Action on Safety and Health v. FTC

• Decision Date: 17 April 1974
• Docket Number: No. 73-1266.,73-1266.
• Citation: 498 F.2d 757
• Parties: ACTION ON SAFETY AND HEALTH, et al., Appellants, v. FEDERAL TRADE COMMISSION, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

498 F.2d 757 (1974)

ACTION ON SAFETY AND HEALTH, et al., Appellants, v. FEDERAL TRADE COMMISSION, Appellee.

No. 73-1266.

United States Court of Appeals, District of Columbia Circuit.

Argued January 14, 1974.

Decided April 17, 1974.

Peter H. Meyers, Washington, D.C., with whom John F. Banzhaf, III, Washington, D.C., was on the brief, for appellants.

James P. Timony, Atty., F. T. C., for appellee. Harold D. Rhynedance, Jr., Asst. Gen. Counsel, F. T. C., Nicholas S. Reynolds, Atty., F. T. C., Howard E. Shapiro, Atty., Dept. of Justice, and Harold H. Titus, Jr., U. S. Atty. at the time the brief was filed, were on the brief, for appellee.

Before WRIGHT and TAMM, Circuit Judges, and WYZANSKI,^* United States Senior District Judge for the District of Massachusetts.

TAMM, Circuit Judge:

Action on Safety and Health, a consumer protection organization, appeals from an order of the United States District Court for the District of Columbia, per Richey, J., dismissing a complaint which sought 1) review of the Federal Trade Commission's (hereafter "Commission") denial of intervention in a pre-complaint consent negotiation; and 2) broad declaratory and injunctive relief concerning the Commission's consent order procedures generally. We hold that the District Court properly dismissed appellants' claims, and the judgment is therefore affirmed.

Before reviewing the factual background, it may be helpful to discuss briefly the Commission's consent order procedure contained in sections 2.31 to 2.35 of the Commission's Rules of Practice, 16 C.F.R. §§ 2.31-2.35 (1973). Under these rules the Commission may notify a "proposed respondent" of its intention to institute a formal proceeding against him. Such notification contains a form of the proposed complaint which the Commission will issue, as well as the proposed order which the Commission will seek. If the proposed respondent elects, within 10 days, to attempt a settlement, negotiations begin between the Commission's staff and the proposed respondent. If the parties are unable to agree, the Commission may commence formal adjudicative procedure pursuant to 16 C.F.R. § 3.11 (1973). If, however, an agreement is reached and accepted by the Commission, the provisionally accepted consent order is placed on the public record for a period of 30 days, during which time any interested party may file comments or views with the Commission. After reviewing any such public comments, the Commission may withdraw its acceptance of the proposed order or conclude the proceeding by final acceptance of the consent order either as originally proposed or as modified in light of comments received.

The facts underlying this appeal are not in dispute. On October 12, 1972, the Commission, pursuant to 16 C.F.R. § 2.-31, declared its intention to issue a complaint charging Volvo, Inc. and others with violation of § 5 of the Federal Trade Commission Act, 15 U.S.C. § 45 (1970). The announcement was accompanied by both a proposed complaint and a proposed order. In sum, the complaint alleged that Volvo, Inc. had made false and deceptive advertising claims concerning the economy and durability of Volvo automobiles. The proposed order would have required Volvo, Inc. to cease and desist from making such claims unless it could substantiate the claims with appropriate facts.

At the request of Volvo, pursuant to 16 C.R.F. § 2.32, pre-complaint consent negotiations were begun. On November 6, 1972, during the negotiation period, appellants filed a motion with the Commission for leave to intervene in the negotiations. This motion¹ was denied by the Commission on December 14, 1972.

The Volvo-Commission negotiations resulted in a consent order which was submitted to the Commission on November 17, 1972. On January 10, 1973, appellants filed their complaint in District Court seeking: 1) review of the Commission's denial of intervention in the Volvo matter; 2) a declaration that the Commission's present consent negotiation procedures were constitutionally defective due to insufficient public participation; and 3) injunctive relief to prevent the Commission from utilizing the allegedly unconstitutional procedures until such procedures were revised to provide for greater public participation.

