814 F.2d 731 (D.C. Cir. 1987), 86-5078, Ticor Title Ins. Co. v. F.T.C.

Docket Nº:86-5078.
Citation:814 F.2d 731
Party Name:1987-1 Trade Cases 67,490 TICOR TITLE INSURANCE COMPANY, et al., Appellants, v. FEDERAL TRADE COMMISSION, et al.
Case Date:March 24, 1987
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

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814 F.2d 731 (D.C. Cir. 1987)

1987-1 Trade Cases 67,490




No. 86-5078.

United States Court of Appeals, District of Columbia Circuit

March 24, 1987

Argued Oct. 20, 1986.

Appeal from the United States District Court for the District of Columbia (Civil Action No. 85-03089).

Theodore B. Olson, with whom Larry L. Simms and Stephen J. Landes, Washington, D.C., were on brief, for appellants.

James M. Spears, Deputy Asst. Atty. Gen., Dept. of Justice, with whom Richard K. Willard, Asst. Atty. Gen., Dept. of Justice, Joseph E. diGenova, U.S. Atty., Robert E. Kopp, Douglas Letter and Thomas M. Bondy, Attys., Dept. of Justice, were on brief, for appellees.

Before EDWARDS and WILLIAMS, Circuit Judges, and JOYCE HENS GREEN, [*] District Judge of the United States District Court for the District of Columbia.

Separate opinions filed by Circuit Judge EDWARDS, Circuit Judge WILLIAMS and District Judge JOYCE HENS GREEN.

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HARRY T. EDWARDS, Circuit Judge:

In this case we are asked to rule on a facial constitutional challenge to section 5(b) of the Federal Trade Commission Act (the "Act"), 1 which authorizes the Federal Trade Commission ("FTC" or the "Commission") to initiate and prosecute complaints against persons suspected of engaging in unfair methods of competition, or unfair or deceptive trade practices. Pursuant to this statutory authority, the FTC issued a complaint against the appellants, six title insurance companies, charging that they illegally restrained competition by fixing prices for title search and examination services. 2 Although the appellants have asserted nonconstitutional defenses to the FTC complaint in an ongoing proceeding before an Administrative Law Judge ("ALJ"), they have also brought this action seeking a declaration that section 5(b) of the Act is unconstitutional and an injunction against the ongoing prosecution and all future FTC prosecutions.

The appellants' constitutional challenge centers on Article II of the Constitution, which provides that "[t]he executive Power shall be vested in a President of the United States of America," and further provides that the President "shall take Care that the Laws be faithfully executed." 3 According to the appellants, Article II prohibits the FTC, an independent federal agency outside the direct control and supervision of the President, from exercising the law enforcement powers conferred upon it by section 5(b) of the Act. Without passing on the merits of this argument, the District Court dismissed the appellants' claim, holding that it was not yet ripe for adjudication. 4 Judge Green and I agree that the appellants' claim must be dismissed on one of two prudential grounds: exhaustion or ripeness. Judge Green would affirm the District Court's determination that this case is not yet ripe for review. Judge Williams, on the other hand, would hold that the filing of a complaint against the appellants was not final agency action, and that the District Court therefore lacked subject matter jurisdiction over the appellants' claim. The entire panel agrees, however, that the appellants' claim was properly dismissed.

Because I would find that the appellants were required to exhaust their available administrative remedies in the ongoing FTC enforcement proceedings before raising their constitutional claim in federal court, I would affirm the judgment of the District Court on the prudential ground of exhaustion.


The issue presented by this complaint is relatively straightforward. The appellants have brought a facial constitutional challenge under the general federal question statute, 28 U.S.C. Sec. 1331 (1982), to the authority of the FTC to initiate and prosecute a complaint against them. The appellants, however, also purport to have nonconstitutional (or statutory) defenses to the FTC complaint, which they are currently asserting before an ALJ in an ongoing administrative proceeding. The question posed by this appeal, then, is whether the appellants must exhaust their nonconstitutional defenses in the ongoing administrative proceeding before bringing their constitutional challenge to the agency's authority in federal court. If the appellants are required to exhaust their administrative remedies, and they prevail on their nonconstitutional defenses, the court will not be required to address the constitutional question. The constitutional question will be preserved, however, if the appellants are found guilty of restraining competition and the Commission issues a cease and desist order against them. The appellants would then be entitled to raise their constitutional challenge in an appeal from the final agency action under 15 U.S.C. Sec. 45(c) (1982).

