NO. 18-16034

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

AMERITECH FINANCIAL, ET AL.,

Plaintiffs-Appellants,

v.

FEDERAL TRADE COMMISSION,

Defendant-Appellee.

On Appeal from the United States District Court

for the Northern District of California

No. 4:17-cv-04817-SBA

Hon. Saundra Brown Armstrong, U.S. Distr. J.

ANSWERING BRIEF

FOR THE FEDERAL TRADE COMMISSION

ANDREW SMITH

Director

SARAH SCHROEDER

ROBERTA TONELLI

Attorneys

Bureau of Consumer Protection

ALDEN ABBOTT

General Counsel

JOEL MARCUS

Deputy General Counsel

IMAD D. ABYAD

Attorney

FEDERAL TRADE COMMISSION

600 Pennsylvania Ave., N.W.

Washington, DC 20580

(202) 326-3579

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TABLE OF CONTENTS

Page

INTRODUCTION......................................................................................1

JURISDICTION ........................................................................................2

QUESTIONS PRESENTED .....................................................................3

STATEMENT OF THE CASE ..................................................................3

A. The FTC Act and Enforcement Process..................................3

B. The FTC’s Telemarketing Sales Rule.....................................6

C. Appellants’ Business Practices ...............................................7

D. Appellants’ Declaratory Judgment Action .............................9

E. The FTC’s Enforcement Action.............................................11

F. Proceedings Below.................................................................12

STANDARD OF REVIEW.......................................................................16

SUMMARY OF ARGUMENT.................................................................16

ARGUMENT ...........................................................................................20

I. APPELLANTS’ DECLARATORY JUDGMENT ACTION FAILED

TO SATISFY THE APA REQUIREMENTS FOR JUDICIAL 

REVIEW............................................................................................20

A. The APA Is Appellants’ Only Route to Judicial 

Review ...................................................................................20

B. Appellants’ Claims Fail the APA Requisites for 

Judicial Review .....................................................................23

1. Appellants do not challenge any “final” FTC 

action ............................................................................23

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2. Appellants have another remedy for their 

claims............................................................................30

C. Appellants Waived Any Argument That They 

Can Seek Review Under the APA, But Their 

Claims Are Meritless Anyway ..............................................31

1. Appellants did not preserve below the 

argument that they satisfy the APA finality 

test................................................................................31

2. Appellants’ APA arguments lack merit

anyway .........................................................................33

D. The “Agency Delay” Exception to the APA 

Finality Requirement Does Not Apply .................................40

II. APPELLANTS’ RIPENESS ARGUMENTS ARE NOT PROPERLY 

BEFORE THIS COURT AND ARE MERITLESS ANYWAY ........................42

III. THE DISTRICT COURT PROPERLY DENIED APPELLANTS 

LEAVE TO AMEND THEIR COMPLAINT YET AGAIN .............................46

CONCLUSION ........................................................................................47

STATEMENT OF RELATED CASES ....................................................48

CERTIFICATE OF COMPLIANCE

CERTIFICATE OF SERVICE

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TABLE OF AUTHORITIES

CASES PAGE

Abbott Labs. v. Gardner,

387 U.S. 136 (1967) ........................................................................43

Air Line Pilots Ass’n Int’l v. Civil Aeronautics Bd.,

750 F.2d 81 (D.C. Cir. 1984) ..........................................................40

Arch Mineral Corp. v. Babbitt,

104 F.3d 660 (4th Cir. 1997) ..........................................................39

Atchison, Topeka & Santa Fe Ry. Co. v. Pena,

44 F.3d 437 (7th Cir. 1994) ...................................................... 39, 40

Bennett v. Spear,

520 U.S. 154 (1997) .......................................... 17, 24, 26, 28, 35, 36

Blue Ribbon Quality Meats, Inc. v. FTC,

560 F.2d 874 (8th Cir. 1977) .................................................... 26, 30

Califano v. Sanders,

430 U.S. 99 (1977) ..........................................................................43

Casey v. FTC,

578 F.2d 793 (9th Cir. 1978) ............................................................4

Chicago & S. Air Lines, Inc. v. Waterman S.S. Corp.,

333 U.S. 103 (1948) ........................................................................35

Ciba-Geigy Corp. v. EPA,

801 F.2d 430 (D.C. Cir. 1986)................................. 18, 35, 36, 37, 38

Direct Mktg. Concepts, Inc. v. FTC,

581 F.Supp.2d 115 (D. Mass. 2008) ...............................................26

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Cases (Cont’d) Page

Fairbanks North Star Borough v. U.S. Army Corps of Eng’rs,

543 F.3d 586 (9th Cir. 2008) ..........................................................24

FTC v. Pantron I Corp.,

33 F.3d 1088 (9th Cir. 1994) ............................................................5

FTC v. Standard Oil Co. of Cal.,

449 U.S. 232 (1980) ................................................................ passim

Gallo Cattle Co. v. U.S. Dep’t of Agric.,

159 F.3d 1194 (9th Cir. 1998) ........................................................22

General Finance Corp. v. FTC,

700 F.2d 366 (7th Cir. 1983) ........................................ 22, 26, 29, 45

Int’l Union of Bricklayers & Allied Craftsman Local

Union No. 20, AFL-CIO v. Martin Jaska, Inc.,

752 F.2d 1401 (9th Cir. 1985) ........................................................33

Kline v. Johns-Manville,

745 F.2d 1217 (9th Cir. 1984) ........................................................33

Kokkonen v. Guardian Life Ins. Co. of Am.,

511 U.S. 375 (1994) .................................................................. 20, 21

Komatsu, Ltd. v. States S.S. Co.,

674 F.2d 806 (9th Cir. 1982) ..........................................................33

LabMD, Inc. v. FTC,

776 F.3d 1275 (11th Cir. 2015) ......................................................26

Lone Star Cement Corp. v. FTC,

339 F.2d 505 (9th Cir. 1964) ..........................................................29

Marathon Oil Co. v. U.S.,

807 F.2d 759 (9th Cir. 1986) .................................................... 13, 21

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Cases (Cont’d) Page

Merrell Dow Pharm. Inc. v. Thompson,

478 U.S. 804 (1986) ........................................................................21

Navajo Nation v. Dep’t of the Interior,

876 F.3d 1144 (9th Cir. 2017) .................................................. 13, 22

Pence v. Andrus,

586 F.2d 733 (9th Cir. 1978) .................................................... 43, 44

Pub. Util. Comm’r of Or. v. Bonneville Power Admin.,

767 F.2d 622 (9th Cir. 1985) ..........................................................40

Recinto v. U.S. Dep’t of Veterans Affairs,

706 F.3d 1171 (9th Cir. 2013) .................................................. 16, 33

Recycle for Change v. City of Oakland,

856 F.3d 666 (9th Cir. 2017) ..........................................................31

Republican Party of Guam v. Gutierrez,

277 F.3d 1086 (9th Cir. 2002) ........................................................22

Rhoades v. Avon Prods., Inc.,

504 F.3d 1151 (9th Cir. 2007) ........................................................21

San Francisco Cnty. Democratic Cent. Comm. v. Eu,

826 F.2d 814 (9th Cir. 1987) ..........................................................16

Schreiber Distrib. Co. v. Serv–Well Furniture Co.,

806 F.2d 1393 (9th Cir. 1986) ........................................................47

Singleton v. Wulff,

428 U.S. 106 (1976) ........................................................................43

Standard Ins. Co. v. Saklad,

127 F.3d 1179 (9th Cir. 1997) ........................................................43

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Cases (Cont’d) Page

Taylor v. Sentry Life Ins. Co.,

729 F.2d 652 (9th Cir. 1984) ..........................................................33

Telecomm. Research & Action Ctr. v. FCC,

750 F.2d 70 (D.C. Cir. 1984) ..........................................................40

Telesaurus VPC, LLC v. Power,

623 F.3d 998 (9th Cir. 2010) .................................................... 16, 47

Ukiah Valley Med. Ctr. v. FTC,

911 F.2d 261 (9th Cir. 1990) .................................. 14, 23, 26, 29, 42

Ukiah Valley Med. Ctr. v. FTC,

1990 WL 25035 (N.D. Cal. Jan. 30, 1990) .....................................29

United States v. Morton Salt Co.,

338 U.S. 632 (1950) ..........................................................................4

U.S. ex rel. Silingo v. WellPoint, Inc.,

904 F.3d 667 (9th Cir. 2018) ..........................................................16

Western Ill. Home Health Care, Inc. v. Herman,

150 F.3d 659 (7th Cir. 1998) .................................................... 38, 39

Wilton v. Seven Falls Co.,

515 U.S. 277 (1995) ........................................................................21

Statutes & Regulations

5 U.S.C. §§ 701 et seq...........................................................................13

§ 703.......................................................................................22

