Reliable Auto. Sprinkler v. Consumer Prod. Safety

• Decision Date: 11 April 2003
• Docket Number: No. 02-5032.,02-5032.
• Citation: 324 F.3d 726
• Parties: The RELIABLE AUTOMATIC SPRINKLER CO., INC., Appellant, v. CONSUMER PRODUCT SAFETY COMMISSION, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

324 F.3d 726

The RELIABLE AUTOMATIC SPRINKLER CO., INC., Appellant, v. CONSUMER PRODUCT SAFETY COMMISSION, Appellee.

No. 02-5032.

United States Court of Appeals, District of Columbia Circuit.

Argued March 14, 2003.

Decided April 11, 2003.

COPYRIGHT MATERIAL OMITTED

Appeal from the United States District Court for the District of Columbia (No. 01cv00025).

Stephen P. Murphy argued the cause for appellant. With him on the briefs was Edward J. McAndrew.

Christine N. Kohl, Attorney, United States Department of Justice, argued the cause for appellee. With her on the brief were Roscoe C. Howard, Jr., United States Attorney, and Douglas N. Letter, Attorney.

Before: GINSBURG, Chief Judge, and EDWARDS and GARLAND, Circuit Judges.

Opinion for the Court filed by Circuit Judge HARRY T. EDWARDS.

HARRY T. EDWARDS, Circuit Judge:

This case arises from an investigation by appellee Consumer Product Safety Commission ("CPSC" or "the Commission") of automatic sprinkler heads manufactured by appellant Reliable Automatic Sprinkler Company ("Reliable"). Commission compliance officials informed Reliable that they intended to make a preliminary determination that the sprinkler heads present a "substantial product hazard" as defined by the Consumer Product Safety Act ("the Act"), 15 U.S.C. § 2064(a). They also requested Reliable to undertake voluntary corrective action to address the alleged hazards associated with the sprinkler heads. In response, Reliable filed suit against the Commission in the District Court, seeking a declaratory judgment that the agency lacks statutory authority to regulate Reliable's sprinkler heads, because they are not "consumer products" as defined by the Act, 15 U.S.C. § 2052(a)(1). The District Court granted the Commission's motion to dismiss for lack of final agency action.

On appeal, Reliable contends that the District Court erred in finding no final agency action. Reliable argues that the Commission has pursued its investigation against the company on the erroneous assumption that the disputed sprinkler heads are "consumer products" under the Act. Thus, according to Reliable, the Commission has taken final agency action in determining that Reliable's sprinkler heads are "consumer products" under the Act and in assuming jurisdiction to regulate them. We reject these contentions.

The Act makes it clear that the Commission has no authority to coercively regulate products before first conducting a formal, on-the-record adjudication. It is undisputed here that the Commission has yet to issue a complaint; it has yet to authorize or conduct a hearing; it has yet to determine conclusively its jurisdiction to regulate; it has yet to determine whether the sprinkler heads present a "substantial product hazard"; and it has yet to issue any compliance orders against Reliable. CPSC has merely conducted an investigation and issued a letter requesting voluntary compliance. This does not constitute final agency action and is therefore unreviewable. Accordingly, we affirm the judgment of the District Court.

I. BACKGROUND

The Act, 15 U.S.C. § 2051 et seq., gives the Commission the authority to conduct investigations on the safety of consumer products. Id. § 2054(b). A principal responsibility of the Commission is to determine "that a product distributed in commerce presents a substantial product hazard and that notification is required in order to adequately protect the public from such substantial product hazard." Id. § 2064(c). If CPSC makes such a determination, it may order the manufacturer, retailer, or distributor of the product to give public notice of the defect, bring the product into compliance with applicable safety standards, replace the product, or refund the purchase price. See id. § 2064(c), (d). The agency can make such a determination and issue a compliance order only after affording interested persons an opportunity for a hearing in accordance with the formal, on-the-record adjudication requirements of the Administrative Procedure Act ("APA"), 5 U.S.C. § 554. See 15 U.S.C. § 2064(c), (d), (f).

Prior to initiating the administrative proceedings required under this statutory scheme, the Commission can "attempt to protect the public from substantial product hazards by seeking ... voluntary remedies," such as "corrective action plans," in which a firm sets forth the remedial action it will voluntarily undertake. 16 C.F.R. § 1115.20. A corrective action plan explains, inter alia, how a firm will notify the public of the hazard, and whether the firm will repair or replace the product, or refund the purchase price. Id. § 1115.20(a). This voluntary corrective action "has no legally binding effect." Id. If the Commission is unable to obtain a firm's voluntary corrective action, it may file an administrative complaint, which initiates formal administrative proceedings, see id. § 1025.11, including a trial-type hearing in accordance with the Commission's rules. See id. § 1025.

