THE JUSTICES OF THE Supreme Court are smart people. If you’re convinced that one of them has blundered, it’s you, in all probability, who has missed something. . . . But on this one, I can’t help myself. . . . I think that, in a recent decision, Justice Gorsuch made a basic mistake.
Here goes.
This morning, I have a piece in Law & Liberty on the Court’s ruling last month in Axon Enterprise, Inc. v. FTC. My summary of the case:
The petitioner before the Supreme Court—Axon Enterprise, a company known for making police body cameras—is a respondent in a proceeding before the [Federal Trade Commission]. Axon believes that [the structure of the FTC’s administrative tribunal] violate[s] the Constitution. Rather than endure a trial before the [FTC’s administrative law judge], as well as an appeal before the commissioners, before pressing its constitutional challenges in a federal court of appeals, Axon proceeded directly to federal district court. This, the Supreme Court ruled, Axon may do.
Eight of the justices reached this conclusion by applying the “Thunder Basin” factors (named for Thunder Basin Coal Co. v. Reich (1994)). Justice Gorsuch joined in the result, but rejected the Thunder Basin test. Instead, he simply examined the text of the jurisdictional statutes at issue in the case.
In my piece, I take it for granted that Gorsuch is on to something when he urges his colleagues to ditch Thunder Basin. He wants the Court to skip straight to an analysis of the statutory text. Sounds like a plan. . . . But in Axon, did Gorsuch get his textual analysis right?
Undoubtedly, it’s possible that he did. Gorsuch focuses on the federal question statute, 28 U.S.C. § 1331—which is indeed broad. “The district courts,” it provides, “shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” Under the plain text of this statute, it would seem, Axon can head straight to federal court and challenge the constitutionality of the FTC’s in-house tribunal.
As the Court has repeatedly said, however, “it is a commonplace of statutory construction that the specific governs the general.” The FTC Act states that a party subject to “an order of the Commission” may “obtain a review of such order in the court of appeals of the United States.” The Administrative Procedure Act confirms that a party may obtain “judicial review” through the FTC Act’s “special statutory review” scheme. And the APA further clarifies that such review is comprehensive. A “preliminary, procedural, or intermediate agency action,” it explains, is “subject to review on the review of the final agency action” (i.e., the “order of the Commission” that rounds off the FTC’s internal proceeding).
Why don’t these specific statutory provisions—15 U.S.C. § 45(c), 5 U.S.C. § 703, and 5 U.S.C. § 704—trump the general federal question statute? As I say in the piece:
If what we care about is plain statutory text, perhaps what we should focus on is the text of the APA—Congress’s effort (long after it enacted Section 1331) to codify the federal courts’ jurisdiction over the administrative state. A court’s power to review a final agency action, under the APA, includes the power to review related preliminary actions. According to Gorsuch, Axon is “not subject to,” and “do[es] not seek review of,” any such “thing”—but [FTC v. Standard Oil Co. of California (1980)] disagrees. The “issuance of [a] complaint” by the FTC, it concludes, is indeed a preliminary “agency action.” Axon believes that the FTC’s complaint is ultra vires. The APA funnels an attack on this preliminary agency action through “the special statutory review proceeding” that Congress has created for the agency in question. Under the APA, therefore, Axon must proceed before the FTC, obtain “an order of the Commission,” and then challenge the filing of the complaint before a federal court of appeals.
Let me expand on that point about Standard Oil—because it’s where I think the basic mistake occurs.
Gorsuch dismisses APA § 704 in a footnote. He writes:
One of the APA provisions the government cites concerns review of “preliminary, procedural, or intermediate agency action.” 5 U. S. C. §704. The government assumes we have “agency action” by dint of the “initiation” or “commencement” of agency proceedings against . . . Axon. [citation to the oral argument transcript]. But “agency action” is a defined term, one that embraces “the whole or a part of an agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act.” 5 U. S. C. §551(13). . . . Axon [is] not subject to, and do[es] not seek review of, any of those things.
This passage takes no account of Standard Oil, which attests, at footnote 7, that the initiation of agency proceedings is agency action:
We agree with [Standard Oil] and with the Court of Appeals that the issuance of the complaint [by the FTC] is “agency action.” . . . “[A]gency action” has the meaning given to it by . . . 5 U.S.C. § 551. That section provides that “‘agency action’ includes the whole or a part of an agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act,” 5 U.S.C. § 551 (13), and also that “‘order’ means the whole or a part of a final disposition . . . of an agency in a matter other than rule making . . . .” 5 U.S.C. § 551 (6). . . . We conclude that the issuance of the complaint by the Commission is “part of a final disposition” and therefore is “agency action.”
Gorsuch recognizes that “‘agency action’ is a defined term.” It is defined by § 551(13). Gorsuch looks at § 551(13), doesn’t see the word “complaint” listed there, and calls it a day. But Standard Oil digs deeper. It discovers that the word “order,” which appears in § 551(13), is in turn defined by § 551(6), and that § 551(6) includes the term “final disposition.” It finds that a complaint is part of a “final disposition” under § 551(6). Then it climbs back up: a “final disposition” is an order under § 551(13), and an “order” is an “agency action” under § 704. Put all that together (complaint = final disposition = order = agency action), and an FTC complaint is agency action reviewable under the APA.
Maybe Standard Oil’s definitional ladder is sturdy; maybe it isn’t. The point, though, is that Gorsuch ignores Standard Oil altogether. If you claim that the issuance of a complaint by the FTC is not “agency action,” you should probably address a Supreme Court decision that says: “the issuance of [a] complaint by [the FTC] . . . is ‘agency action.’”
Has the Court ever revisited Standard Oil’s footnote 7? Yes—once. And it does not help Gorsuch’s cause. Quite the contrary. Here’s what Justice Scalia had to say in Whitman v. American Trucking, Inc. (2001): “[T]he word ‘action’ . . . is meant to cover comprehensively every manner in which an agency may exercise its power. See FTC v. Standard Oil Co. of Cal., 449 U.S. 232, 238, n. 7 (1980).”
Gorsuch claims that “Axon [is] not subject to, and do[es] not seek review of,” an “agency action.” Yet it is, and it does. So says the APA, as understood by Standard Oil. This is strong textual evidence that Axon should have to use the FTC Act, rather than the federal question statute, to enter federal court. (More on that in my piece.)
Neil Gorsuch is a smart guy. Nothing I’ve said changes that. And who knows? Maybe I’ve gone off the rails somewhere. But it seems like he bungled this one.
Originally posted at Corbin’s Substack, Policy & Palimpsests.