Court Opinion

ID: 8909425
Source: CourtListenerOpinion
Date Created: 2022-11-27 02:26:59.124305+00
Date Added: 2024-06-11T17:08:24.893788
License: Public Domain

JAMES M. CARTER, Circuit Judge,
concurring and dissenting:
(1) I concur in that portion of Judge Tang’s opinion holding that a determination by the Federal Trade Commission (hereafter “FTC”) that there is “reason to believe” a violation of law has occurred, is within the agency’s discretion and not reviewable in the district court under the Administrative Procedure Act (hereafter “APA”). (2) I dissent from the holding that there is reviewable by the court the question as to whether the FTC did or did not make a “reason to believe” determination. (3) I also dissent from the holding that FTC’s action was “final action” and thus reviewable.

The Remand to Determine if the FTC Made a Determination

The opinion should have ended after point (1) above. In my opinion the discussion of the additional points (2) and (3) above referred to is foreclosed by what the majority decided as to the first point. If the “reason to believe” decision is not reviewable, then it seems wrong to me to decide whether the FTC did or did not make a “reason to believe” determination is reviewable. Had the first point been decided otherwise, namely, that the determination as to “reason to believe” a violation had occurred was reviewable, then, of course, it would follow there could be reviewed also the question as to whether or not the FTC did actually make a “reason to believe” determination. But since the majority held that the “reason to believe” decision was not reviewable but rested in agency discretion, it seems wrong to me to hold, as the majority does, as to the second point.
The government’s brief demonstrates the rule that action by the FTC in starting a proceeding is agency action committed to agency discretion. The law is based upon the general theory of prosecutorial discretion and the APA exception for agency discretion. Thus judicial review of prosecutorial discretion in the administrative area is generally rejected, whether the agency’s decision is for prosecution (e. g., Miles Laboratories, Inc. v. FTC, 50 F.Supp. 434 (D.D. C.1943), affirmed, 78 U.S.App.D.C. 326, 140 F.2d 683, cert. denied, 322 U.S. 752, 64 S.Ct. 1263, 88 L.Ed. 1582 (1944); Hills Bros. v. FTC, 9 F.2d 481 (9 Cir.), cert. denied, 270 U.S. 662, 46 S.Ct. 471, 70 L.Ed. 787 (1926)), or whether the agency’s decision is against *1388prosecution (e. g., Vaca v. Sipes, 386 U.S. 171, 182, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967) (NLRB) (dictum); Kixmiller v. SEC, 160 U.S.App.D.C. 375, 379, 492 F.2d 641, 645 (1974)).
In such cases the regularity of prosecuto-rial discretion is generally assumed. Only the most unusual and compelling circumstances, which must be specially pleaded, will permit inquiry into whether the prosecutor’s conduct falls outside the discretion permitted to him and be subject to review. See Yick Wo v. Hopkins, 118 U.S. 356, 373-74, 6 S.Ct. 1064, 30 L.Ed. 220 (1886); United States v. Steele, 461 F.2d 1148 (9 Cir. 1972). No such facts are pleaded in this case.
In Hills Bros. v. FTC, supra, this circuit held that notwithstanding the “reason to believe” standard in the FTC Act, the discretion of the FTC to issue complaints was no different from other generally nonre-viewable prosecutorial determinations. It held it was not necessary for the FTC to list its specific grounds for its “reason to believe.”
Although the APA was enacted in 1946, the provision for exceptions from judicial review “agency action . . . committed to agency discretion by law” was a restatement of existing law. See “Administrative Procedure Act, Legislative History,” S.Doc. 248, 79th Congress, 2d Session, 229 — 30 (1946). Thus the principles set forth in Hills Bros, in 1926 were reaffirmed by Congress when it enacted the APA in 1946.
Finally, judicial review of whether FTC made a determination of “reason to believe,” etc., would require courts to probe the mental processes of the Commissioners, a procedure disapproved in United States v. Morgan, 313 U.S. 409, 422, 61 S.Ct. 999, 85 L.Ed. 1429 (1941).
The decision in the case at hand as to the second point, allowing review to determine if the FTC actually made a determination of “reason to believe,” would open a can of worms and lead to various appeals of preliminary acts and orders. The decision is incorrect and inconsistent with the prior holding that the “reason to believe” decision is action committed to agency discretion and not reviewable by this court.
With the slight opening for review provided by the second point of this decision, I foresee that there will be attempts in every FTC proceeding to seek review of some preliminary matter. This could cripple FTC’s ability to function.
I would hold that since determination of the “reason to believe” issue was committed to agency discretion and exempted from judicial review under 5 U.S.C. § 701(a)(2), and since nothing in plaintiff’s district court complaint creates any genuine issue as to the regularity of the Commission’s complaint, judicial review of the Commission’s decision to issue the complaint is unwarranted and improper.

