OPINION OF THE COURT
ALDISERT, Circuit Judge.
We are to decide whether the district court had jurisdiction to entertain preenforcement suits for declaratory and injunctive relief against the Federal Trade Commission
Prompted by what it considered the inadequacies of existing corporate financial reporting, the Bureau of Economics recommended in 1970 that the Commission exercise its authority to require meaningful public reporting of financial information on a divisional basis as an extension of the existing Quarterly Financial Reports program. In March of 1974, the Commission submitted its proposed Line of Business (LB) Reports Form to the Comptroller General pursuant to 44 U.S.C. § 3512. The forms require, inter alia, detailed sales and cost data broken down into line of business categories as defined by the Commission. Finding specifically that the "information sought in the FTC LB proposal is not presently available from another source within the Federal government," the Acting Comptroller General approved the LB form, with certain provisions not here relevant, on May 13, 1974.
On August 2, 1974, the FTC adopted a resolution putting the program into effect. This resolution, which later appeared in the Federal Register, stated in part that "continuing and current financial data and statistics from corporations within the various industries and lines of commerce of the United States" were "necessary for the proper functioning of the government". 39 Fed.Reg. 30377 (1974). Pursuant to the resolution, the Commission ordered 345 of the nation's largest companies to complete and file LB reports. The orders required that
Seven corporations, the appellees at No. 75-1282, filed suit in the district court on January 22, 1975, seeking preenforcement declaratory and injunctive relief. They alleged, inter alia, lack of statutory authority to issue the LB orders, undue burden on the companies to comply with the orders, and failure of the Commission to promulgate the orders in accordance with the procedures for rule making prescribed by the Administrative Procedure Act. They also asserted various constitutional grounds. Six other companies, appellees at Nos. 75-1283/8, filed similar actions on February 14, 1975. Appellee at No. 75-1289 filed its action on February 24, 1975, seeking virtually the same relief. The Commission moved to dismiss the complaints; the companies moved for preliminary injunctions against enforcement of the LB orders. The district court denied the Commission's motion, and granted the corporations' motions, entering preliminary injunctions on February 19 (A. O. Smith I) and March 18, 1975 (A. O. Smith II). The Commission's appeals from both orders have been consolidated before us.
On appeal, the Commission advances alternative theories for reversal. First, it argues that the district court did not have jurisdiction to entertain this pre-enforcement suit, because the FTC Act provides for counter-enforcement procedures which afford a party challenging an FTC order with an adequate remedy. See 15 U.S.C. § 49. Next, the Commission contends that, if the district court had jurisdiction, it should have declined to exercise that jurisdiction, because the controversy was not yet ripe for judicial resolution. Finally, the Commission urges that the district court erred in preliminarily enjoining the Commission from giving notice of default and from enforcing penalties for failure to file. Here, the FTC particularly controverts the district court's conclusion that appellees established a probability of succeeding with the merits of their rule-making claims; the Commission contends that its LB orders were issued pursuant to Section 6 of the FTC Act, 15 U.S.C. § 46, and were not subject to the rule-making provisions of the Administrative Procedure Act, 5 U.S.C. § 553. The Commission also challenges the issuance of the preliminary injunction on the ground that appellees failed to prove they would be irreparably harmed absent the injunction.
We conclude that the district court had jurisdiction; that it properly exercised that jurisdiction because the controversy was ripe for judicial resolution; but that it erred in issuing the preliminary injunction because appellees failed to establish irreparable harm. Accordingly, we neither reach, nor express an opinion on, the question whether appellees demonstrated a probability of succeeding on the merits of their claim that the APA's rule-making provisions applied to the issuance of the LB orders.
