Federal Trade Commission v. Henry Broch & Company

PETITIONER: Federal Trade Commission
RESPONDENT: Henry Broch & Company
LOCATION: Allen-Bradley Clock Tower

DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 368 US 360 (1962)
ARGUED: Nov 16, 1961
DECIDED: Jan 15, 1962

Facts of the case


Media for Federal Trade Commission v. Henry Broch & Company

Audio Transcription for Oral Argument - November 16, 1961 (Part 1) in Federal Trade Commission v. Henry Broch & Company

Audio Transcription for Oral Argument - November 16, 1961 (Part 2) in Federal Trade Commission v. Henry Broch & Company

Archibald Cox:

Mr. Chief Justice, before the recess, I had pointed out that the respondent did not raise the subjection to the scope of the order when it was before the Federal Trade Commission upon the initial decision or the Hearing Examiner's proposed order.

Having failed to raise the question there, we submit, that he could not raise it in the Court of Appeals and that the Court of Appeals therefore erred not only in permitting him to raise it indirectly, but in modifying the order on its own motion.

As I pointed out in answer to a question by Mr. Justice Harlan, the Federal Trade Commission Act and therefore this case defer from the National Labor Relations Act in preceding case.

And the Federal Trade Commission Act and the Clayton Act do not contain any express provision declaring that the reviewing court shall not consider a question which was not called to the attention of the administrative agency.

As a matter of history and language, I would think that no significance could possibly be attributed to the distinction because the fact is that the Federal Trade Commission Act and the Clayton Act were both enacted back 50 years -- not quite 50 years, 45 or so years ago before our present notions of administrative law had thoroughly evolved.

This Court has held on many occasions that the same substantive rule of law governs those agencies like the government cases coming from those agencies like the Interstate Commerce Commission and the Federal Trade Commission even though their basic statutes do not contain the same words.

I suppose that the most complete and authoritative discussion of that point was in the Tucker Freight Lines case -- Tucker Truck Lines case in 344 U.S., where again the statute did not contain this language.

The Court said, “We recognized in more than a few decisions that Congress has recognized in more than a few statutes that orderly procedure and good administration require that objections to the proceedings of an administrative agency be made while it has opportunity for correction in order to raise issues reviewable by the courts.

And that doctrine has been specifically applied to orders and objections to the form or scope of orders of the Federal Trade Commission in the Moog Industries case where the question was whether the effect -- what should be the effective date of an order in order to avoid alleged unfair substantive advantages and the Court squarely held that since the point respecting the date of the order had not been raised before the Commission, it could not be presented to a reviewing court.

I think I also pointed out in the Ochoa case that there are other decisions holding that it makes no difference whether the Court considers this kind of question on the request of a party or on its own motion and of course the absurdity of such a distinction is brought out in this case where the party raised it.

The Court dismissed his motion and then on its own motion changed the order.

One can't believe that what really happened wasn't that party raised a question and the court heeded its motion.

Charles E. Whittaker:

Is there a basis for saying that one does challenge the breadth of the order when he challenges the whole order and said you had no authority to make it at all?

Archibald Cox:

I would think -- I would think not.

Now, as said to Justice Frankfurter before the recess, I would think a challenge to findings or rulings with the respect to what was a substantive violation of the statute would necessarily imply a challenge to the parts of the order that were based upon the agency's interpretation of the statute.

And then let's suppose for example that the argument in this case had been, that although Section 2 (c) applies to seller's brokers and forbids the broker himself to pass on the brokerage to the buyer, actually hand the money to it that it does not apply where the broker simply reduces his brokerage fee and what is passed on to the buyer is left in the discretion of the seller.

Now, I would think that if Mr. Rowe had raised that argument before the Commission that it would not -- I don't think it had any merits, but assume that it were held to have merit, I do not think it would lie in the Commission's mouth to come before the Court and say, “Well, you raised that substantively but you didn't object to an order that covered the second as well as the first,” but here you see, as I suggested to Justice Frankfurter before the recess, no one raised the question -- no one raised before the Commission the factual question upon which the issue now before this Court depends if it gets to the merit.

Whether the order should include references to other sellers or other buyers, depends before the Commission and here forgot the merit, on whether passing on this brokerage fee indicates that this is a fellow who is likely to pass on brokerage fees or indicates that this is a fellow who is likely to pass on brokerage fees in transactions between Canada and Smucker.

In other words nothing to suggest, there was no objection raised that would suggest there's something peculiar about the transaction between Canada and Smucker that couldn't repeat itself in transactions between other sellers and buyers.

And therefore, there was no objection raised that would direct the Board's attention to that question which was the -- one underlying I think, the basic scope for the order.

So I would think that a blanket objection to the order based on entirely different grounds that would not suggest then and went only to matters of substance, it couldn't in any sense be said to include an objection of this kind.

John M. Harlan II:

Could I ask you one question.

This maybe entirely wrong, but I have dim recollection that at some stage along the line the Federal Trade Commission Act unlike the Labor Act provided not for enforcement of the order, but in effect for a -- of the Commission's order but in effect, the entry of a new order, an independent order by the Court.

Archibald Cox:

Your -- there is a difference between the Clayton Act which is the one we're dealing with --

John M. Harlan II:


Archibald Cox:

-- and the National Labor Relations Act.

When the Federal Trade Commission makes it cease-and-desist order then the respondent may take it to the Court and secure review.

No order of enforcement which is punishable by contempt could be made under the original Clayton Act at that stage.

Therefore, in order -- and that statute incidentally applies to this case so that in order to proceed for a violation of an order under the Clayton Act, the Commission must have a new independent proceeding finding that the order had been violated.

Now that if there was no petition for review then of course that will be a second administrative proceeding.