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United States v. Morton Salt Co.

Supreme Court of United States
338 U.S. 632 (1950)
ELI5:

Rule of Law:

The Federal Trade Commission's investigatory powers under § 6 of the FTC Act are broad and distinct from judicial functions, allowing the agency to require corporations to file special reports demonstrating compliance with a court-enforced order without seeking prior judicial approval.


Facts:

  • The Federal Trade Commission (FTC) found that Morton Salt Company and International Salt Company, along with other producers, had engaged in anti-competitive practices in the pricing, producing, and marketing of salt.
  • Following an FTC cease and desist order that was affirmed by a Court of Appeals, the companies were required to file an initial report showing they had ceased these practices.
  • The companies filed the initial compliance reports, which were accepted by the FTC.
  • Approximately four years later, the FTC, acting on its own initiative and without applying to the court, ordered the companies to submit new, highly particularized reports to demonstrate their continuing compliance with the court-enforced order.
  • The new order demanded a complete statement of prices, terms of sale, books of freight rates, and price lists used in marketing salt from January 1, 1944, onwards.
  • Morton Salt and International Salt refused to supply the particularized information, informing the FTC that while they had complied with the decree, they doubted the Commission's jurisdiction to require further reports.

Procedural Posture:

  • The Federal Trade Commission issued a cease and desist order against Morton Salt and other salt producers.
  • The Court of Appeals for the Seventh Circuit affirmed the FTC's order with modifications, ordering the companies to comply and file initial compliance reports.
  • After the companies refused to file additional reports demanded by the FTC years later, the United States sued them in U.S. District Court seeking a mandatory injunction and civil penalties.
  • The District Court granted summary judgment for the salt companies, dismissing the complaint for want of jurisdiction.
  • The United States, as appellant, appealed to the Court of Appeals for the Seventh Circuit, which affirmed the district court's decision in favor of Morton Salt and International Salt, the appellees.
  • The United States successfully petitioned the U.S. Supreme Court for a writ of certiorari.

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Issue:

Does the Federal Trade Commission have the statutory authority under § 6 of the Federal Trade Commission Act to require a corporation to file special reports demonstrating its continuing compliance with a judicially-enforced cease and desist order, without first obtaining an order from the enforcing court?


Opinions:

Majority - Mr. Justice Jackson

Yes, the Federal Trade Commission has this authority. The Commission's power to require special reports under § 6 of the FTC Act is a broad, inquisitorial power separate from the judicial function of adjudication. This investigatory authority is analogous to that of a grand jury, which can investigate on suspicion or simply to ensure the law is being followed, and is not an improper usurpation of the enforcing court's jurisdiction. The powers granted in § 6 are not confined to general economic surveys but can be used to aid any of the Commission's functions, including enforcing § 5 cease and desist orders. Furthermore, corporations do not share the same Fourth Amendment protections as individuals, and an agency's demand for information is permissible as long as the inquiry is within the agency's authority, the demand is not too indefinite, and the information sought is reasonably relevant.



Analysis:

This decision significantly empowers administrative agencies by affirming their broad, independent investigatory authority. It largely invalidates the 'fishing expedition' defense against agency inquiries by establishing that agencies do not need probable cause of a violation to demand information from regulated entities. By analogizing the agency's power to that of a grand jury, the Court grants agencies wide latitude to proactively monitor compliance and investigate potential wrongdoing, profoundly shaping the landscape of administrative law and corporate regulation.

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