Final Agency Action Under 5 U.S.C. § 704

The majority also holds that the action of the FTC was final agency action under 5 U.S.C. § 704 (point (3), supra). I disagree. The review of the Commission’s proceedings should await the final action of the Commission.
In Gifford-Hill & Co. v. FTC, 173 U.S. App.D.C. 135, 137, 523 F.2d 730, 732 (1975), the court held that a “decision [by the FTC] to institute an adjudicatory proceeding is not an ‘agency action’ — and most certainly not a ‘final agency action’ — made reviewable by the [Administrative Procedure Act].” See also Miles Laboratories v. FTC, 78 U.S.App.D.C. 326, 328, 140 F.2d 683, 685, cert. denied, 322 U.S. 752, 64 S.Ct. 1263, 88 L.Ed. 1582 (1944).
In Chamber of Commerce v. FTC, 280 F. 45 (8 Cir. 1922) the FTC filed a complaint alleging that the Commission had reason to believe that petitioners were engaging in unfair competition. The petitioners sought judicial review of the issuance of the complaint. The court of appeals held that “neither the District Court nor this court has power under the act [FTC] to interfere with the investigation and inquiry of the Commission” {id., p. 48), and dismissed the action. The court’s holding was specifically approved by the Supreme Court in Petroleum Exploration, Inc. v. Public Service Comm’n, 304 U.S. 209, 222, n. 21, 58 S.Ct. 834, 82 L.Ed. 1294 (1938) and in Federal *1389Power Comm’n v. Edison Company, 304 U.S. 375, 385, 58 S.Ct. 963, 82 L.Ed. 1408 (1938).
Plaintiff contends that the issue of the administrative complaint should be treated as “final” under 5 U.S.C. § 704 and that exhaustion of administrative remedies should not be required, because, in the absence of judicial review at the preliminary-stage, the validity of the issuance of the administrative complaint cannot later be reviewed or becomes moot. Plaintiff contends that if the complaint is ultimately dismissed by the Commission, there would be nothing to review; that if the proceedings ultimately result in a cease and desist order, a review is limited to the validity of that order and does not extend to the propriety of the issuance of the underlying complaint, citing Hills Bros. v. FTC, supra (9 F.2d at 484). Thus plaintiff argues that the issuance of the administrative complaint should be deemed “final” for review purposes because, otherwise, there would be “no adequate remedy in a court” for a review of the matter.
The contention is without merit. The issuance of the complaint is a preliminary agency determination and not “final” in any effective sense. Plaintiff’s argument is based on a misconception of the purpose and meaning of the “no other remedy” provision in 5 U.S.C. § 704. That provision or condition was not intended to convert preliminary agency decisions that otherwise become moot into final agency actions in order to afford judicial review. Rather, it is designed to exempt “final agency action” from judicial review under the APA if there is an adequate alternative legal remedy. See, e. g., Warner v. Cox, 487 F:2d 1301, 1304 (5 Cir. 1974). See generally Richfield Oil Corporation v. United States, 207 F.2d 864, 869, 870 (9 Cir. 1953).
Plaintiff’s remedy, which is an adequate one, is to test the validity of the final effective agency action. The cease and desist order is subject to judicial review and the findings of the Commission must be supported by substantial evidence.
Plaintiff is seeking an exception to the rule requiring exhaustion of administrative remedies. APA’s limitation of judicial review to cases involving “final agency action” is a codification of the “exhaustion” rule. The rule is justified by “very practical notions of judicial efficiency . . . McKart v. United States, 395 U.S. 185, 194, 195, 89 S.Ct. 1657, 1663, 23 L.Ed.2d 194 (1969).
Legal expenses in pursuing defenses to administration action (or remedies) is not a sufficient reason to avoid the exhaustion requirement. Petroleum Exploration Inc., supra (304 U.S. 209, 222, 58 S.Ct. 963, 82 L.Ed. 1408).
“To permit judicial review of every procedural, preliminary and interlocutory order or ruling by which a person may consider himself aggrieved, would afford opportunity for constant delays . . . and would render orderly administrative proceedings impossible. Moreover, it would result in bringing to the courts such an avalanche of trivial procedural questions as largely to monopolize their time and energies.” Utah Fuel Co. v. National Bituminous Coal Comm’n, 69 App.D.C. 333, 339, 101 F.2d 426, 432 (1938).
Exceptions to the exhaustion doctrine apply only in “very unusual and limited circumstances,” Lone Star Cement Corp. v. FTC, 339 F.2d 505, 510 (9 Cir. 1964); and require, for one thing, a showing of substantial prejudice, i. e., “irreparable injury.” Renegotiation Board v. Bannercraft Co., 415 U.S. 1, 24, 94 S.Ct. 1028, 39 L.Ed.2d 123 (1974); McKart v. United States, supra (395 U.S. at 197, 89 S.Ct. 1657) (incarceration). No irreparable injury to plaintiff is shown in this case.
The decision should be limited to the first point referred to above. I would affirm on that basis alone.