General Foods Corporation

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IN THE MATTER OF GENERAL FOODS CORPORATION Doket 908.5. Interloto March 1980 ORDER REMANDING MOTION FOR COURT ENFORCEMENT OF SUBPOENA The administrative law judge has certified to the Commission motion by General Foods for court enforcement of a subpoena duces tecum issued jointly to Jorge Wolncy Atalla, as Chairman of thc Board of Hils Bros. Coffee, Inc., and to Copersucar, c/o Jorge Wolney Atalla. Thc administrative law judge recommends that court enforcement be limited to Specifications 4 and 5, since he believes the other specifications are either duplicative or call for noncssential material. In brief Specifications 4 and 5 request documents concerning the reasons for Copersucar s acquisition of Hills Bros. and the changes made in Hil Bros.' operations by Mr. Atalla or Copersucar. Copersucar and Hils Bros. have raised two issues concerning the cnforceability of this subpoena. First, Copersucar contends that insofar as the subpoena seeks documents located in Brazil, it exceeds the Commission s statutory authority under Section 9 of the Federal Trade Commission Act, which provides that "the production of . . . documentary evidence may be required from any place in tbe United States." Copersucar s interpretation notwithstanding, Section 9 authorizes the Commission to subpocna documents located abroad, as well as documents located anywhere within the United States. FTC Compagnie de Saint-Gobain-Pont- Mousson Misc. No. 78-194 (D. , filed Feb. 14 , 1980); cf. CAB v. Deutsche Lufthansa Aktiengesellschaft, 591 F. 2d 951 (D. C. Cir. 1979); FMC v. DeSmedt 336 F.2d 464 (2d Cir. cert. denied 385 U.S. 974 (1966). Thus, nothing in Section 9 would preclude enforcement of the subpoena.

Second, Hils Bros., acting on Mr. Atalla s behalf, has objected that the subpocna was not served in compliance with Rule 4.4(a)(1)(i) of the Commission s Rules of Practice, which require that service by mail of complaints, orders and other process under Section 5 be made to a person or corporation at his, her, or its residence or "principal office or place of business." The ALJ has read the rule to authorize service either at the principal office or any place of business of the party to be served. Hills Bros. contends that the word "principal" qualifies both office" and "place of business " and that Hills Bros.' headquarters do not constitute Copersucar s or Mr. Atalla s principal place of business. We agree with Hills Bros.' interpretation of thc rule.' This conclusion 1 Rue 4A(a)(1)(i) is dcrived from Section 5(f) of the Federal Trae Commi!lion Act. While we have found no directly.on point and the legislative history is silcI11 lherea. pernuasiv c grundJ to inferthat our interpretation of (Ominued) Interlocutory Order 95 F.

docs not sette the question of service, however, since it might also he argued (1) that Rule 4.4(a)(1)(i) is satisfied by service on a foreign corporation s principal place of business in the United States, and that Hils Bros. constitutes Copersucar s principal place of business in the United States; or (2) that the more lenient provisions of Rule 4.4(a)(2) govern service in this instance.

We do not reach these issues, which have not been fully briefed by the parties, because we find it necessary to remand the matter to the ALJ for further proceedings on the more basic issue of personal jurisdiction. While the Commission s subpoena authority may reach beyond the borders of the United States, it is not without limits. At a minimum, the enforceability of Commission subpoenas is circumscribed by the authority of an enforcement court, under Section 9, to exercise personal jurisdiction over the subpoena recipient. It would be a hollow gesture for us to authorize enforcement of a subpoena without even a threshold showing that the subpoenaed party is likely to be amenable to the jurisdiction of the enforcement court. Moreover, the fact that the assertion of enforcement jurisdiction over companies and documents located abroad may affect the interests and policies of foreign governments and raise questions of international comity warrants at least a threshold jurisdictional inquiry.