On January 29, 1973, after oral argument, the District Court issued an order dismissing the complaint. The District Court found, in pertinent part:

It appearing to the Court that it lacks jurisdiction of the subject matter hereof, for the reason that a grant or denial of intervention in Commission non-adjudicative consent negotiations is entirely discretionary with the Commission and is not judicially reviewable; and that no showing has been made that defendant has clearly violated an important constitutional or statutory right of plaintiffs since the commission\'s consent order procedure, 16 C.F.R. sections 2.31-.35, affords plaintiffs ample and meaningful opportunity to comment on executed consent agreements prior to final acceptance or rejection of such agreements by the Commission . . . .²

Appellants noted their appeal to this court on February 1, 1973, and moved the District Court for an injunction pending appeal. The District Court denied the motion.³ On March 13, 1973, the Commission provisionally accepted the proposed consent agreement and, pursuant to 16 C.F.R. § 2.34(b) placed the agreement on the public record for 30 days, thereby providing opportunity for public comment before the order was finally accepted. Appellants, on April 23, 1973, moved this court, under Rule 8(a) Fed.R.App.P., for an order staying the Commission from finally accepting the consent agreement pending appeal. This court denied appellants' motion for stay.⁴ After the period for public comment had ended, the Commission, on June 26, 1973, issued the final order in the Volvo matter.

The first of appellants' two arguments before this court is that the trial court erred in finding that the grant or denial of intervention in consent negotiations is "entirely discretionary with the Commission and is not judicially reviewable."

Appellants admit that the sole express grant of judicial review in the Federal Trade Commission Act provides for review only of cease and desist orders and only at the request of respondents thereto.⁵ However, appellants rely on cases such as Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), arguing that an explicit provision for review of certain enumerated types of administrative action does not necessarily preclude review of non-enumerated actions.⁶ Thus, it is argued, unless the FTC Act contains "clear and convincing evidence" of an intent to withhold review, review must be granted.

We find that appellants' analysis, with its emphasis on a broad presumption favoring judicial review, is misleading in deciding the question presented. The question before us is not whether appellants have a broad right to seek review of Commission orders but whether review of this agency action is precluded by law. One who must rely upon the APA review provisions to overcome the silence of a particular organic statute must take the good with the bad. The statute and the cases make it clear that if an action is "committed to agency discretion by law," judicial review is not available. Our reading of Abbott Laboratories v. Gardner, supra, convinces us only that if a particular organic statute is silent on the question of judicial review, courts should recognize the basic presumption favoring judicial review, embodied in the Administrative Procedure Act, "so long as . . . the action is not committed by law to agency discretion, 5 U.S.C. § 701(a)."⁷ Abbot Laboratories v. Gardner, supra, at 140 (emphasis supplied). See, e. g., Panama Canal Co. v. Grace Line, Inc., 356 U.S. 309, 317, 78 S.Ct. 752, 2 L.Ed.2d 788 (1958); Curran v. Laird, 136 U.S.App. D.C. 280, 420 F.2d 122 (1969); United States v. One 1961 Cadillac, 337 F.2d 730 (6th Cir. 1964); K. Davis, Administrative Law Treatise § 28.16 at 64-65 (1970 Supp.). Our inquiry must focus on the precise question of whether the power to grant or deny intervention in a consent decree negotiation has been "committed to agency discretion by law." If it has been so committed, § 701(a) (2) of the APA must control and judicial review is precluded.⁸ Although the order of the trial court did not specifically mention § 701(a) (2) of the APA, we are satisfied that the trial court relied upon this provision in dismissing appellants' claim for lack of jurisdiction.

The action of the Commission here under examination is the denial of appellants' motion to intervene in ongoing negotiation proceedings. The Federal Trade Commission Act is silent as to intervention in such consent negotiations. The Act speaks only of intervention in adjudications.⁹ The Commission's Rules of Procedure make it clear that "Adjudicative proceedings . . . do not include . . . negotiations for the entry of consent orders."¹⁰ The United States Court of Appeals for the Second Circuit has held that the Commission's consent order procedure was established pursuant to § 554(c) of the Administrative Procedure Act¹¹ and that such negotiation proceedings are clearly not adjudicative in nature. The Second Circuit stated:

Nothing in the Administrative Procedure Act or in the basic principles of fair procedure precludes the Commission from creating and following a procedure for settling disputes without recourse to adjudication. Consent negotiations are not a stage in adjudication but a means of establishing whether adjudication can be avoided altogether. Like investigations, consent negotiations are distinct from the adjudicative process and hence not governed by the standards which control adjudicative procedure.¹²

When it passed § 554(c) of the APA, Congress clearly intended that the development of informal consent decree procedures be left to the individual agency's discretion. The court in Bristol-Myers v. FTC, ...