Federal Trade Commission v. Flotill Products, Inc.

PETITIONER: Federal Trade Commission
RESPONDENT: Flotill Products, Inc.
LOCATION: Lafayette Diner

DOCKET NO.: 20
DECIDED BY: Warren Court (1967-1969)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 389 US 179 (1967)
ARGUED: Oct 16, 1967
DECIDED: Dec 04, 1967

Facts of the case

Question

Media for Federal Trade Commission v. Flotill Products, Inc.

Audio Transcription for Oral Argument - October 16, 1967 in Federal Trade Commission v. Flotill Products, Inc.

Earl Warren:

Number 20, Federal Trade Commission petitioner versus Flotill Products Incorporated et al. Mr. Shapiro.

Howard E. Shapiro:

Mr. Chief Justice, may it please the Court.

The question in this case is whether a majority of a quorum of the Federal Trade Commission may issue a valid cease-and-desist order under Section 1 of the Federal Trade Commission Act.

The Commission is composed of five commissioners.

Since its inception, its rules have provided that a majority of the commission that is three commissioners constitute a quorum for the transaction of business.

A three-judge Division of the Court of Appeals for the Ninth Circuit held that a three-member quorum could not act when divided two-to-one.

The Court of Appeals itself was divided two-to-one and the Commission petitioned for rehearing en banc.

The Court of Appeals adhered to its ruling that a single dissent would bar valid action.

It divided itself on this issue five-to-four.

The Commission is here on a writ of certiorari because it believes that the ruling below will severely impair its ability to function when only three of its five members are available to participate in a decision.

Now, an order issued by divided two-to-one quorum of the Commission is an order issued by a minority of the total number of commissioners authorized by the statute.

The Court of Appeals taking note of this concluded that this is not what Congress had intended.

It relied on two factors.

First, the statute makes no express provision for action by a three member quorum and second, the Commission must have a politically balanced makeup, at least the statute says that not more than three of the five commissioners shall be members of the same political party.

So in effect, the Court of Appeals held that the Commission could act by a three-member quorum, but the three member quorum would have to be unanimous.

A dissent by the three member quorum would constitute a veto.

The Commission proceeding involved charges that the respondent Flotill Products, a West Coast canner and food processor made payments in lieu of brokerage, illegal under Section 2(c) and payments of promotional allowances illegal under Section 2(d) of the Robinson-Patman Act.

There were cross appeals from a hearing examiner?s decision by the respondent and by the Commission?s Complaint Counsel and these cross appeals were argued to a full five member panel of the Commission.

But while the case was under submission, two of the commissioners resigned, leaving only three commissioners who had heard the oral argument sitting.

A fourth commissioner was appointed prior to the decision by the Commission, but he declined to participate on the ground that he had not heard oral argument.

The three remaining commissioners were Chairman Dickson, Commissioner McIntyre, and Commissioner Elmon.

They agreed with Commissioner Elmon concurring in the result that the charges of illegal promotional allowances had been established.

Now the Court of Appeals affirmed and enforced this part of the order, so that aspect of the case if out.

When it did that, it also of course recognized that the Commission may act by a valid three-member quorum.

Now the commissioners disagreed as to the illegal brokerage charges.

There were three elements in this charge of illegal brokerage.

As to one of them, all three commissioners were agreed that the charge should be dismissed and they dismissed that aspect of the charge on the merits.

As to a second, Commissioner Dickson and Commissioner Elmon were agreed that they should be dismissed, but Commissioner McIntyre dissented, so those aspects of the charges were dismissed.

Now, the third aspect of these brokerage charges involved the respondent Flotill and they concerned some charges, some illegal brokerage it was alleged, paid to the Nash-Finch Company.

Commissioners Dickson and McIntyre agreed that the Nash-Finch charges had been sustained, and Commissioner Elmon dissented.