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ARON v. FTC

May 17, 1943

ARON et al.
v.
FEDERAL TRADE COMMISSION et al.



The opinion of the court was delivered by: KALODNER

The issue here is as to whether this court has jurisdiction to enjoin the holding of hearings and the taking of testimony in a proceeding before the Federal Trade Commission.

Briefly stated, the facts are as follows:

 On or about August 10, 1942, the Federal Trade Commission instituted proceedings against the plaintiffs. The Commission's complaint charged the plaintiffs with engaging in unfair acts and practices in commerce and violation of Section 5 of the Federal Trade Commission Act, 52 Stat. 111, 15 U.S.C.A. ยง 45. *fn1" Specifically, the Commission's complaint alleged that plaintiffs were engaged in the distribution and sale of push cards and punch boards in interstate commerce; that said push cards and punch boards are sold for the purpose of being used, and are used by, the ultimate purchasers thereof, in combination with other merchandise as a means of selling such other merchandise by means of lot or chance; that such sale and distribution of push cards and punch boards by plaintiffs supplies to, and places in the hands of, the purchasers a means of conducting lotteries and games of chance, and of selling and distributing merchandise in interstate commerce packaged and assembled for sale by lot or chance, and is contrary to the public interest.

 On September 22, 1942, the plaintiffs filed their answer to the complaint. Subsequently, on April 14, 1943, the Commission scheduled hearings in Philadelphia to commence April 26, 1943, and designated the defendant Preston to conduct such hearings as Trial Examiner.

 On April 21, 1943, plaintiffs filed a complaint in this Court praying, inter alia, that a preliminary injunction issue restraining the Commission and the individual defendants named in the complaint from holding any hearings or otherwise proceeding with the prosecution of the Commission's complaint.

 The plaintiffs premise their action here on the contention that the Commission's complaint does not allege that the plaintiffs are engaged in competition with other punch board manufacturers, and that the sale and distribution of the punch boards in interstate commerce does not, in itself, constitute an unfair act or practice in commerce, and that therefore the Commission is without jurisdiction in the premises.

 The Commission filed a motion to dismiss the plaintiffs' complaint here, raising the issue as to this Court's jurisdiction.

 It is clear that the plaintiffs' motion for preliminary injunction must be denied, and that the Commission's motion to dismiss the plaintiffs' complaint must be granted.

 This court is without jurisdiction to enjoin any proceedings before the Federal Trade Commission.

 A proceeding before the Commission is a statutory proceeding, under the provisions of Section 5 of the Act. Jurisdiction to determine what constitutes unfair acts or practices in commerce, within the meaning of the Act, is vested exclusively in the Commission -- and this Court may not substitute its jurisdiction for that of the Commission for the purpose of determining whether the acts and practices charged in the Commission's complaint constitute unfair acts or practices, which the Commission alone is authorized to restrain.

 The Federal Trade Commission Act provides for full hearing to persons charged with its violation. The Act further provides that any cease and desist order made by the Commission may be reviewed by the United States Circuit Court of Appeals, and that the jurisdiction of the Circuit Court of Appeals to affirm, enforce, set aside, or modify any order of the Commission is exclusive, under Section 5(d) of the Act.

 Apart from the fact that the Circuit Courts alone are vested with exclusive jurisdiction to review orders of the Federal Trade Commission, it is well settled that the conduct of a statutory proceeding by an administrative agency of the government, where judicial review is provided for by the enabling statute, may not be enjoined by either a District Court or a Circuit Court of Appeals.


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