§ 704............................................................... 14, 22, 23, 30, 32

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Statutes & Regulations (Cont’d) Page

15 U.S.C. §§ 41 et seq...............................................................................3

§ 43 ..........................................................................................4

§ 45(a) ..................................................................................3, 4

§ 45(b) ..................................................................................4, 5

§ 45(c).......................................................................................5

§ 46 ..........................................................................................4

§ 49 ..........................................................................................4

§ 53(b) ............................................................................ 4, 5, 44

§ 57a(d)(3)................................................................................6

§ 57b-1 .....................................................................................4

§§ 6101-6108............................................................................6

§ 6102(c)...................................................................................6

28 U.S.C. § 1291.......................................................................................3

§ 1331........................................................................... 2, 10, 21

§ 1651(a) ................................................................................40

§ 2201..................................................................... 2, 10, 13, 21

16 C.F.R. § 2.7 .........................................................................................4

§ 2.7(b) .....................................................................................4

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Statutes & Regulations (Cont’d) Page

16 C.F.R. §§ 3.51-3.54..............................................................................5

§ 4.14.................................................................................. 6, 24

16 C.F.R. Part 310...................................................................................6

§ 310.2(o) ........................................................................... 7, 37

§ 310.3(a)(2)(x).........................................................................6

§ 310.4(a)(5)(i) .........................................................................7

Fed. R. Civ. P. 65(b)(1) .........................................................................44

65(b)(3) .........................................................................44

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INTRODUCTION

Appellants are three interrelated corporations that purportedly 

provided student loan debt relief services, and an individual who is 

their CEO and primary shareholder. The Federal Trade Commission 

(FTC) suspected that appellants were violating the FTC Act and related 

rules and began to investigate. Appellants then sought to short-circuit 

the agency’s normal investigation and enforcement processes by rushing

to court seeking a declaration that their practices do not violate the law, 

rather than awaiting the outcome of the investigation and then—if 

necessary—defending themselves against an enforcement lawsuit. In 

the order on appeal, the district court rejected their attempt to jump the 

gun and dismissed their case for lack of subject matter jurisdiction on 

the ground that the FTC had not taken any “final agency action” that 

could be challenged in court.

Meanwhile, the FTC concluded its investigation and filed an 

enforcement complaint against appellants in the same district court. 

The FTC’s complaint alleged that appellants violated the FTC Act and 

related rules by operating a student debt relief scam that tricked 

consumers out of millions of dollars. The United States recently filed

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criminal charges for the same conduct against appellant Frere, who ran 

the scheme.

Appellants could have focused on defending their practices in the 

FTC’s enforcement case, where they could—and, in fact, did—raise the 

exact same claims and defenses that they raised in this declaratory

action. Instead, they have filed this appeal from the district court’s 

dismissal of their complaint.

Appellants now attempt to recast their complaint to avoid an

unbroken, decades-long line of authority precluding judicial challenges 

to FTC investigations. The attempt fails. For one thing, they waived 

their principal argument that they satisfied the APA requirements for 

suit by failing to raise it below. The claim fails on its merits in any 

event because a judicial challenge to an FTC investigation is plainly not 

viable under longstanding and unbroken precedent. The Court should 

affirm the decision below.

JURISDICTION

Appellants claimed in their complaint below that the district court 

had jurisdiction under the Declaratory Judgment Act, 28 U.S.C. § 2201, 

and the general federal question statute, 28 U.S.C. § 1331. The district 

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court held that it lacked jurisdiction, and as we show below, that 

determination was correct. This Court has jurisdiction under 28 U.S.C. 

§ 1291.

QUESTIONS PRESENTED

Appellants sought a declaration that their student loan debt relief 

services—which, at the time of their complaint, were the subject of an 

ongoing FTC investigation—were either not subject to, or not in 

violation of, the FTC Act and related regulations. The district court 

dismissed for lack of subject matter jurisdiction. The questions 

presented on appeal are:

1. Whether the district court had jurisdiction; and

2. Whether the district court properly exercised its discretion 

when it denied leave to file a second amended complaint.

STATEMENT OF THE CASE

A. The FTC Act and Enforcement Process

The FTC Act, 15 U.S.C. §§ 41 et seq., prohibits “unfair methods of 

competition” and “unfair or deceptive acts or practices” in or affecting 

commerce. Id. § 45(a). Congress empowered the FTC to enforce these 

provisions, in its discretion, either through administrative adjudication 

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or enforcement actions in federal district courts. Id. §§ 45(a) & (b), 

53(b).

Congress also authorized the FTC to undertake investigations, 

and issue compulsory process, to ferret out violations of the FTC Act. 

Section 3 of the FTC Act, for example, empowers the FTC to prosecute 

any inquiry necessary to its duties in any part of the United States. 15 

U.S.C. § 43. Section 6 empowers the agency to gather and compile 

information concerning, and to investigate from time to time, the 

organization, business, conduct, practices and management of, any 

person, partnership or corporation engaged in or whose business affects 

commerce, with certain exceptions not relevant here. Id. § 46. Section 9 

authorizes the FTC to issue subpoenas to compel the testimony of 

witnesses and the production of documentary evidence. Id. § 49; see 16 

C.F.R. § 2.7. And Section 20 empowers it to require, via a “Civil 

Investigative Demand,” the production of documents or information 

relating to any law enforcement investigation. 15 U.S.C. § 57b-1; see 16 

C.F.R. § 2.7(b). See also United States v. Morton Salt Co., 338 U.S. 632, 

642-43 (1950) (affirming FTC’s power to investigate probable violations 

of the FTC Act); Casey v. FTC, 578 F.2d 793, 799 (9th Cir. 1978) (same).

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Following an investigation, the FTC may issue an administrative 

complaint whenever it determines that such action is in the public 

interest, and it has “reason to believe” that a person, partnership, or 

corporation has been or is violating the Act’s prohibitions. 15 U.S.C. 

§ 45(b). Administrative complaints are tried before an administrative 

law judge and are subject to de novo review by the five-member 

Commission. Id.; 16 C.F.R. §§ 3.51-3.54. If the FTC determines that the 

Act was violated, it may issue a cease and desist order. 15 U.S.C. 

§ 45(b). FTC cease and desist orders are subject to judicial review 

exclusively in the U.S. courts of appeals. Id. § 45(c).

Alternatively, the FTC may file a federal district court action 

under section 13(b) of the FTC Act. 15 U.S.C. § 53(b). That provision 

authorizes a lawsuit when the FTC has “reason to believe” that a 

person, partnership, or corporation is violating or is about to violate any 

provision of law enforced by the FTC. Id. Section 13(b) empowers the 

district court to grant injunctive and such other relief as the Court may 

deem appropriate to halt and redress the violation, id., including 

equitable monetary relief. FTC v. Pantron I Corp., 33 F.3d 1088, 1102 

(9th Cir. 1994).

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Whichever enforcement route the FTC follows, the commissioners 

alone are charged with deciding, by a majority vote, whether to initiate

a law enforcement proceeding—and where (i.e., in an administrative or 

federal court forum). 16 C.F.R. § 4.14.

B. The FTC’s Telemarketing Sales Rule

In the Telemarketing and Consumer Fraud and Abuse Prevention 

Act, Congress directed the FTC to prescribe rules that prohibit abusive 

or deceptive telemarketing acts or practices. 15 U.S.C. §§ 6101-6108. In 

1995, the FTC thus promulgated the Telemarketing Sales Rule (TSR),

which the agency has amended several times since, most recently in 

2016. See 16 C.F.R. Part 310. A violation of the TSR constitutes a 

violation of the FTC Act. See 15 U.S.C. §§ 57a(d)(3), 6102(c).

As relevant here, the TSR prohibits sellers and telemarketers 

from misrepresenting any material aspect of a “debt relief service.” 16 

C.F.R. § 310.3(a)(2)(x). The TSR defines that term to mean “any 

program or service represented, directly or by implication, to 

renegotiate, settle, or in any way alter the terms of payment or other 

terms of the debt between a person and one or more unsecured creditors 

or debt collectors, including, but not limited to, a reduction in the 

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balance, interest rate, or fees owed by a person to an unsecured creditor 

or debt collector.” Id. § 310.2(o).

