were encountered because of the transition that was taking place resulting from the reorangization and the diversion of manpower to the Special Projects Division, as well as a Legal and Planning Division. We believe the reorganization has now reached a point where the operation of the Bureau is more efficient and the pending caseload for individual attorneys is almost within manageable proportion. It is hopeful that in the near future we will see few, if any, of the delays which have taken place in the past. In addition, we are utilizing the speed-up procedure of attaching the field report whenever possible to our brief transmittal memorandums to the Commission. Safeguards have also been instituted wherein specific dates are now being set by Division Chiefs within which time each matter must be submitted to the Commission, unless for good cause shown extensions are granted. It must also be recognized that while we may have a designated number of attorneys within the Bureau,they are of varying degrees of experience and competency. There has been in the last few years a large turn-over of younger attorneys and a loss of staff due to deaths and retirements, all of which necessitates reassignments and training periods for new attorneys. For example, in the Division of General Practices, during the last year approximately nine attorneys were lost because of resignations, retirements, etc. Because of this fact, and in an effort to balance workloads, I understand there were more than 250 reassignments of cases in that Division. We are still bogged down with an unmerciful number of Congressional inquiries and routine complaints, all of which must be handled with a minimum of delays. Without going into detail, there is another factor which substantially interferes with the drafting of complaints. This is the present pre-trial procedure which entails endless, time-consuming details such as motions, answers to motions, interlocutory appeals, trial briefs, pre-trial conferences, etc. Getting a case to a hearing requires a Herculean effort and one or more lawyers are lost for weeks on end in accomplishing this. It distresses us to encounter delays in any kind of case, and we shall continue to do everything in our power to either eliminate or reduce these delays to a minimum. It is believed that an additional explanation for the delay in the instant case may help the Commission to understand the unusual circumstances in this matter. The proposed complaint in this matter was forwarded to the Commission on January 3, 1968. By minute of April 24, 1968, this matter was returned to the staff for redrafting the complaint and for re-interviewing customers of proposed respondent using financing by Colonial Mortgage Service Company in order to determine the basis for their patronizing Colonial as well as checking the intracorporate relationship between proposed respondent and Colonial and the circumstances of the changes adopted in proposed respondent's financing policies after its acquisition by SUNASCO. On April 30, 1968, the file was sent to the field for a supplemental investigation. On June 27, 1968, the file was returned from the field. The supplemental investigation conducted pursuant to this directive indicated that proposed respondent commenced winding up its affairs in January 1967 and that it had not been in active operation since March 1967. The staff attorney responsible for the matter in a subsequent inquiry was advised by S. Theodore Blumenfeld, Assistant Secretary and a Director of proposed respondent, as well as Executive Vice President of Atlas Financial Corporation, that although proposed respondent had been in a very inactive state since 1967, it maintained a sales office and that over a period of a year thirteen houses manufactured by Presidential Homes, Inc., had been sold. Mr. Blumenfeld also pointed out that Modern Design Homes, Inc., initially named as a proposed respondent, had been sold in 1967. At this juncture, even though confronted with the likelihood that a recommendation for closing would be appropriate in view of the apparent lack of public interest, the staff nevertheless undertook to prepare a consent agreement for execution by proposed respondent with the thought of perhaps realizing something from the time spent on the matter. During the course of the supplemental investigation, Mr. Blumenfeld had stated that he would not hesitate to sign a Commission cease and desist order on behalf of proposed respondent but would not do so if Colonial and Atlas were included. In this connection, it should be observed that no evidence was developed which would warrant the naming of Colonial or Atlas in this matter. There was also considered the remote possibility that the rights which proposed respondent had granted to Presidential Homes, Inc., might be reassigned to it. In a memorandum, dated December 10, 1968, directed to the Bureau of Field Operations, and prepared by the staff attorney, the consent agreement was transmitted for execution by proposed respondent. pursuant to Section 