APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA.
Warren, Black, Reed, Frankfurter, Douglas, Jackson, Burton, Clark, Minton
MR. JUSTICE BURTON delivered the opinion of the Court.
The principal question for decision is whether the Defense Production Act of 1950*fn1 authorized the President
to apply administrative action to the enforcement of its wage stabilization provisions. For the reasons hereafter stated, we decide that it did.
There is here also the question whether such administrative enforcement may be applied even after the restrictions placed on wages under Title IV of the Act*fn2 have expired, provided the enforcement is limited to violations antedating such expiration. Our answer is in the affirmative.
Appellee further claims that the pending administrative proceeding should be enjoined because the mere conduct of that proceeding might cause it irreparable damage. For the reasons given below, we find that argument untenable.
Appellee, Grand Central Aircraft Company, is a California corporation which was engaged, in 1951, in the production and repair of aircraft equipment in Glendale, California, and Tucson, Arizona. November 4, 1952, the Wage Stabilization Board*fn3 filed a complaint with the National Enforcement Commission*fn4 alleging in substance that appellee, between January 26, 1951, and January 1, 1952, had paid wage increases in violation of an order freezing wages at the levels of January 25, 1951.*fn5 Those payments consisted of wages totaling about $5,500,000, including about $750,000 alleged to have been in excess
of the wage ceilings. January 14, 1953, the National Enforcement Commission appointed Phil C. Neal to hear the evidence as an Enforcement Commissioner and to recommend to the Commission a determination of the issues in the proceeding. He set the case for hearing on February 24 at Los Angeles, California, but further action was enjoined, as stated below, so that the proceeding is still pending at that stage.*fn6
February 13, 1953, appellee filed the instant suit in the United States District Court for the Northern District of California, Southern Division. Appellee asked the court to restrain the defendant members of the Wage Stabilization Board, the National Enforcement Commission, officials of the Twelfth Region Wage Stabilization Board, and the Enforcement Commissioner, from proceeding with the administrative hearing. Only the regional officials and the Enforcement Commissioner were served. In its complaint, appellee denied that it had violated the Defense Production Act or any regulation or order under it. Appellee claimed also that the administrative procedure then being followed was unauthorized by the Constitution or any statute and that, even if originally authorized, that authorization had now expired. Finally, appellee claimed the hearing should be enjoined because the mere conduct of the proceeding would inflict irreparable damage upon it. A three-judge District Court, convened under 28 U. S. C. (1952 ed.) § 2282, granted the restraining order and interlocutory injunction sought by appellee against further conduct of the administrative proceeding. After hearing and trial, the injunction was made permanent. 114 F.Supp. 389. The
order was then appealed to this Court under 28 U. S. C. (1952 ed.) § 1253. Stay of the injunction was denied, two Justices dissenting and one not participating. 345 U.S. 988. Probable jurisdiction of the appeal was noted. 346 U.S. 920.
A somewhat comparable case was decided by a three-judge United States District Court for the Northern District of Texas in favor of an employer June 14, 1953, in Jonco Aircraft Corp. v. Franklin, 114 F.Supp. 392, with Chief Circuit Judge Hutcheson dissenting. That judgment was reversed by this Court, per curiam, for failure of appellee to exhaust its administrative remedy. 346 U.S. 868.
We consider first the claim to injunctive relief which appellee made on the ground that the conduct of the proposed administrative hearings would cause it irreparable damage by weakening its bank credit and depriving it of essential working capital. On that basis, interlocutory relief was granted pending the court's determination of the ultimate issue of the validity of the administrative procedure. That injunction has been made permanent but the Government, on behalf of appellants, contends that appellee is acting prematurely in seeking such relief before carrying the prescribed administrative procedure at least to the point where it faces some immediate compulsion and greater probability of damage than it has established.
The proposed hearings are to be held before an Enforcement Commissioner with authority merely to recommend findings to a Regional Enforcement Commission subject to review by the National Enforcement Commission. Those findings may show no violation of wage ceilings. At most, they will be concerned with appellee's
alleged payment of wages in excess of wage ceilings to an extent of about $750,000. If such a violation of the ceilings is found by the National Enforcement Commission, it may then, under § 405 (b) of the Defense Production Act of 1950 and the President's delegated authority, certify to governmental agencies, including the Bureau of Internal Revenue for income-tax purposes, the disallowance of all or part of appellee's illegal wage payments. Appellee argues that such proceedings carry the possibility of the disallowance as a business expense, for income-tax purposes, of $750,000, more or less, up to the total wages paid, exceeding $5,500,000. Appellee contends also that the mere threat of such action would jeopardize the bank credit upon which it depends for essential working capital. There is grave doubt of the right of appellee thus to test the validity of administrative procedure before exhausting it or bringing the issues closer to a focus than it has done. However, it is clear that once the right of the Government to hold administrative hearings is established, a litigant cannot enjoin them merely because they might jeopardize his bank credit or otherwise be inconvenient or embarrassing. Aircraft & Diesel Corp. v. Hirsch, 331 U.S. 752, 777-779. "The expense and annoyance of litigation is 'part of the social burden of living under government.'" Petroleum Exploration, Inc. v. Public Service Commission, 304 U.S. 209, 222. See also, Myers v. Bethlehem Corp., 303 U.S. 41, 47; Chicago & Southern Air Lines v. Waterman Corp., 333 U.S. 103, 112-113; Franklin v. Jonco Aircraft Corp., per curiam, 346 U.S. 868.
It is appellee's principal claim that there is no properly authorized administrative procedure for it to exhaust and that the administrative authorities who seek to determine its case have no lawful right to do so. We, therefore, ...