First Commodity Corp. v. COMMODITY FUTURES TRADING

• Decision Date: 31 July 1986
• Docket Number: Civ. A. No. 85-4221-S.
• Citation: 644 F. Supp. 597
• Parties: FIRST COMMODITY CORPORATION OF BOSTON, Plaintiff, v. COMMODITY FUTURES TRADING COMMISSION, et al., Defendants.
• Court: U.S. District Court — District of Massachusetts

644 F. Supp. 597

FIRST COMMODITY CORPORATION OF BOSTON, Plaintiff, v. COMMODITY FUTURES TRADING COMMISSION, et al., Defendants.

Civ. A. No. 85-4221-S.

United States District Court, D. Massachusetts.

July 31, 1986.

James M. Bruch, David G. Leftancois, First Commodity Corp., Boston, Mass., Jeffrey S. Rosen, Stoppleman, Rosen, Eaton & DeMartino, Washington, D.C., for plaintiff.

Edward S. Geldermann, Commodity Futures Trading Com'n, Washington, D.C., for defendants.

MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO DISMISS OR, IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT

SKINNER, District Judge.

Plaintiff First Commodity Corporation of Boston ("First Commodity"), a futures commission merchant registered with defendant Commodity Futures Trading Commission (the "Commission"), filed this action against the Commission and the individual Commissioners seeking injunctive and declaratory relief concerning the reparations program administered by the Commission pursuant to § 14 of the Commodity Exchange Act, as amended (the "Act"), 7 U.S.C. § 18. That section provides that "any person complaining of any violation of any provision of the Act, or any rule, regulation or order issued thereunder, by any person who is registered under the Act may ... apply to the Commission for an order awarding actual damages proximately caused by such violation." 7 U.S.C. § 18(a). Decisions on complaints filed with the Commission under § 14 are rendered by staff in the Office of Proceedings, Judgment Officers and Administrative Law Judges ("ALJ's"). See Rule 12 of the Revised Rules Relating to Reparation Proceedings, 17 C.F.R. Part 12. As of February 13, 1986, First Commodity was a respondent in 86 reparation actions pending before the Commission.

In Count I of the Complaint, plaintiff seeks a declaration that by allegedly participating in the preparation of a series of investigative reports concerning the commodity industry for a Chicago television station and arranging for the series to be shown to the staff of the Office of Proceedings, Judgment Officers and ALJ's, the Commission violated plaintiff's right to due process of law as guaranteed by the Fifth Amendment of the United States Constitution and § 7 of the Administrative Procedure Act ("APA"), 5 U.S.C. § 556(b). First Commodity also seeks an injunction restraining the Commission and its agents and employees from engaging in any conduct tending to deprive plaintiff of an impartial forum in reparation actions. In Count II, plaintiff seeks a judgment declaring that the reparations program is unconstitutional as violative of Article III and an order enjoining the Commission from administering the reparations program.

The defendants move to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction. In the alternative, they contend that Count I should be dismissed for failure to state a claim and for failure to exhaust administrative remedies and that Count II should be dismissed because the constitutional claim under Article III is not yet ripe and, in any event, is without merit.

Jurisdiction.

The Commission asserts that plaintiff's complaint should be dismissed because subject matter jurisdiction over the entire action lies exclusively in the United States Court of Appeals. Section 14(e) of the Act provides, in pertinent part:

Any order of the Commission entered hereunder shall be reviewable on petition of any party aggrieved thereby, by the United States Court of Appeals for any circuit in which a hearing was held, or if no hearing was held, any circuit in which the appellee is located, under the procedure provided in paragraph (b) of section 6 of this Act.

7 U.S.C. § 18(e). First Commodity claims that this section does not vest "exclusive" jurisdiction in the courts of appeal. However, § 14(d) of the Act, after stating that reparation awards may be enforced by means of orders issued by district courts, provides that "subject to the right of appeal under subsection (e) of this section, an order of the Commission awarding reparations shall be final and conclusive". 7 U.S.C. § 18(d). This language clearly indicates that the district courts do not have jurisdiction to review the merits of reparation awards. See New England Telephone and Telegraph Co. v. Public Utilities Commission, 742 F.2d 1, 7 (1st Cir. 1984). Moreover, it is well settled that "even where Congress has not expressly conferred exclusive jurisdiction, a special review statute vesting jurisdiction in a particular court cuts off other courts' original jurisdiction in all cases covered by the special statute". Investment Company Institute v. Board of Governors of the Federal Reserve System, 551 F.2d 1270, 1279-80 (D.C.Cir.1977); accord, e.g., Public Utilities Commissioner of Oregon v. Bonneville Power Administration, 767 F.2d 622, 627 (9th Cir.1985) ("Bonneville").

