Federal Trade Commission v. Dean Foods Company

PETITIONER:Federal Trade Commission
RESPONDENT:Dean Foods Company
LOCATION:Congress

DOCKET NO.: 970
DECIDED BY: Warren Court (1965-1967)
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 384 US 597 (1966)
ARGUED: Mar 28, 1966
DECIDED: Jun 13, 1966

Facts of the case

Question

Audio Transcription for Oral Argument – March 28, 1966 in Federal Trade Commission v. Dean Foods Company

Earl Warren:

Federal Trade Commissioner — Commission, petitioner versus Dean Foods Company et al.

Mr. Solicitor General.

Mr. Chief Justice, may it please the Court.

This case is here on certiorari to the Court of Appeals for the Seventh Circuit.

I would like to first reverse and give the question and then get to the facts because the two are so combined together, there’s only a single question before the Court, it’s whether or not a Federal Court of Appeals having ultimate review jurisdiction of a Federal Trade Commission merger proceeding may under the All Writs Statute issue an injunction to maintain the status quo pending the outcome of the administrative proceedings where the validity of a merger under Section 7 of the Clayton Act is pointed issue.

We emphasize that only the jurisdiction of the Court of Appeals is involved in this case because that was the ruling of the Seventh Circuit Court of Appeals.

We do not argue that in the circumstance of this case adaptable principles required the issuance of the injunction for the court below did not reach the merits of the question.

The Court of Appeals for the Seventh Circuit dismissed the petition of the Commission on the grounds that was simply without power to entertain it.

And so the facts be very briefly stated, around December 13 of last year, Dean Foods Company and Bowman Dairy Company agreed that Dean would acquire all of Bowman’s operating assets as of January 3 of this year.

The month prior granting to this agreement, Dean had asked the merger division of the Federal Trade Commission for its informal advice as to the legality of this proposed acquisition.

And after an immediate investigation, the merger division of FTC advised Dean that it would recommend that a complaint be issued against this acquisition.

Dean and Bowman were substantial competitors in the sale of package milk in Chicago area.

Bowman was the first or second largest seller of packaged milk while Dean was the third or fourth largest seller in that area.

All together, the four largest dairy companies had a combined market in the area.

The share exceeded 40% of that market.

Since the agreement between Dean and Bowman would eliminate Bowman as a competitor, there was we submit sufficient reason to believe that it would violate Section 7 of the Clayton Act in view of the high concentration in the Chicago milk market.

Dean, however, notified the Commission’s staff on December 14th, that the purchase agreement between Bowman had been consummated and executed the day before which was December 13.

And on December 22, the Commission — the Federal Trade Commission issued a complaint charging that Dean’s acquisition of Bowman would substantially lessen competition in violation of Section 7 of the Clayton Act.

Now, Dean had told the Commission staff that shortly after a consummation agreement, it intended to dispose off Bowman’s retail delivery milk routes, closed barriers of its plants and consolidate operations of the two companies and so the Commission on December 30 filed a petition in the Seventh Circuit which is the normal within dispute as the Court of Appeals which would have the ultimate jurisdiction to review any action by the Federal Trade Commission.

And in these pleadings, was sought an order under the All Writs Statute enjoining Dean and Bowman from taking any steps to carry out the purchase agreement pending completion of the Commission’s adjudication of its complaint.

And in that, they alleged — the Commission alleged that if Dean carried out its plans for the disposition of Bowman’s assets, it would be virtually impossible to restore Bowman as a viable independent company, should the acquisition finally be adjudged and lawful.

The Commission wished to preserve the possibility of an effective remedy against this merger.

On January 4th, the Court of Appeals entered the temporary restraining order and agreement was held up on January of 19th, the Seventh Circuit dismissed the Commission petition for one of jurisdiction and at the same time it dissolve the temporary restraining order.

And three hours later, the purchase agreement was carried out and Dean begun effectuating the merger.

And on January 24th, Mr. Justice Clark entered the order stating most of the changes in the business in operation of Bowman pending the disposition of this petition for certiorari.

Byron R. White:

Who represented the Commission in the Court of Appeals?

The Commission’s lawyers.

Byron R. White:

And the part — the justice had no connection to that issue?

No sir.

The — Mrs. Turner was here was the one who represented them in the Court of Appeals.

And in the Court of Appeals from the very beginning, of course it should be pointed out it was on affidavits and both sides, lawyers appeared and the Commission’s lawyers argued under the All Writs Statute and the three judges of the Court of Appeals especially residing judge kept insisting that the Commission had no right to file the suit and had no standing.

The lawyer representing Dean insisted that he would go into the merits and constantly told the Court that if the Court granted the restraint — granted the injunction, the only recourse would be to drop the agreement and everything would fall through.

And the conclusion of the Court of Appeals which appears here on page 154, set forth clearly that the whole theory was that the Commission had no right to file the action.

And indeed in this Court, Dean has insisted that the point is whether or not the Federal Trade Commission has standing to sue rather than to whether or not the All Writs Statute means what it says.

Of course, we recognize that the Department of Justice acting through the anti-trust division could have gone into the District Court but there are two points that we have met at the beginning of this.

And I don’t think there’s legal relevance to it except for the in terrorem effect but Dean went to the Federal Trade Commission to report this merger, they didn’t go to the anti-trust division.

And its understanding that I have is that either the anti-trust or federal trade could have looked at this merger but that because of the large number of milk merger cases that have been considered by the Federal Trade Commission, it’s generally understood that the Federal Trade Commission is better equipped to examine into the merger of milk mergers, milk companies, then would be the anti-trust division to the same — I understand there are others like automobiles etcetera, that anti-trust itself is better equipped to handle.

The two agencies have coextensive authority in this field but the argument is very interesting on behalf of Dean and Bowman.

I’m sure that had the anti-trust division moved in the District Court, the argument would be made that the Federal Trade Commission should have moved in the Court of Appeals.

