Kessenich v. Commodity Futures Trading Com'n
| Decision Date | 27 July 1982 |
| Docket Number | Nos. 81-2137,81-2138,s. 81-2137 |
| Citation | 221 U.S. App. D.C. 314,684 F.2d 88 |
| Parties | Paul W. KESSENICH, Petitioner, v. COMMODITY FUTURES TRADING COMMISSION, Respondent. ROSENTHAL & COMPANY, Petitioner, v. COMMODITY FUTURES TRADING COMMISSION, Respondent, Paul W. Kessenich, Intervenor. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Petitions for Review of an Order of the Commodity Futures Trading commission.
On Motions to Dismiss and to Disqualify Counsel.
William E. Sumner and Anneke Woodward, Atlanta, Ga., for Paul W. Kessenich, petitioner in No. 81-2137 and intervenor in No. 81-2138.
David R. Merrill and William E. Gressman, Washington, D. C., for respondent.
Before TAMM and WILKEY, Circuit Judges.
Opinion PER CURIAM.
In these cases transferred from the Fifth Circuit, 1 both parties cross-appeal a reparations award of the Commodity Futures Trading Commission (CFTC). The successful complainant before the CFTC, Paul Kessenich, moves to dismiss Rosenthal & Company's cross-appeal and moves to disqualify Rosenthal's counsel. We grant the motion to dismiss because the better interpretation of the applicable statute is that the time to file the required bond is jurisdictional and Rosenthal filed the bond out of time. Rosenthal's counsel is a former employee of the CFTC and initially processed Kessenich's complaint. Although there is little indication that this counsel has gained an actual advantage from his past official connection with the case, we grant the motion to disqualify in order to protect the integrity of this court and the agency.
Under section 14 of the Commodity Exchange Act, 7 U.S.C. § 18 (1976), a person aggrieved in certain transactions dealing with commodity trading is given an exclusive remedy for his injury. He may submit a petition to the CFTC setting forth the relevant facts. The Commission initially determines whether the facts alleged, if true, constitute a violation of the Act and whether the facts show that the complainant was injured as a result of the violation. See id. § 18(a); 17 C.F.R. § 12.21. This screening of complaints has been delegated to the Director of the Commission's Division of Enforcement, who has designated the Reparation Unit to perform the task. Where a cognizable claim is determined to be stated, the Commission forwards a copy of the complaint to the respondent for satisfaction or response. If the complaint is not satisfied, the Commission may institute a formal adjudicatory proceeding before an Administrative Law Judge (ALJ). Following a hearing, the ALJ renders an initial decision establishing liability and compensation, which may be reviewed by the Commission. A final decision of the Commission may be appealed to the U.S. Court of Appeals for the circuit in which the hearing was held or, if no hearing was held, in any circuit in which the appellee is located. See 7 U.S.C. § 18(g); Rosenthal & Co. v. CFTC, 658 F.2d 278 (5th Cir. 1981).
In accordance with these procedures, Paul Kessenich filed a complaint with the Commission on March 6, 1977. The letter was addressed to Clinton Burr, an attorney in the Division of Enforcement. (He was later designated Chief of Reparations in November 1977.) The complaint alleged unlawful acts in connection with certain unauthorized transactions in commodity options on Kessenich's account with Rosenthal & Company (Rosenthal). When no settlement was reached by the parties, the complaint was forwarded for adjudication.
A hearing was held in Washington on May 25, 1978. A final decision of the CFTC was rendered on March 24, 1981. The Commission awarded Kessenich $980.46 in damages and $10,470.54 for speculative lost profits. On April 1, 1981, the law firm that had represented Rosenthal before the CFTC was replaced by Rosenthal's general counsel. This counsel is the same Clinton Burr who had previously worked at the CFTC.
Rosenthal filed a petition for review of the CFTC's decision in the Fifth Circuit on April 7, 1981. It filed the bond required by statute on May 6, 1981. Kessenich cross-appealed shortly thereafter. Three motions were made before the Fifth Circuit:
(1) Rosenthal moved for transfer to the District of Columbia Circuit because that is the location in which the hearing was held;
(2) Kessenich moved to dismiss in No. 81-2138 for failure to file the bond in a timely manner. The statute requires bond to be filed within 30 days of the Commission's decision, and Rosenthal's bond was filed 43 days after the decision (3) Kessenich moved to disqualify Clinton Burr as Rosenthal's counsel in both cases because he had dealt with the case while at the CFTC.