Reliable is a manufacturer of automatic sprinkler heads that are incorporated into automatic fire sprinkler systems installed in commercial buildings. From 1973 to 1983, Reliable manufactured the "Model A Flush" sprinkler heads. In 1999, the Commission's Office of Compliance began investigating these sprinkler heads to determine whether they present a substantial product hazard. On September 11, 2000, Commission compliance officials informed Reliable by letter that "it is the intention of the Compliance staff to make the preliminary determination that these sprinklers present a substantial product hazard, as defined by ... 15 U.S.C. § 2064(a)." Letter from Jimmie L. Williams, Jr., Counsel for Office of Compliance, CPSC, to Paul D. Derounian, Counsel for Reliable (Sept. 11, 2000), reprinted in Joint Appendix ("JA") 27. But prior to making the preliminary determination, the officials requested Reliable to take "voluntary corrective action," pursuant to 16 C.F.R. § 1115.20(a). Id.

To date, Reliable has not submitted a voluntary corrective action plan. The Commission has not yet made a formal determination that the sprinkler heads present a "substantial product hazard," or even filed an administrative complaint initiating the administrative proceedings that would be required before the agency could make such a determination. Indeed, the Commission has not as yet made a record determination that it has jurisdiction over Reliable's sprinkler heads. The Commission has brought administrative enforcement proceedings pursuant to 15 U.S.C. § 2064 against several other manufacturers of sprinkler heads, see CPSC Admin. Compl. ¶ 1, JA 59; CPSC Admin. Compl. ¶ 1, JA 166, but Reliable is not a party to those proceedings.

On January 9, 2001, Reliable filed the instant suit against the Commission in the District Court, seeking a declaratory judgment that Reliable's sprinkler heads are not "consumer products" within the meaning of the Act, 15 U.S.C. § 2052(a)(1), which defines "consumer product," subject to certain exceptions, as:

any article, or component part thereof, produced or distributed (i) for sale to a consumer for use in or around a permanent or temporary household or residence, a school, in recreation, or otherwise, or (ii) for the personal use, consumption or enjoyment of a consumer in or around a permanent or temporary household or residence, a school, in recreation, or otherwise....

Reliable contended that, because its sprinkler heads are not consumer products within the meaning of the Act, the Commission lacked statutory authority to regulate Reliable's sprinkler heads. See Complaint for Declaratory Judgment, JA 5, 9-10. The District Court granted the Commission's motion to dismiss for lack of subject matter jurisdiction pursuant to FED. R. CIV. P. 12(b)(1). See Reliable Automatic Sprinkler Co., Inc. v. CPSC, 173 F.Supp.2d 41, 52 (D.D.C.2001). Relying on FTC v. Standard Oil Co. of Cal., 449 U.S. 232, 243, 101 S.Ct. 488, 494-95, 66 L.Ed.2d 416 (1980) (holding that the agency's issuance of an administrative complaint averring reason to believe that the plaintiff was violating the law is not final agency action), the District Court held that the Commission's investigatory steps did not rise to the level of final agency action within the meaning of the APA. Reliable, 173 F.Supp.2d at 52.

II. ANALYSIS

We review de novo the District Court's grant of appellee's motion to dismiss. Weyrich v. New Republic, Inc., 235 F.3d 617, 623 (D.C.Cir.2001).

Under the APA, "[a]gency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review." 5 U.S.C. § 704. As a threshold matter, the parties raise the issue of whether the District Court's dismissal of the case pursuant to FED.R.CIV.P. 12(b)(1) was improper, because, in cases such as this one, in which judicial review is sought under the APA rather than a particular statute prescribing judicial review, the requirement of final agency action is not jurisdictional under Califano v. Sanders, 430 U.S. 99, 107, 97 S.Ct. 980, 985, 51 L.Ed.2d 192 (1977) (holding that "the APA does not afford an implied grant of subject-matter jurisdiction permitting federal judicial review of agency action"). We need not dwell on this issue, for it raises a question of no significance in this case. If there was no final agency action here, there is no doubt that appellant would lack a cause of action under the APA. Therefore, even though there was no basis for dismissal under Rule 12(b)(1), we may properly affirm the District Court's judgment pursuant to Rule 12(b)(6). See EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C.Cir.1997).

Having disposed of the threshold issue, we turn now to the question of finality. The District Court's authority to review the conduct of an administrative agency is limited to cases challenging "final agency action." 5 U.S.C. § 704. An agency action is deemed final if it is "`definitive'...