The TSR also prohibits so-called “advanced fees,” meaning the 

collection of money from a debtor before the debt has been successfully 

renegotiated to the debtor’s satisfaction. Specifically, the Rule bars 

sellers and telemarketers of debt relief services from either requesting 

or receiving fees for their services until and unless (A) the seller or 

telemarketer has renegotiated, settled, reduced, or otherwise altered 

the terms of the debt pursuant to a plan or agreement executed by the 

customer; and (B) the customer has made at least one payment 

pursuant to that plan or agreement between the customer and the 

creditor or debt collector. 16 C.F.R. § 310.4(a)(5)(i).

C. Appellants’ Business Practices

Plaintiff-appellants are American Financial Benefits Center 

(AFBC), Ameritech Financial (Ameritech), Financial Education Benefits 

Center (FEBC), and their CEO and primary shareholder, Brandon 

Frere. Op. 1-2; First Amended Complaint (FAC) (DE.19) ¶¶5-8

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[EOR_278-79].1 Until late 2015, AFBC marketed to consumers two 

types of services, which they usually bundled together: student loan 

debt relief services, and so-called “supplemental membership benefits.” 

Op. 3; FAC ¶¶19-20, 23 [EOR_281, 283]. AFBC provided student loan 

debt relief services by purportedly “identifying potential federal loan 

relief programs available to consumers, preparing documentation for 

those consumers, and performing other related student loan processing 

services.” Id. AFBC’s “supplemental membership benefits,” included a 

range of products unrelated to student debt relief services, such as 

financial planning tools, educational kits, access to various websites 

and forms, identity theft protection tools, credit repair service 

discounts, and even roadside assistance, medical savings cards and 

telemedicine. Id.

Apparently out of concerns that AFBC’s business practices may 

have violated the FTC laws and regulations described above, Frere 

formed Ameritech and FEBC in 2015 in order to provide the student 

loan services and the supplemental membership benefits through 

 

1 As used in this brief, “EOR” refers to appellants’ Excerpts of Record; 

“SER” refers to the FTC’s Supplemental Excerpts of Record; and “DE” 

refers to the district court’s Docket Entry Number.

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separate entities. Op. 3; FAC ¶¶21-22 [EOR_282]. Appellants alleged 

below that since 2015, Ameritech has not accepted “advanced fees” for 

its student loan debt relief services and that FEBC’s membership 

services have been offered to Ameritech’s student loan customers 

through an optional program for a monthly fee. Op. 3-4; FAC ¶¶21, 23

[EOR_282-83]. AFBC, meanwhile, allegedly stopped marketing to 

consumers, but has continued to provide its existing customers with the 

so-called “membership services” and to assist them with the annual recertifications necessary to their continued eligibility for student loan 

debt relief programs. Op. 4; FAC ¶20 [EOR_281-82].

D. Appellants’ Declaratory Judgment Action

The FTC began to investigate appellant’s business practices in 

early December 2016. After appellants learned of the investigation, they 

sued the FTC seeking a declaration “that the debt relief provision of the 

TSR will not apply to [appellants], or, alternatively, that [appellants] 

are fully complying with the legal requirements outlined by the TSR.” 

FAC ¶4 [EOR_278]; see id. at 12 (Prayer for Relief) (same) [EOR_288].

Appellants sought in their amended complaint a further declaration 

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that they “are making no knowing misrepresentations to consumers 

through [their] practices and operations.” FAC ¶4 [EOR_278].

Appellants claimed that the district court had jurisdiction under 

the general federal question provision, 28 U.S.C. § 1331, and the 

Declaratory Judgment Act, 28 U.S.C. § 2201. FAC ¶10 [EOR_279]. 

Appellants’ jurisdictional claim rested on a single factual allegation: 

that they “learned that Defendant FTC was in the final process of 

gathering information to file a lawsuit against one or more of 

[appellants] on the purported and factually unsupportable basis that 

[appellants] made misrepresentations to consumers, and also violated 

the debt relief service provision of the [TSR].” Id. ¶3 [EOR_277]. 

Appellants alleged that if and when the FTC brings its enforcement 

action against them, “it will seek emergency and potentially ex parte 

injunctive relief that may lead to the closing of [the corporate 

appellants],” and that they “face[d] perilous danger by these actions.” 

Id. ¶35 [EOR_287].2

 

2 Appellants alleged that their counsel wrote to the former Chairwoman 

of the FTC on December 29, 2016, “to inform her of the services being 

offered by [appellants], and to explain why the TSR did not apply to 

[them].” FAC ¶25 [EOR_284]. Appellants claimed that because the 

Chairwoman “never responded” to their letter, they “were left in the 

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E. The FTC’s Enforcement Action 

On February 7, 2018, following conclusion of its investigation, the 

FTC filed an enforcement action against appellants in the same district 

court where their declaratory action was pending. See Complaint for 

Permanent Injunction and Other Equitable Relief, FTC v. American 

Financial Benefits Ctr., et al., No. 4:18-cv-0806 (N.D. Cal. filed Feb. 7, 

2018) [SER_027-089]. The FTC charged that appellants “have operated 

a debt relief enterprise that has tricked consumers out of millions of 

dollars.” Id. ¶12 [SER_030]. It charged appellants with one count of 

violating the FTC Act, and two counts of violating the TSR. Id. ¶¶47-59

[SER_039-042]. Specifically, the FTC alleged that appellants unlawfully 

collected from consumers advanced fees of $600-800 plus additional 

monthly fees, “purportedly to enroll consumers in federal loan 

assistance programs.” Id. ¶12-13 [SER_030-31]. In many cases, 

however, “the consumer was not enrolled in the promised federal loan 

program,” and the monthly fees, which consumers believed were being

applied to pay down their loans, “[we]re actually going towards a 

membership to a ‘financial education’ program that includes access to 

 

dark without any recourse.” Id. As we discuss below, appellants’ letter 

does not alter the jurisdictional analysis in this case. See infra, at 28-30.

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various resources unrelated to their student loans.” Id. On November 

29, 2018, the district court entered a preliminary injunction against 

appellants and appointed a receiver for their businesses. Order 

Granting Motion for Preliminary Injunction, FTC v. AFBC, No. 18-cv0806 (N.D. Cal. Nov. 29, 2018) [SER_164-190].3

F. Proceedings Below

On October 20, 2017, the FTC moved to dismiss appellants’ 

original complaint for lack of jurisdiction pursuant to Fed. R. Civ. P. 

12(b)(1). In response, appellants filed an amended complaint, but the 

amendments failed to cure the jurisdictional defects. FAC [EOR_276-

288]. The FTC thus renewed its motion to dismiss. (DE.24). The FTC 

showed that an administrative agency’s duly authorized investigation, 

even if it could lead to an enforcement suit, raises no justiciable 

issues—both because it is not a final agency action, and because the 

target of the investigation will have adequate relief if there is a future 

enforcement action. DE.24 at 6-11.

 

3 On December 5, 2018, the United States filed criminal charges against 

appellant Brandon Frere, for wire fraud stemming from the same 

conduct at issue in the FTC’s enforcement action against appellants. 

See United States v. Frere, No. 3:18-mj-71724-SK (N.D. Cal. filed Dec. 5, 

2018).

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In the order on review, the district court granted the FTC’s motion 

to dismiss. Op. 18 [EOR_23]. It held that neither the Declaratory 

Judgment Act nor the federal question statute supplies jurisdiction. The 

court noted first that appellants had “acknowledge[d]” in their own 

briefing that the Declaratory Judgment Act, 28 U.S.C. § 2201, “ ‘does 

not create an independent jurisdictional basis for actions in federal 

court’.” Op. 7 [EOR_12] (citing MTD Opp’n 14 [EOR_249]; quoting 

Marathon Oil Co. v. U.S., 807 F.2d 759, 763 (9th Cir. 1986)).

The district court next concluded that the general federal question 

statute did not provide jurisdiction in the absence of a final order that 

provided a cause of action under the Administrative Procedure Act

(APA), 5 U.S.C. §§ 701 et seq. In particular, the court held that 

“although the APA does not itself confer jurisdiction, it both creates a 

cause of action and provides a waiver of sovereign immunity in suits 

seeking judicial review of federal agency action under § 1331.” Op. 8

[EOR_13] (citing Navajo Nation v. Dep’t of the Interior, 876 F.3d 1144, 

1170-71 (9th Cir. 2017)). 

