Jaunich v. U.S. Commodity Futures Trading Com'n

Decision Date14 March 1995
Docket NumberNo. 93-3954,93-3954
Citation50 F.3d 518
PartiesGregory JAUNICH, Petitioner, v. UNITED STATES COMMODITY FUTURES TRADING COMMISSION, Respondent.
CourtU.S. Court of Appeals — Eighth Circuit

Alfred Stanbury, Minneapolis, MN, argued, for petitioner.

Gracemary Rizzo Moleski, Washington, DC, argued, for respondent.

Before WOLLMAN, Circuit Judge, JOHN R. GIBSON, Senior Circuit Judge, and HANSEN, Circuit Judge.

HANSEN, Circuit Judge.

Gregory Jaunich has filed with this court a petition for judicial review of a decision of the United States Commodity Futures Trading Commission (CFTC), which affirmed, in part, disciplinary actions taken against him by the Minneapolis Grain Exchange (MGE). Because we conclude that we lack jurisdiction to conduct the initial review of this agency action, we transfer the matter to the appropriate United States district court.

I.

Gregory Jaunich has been a member of the MGE since 1987, acting as both a floor broker (purchasing or selling for other persons) and a floor trader (purchasing or selling for his own account). See 7 U.S.C. Sec. 1a(8) & (9) (defining "floor broker" and "floor trader"). Jaunich has served as the primary floor broker for Benson-Quinn Commodities, Inc., a registered futures commission merchant.

The disciplinary proceedings instituted by the MGE against Jaunich arose from events occurring on June 13, 1988, during a very busy "drought market." On that morning, a customer of Benson-Quinn placed four "stop orders" (orders to be executed when the market prices reach a particular level) to sell wheat futures at various specified prices. The MGE alleged that after those four stop orders had been triggered by market price levels, Jaunich traded for his own account prior to executing his customer's trades on the four stop orders. Jaunich stated that he did not recall the specific trades in question, but contends that given the fast-moving drought market he probably had not received the stop orders prior to selling for his own account.

On the same morning and at about the same time Jaunich was alleged to have made the trades ahead of his client, Jaunich recorded eight transactions opposite another broker, Gary Sikkink. The MGE alleged that those trades were not reported in the MGE's Time and Sales Report and that Jaunich's trading card on those transactions reflected prices different from those listed on the Time and Sales Report for the same time period. The MGE also produced evidence that Sikkink did not execute those trades with Jaunich. Jaunich has alleged that the chaotic conditions of the drought market changed the way that trades were recorded and reported and has argued that the rules on reporting were not vigorously enforced during that period given the chaotic conditions.

In July 1988, the MGE Compliance Department opened an investigation of the June 13, 1988, transactions described above. In November 1990, the Compliance Department notified Jaunich that charges were being brought against him dealing with the two sets of trades. After the Futures Trading Conduct Committee (FTCC) held a hearing on the charges, it found that Jaunich had violated the following MGE Rules: Rule 750, prohibiting a floor broker from trading for his own account ahead of customer's orders; Rule 741, prohibiting a member from acting as both buyer and seller in a futures transaction; Rule 714, requiring all trades to be made by open outcry; Rule 725.01, requiring that all trades be made competitively and reported to the market observer; and Rules 612.01(b) & (g), defining uncommercial conduct. The FTCC imposed a $20,000 fine and suspended Jaunich for 20 trading days.

Jaunich appealed to the CFTC. The CFTC affirmed the FTCC's findings that Jaunich had violated Rule 750, Rule 714, Rule 725.01, and Rules 612.01(b) & (g). The CFTC, however, reversed the FTCC's finding that Jaunich violated Rule 741. The CFTC remanded the case to the FTCC to reassess its sanctions in light of the reversal on one charge. On remand, the FTCC reduced the penalties to a $15,000 fine and a 15-day suspension. Jaunich again appealed to the CFTC. The CFTC affirmed the FTCC without further opinion. Jaunich has appealed the CFTC's decision directly to this court.

II.

The first issue we must address is whether we have jurisdiction to review directly the CFTC's order. As a general rule, unless a statutory provision provides for jurisdiction in the court of appeals, the district courts have "exclusive jurisdiction to review any reviewable action of a federal agency." 3 Kenneth Culp Davis & Richard J. Pierce, Jr., Administrative Law Treatise Sec. 18.2, at 165 (3d ed. 1994); see also Noland v. United States Civil Serv. Comm'n, 544 F.2d 333, 334 (8th Cir.1976) ("jurisdiction of the courts of appeals to review orders rendered by administrative agencies is wholly dependent upon statute"). While the analytical framework for determining whether initial review should proceed in the court of appeals or the district court appears somewhat simple, it is often complicated by confused case law standards or poorly drafted and ambiguous statutory language. 3 Davis & Pierce, Administrative Law Sec. 18.2 at 165. The latter observation accurately describes the case before us.

