The opinion of the court was delivered by: Decker, District Judge.
It appears from the above "savings provision" that Congress
did intend the civil penalties to apply to violations of the
pre-Magnuson-Moss Act rules. Defendants suggest that the court
should interpret the phrase "with the same validity as such
rule could have been promulgated had this section not been
enacted" to mean that all provisions of the Magnuson-Moss Act
should not apply to the old rules, including the civil penalty
provision. Congress was careful, however, to only exempt the
old rules from the requirements in Section 202 of the Act.
There is nothing in the savings provision or its legislative
history to indicate that the civil penalty provisions in
Section 205 were also excluded. Nor is there any indication
that Congress intended to create a two-tiered system of rules
with different enforcement mechanisms, as defendants suggest.
Other aspects of the Magnuson-Moss Act and its legislative
history support the inference that Congress intended that old
rules like the mail order rule would be enforced by civil
penalties, rather than only by cease and desist orders. Though
there is no question that Congress, at the time the
Magnuson-Moss Act was passed, was concerned about the
procedures used by the FTC in promulgating its substantive
rules, Congress also indicated its displeasure at the
ineffectiveness of using cease and desist orders to enforce
H.R.Rep.No. 93-1107, supra, at 7712. In the absence of any
clear statements to the contrary, it would be incongruous to
assume that Congress wished the FTC to continue to be hampered
by what it expressly considered to be an ineffective
And finally, when Congress did turn its attention to the
question of whether the civil penalty provision would apply
retroactively, it enacted the following provision:
Magnuson-Moss Act, § 205(b). This provision speaks in terms of
the time of the violation, not in terms of when the particular
rule that was violated was promulgated. In fact, if defendants'
position is correct, that section of the Magnuson-Moss Act is
largely stripped of all meaning. By definition, there could be
no rule violations before the enactment date, if there were no
rules at that time to which the civil penalty provision
applied. Constructions which render language passed by Congress
meaningless are not favored.
In addition to their arguments based on the language and
history of the Magnuson-Moss Act, defendants also claim that
their position is supported by general legal doctrine. First,
defendants argue that applying the civil penalties to rules
promulgated before the Act was passed would result in the Act
being enforced retrospectively and that such constructions are
not favored. And second, defendants suggest that this court
follow the reasoning of the cases under the Finality Act of
1959 and hold that the civil penalty provision does not apply
to the mail order rule. Neither of defendants' arguments is
The cases cited by defendants in support of their
proposition that retrospective constructions of punitive
statutes are to be avoided, U.S. Fidelity Co. v. Struthers
Wells Co., 209 U.S. 306, 28 S.Ct. 537, 52 L.Ed. 804 (1908), and
South East Chicago Commission v. Department of Housing and
Urban Development, 488 F.2d 1119 (7th Cir. 1973), involve the
application of statutes to conduct undertaken before the
effective dates of the relevant statutes. Here, the conduct
under attack by the FTC is defendants' alleged violations of
the mail order rule. All violations that are the subject of the
instant litigation took place well after the Magnuson-Moss Act
was enacted. Consequently, this case involves a prospective
application of the civil penalty provision, not a retrospective
one. Therefore, defendants' argument is irrelevant.
Also largely irrelevant is defendants' argument based on the
Finality Act cases, FTC v. Jantzen, Inc., 386 U.S. 228, 87
S.Ct. 998, 18 L.Ed.2d 11 (1966), and FTC v. Broch & Co.,
368 U.S. 360, 82 S.Ct. 431, 7 L.Ed.2d 353 (1962). The Finality Act
provided civil penalties for violations of certain FTC cease
and desist orders. In the two cases cited, the Supreme Court
noted that the FTC was not authorized to seek civil penalties
for violations of cease and desist orders entered before the
Finality Act was passed. That conclusion, however, was not
based on any general proposition that Congress could not apply
civil penalties to future violations of a previously adopted
FTC rule or order, but rather on the fact that Congress
expressly provided that civil penalties would not apply to the
earlier cease and desist orders. The following provision was
part of the Finality Act:
"The amendments made by section 1 have no
application to any proceeding initiated before
the date of enactment of this Act under the third
or fourth paragraph of section 11 of the
[Clayton] Act. . . . Each such proceeding shall
be governed by the provisions of such section as
they existed on the day preceding the date of
enactment of this Act."
Jantzen, 386 U.S. at 232, 87 S.Ct. at 1001. There is no
analogous provision in the Magnuson-Moss Act.
In fact, if the Finality Act cases are relevant to the
instant dispute at all, they provide support for the
proposition that Congress did intend the civil penalty
provision to be applicable to violations of the mail order
rule. In the Finality Act, Congress demonstrated that, if it
did not mean for civil penalties to be applicable to FTC
action taken before the penalty provision was passed, it was
capable of making that intention perfectly clear. The fact
that Congress did not include in the Magnuson-Moss Act a
provision similar to that found in the Finality Act is some
evidence that Congress did not intend for the courts to add
such a provision by construction.
In sum, the court concludes that, to the extent
Congressional intent is discernible, Congress intended that
the FTC could enforce the mail order rule by bringing an
action to recover civil penalties for violations. Defendants'
motion to dismiss that part of plaintiff's complaint will be
Defendants have also moved to dismiss plaintiff's request to
obtain permanent injunctive relief against future violations
of the mail order rule. Defendants essentially argue that the
FTC is not legally authorized to seek a permanent injunction
against rule violations.
It appears, however, that the FTC is authorized to seek
permanent injunctive relief, in those cases where it is
warranted, under 15 U.S.C. § 53(b). That subsection
provides, inter alia, that the FTC may seek a preliminary
injunction, pending consideration of a complaint filed before
the Commission. The subsection then continues as follows:
"Provided further, That in proper cases the
Commission may seek, and after proper proof, the
court may issue, a permanent injunction."
Id. By its terms, that statute appears to give the FTC
authority to seek a permanent injunction in all cases in which
it believes that it can prove the necessary facts, irrespective
of the pendency of an administrative complaint. Three other
district courts have so held. See United States v. National
Dynamics Corp., 525 F. Supp. 380 (S.D.N.Y. 1981); FTC v.
Virginia Homes Manufacturing Corp., 509 F. Supp. 51 (D.Md.
1981), aff'd, 661 F.2d 920 (4th Cir. 1981); FTC v. Singer,
534 F. Supp. 24 (N.D.Cal. 1981). Defendants' arguments to the
contrary are not persuasive.
For the reasons stated above, defendants JS&A and Sugarman's
motion to dismiss is denied.