Appellants' initial argument is that the district court had no jurisdiction to entertain pre-enforcement complaints challenging the LB orders. At the outset, we note that the district court held that it had federal question jurisdiction under 28 U.S.C. § 1331, or, alternatively, jurisdiction under 28 U.S.C. § 1337. A. O. Smith I, supra, 396 F.Supp. at 1113; see Tr. Oral Arg. at 44-45. Appellants do not contest these rulings. In any event, we would agree with the district court. Thus, this case is distinguishable from West Penn Power Co. v. Train, 522 F.2d 302 (3d Cir. 1975), petition for cert. filed, 44 U.S.L.W. 3417 (U.S. Jan. 9, 1976) (No. 75-974), the primary holding of which was that the district court had
Instead, appellants' first contention proceeds from recognition that the LB orders were issued pursuant to Section 6(b) of the FTC Act, 15 U.S.C. § 46(b), and, as such, were not self-enforcing. Rather, the legislative scheme calls for the Commission to enforce the LB orders by using the procedures set forth in Sections 9 and 10 of the Act, 15 U.S.C. §§ 49, 50. Under Section 9 the Commission may petition the court for an order in the nature of mandamus to compel the filing of a report; Section 10 provides for the issuance of notices of default, and for the accrual of civil penalties of $100 a day for each day of default after the thirtieth day following receipt of the notice. Accordingly, appellants argue that, until the FTC seeks to enforce its orders, the district courts are without jurisdiction to entertain actions for declaratory and injunctive relief.
In this argument, appellants rely on FTC v. Claire Furnace Co., 274 U.S. 160, 47 S.Ct. 553, 71 L.Ed. 978 (1927), as modified by the holding in St. Regis Paper Co. v. United States, 368 U.S. 208, 82 S.Ct. 289, 7 L.Ed.2d 240 (1961). These cases, appellants contend, stand for the proposition that, unless a notice of default has issued, there can be no judicial review of an FTC order issued pursuant to Section 6(b) until the Commission moves for enforcement under Section 9. See, e. g., Genuine Parts Co. v. FTC, 445 F.2d 1382 (5th Cir. 1971).
The appellees' response is that the Claire Furnace-St. Regis formula no longer controls. They point out that Claire Furnace antedated the Declaratory Judgment Act by some seven years and the Administrative Procedure Act by some 19 years. See Abbott Laboratories v. Gardner, 387 U.S. 136, 142 and nn. 4-6, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967). Most important, contend appellees, the paramount principles today in deciding whether federal courts have jurisdiction to review administrative actions derive from the Supreme Court's 1967 Abbotts Laboratories trilogy,
The fundamental jural lesson flowing from Abbott Laboratories is this: a person aggrieved by final agency action may come to federal court for judicial review "so long as [a] no statute precludes such relief or [b] the action is not one committed by law to agency discretion." 387 U.S. at 140, 87 S.Ct. at 1511. Appellants do not claim applicability of either exception; nor do we find one obtained. As the Supreme Court said in Abbott Laboratories, and reiterated last term in Dunlop v. Bachowski,
A second teaching of Abbott Laboratories is that, where the party aggrieved seeks injunctive and declaratory relief as here, since those remedies are discretionary, the court should hesitate to apply them unless (a) the issues are fit for judicial resolution and (b) withholding judicial consideration would result in hardship to the parties. Abbott Laboratories, supra, 387 U.S. at 149, 87 S.Ct. 1507. As Judge McGowan recently observed, this law of "ripeness", once a tangled web of special rules and distinctions, is since Abbott Laboratories "very much a matter of practical common sense." Continental Air Lines, Inc. v. CAB, 173 U.S.App.D.C. 1, 18, 522 F.2d 107, 124 (1975).
In assessing the fitness of the challenge to FDA actions for judicial decision, Justice Harlan looked to two factors: (1) the nature of the issues, which he denominated "purely legal", Abbott Laboratories, supra, 387 U.S. at 149, 87 S.Ct. 1507, and (2) the finality of the agency actions. These guidelines are consonant with the underlying rationale for the ripeness doctrine — "to prevent the courts . . . from entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized . . .." Ibid. at 148, 87 S.Ct. at 1515. See also Weinberger v. Salfi, 422 U.S. 749, 765, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975).
Here, the ultimate issues raised by appellees' challenges to the LB orders are purely legal: whether the promulgation of the LB resolution exceeded the Commission's authority or was in the nature of an administrative rule so as to require prior compliance with rule-making procedures specified in the APA. Further factual development would not sharpen the issues; nor does judicial consideration
The FTC's action requiring LB reports was also final. The LB orders issued to the individual companies, including all appellees, warned specifically of applicable civil fines for failure to file or for filing a false report. See page 10, supra. Before appellees filed their complaints, the Commission had denied initial, renewed and amended motions to quash. During the course of this litigation there has not been a hint that the FTC intended to compromise the orders; rather, appellants have steadfastly conveyed the impression that they desire full and prompt compliance with the LB program. Thus, viewing the matter pragmatically, we have no hesitancy in concluding that the LB orders were final and, therefore, fit for judicial review.