The Commodity Exchange Act (CEA), 7 U.S.C. Secs. 1-25, specifically provides that the CFTC may review disciplinary actions taken by any exchange, like the MGE. 7 U.S.C. Sec. 12c(b). Judicial review of CFTC orders reviewing exchange disciplinary proceedings is only obliquely referenced in Sec. 12c:

The Commission [CFTC] may affirm, modify, set aside, or remand any exchange decision it reviews ... after a determination on the record whether the action of the exchange was in accordance with the policies of this chapter. Subject to judicial review, any order of the Commission [CFTC] ... shall govern the exchange in its further treatment of the matter.

7 U.S.C. Sec. 12c(c) (emphasis added). While section 12c(c) does not specify which court should conduct judicial review of the CFTC's orders reviewing exchange disciplinary proceedings, other sections of the CEA, including those dealing with appeals of similar CFTC orders, specifically provide for initial/direct review in the United States court of appeals. See 7 U.S.C. Sec. 9 (initial judicial review in court of appeals for CFTC orders imposing sanctions against any person for violating the CEA or CFTC rules, regulations, or orders); 7 U.S.C. Sec. 21(i)(4) (initial judicial review in court of appeals for CFTC orders reviewing disciplinary action taken by registered futures association).

The CFTC argues that because section 12c is silent on the issue of which court has jurisdiction to perform the initial judicial review, we have no specific statutory authorization to perform the initial judicial review in this case. The CFTC contends that judicial review should begin in the district court and has moved to dismiss this case for want of jurisdiction, or alternatively, that we transfer this case to the district court. Jaunich, on the other hand, argues that a reading of the entire CEA indicates that initial judicial review should proceed in this court. Jaunich argues that it would not make sense to add an extra layer of review, and the time and expense that it brings, by transferring this case to the district court. Jaunich also argues that given the fact that the CFTC can institute its own disciplinary proceeding for a violation of exchange rules when the exchange itself fails to act, and that under 7 U.S.C. Sec. 9 the CFTC initiated proceeding would be subject to judicial review directly by the court of appeals, it would be incongruent to require initial judicial review by the district court in a virtually identical case where the only difference is that the exchange initially conducted the disciplinary proceeding.

We previously have dismissed a petition for direct review of an agency decision after finding that there was no special statute conferring jurisdiction on us to review the question presented. Noland, 544 F.2d at 334. Other courts, likewise, have concluded that where no authority is provided by statute for direct review of agency action in the court of appeals, judicial review should begin in the district court under 5 U.S.C. Sec. 703. See, e.g., International Bhd. of Teamsters v. Pena, 17 F.3d 1478, 1481 (D.C.Cir.1994) (unless a statute provides otherwise, default rule is that initial review of agency action should begin in district court instead of court of appeals); Illinois Dep't of Public Aid v. Schweiker, 707 F.2d 273, 277 (7th Cir.1983) ("presumption that final agency action is reviewable in district court if no specific method of judicial review is prescribed by statute"). See also 3 Davis & Pierce, Administrative Law, Sec. 18.2 at 165 (same). Thus, where the statute is silent on judicial review, we assume that review will proceed first in the district court.

However, where the statute is ambiguous on the subject of judicial review, other courts have resolved the ambiguities in favor of initial review of agency action in the court of appeals. National Parks and Conservation Ass'n v. Federal Aviation Admin., 998 F.2d 1523, 1529 (10th Cir.1993) ("[i]f there is any ambiguity as to whether jurisdiction lies with a district court or with a court of appeals we must resolve that ambiguity in favor of review by a court of appeals") (quoting Suburban O'Hare Comm'n v. Dole, 787 F.2d 186, 192 (7th Cir.) cert. denied, 479 U.S. 847, 107 S.Ct. 169, 93 L.Ed.2d 106 (1986)). The Supreme Court has articulated the reasons for resolving ambiguities in favor of initial review in the...

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    ...the Act or CFTC rules.3 The case law interpreting 7 U.S.C. § 9 further supports this conclusion. Jaunich v. United States Commodity Futures Trading Commission, 50 F.3d 518, 520 (8th Cir.1995) (court of appeals lacked jurisdiction to review CFTC orders issued under 7 U.S.C. § 12c(c), which i......
  • Clark v. Commodity Futures Trading Com'n, Docket No. 98-4291
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    • February 17, 1999
    ...Finally, we note our respectful disagreement with the analysis of our sister circuit in Jaunich v. United States Commodity Futures Trading Commission, 50 F.3d 518 (8th Cir.1995), a case on all fours factually with the case before us. Jaunich was a member and floor broker of the Minneapolis ......
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    • Connecticut Bar Association Connecticut Bar Journal No. 74, 1999
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