I don’t know just how it would work out.

Byron R. White:

But if the department had moved in the District Court, would’ve been moving under perhaps the Federal Trade Commission or to the United States?

It would be moving under its authority as the Department of Justice under statutory authority but, if —

Byron R. White:

But it would have been in connection with the complaint of its own, wasn’t it?

It would have been its own complaint but I do not — it’s my understanding that the anti-trust division in the Federal Trade Commission keep each other advised of what the other one is doing but if it is an anti-trust matter then the anti-trust division of the Department of Justice handles it in the US attorney or member of the anti-trust division is the man who proceeds and not the Commission.

Potter Stewart:

Oh the — the anti-trust division if it had gone in this way, it would had to file the Section 7 suit, wouldn’t it?

In the District Court —

Potter Stewart:

District Court, yes.

— and if so, they would only have had to show that they had a good reasonable possibility of winning, that’s all they would have to show.

Potter Stewart:

Yes, but they couldn’t just gone on it at large and said that they like to have injunction with a Federal Trade Commission.

Right.

Well, not an aid to the Federal Trade Commission would be on their own action.

Potter Stewart:

Yes.

And we think that Congress in setting up the two fields had in mind that there were some types of actions that a commission independently could handle better than an arm of the Department of Justice where the ultimate decision in the Department of Justice anti-trust case is made by the District Judge.

The decision if made by the Commission is made by the Federal Trade Commission and the Court of Appeals comes in only after the Trade Commission makes its ruling so that the expertise is really the Commission.

Now, if the Federal Trade Commission is unable to hold things in the status quo under certain circumstances, then once they decide the case and that there should divestiture, it’s possible that you can’t divest what you don’t have and that is why we sought there was no question but that the Court of Appeals having the ultimate order to sign in this particular case or any other case, most certainly had the right to protect its jurisdiction not the jurisdiction of the Commission, the jurisdiction of the Federal Trade Commission or counsel, but the jurisdiction of the Court of Appeals itself.

Abe Fortas:

General —

Yes.

Abe Fortas:

— if the Federal Trade Commission had entered an order here prohibiting merger or requiring divestiture, the respondents would then would have a choice of Courts of Appeals, would they not, that is to say the —

It’s either the — I understand, it’s either the — where they do business or where they reside.

Abe Fortas:

And they were to have a choice of —

Not in this case.

Abe Fortas:

— Court of Appeals.

Not in this case?

Yes they would.

They would’ve had a choice, yes sir.

They would’ve had a choice.

Abe Fortas:

They would’ve had a choice so that it’s by no means forgone conclusion that the case would ultimately have gone at the Seventh Circuit.

No sir, but it is a foregone conclusion that the Seventh Circuit was a Court of Appeals which would have had jurisdiction.

And in this particular case, the real nub of it as I understand from the pleading, from the affidavits, the real challenge to the merger is in the Chicago area —

Abe Fortas:

On the other hand if the Federal Trade Commission decided that case had not been made out and dismissed the complaint then the Federal Trade Commission would not have had an appeal, would it?

No sir.

Abe Fortas:

So that the — if this case was ever to go through Court of Appeals, the choice of the Court of Appeals would’ve been the respondents.

I have to agree I think on that but the whole point is that, it wouldn’t make too much difference as this — the posture of this case brings us to it.

If the Court of Appeals had decided that the Federal Trade Commission lost out on the two points or either one of them, namely that they would more than likely prevail eventually and two, the irreparable harm wasn’t shown, then the trade commission would be pretty hard pushed in this case but in this case the Court said we just don’t have jurisdiction and I think that’s the point that the trade commission and indeed the United States Government is interested in clearing up.

Abe Fortas:

Well, they didn’t quite say that, did they, as I believe, you have pointed out earlier.

The Court said that the Federal Trade Commission had no authority to bring the case to the Court of Appeals in other words that it had no standing in effect and that there was nothing that properly before the Court —

It would be which I think was saying in any Court of Appeals.

Abe Fortas:

Do you think that it’s the same thing to say that Trade Commission had no authority to bring the case on one hand, on the other hand, to say that Court of Appeals itself has no jurisdiction?

Well, I think the — as I read it, was a little confused and I think it goes on standing to sue.

Abe Fortas:

Yes.

But legally and conceptually, do you think those two things are the same and you said question of standing as the Trade Commission’s question of jurisdiction of the Court?

Mr. Justice Fortas, normally, I would say yes, but I have a little different feeling about the whole writ statute.

The All Writ Statute, as I understand it, is not for the benefit of any litigant.

It’s solely for the benefit of the Court’s jurisdiction and I think that standing to sue isn’t in the same category as to standing the sue for damages or standing to ask for an injunction.

I believe that the All Writ Statute is the Court should be able to do it without parties if necessary because I can’t find a single case etcetera.

Abe Fortas:

Now, the parties and without a case before it?

No sir, you have to have a controversy obviously in order for the Court to have jurisdiction and can’t have a controversy without parties.

Abe Fortas:

Now, that’s (Voice Overlap) —

That’s where I get (Voice Overlap) —

— controversies and lots of controversies that are can’t controversies in the constitutional issue.

Yes, but I mean that’s why the Court is correct that you do have to have standing to sue because the standing to sue is back with the Commission and if the Court of Appeals has the ultimate jurisdiction over the merger proceeding in the Federal Trade Commission then I don’t see, how could say that the Federal Trade Commission doesn’t have the standing to ask the Court of Appeals to protect what ultimately will have to come to the Court of Appeals.

And along that same line it seems to me that I should mention the other point of Dean’s argument which is that this will be very harmful to the Courts of Appeals because they aren’t setup to hear cases where there’s an evidentiary problem involved.

Well, the truth of the matter is that they are running about and I thought some unknown reason, I’m familiar with the fact that the Courts of Appeals are little loaded with, they don’t want extra work.