The court rejected as “utterly without basis” appellants’ argument 

that the APA does not apply in this case, noting that appellants “fail[ed]

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to identify any other basis for judicial review” of the FTC’s actions. Op. 

9 [EOR_14]. Moreover, the court explained that the APA’s restriction of

judicial review to a “final agency action for which there is no other 

adequate remedy in a court,” 5 U.S.C. § 704, “ ‘is a jurisdictional 

requirement imposed by statute’.” Op. 10 [EOR_15] (quoting Ukiah 

Valley Med. Ctr. v. FTC, 911 F.2d 261, 266 (9th Cir. 1990)).

Turning to the issue of whether appellants’ action satisfied the 

APA requirements, the district court first found that appellants “ha[d]

waived any argument that jurisdiction exits [sic] under the APA.” Op. 

11 [EOR_16]. It noted that they had raised the claim only in a onesentence footnote, asserting without discussion or support that “the 

actions taken by the FTC would be sufficiently reviewable and that 

there would be no adequate remedy in court.” Id. (citing MTD Opp’n 6 

n.6 [EOR_241]).

“Waiver aside,” the district court also found that “finality under 

the APA is lacking” here. Op. 12 [EOR_17]. It relied on the Supreme 

Court’s decision in FTC v. Standard Oil Co. of Cal., 449 U.S. 232 (1980), 

which held that an FTC administrative complaint is not a final action 

subject to judicial review. “[I]f the issuance of a complaint does not 

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constitute final agency action,” the court reasoned, “then a fortiori, the 

investigation leading up to the decision to file a complaint does not 

constitute such action.” Op. 13 [EOR_18]. 

The district court concluded further that appellants failed the 

second part of the APA finality requirement as well because they had

“another adequate remedy”: the FTC’s enforcement action against them

now pending before the same court. Op. 15 [EOR_20]. There, appellants 

“will be able to present all of the defenses and arguments they seek to 

advance in this action,” and the remedy they seek “will be available”

there as well. Id.4

Finally, the court denied appellants’ request for leave to amend 

their complaint a second time. Op. 17-18 [EOR_22-23]. It found their 

“bare request” meritless because they “already amended their complaint 

without success,” and their “vaguely defined proposed amendments—

i.e., addressing the APA and updating the factual background to include 

the filing of the FTC’s civil complaint—would be futile.” Id.

 

4 The FTC also argued that appellants’ claims were unripe and that 

declaratory relief was inappropriate. Op. 16 [EOR_21]. The court 

declined to reach those issues, however, in light of its determination 

regarding finality. Id. at 16-17 [EOR_21-22].

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This appeal followed.

STANDARD OF REVIEW

This Court reviews de novo a district court’s grant of a motion to 

dismiss pursuant to Fed. R. Civ. P. 12(b)(1). Recinto v. U.S. Dep’t of 

Veterans Affairs, 706 F.3d 1171, 1175 (9th Cir. 2013); San Francisco 

Cnty. Democratic Cent. Comm. v. Eu, 826 F.2d 814, 818 n.3 (9th Cir. 

1987), aff’d, 489 U.S. 214 (1989).

The Court reviews a district court’s denial of leave to amend the 

complaint for abuse of discretion. U.S. ex rel. Silingo v. WellPoint, Inc., 

904 F.3d 667, 676 (9th Cir. 2018); Telesaurus VPC, LLC v. Power, 623 

F.3d 998, 1003 (9th Cir. 2010).

SUMMARY OF ARGUMENT

The need for this appeal is perplexing. The thrust of appellants’

complaint was that only a declaratory judgment action could give them 

a way to show that the TSR did not apply to their business. The theory 

had little strength to begin with, since appellants could defend 

themselves against any FTC enforcement proceeding. The claim was 

sapped of any force by the FTC’s subsequent filing of an enforcement 

case, in the course of which appellants may—and indeed already did—

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raise every legal argument they tried to raise in seeking a declaratory 

judgment. This appeal therefore will determine nothing of substance, 

but amounts largely to a waste of government and judicial resources.

I. The district court lacked subject matter jurisdiction over 

appellants’ challenge to the FTC’s investigation into their business 

practices. The APA is the only statutory route to judicial review here, 

and appellants fail to meet the baseline requirements that they 

challenge a final agency action and that they have no other adequate 

remedy in court.

An agency action is final only if it (a) marks “the consummation of 

the agency’s decisionmaking process” in the sense that “it must not be of 

a merely tentative or interlocutory nature”; and (b) is “one by which 

rights or obligations have been determined, or from which legal 

consequences will flow.” Bennett v. Spear, 520 U.S. 154, 177-78 (1997)

(internal quotation marks and citations omitted). Appellants come 

nowhere close to satisfying either prong.

An FTC investigation is barely the beginning of the agency’s 

process, let alone its consummation. Nor does an investigation (or even 

an FTC-issued complaint) determine any legal rights or obligations. 

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That is why the Supreme Court established decades ago in FTC v. 

Standard Oil Co. of Cal., 449 U.S. 232 (1980), that an FTC complaint 

does not constitute a reviewable “final agency action.” It follows a 

fortiori that a pre-complaint investigation cannot amount to a final 

action.

Nor are appellants without a remedy in court. That was clear 

during the investigation, since their claims could have been raised 

during any ensuing enforcement case. It is even clearer now that the 

FTC has actually filed a case and appellants have actually raised their 

identical legal claims there. 

Appellants cannot escape the holding of Standard Oil by now 

recasting their claims as a purely legal challenge to the FTC’s 

authority. At the outset, they raised no such argument below and may 

not do so now. Moreover, appellants’ repackaging of their complaint as a 

purely legal challenge collides with the complaint, which plainly raises 

factbound issues. And even if their claims were purely legal, that alone 

does not satisfy the APA’s definition of finality. The D.C. Circuit’s 

decision in Ciba-Geigy v. EPA, 801 F.2d 430 (D.C. Cir. 1986), is not to 

the contrary. There, the agency directed a regulated party to take 

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action, thereby fixing that party’s legal obligations. Here, by contrast, 

the FTC has not directed appellants to do anything at all. Only the 

district court can do that.

Nor can appellants escape Standard Oil on the theory that the 

FTC has reached a “final” legal determination that the TSR applies to 

them. The agency must reach such a tentative decision every time it 

investigates and issues a complaint. Recasting the FTC’s legal theory of 

its case as a “final” legal determination would nullify both the holding 

of Standard Oil and the APA finality requirement. Indeed, the Supreme 

Court expressly warned against “turning prosecutor into defendant.” 

449 U.S. at 242-43.

Even less persuasive is appellants’ argument that their claims fit

within the “agency delay” exception to the APA’s finality rule. The relief 

available for agency delay is a writ of mandamus, but appellants did not 

seek such relief. Nor would they be entitled to mandamus. There has 

been no delay at all here, let alone delay serious enough to justify 

extraordinary relief. And appellants point to no action that the FTC is 

required to take but has unreasonably withheld. Nor have appellants 

identified any harm they have suffered from a supposed delay.

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II. The district court did not address appellants’ ripeness 

arguments and neither should this Court. At any rate, appellants point 

to no final FTC action, and their claims are unripe for that reason 

alone. They also cannot show any hardship in the absence of judicial 

consideration. They claimed below that they risked being shut down 

without prior notice, but that outcome is foreclosed by the FTC Act, and 

is moot anyway in light of the intervening filing of the enforcement case 

and the district court’s preliminary injunction proceeding in that case.

III. The district court’s denial of leave to file yet another 

amended complaint was well within its discretion. Appellants had

already fruitlessly amended their original complaint in response to the 

FTC’s jurisdictional challenge. As the district court rightly put it, their 

“vaguely defined” proposed further amendments simply could not cure 

“the fundamental and fatal deficiencies in their complaint.”

ARGUMENT

I. APPELLANTS’ DECLARATORY JUDGMENT ACTION FAILED TO 

SATISFY THE APA REQUIREMENTS FOR JUDICIAL REVIEW

A. The APA Is Appellants’ Only Route to Judicial Review

Federal district courts are courts of limited jurisdiction; they

“possess only that power authorized by Constitution and statute.” 

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Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). It 

therefore is “to be presumed that a cause lies outside this limited 

jurisdiction,” and “the burden of establishing the contrary rests upon 

the party asserting jurisdiction.” Id. Appellants asserted below that the 

district court had jurisdiction under the Declaratory Judgment Act, 28 

U.S.C. § 2201, and the general federal question statute, 28 U.S.C. 

