Zen Magnets, LLC v. Consumer Prod. Safety Comm'n

• Decision Date: 04 August 2020
• Docket Number: 19-1186,Nos. 19-1168,s. 19-1168
• Citation: 968 F.3d 1156
• Parties: ZEN MAGNETS, LLC, Plaintiff - Appellee/Cross-Appellant, v. CONSUMER PRODUCT SAFETY COMMISSION, Defendant - Appellant/Cross-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

968 F.3d 1156

ZEN MAGNETS, LLC, Plaintiff - Appellee/Cross-Appellant,

v.CONSUMER PRODUCT SAFETY COMMISSION, Defendant - Appellant/Cross-Appellee.

Nos. 19-1168

19-1186

United States Court of Appeals, Tenth Circuit.

FILED August 4, 2020

David C. Japha, Levin Jacobson Japha, PC, Denver, Colorado (Evan House with him on the briefs), for Plaintiff-Appellee/Cross-Appellant.

Jaynie Lilley, Attorney, Appellate Staff, United States Department of Justice, Civil Division, Washington, DC (Joseph H. Hunt, Assistant Attorney General; Jason R. Dunn, United States Attorney; Daniel Tenny and Patrick G. Nemeroff, Attorneys, Appellate Staff, on the briefs), for Defendant-Appellant/Cross-Appellee.

Before BACHARACH, McHUGH, and EID, Circuit Judges.

BACHARACH, Circuit Judge.

The Consumer Product Safety Commission conducted two proceedings involving the making of small rare-earth magnets. The first proceeding consisted of a rulemaking affecting all manufacturers of these magnets. The second proceeding consisted of an adjudication affecting only one manufacturer: Zen Magnets, LLC. For the adjudication, the Commission needed to provide Zen with a fair proceeding under the Fifth Amendment's Due Process Clause. Withrow v. Larkin , 421 U.S. 35, 46–47, 95 S.Ct. 1456, 43 L.Ed.2d 712 (1975).

Zen contends that the adjudication was unfair for two reasons:

1. The Commissioners conducted the adjudication after engaging in a rulemaking on closely related issues.

2. Three Commissioners participated in the adjudication after making public statements showing bias.

The district court concluded that

• the Commission hadn't denied due process by simultaneously conducting the adjudication after a related rulemaking,

• two of the Commissioners (Kaye and Robinson) had not shown bias through their public statements, and

• one Commissioner (Adler) had shown bias through a public statement about Zen.

Both parties appeal. The Commission appeals the district court's decision as to Commissioner Adler. Zen cross-appeals, arguing that

• three Commissioners had violated due process by prejudging the issues and

• the district court had issued an advisory opinion on the merits.

Our jurisdiction extends to the parties’ contentions involving due process. For these contentions, we conclude that the Commissioners’ participation in the rulemaking and their statements did not result in a denial of due process. So we affirm the district court's judgment as to Commissioners Robinson and Kaye but reverse as to Commissioner Adler. We lack jurisdiction to decide whether the district court rendered an advisory opinion.

I. The Commission conducts a rulemaking and a related adjudication.

Zen's small rare-earth magnets are shiny and smooth, resembling candies that commonly garnish cookies and desserts. The appearance sometimes leads young children to put the magnets in their mouths. Older children also sometimes put the magnets in their mouths to magnetize braces or mimic facial piercings. When put in children's mouths, the magnets are sometimes swallowed, lodging in the digestive system and causing serious injury or death.

The Consumer Product Safety Commission tried to address this danger through both rulemaking and adjudication. Through rulemaking, the Commission proposed a safety standard to either enlarge the magnets or weaken their magnetic strength. See Safety Standard for Magnet Sets, 77 Fed. Reg. 53,781, 53,787 –88 (Sept. 4, 2012); 15 U.S.C. §§ 2056(a), 2058 (2018). The Commission approved the final rule in a public hearing in September 2014.¹ At that hearing, three of the Commission's members (Adler, Kaye, and Robinson) made statements about the risk posed by the magnets, the impossibility of mitigating that risk, and Zen's role as a magnet distributor.

Shortly after proposing the safety standard, the Commission initiated an adjudication by authorizing complaints against Zen and two other distributors of small rare-earth magnets. The complaints alleged that the magnets presented a "substantial product hazard." See 15 U.S.C. § 2064(a) (2018). The other two distributors entered into consent agreements with the Commission, leaving Zen as the only remaining distributor in the adjudication.

In that adjudication, an administrative law judge found that

• the magnets did not present a substantial product hazard when accompanied by appropriate warnings and age recommendations and

• the previous warnings had been inadequate.

Given these findings, the administrative law judge recalled the magnets that Zen had sold without adequate warnings or age recommendations.

