Senator BREWSTER. The next witness is Gilbert Weil of the Association of National Advertisers, Inc.

STATEMENT BY GILBERT H. WEIL, PARTNER, LAW FIRM OF WEIL & LEE, NEW YORK, N.Y., REPRESENTING THE ASSOCIATION OF NATIONAL ADVERTISERS, INC., NEW YORK, N.Y.

Mr. WEIL. The association, the ANA, is a trade association incorporated as a membership corporation by virtue of the laws of the State of New York. In excess of 450 companies throughout the United States hold memberships in the association, the companies being engaged in the sale of various products or services. The basic common interest of the companies, which is the primary reason for the association's existence, is their use of varied advertising media to promote their respective businesses and, through the offices and facilities of this association, the various companies strive to improve the efficiency, elevate the stature, and enhance the productive value of advertising and its techniques as a constructive marketing tool, within the confines of their own companies and upon an industrywide basis.

We appreciate greatly the opportunity to express our views on the subject of extending the Federal Trade Commission's opportunity to apply to the Federal courts for temporary injunctions in cases involving possible violations of section 5 of the Federal Trade Commission Act. That avenue exists already, of course, with respect to foods, drugs, cosmetics, and devices. It is undoubtedly appropriate as to such products, because of their intimate involvement with public safety and health. The question now posed by the proposed Senate Joint Resolution 130, and by S. 3065 and S. 3066, is whether it should be enlarged to other areas.

In general we support such an extension, as being in the public interest. We propose certain safeguards, however, which we believe to be equally in the public interest.

As we see it, there are two important objectives to be achieved, and, since they are somewhat at odds with each other, one must seek the wisest adjustment between them, the tempering of each to the imperatives of the other, which will produce the greatest amount of good at the least expense in detriments.

The two interests are: on the one hand, that if there is false advertising or promotional activity, the public shall be relieved of its assault as quickly as possible; on the other, that a valid advertising or promotional campaign not be unfairly sacrificed to the substitution of speed for justice.

The public has a stake in both concerns. It is readily obvious with respect to the first, but no less real with regard to the second. Apart from the fundamental importance to our society that principles of due process not be short-circuited in any circumstances, there is a growing appreciation in these days that legitimate purchase information re garding available products and services is of considerable importance to consumers; and that advertising and promotional functions contribute substantially to the mass distribution which underprops our GNP and our standard of living.

A temporary injunction is a drastic remedy. It is granted in civil cases only when the court is convinced of two essentials: that the plain

tiff in the case is highly likely to be the victor after the case has run its full course, and that the plaintiff will be seriously and irreparably injured if he does not get the temporary injunction in the meanwhile. Even then, a bond is usually required of the plaintiff to indemnify the defendant for the harm occasioned by the temporary injunction if it later turns out that the plaintiff was wrong.

In many instances, if not most, a temporary injunction at the behest of the Federal Trade Commission will mark the end of the case. Once an advertising campaign has been interrupted, it will rarely be worth reinstating a year or more later, especially if a cloud has been meanwhile cast upon its believeability by the interim pronouncement of a court that it is so probably and grievously deceptive as to call for summary interdiction. Thus, the question becomes unfairly begged, for an ultimate determination of whether the temporary injunction had really been justified in the first place may never be made; and the right to make the claim (and the public's right to receive it) will have been lost to the force of circumstances, even though it might have been vindicated by a full and fair trial.

In this very connection, it is important to note that there may be an unusually liberal predisposition in some courts to grant temporary injunctions to the Commission where it would not issue them, under the same facts, to private plaintiffs. This would be due not only to deference to the Commission as a guardian of the public. (That office is undoubtedly entitled to great respect and weight; but it should not be a substitute for proof that the proper prerequisites exist for unleashing such a potent and potentially damaging, weapon as the temporary injunction.) It would be the consequence, also, of the wording proposed, that the temporary injunction be ordered "Whenever the Commission has reason to believe" that there is or is about to be a violation of section 5. That might be construed to mean any case in which the Commission issues a complaint, for such "reason to believe" is a statutory condition precedent to instituting every case under section 5(b) of the Federal Trade Commission Act. Some courts (with others disagreeing) have given almost that automatic an application to such language in the present section 13 (a) of the Federal Trade Commission Act.

