Federal Trade Commission v. Universal-Rundle Corp.
387 U.S. 244, 1967 U.S. LEXIS 2968, 18 L. Ed. 2d 749 (1967)
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Rule of Law:
A federal appellate court may not overturn an administrative agency's discretionary decision regarding the enforcement of its orders unless the agency's action constitutes a patent abuse of discretion.
Facts:
- Universal-Rundle, a plumbing fixture manufacturer, offered 'truckload discounts' of approximately 10% to its customers.
- Some of Universal-Rundle's customers could not afford to purchase in truckload quantities and therefore did not receive the discounts.
- Certain customers who received the discount were in direct competition with the smaller, 'less favored' purchasers who did not.
- After the FTC issued an order against its practice, Universal-Rundle presented evidence that its major competitors also offered truckload discounts, some averaging as high as 18%.
- Universal-Rundle held a market share of approximately 5.75%, while its five largest competitors held shares ranging from 6% to 32%.
- The company asserted that being the only manufacturer under an order to cease this practice would cause it substantial financial losses and decrease its sales.
Procedural Posture:
- The Federal Trade Commission (FTC) issued a complaint against Universal-Rundle for illegal price discrimination under the Clayton Act.
- After evidentiary hearings, the FTC found Universal-Rundle in violation and issued a cease-and-desist order.
- Universal-Rundle petitioned the FTC to stay the order pending an industry-wide investigation.
- The FTC denied Universal-Rundle's petition for a stay.
- Universal-Rundle, as petitioner, sought review in the Court of Appeals for the Seventh Circuit.
- The Court of Appeals set aside the FTC's denial of the stay and remanded the case, instructing the Commission to conduct an industry investigation.
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Issue:
Does a court of appeals exceed its authority when it postpones a Federal Trade Commission (FTC) cease-and-desist order against a single company pending an FTC investigation into alleged industry-wide violations?
Opinions:
Majority - Mr. Chief Justice Warren
Yes, a court of appeals exceeds its authority in this situation. An administrative agency's decision on whether to stay enforcement of an order involves factors peculiarly within its expert understanding and should not be overturned by a court absent a patent abuse of discretion. The evidence provided by Universal-Rundle was inconclusive and did not establish that its competitors' practices were illegal in the same way, nor did it sufficiently prove that the company would be 'sacrificed' by the order. The FTC's decision to deny the stay was based on a reasonable evaluation of the petition, and the Commission alone is empowered to develop an enforcement policy that best achieves the goals of Congress. Even if a company proves industry-wide violations, the FTC is not obligated to withhold enforcement against one violator while it investigates others.
Analysis:
This case reinforces the principle of judicial deference to administrative agency expertise, particularly concerning enforcement strategies and resource allocation. It solidifies the 'patent abuse of discretion' standard from Moog Industries as the high bar for overturning an agency's discretionary decision. The ruling makes it difficult for a company found in violation of the law to delay enforcement by claiming that its competitors are engaging in similar practices, thereby strengthening the FTC's hand in pursuing individual enforcement actions as it sees fit.