§1331. FAC ¶10 [EOR_279]. As the district court correctly ruled, 

however, neither statute gives appellants a cause of action over which 

that court could have exercised jurisdiction. Appellants have now 

abandoned their reliance on Section 2201 and press only Section 1331.5

Section 1331 grants district courts jurisdiction over “civil actions 

arising under the * * * laws * * * of the United States.” 28 U.S.C. 

§ 1331. But it does not supply jurisdiction in the absence of a cause of 

action granted by another law under which the case arises. See Merrell 

 

5 The Declaratory Judgment Act creates only a remedy and not “an 

independent jurisdictional basis for actions in federal court.” Marathon 

Oil, 807 F.2d at 763; accord Wilton v. Seven Falls Co., 515 U.S. 277, 288 

(1995). A plaintiff seeking declaratory relief therefore must invoke the 

Court’s jurisdiction on some other basis. Rhoades v. Avon Prods., Inc., 

504 F.3d 1151, 1157 (9th Cir. 2007).

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Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808-09 (1986); Republican 

Party of Guam v. Gutierrez, 277 F.3d 1086, 1088-89 (9th Cir. 2002).

When the United States or one of its agencies is the subject of a 

lawsuit concerning administrative action (or inaction), “[t]he 

jurisdiction of the federal courts * * * is codified in the Administrative 

Procedure Act.” General Finance Corp. v. FTC, 700 F.2d 366, 372 (7th 

Cir. 1983); accord Navajo Nation, 876 F.3d at 1170-71; Gallo Cattle Co. 

v. U.S. Dep’t of Agric., 159 F.3d 1194, 1198 (9th Cir. 1998). The APA is 

the “exclusive” method for review of agency conduct; parties “may not 

bypass” it “simply by suing the agency in federal district court under 

1331.” General Finance, 700 F.2d at 368 (citing 5 U.S.C. §§ 703, 704). “If 

a review proceeding is not authorized by” Section 704 of the APA, then 

general jurisdictional statutes like Section 1331 “cannot be used to 

confer jurisdiction.” Id. at 372. Moreover, the government is generally 

immune from suit under principles of sovereign immunity, and it is the 

APA that waives sovereign immunity in suits seeking review of a 

federal agency action under § 1331. Gallo Cattle, 159 F.3d at 1198.

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Thus, the district court could have exercised jurisdiction under 

§ 1331 only if appellants satisfy the APA conditions for review of 

administrative actions. As we show next, they do not.

B. Appellants’ Claims Fail the APA Requisites for 

Judicial Review

The APA permits judicial review for two categories of agency 

conduct: (1) “[a]gency action made reviewable by statute”; and (2) “final 

agency action for which there is no other adequate remedy in a court.” 5 

U.S.C. § 704; see Ukiah Valley, 911 F.2d at 263. Appellants concede that 

they do not challenge agency action “made reviewable by statute.” See

Br. 30 n.5.

Thus, the APA would allow appellants to sue only if they both (a) 

challenged a “final” FTC action; and (b) had “no other adequate remedy 

in a court.” Appellants satisfied neither condition.

1. Appellants do not challenge any “final” FTC 

action 

Two prerequisites “must be satisfied” for an agency action to be 

deemed “final” for purposes of judicial review under the APA: “First, the 

action must mark the consummation of the agency’s decisionmaking 

process,” in the sense that “it must not be of a merely tentative or 

interlocutory nature”; and “second, the action must be one by which 

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rights or obligations have been determined, or from which legal 

consequences will flow.” Bennett v. Spear, 520 U.S. at 177-78 (internal 

quotation marks and citations omitted); accord Fairbanks North Star 

Borough v. U.S. Army Corps of Eng’rs, 543 F.3d 586, 591 (9th Cir. 

2008).

The only FTC action that appellants challenged in their amended 

complaint was the then-pending investigation by FTC staff into their 

debt relief practices. An investigation does not meet the Bennett

conditions for finality. It is not nearly “the consummation of the 

agency’s decisionmaking process”; it is scarcely the beginning of that 

process. When appellants filed suit, the FTC had not even completed its 

inquiry, let alone decided whether to proceed against them. The 

procedural posture matters because many FTC investigations do not 

result in an enforcement action, and even if the FTC’s staff recommends 

action, a case may be filed only if a majority of the FTC’s commissioners

vote to do so. See 16 C.F.R. § 4.14.

Nor is the conduct of an investigation an action that determines 

rights or obligations or from which legal consequences will flow under 

Bennett’s second prong. Indeed, the Supreme Court made clear in

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Standard Oil that even the filing of a complaint is not a “final” decision. 

As the district court properly reasoned (Op. 13), if the agency’s issuance 

of a formal complaint is not a final, reviewable action, then a fortiori a 

mere preliminary investigation to determine whether to issue or file a 

complaint cannot possibly be final. Standard Oil also held that having 

to defend against an FTC complaint is not the type of injury that can 

render an agency action final for APA review. 449 U.S. at 244.

In Standard Oil, after an antitrust investigation, the FTC issued

an administrative complaint against the Standard Oil Company. See

449 U.S. at 234. The company then sued the FTC, seeking a declaration 

that the issuance of the administrative complaint was unlawful because 

the FTC lacked a valid “reason to believe” that an antitrust violation 

had occurred. Id. at 235. 

The Supreme Court held that “[t]he Commission’s issuance of its 

complaint was not ‘final agency action.’” 449 U.S. at 239. It reasoned 

that a complaint represents merely “a threshold determination that 

further inquiry is warranted and that a complaint should initiate 

proceedings.” Id. at 241. Noting that the issuance of the FTC’s 

complaint would have no legal force or business consequences, the 

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Court cautioned that judicial review “before adjudication concludes” “is 

likely to be interference with the proper functioning of the agency and a 

burden for the courts,” and thus “should not be a means of turning 

prosecutor into defendant.” Id. at 242-43.

Like the issuance of an administrative complaint, the filing of an 

FTC enforcement complaint in court merely initiates the process of 

fixing the rights and obligations of the parties. Only the court’s final 

judgment would mark the point when appellants’ rights or obligations 

can be said to “have been determined.” Bennett, 520 U.S. at 178. Until 

then, no “legal consequences will flow” from the FTC’s actions. Id.

Numerous courts, including this one, have applied Standard Oil’s 

reasoning to reject pre-enforcement challenges to FTC investigations. 

See, e.g., Ukiah Valley, 911 F.2d at 263-64; LabMD, Inc. v. FTC, 776 

F.3d 1275, 1279 (11th Cir. 2015); General Finance, 700 F.2d at 368-69; 

Blue Ribbon Quality Meats, Inc. v. FTC, 560 F.2d 874, 876-77 (8th Cir. 

1977); Direct Mktg. Concepts, Inc. v. FTC, 581 F.Supp.2d 115, 117 (D. 

Mass. 2008). That consistent line of decisions establishes firmly that a

challenge to an FTC investigation is not final under the APA and 

therefore is not subject to challenge in court.

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Appellants nevertheless claim that the district court wrongly 

“applied an expansive reading of Standard Oil,” which they contend 

does not control here. Br. 31. In fact, Standard Oil is on all fours with 

this case. As described above, in Standard Oil, the FTC investigated 

possibly unlawful conduct, determined that it had “reason to believe” 

that a violation had occurred, and issued an administrative complaint. 

In virtually the same way here, the FTC investigated appellants’ 

conduct, then later determined that it had “reason to believe” they had 

violated the FTC Act, and filed a complaint in federal court. The 

procedural difference in administrative versus judicial venue is 

immaterial to the question of finality.

Appellants are wrong that Standard Oil is unlike this case 

because there the question was whether the FTC had reason to believe 

that a violation occurred whereas here the question is whether the law 

applies to appellants. Br. 31-32. That is a distinction without a 

difference. In both cases, the operative question is whether the FTC’s

pre-judgment processes constitute final action for purposes of APA 

review.

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Appellants cannot escape the implications of Standard Oil on the 

ground that “[t]he very fact of [the FTC’s] investigation demonstrates 

that the FTC finally decided that the * * * TSR applied to” them. Br. 15. 

