Axon Enterprise, Inc. v. Federal Trade Commission
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| Axon Enterprise, Inc. v. Federal Trade Commission | |
| Term: 2022 | |
| Important Dates | |
| Argued: November 7, 2022 Decided: April 14, 2023 | |
| Outcome | |
| United States Court of Appeals for the Ninth Circuit reversed and case remanded | |
| Vote | |
| 9-0 | |
| Majority | |
| Chief Justice John Roberts • Elena Kagan • Samuel Alito • Sonia Sotomayor • Brett Kavanaugh • Amy Coney Barrett • Ketanji Brown Jackson | |
| Concurring | |
| Clarence Thomas • Neil Gorsuch | |
Axon Enterprise Inc. v. Federal Trade Commission was a U.S. Supreme Court case decided on April 14, 2023, that questioned the jurisdiction of federal courts over constitutional challenges to the structure of the Federal Trade Commission (FTC). Axon Enterprise Inc. argued in part that the double for-cause removal protections afforded to the FTC’s administrative law judges unconstitutionally insulate them from presidential control. At issue was whether plaintiffs must make constitutional challenges through the agency adjudication process before bringing the issue before a federal court. The court unanimously held that federal courts have jurisdiction to hear constitutional challenges to the structure of the FTC and the Securities and Exchange Commission (SEC).[1][2]
The case was argued before the Supreme Court of the United States on November 7, 2022, during the court's October 2022-2023 term.
The case came on a writ of certiorari to the United States Court of Appeals for the Ninth Circuit. To review the lower court's opinion, click here.
Why it matters: The U.S. Supreme Court's decision in the case provided clarity on whether plaintiffs can raise constitutional challenges to the structure of administrative agencies in federal court without first going through administrative proceedings. The ruling affirmed that federal court’s maintain federal-question jurisdiction to hear challenges to the structure of the FTC and the SEC.
Timeline
The following timeline details key events in this case:
- April 14, 2023: The U.S. Supreme Court reversed the decision from the United States Court of Appeals for the Ninth Circuit and remanded the case for further proceedings.[3]
- November 7, 2022: The U.S. Supreme Court heard oral argument.
- January 24, 2022: The U.S. Supreme Court agreed to hear the case.
- July 20, 2021: Axon Enterprise, Inc. appealed to the U.S. Supreme Court.
- January 28, 2021: The United States Court of Appeals for the Ninth Circuit affirmed a district court ruling, dismissing Axon's constitutional challenge to the Federal Trade Commission's structure because the company had not raised the issue before the agency first.[1]
Background
Federal Trade Commission (FTC) takes antitrust action against Axon
Axon Enterprise, Inc., a body camera company, acquired a competitor in 2018 and the Federal Trade Commission (FTC) opened an antitrust investigation. The FTC ordered Axon to undo the acquisition and turn the competitor company "into a 'clone' of Axon using Axon's intellectual property."[1]
Axon sues the FTC
Axon challenged the FTC's antitrust demand, filing a lawsuit in a federal district court on January 3, 2020.[1] Axon made the following three claims:[1]
- 1) The FTC's administrative proceeding violated Axon's due process rights.
- 2) The FTC's structure violates Article II by providing improper insulation from the president. Axon argued in part that the double for-cause removal protections afforded to the FTC’s administrative law judges unconstitutionally insulate them from presidential control.
- 3) Axon's acquisition of a competitor company did not violate antitrust law.
Lower courts hold that they lack jurisdiction over Axon's challenge
The district court dismissed Axon's case, saying it lacked jurisdiction.[1] The court held that when Congress created the FTC's administrative review procedures it implied that district courts did not have authority to review constitutional challenges to the agency before the agency considered those challenges through adjudication.[1]
The United States Court of Appeals for the Ninth Circuit affirmed the lower court's decision and Axon appealed to the U.S. Supreme Court.[4]
Questions presented
The petitioner presented the following questions to the court:
Question presented:
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Oral argument
The U.S. Supreme Court heard oral argument on November 7, 2022.
Audio
Audio of oral argument:[7]
Transcript
Transcript of oral argument:[8]
Outcome
The court ruled unanimously that federal courts have jurisdiction to hear constitutional challenges to the structure of the Federal Trade Commission and the Securities and Exchange Commission. It reversed the United States Court of Appeals for the Ninth Circuit’s ruling and remanded the case for further proceedings.