In measuring ripeness from the standpoint of whether withholding judicial review would result in hardship to the parties, the Supreme Court requires that the impact on the complaining party be "sufficiently direct and immediate."
Ibid. at 153, 87 S.Ct. at 1518. See generally, K. Davis, Administrative Law Text § 21.04, especially at 404-06 (1972).
One reason for scrutiny of the "hardship to the parties" aspect of the ripeness formula is that the factual complex — but not necessarily all of it — relevant to hardship will also be relevant to the question of "irreparable injury" which must be satisfied, should it be reached, before an injunction may issue. We perceive the two concepts — "hardship to the parties" and "irreparable injury" — to be jurisprudential cousins, not identical twins. The same analytical factors may or may not support each concept; the context in which the factors are utilized is critical. Thus, certain factors will dominate in considering hardship to the parties, while different factors may be critical in considering irreparable injury for purposes of issuing a preliminary injunction; still other factors may come into play when irreparable harm is considered in the context of a request for a permanent injunction.
Another reason for careful analysis in this area is that not every impact will be sufficiently direct and immediate. This much is clear from the Abbott Laboratories trilogy. There, the Court differentiated among the factual complexes presented to it. At issue in Abbott Laboratories was an FDA order "requiring labels, advertisements, and other printed matter relating to prescription drugs to designate the established name of the particular drug involved every time its trade name is used anywhere in such material." 387 U.S. at 139, 87 S.Ct. at 1510. The Court found the impacts sufficiently direct and immediate:
Ibid. at 152-53, 87 S.Ct. at 1517-1518 (footnotes omitted). In Gardner v. Toilet Goods Ass'n, supra, the challenge was to FDA regulations regarding color additives and hair dyes. The Color Additive Amendments of 1960 had allowed the FDA to prescribe conditions for the use of color additives, requiring clearance and certification of each "batch" of each additive. 21 U.S.C. §§ 321(t), 376. Two of the challenged regulations included as color additives substances alleged to fall outside the statutory definition. 21 C.F.R. § 8.1(m) (1967) (diluents); 21 C.F.R. § 8.1(f) (1967) ("Lipstick, rouge, eye makeup colors, and related cosmetics intended for coloring the human body"). A statutory exemption for hair dyes bearing a designated cautionary label, 21 U.S.C. § 361(a), (e), was alleged to be undercut by a third regulation, 21 C.F.R. § 8.1(u) (1967). Again, the Court found sufficiently direct and immediate impacts:
387 U.S. at 172-73, 87 S.Ct. at 1529. On the other hand, in Toilet Goods Ass'n v. Gardner, supra, the challenge was to a regulation providing that if a person refused to permit authorized FDA employees access to regulated manufacturing facilities, the FDA might suspend certification service to that person. The Court found a want of ripeness, noting:
387 U.S. at 164-65, 87 S.Ct. at 1524-1525.
Thus, it appears from the Abbott Laboratories trilogy that one seeking discretionary relief may not obtain pre-enforcement judicial review of agency action if there is no immediate threat of sanctions for noncompliance, or if the potential sanction is de minimis. Conversely, the court should find agency action ripe for judicial review if the action is final and clear-cut, and if it puts the complaining party on the horns of a dilemma: if he complies and awaits ultimate judicial determination of the action's validity, he must change his course of day-to-day conduct, for example, by undertaking substantial preliminary paper work, scientific testing and record-keeping, or by destroying stock; alternatively, if he does not comply, he risks sanctions or injuries including, for example, civil and criminal penalties, or loss of public confidence.
