Lever Brothers Co. v. Federal Trade Commission

(2 ERC 1651) (1st Cir. April 20, 1971)

Detergent manufacturers' attempt to enjoin FTC hearings on proposed phosphate labeling rule must fail where plaintiffs make no showing that such hearings would result in substantial hardship. Agency not required to file environmental impact statement on proposed rule prior to hearings, so long as statement is filed in time to permit analysis before rule goes into effect. Plaintiffs' failure to show substantial hardship obviates need for court to consider whether procedural objections to agency hearing may be litigated before final agency action.

Counsel for Lever Brothers:
Fred C. Schribner, Jr.
Peter S. Plumb
Ralph I. Lancaster, Jr.
Pierce, Atwood, Scribner, Allen & McKusick
465 Congress St.
Portland, Me. 04111
(207) 773-6411

William Rogers
Stuart J. Friedman
Arnold & Porter
1229 19th St., N.W.
Washington, D.C. 20036
(202) 223-3200

Donald J. Lunghino Assistant Secretary
Lever Brothers Co.
390 Park Ave.
New York, N.Y. 10001
(212) 688-6000

Counsel for FTC:
Peter Mills U.S. Attorney
John B. Wlodkowski Assistant U.S. Attorney
156 Federal St.
Portland, Me. 04112
(207) 775-3131

Joseph Martin, Jr. General Counsel
Harold D. Rhynedance Assistant General Counsel
Gerald Harwood
Federal Trade Commission
Washington, D.C. 20013
(202) 962-5463

[1 ELR 20329]

Coffin, C.J.

Plaintiffs, under exceptional time pressure have applied to me as a single judge under Rule 8(a), F.R.A.P., for an injunction pending appeal from the district court's granting of defendant's motion for summary judgment. The district court determined that plaintiffs' application for an injunction staying Commission hearings, which plaintiffs allege are illegal, was not yet ripe for adjudication. In considering plaintiffs' motion for an injunction pending appeal, this court must be convinced that plaintiffs have a probability of prevailing on the merits of their appeal and that plaintiffs will suffer irreparable harm if the injunction is not granted. Automatic Radio Mfg. Co., Inc. v. Ford Motor Co., 390 F.2d 113, 115 (1st Cir. 1968, cert. denied, 391 U.S. 914 (1968).

In this case the issue on the merits is whether the district court abused its discretion in holding that plaintiffs' claims were not yet "ripe" for judicial resolution. That such a determination is discretionary and not lightly to be overruled is clear. Abbott Laboratories v. Gardner, 387 U.S. 136, 148 (1967). In Abbott Laboratories the Court pointed to two reasons why the issue was fit for adjudication. First, the issue was a purely legal one. 387 U.S. at 149. There is no dispute that the issues here are also purely legal. Second, the regulations in issue were "final agency action" within the meaning of the Administrative Procedure Act. 387 U.S. at 149-150. There is no dispute that no such final regulations are at issue here; the question is the legality of the procedure not the legality of a rule which might result from the procedure. The district court, with some support from another circuit, Bristol-Myers Co. v. Federal Trade Commission, 424 F.2d 935, 940 (D.C. Cir. 1970), cert denied, U.S. (1971), found that the procedure could not be challenged until a final agency rule was adopted. Plaintiffs argue that no such final rule is required in order for them to challenge agency action at a more preliminary stage so long as a real question of the legality of the agency proceedings is presented. See, e.g., Jewel Companies, Inc. v. Federal Trade Commission, 432 F.2d 1115 (7th Cir. 1970); Elmo Division of Drive-X Co. v. Dixon, 348 F.2d 342 (D.C. Cir. 1962); Amos Treat Co. v. Security and Exchange Commission, 306 F.2d 260 (D.C. Cir. 1962); Deering Milliken, Inc. v. Johnston, 295 F.2d 856 (4th Cir. 1961); Yanish v. Wixon, 81 F. Supp. 499 (N.D. Col. 1948). Although all of these cases are lower court opinions and all but one were written before Abbott Laboratories, they are still somewhat troublesome.

Whether or not "final agency action" may be required as a predicate to judicial intervention even where the initiation of agency proceedings is attacked is, I conclude, not necessary for me to decide. For Abbott also required, in addition to a determination of fitness of the issue for judicial decision, a determination that hardship to the parties stemming from withholding court consideration was such as to justify intervention. As to this issue plaintiffs make two contentions: that no hardship need be shown, other than that of suffering proceedings which are allegedly infected with illegality; and, that, in any event they have alleged sufficient hardship aliunde.