The agency must reach such a tentative decision every time it 

investigates and issues a complaint. Recasting the Commission’s legal 

theory of its case as a “final” legal determination would nullify both the 

holding of Standard Oil and the APA finality requirement. Indeed, in 

Standard Oil, the Commission declined to dismiss the complaint, 

thereby affirming its prior determination that it had a valid reason to 

believe that a violation had been committed. The Supreme Court held 

that the refusal to dismiss still was not a “definitive” action for purposes 

of APA finality. 449 U.S. at 243. Moreover, even if the FTC’s legal 

theory could somehow be deemed final, it does not in any sense 

determine “rights or obligations” and no “legal consequences will flow”

from it. Bennett, 520 U.S. at 177-78.

Appellants are also incorrect in suggesting that the finality 

requirement is excused because the FTC did not respond to a letter that 

appellants wrote to the agency’s head in 2016 “to explain why the TSR 

did not apply to [them].” FAC ¶25 [EOR_284]. See n.2, supra; Br. 46. 

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They argue that the letter shows that they exhausted their 

administrative remedies, and contend that exhaustion renders the 

FTC’s [in]action final.

In fact, “whether the plaintiffs have exhausted their 

administrative remedies does not determine the issue of finality” under 

the APA. Ukiah Valley Med. Ctr. v. FTC, No. C-89-4494, 1990 WL 

25035, *3 (N.D. Cal. Jan. 30, 1990), aff’d, 911 F.2d 261 (9th Cir. 1990). 

That principle is clear from Standard Oil, where the company sought 

agency dismissal of the administrative complaint before filing its 

declaratory action in court. The Court explained that the company “may 

well have exhausted its administrative remedy as to the averment of 

reason to believe. But the Commission’s refusal to reconsider its 

issuance of the complaint does not render the complaint a ‘definitive’ 

action.” 449 U.S. at 243. Likewise, in Ukiah Valley, this Court

determined that the FTC’s issuance of a complaint challenging a merger 

was not a reviewable final agency action and then found it unnecessary 

to consider whether the merging parties had exhausted administrative 

remedies. 911 F.2d at 266 n.5 (citing Lone Star Cement Corp. v. FTC, 

339 F.2d 505, 509-512 (9th Cir. 1964)). See also General Finance, 700 

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F.2d at 371 (FTC’s issuance of investigatory subpoenas deemed not final 

notwithstanding agency’s denial of petitions to quash the subpoenas); 

Blue Ribbon Quality Meats, 560 F.2d at 875-76 (same).

2. Appellants have another remedy for their claims

Appellants also failed to show that they had “no other adequate 

remedy in a court,” 5 U.S.C. § 704, which independently bars their case

under the APA. They plainly had such a remedy when they filed their 

case: they could raise their claims in defense of a future FTC 

enforcement action.

Now, the adequacy of appellants’ remedy is even plainer. The FTC 

has actually filed an enforcement case, in the same district court before 

the same judge, in which appellants will be able to defend their 

practices and press all the claims and defenses that they advance here. 

Likewise, the remedy that they sought in the district court—a ruling 

that their businesses are either not subject to or satisfy the TSR, and 

that they are not making material misrepresentations to consumers—

will be available to them in the FTC enforcement proceeding. Indeed, 

appellants’ continued pursuit of their declaratory action in this Court—

all the while making the very same claims and defenses in the FTC’s 

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enforcement action against them6—is puzzling, and simply wastes

scarce government and judicial resources.

C. Appellants Waived Any Argument That They Can Seek 

Review Under the APA, But Their Claims Are

Meritless Anyway

1. Appellants did not preserve below the argument 

that they satisfy the APA finality test

Appellants devote the bulk of their brief to arguing that their 

declaratory action satisfied the APA conditions for judicial review. 

Below, however, they raised the issue only in a “terse one-sentence 

footnote.” Op. 11 [EOR_16] (citing Recycle for Change v. City of 

Oakland, 856 F.3d 666, 673 (9th Cir. 2017)). The district court rightly 

held that appellants’ fleeting mention of the issue waived it. They may 

not press the claim for the first time on appeal.

Specifically, the FTC based its motion to dismiss the original

complaint on the primary ground that it did not satisfy the APA 

conditions for judicial review. See FTC Motion to Dismiss Complaint

(DE.18), at 6-12. In response, appellants filed an amended complaint.

DE.19 [EOR_276-288]. Despite appellants’ clear understanding that 

 

6 See, e.g., Order Denying Defendants’ Motion to Dismiss, FTC v. AFBC, 

No. 18-cv-0806 (N.D. Cal. Aug. 8, 2018), at 17-19 [SER_159-161] 

(affirming applicability of the TSR to appellants’ conduct).

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they faced a challenge under the APA finality requirements, the 

amended complaint did nothing to address them. Id.

The FTC’s second motion to dismiss renewed the argument that 

the amended complaint identified no “final agency action for which 

there is no other adequate remedy in a court.” 5 U.S.C. § 704; see FTC 

Motion to Dismiss First Amended Complaint (DE.24), at 6-11

[EOR_261-66]. Even then, however, appellants’ opposition ignored 

finality and relied entirely on the claim that the APA does not apply to

their declaratory action at all. See Plaintiffs’ Opposition to FTC Motion 

to Dismiss FAC (DE.30), at 6-9 [EOR_241-44]. 

As a backstop to their primary argument, appellants included the 

following footnote:

While Plaintiffs contend the APA does not apply, their 

position is that jurisdiction would exist were this Court to 

apply that statute because the actions taken by the FTC 

would be sufficiently reviewable, and that there would be no 

adequate remedy in court.

Id. at 6 n.6 [EOR_241]. That was appellants’ only effort below to 

address judicial review under the APA.

This Court has long rejected efforts to introduce on appeal 

arguments that were not properly preserved in the district courts. In 

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Int’l Union of Bricklayers & Allied Craftsman Local Union No. 20, AFLCIO v. Martin Jaska, Inc. (Bricklayers), 752 F.2d 1401 (9th Cir. 1985), 

for example, the Court held that it “will not * * * review an issue not 

raised below unless necessary to prevent manifest injustice.” Id. at 

1404; accord Recinto, 706 F.3d at 1176 n.3; Kline v. Johns-Manville, 745 

F.2d 1217, 1221 (9th Cir. 1984); Komatsu, Ltd. v. States S.S. Co., 674

F.2d 806, 812 (9th Cir. 1982).7 As if describing appellants’ own footnote,

this Court rejected in Bricklayers—as “pitiably inadequate”—an 

attempt to preserve an argument for appeal by merely mentioning it as 

a “just in case” backstop. 752 F.2d at 1405 n.6.

2. Appellants’ APA arguments lack merit anyway

Even if the Court were to consider appellants’ new arguments, 

they are meritless. Appellants seek to escape the mandate of Standard 

Oil and its progeny by recasting their complaint as posing only a 

question of law concerning whether the FTC has statutory authority 

over them. They then assert that the FTC has conclusively answered 

 

7 To show “manifest injustice,” “the proponent ‘must show exceptional 

circumstances why the issue was not raised below’.” Bricklayers, 752 

F.2d at 1404 (quoting Taylor v. Sentry Life Ins. Co., 729 F.2d 652, 655-

56 (9th Cir. 1984) (per curiam)). Appellants have not even attempted to 

make such a showing.

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that question and that the agency’s legal determination is a final action 

reviewable under the APA. But the new theory cannot be squared with 

the actual allegations of the complaint, and would not satisfy the APA 

requisites for judicial review in any event.

Appellants’ complaint sought a declaration that appellants’

businesses were not subject to the requirements of the TSR as a matter 

of law—but it also asked for a declaration that, as a matter of fact, their 

practices complied with the statute. See FAC ¶37 [EOR_287-88].

Appellants also acknowledged in their complaint that the FTC’s 

investigation also involved misrepresentations in violation of Section 5 

of the FTC Act, see id. ¶4 [EOR_278], and their complaint sought a 

declaration that “they are not making misrepresentations to 

consumers.” FAC ¶40 [EOR_288]. The plain terms of the complaint thus 

fatally undermine their claim on appeal that the case “presents a 

‘purely legal’ question of statutory interpretation—whether [their] 

activities fall within the [TSR] definition of ‘debt relief service.’” Br. 36.

Even if the complaint were construed as a purely legal challenge, 

however, it still fails the APA finality test. As we explained above (at 

23-26), the Supreme Court has ruled that the Commission’s vote to 

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issue a complaint is not a final action but only “a threshold 

determination that further inquiry is warranted,” Standard Oil, 449 

U.S. at 241. It does not “impose an obligation, deny a right or fix some 

legal relationship as a consummation of the administrative process.”