But there are only about six of these merger cases that arrive each year and if you divide six among 11 Circuits, I don’t think that would be too tough.

Secondly, that many of these has not most of them when the application is made for the temporary injunction, there will be affidavits and counter affidavits, expert affidavits and factual affidavits, and there would not normally be the necessity for live testimony with the caveat that there had been District Court cases that have been reasonably protracted, similar cases and they’re correct that some of them around five days or six days.

But I don’t believe that that in and of itself is enough deny the right of the Federal Trade Commission to use or to ask for or to request the Court of Appeals to use its All Writs Statute.

The other —

Byron R. White:

Mr. Solicitor General, could I ask you?

Yes Mr. Justice White.

Byron R. White:

I gather that you feel that this is the only avenue that the Federal Trade Commission could follow.

Yes sir.

Byron R. White:

To get to the kind of relief that it wants, this protection pending a hearing.

This is the only rule that may go.

I should say that if I protect myself to this, once the Trade Commission agrees that they’re going to take the matter as contrasted to the department.

Byron R. White:

I understand.

Then they cannot go in the District Court (Voice Overlap) —

Byron R. White:

You mean, the only other to way to get relief with Department of Justice file sue itself and then the whole case maybe at the Department of Justice or the Federal Trade Commission.

That’s exactly my understanding.

Byron R. White:

Dean’s brief on page 33 says this, with regard to the seeking a temporary restraining order that doesn’t observed however that the Commission does have the right to request the attorney general to seek such action on its behalf including a senate report in 1957.

I don’t quite understand that statement of your remarks.

My understanding —

Byron R. White:

I gather you do not think the Department of Justice could seek an injunction on behalf of Federal Trade Commission at all.

As I understand it, we deal with it on page 32 of our brief but in specific answer to your question, the Trade Commission could ask the attorney general to act, that’s as far as that goes.

Byron R. White:

But it couldn’t — I gather from what you say that you don’t believe to Department of Justice could seek an injunction on behalf of Federal Trade Commission?

No sir, I think it would have to seek it on its own behalf that’s in the District Court.

I don’t see how the District Court has jurisdiction for the Federal Trade Commission.

Byron R. White:

Absent as the suit by the Department of Justice?

Absent the suit by the Department of Justice pursuant to its section of the court.

There are two different section involved and I would say that if the — when this first started, it is my understanding that despite the fact that Dean went to trade that the Federal Trade Commission could very well have said, “Look we’re not involved in dairy cases.

We’ll refer this over to the Department of Justice.”

Byron R. White:

Most would be able to big (Inaudible) actually if this statement being brief or merely true I suppose, this is the question of the Department of Justice — actually the lawyers with the Federal Trade Commission and then the question of which court, it goes into.

We’d have to — I guess the archive built in there would be no man’s land between the Trade Commission and the Department of Justice but everybody was really be dug in.

I think —

William J. Brennan, Jr.:

Mr. Solicitor General.

Yes Mr. Justice Brennan.

William J. Brennan, Jr.:

I don’t notice at page 32 that you deal with the Senate report to which that Dean’s brief refers, do you know anywhere else in your brief?

No sir.

We —

William J. Brennan, Jr.:

You know what this is on its face, the brief does have the right to impress the attorney general to seek such action on its behalf and there’s Senate report – coming from the Senate report, you don’t have that any?

No sir, the reason we didn’t was the research that didn’t have to be original research, it was there.

This was when the Federal Trade Commission was trying to get its own authority to issue injunctions in every thing and it’s all tied up together that’s why we don’t object to talk to any of these quotes.

William J. Brennan, Jr.:

I gather what you’re saying is that yes you have the right to seek such action on its behalf means in the sense that you’re talking about and the original Section 7 suit in the District Court.

In the District Court but that wouldn’t be the Trade Commission and the two —

Abe Fortas:

Well, — I beg your pardon.

Yes sir.

Abe Fortas:

It’s contended that there is something peculiar in this particular merger that would make it impossible for the Trade Commission to do what it has done in other cases, many other cases which is after the consummation of the merger to enter an order requiring divestiture.

Yes sir.

Abe Fortas:

Is there something — is it — you rely upon some peculiarities of this case that would make subsequent divestiture in the (Voice Overlap).

Well, the allegations that are made are that Dean intends to close out factories, to close out business — I don’t mean — I mean claims because I think those allegations are made and at this stage, I don’t know what the proof would be but I assume the Federal Trade Commission would not make those allegations unless it was correct.

And they threatened it all along, Dean has been threatening it as long it would go.

weapon on the go.

Now, if they can show at the hearing in the Court of Appeals that you’re not going to get rid of plants and not going to get rid of machinery, you are not going to get rid of that then that all that goes to whether or not an injunction was necessary.

But the fact that they don’t want to hold things in statute quo would seem to me at least to be that they were in a hurry and my only point is that I’m not saying that the Federal Trade Commission is entitled to this injunction.

I’m saying then entitled to have a full hearing and that on the basis of this record the Court of Appeals should have issued the injunction.

That’s our only position.

Now, what ultimately will come out of it and incidentally the Trade Commission is proceeding as fast as they can with their hearing.

The Trade Commission has been trying to get more than this Mr. Justice Harlan.

They’ve been trying to get their right to issue their own order without even coming into the Court.

And they have been doing — yes sir, they’ve been trying to get this particular right but that isn’t of any value at all in this particular case because there’d been other cases in which there’s been a showing that the Du Pont case for example, where they constantly try to get the horizontal and the vertical straightened out.

And eventually Congress did do it but this Court didn’t either on DuPont case.

I think the fact that they’ve been trying to get it does not — my position is that in this case, as in similar cases, unless Congress says that in FTC cases, the All Writ Statute shall not apply, the All Writ Statute applies.

It’s not that you have to show affirmative authority to use it but we have a right to use it unless there’s affirmative authority not to use it.