Certainly it cannot be intended that there shall be a right created for the Commission to have a temporary injunction in every case it brings.

But if it is not so intended, there should be some legislative pronouncement to inform the courts that they are required to exercise the drastic remedy only in the drastic situations.

That does seem to be all that the proponents of the pending bills have in mind. It is probably what they believe to be implicit in the prerequisite of "Upon proper showing ***."

The proposals are in response to what appears to be a shocking set of conditions particular to the home improvement area. The cause for legislative action has been described by the Chairman as "schemes to defraud the public which are clearly in violation of the FTC Act," by which "consumers may be lured into participating in schemes which ultimately defraud them of hundreds of dollars. *** extensive swindling *** fly-by-night operators who are currently fleecing the public."

Senate Joint Resolution 130 seems to us well calculated to meet such needs without unduly impinging upon the other interests to which we have referred. It is limited to the industry where the legislature finds existent transgressions of such flagrancy and serious consequences as would well justify invoking such drastic jurisprudential surgery under any traditional legal conceptts.

S. 3065 and S. 3066, on the other hand, could become legislative overkill, for which a commensurate need has not been demonstrated. If, as, and when it is shown, the pattern of S.J. 130 can always be extended to the additional situations which properly call for it in the judgment of Congress. S. 3065 and S. 3066, however, might remove that exercise of judgment into the hands of the Commission, if its view is correct that little more than rubberstamping by the courts, upon a mere showing that the "Commission has reason to believe***" is permitted by the proposed form of statute.

And there is a further evil in making temporary injunctions that easily available. The road to a temporary injunction should not be so inviting that the Commission may seek to travel it in any but relatively extreme cases where, as the Chairman has said, there is actual intent to defraud, clear violation of the Federal Trade Commission Act, and truly substantial injury to the public; for the very act of seeking the temporary injunction commits the Commission to a point of view as to the merits of the case which renders it virtually incapable thereafter of proceeding with the judicial-like freedom from bias that is so essential to a fair trial-or at least to the appearances of a fair trial which, as Congress emphasized so often during its deliberations upon the Administrative Procedure Act, is equally important in preserving public respect for the law and order of the administrative agency process.

Mr. Justice Fortas expressed this well in his dissenting opinion in FTC v. Dean Foods Co., 384 U.S. 597 (1966), when he wrote, at pages

617-618:

The Commission was not intended to-it has no power to it should notmake a judgment on the merits prior to notice and hearing. To sanction its doing so is to strike a devastating blow at the fundamental theory upon which the exercise of both prosecutorial and adjudicatory functions by an administrative agency is based. Cf. § 5(c) of the Administrative Procedure Act of 1946, 5 U.S.C. § 1004 (c) (1964 ed.).

The Commission, prior to taking evidence and writing a report, is supposed to make only a very limited judgment: that there is "reason to believe" the law is being violated. But to obtain a preliminary injunction, it must-without hearing the other side, and ordinarily merely on its staff's recommendation, necessarily based upon a quick exposure of the facts-file affidavits or produce evidence with the calculated purpose of demonstrating to the court of appeals that consummation of the merger will have such adverse effects that it must be halted in limine. In fact, and in all realism, it must take positions and establish, with sufficient positiveness to overcome strenuous opposition, that the merger will tend substantially to lessen competition or create danger of monopoly, that it is harmful to the economy, immediately threatening in its consequences, and that it is unlawful. There must be Commission conclusions, not merely the views of the staff. Their assertion and necessarily stout advocacy make a mockery of a subsequent quasi-judicial proceeding in which the Commission is supposed objectively to consider the same issues on the basis solely of the record.

Notwithstanding that a bare majority of the Supreme Court did not find this reasoning sufficiently compelling as a matter of law to govern the decision in that case, its logic may well command respect, as a matter of policy, in the legislative chambers.