Adjudication

• Pages: 231-281

231

CHAPTER VI

PART 3 ADJUDICATION

Although the Commission has conducted an adjudicative function

throughout its existence, in recent years the Commission has undertaken

an extensive effort to modernize and expedite its adjudicative

proceedings. For example, the Commission amended its Rules of

Practice in 2009 to impose deadlines by which evidentiary hearings must

commence and for the issuance of decisions. In cases in which the

Commission is seeking preliminary injunctive relief in federal district

court, the evidentiary hearing in the ancillary administrative proceeding

normally must begin within five months after the date on which the

administrative complaint was issued. In all other cases, the

Administrative Law Judge’s (ALJ’s) evidentiary hearing must begin

within eight months after the date on which the administrative complaint

was issued.

1

Although the Commission has retained the discretion to alter

these deadlines,

2

neither the parties to the proceeding nor the ALJ may

alter them. Likewise, the Commission limited the length of the ALJ’s

evidentiary hearing to 210 hours, unless the Commission determines

there is good cause to extend the deadline.

3

The Commission also amended its Rules of Practice in 2009 to

require the ALJ to issue an initial decision within seventy days after the

filing of the last filed initial or reply proposed findings of fact and

conclusions of law and order pursuant to Rule 3.46; within eighty-five

days after the closing of the hearing record pursuant to Rule 3.44(c)

where the parties have waived the filing of proposed findings; or within

fourteen days after the granting of a motion for summary decision

following a referral of such motion from the Commission.

4

The ALJ

unilaterally may extend any of these deadlines by up to thirty days for

“good cause,” and has done so in some (although not all) cases since this

rule change.

5

The Commission may further extend any of these time

periods for “good cause.”

6

Finally, the Commission amended its Rules of

1

. 16 C.F.R. § 3.11(b)(4).

2

. Id.

3

. Id. § 3.41(b).

4

. Id. § 3.51(a).

5

. See Initial Decision, POM Wonderful LLC, Dkt. No. 9344, at 2-3

(May 17, 2012), available at http://www.ftc.gov/os/adjpro/

d9344/120521pom decision.pdf.

6

. Id.

232 FTC Practice and Procedure Manual

Practice in 2009 to impose deadlines by which the full Commission will

issue final decisions on appeal from initial decisions. For cases in which

the Commission sought preliminary relief in federal court, it will issue its

final decision within forty-five days after oral argument; within forty-

five days after the deadline for filing reply briefs if no oral argument is

scheduled; or within forty-five days after the deadline for filing

objections to the initial decision, if no party files objections and no oral

argument is scheduled.

7

In al l other cases, the Commission will issue its

final decision within 100 days after oral argument, or, if no oral

argument is scheduled, within 100 days after the deadline for filing reply

briefs.

8

Although the Commission characterized its self-imposed

deadlines for rendering final decisions as “tight deadlines,”

9

and the

specific Rule (§§ 3.52(a)-(b)) imposing the deadlines do not permit the

Commission to extend them for good cause, the Commission on one

occasion extended its deadline for issuing a final decision pursuant to

Rule 4.3,

10

which permits the Commission to extend any deadlines in the

Rules of Practice for good cause shown.

11

In 2009 the Commission also eliminated Rule 3.11A fast-track

proceedings. The Commission determined that fast-track proceedings

were unnecessary in light of the generally-applicable expedited deadlines

it had approved for administrative proceedings.

12

A. Separation of Functions

One of the unique characteristics of the FTC is its ability, as an

independent administrative agency, to choose between litigating its cases

in federal district court or through administrative adjudication. The

FTC’s adjudicative functions are governed by Section 5(b) of the FTC

Act,

13

the Administrative Procedure Act (APA),

14

and Parts 3 and 4 of

7

. 16 C.F.R. §§ 3.52(a)(1), (2).

8

. Id. § 3.52(b)(2).

9

. 74 Fed. Reg. 1,804, 1,806 (Jan. 13, 2009).

10

. 16 C.F.R. § 4.3(b).

11

. See Order Extending Timetable for Issuing Final Decisio n & Order, POM

Wonderful LLC, Dkt. No. 9344 (Nov. 27, 2012), available at

http://www.ftc.gov/os/adjpro/d9344/121127commordeotissuefinaldecand

ord.pdf (timetable extended to permit the Commission to “give full

consideration to the many i ssues presented by the cross-appeals in this

matter . . . .”).

12

. See 74 Fed. Reg. 20,205, 20,206 (May 1, 2009).

13

. 15 U.S.C. § 45(b).

14

. 5 U.S.C. § 554.

Part 3 Adjudication 233

the FTC Rules of Practice (FTC’s Rules or Rules).

15

The Federal Rules

of Civil Procedure and the Commission’s Operating Manual

16

also

provide guidance.

Adjudicative proceedings are often described as “Part 3” matters,

referring to the Part in Title 16 of the Code of Federal Regulations that

contains the agency’s Rules of Practice for Adjudicative Proceedings.

Part 3 adjudication tracks federal court procedures in many respects. The

process begins once the Commission votes to issue an administrative

complaint.

17

A significant difference from federal court practice,

however, is that the adjudicative function is carried out by the same

agency that investigates and prosecutes the alleged violation.

18

The trial

of a Part 3 matter is handled by an ALJ, whose independence from

agency management is intended to be protected in a number of ways.

19

Appeals from an initial decision of an ALJ, however, are heard by the

full Commission. In order to preserve the impartiality and independence

of decision-makers, the APA prohibits any employee engaged in the

investigation or prosecution of a matter from participating in the decision

or agency review of the matter.

20

Additionally, the FTC’s Rules strictly

regulate communication within the agency and with nonemployees

regarding Part 3 matters.

15

. 16 C.F.R. § § 3.1.-3.72, 4.1-4.7. These regulations specifically apply to

adjudicative proceedings.

16

. FTC, FTC OPERATING MANUAL § 10, available at http://www.ftc.gov/

foia/adminstaffmanuals.shtm [hereinafter FTC OPERATING MANUAL].

17

. 16 C.F.R. § 3.11(a).

18

. 5 U.S.C. § 554. The Supreme Court has held that a state agency’s power

to investigate and adjudicate the same matter do es not in itself violate due

process. According to the Court, “The initial charge or determination of

probable cause and the ultimate adjudication have different bases and

purposes. The fact that the same agency makes them in tandem and that

they relate to the same issues does not result in a procedural due process

violation.” Withrow v. Larkin, 421 U.S. 35, 58 (1975). Likewise, it is

well settled in the federal circuit courts that the FTC may act as an

investigator, prosecutor, and judge without violating due process. See,

e.g., Kennecott Copper Corp. v. FTC, 467 F.2d 67, 79 (10th Cir. 1972) ;

FTC v. Cinderella Career & Finishing Sch., Inc., 404 F.2d 1308, 1315

(D.C. Cir. 1968).

19

. See Section A(2), infra.

20

. 5 U.S.C. § 554(d).