In this case, the LB order issued to each of the appellees was clear-cut. As previously rehearsed, there was never any doubt but that the FTC contemplated full and prompt compliance. By the time appellees filed suit, the agency action requiring the LB reports was final: the Commission had denied original motions to quash, as well as renewed and amended motions. Appellees were placed in an immediate and real quandary: if they chose to comply with the LB orders, as more than 200 companies did, they would have had to commit substantial resources — both in terms of money and manpower — to develop accounting techniques necessary for compliance and, as a result, suffer loss of profits;
Accordingly, we hold that the district court did not err either in determining that it had jurisdiction to entertain the complaints or in using its discretion to exercise jurisdiction, because the controversy
In reviewing the grant or denial of preliminary injunctions over the years, this court has emphasized the following considerations:
1. The law has entrusted the power to grant or dissolve an injunction to the discretion of the trial court in the first instance, and not to the appellate court. Stokes v. Williams, 226 F. 148, 156 (3d Cir. 1915), cert. denied, 241 U.S. 681, 36 S.Ct. 728, 60 L.Ed. 1234 (1916).
2. Unless the trial court abuses that discretion, commits an obvious error in applying the law, or makes a serious mistake in considering the proof, the appellate court must take the judgment of the trial court as presumptively correct. Ibid; see Oburn v. Shapp, 521 F.2d 142, 147 (3d Cir. 1975); United States v. Ingersoll-Rand Co., 320 F.2d 509, 523 (3d Cir. 1963).
3. "This limited review is necessitated because the grant or denial . . . is almost always based on an abbreviated set of facts, requiring a delicate balancing of the probabilities of ultimate success at final hearing with the consequences of immediate irreparable injury which could possibly flow from the denial of preliminary relief." United States Steel Corp. v. Fraternal Ass'n of Steelhaulers, 431 F.2d 1046, 1048 (3d Cir. 1970).
4. In exercising its limited review of the grant or denial of preliminary injunctive relief, the appellate court asks: (a) Did the movant make a strong showing that it is likely to prevail on the merits? (b) Did the movant show that, without such relief, it would be irreparably injured? (c) Would the grant of a preliminary injunction substantially have harmed other parties interested in the proceedings? (d) Where lies the public interest? Commonwealth of Pennsylvania ex rel. Creamer v. United States Dep't of Agriculture, 469 F.2d 1387, 1388 n.1 (3d Cir. 1972) (per curiam); Croskey Street Concerned Citizens v. Romney, 459 F.2d 109, 112 (3d Cir. 1972) (concurring opinion). Also see Oburn v. Shapp, supra, 521 F.2d at 147; Delaware River Port Authority v. Transamerican Trailer Transport, Inc., 501 F.2d 917, 919-20 (3d Cir. 1974).
5. "The applicant for a preliminary injunction bears the burden of establishing a right to such injunctive relief and that irreparable injury will result to him if it is not granted." Bancroft & Sons Co. v. Shelley Knitting Mills, Inc., 268 F.2d 569, 574 (3d Cir. 1959) (footnote omitted). Moreover, we have emphasized "the elementary principle that a preliminary injunction shall not issue except upon a showing of irreparable injury." National Land & Investment Co. v. Specter, 428 F.2d 91, 97 (3d Cir. 1970).
In examining claimed aspects of the irreparable injury that would befall appellees in the absence of an injunction pendente lite, two other factors command our attention. First, as previously rehearsed, irreparable harm, as a concept to be considered in the context of a preliminary injunction, is related to, but not the equivalent of, the hardship-to-the-parties ingredient of the Abbott Laboratories ripeness test. Second, the requisite is that the feared injury or harm be irreparable — not merely serious or substantial. "The word means that which cannot be repaired, retrieved, put down again, atoned for. . . . Grass that is cut down cannot be made to grow again; but the injury can be adequately atoned for in money. The result of the cases fixes this to be the rule: the injury must be of a peculiar nature, so that compensation in money cannot atone for it . . .." Gause v. Perkins, 3 Jones Eq. 177, 69 Am.Dec. 728 (1857). "Irreparable injury is suffered where monetary damages are difficult to ascertain or are inadequate." Danielson v. Local 275, Laborers Union, 479 F.2d 1033, 1037 (2d Cir. 1973). See generally E. Re, Cases and Materials on Equity and Equitable Remedies 1018-35 (1975).
Against this backdrop we consider first whether the trial court erred when
396 F.Supp. at 1118. In its second opinion, the district court amplified:
A. O. Smith II, supra, 396 F.Supp. at 1134-35 (footnotes omitted). Thus, in concluding that appellees would suffer irreparable injury absent an injunction pendente lite, the district court relied on consideration of: (a) the asserted difference in the scope of discovery available in a pre-enforcement, as opposed to a counter-enforcement, action; (b) "the unrecoverable costs and commitment of diverse business resources . . . incident to preparation and compliance with the Commission orders"; and (c) potential criminal and civil sanctions for noncompliance or faulty compliance.