2.14 of the Rules. During the period from June 27, 1968, until this matter was returned to the field on December 10, 1968, Mr. Ryan took three weeks' annual leave. In addition, during this period of time he had been complaining about not feeling well but continued to carry out his assignments. In the early part of November, he was absent on emergency leave and was subsequently on extended sick leave covering more than a month because of a nervous condition. This necessitated reassignment of the case to Attorney John T. Walker on January 21, 1969. During the time that the instant matter was under consideration, Mr. Ryan had three matters involving similar enterprises and practices. Complaints and consent agreements were prepared in Hi-Line, Inc., File No. 662 3792; H. R. Rieger Co., Inc., et al., File No. 662 3793; and Best Homes, a partnership, et al., File No. 662 3663. In the first two files, the Commission accepted the executed consent agreements and complaints issued under Docket Nos. C-1447 and C-1482, while the third file has not as yet been returned to this Bureau from the Washington Area Field Office. In summary, due to the limited public interest that subsequently developed in the case, a leave period, disposition of other matters with greater public interest, and the illness of Attorney Ryan, all combined to delay this matter. What happened here is similar to the recent Volkswagen cases. Complaints were prepared and submitted to the Commission, only to be returned for additional investigation. Subsequent investigation disclosed proposed respondents were out of business. In the Volkswagen cases, we closed the case; however, in the instant matter we attempted to salvage something but to no avail, since a memorandum is now going forward recommending closing and rejection of a consent agreement signed only by the corporation. Respectfully submitted, FRANK C. HALE, Director, Bureau of Deceptive Practices. OCTOBER 14, 1968. NOTICE TO THE PROFESSIONAL STAFF, BUREAU OF DECEPTIVE PRACTICES Re: Re-submission to the Commission of Matters Returned to the Staff for Further Action and Report (AM 6Z051.26 and AM 6–055.6) The staff is reminded of the requirement that: "Unless some other specific time limit is set, all matters which the Commission returns to the staff for further investigation, recommendation, or other action, should be re-submitted to the Commission within 90 days"; and that: "If the staff action has not been completed at the end of 90 days, the status of the matter will be reported to the Commission." It is necessary that reports to the Commission concerning the status of matters not completed within the designated time limits, contain brief but informative explanations of the reasons for delay. It is not enough to report, for example, that a matter is pending in a particular field office. For the purpose of enabling the staff to make an informative status or interim report to the Commission with respect to any such matter pending in the Bureau of Field Operations, the attorney in this Bureau responsible for such matter is directed to inquire, in person or by telephone through the office of the Director of the Bureau of Field Operations, at least 10 days before the expiration of the designated time limit, concerning the status, the reasons for delay, and the prospective completion date of such matter. We have been assured by the Acting Director of the Bureau of Field Operations that we will receive the full cooperation of that Bureau in assisting us to make an informative and timely report to the Commission. FRANK C. HALF, Director, Bureau of Deceptive Practices. FEDERAL TRADE COMMISSION, Memorandum for: Frank C. Hale, Director, Bureau of Deceptive Practices. Henry D. Stringer, Director, Bureau of Textiles and Furs. Re Delays in Obtaining Compliance with Commission Orders. The Commission has noted (Minute dated May 20, 1968) with concern that negotiations seeking compliance with Commission orders are sometimes protracted over long periods of time. One factor apparently contributing to such delays is the use of the mails in an effort to clarify confusion or misunderstanding. In order to reduce this time lag, the Divisions of Compliance of the Bureaus of Restraint of Trade and Deceptive Practices and the Division of Enforcement of the Bureau of Textiles and Furs, in appropriate instances, should telephone officials of respondent companies to clarify matters or invite them to Washington for consultation. When the respondent is a small businessman and a trip to Washington would be an undue burden, consideration should be given to referring the file to the Bureau of Field Operations for expeditious discussion to assist respondent in complying. The intent of this instruction is that the Divisions responsible for compliance, depending upon the facts in the particular case, employ procedures which will avoid the delays which result from lengthy exchange of correspondence. Please arrange to have copies of this memorandum distributed to all attorneys on your respective staffs