Dr. STASON. No, sir; I don't believe I would agree with that fully. It seems to me that a respondent before an administrative agency can be given a fair trial on the facts, the law can be fairly applied to the facts to reach a conclusion of guilt, and still he may be unfairly treated when the remedy is attached, when the penalty is prescribed by the agency having authority to prescribe the penalty. In other words, I think there are three stages where unfairness to a private respondent can result: Either in the determination of the facts, or in the application of the law to the facts, or in the terms of the penalty, or what I would call remedial measures. Now we have felt that the Commissioners being expert, and having expert assistance available, are well qualified to deal with the fact issues, so we leave to them the determination of the fact issues, subject to a reasonable measure of judicial control to correct palpable errors. On the law questions the courts conventionally retain control and the statutes, in almost all instances, provide for review on questions of law. Now we come to the third stage, namely, the remedy. Who is going to determine the question of what remedy is to be applied? Of course, in dealing with the problems that the Federal Trade Commission must deal with, its judgment concerning the appropriate remedy should be very good, and is very good, and should be given a high degree of authority. It should be given as high a degree of authority as its decisions on the facts, but there ought to be some control in the courts to prevent unreasonably harsh action. At the present time, as I read the cases, the courts are saying the question of remedy is entirely discretionary, it is entirely with the agency to determine. It seems to me that something a little more han that is necessary if a full measure of justice is to be afforded. The CHAIRMAN. Does your theory install the court as a substitute for the Commission? Dr. STASON. I don't think so. Not in the proposal I make, at least. It simply says this, that the court may modify the remedy if it finds it to be unreasonably harsh or severe. It is equivalent to the power of the court to set aside a decision on the facts, if it finds it to be contrary to the substantial evidence on the whole record. Mr. O'HARA. Dean, aren't you wavering a little bit in my favor for a trial de novo! Dr. STASON. A trial de novo to me, Mr. O'Hara, means a new trial on a proceeding in court with a record being built up in the court, and the court having full authority to deal with the questions of fact and law and remedy. Mr. O'HARA. I appreciate that, but, Dean, what is troubling me about your suggestion-and I have the greatest respect in the world for your suggestions-is that an important question of fact may be brought out in a case; the trier of the facts may have a witness on the stand; he observes him, and while that witness is not impeached, the trier of facts may discount that testimony 100 percent, whereas the appellate court may not do so. You suggest, if I follow you correctly, that very interesting contention here-a reviewing authority on the part of the court which goes beyond the question of law. What troubles me is you are giving in part a trial de novo power to the reviewing court, without saying so. You are limiting that court. I think prob ably it will be true-I don't know-that in a great many of these cases that are tried, they are not appealed. Occasionally you get the type of case where the person affected feels that the law has been misapplied, or there has been the taking of a small part of the testimony and basing a decision on it, when it is outweighed by other testimony. In either of those cases, Dean, it seems to me a complete remedy is only obtained by a trial de novo. I think if appeals were resorted to merely for the purpose of delay, it would be a bad situation, but I think in a serious case where you have a very close question of fact and a very close question of law, that actually the remedy for the person or corporation affected would be only by trial de novo. I don't wish to labor that point, but that is what troubles me. Dr. STASON. There is a very important question of governmental policy that is involved in the situation that you have stated. The question is, What shall be the division of labor between the governmental agency with its technical staff and all of its equipment on the one hand, and the court on the other? Where shall the line be drawn? Mr. O'HARA. No. It is a struggle between the three coordinated branches of our Government on the one hand, and a supergovernment called bureaucracy on the other. That is the way I view it. It is a very serious thing to my mind, of whether we are getting away from the theory of the legislative, executive, and judicial into another form of government that our forefathers never intended. We either maintain or destroy constitutional government. Dr. STASON. Well, I have proceeded on the assumption that we have the administrative agencies as an essential part of our governmental scheme, and our best efforts should be devoted to making them work as fairly and effectually and