Chicago & S. Air Lines, Inc. v. Waterman S.S. Corp., 333 U.S. 103, 113 

(1948); accord Bennett v. Spear, 520 U.S. at 177-78. An FTC 

investigation does not even reach that stage of the proceeding. The 

ultimate determination whether the FTC has authority over alleged 

violative practices will be made by the court hearing an enforcement 

case.

Yet every time the Commission votes to issue or file a complaint, it 

must reach a legal determination that a statute alleged to be violated 

applies to the defendant and the acts at issue. Appellants’ proposed 

approach would, therefore, gut the rule of Standard Oil and the many 

cases that have followed it. 

The D.C. Circuit did not hold to the contrary in Ciba-Geigy Corp. 

v. EPA, 801 F.2d 430 (D.C. Cir. 1986), appellants’ principal case. See Br. 

33-36. There, the Environmental Protection Agency (EPA) ordered Ciba 

to change the labeling on a pesticide product. Ciba challenged the 

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directive on the ground that EPA’s statute required it to cancel the 

company’s product registration before it could impose labeling changes.

“The sole question” before the D.C. Circuit in that case was “whether 

Ciba-Geigy’s complaint presents a controversy ripe for judicial review.” 

801 F.2d at 434. The court ruled that the matter was ripe.

As appellants would have it, Ciba-Geigy stands for the proposition 

that as long as a complaint presents a “purely legal question,” it is 

reviewable under the APA. That is false. For one thing, Ciba-Geigy did 

not involve the APA at all; it addressed ripeness. That inquiry demands 

only that the agency action be “sufficiently final” to warrant the 

expenditure of judicial resources, id. at 435, not that it be final within 

the meaning of the APA. 

Moreover, Ciba-Geigy is nothing like this case. There, the EPA 

had ordered Ciba to change its labeling, a direct and immediate effect 

completely lacking here. The company’s rights or obligations “ha[d]

been determined” and “legal consequences * * * flow[ed]” from the 

agency’s action. Bennett, 520 U.S. at 178. Here, as explained above, 

appellants have not been ordered to do anything and no rights have 

been determined. See supra, at 23-26. When appellants filed suit, the 

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FTC was only investigating them; now it has merely asked the court to 

determine whether a legal violation has occurred. 

Ciba-Geigy also involved a “a pure legal question as to what 

procedures EPA was obliged to follow before requiring a labeling 

change,” which was “independent of and separable from the largely 

factual question” of whether the pesticide at issue required a labeling 

change. 801 F.2d at 435.8 As we showed above (at 33-34), this case does 

not involve a pure legal question. Nor is the legal question of whether 

the TSR applies to appellants separable from the facts. Whether 

appellants’ practices constitute a “debt relief service” is a factbound 

inquiry. The TSR defines “debt relief service” as “any program or service 

represented, directly or by implication, to renegotiate, settle, or in any 

way alter the terms of payment or other terms” of a person’s unsecured 

debt. 16 C.F.R. § 310.2(o) (emphasis added). Applying that definition 

plainly can be done only to a developed set of facts, including what 

appellants promised consumers and the services consumers received.

 

8 The parties agreed that the matter was purely legal, which factored 

heavily in the court’s conclusion that the issue was “fit for review.” See 

Ciba-Geigy, 801 F.2d at 435 (“[W]e have no reason to believe that our 

consideration of the issue would be facilitated by further factual 

developments.”).

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Significant differences in the statutory schemes at issue here and 

in Ciba-Geigy underscore the factbound nature of this case compared 

with Ciba-Geigy. The EPA enforced pesticide labeling rules through

product registration and cancellation hearings. See 801 F.2d at 431-32. 

The question of “what procedures EPA was obliged to follow before 

requiring a labeling change,” was purely legal and had nothing to do 

with the merits of a mislabeling decision. Id. at 435. By contrast, the 

FTC enforces the TSR through adjudication, including development of a 

factual record on the alleged violation. For that reason, the D.C. Circuit 

specifically contrasted the EPA’s regime to the FTC’s and held that the 

FTC’s “issuance of complaint initiating enforcement action” is “not 

separable from the agency’s ultimate enforcement decision.” Id. (citing 

Standard Oil, 449 U.S. at 241, 246).

Appellants’ remaining cases (Br. 36-37) are equally inapposite. 

Western Ill. Home Health Care, Inc. v. Herman, 150 F.3d 659 (7th Cir. 

1998), concerned a Department of Labor (DOL) determination that two 

affiliated entities had a “legal obligation * * * to cumulate the time their 

respective employees spend at each company for purpose of computing 

entitlement to overtime wages.” Id. at 663. Entirely unlike the present 

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case, the DOL ruling had the very kind of direct, immediate, and 

concrete impact—wholly absent here—that rendered it “final for 

purposes of judicial review.” Id.

Arch Mineral Corp. v. Babbitt, 104 F.3d 660 (4th Cir. 1997), is

similar to Western Illinois. There, the agency notified Arch that it would 

be deemed a “presumed controller” of a related entity subject to agency 

sanctions, thereby rendering Arch itself ineligible for mining permits.

Id. at 666. The Fourth Circuit concluded that the case was ripe for 

review because “[t]he critical facts are not disputed”; the agency “admits 

that it could list Arch on the [permit-blocking system] without notice”; 

and “this would inflict ‘immense’ harm on Arch.” Id. at 665, 668. Arch 

Mineral has no bearing here for all the reasons discussed above. Here, 

there is no final agency action or allegation of serious hardship from the 

FTC’s investigation or enforcement case.

Lastly, Atchison, Topeka & Santa Fe Ry. Co. v. Pena, 44 F.3d 437 

(7th Cir. 1994) (en banc), involved an undisputedly final agency action. 

The Federal Railroad Administration published a new final rule in the 

Federal Register governing the conduct of regulated parties. Id. at 440. 

The rule was self-evidently final, and the issue barely merited 

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discussion in the court’s opinion. Id. at 441. Appellants’ reliance on the 

case is a mystery.

D. The “Agency Delay” Exception to the APA Finality

Requirement Does Not Apply

Recognizing the feebleness of their finality argument, appellants

argue in the alternative that the requirement does not apply to them at 

all. They claim that “the failure by the FTC to address the underlying 

jurisdictional question, whether by inaction or delay, has subjected 

Appellants to immediate, substantial hardship and irreparable harm 

with no avenue to obtain relief.” Br. 43-44. The contention fails on 

several grounds.

Appellants did not raise any such contention below, and for the 

reasons discussed above, at pages 31-33, they may not do so now. As 

appellants’ own cited authorities make clear, parties claiming 

unreasonable agency delay or inaction typically seek mandamus to 

compel the wrongly withheld agency action, and jurisdiction in such 

cases is granted by the All Writs Act, 28 U.S.C. § 1651(a). See Pub. Util. 

Comm’r of Or. v. Bonneville Power Admin., 767 F.2d 622, 630 (9th Cir. 

1985); Telecomm. Research & Action Ctr. v. FCC (TRAC), 750 F.2d 70, 

72, 75-76 (D.C. Cir. 1984); Air Line Pilots Ass’n Int’l v. Civil Aeronautics 

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Bd., 750 F.2d 81, 84 (D.C. Cir. 1984). The complaint here neither sought 

mandamus relief nor invoked the All Writs Act. See FAC, at 12, ¶10

[EOR_288, 279].

Even if the argument were properly before the Court, it is 

meritless. To begin with, it is moot. It is not clear what type of action 

appellants claim the FTC has wrongly withheld, but the only “action” 

the FTC takes after an investigation is the issuance or filing of a 

complaint. A complaint has now been filed and there is nothing further 

for this Court to order the FTC to do. For the same reason, appellants 

may now raise all their legal challenges in court without the need for 

extraordinary relief.

More fundamentally, there has been no delay here for several 

reasons. The agency completed its investigation and filed its complaint 

in about a year, hardly an unreasonable amount of time. Indeed, even if 

it had not yet acted, agency action can be unreasonably delayed only if 

an agency is required to take some action—but the FTC faces no such 

requirement. The FTC is a law enforcement agency, akin to a 

prosecutor. It may investigate and determine whether or not to file a 

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case, but it has no duty to do either.9 Indeed, as discussed above, even 

when the FTC files a complaint, that is not a final agency action, so no 

delay or inaction could have occurred in its conduct. Appellants’ claimed 

exception to the finality rule is simply inapplicable under these 

circumstances.

