within the framework of the law courts. The truth is, of course, that judges are not the only men who are able to decide a case with justice and fairness. My objection to the OHara bill is that it utterly rejects the basic concept of administrative law that monopoly and commerce can be fairly regulated by agencies with quasijudicial power granted them by Congress to carry out policies laid down by Congress in specific statutes. The bill constitutes a direct attack at the very foundation of administrative law. It stems from the belief that the investigation of unfair methods of competition must be so totally separated from the evaluation of the facts and the law that justice can be done only if the decision-making power is turned over in total to the courts. I find this unnecessary, undesirable, and positively harmful to the public good. The remedy for abuse of quasi-judicial power, I believe, is found in strengthening of the Administrative Procedure Act and in the constant control exercised by Congress over the administrative agencies. Congress periodically reviews their activities each time it enacts an appropriation measure; it has the power at any time to conduct an investigation of agency activities; it may replace the responsible heads of the agency. To me, those are adequate powers for safeguarding the administrative process. I do not see the necessity for transferring the judicial functions of the Federal Trade Commission to the courts to achieve this end. Moreover, I believe that adoption of the O'Hara bill will serve as a most pernicious precedent for crippling other administrative agencies in a similar manner since every other regulatory agency is equally vulnerable to the same criticisms as have inspired this bill.
I urge the committee to reject the O'Hara bill. The public would be the loser if the bill were to become law. The existence of the administrative process in modern life does not constitute a threat to established law nor does it mean the denial of due process and individual rights. The Federal Trade Commission has a responsible role to play in carrying out the national policy toward monopoly and fair play in business. The balance which should be struck between the administrative agency and the courts should be decided on the basis of efficiency and practicality, rather than on empty reliance upon the judicial process and the procedures and rules of the law courts. In working out a modus vivendi between administrative law and court law, Congress should follow the pattern already set forth by the Administrative Procedure Act. The real challenge before Congress, so far as the Federal Trade Commission is concerned, is whether the national policy toward monopoly and fair competition is to be given strength or vigor or is to be weakened and curtailed. My own view is that adoption of the O'Hara Act will seriously hamper the enforcement of the Federal Trade Commission Act, and that the public interest will thereby be greatly prejudiced.
Mr. O'HARA. The committee will recess until 2 o'clock.
(Whereupon, at 12:30 p. m., a recess was taken, to reconvene at 2 p. m.)
The committee reassembled at 2 p. m., pursuant to the taking of a recess, in room 1334, New House Office Building, Hon. Charles A. Wolverton (chairman) presiding.
The CHAIRMAN. The committee will please come to order.
The next witness will be S. Chesterfield Oppenheim, professor of law and acting dean, George Washington University Law School, Washington, D. C. STATEMENT OF S. CHESTERFIELD OPPENHEIM, PROFESSOR OF
LAW AND ACTING DEAN, THE GEORGE WASHINGTON UNIVERSITY LAW SCHOOL, WASHINGTON, D. C.
Mr. OPPENHEIM. Mr. Chairman and members of the committee, my name is S. Chesterfield Oppenheim. Since 1927 I have been professor of law in the George Washington University Law School and have specialized in the law of unfair trade practices and the Federal antitrust laws. I am also a member of the Michigan and District of Columbia bar. During the last two decades of teaching law in the city of Washington I have had numerous opportunities to observe at first hand the work of the Federal Trade Commission. My teaching and research have given me an insight into the jurisdiction and activities of the Federal Trade Commission and related agencies of the Government dealing with our national public policy relating to unfair trade practices and restraints of trade. I have published a number of books and articles in that field.
I am appearing here in opposition to H. R. 3871 because, its provision for the withdrawal from the Federal Trade Commission of quasi-judicial adjudicatory functions will not only nullify the past achievements of the Commission but will also end its existence as an effective Federal regulatory agency.
I have prepared a rather detailed statement in opposition to this bill and would like to offer the statement for filing in the record of the hearings, confining my oral presentation to a brief summary of my position.
H. R. 3871 rests on the fallacious major premise that the Federal Trade Commission should be deprived of its quasi-judicial powers because the sole method of guaranteeing a fair and full hearing by an impartial tribunal is before the traditional courts of law.
This is a futile effort to reverse the trend of the administrative process. This attitude stems from the idea that the quasi-judicial administrative tribunal is alien to the Anglo-American legal system. It is comparable to the attitude of distrust displayed by the common law courts when courts of equity were developing.
There is no need for a surgical removal of the quasi-judicial powers of the Federal Trade Commission as proposed by H. R. 3871.
The basic issue is this: Whether we can have judicial supremacy in the appropriate sphere of judicial review by the courts of the administrative determin-tions of a Federal regulatory agency and at the same time utilize ‘he specialized expertness and experience of an administrative tribunal in adjudicating complex factual issues.