That’s our position.

Abe Fortas:

That’s the only case in which Trade Commission has tried to secure that sort of relief?

I understand that there have been several efforts before but they have been settled different ways, some have been voluntary and there have been others.

But that the anti-trust bar knew that it was coming.

Now, that’s not in the record.

Abe Fortas:

Knew that the what was coming?

This type of proceedings, not this case, this type of — that the Federal Trade Commission was going to try to do it.

I mean it was an article by Commissioner Ellman and others that sort of said that they were trying.

Abe Fortas:

I think the anti-trust bar has realized that there was a certain desire on the acts of the Federal Trade Commission.

I think, we would agree on that.

William J. Brennan, Jr.:

Have you any suggestion why Congress has been so reluctant to clear this thing up?

It’s my position that they assumed that this power was there, the All Writ statute.

Byron R. White:

(Voice Overlap)

Sir?

Byron R. White:

They said it wasn’t so explicitly in the committee report, they’ve said that plain black and white that the Federal Trade Commission has no such norm.

Well, Committee reports are of value, if you are construing a particular statute but I don’t think a committee report on a Federal Trade Commission request is binding on interpretation of the All Writ Statute which has been there for quite a while.

Byron R. White:

I agree that (Voice Overlap) —

I think this Court —

Byron R. White:

— I agree with you, it is a binding but in terms of — at least you have to — but that’s at least what was committee report?

I think, that I would be in complete agreement with that.

The committee was interested in not moving too fast and not getting to Federal Trade Commission to watch power.

Byron R. White:

The committee is confusing at all.

Well, I also think that the Federal Trade Commission would push a little hard too.

I think they were both there but the — I would beg that we get to the point of, Congress has clearly said that something must be done to examine and look into these mergers.

They are given the authority both to anti-trust and to the Federal Trade Commission and I believe that Congress intended that neither group, neither Department of Justice or Federal Trade be taken away anything necessary tools that they need if they do not into Federal Trade Commission does need this then certainly they shouldn’t have but this I think on the record in this case where Dean is going to make it impossible to reset up Bowman.

I think that this is the type of one when Dean is not or but it maintain the status quo that in this case the Federal Trade Commission should be given an authority and that would automatically be limited to a showing that there is convincing evidence that if this is allowed to remain divestiture will not work not entirely but it will be difficult.

Byron R. White:

Mr. Solicitor, do you know of any instances in which mostly Department of Justice and Federal Trade Commission has moved against the same anti-trust violation?

I don’t know sir, “never”.

Byron R. White:

Are you sure they didn’t move against the same violation in a one criminal and one civil and the one of the chemical cases?

It says, (Inaudible) institute and there was a little “a little difference” between the two.

Byron R. White:

They’re quite, yes.

Abe Fortas:

Well, (Voice Overlap) — (Voice Overlap).

Therefore, if it please the Court it’s the Government’s position that the judgment of the Court of Appeals from the Seventh Circuit should be reversed and remanded to them for the purpose of issuing the injunction and that the restraining order issued by Mr. Justice Clark be continued in the meantime.

Earl Warren:

Mr. Chaffetz.

Hammond E. Chaffetz:

Mr. Chief Justice, if it please the Court.

To clear up one or two matters that came up in the argument of Solicitor General.

Mr. Justice Fortas asked about the jurisdiction of the Court of Appeals in the event, that the Commission dismissed the proceedings before it.

I’d like to call Justice’s attention to the fact, which I’m sure you’re aware of, that under the Finality Act even if the Commission enters an order against the respondents, and if the respondent doesn’t appeal there’s no Court of Appeals that obtains any jurisdiction.

There’s no longer any enforcement proceeding in Court of Appeals.

Violation of the order by the respondent is subject to prosecution on the part of the Department of Justice and the District Court.

Case only goes to the Court of Appeals if the respondent within 60 days after the order chooses to seek a review in the Court of Appeals.

But respect to the questions asked by Mr. Justice White and Mr. Justice Brennan concerning page 32 of our brief, (Inaudible) act — I think it means and it means what the Solicitor General said.

Byron R. White:

Well, all the way it looks that read out to me, but you thought so — .

Hammond E. Chaffetz:

What it meant is this, what actually happened Mr. Justice White in those hearings, the Attorney General Brown Neil was the witness.

Byron R. White:

Well, do you agree with the Senate report or not?

Hammond E. Chaffetz:

I think what it means is that the Federal Trade Commission asked that probably suggest that probably does bring its own into Senate proceeding.

What happened was the Attorney General —

Byron R. White:

I suppose it could do that then the suit could just sit there, couldn’t it if they got a new temporary injunction?

Hammond E. Chaffetz:

I don’t know.

I assume that this is what is happening.

I’m referring to the attorney general, your predecessor’s testimony where he testified on this very subject.

He was asked about this question, what happened if the — if he thought the Commission can’t get temporary relief.

He says that creates no critical problem.

He says we work very closely with the Federal Trade Commission and yet there is an occasion, we’re seeking this kind of relief, we would file a lawsuit.

Abe Fortas:

Who said that?

Hammond E. Chaffetz:

We just — Attorney General Brown Neil.

It does refer to an argument in our brief.

And that’s exactly what Congress intended and that’s the burden of my argument.

Hammond E. Chaffetz:

Congress intended just that.

As the Department of Justice should proceed if there was occasion to proceed in the Court.

I think the immediate question is, will the Congress didn’t consciously withhold from the Federal Trade Commission, the authority to do the very thing they’re seeking to do in these proceedings.

And this is demonstrated from the very beginning, from the day that first Federal Trade Commission Act and the Clayton Act was passed, Congress deliberated about this very subject.

And I hope to show that quite initiative that what they intended is what the situation is as existed today and as everybody understood to exist today until we — this proceeding was filed.