effectively as possible, and to working out the wise dividing lines between their authority and the authority of the courts. Now, if we do adopt the principle of the trial de novo, then by so doing, you bring about several collateral results which may not be so good. In the first place, you burden the courts with a very considerable mass of litigation that the courts would find difficult to dispose of. And, in the second place, you would be taking the authority and responsibility away from the commissions, making it unlikely that they would be developed in an authoritative and responsible way. In the third place, you would by adopting the trial de novo technique put to one side whatever benefits might be obtained by the very large technical staff and equipment of the agency. So that it seems to me that the wise course to pursue is one short of trial de novo, is one of working out a division of labor by which the technical work will be done by the administrative agency, but the court will be given the power to check palpable errors wherever they arise, whether they arise in connection with fact issues or law questions or remedies. That is my theory. Mr. ROGERS. Dean, just one question: Why, in your opinion, should this review be in the circuit rather than in a district court? Why should a man in my district have to travel long distances to get to a circuit court? Why shouldn't he be permitted to register his appeal in the district court? Dr. STASON. That is a question that has some rather large implications. I suppose, in a brief sentence, the principal reason for going to the circuit court instead of starting in a district court and working on up is one of expedition. It saves one step on the way to the Mr. ROGERS. Yes; if you want to save steps. Dr. STASON. I suppose the Constitution might prevent it. I am not arguing for it on that ground; I am simply trying to state the reasons why it is achieved in this way. Another reason is this: In connection with these governmental problems that have such wide incidence, it is desirable to develop some kind of uniformity of practice. If the appeals go to 10 circuits, there will at least be only 10 different rules on any one subject, assuming that they never get to the Supreme Court; whereas, if they were carried to the numerous district courts, there would be a tendency to diversify that would be much stronger. I am trying to think of the reasons in favor of an appeal to the circuit court of appeals. I suppose the matter of expense is involved; two trials are cheaper than three. Mr. ROGERS. But you could presumably get an appeal from a district court Dr. STASON. There may not be. Mr. ROGERS. Would it be cheaper for the respondents to go direct to the district court rather than to the circuit court, in the first place? Dr. STASON. I think it boils down to a question of judicial expediency-which is the more effective way of doing it? An objection to it you have already stated, the distance one has to go in order to seek relief. Mr. ROGERS. Plus the expense. Dr. STASON. Plus the expense. We have weighed the pros and cons, and we have come out with the circuit court of appeals as the answer in quite a considerable number of statutes. It is not a matter of much The CHAIRMAN. How much more time do you require, doctor? Dr. STASON. Mr. Chairman, I am entirely through. I will be glad to answer any questions. Mr. RABIN. Doctor, you gave us the language you would suggest if the McCarran-Sumners bill were adopted. Let us suppose it were not adopted. Are you satisfied with the language in this bill now, H. R. 2390? Dr. STASON. If it were not adopted, and if the commission did not effectuate the procedures in some other way, then I think the language as suggested has merit. Mr. RABIN. Let us assume this bill were passed, and let us assume the high courts did find that the facts were suported by a preponderance of evidence. Then I assume the facts would be conclusive. Now, do you believe under the language, of this bill as drawn, that the courts would have the right to change the sentence, or change the remedy? Dr. STASON. No. Mr. RABIN. They wouldn't, under this bill? Dr. STASON. Oh, under the bill? Mr. RABIN. Yes. Dr. STASON. Under the other clause of the bill, namely, the amendment prescribing that the order may be modified as in its judgment the circumstances of the case require, I think the court might construe that to permit a change of remedy. If I were doing it, though, I would say so in so many words. Mr. RABIN. I understand that, but I wanted your understanding of the bill as now presented. Let us assume that the courts should find the facts to be supported by a fair preponderance of evidence, and therefore the facts became conclusive. Do you believe, under the phraseology of this bill the court would then have the right to change the remedy? Let me put a preliminary question: Do you believe the court should have the right to change the remedy? Dr. STASON. Yes; I believe the court should have the right to change the remedy if it finds it too harsh. Mr. RABIN. Even under the terms of this bill? Dr. STASON. Yes. Mr. RABIN. Now, do you believe this bill gives it