The Supreme Court yesterday let stand a ruling that three auto companies being investigated for possible antitrust violations must exhaust administrative remedies before filing suit to avoid complying with subpoenas.
The justices declined to hear arguments on an appeal by American Motors, Chrysler and General Motors claiming subpoenas issued by the Federal Trade Commission were overly broad and amounted to unconstitutional search and seizure.
The FTC initiated an auto industry investigation in 1977, issuing subpoenas to GM, Chrysler, Ford and AMC for a wide range of information on how they set their prices and make their profits.
It was the first inquiry in 40 years on competition in the auto industry.
GM, Chrysler and AMC wnet to court, charging the scope of the subpoenas was so broad it amounted to unlawful search and seizure.
However, Ford asked the FTC to cancel the subpoena, claiming the agency was on a "fishing expedition" and that it would cost $100 million to comply.
In March, the FTC turned Ford down but trimmed the demands of the subpoena.
The remaining auto companies won the first round when a federal district judged barred the FTC from taking steps to enforce the subpoenas.
The remaining auto companies won the first round when a federal district judge barred the FTC from taking steps to enforce the subpoenas.
The 6th U.S. Circuit Court of Appeals, however, reversed the decision and dismissed their complaint on grounds that "all issues . . . can and must under law be presented first to the FTC and, if rejected, may then be litigated."
The auto firms appealed to the Supreme Court, arguing the appeals-court decision "seriously curtails federal-court jurisdiction" to hear "challenges to federal agency misconduct and to halt the unconstitutional exercise of official power."
The subpoenas demand confidential records and information, the automakers told the Court, but commission rules do not provide any way to challenge the "seizure" of this information.
"Chrysler has concluded that, merely for it to make detailed estimates of burden for resisting the FTC's oppressive demands, it would have to spend several hundreds of thousands of dollars and divert needed personnel from their essential operating duties," the automakers told the Court.
Since action was initiated, Chrysler has fallen into deep financial trouble.
AMC estimated its cost of compliance at several million dollars.
Lawyers for the FTC argued the subpoenas were preliminary, not final agency action that could be challenged.