When I finished with that subject — hand to go on to discuss this very critical question of whether this Court should approve such a radical departure with respect to the proceedings in the Court of Appeals, that’s the thrust upon the Court of Appeals, the holding of the fairly difficult preliminary injunction hearings in merger cases.

The courts just aren’t just set up.

The Court of Appeals just aren’t setup, and those cases shouldn’t be handled on affidavits.

As a matter of fact, most district judges will refuse to hear it.

These cases on affidavits unless what we consent, consent of both parties, and when I finish with that subject, I hope to have just a few minutes, make a very urgent appeal to this Court, to vacate to stay which this Court has entered on the ground that on the merits, the Federal Trade Commission has very little hope of prevailing.

In view of the uncontroverted facts by no means, if I’m going to ask the Court to evaluate the facts and balance closed questions of fact.

I say on the uncontroverted fact as they exist today beyond dispute, it was little like where the appeal proceed and because this restraining order is causing very grievance, irreparable damage to Dean Foods.

I hope the Court will vacate this day and dismiss the petition for certiorari to sustain the judgment below on the ground that the jurisdictional question is really hypothetical.

Well, anyway this Court wouldn’t approve the issuance of a temporary injunction in any event on the uncontroverted facts in this case.

I want to make sure too that the Court understands that Dean Foods has acted in the utmost of good faith from the very beginning.

We notify that Federal Trade Commission six weeks in advance for the execution of agreement of what our intentions were give them all the evidence and asked them to investigate it.

When we signed the agreement, we told them immediately.

We set the closing date for several weeks hence to afford then the opportunity to take the matter up with the Department of Justice and to bring Head of the Department of Justice bring the suit against us, if they decide go into court.

We hope that they wouldn’t proceed at all.

We postpone the closing date.

When they decided they want the suit to give them (Inaudible) to the Court and what is highly significant to Your Honors is that we —

Abe Fortas:

Is that quite what you mean Mr. Chaffetz?

Hammond E. Chaffetz:

I beg your pardon.

Abe Fortas:

I said is that (Voice Overlap) —

Hammond E. Chaffetz:

I thought it was, I thought that was really two years, the closing date was really January 3, we postponed the closing date by agreement by January 10, and to close the opportunity to file proceeding in the Court and give the Court the chance to consider.

Abe Fortas:

You didn’t really, what shall I say hope that the Trade Commission would relinquish jurisdiction to the Department of Justice.

Hammond E. Chaffetz:

Yes we did.

In fact, we did.

On the whole history of this thing, I had assumed honestly, that if they did intend to sue, they turned the matter over to the Department of Justice, they do have this close as on.

They worked very closely in all of these cases but this just was — the point I really want to across is that under the agreement, under the agreement, we provided to protect Dean Food that if there were a proceeding pending in any court on the closing date, we would have the right to withdraw.

Hammond E. Chaffetz:

We lost that right to withdraw and we were compelled to go through with the closing, when the Court of Appeals dismissed the proceeding and Bowman did a tender of performance and I had to advice my client that we’d be subjected to a very serious damage suit.

If we breached the agreement and refuse to go to food deal once the Court of Appeals dismissed the proceeding but we had, we thought — protect ourselves fully in agreement by anticipating the possibility of a lawsuit, and giving ourselves the reality in the event that the proceeding was still pending or in the event that a temporary injunction were granted.

We lost our right and we were compelled to win to the agreement.

The moment, the District Court for whatever reason dismissed the proceeding.

I pleaded with the District Court of Appeals to hear us on the merits.

I wanted the hearing on the merits because I was sure, we would prevail on the merits and it was this Counsel for the Federal Trade Commission, that said to the court, you can’t hear the argument on the merits unless you are first to satisfy that you had jurisdiction.

I maintain that they could dismiss on the merits without considering the question of jurisdiction, if they wouldn’t have exercised the jurisdiction, so they had it.

Coming out to the immediate question of congressional intent, did Congress consciously withhold this authority?

I say that when the Clayton Act and the Federal Trade Commission was first enacted, there was — a big debate was what authority should be given to the Federal Trade Commission.

And the decision was made to put the jurisdiction to proceed in the courts in the Department of Justice not in the Federal Trade Commission to bring original actions, to bring contempt proceedings in a case — in order of the Federal Trade Commission was violated with the Department of Justice that was to go into the Court.

And it was said in the reports that the Federal Trade Commission had confined itself to administrative proceedings for time being and then from time to time as experience indicated, the authority of the Federal Trade Commission might be expanded.

There was not a word anywhere to indicate that the Federal Trade Commission would go into course.

But you don’t have to rely on the ancient history, let’s take the current history.

In the past 12 years, no less than 37 bills and I’m not sure we found them all but we have found 37 bills were filed in Congress to give the Commission a kind of jurisdiction they’re seeking here.

There are all different kinds of bills but in essence was concerned with giving the Federal Trade Commission the right to get preliminary relief.

Byron R. White:

None came to vote.

Hammond E. Chaffetz:

None came to vote in the Congress but —

Byron R. White:

(Inaudible)

Hammond E. Chaffetz:

Four, it was only four committee reports covering several of the bill.

There were five —

Byron R. White:

(Inaudible)

Hammond E. Chaffetz:

Yes, there were.

Yes there were.

Byron R. White:

(Inaudible)

Hammond E. Chaffetz:

I think it didn’t come to vote because the very thing that were —

Byron R. White:

(Inaudible)

Hammond E. Chaffetz:

No, no.

No, I think they just didn’t come up because there wasn’t there much support in Congress to give the commission the right to proceed in the Court in view of the fact to the Department of Justice had ample authority to see the Court.

I think that was — I think that if the Department of Justice didn’t have the right to proceed.

Byron R. White:

Department of Justice support bill?

Hammond E. Chaffetz:

Department of Justice support bills that’s true.

Although that they say — Brown Neil did say.

I think Your Honor you yourself supported one of the bills, the recent, the order of free admission.

