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Federal Trade Commission v. McLean

February 8, 1938

FEDERAL TRADE COMMISSION
v.
A. MCLEAN & SON ET AL.



Petitions for Rules to Show Cause Why Respondents Should Not be Adjudged in Contempt.

Author: Sparks

Before EVANS and SPARKS, Circuit Judges, and LINDLEY, District Judge.

SPARKS, Circuit Judge.

The Federal Trade Commission has filed a petition for a rule against McLean and Son, a corporation, and one against M. J. Holloway and Company, a corporation, to show cause why each should not be adjudged in contempt of this court for violation of a decree entered by this court July 1, 1936. That decree was entered pursuant to application of the Commission for enforcement of its order against both respondents to cease and desist from certain practices theretofore found by the Commission to constitute unfair and forbidden methods of competition. See Federal Trade Commission v. A. McLean & Son, 7 Cir., 84 F.2d 910.

The petition presented in each case was filed under the same title and number as the original proceeding, and was filed as a part of that proceeding. The prayer of each petition is as follows:

"Wherefore, Federal Trade Commission prays that said (respondent) be ordered to show cause why it should not be adjudged in contempt of this Court, in having so disobeyed said decree of this Court so made and entered on the first day of July, 1936."

Respondents filed answers in the nature of motions to dismiss the petitions for rule to show cause on the grounds that:

1. The object of the petitions for contempt is necessarily punitive and not compensatory, and accordingly should have been presented as an independent petition and not as supplemental proceedings in the original cause.

2. The petitions set forth only the pleader's conclusions in support of the charge, and not sufficient allegations of fact as to the subject matter alleged to violate the court's order.

3. The verification of the petitions is insufficient, not being by persons having personal knowledge of the facts, and purporting to be upon affiant's belief.

4. There was no contempt of the court's order, as indicated by certain facts set forth by respondents.

In reply to respondents' motions to dismiss, petitioner, the Commission, stated that its proceeding was one for civil contempt, and that it was a part of a proceeding based upon section 5 of the Federal Trade Commission Act, 15 U.S.C.A. ยง 45, which provides for a civil proceeding only and for a decree in the nature of an injunction; that it was not punitive; that it was wholly remedial, being prosecuted in the public interest; and that it was ancillary to the main case and in aid of the enforcement of the decree of this court. It further urged that the assessment of a fine would not indicate that the proceeding was criminal since a fine is as much an incident of civil contempt as of criminal, the difference between the two being that in civil contempt the fine must bear a relation to the injury sustained by the complaining party. In its petitions for rules to show cause, the Commission made no allegation of injury to itself and no request for fines payable to it in compensation for expense incurred as a result of respondents' alleged contempts. However, in its brief in opposition to the motions to dismiss, to show that it was entitled to such fines, it made the following statement:

"The Government, under the decree of this Court, represents the interests of the Government and of the public. The Government has borne the expense of a nationwide investigation to ascertain the facts which constitute the company's violations of the decree herein, and it pays all salaries and other expenses incident to the prosecution of this proceeding. The public is, as a matter of law, injured by such violations. The Government is entitled to a fine which bears a reasonable relation to all these injuries. The amount may not be calculated with accuracy, but the Court may reasonably approximate it in fixing a fine in a substantial sum.

"The cash outlay required of the Government in its investigations and in the prosecution of the pending petition may not be ascertained with certainty; ...


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