Justice Elena Kagan delivered the opinion of the court. Justice Clarence Thomas delivered a concurring opinion and Justice Neil Gorsuch delivered an opinion concurring in the judgment.[2][9]
Opinion
Opinion of the court
Justice Elena Kagan delivered the opinion of the court, which argued that federal courts have jurisdiction to hear constitutional challenges to the structure of the FTC and the SEC. The court considered three factors to determine whether constitutional challenges of agency action fall under the jurisdiction of district courts. These factors are referred to as the Thunder Basin factors, as they stem from the decision in Thunder Basin Coal Co. v. Reich. The factors consider whether federal jurisdiction could “foreclose all meaningful judicial review” of a claim, whether the challenge is collateral to a statute’s review provisions, and whether the challenge falls outside of “the agency’s expertise.” After consideration of the Thunder Basin factors, the court delivered the following opinion:[9]
| “ | All three Thunder Basin factors thus point in the same direction—toward allowing district court review of Axon’s and Cochran’s claims that the structure, or even existence, of an agency violates the Constitution. For the reasons given above, those claims cannot receive meaningful judicial review through the FTC Act or Exchange Act. They are collateral to any decisions the Commissions could make in individual enforcement proceedings. And they fall outside the Commissions’ sphere of expertise. Our conclusion follows: The claims are not “of the type” the statutory review schemes reach. Id., at 212. A district court can therefore review them.[6] | ” |
Concurring opinions
Justice Clarence Thomas delivered a concurring opinion. He agreed with the ruling and the precedent applied, however, he expressed concerns over constitutional concerns that could arise from the ruling:[9]
| “ | I write separately, however, because I have grave doubts about the constitutional propriety of Congress vesting administrative agencies with primary authority to adjudicate core private rights with only deferential judicial review on the back end.[6] | ” |
Justice Neil Gorsuch wrote an opinion concurring in the judgment, but argued against the use of the Thunder Basin factors.[9]
| “ | While the Court reaches the right result today, its choice of the wrong path matters. Not just because continuing to apply the Thunder Basin factors leaves the law badly distorted. It also matters because Thunder Basin’s throw-it-in-a-blender approach to jurisdiction imposes serious and needless costs on litigants and lower courts alike.[6] | ” |
Text of the opinion
Read the full opinion here.
Commentary about the case
Pre-decision commentary
Stone Washington argued in an article for the Competitive Enterprise Institute that administrative law courts (ALCs) are responsible for executive overreach by administrative agencies and that cases such as Axon provide the opportunity to limit such authority. Washington wrote that “ALCs are just part of the administrative state’s seemingly unchecked growth in recent decades. Administrative law courts can deny citizens the right to a jury trial and the right to present or appeal a case before an Article III court. Nor are ALCs impartial. Agencies with ALCs appear to reign by their bureaucratic authority alone, operating beyond the separation of power constraints of the Constitution.”[10]
Law professor Kent Barnett argued that a SCOTUS decision in favor of Axon would not have a significant impact on agency enforcement. Barnett stated, according to Reuters, “These challenges will prove disruptive in some degree to agency enforcement proceedings because they permit additional litigation… But that is not an unfair burden when Congress has exceeded its powers in fashioning the administrative state.”[11]
In a blog post from the Yale Journal on Regulation, Asheesh Agarwal argued that “by expanding its regulatory reach in ways that may exceed its mandate, the FTC could persuade the Court that companies need the ability to go into federal court immediately to challenge activities that exceed the agency’s statutory authority. Moreover, by pushing the envelope on rulemakings and policy guidance, the FTC may well lay the groundwork for the Court to revisit the FTC’s constitutionality in future cases.”[12]
Post-decision commentary
