CFJ Files Amicus Brief in Axon v. Federal Trade Commission
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Brief of Amicus Curiae the Committee for Justice as Amicus Curiae in Support of Petitioner
INTRODUCTION AND SUMMARY OF THE ARGUMENT
“[I]ndependent agencies wield substantial power with no accountability to either the President or the people,” and they “pose a significant threat to individual liberty and to the constitutional system of separation of powers and checks and balances.” Seila L. LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2212 (2020) (Thomas, J., concurring in part and dissenting in part) (internal citations omitted). Thus, regulated parties like Petitioner—with millions on the line—must have timely access to the federal courts when they are subject to an agency’s unconstitutional actions.
Axon is a major manufacturer of law-enforcement equipment that sought to acquire a failing competitor. When the Federal Trade Commission exerted its enormous power to “extract from Axon everything it [could] think of,” Pet. Br. 49, Axon fought back. It alleged that the FTC’s opaque “clearance” process violates due process and that the agency’s double layer protections for administrative law judges violates the Constitution. Accordingly, Axon’s injury is rooted not in any FTC penalty, but in the violation of the separation of powers. Indeed, Axon’s claim is a challenge to “the very existence” of the FTC. Pet. App. 29 (Bumatay, J., concurring in the judgment and dissenting in part) (emphasis added).
Nonetheless, the district court held, and the Ninth Circuit affirmed, that Axon could not have its day in court until the FTC—which has no expertise on these constitutional issues—produces a final agency action. Even the panel majority admitted that its own conclusion was counterintuitive: “it seems odd to force a party to raise constitutional challenges before an agency that cannot decide them.” App. 16. The lower court decisions are wrong, and this Court should correct course.
Amicus agrees with Petitioner that the FTC Act does not strip the district courts of Section 1331 jurisdiction to hear Axon’s challenge to the constitutionality of the agency’s structure, procedures, and existence. See Pet. Br. 29-45. Congress may limit the subject-matter jurisdiction of federal courts. But if Congress intends to statutorily limit the jurisdiction of lower federal courts, it must clearly say so.
Congress did not do so here. The FTC Act’s judicial review provision does create a narrow, pragmatic exception to the normal rules of district court jurisdiction by expediting challenges to cease-and-desist orders to the courts of appeals. And that exception makes sense, since challenges to FTC cease-and-desist orders are more akin to those heard by an appellate court, especially given that administrative proceedings have already taken place. But the Act says nothing about divesting federal courts of jurisdiction over constitutional challenges to the agency’s “very power to act at all.” Pet. Br. 20.
Such a limitation on claims involving the agency cannot be inferred from the FTC Act’s silence on the matter. Nor would an exception for such claims make sense. Federal courts cannot be forced to abdicate their Article III role merely because a case is related to an administrative agency. Such an abdication eschews the separation of powers and due process—especially when the constitutional challenge centers on the agency conducting the administrative proceeding. Put simply, the fundamental principle that courts should independently scrutinize the constitutionality of agencies follows logically from the tripartite system of government the Framers created.
Amicus writes separately, however, to highlight the significant due process concerns with the FTC’s administrative proceedings and the need for prompt and meaningful judicial review. To start, the process afforded to regulated parties is vastly different based on whether the FTC or the DOJ handles the enforcement action. And this entire process is opaque to the regulated parties and the public. Because the DOJ has no adjudicative power of its own, a case put on the “DOJ track” is pursued in a federal district court. Cases put on the “FTC track,” however, are often filed through the FTC’s own in-house adjudication mechanism.
And unlike federal court proceedings that are subject to rigorous due process protections and presided over by an independent Article III judge, the FTC’s administrative proceedings receive fewer protections and are presided over by an administrative law judge (ALJ)—an individual directly accountable to neither the FTC nor the President. These differences lead to higher costs and non-coherent processes for the parties. And if the challenged entity happens to end up being pursued by the FTC instead of the DOJ, the already lengthy litigation process is likely to be longer.
Not only do those subject to DOJ enforcement enjoy review by district courts, but the FTC’s processes and procedures are stacked in the agency’s favor. While DOJ must go to federal court, the FTC has the option to act as investigator, prosecutor, and judge. And, “[a]s one might expect of a forum in which the investigator, prosecutor, trial-level judge, and appellate-level judge all work for the same agency, the FTC fares shockingly well in proceedings before its own ALJ.” Pet. 9.
These due process concerns underscore the need for timely, meaningful judicial review. Meaningful judicial review is precluded by the inherently unfair nature of the FTC’s administrative gauntlet, the costs of litigation, and the amount of time it takes to make it through the FTC’s administrative process before reaching federal court. Indeed, as a practical matter, for the vast majority of defendants, the long and expensive delay in meaningful review means that important constitutional questions will never be adjudicated. Whether meaningful judicial review exists can make or break a company, and the FTC has broken many.
Not only can prompt and meaningful judicial review make or break a business, but timely judicial review is critical to enforce the separation of powers. Ensuring that district courts remain free to exercise the jurisdiction Congress gave them to adjudicate structural constitutional claims like the ones here is essential to preserving the separation of powers and preventing agency overreach. The Court should reverse the decision below...