that right? Dr. STASON. As now worded? Mr. RABIN. As now worded. Dr. STASON. It may be so construed, and probably would be. Mr. RABIN. It is open to construction, and you prefer it be written in exact language? Dr. STASON. That is right; it is open to construction and I think there is a chance it might go the other way. The CHAIRMAN. Thank you, Dr. Stason. Mr. Digges, how much time do you require? Mr. DIGGES. Not more than 15 minutes. The CHAIRMAN. We are somewhat behind on our schedule. We are trying to let those from out of town get away. STATEMENT OF ISAAC W. DIGGES, REPRESENTING THE Mr. DIGGES. My name, Mr. Chairman, is Isaac W. Digges; I am an attorney at law, of Bedford, N. Y. I appear here as counsel for the Association of National Advertisers. I am not quite so disinterested as the witness who just preceded me. That organization is an organization composed of some 400 manufacturing companies, some large, some small, and some medium-sized, who use the vehicle of national advertising in the marketing of their goods, wares and merchandise. The Reece bill has been fully discussed, and I believe clearly understood by the board of directors of that organization, and it is pursuant to their instruction that I appear here to testify with regard to one portion of it. It happens also that I have, over a period of the past 20 years, appeared in cases from time to time, as attorney for respondents, in Federal Trade Commission proceedings. However, in what I expect to say, I hope not to refer directly or by conclusion to any case in which I have had a personal interest, nor do I appear here as a special pleader for the food, drug, or cosmetic industries. The association which I represent has never appeared in a commission proceeding, either for it or against it; it has never been made the subject of a Commission complaint. That organization is interested primarily in two things; first, the degree of proof which is required to sustain a cease-and-desist order of the Federal Trade Commission, and, second, that a defendant be tried only once for the same offense. We do not have any views which are worthy of presentation here as to where jurisdiction should vest with regard to the labeling or advertising or marking of foods, drugs, and cosmetics. Our only concern is an avoidance of duplication. We assume that you will receive lots of evidence on those particular questions from those who are more directly interested, both from the Government and from the interested industries. Mr. Chairman, I would like to talk about this thing from the viewpoint of a trial attorney who has had some practical experience, rather than theoretical experience, in working under the present system. Our main criticism of the present situation is that the rule of proof which provides that the Commission's findings must be final if there is any substantial evidence to support them, places an unreasonable burden upon the trial attorney for a respondent, and, consequently, upon his client who mu t pay the bill. It is our mature judgment that the rule of proof in Federal Trade Commission cases should be exactly the same as that which prevails in every civil court in the United States, that is, judgment upon a fair preponderance of the evidence. Now, as a practical matter, a conscientious attorney whose client has been cited before the Federal Trade Commission, must make such an exhaustve study of his case prior to the trial that he is prepared to break every Government witness on cross-examination. Otherwise, he must assume that he will lose his case. And in this connection, he may even have, as adversary witnesses, representatives of the executive branch of the Government itself. I am bound to reach that conclusion because the courts have stated time and again that any substantial evidence will support the Commission's findings, and the Commission itself considers that it has the authority to pick and choose as between witnesses and as between experts, a right which the Supreme Court of the United States in the Herzfeld case has specifically denied the courts reviewing the case. Mr. O'HARA. Mr. Digges, will you permit a question? Mr. DIGGES. Yes, sir. Mr. O'HARA. In other words, the Commission has the right to take out small bits of testimony which are disputed by other reliable witnesses and base its findings upon that small bit of evidence, and that is final, so far as the litigant is concerned; is that correct? Mr. DIGGES. That is correct, sir, and many cases have stated the concept in just those words, or approximately those words. By way of illustration, I might also say that this is the Commission's view of its own functions. In a recent case, Commissioner Freer, in discussing an appeal from the Commission's order, had this to say: In that appeal, however, the door will be closed to any weighing of the evidence by the court, since the finding of the Commission as to the facts, if supported by evidence, shall be conclusive. That mans to me that the court looks at the record for one purpose only, and that is to see whether or not there is substantial evidence, acceptable evidence of any kind to support any finding of the Com |