concerned with this subject matter. To: The Professional Staff, Bureau of Deceptive Practices. Subject: Applications for Complaint Forwarded by Field Offices. MAY 19, 1969. My contacts with the various field offices located around the country have revealed some dissatisfaction with the manner in which we are handling their applications for complaint. As you know, applications from a field office can be broken down into two general categories: (1) those in which the field office merely forwards an application received from the public; and (2) those in which the field office actually recommends that an investigation be docketed. The problem arises with respect to the latter category. There is a feeling that field office recommendations are not handled with sufficient dispatch, and the recommendations are frequently overruled or ignored without explanation. To insure future good relations with these offices, the following procedures will be instituted immediately: 1. Applications for complaint accompanied by a positive field-office recommendation that an investigation be undertaken will be processed on an "Expedite" basis; and 2. If the field office recommendation is not followed, the originating office will be briefly informed, in writing, of the reason for our decision. The foregoing instructions do not supplant, but are to be considered as supplementary to, the instructions contained in the Executive Director's memorandum of March 12, 1965 (copy attached). FRANK C. HALE. FEDERAL TRADE COMMISSION, Memorandum to: Director, Bureau of Deceptive Practices; Director, Bureau of Industry Guidance; Director, Bureau of Restraint of Trade; Director, Bureau of Textiles and Furs. From: John N. Wheelock, Executive Director. Re Applications for Complaint. As you know, the Field Offices transmit applications for complaint which are received from local applicants to the Washington Office by Form 6-5. Please instruct your staff to provide a carbon copy of the response to the applicant to be attached to the form when it is returned, via the Correspondence Unit, to the Field Office. This procedure will provide the Field Offices with information as to the kind of disposition made of the application, the reason therefor, and the identity of the staff member responsible. It has come to my attention that the 60-day goal for the disposition of application is loosely observed. Please bring this matter to the attention of your staff. JOHN N. WHEELOCK, Executive Director. 1971 FEDERAL TRADE COMMISSION BUDGET-BOB HEARING- OCTOBER 17. 1969 Continued (2) Policy planning Policy planning is essential for adequate accomplishment of the missions of any Agency. In my memorandum to the Commission dated August 29, 1969, I set forth my proposals for immediate action in regard to policy planning. (Memorandum attached.) To: The Commission. MEMORANDUM From: Paul Rand Dixon, Chairman. AUGUST 29, 1969. Subject: Commission Minutes of January 24, 1969, respecting policy planning. In Commissioner Nicholson's memorandum of August 11, 1969, to the Commission on policy planning, he discusses eight topics: (1) Trivia; (2) Overdependence on Mailbag; (3) Delay: (4) No evaluation of past experience; (5) Inability to bail out of losing causes; (6) Inadequate role of Economist in Planning; (7) The lack of a rational overall agency view in budgeting; and (8) Conclusions. The first six topics are discussed in general terms with ample quotes from prior reports together with a few selected statistics and case histories. The seventh item on budgeting has been written with a lack of understanding of the budget process and a constructed table that is factually inaccurate. It would be impossible to evaluate the overall factual content of this memorandum without in-depth studies, aside from the obviously misleading section on budgeting. However, the sections on "Delay," and "Overdependence on the Mailbag," give impressions of uncontrolled activity and a lazy and incompetent staff that are not true. Before dealing with budgeting it seems necessary to present facts that contradict these impressions. In discussing "Overdependence on the Mailbag," the statement is made on page 8 that: The overwhelming bulk of Commission activities is generated from "application for complaint" made by the public. The figures cited after this statement only prove that legal casework is primarily generated by the public. Actually, the major legal work of the Commission is not its individual cases and our legal personnel spend more time on special projects and studies, rules and regulations, guides, advisory opinions, etc. than on casework. For example, special studies originated by the Commission in fiscal 1969, such as those on long-term leasing of tires; reciprocal patronage and dealings between industrial firms; advertising rate structure of newspapers; deceptive and fraudulent practices perpetrated in the sale of home improvements, importation of used and reconditioned foreign cars sold as new, survey of automobile sticker prices, etc. took up more professional time