The Federal Trade Commission (FTC) has the distinct advantage of being able to bring enforcement actions before its own administrative tribunals.

The FTC rarely loses a case brought through this administrative process, and even when an administrative law judge (ALJ) rules against the FTC, as recently occurred, the FTC Commissioners are empowered to overrule the ALJ’s decision.

The constitutionality of this process, particularly the use of tenured ALJs, has been challenged in an action brought in federal district court. The FTC moved to dismiss based on jurisdiction, arguing that any challenge to its administrative process, even to the constitutionality of that process, must first be brought before an FTC administrative tribunal. The district court and subsequently the Circuit Court hearing the matter agreed.

However, the Supreme Court recently overturned these decisions, finding that the “here and now injury” of having to go through the very process being challenged would effectively preclude any meaningful review. The Court compared it to a challenge to the right to stand trial which would be denied if the party needs to go through the trial first to bring an effective challenge. The Court also found that the right to challenge the administrative process is “collateral” to the FTC’s function and falls outside of its purview.

The matter now moves back to district court, where the outcome of challenging the FTC’s administrative process is far from certain, but the FTC’s continued use of this powerful tool is at risk.

[View source.]