Plaintiffs stated in oral argument, in support of the first contention, that, in substance, any party with standing could properly seek to enjoin illegal agency action. Abbott Laboratories, however, seems to accept as a necessary spring for judicial intervention "an immediate and significant change in the plaintiff's conduct of their affairs with serious penalties attached to noncompliance. . . ." 387 U.S. at 153. Moreover, none of the cases relied on by plaintiffs, supra, addresses the requirement of a showing of hardship. In the light of such authorities as well asof general principles of judicial restraint with regard to untimely intervention in administrative proceedings, I cannot say that plaintiffs are likely to prevail in their assertion that standing plus an assertion of illegal agency action are enough to justify injunctive relief, without a showing of hardship threatened by judicial abstinence.

Plaintiffs, however, vigorously assert several hardships they will suffer if the Commission hearings are held without a determination of their legality in advance. First, they will lost the procedural safeguards, such as the right to cross-examine, which they say are not a part of the procedure the Commission has chosen but are a part of the procedure the Commission should have chosen. Thus, they say, they will be unable to refute harmful evidence and the Commissioners will be prejudiced on their case even if the Commission is subsequently required to conduct the hearing according to the proper procedure. This alleged hardship presupposes that the evidence that will be introduced at the hearing will be overwhelmingly opposed to plaintiffs' position. But plaintiffs too will introduce evidence on the proposed rule which will also not be filtered through cross-examination. I cannot automatically assume — for the purpose of predicting plaintiffs' likelihood of prevailing on appeal — that the hearing will influence the Commission against plaintiffs; it may influence them in plaintiffs' favor. Nor can I say that plaintiffs are likely to persuade the court of appeals that the Commission would be unable subsequently to grant plaintiffs a fair hearing if they were compelled to grant a second hearing under a different procedure. Adjudicatory bodies, like courts, must often retry an issue a second time, and I cannot now assume that a second hearing would prove less fair.

Plaintiffs' second alleged hardship is that they will not receive a statement from the Commission on the environmental impact of the proposed ruling before the hearings. The Commission has stated that it will file such a statement if it decides to adopt the proposed rule, but plaintiffs assert that will be too late. I would think that plaintiffs are not harmed so long as the statement is filed in time to allow the proposed environmental impact to be analyzed before the rule goes into effect. Plaintiffs, it is true, argue that the pressures of publicity place them in the dilemma of adhearing to their present products despite increasing resistance or of using different, untested, and possibly deleterious ingredients. But, since they would hazard the latter course only because of fear of falling sales, this argument is really an aspect of the final hardship alleged.

This is the alleged loss of sales which will result from the hearings. True, so long as the ecological implications of products are not satisfactorily laid to rest, there will be unease and ferment. But plaintiffs are assuming not only that the hearings will be overwhelmingly negative toward their products but also that they will have a convincing and disastrously additive effect on the public. At this juncture I cannot say that either assumption is sufficiently likely. Plaintiffs may make their case that their products are less harmful than available substitutes. Even if plaintiffs do not convince the public, there is no sufficient assurance that the public will pay such attention that sales will be significantly affected. I therefore conclude that this alleged hardship is not such that plaintiffs have a likelihood of prevailingon the merits before the entire court.

Plaintiffs' showing of hardship fails to convince me that they are likely to prevail on the merits of the appeal. The procedural issue which plaintiffs seek to raise at this premature state in the process can be raised after the Commission takes final action along with any issues on the merits which may present themselves.Unless plaintiffs make a substantial showing of hardship, the court of appeals is unlikely to risk the piecemeal litigation which may result if plaintiffs are permitted to raise procedural issues now and substantive issues now and substantive issues at a later date. Such a policy is essential to prevent litigants from further delaying already attenuated agency procedures.

Plaintiffs' showing of the irreparable harm which will result if this injunction is denied is the same as their showing of hardship. Since I have concluded that the showing of hardship is likely to prove insufficient to convince the court of appeals that this case is ripe for adjudication, it follows that plaintiffs have also made an insufficient showing of irreparable harm.

The motion is denied.