This Report summarizes an opinion issued on January 24, 2022 (Part I); and cases granted review on January 21 and 24, 2022 (Part II).
Cases Granted Review: Axon Enterprise, Inc. v. Federal Trade Commission, 21-86
Axon Enterprise, Inc. v. Federal Trade Commission, 21-86. At issue is whether Congress impliedly stripped federal district courts of jurisdiction over constitutional challenges to the Federal Trade Commission’s structure, procedures, and existence by granting the courts of appeals jurisdiction to “affirm, enforce, modify, or set aside” the Commission’s cease-and-desist orders. After acquiring a competitor and drawing attention from the FTC over antitrust concerns, petitioner Axon Enterprise sued the FTC in federal district court, challenging, among other things, the constitutionality of the FTC itself. Among other things, Axon argued that the “dual-layer for-cause removal protections afforded [the FTC’s] administrative law judges” violates the separation of powers. In response, the FTC filed an administrative complaint challenging Axon’s acquisition of its competitor. The FTC also sought, and was granted, dismissal of Axon’s federal district court suit. The Ninth Circuit affirmed the dismissal in a divided opinion. 986 F.3d 1173.
To determine whether Congress had precluded federal court jurisdiction over the claims at issue, the Ninth Circuit majority applied three factors derived from Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994): (1) whether a party can obtain meaningful judicial review in the statutory scheme; (2) whether the claim is “wholly collateral” to the statutory scheme; and (3) whether the claim is outside the agency’s expertise. First, the majority concluded that, because final orders of the FTC can be appealed to a federal circuit court, a party will have meaningful judicial review of agency action, even if that party must first endure the burdens of a full administrative proceeding. Second, noting that courts apply the “wholly collateral” factor in the “procedural sense,” the majority found this factor to support preclusion of federal court jurisdiction because Axon’s claims were the “vehicle by which” Axon sought to prevail at the agency level. Although the third factor supported federal court jurisdiction because resolution of Axon’s constitutional claims did not implicate the FTC’s expertise, the majority ultimately concluded that the factors weighed in favor of preclusion of jurisdiction. In doing so, the majority placed great emphasis on the first factor and its finding that judicial review would be available.
Axon argues that that the Ninth Circuit misapplied the Thunder Basin factors to situations such as in this case, where parties present structural constitutional challenges (rather than simply challenges to agency action). In particular, Axon takes issue with the Ninth Circuit’s heavy reliance on the mere availability of eventual judicial review as being sufficient to infer that Congress intended to preclude federal court jurisdiction. Axon claims instead that being subject to a burdensome and structurally unconstitutional administrative process is a “here-and-now” constitutional injury for which the federal courts must be immediately available to remedy. Axon notes that despite the eventual availability of judicial review for an adverse administration action, the injury inheres in the process itself and thus such an injury would not be remedied in the event of a favorable administrative decision or other resolution. Axon also argues that, because its structural constitutional claims can be substantively separated from the merits of the underlying antitrust claim brought by the FTC (which it did not raise in its federal district court action), the Ninth Circuit erred in concluding that its federal court complaint was not “wholly collateral” to the administrative action. Axon insists that interpreting Thunder Basin’s “wholly collateral” factor in the “procedural sense” is “nonsense” and “circular,” as it would “punish the victim of an ongoing constitutional violation for satisfying the redressability requirement of standing.”
[Editor’s note: Some of the language in the background section of the summary above was taken from the petition for writ of certiorari and brief in opposition.]