Sean Heather, Senior Vice President of International Regulatory Affairs and Antitrust for the U.S. Chamber of Commerce, released a statement following the SCOTUS decision stating, “Today’s unanimous Supreme Court decision ensures businesses will get their day in court to challenge those procedures. They do not have to wait to raise constitutional claims until the end of the very unconstitutional procedures they seek to challenge.”[13]
Troutman Pepper’s Consumer Financial Services practice argued that “because the Consumer Financial Protection Bureau’s (CFPB) administrative powers and processes are modeled after the FTC and SEC, the Supreme Court’s decision should apply to the CFPB, as well as other federal agencies with similar administrative enforcement powers. We also believe that, between the Court’s joint decision in Axon Enterprise and Cochran and its Free Enterprise ruling, a company can likely bring constitutional challenges against an agency in federal court at any point during an administrative enforcement process, without waiting until the agency starts an administrative proceeding by formally asserting alleged violations.”[14]
Corbin K. Barthold wrote in an essay for Law & Liberty magazine arguing against the unanimous nature of the decision. Barthold argued, “The Supreme Court’s cases on jurisdiction have a way of drawing lone dissents. The Court has often had—and benefited from having—that one curmudgeonly justice who errs on the side of keeping the federal judiciary to a limited agenda. Axon Enterprise Inc. v. FTC was a missed chance for someone to carry on the tradition.” [15]
Impact
- See also: Independent federal agency
The decision in Axon Enterprises, Inc. v. Federal Trade Commission allows individuals and businesses to challenge administrative action by the FTC and SEC in court without first completing agency proceedings. The SCOTUS decision permits individuals to circumvent administrative review procedures in certain situations and places constitutional limitations on administrative agencies. The decision in this case could also extend to other executive agencies.[16]
October term 2022-2023
The Supreme Court began hearing cases for the term on October 3, 2022. The court's yearly term begins on the first Monday in October and lasts until the first Monday in October the following year. The court generally releases the majority of its decisions in mid-June.[17]
See also
External links
- Search Google News for this topic
- U.S. Supreme Court docket file - Axon Enterprise, Inc. v. Federal Trade Commission (petitions, motions, briefs, opinions, and attorneys)
- SCOTUSblog case file for Axon Enterprise, Inc. v. Federal Trade Commission
Footnotes
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 CASETEXT, "Axon Enter. v. Fed. Trade Comm'n," January 28, 2021
- ↑ 2.0 2.1 Oyez, "Axon Enterprises Inc. v. Federal Trade Commission," accessed April 18, 2023
- ↑ SCOTUSblog, "Axon Enterprises Inc. v. Federal Trade Commission," accessed April 18, 2023
- ↑ U.S. Supreme Court, "Axon Enterprise, Inc. v. Federal Trade Commission Petition for a writ of certiorari," July 20, 2021
- ↑ U.S. Supreme Court, "Axon Enterprise, Inc. v. Federal Trade Commission, Question Presented," January 24, 2022
- ↑ 6.0 6.1 6.2 6.3 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ Supreme Court of the United States, "Oral Argument - Audio," argued November 7, 2022
- ↑ Supreme Court of the United States, "Oral Argument - Transcript," argued November 7, 2022
- ↑ 9.0 9.1 9.2 9.3 Justia, "Axon Enterprises Inc. v. Federal Trade Commission, 598 U.S. _ (2023)," accessed April 18, 2023
- ↑ Competitive Enterprise Institute, "What Are Administrative Law Courts? Why Do They Matter?" March 10, 2023
- ↑ Reuters, "SCOTUS case could have 'astonishing consequences' for federal agency enforcement," January 25, 2022
- ↑ Yale Journal of Regulation, "The FTC's Recent Moves Could Cost It in the Supreme Court, by Asheesh Agarwal," October 23, 2022
- ↑ U.S. Chamber of Commerce, "Supreme Court Hands Businesses a Big Win in Case Against FTC," April 14, 2023
- ↑ Troutman Pepper, "Supreme Court Unanimously Holds That Companies Can Bring Constitutional Challenges Against Federal Agencies in Court Without Exhausting Administrative Remedies," April 17, 2023
- ↑ Law & Liberty, "Heretical Thoughts on Axon v. FTC," May 2, 2023
- ↑ Gibson Dunn, "Supreme Court Holds That Federal District Courts Have Jurisdiction To Hear Structural Challenges To FTC and SEC," April 14, 2023
- ↑ SupremeCourt.gov, "The Supreme Court at Work: The Term and Caseload," accessed February 4, 2021
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