But the change that Brown Neil did say, there wasn’t that a critical, there wasn’t a critical on that but there were these five printed volumes of hearings on the subject.

There were four committee reports hearings to the 84th and 85th and 87th Congress says and here is this most significant thing in the — in the hearings in 1958 before Senator Kefauver.

There were whole group of bills, one together for extent of hearings and Senator Kefauver in the opening hearing referred to the range of the bills before the Committee and their report, included in the bills at this time was the Finality Bill which was finally enacted, which was reported in Clayton Act which contains that the Act as Your Honors know that what the Clayton Act on a parody was the Federal Trade Commission Act and there, the orders of the Commission final when issued without waiting for an order of the Court of Appeals.

But in the Section 11 (c) of the Act is then amended, there is the provision which came out of these hearings in 1958 which says that the Court of Appeals shall have jurisdiction to grant preliminary relief.

When?

Only after a petition for review has been filed in the Court of Appeals when the record has been completed before the Federal Trade Commission.

So we have this interesting situation that the whole subject was under discussion by the Senate Committee of what kind of relief the Commission should be entitled to seek.

There were several bills and only one bill was reported out and eventually came law and that’s the bill which limited the Federal Trade Commission to proceed in the Court of Appeals only after a petition for review had been filed.

To my mind, that is conclusively terminated but with congressional intent.

They refused to pass the bills given the Commission to —

Byron R. White:

(Inaudible)

Hammond E. Chaffetz:

I beg pardon?

Byron R. White:

(Inaudible)

Hammond E. Chaffetz:

It was never voted down.

There wasn’t enough interest to apparently to bring it up for a vote.

And here’s —

Byron R. White:

(Inaudible)

Hammond E. Chaffetz:

When you have 37, if you realize Your Honor, the aggressive program, the aggressive program of the Federal Trade Commission over these 12 years, every single year they were present and they were these hearings.

This thing was fully considered by the Congress and Congress refused to act for whatever reasons, they refused to act and if it is a matter as we submit it is, and this Court has held it is a congressional intent, it seems to me that is (Inaudible).

Let me go step further Your Honor, in the same 58 hearings, attention was of Chairman Gwen, the esteemed Chairman of the Federal Trade Commission who was then testified was invited to fact that two Courts of Appeals to turn him down on this very same matter involved in these cases, the application of the All Writs Act, and he was asked about that, weren’t you turned down by the Court and he said, “Yes, we were turned down by the Second Circuit, turned down by the Third Circuit.”

For the reasons that we argue that this Court should turn down it again.

And Senator Kefauver said to him, were you consider petitioning for certiorari in the National Paper case?”

And Judge Gwen said very frankly, “We consider, we decided against it because we agreed that the Court was right.”

And Senator Kefauver said, “I think you were right in that conclusion.”

So that at that moment of time, you had the Third Circuit and Second Circuit saying that the All Writs Act couldn’t apply in the face of the congressional intent to the contrary, you have the Federal Trade Commission agreeing with what the Congress that they didn’t have the right to proceed in the Court of Appeals.

You had everybody as Your Honor — Mr. Justice White said a few minutes ago, everybody quote that there was no authority proceed absent legislature and legislation wasn’t forced on.

Byron R. White:

You don’t — you disagree with Transamerica case?

Hammond E. Chaffetz:

I disagree with Transamerica case is also — I also think it’s highly distinguishable.

For one thing, the Transamerica case was decided in 1950 before the Finality Act.

At that time, every Federal Trade Commission order had to go to Court of Appeals for enforcing before became an effective order.

After Finality Act, as I’ve said, you’ll ready you don’t go to the Court of Appeals anymore unless the respondent chooses to go.

And then of course as Mr. Justice Fortas points out, he has his election of the court.

But in Transamerica case, in those hearings when they were asked about the Transamerica case, they said, “That case doesn’t help us very much, that’s a very narrow decision.”

That was a pure question of jurisdiction, whereby race of diligence that completed merger and ousted the Federal Trade Commission and the Court of any jurisdiction that’s a real judgment.

Here, we don’t have any problem of the Court’s jurisdiction at all.

The only question here is one of — by the Commission called effective —

Byron R. White:

So that was the perfectly sound decision?

Hammond E. Chaffetz:

No, I think the Second Circuit said it was an erroneous decision.

Second Circuit said, “We disagree with Transamerica.”

But I say well, I disagree with Transamerica, I think it’s also distinguishable from the case that we have before us today.

We don’t have a question involving the jurisdiction of the Court of Appeals at all.

No question about the jurisdiction.

The only question is one of the status quo on the facts.

I want to come to second — and I am going to run whole this very briefly, the question of the Court of Appeals hearing the preliminary injunction case.

To my mind, this is a matter of very great significance.

In this very case, normally we’re allowed 45 minutes on the side to handle this whole case and the Court generously gave us 50 minute during the course of the 50-minute session, during the course of the argument on affidavit.

Now, I’ve been involved in these hearings in the District Court.

They’re an entirely different type of hearing.

When you’re in a District Court, you have pretrial conference with the judge, the issues are set up, the decision is made as to what extent, you proceed on affidavits and to what extent you stipulate, what extent you proceed on testimony.

The trend, the trend as reported by the courts, the trend in preliminary injunction hearings today is to have virtually a trial on the merits in the District Courts with hundreds of pages, thousands of pages of testimony.

The reason for it is that very frequently in these cases that preliminary injunctive hearing is a final hearing as it would have been in this very case, had the Court granted a preliminary injunction against this, that would be in the end of this transaction.

The reason is and important reason is that you can’t live under a temporary injunction and maintain the status quo for the period of time that takes to try one of these cases.

Rail problems, finance problems, customer problems and what a normally if the court stops the merger at the beginning that’s the end of the transaction.

So that’s where the district judge can fairly conscience not grant injunction without a full hearing or to deny injunction to the Department of Justice without a full hearing.