Finally, appellants have failed to show the required irreparable 

harm resulting from the alleged delay. They assert without support that 

“the delay in this instance severely impacts the financial well-being of 

Appellants,” Br. 46, but until the district court’s preliminary injunction 

appellants operated their businesses without interruption. The burden

of defense is not only unrelated to any “agency delay,” but is not even a 

cognizable harm. Standard Oil, 449 U.S. at 244; Ukiah Valley, 911 F.2d 

at 264.

II. APPELLANTS’ RIPENESS ARGUMENTS ARE NOT PROPERLY 

BEFORE THIS COURT AND ARE MERITLESS ANYWAY

Appellants argue that their claim is “ripe” for judicial review. Br. 

37-43. This Court, like the district court, need not reach the issue 

because this case fails for lack of jurisdiction. The question is not 

 

9 Appellants’ letter to the FTC chairwoman did not impose a duty to act 

on the agency any more than a letter to the United States Attorney can 

do so. 

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properly before the Court anyway because the district court did not 

address it, Op. 16 [EOR_21], and “the general rule” is that “a federal 

appellate court does not consider an issue not passed upon below.” 

Singleton v. Wulff, 428 U.S. 106, 120 (1976); accord Standard Ins. Co. v. 

Saklad, 127 F.3d 1179, 1180 n.1 (9th Cir. 1997).

At any rate, the matter is not ripe. The Supreme Court has set out 

two factors for evaluating ripeness: “fitness of the issues for judicial 

decision,” and “hardship to the parties of withholding court 

consideration.” Abbott Labs. v. Gardner, 387 U.S. 136, 149 (1967), 

abrogated on other grounds, Califano v. Sanders, 430 U.S. 99 (1977); see 

Pence v. Andrus, 586 F.2d 733, 737 (9th Cir. 1978) (same). Appellants

satisfy neither factor.

First, “[w]ithin the context of pre-enforcement challenges to 

agency [actions], fitness for judicial decision requires a finding that the 

agency action is final and that the issues involved are legal ones.” 

Pence, 586 F.2d at 737 (citing Abbott Labs., 387 U.S. at 149). As

discussed above, appellants have failed to show a final agency action

even under the more lenient finality inquiry of ripeness doctrine, and 

their ripeness argument fails for that reason alone. Moreover, as 

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discussed above, the issues that appellants’ complaint raises—i.e.,

whether the TSR applies to their commercial activities and whether 

their practices satisfy the FTC’s statutory and regulatory mandates—

are not purely legal. They are factbound and would require significant 

record development to resolve. See, e.g., Pence, 586 F.2d at 737 (issues 

requiring factual development are not ripe).

Nor will any hardship flow if the court does not consider their 

claims. Their only allegation of harm below was a purported “threat of 

being shut down without prior notice.” FAC ¶32 [EOR_286]. But 

appellants would—and did—have ample notice to defend against an 

attempt to shut them down. They briefed the issue extensively before 

the district court granted a preliminary injunction and appointed a 

receiver for their businesses.10 See Order Granting Motion for 

Preliminary Injunction, FTC v. AFBC, No. 18-cv-0806 (N.D. Cal. Nov. 

 

10 In some cases, the FTC seeks ex parte temporary relief to prevent the 

dissipation of assets or destruction of evidence. Fed. R. Civ. P. 65(b)(1). 

But that rationale loses its force when the investigation’s target knows 

about the investigation—as was the case here, FAC ¶¶26-31 [EOR_284-

86]. And even when the FTC seeks an ex parte TRO, subsequent 

preliminary relief must be pursued expeditiously, Fed. R. Civ. P. 

65(b)(3), and may only be granted “after notice to the defendant.” 15 

U.S.C. § 53(b).

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29, 2018) [SER_164-190]. Moreover, appellants’ alleged fear of “ex parte” 

closure of their operations, FAC ¶35 [EOR_287], was baseless since they 

were well aware of the investigation and in continual discussions with 

FTC staff about it. See id. ¶¶26-31 [EOR_284-86].

On appeal, appellants claim that their having to operate under the

cloud of legal uncertainty brought on by the FTC’s investigation

satisfies the hardship requirement. Br. 38-39. Not so. Ripeness requires 

a showing that the FTC action “is hurting [appellants] now” and “is not 

just a portent of a future harm that cannot occur unless and until the 

agency takes other measures against [them].” General Finance, 700 

F.2d at 371. Likewise, appellants’ attempt to re-cast their hardship 

claim as one flowing from the FTC’s “Game of Loans” enforcement 

campaign is unavailing. Br. 39-42. The enforcement actions involved in 

that campaign—while grouped together in public announcements in 

order to raise consumer awareness—are in fact separate and 

independent court proceedings, affecting only the defendants named in 

each one. Appellants have not—and cannot—claim any immediate 

irreparable harm from the FTC’s investigation of their practices, or 

from the courts’ withholding consideration of their declaratory claims.

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That is all the more so in light of the FTC’s enforcement action, where 

those claims can be fully aired and decided.

III. THE DISTRICT COURT PROPERLY DENIED APPELLANTS LEAVE TO 

AMEND THEIR COMPLAINT YET AGAIN

After the FTC moved to dismiss the first complaint, appellants 

filed an amended one. After the district court dismissed their amended 

complaint, they asked for leave to yet again amend. The court carefully 

considered appellants’ “vaguely defined proposed amendments” and 

concluded that they “would be futile” because they “[could] not cure the 

fundamental and fatal deficiencies in their complaint.” Op. 17, 18

[EOR_22-23].

On appeal, appellants do not even attempt to explain how their 

proposed amendments would make a difference to their complaint’s 

jurisdictional deficiency. The district court’s 12(b)(1) dismissal was 

predicated not on an insufficiency of allegations, but on the absence of 

any final FTC action. Nothing in the proposed amendments could cure 

that basic jurisdictional flaw. Indeed, appellants had already failed to 

cure this deficiency in their first amended complaint—filed in response

to the FTC’s initial motion to dismiss, which invoked the very same 

jurisdictional arguments as the second motion. 

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In those circumstances, there is no reason to think that yet 

another amendment would be any more effective; appellants have thus 

failed to meet their burden of showing that the district court abused its 

discretion. “A district court may deny a plaintiff leave to amend if it 

determines that ‘allegation of other facts consistent with the challenged 

pleading could not possibly cure the deficiency’.” Telesaurus, 623 F.3d at 

1003 (quoting Schreiber Distrib. Co. v. Serv–Well Furniture Co., 806 

F.2d 1393, 1401 (9th Cir. 1986)).

Appellants’ desire to keep this litigation alive, see Br. 48, is all the 

more curious since they now have a forum—the FTC’s enforcement 

action, pending before the very same judge—in which they may raise all 

of their substantive claims and defenses. Yet appellants utterly fail to 

explain why the enforcement case would be inadequate to adjudicate

the legality of their practices.

CONCLUSION

For the foregoing reasons, the district court’s order of dismissal 

with prejudice should be affirmed.

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STATEMENT OF RELATED CASES

Pursuant to Circuit Rule 28-2.6, no other cases in this Court are 

deemed related to this appeal.

ANDREW SMITH

Director

SARAH SCHROEDER

ROBERTA TONELLI

Attorneys

BUREAU OF CONSUMER 

PROTECTION

February 28, 2019

Respectfully submitted,

ALDEN ABBOTT

General Counsel

JOEL MARCUS

Deputy General Counsel

/s/ Imad Abyad

IMAD D. ABYAD

Attorney

FEDERAL TRADE COMMISSION

600 Pennsylvania Ave., N.W.

Washington, DC 20580

(202) 326-3579

iabyad@ftc.gov

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CERTIFICATE OF COMPLIANCE

I hereby certify that this brief complies with the type-volume 

limitations of Fed. R. App. P. 32(a)(7)(B)(i), in that it contains 9,315

words, excluding the parts exempted by Fed. R. App. P. 32(a)(7)(B)(iii), 

and using the Microsoft Word word-processing system.

/s/ Imad Abyad

IMAD D. ABYAD

Attorney

FEDERAL TRADE COMMISSION

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CERTIFICATE OF SERVICE

I hereby certify that on February 28, 2019, I electronically filed 

the foregoing “Answering Brief for the Federal Trade Commission” and 

“Supplemental Excerpts of Record” with the Clerk of the Court for the 

United States Court of Appeals for the Ninth Circuit by using the 

appellate CM/ECF system. I certify that all participants in the case are 

registered CM/ECF users, and thus service will be accomplished by the 

appellate CM/ECF system.

/s/ Imad Abyad

IMAD D. ABYAD

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