Counsel for the agency appealed to the Consumer Product Safety Commission, and Zen sought recusal of Commissioners Adler, Robinson, and Kaye, arguing that they had improperly prejudged the adjudication based on

• the overlap between the issues in the rulemaking and adjudication and

• the Commissioners’ public statements.

The Commissioners declined to recuse. Three years after passing the final magnet rule, the Commission decided that

• the magnets presented a substantial product hazard because a defect created a substantial risk of public injury and

• no warnings could mitigate the risk of injury.

Zen appealed to federal district court, renewing challenges to the participation of Commissioners Adler, Robinson, and Kaye and arguing that the Commission's decision was arbitrary and capricious under the Administrative Procedure Act. The district court ruled that (1) the decision was not arbitrary and capricious, (2) Commissioners Robinson and Kaye had not violated due process by participating in the adjudication after publicly remarking about Zen and its magnets, and (3) Commissioner Adler had violated due process by participating in the adjudication after publicly remarking about Zen and its magnets. The district court thus invalidated the Commission's final order.

After the district court issued its order, Zen filed a Rule 59(e) motion to alter or amend the judgment. In this motion, Zen asked the district court to vacate its conclusion that the Commission's reasoning was not arbitrary and capricious, characterizing this conclusion as an impermissible advisory opinion. The district court rejected this request.

II. We conduct de novo review.

Our review is de novo. N. M. Cattle Growers Ass'n v. U.S. Fish & Wildlife Serv. , 248 F.3d 1277, 1281 (10th Cir. 2001). The Commission's opening brief cites the standard to review a summary-judgment ruling, and the parties refer to their briefs in district court as cross-motions for summary judgment. See First Br. at 17; Appellant's App'x, vol. 2, at 398, 419. But the summary-judgment standard doesn't apply because the district court's decision involved an administrative appeal. See Olenhouse v. Commodity Credit Corp. , 42 F.3d 1560, 1579–80 (10th Cir. 1994) (stating that district courts reviewing agency actions should function like appellate courts and "motions for summary judgment are conceptually incompatible with the very nature and purpose of an appeal").

III. We have jurisdiction over the Commission's appeal and part of Zen's cross-appeal.

Every appellant bears the burden of proving appellate jurisdiction by demonstrating the finality of the challenged decision or identifying a specific grant of jurisdiction. EEOC v. PJ Utah, LLC , 822 F.3d 536, 542 n.7 (10th Cir. 2016) ; see 28 U.S.C. § 1291 (2018). An administrative remand is not ordinarily considered a final decision. Western Energy All. v. Salazar , 709 F.3d 1040, 1047 (10th Cir. 2013). We thus generally lack jurisdiction over remands to administrative agencies. Id.

Both parties invoke the practical-finality exception for their appeals. We conclude that the exception applies to the Commission's appeal as to the disqualification of Commissioner Adler, and we exercise pendent appellate jurisdiction over Zen's cross-appeal as to the participation of Commissioners Kaye and Robinson. But we lack jurisdiction over Zen's cross-appeal on the refusal to vacate the district court's opinion as an advisory opinion.

A. We have jurisdiction over the Commission's appeal under the practical-finality exception.

Though appellate jurisdiction requires finality, we construe the term "finality" based on practicality. Gillespie v. U.S. Steel Corp. , 379 U.S. 148, 152, 85 S.Ct. 308, 13 L.Ed.2d 199 (1964). With this lens of practicality, we sometimes regard a district court's remand to an agency as "practically final." Western Energy All. v. Salazar , 709 F.3d 1040, 1049–50 (10th Cir. 2013). A district court's remand is practically final when it is urgent that an issue be decided because it is important, serious, and unsettled. Bender v. Clark , 744 F.2d 1424, 1427 (10th Cir. 1984).

To decide whether a decision is practically final, we ask whether "the danger of injustice by delaying appellate review outweighs the inconvenience and costs of piecemeal review." New Mexico v. Trujillo , 813 F.3d 1308, 1317 (10th Cir. 2016) (quoting United States v. Copar Pumice Co. , 714 F.3d 1197, 1209 (10th Cir. 2013) ).

Practical finality is particularly appropriate when an agency may be foreclosed from appellate review. Id. at 1318 n.4 ; Bender v. Clark , 744 F.2d 1424, 1428 (10th Cir. 1984). For example, we found the ruling practically final in Bender v. Clark, 744 F.2d 1424, 1427–28 (10th Cir. 1984). In Bender , a district court remanded after concluding that the Interior Board of Land Appeals had applied the wrong standard of proof. 744 F.2d at 1426. In exercising jurisdiction, we emphasized the importance of applying the correct standard of proof. Id. at 1428. Though the issue was important, it was unlikely to return if we did not undertake appellate review. Id. So deferring appellate jurisdiction would have threatened our ability to address an important issue involving the standard of proof. Id.

Deferring jurisdiction here could similarly threaten our ability to address the Commission's appellate issue involving due process. This issue is serious and important, for due process is an "absolute...