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Federal Trade Commission v. Feldman

decided: February 24, 1976.


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 74-C-2787 JAMES B. PARSONS, Judge.

Fairchild, Chief Judge, Hastings, Senior Circuit Judge, and Pell, Circuit Judge.

Author: Fairchild

FAIRCHILD, Chief Judge.

This is an appeal from a district court order requiring appellants Jerry L. Feldman, President, Checker Taxi Company, Inc. and Checker Taxi Company, Inc., (hereafter referred to jointly as "Checker"), to comply with subpoenas duces tecum issued in connection with an investigation presently being conducted by the Federal Trade Commission.*fn1

Section 6(a) of the Federal Trade Commission Act (15 U.S.C. § 46(a)) authorizes the Commission "to investigate from time to time the organization, business, conduct, practices, and management of any person, partnership, or corporation engaged in or whose business affects commerce, . . . and its relation to other persons, partnerships, and corporations." Section 9 (15 U.S.C. § 49) empowers the Commission "to require by subpoena the attendance and testimony of witnesses and the production of all such documentary evidence relating to any matter under investigation." The nature of the present investigation is, as stated in the resolution of the Commission, directing use of compulsory process, dated January 3, 1973:

To determine whether or not the activities and practices by Checker Motors Corporation, Checker Taxi Cab Company, Inc., Yellow Cab Company, Inc. (Chicago), in connection with the regulation, ownership and operation of taxi services, in commerce, are conducted in an unfair manner for the purpose or with the effect of restraining or foreclosing competition, in violation of Section 5 of the Federal Trade Commission Act (15 U.S.C. § 45).

15 U.S.C. § 45(a)(1) declares unlawful "unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce."*fn2

The Commission issued subpoenas duces tecum seeking documents dealing with the business operations of Checker, its subsidiaries and affiliates. Checker filed a motion to quash the subpoenas and to close the investigation. By order and opinion issued January 31, 1974, the Commission denied the motion. A petition for enforcement of the subpoenas was subsequently filed in the district court. On April 30, 1975, the court issued a final order granting enforcement, although reserving jurisdiction to alleviate vexation and hindrance. Checker appealed.


Appellants assert that the district court erred in failing to apply the doctrines of res judicata and collateral estoppel. They rely on the judgment and decisions reached in an action brought by the United States in the 1940's against Yellow Cab Company and others to restrain alleged violations of §§ 1 and 2 of the Sherman Act. They contend that these decisions establish, since appellants have presented affidavits showing that relevant practices have not changed, that the present FTC investigation and any complaint proceeding which could result are foredoomed to futility.

In the Yellow Cab Co. action, the district court first dismissed the complaint, United States v. Yellow Cab Co., 69 F. Supp. 170 (N.D. Ill. 1946). The decision was reversed (in part), 332 U.S. 218, 67 S. Ct. 1560, 91 L. Ed. 2010 (1947). After trial on remand, judgment was entered for defendants, 80 F. Supp. 936 (N.D. Ill. 1948). The judgment was affirmed, 338 U.S. 338, 70 S. Ct. 177, 94 L. Ed. 150 (1949). The appellants here are either identical to or successors in interest of defendants in Yellow Cab Co.

A similar subpoena, directed to others, but part of the same investigation, was considered in F.T.C. v. Markin, 391 F. Supp. 865 (W.D. Mich. 1974). Pointing out that the Sherman Act claims in the earlier litigation and claims which the FTC might pursue arise under different statutes, and referring to limiting language in the Supreme Court Yellow Cab Co. decisions, the district court in Michigan rejected the res judicata claim.

In the instant case, the district court said:

[A] decision by this Court on the res judicata effects of the two Yellow Cab cases would seem to be premature in light of the potential differences in facts and law between those two cases and the alleged scope of the current FTC investigation. Similarly, a decision on the 'in commerce' issue would be premature. In its first Yellow Cab decision, the Supreme Court expressly stated that it did not intend to ...

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