Apparently the Fifth Circuit consolidated the cases. It then granted the motion to transfer to this circuit without deciding the motions to dismiss and to disqualify. See Rosenthal & Co. v. CFTC, 658 F.2d 278 (5th Cir. 1981). These two motions are now before the panel.
The motion to dismiss is well taken. The relevant subsection of the Commodities Exchange Act, dealing with judicial review of reparation hearings, states in full:
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 section 9 of this title. Such appeal shall not be effective unless within 30 days from and after the date of the reparation order the appellant also files with the clerk of the court a bond in double the amount of the reparation awarded against the appellant conditioned upon the payment of the judgment entered by the court, plus interest and costs, including a reasonable attorney's fee for the appellee, if the appellee shall prevail. Such bond shall be in the form of cash, negotiable securities having a market value at least equivalent to the amount of bond prescribed, or the undertaking of a surety company on the approved list of sureties issued by the Treasury Department of the United States. The appellee shall not be liable for costs in said court. If the appellee prevails, he shall be allowed a reasonable attorney's fee to be taxed and collected as part of his costs.
7 U.S.C. § 18(g) (emphasis added).
Generally the limits placed on the time to seek judicial review are "jurisdictional and unalterable." Microwave Communications, Inc. v. FCC, 515 F.2d 385, 389 (D.C.Cir.1974). Here the plain meaning of the statute is that filing of a bond in a timely manner is a prerequisite to pursuing appeal. In Saharoff v. Stone, 638 F.2d 90 (9th Cir. 1980), the Ninth Circuit held that filing of the bond was mandatory:
The plain meaning of § 18 requires a double bond to be filed in order to obtain judicial review. (Petitioner) has identified no legislative history and we have discovered none, which persuades us the filing of the bond was not intended to be a mandatory requirement.
Id. at 91-92. The court did not reach the question whether the time for filing was unalterable. 2
The bond requirement reflects at the least a strong congressional concern for either prompt payment of the reparation award or a guarantee that it will be paid. This concern is manifest in 7 U.S.C. § 18(h), which mandates suspension of trading for any registered trader who fails either to take an appeal or to pay the award within 15 days of the end of the period allowed for compliance with the award. A plain reading of the statute thus indicates that the time to file the bond is significant.
There is one other strong indication that the time for filing a bond is jurisdictional. As the Commission notes in its response to the motion to dismiss, section 18 is patterned after the judicial review portions of the Perishable Agricultural Commodities Act (PACA), 7 U.S.C. § 499g(c). As discussed below, there is little if any doubt that timely filing of the appropriate bond is a jurisdictional prerequisite for judicial review under that statute. It therefore follows that timely filing of the bond should also be necessary to seek review under section 18.
Under PACA, judicial review may be sought in the United States District Court, but the review is conditioned with identical language concerning filing of a bond for double the amount of the reparation award within thirty days after the date of the award. The House Report concerning the implementation of the bond requirement for PACA leaves no doubt that timely filing of the bond was intended to be jurisdictional:
Section 9 (of the bill) amends section 7(c) of the act to make it clear that an appeal from a reparation award of the Secretary shall not be effective as an appeal, and therefore not a matter within the jurisdiction of the district court of the United States in which the petition is filed, unless the required bond is filed with the court within 30 days from and after the date of the Secretary's order.
H.R.Rep.No.1546, 87th Cong., 2d Sess. 7 (1962), reprinted in 1962 U.S.Code Cong. & Ad.News 2749, 2754. 3 The bill which was later enacted as the Commodity Futures Trading Commission Act of 1974 (CFTC Act) also provided for review in the district court conditioned upon the timely filing of the bond. See H.R.Rep.No.975, 93d Cong., 2d Sess. 7, 121 (1974). The Conference Report accepted an alteration by the Senate to allow a more restricted scope of judicial review to be carried out by the courts of appeals. See S.Rep.No.1194, 93d Cong., 2d Sess. 7, 34-35 (1974). The bond requirement was retained. This strongly indicates that Congress also intended that timely filing of the bond in the court of appeals is a jurisdictional requirement under the CFTC Act.
Rosenthal counters these indications of congressional intent with a number of arguments. First, it claims that Kessenich has suffered no prejudice from the late filing of the bond. Whether Kessenich has been prejudiced in...
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