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Arizona District Court Tentatively Dismisses Axon v. FTC

On March 10, 2020, the United States District Court for the District of Arizona issued a tentative ruling denying Axon Enterprise’s motion for preliminary injunction and dismissing its complaint against the Federal Trade Commission, due to lack of subject matter jurisdiction.

In its tentative ruling, the Court acknowledged the significance of Axon’s constitutional claims and their similarity to a pending Supreme Court case against the Consumer Financial Protection Bureau.[2]  But the Court concluded that a district court is not the proper forum for Axon to raise these claims:  “It is ‘fairly discernable’ from the FTC Act that Congress intended to preclude district courts from reviewing the type of constitutional claims Axon seeks to raise here—instead, Axon must raise those claims during the administrative process and then renew them, if necessary, when seeking review in the Court of Appeals.”[3]

The Court reached this conclusion using a three-factor test examining statutory preclusion to initial judicial review of agency action set forth in Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994) and its progeny.[4]  First, the Court determined that the language, structure, and purpose of the FTC Act demonstrate Congress’ intent to preclude judicial review, as evidenced by the FTC Act’s “detailed scheme” to prevent unfair methods of competition; “enforcement provisions creat[ing] timelines and mechanisms for adjudicating alleged violations;” and judicial review process conferring “exclusive jurisdiction” on Courts of Appeals to review final agency orders.[5]

Second, the Court interpreted the FTC Act’s legislative history to support Congress’s intent to preclude district court jurisdiction: “Judicial review of final, and only final, FTC actions was a component of the FTC Act from its earliest iterations. . . . It does not appear Congress ever considered amending the FTC Act to route complaints through any process other than administrative proceedings.”[6]

FOOTNOTES

[1] See “Axon Sues FTC Over Use of Administrative Adjudication in Merger Investigations” for a detailed description of Axon’s complaint challenging the constitutionality of the FTC administrative process.
[2] Tentative Ruling, Axon v. FTC, et al., Case No. 2:20-cv-00014-DMF, Dkt. No. 29 at 3 (“Tentative Ruling”); see Seila Law LLC v. Consumer Fin. Protection Bureau, No. 19-7.
[3] Tentative Ruling, supra n.2 at 3-4.
[4] Id. at 6; see Thunder Basin Coal Co. v. Reich, 510 U.S. 200, 207 (1994) (“In cases involving delayed judicial review of final agency actions, we shall find that Congress has allocated initial review to an administrative body where such intent is fairly discernible in the statutory scheme.  Whether a statute is intended to preclude initial judicial review is determined from the statute’s language, structure, and purpose, its legislative history, and whether the claims can be afforded meaningful review.”) (internal quotations and citations omitted); see also Free Enterprise Fund v. Public Co. Accounting Oversight Bd, 561 U.S. 477 (2010) (provisions of the Sarbanes-Oxley Act establishing the Public Company Accounting Oversight Board declared unconstitutional); Elgin v. Dep’t of Treasury, 567 U.S. 1 (2012) (Civil Service Reform Act precluded the district court from exercising jurisdiction).
[5] Tentative Ruling, supra n.2 at 11-13.
[6] Id. at 14.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume X, Number 79

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Thomas Dillickrath Partner Antitrust and Competition
Partner

Thomas Dillickrath is a partner in the Antitrust and Competition Practice Group in the firm’s Washington, D.C. office.

Tom focuses on antitrust litigation and merger investigations. Prior to joining the firm, he served as Deputy Chief Trial Counsel at the Federal Trade Commission’s (FTC's) Bureau of Competition. During his time at the FTC, Tom litigated antitrust cases brought by the FTC involving mergers and acquisitions and other business practices affecting U.S. consumers. In particular, he was lead trial counsel in the agency’s successful federal court litigations blocking the...

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Molly C. Lorenzi Antitrust Attorney Sheppard Mullin
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Molly C. Lorenzi is an attorney in the Antitrust and Competition Practice Group in the firm's San Francisco office.

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Molly speaks four languages fluently (Italian, Spanish, French and English), and is part of the firm’s international team defending global merger and competition conduct investigations across continents, as well as prosecuting and defending U.S. antitrust and trade cases in federal and state courts throughout the country. Molly is also part of the firm’s pioneering group representing industry, scientific and governmental collaborations that accelerate environmental change.

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