And so I say that it would be a very radical departure to subject the Court of Appeals to this kind of a — to this kind of a proceeding.

William J. Brennan, Jr.:

May I get back to one moment Mr. Chaffetz.

Hammond E. Chaffetz:

Yes.

William J. Brennan, Jr.:

Did you said no question here at jurisdiction of the Court?

Hammond E. Chaffetz:

That’s right.

William J. Brennan, Jr.:

Then what —

Hammond E. Chaffetz:

That’s if (Voice Overlap) —

William J. Brennan, Jr.:

— and you used the standing argument, is that it?

Hammond E. Chaffetz:

Well, I say that there’s no question here of protecting the jurisdiction of the Court of Appeals because no problem of ouster of jurisdiction.

The problem here is solely one of maintaining the status quo and one of the effective relief and on the question to stand to sue my position is that Congress consciously —

William J. Brennan, Jr.:

I’m sorry, I’m not quite sure, I follow a chat.

You’re not going to say that this all turns on standing?

Hammond E. Chaffetz:

No, I say this does turn on whether Congress consciously withheld from the Commission, the right to bring this very proceeding.

I say Congress withheld this — that knowing that the Commission recognize everybody recognize they didn’t have authority unless they —

William J. Brennan, Jr.:

I won’t say withheld —

Hammond E. Chaffetz:

Yes.

William J. Brennan, Jr.:

— nothing what you expressly denied the authority.

Hammond E. Chaffetz:

I think it does.

I think the statute (Voice Overlap) as I say.

If you look at the original statute, Clayton Act and the Federal Trade Commission Act it’s perfectly clear that there was an allocation of functions between the departments and the Federal Trade Commission was deliberately confined to running an administrative function —

Byron R. White:

So, the federal — so the Court does not have jurisdiction to grant an injunction that the suit for the Federal Trade Commission?

Hammond E. Chaffetz:

That’s right.

William J. Brennan, Jr.:

Mr. Justice —

Hammond E. Chaffetz:

Oh, —

William J. Brennan, Jr.:

I’m sorry (Voice Overlap).

Hammond E. Chaffetz:

No question about it.

I misunderstood you.

William J. Brennan, Jr.:

I see.

You don’t have to — none jurisdiction.

Hammond E. Chaffetz:

If the District Court does not have jurisdiction —

Byron R. White:

(Voice Overlap)

Hammond E. Chaffetz:

— the Court of Appeals does not have jurisdiction, no, that’s right.

That’s right.

Hammond E. Chaffetz:

No of course, no question.

That’s what Congress have said, that’s what Congress has withheld.

Tom C. Clark:

Do you say you went from the Department of Justice?

Hammond E. Chaffetz:

I beg pardon?

Tom C. Clark:

Did you go to the Department of Justice?

Hammond E. Chaffetz:

No, you don’t Mr. Justice Clark for the reason that if you go to either one they merely contact the other and they make the decision between them as to have then proceed.

I have gone to the Federal Trade Commission in the past and ended up before the Department of Justice.

If I find that the Department of Justice is the one that is — understood.

Tom C. Clark:

Do I understand, you to say that, (Inaudible) the Department of Justice make this at this time?

Hammond E. Chaffetz:

We initially put the closing the date far enough ahead so the agencies of the Government would have ample opportunity to decide what action they want to take if any and so that if they decided to proceed in the Court which would mean the Department of Justice proceeding filing its own action in the District Court and if the case was pending at the time of the closing we would have it out.

We would’ve withdrawn from the transaction.

They elected to make a test case out of it, the reason why the Department of Justice is clearly in the record, they discussed with the department and they decided that instead of the department suing this test case would be brought here.

And as result of that that we got in to the situation where the Court of Appeals had no jurisdiction and we were forced to go ahead and close the transaction although we have thought we had amply protected ourselves against every reasonable eventuality.

Tom C. Clark:

Was that after the complaint was filed under the commission or before?

Hammond E. Chaffetz:

They filed with the — the issued a complaint first and then they notified as there were proceeding in Court of Appeals.

Tom C. Clark:

(Inaudible)

Hammond E. Chaffetz:

No, no.

They obviously went to the Department of Justice before they filed the complaint from the very beginning according to their own statements to the Court of Appeals.

They said, “We discussed this matter with the Department of Justice and it was concluded between us that we the Federal Trade Commission should proceed and bring this test case in the Court of Appeals instead of the Department of Justice being in proceeding.”

I think this is in the record.

Tom C. Clark:

(Inaudible)

Hammond E. Chaffetz:

Yes, it was.

I’m sure it was.

I understand the whole statements to the Court.

I must come to this question of state, in eliminating state.

We are being seriously heard.

You have a situation where we have only the operating assets of Bowman, not the liquid assets, not the financial assets.

They were withheld by Bowman Company.

The Bowman Company, there’s a separate corporation that called the (Inaudible) Corporation.

They have these operating assets, employees who want — employees of either Bowman or Dean under an ambiguous status quo order where we require to supply the operating funds and really don’t control the operations, the loses are enormous, we can’t do anything about it, we can’t control the morale of employees.

Hammond E. Chaffetz:

That’s the situation that we’re in now and here’s the situation on the merits, could the Commission proceed, could the Commission win on the merits.

I say, they can’t on the (Inaudible) effects for these simple reasons.

They said that the merger put Bowman out of business.

The uncontroverted facts are that the major stockholders of Bowman had decided before they ever talked to Dean to liquidate if Dean or somebody didn’t buy them and they made several efforts itself and Dean was the only one that showed any interest and Dean only paid them two-thirds of a book value of their assets.

They were going to liquidate because they were in a losing proposition, they were concentrated on retail goods in Chicago and retail goods with the horse and boogie stage of the (Inaudible) that you just can’t have.