Of course, the Commission has not issued any final order which is relevant to this case. But where a statute explicitly confers jurisdiction upon the courts of appeal to review agency action, that jurisdiction is exclusive and deprives all other courts of jurisdiction over any "suit seeking relief that might affect the Circuit Court's future jurisdiction". Telecommunications Research & Action Center v. F.C.C., 750 F.2d 70, 78-79 (D.C.Cir.1984) ("TRAC"); Bonneville, 767 F.2d at 626. Although TRAC concerned a challenge to nonfinal agency action on the ground of unreasonable delay, its holding applies to challenges to nonfinal agency action on the ground of bias. Bonneville, 767 F.2d at 629; Air Line Pilots Ass'n Intern. v. C.A.B., 750 F.2d 81, 88 (D.C.Cir.1984); see Jamison v. F.T.C., 628 F.Supp. 1548, 1551 & n. 2 (D.D.C.1986).

First Commodity contends that the courts of appeal lack jurisdiction to grant the injunctive relief requested in either count of its complaint. It notes that § 14(e) of the Act incorporates § 6(b) of the Act, 7 U.S.C. § 9, by reference. That section gives the courts of appeal "jurisdiction to affirm, to set aside, or modify the order of the Commission ..." From this, plaintiff concludes that the Court of Appeals does not have the authority to issue declaratory judgments or prospective injunctions of the type sought. Plaintiff's Brief at 19.

The full text of the relevant portion of § 6(b) indicates the Court of Appeals has broader power than the above-quoted language suggests:

After the issuance of the order by the Commission, the person against whom it is issued may obtain a review of such order or such other equitable relief as to the court may seem just by filing in the United States court of appeals ... a written petition ... praying that the order of the Commission be set aside.... Upon the filing of the petition the court shall have jurisdiction to affirm, to set aside, or modify the order of the Commission, and the findings of the Commission as to the facts, if supported by the weight of the evidence, shall in like manner be conclusive.

7 U.S.C. § 9 (emphasis added). Moreover, the All Writs Act, 28 U.S.C. § 1651(a), empowers a federal court to issue writs of mandamus necessary to protect its prospective jurisdiction. Should the Court of Appeals choose to exercise jurisdiction over plaintiff's interlocutory claim of bias, it would have the power to issue any necessary orders. See Bonneville, 767 F.2d at 630.¹

First Commodity claims that TRAC is inapplicable because the relief sought in this action does not relate to the pending reparation actions. This argument is not persuasive. Although the requested injunction is prospective, it could only be based upon a determination that the defendants' past conduct violated either the Due Process Clause of the Fifth Amendment or § 7 of the APA, 5 U.S.C. § 556(b). Indeed, this is precisely the declaratory judgment plaintiff seeks. Such a judgment would have res judicata effect with respect to plaintiff's claims of bias in the reparation actions. As any judgment would predetermine an issue to be raised in First Commodity's appeal from an adverse determination in any of the reparation actions, it clearly would affect the prospective jurisdiction of the Court of Appeals. Accordingly, jurisdiction over Count I of the complaint is precluded by the analysis of TRAC.

Plaintiff's claim that the reparation program violates Article III of the Constitution stands on a different footing, however. This challenge to § 14 of the Commission's enabling statute is not within the class of claims committed to the courts of appeal by §§ 14(d) and (e), 7 U.S.C. § 18(d)(e). Cf. Bonneville, 767 F.2d at 625-26 (constitutional challenge to ongoing agency proceedings within court of appeals' exclusive jurisdiction where judicial review provision provided that "suits to challenge the constitutionality of this chapter ... shall be filed in the United States court of appeals ...", 16 U.S.C. § 839f(e)(5)). Although consideration of the merits of First Commodity's claim may have some effect on future appellate jurisdiction, I agree with Judge Hogan that the holding of TRAC "is limited to claims seeking review of agency process, and does not encompass constitutional challenges to an agency's enabling statute". Ticor Title Insurance Co. v. F.T.C., 625 F.Supp. 747, 749 (D.D.C.1986); see Assure Competitive Transportation, Inc. v. United States, 629 F.2d 467, 471 (7th Cir.1980), cert. denied, 449 U.S. 1124, 101 S.Ct. 941, 67 L.Ed.2d 110 (1981). Only in cases concerning agency process do the concerns of judicial economy and expertise which the Court of Appeals found "compelling" in TRAC, 750 F.2d at 78, have significant weight. Accordingly, the district court has subject matter jurisdiction over the constitutional claim advanced in Count II of the complaint.

Ripeness.

Defendants next contend that plaintiff's Article III claim is not sufficiently ripe to establish a concrete case or controversy.

The basic rationale of the ripeness doctrine is to prevent the courts, through avoidance

...