The information we have been given here is too sketchy to inspire confidence that even a colorable claim of jurisdiction over Copersucar can be maintained. The company is located in Brazil and purports to have no holdings in the United States other than Hils Bros. It is true that Hills Bros. is wholly owned by Copersucar and that Mr. Atalla evidently one of Copersucar s principal investors, is the Chairman of the Board of Hils Bros. However, we are also told that, according to a formal interview " Hils Bros. is "fairly autonomous" of Copersucar and that Mr. Atalla comes to San Francisco but once a year, staying only briefly before returning home to Brazil. These few facts are insufficient by themselves to warrant the assertion of enforcement jurisdiction over Copersucar where, as here, it is neither the target of a Commission investigation, nor charged with a violation of Section 5 of the Federal Trade Commission Act or any other statute administered by the Commission.

the language in the rule and statuw is in a'ord with congresional intent. The term " principal office" and "principal place of busines. " are use commonly if! corporation codes, hal1kruptcy laws, and juridictional statute. However, in some contexts, what qualifies !W a principal uffice may not necarily be a principal plac of busincs. Sa MOIs1 F'eWirul ?radice 77(.21J. It thus seems reasonable to asume that Congr combined the twu fonnulations in Section 5(f) to ensure that servce woud h. upheld reles of the category into which the pl.a of deliver was deemed to fall. This interpretation ensures both that S('.rce is proper and that pro is delivered to reponsible employee of the busines concerned. If, on the other hand, the ALJ' s interpretation were to be acpte, scrvj(' would be upheld when made at any place of busines. . no matter how iI-euippe it might be to pro a suhpona or transmit it quickly to appropriate company officials. GENERAl" FOODS CORP.

383 Interlocutory Order Since the jurisdictional issue was not squarely presented below, we remand to the ALJ for further proceedings on this question. As the party that seeks documents from Copersucar, General Foods wil have the burden of establishing a reasonable basis for the Commission to invoke the exercise of a district court's enforcement jurisdiction. In cases involving nonresident corporations, the appropriate test is whether the party concerned has sufficient contacts with the forum that the exercise of personal jurisdiction "does not offend traditional notions of fair play and substantial justice. Interntional Shoe Co. Washington 326 U.S. 310, 316 (1945), quting Milliken v. Meyer, 311 S. 457, 463 (1940); Honeywell, Inc. v. Metz Apparatewerke 509 F. 1137, 1143-4 (7tb Cir. 1975); see also Restaterrnt (Second) of Conflict of Laws, 50, 52 (1969). General Foods may be able to demonstrate that personal jurisdiction over Copersucar is reasonable because that company is, in effect, itself doing business in this country through its operation and control of Hils Bros. See, e. , SCM Cor. v. Brother Int' Corp. 316 F.Supp. 1328 (S. Y. 1970); Flank Oil Co. v. Continental Oil Co- 277 F. Supp. 357 (D. Colo. 1957); M. Stein Enterprses v. Irish Int' l Air Lines 236 F.Supp. 71 (1964). Even if there are insufficient grounds for establishing jurisdiction on that basis, the exercise of jurisdiction over Copersucar may still be reasonable in view of all of that company s contacts with interstate commerce and its relationship to the case at hand. Cryorrdics, Inc. v. Spembly, Ltd. 397 F. Supp. 2B7 (D. Conn. 1975); SCM Cor. , supm; see also Kulka v. Superior Cou.rt 436 U. S. 84 (1978); Hanson v. Denckla 357 U. S. 235, 253 (1958). In outlining how General Foods might meet its burden of justifying the exercise of enforcement jurisdiction, we do not suggest that the issue can be resolved through application of one or two mechanical tests. Unfortunately, there are no hard and fast rules for determining when a foreign corporation s contacts with a forum are such that it may reasonably fall under that forum s jurisdiction; decisions in this area can be made only on the relevant facts of each particular case. Moreover, the problem of determining jurisdiction is especially difficult in this instance because Copersucar is not a respondent in the administrative proceeding, but is merely a party from whom General Foods seeks discovery. Accordingly, we suggest that the AW invite Hills Bros., Copersucar, and the parties to the proceeding to brief the relevant criteria that should be considered in determining whether jurisdiction may be exercised over Copersucar. Given the intricacy of the jurisdictional issue, it warrants noting that the subpoena at issue here appears to have been properly served on Hils Bros., since it was addressed to Mr. Atalla as Hils Bros.' Chairman of the Board. See FTCv. Anderson 442 F.Supp. 1118 (D. ,, . ,,,,, .) ,,, \,\,,,,., \\! ,,,,,. . ,. $ ,,. .., . \\.. ,,,., ,, , ... ,,,,. ,,,,,. ,.,,,,,,,, ,,,,,,,., . .., ., . . .. ,. ., ,,,., ,,,, : ,,..,,..,,, , ,..,.. ,,, ,..,. . . . . 9r, y.'r.

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