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  1. The Hastings and Andrade Precedents

    On two recent occasions, this circuit has considered whether to require litigants to pursue available remedies on nonconstitutional claims where the litigant has brought a constitutional challenge to the very authority of the government to take action against him. Most recently, in Hastings v. Judicial Conference of the United States, 770 F.2d 1093 (D.C.Cir.1985), cert. denied, --- U.S. ----, 106 S.Ct. 3272, 91 L.Ed.2d 562 (1986), we considered whether a United States District Court judge should be allowed to challenge the facial constitutionality of the Judicial Councils Reform and Judicial Conduct and Disability Act of 1980, 28 U.S.C. Secs. 331-332, 372, 604 (1982), which establishes an elaborate mechanism by which federal judges may be investigated and disciplined by their fellow judges for "conduct prejudicial to the effective and expeditious administration of the business of the courts." Id. Sec. 371(c)(1). In Hastings, we held that we should postpone review of the constitutional question until the procedures outlined in the statute had actually been applied to Judge Hastings. We reasoned that we were ill-equipped to pass judgment on the facial validity of the statute without better knowledge of the precise nature of the powers to be exercised by the judicial tribunals under the statutory scheme. We thus assumed that exhaustion of the statutory procedures would refine the constitutional issues for subsequent judicial review. 770 F.2d at 1099-1101.

    In a separate portion of the opinion, however, we considered whether to pass on the constitutionality of certain informal fact-gathering powers that had been exercised under the statute. Again, we declined to reach the constitutional issue, reasoning that to do so "would contravene another aspect of avoidance--the policy [against] rendering judgment on the constitutionality of proceedings while the proceedings themselves are going on." Id. at 1102 (emphasis in opinion). We found that disruption of the ongoing proceedings would be justified only if the plaintiff could demonstrate that he would suffer "serious and irremediable injury" in the absence of immediate judicial review. Id. We concluded that Judge Hastings had not made a showing of irreparable injury because the proceedings to which he was subject might terminate at any number of points before sanctions were imposed against him. The effect of our holding was to require Judge Hastings to defend himself in the statutory proceedings before bringing his constitutional challenge to the facial validity of the statute in federal court.

    Two years before the decision in Hastings, a different panel of the court issued an opinion in Andrade v. Lauer, 729 F.2d 1475 (D.C.Cir.1984). Andrade is significant because it is not easily reconciled with the judgment in Hastings. In Andrade, employees of the Office of Juvenile Justice and Delinquency Prevention ("OJJDP")--an agency within the Department of Justice--challenged the implementation of a reduction in force ("RIF"), pursuant to which they were removed or demoted from their positions at the agency. The employees challenged the RIF on three grounds. First, they argued that the procedures used in implementing the RIF violated federal personnel regulations. Second, they argued that the RIF violated certain statutory proscriptions. Third, they maintained that the officials responsible for implementing the RIF were without authority to do so, because they held office in violation of the Appointments Clause, U.S. CONST. art. II, Sec. 2, cl. 2.

    The first issue addressed in Andrade was whether the employees were required to pursue their nonconstitutional and constitutional claims through the "statutory and contractual" grievance procedure contained in their union's contract with the Department of Justice. 729 F.2d at 1484-91. Congress had mandated that public sector collective bargaining agreements contain a procedure for resolving grievances in cases involving RIFs, 5 and had defined a "grievance," in part, as any complaint

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    by an employee concerning "any claimed violation, misinterpretation, or misapplication of any law, rule, or regulation affecting conditions of employment." 6 Accordingly, the union and the Department of Justice had negotiated a grievance provision conforming to the requirements prescribed by Congress. Under the parties' negotiated grievance provision, a grievance concerning a RIF could be pursued in several steps. First, the individual employee affected by the RIF could appeal the adverse employment action to certain high level management officials. Second, if the grievance was not resolved at this level, the union could refer the matter to arbitration. Finally, either party could appeal the arbitrator's award to the Federal Labor Relations Authority. Id. at 1485.

    Because Congress had defined a "grievance" to include any complaint regarding a "claimed violation...

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