And this Court itself, Mr. Justice Clark recognized the necessity of even the (Inaudible) of the need of carrying on these goods.

We’re in the process of disposing of the goods which is half of the Bowman business in the critical area of Chicago.

And so take their percentage.

They say Bowman had 16% and Dean had 7% together with 23% and they say this was a big section in American.

The fact of the matter is we’re getting rid of half of the Bowman business and as the Court I think understands Dean is going to lose its principal customer in Chicago with 75% of all of business they have there.

This is clear and undisputed no question about that.

Only the commission does to put in the affidavit by the times that it is but we assure Dean with all their resource in this will overcome that somehow.

The fact of the matters is Dean is going to lose 75% of its business.

Half the — going business gone when we get through and this is uncontraverted when we get through together will have no more than 10% of the business in Chicago instead of the 23% which is the basis of the Commission’s prima facie case.

And the concentration in Chicago on the basis of its statistics of the Department of Agriculture will be the lowest of any metropolitan area in the entire United States.

Byron R. White:

Well that that’s — .

Hammond E. Chaffetz:

The Dean business in Chicago, his name is (Inaudible) but it was build up on (Inaudible) and they’re going to lose it.

But that their business, when they loses (Inaudible) the very significance in Chicago —

Byron R. White:

(Inaudible)

Hammond E. Chaffetz:

(Inaudible) like all of the others is going into the business themselves.

(Inaudible) customer of Bowman which is one of the customer we’re taking over.

They’re going into the business in Cincinnati themselves, they’re going into Detroit in just a matter of time when they are going in to the business.

So what Dean is going to get, Dean is just trying to rescue something, to salvage which they can from Bowman and Dean and maintain a viable business here.

And the end result is going to be that the —

Tom C. Clark:

You have this going — going to — its own business.

Hammond E. Chaffetz:

Yes.

Tom C. Clark:

(Inaudible)

Hammond E. Chaffetz:

Confidentially, and its confidence letter is filed to (Voice Overlap) —

Tom C. Clark:

(Inaudible)

Hammond E. Chaffetz:

There are problems and so fort sir.

Hammond E. Chaffetz:

And I don’t want to prejudice (Inaudible) anyway.

They have their own problems working out on their own solution, they’ve been very (Inaudible) in giving the Commission the true statement of what they’re intentions were and that letter was filed with the Court of Appeals.

But what I say is, so Bowman was going to go out of business anyway.

The situation that is so much better from the stand point of concentration and ever was before with these two companies having together only 10% of the business and the independents having over 70% of the business in Chicago compared to 60% a short time ago.

I say there is no chance of their winning this case in the —

Abe Fortas:

Mr. Chaffetz, did the Trade Commission ask the parties to enter into an economist stipulation which would provide a means for divestiture in the even that this — that they showed its order?

Hammond E. Chaffetz:

Not in those terms.

What actually happened —

Abe Fortas:

Well, what — what —

Hammond E. Chaffetz:

What actually happened was this Your Honor, when they notified us, that they objected to the proceeding, we made several suggestion that we come down and see if we can work something all with.

We didn’t want a litigation and we wanted to sit down with them and see if we could make some accommodation, agree not to dispose to this or dispose of that, solved our problem but helped them too.

They expressed no interest in that, they wanted to file this test, this test case.

Abe Fortas:

Well, you know do you not that Trade Commission has workout such (Voice Overlap).

Hammond E. Chaffetz:

Yes.

Abe Fortas:

But are you telling me now that the —

Hammond E. Chaffetz:

No, they wouldn’t (Voice Overlap) —

Abe Fortas:

(Voice Overlap)

Hammond E. Chaffetz:

Let me tell you one thing Mr. Justice Fortas.

One thing they absolutely insisted on was the thing this Court granted, the thing they absolutely insisted on is that we should not dispose of these retail goods in Chicago.

That was a sign of (Inaudible).

Abe Fortas:

And did you —

Hammond E. Chaffetz:

And we couldn’t do that because that was breaking the back of Bowman and would’ve broken our back and Mr. Justice Clark recognized that promptly and we got the relief on that from this Court not from the Federal Trade Commission.

So, and the reason they were —

Abe Fortas:

Well, regardless of whose back was broken or not broken, did they propose to you such stipulation?

Hammond E. Chaffetz:

No, I think not, not — no, it did not.

No, it did not.

But I want to make sure that you understand the significance of it, they made it clear to us that there no circumstances whether they let us get rid of those retail goods and the only reason why is that affected of their jurisdiction, their statistics, if we gave up their goods instead of 60% Bowman would have A, instead of 23% you only have whatever was 60 and so they needed us, require us to hang on, on those goods just so they would have a case on earth.

Abe Fortas:

Mr. Chaffetz, because I’m asking whether the Federal Trade Commission proposed stipulation at the time that you know and I know and have entered into before which would permit effectuation of a divestiture order that were entered and now you’re telling me that the — you run a Trade Commission proposed a provision in such stipulation.

Hammond E. Chaffetz:

We didn’t propose, let me make that clear Your Honor.

I would have gone to them if I thought there was a reason for chance to work, and now we did.

Hammond E. Chaffetz:

We called them several times to see if we could work out something but when they needed — absolutely clear to us that the retail goods had it be maintained under any circumstances, there was no point of our going to them and suggest some kind of solution because we just couldn’t do that.

We had to get relief both those goods lost the Bowman Company alone a million and a half dollars in 1964 and a losses I could assure Your Honor, are great even now even though we’ve gotten there most of — because once you get rid of the routes you still have a plan, and we had a great big hulk of a plant there, without the utilization that passed under the status quo, we have to keep this great big whole hulking plant going there until someday the Commission to decide this case.

So for those reasons, I urgently ask Your Honors to look the latter section of our brief where we set these facts in more detail, consider of a status quo order should be vacated and that the petition for certiorari should be dismissed because it was under the circumstances of this case.

Thank you very much.