of the legal personnel in our field offices than did individual casework. A cursory review of functional legal activity would provide information that casework, although important, takes up less time of our legal personnel than noncasework and that it is not the sole vehicle for accomplishing this Commission's missions. Advisory Opinions, Guides, Rules of Practice, Truth in Lending interpretations and educational activity, developing regulations under the Packaging Act, special projects on auto warranties; general consumer problems, etc, etc. etc., are more time consuming than casework. On page 17 in footnote 20 statistics are given for casework in the FTC field offices with a concluding statement: This does not suggest hundreds of attorneys "swamped" with work. I know of no other evidence that staff attorneys are overworked. There is no excuse for huge backlogs. In fiscal 1969, at one time out of a field staff of 150 attorneys nearly 90 were engaged on special investigations and projects under Commission directives and as discussed above this is not an unusual situation. On page 18, the statement is made: Pleas by management personnel about manpower shortages are hard to take seriously when these are the very people leading the 4:45-5:00 exodus from the garage and, when, with certain exceptions, these are the people whose cars are rarely to be found in the garage on Saturday. A quick observation of the garage at 5:10 p.m. on Monday and Tuesday, August 25 and 26, showed that of 58 parking spaces 43 were still occupied on August 25, and 45 on August 26. Does this show a quick rush to leave before our 5 p.m. quitting time? A count of those signing into the FTC building on Saturday, July 26 shows that 92 employees, or more than 10% of the FTC headquarters staff, were in the building that day. This fact would seem to indicate that FTC staffers are among the most dedicated of public servants. Further proof of this assertion is shown by the fact that 40,487 hours of annual leave were lost by the staff in calendar 1969, or more than 4 days per employee. A large percentage of the lost leave can be credited to our higher level professional and managerial employees whose average loss was more than 11 days each. Specifically on budgeting the memorandum shows a lack of understanding of the Federal budgetary system, statistics are misused and one inaccurate statistical table has been constructed. On pages 31 and 32 the memorandum discusses the irrationality of the budget process and attempts to show that budget requests are not based on workload. In the real life situation the final budget of FTC is vitally influenced by Presidential decision making as to programs requiring national precedence. For example, when originally considering needs for funding programs for fiscal 1967 this Commission voted an increase of $1,748,700 for 242 positions on July 9, 1965. After direction from the Bureau of the Budget that the President would not permit expanded activities, this Commission, on July 22, 1965, voted to reconsider its action of July 9, 1965, and not to request any increase in its budget submittal for fiscal 1967. For fiscal 1969 this Commission originally approved a $2,950,000 increase for 286 employees and after receipt of a letter from the Director of the Bureau of the Budget the request submitted was pared to an increase of $542,000 and 36 additional employees. Knowledge of the factual situations for fiscal years 1967 and 1969 would surely have prevented the statement found on page 33 of the memorandum to the effect that: The irregularity in the budget increases requested removes any credibility that might be generated by the various fervent budget increase appeals. On page 37 misunderstanding of the Federal budget process is clearly evident from the statement: When examining the budgets for fiscal 1966–1969, it can be seen that in both 1967 and 1969 the Commission was allocated more money it requested originally of the Budget Bureau. and the non-factual constructed table headed "Position Increases 1966-1969.” The true situation is that this Commission determines how much additional funding will be required for a fiscal year and submits its request to the Bureau of the Budget showing how many additional positions will be established if the request is approved. Then the Bureau of the Budget advises the Commission as to total funds it can request in its budget to the Congress and this Commission determines the number of new positions to request of the Congress. Then, after Congressional appropriation, this Commission determines the number of positions it can fund with the money provided. Nowhere in the budget process is there a hard decision by the Bureau of the Budget or the Congress as to the number of new positions this Commission can fund. Position ceilings have in the past been placed on the Commission by the Bureau of the Budget and the Congress (Revenue and Expenditure Control Act of 1968) without regard to funding in order to curtail Federal employment and relieve inflationary pressures. |