We may begin by conceding that the scope of discovery in a summary enforcement proceeding might be different from that in a plenary suit, just as it
In A. O. Smith I, supra, the district court alluded to the claim of unrecoverable costs of compliance as an element of irreparable injury. In the context here presented, we find that this asserted harm did not constitute irreparable injury. At issue was a preliminary injunction — a form of relief requiring a strong showing of necessity. Furthermore, the alleged injury was "unrecoverable costs and commitment of diverse business resources." Without intending to disparage the importance of such an injury, we observe that all that is lost is profits. Any time a corporation complies with a government regulation that requires corporation action, it spends money and loses profits; yet it could hardly be contended that proof of such an injury, alone, would satisfy the requisite for a preliminary injunction. Rather, in cases like these, courts ought to harken to the basic principle of equity that the threatened injury must be, in some way, "peculiar".
Moreover, even assuming that the asserted harm could, in these circumstances, constitute irreparable injury, the district court's summary conclusion on the irreparable harm issue is unsupported by basic findings of fact. The district court's opinion made reference to the median cost of compliance ($50,000) and to estimates that some companies might have to expend in excess of one million dollars in preparing LB reports. A. O. Smith I, supra, 396 F.Supp. at 1118. But it did so in the context of discussing the public interest, not irreparable injury. Moreover, the sources of these figures were government reports,
At this juncture, we hasten to add that we do not reach the question of whether, if proved at final hearing, loss of profits from compliance with the LB orders could constitute irreparable injury in the context of a permanent injunction.
The district court's reliance on the possibility of civil fines — in the amount of $100 a day to commence 30 days after the FTC served a notice of default — was also misplaced. The appellees, as previously noted, are not "small" corporations. The FTC resolution to require LB reports stemmed from recommendations in a memorandum from Russell C. Parker, Assistant to the Bureau of Economics, reprinted in "Role of Giant Corporations," Hearings Before the Subcommittee on Monopoly of the Senate Select Committee on Small Business, 92d Cong., 1st Sess. Pt. 2A at 1807-17 (1972). Nor, as previously stated, are we confronted with a situation where any appellee has proved that compliance with the LB program would render it unable to meet its debts as they come due.
Finally, in assessing irreparable injury, the district court alluded to possible criminal penalties. Appellants vehemently contend that appellees are not subject to criminal sanctions. See n.9 supra. Whatever the merit of appellees' rebuttal to that argument as it affects ripeness, the brute fact is that, in the context of the irreparable injury element
Accordingly, we hold that the district court erred in finding that appellees had sustained their burden of proving irreparable injury. Such a finding is a necessary ingredient to the issuance of a preliminary injunction. National Land & Investment Co. v. Specter, supra. Therefore, the district court's order may not stand. Nor need we reach other issues tendered by the parties in this appeal, viz., the appellees' likelihood of success on the merits, the effect of a preliminary injunction on other interested parties, or the public interest in the grant or denial of a preliminary injunction.
That part of the district court's order denying appellants' motion to dismiss the complaints for want of jurisdiction will be affirmed; that part granting preliminary injunctions will be vacated.
ADAMS, Circuit Judge (concurring):
I agree with parts I and II and with section C of part III of the majority opinion. In reversing the grant of the preliminary injunctions entered in this case, however, I would limit our holding to the failure of the plaintiffs to demonstrate, in the record before the district court, irreparable harm. Such a course would avoid the resolution of issues that need not be decided at this time.
Some cost of compliance with a Federal Trade Commission order is concededly inevitable, but the record here does not show with particularity the burden such compliance would impose upon the individual plaintiffs. To find irreparable harm in this regard the district court appears to have relied only on statistical figures from governmental reports.
Nor is there a basis in the record for concluding that differences in the extent of discovery, depending upon the type of proceeding available to the litigants, can never constitute irreparable harm.
Appellees submitted affidavits and adduced testimony which might have supported a specific finding on the point, but the district court did not predicate its conclusion of irreparable injury on those materials.