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Company in FTC crosshairs fights to revive regulatory challenge

Pushback over an antitrust investigation that cost Axon at least $1.6 million is at the heart of the latest Supreme Court case poised to shrink the already receding power of U.S. federal agencies.

WASHINGTON (CN) — An opponent of the Federal Trade Commission went to the Supreme Court on Monday in a bid to remove the jurisdictional hurdles that have been preventing it from suing the agency. 

Even with the justices careful not to give away how they might rule in the case, they appeared skeptical about letting the commission's administrative procedures get primacy over litigation. 

“What sense does it make for a claim that goes to the very structure of the agency having to go through the administrative process,” Justice Samuel Alito asked. 

The case grew out of an antitrust investigation that the FTC launched against Axon when the police technology company acquired a competitor in 2018.

Axon, which sells body-worn cameras and digital evidence management systems for law enforcement, claims its cooperation with the FTC cost $1.6 million over the course of a year and a half. It says the FTC snubbed its offer to walk away from the acquisition and divest all of the competitor’s assets, instead pushing it to turn its competitor into a clone of Axon or face administrative proceedings. 

Axon filed suit, challenging both the constitutionality of the commission's administrative law judges and the agency itself. Though a federal judge dismissed the suit for lack of subject-matter jurisdiction, Axon's appeal managed to split the Ninth Circuit. Ultimately the appeals court affirmed the jurisdictional dismissal but did not rule out that Congress divested federal district courts of the ability to decide constitutional challenges against agencies. 

At oral arguments Monday in Washington, Axon told the justices that Congress granted jurisdiction for district courts to oversee these cases and has never taken it away. 

“Congress has expressly granted district courts original jurisdiction over all civil actions arising under the Constitution, and it is common ground that Congress has never expressly withdrawn or restricted that jurisdiction with respect to the constitutional claims at issue here,” said Paul Clement, an attorney for the company with Clement & Murphy. 

The government urged the high court meanwhile to affirm dismissal. 

“It is a longstanding principle of administrative law that courts will not intervene in an ongoing agency proceeding until that proceeding culminates in a rule or order that imposes sanctions or determines legal rights or obligations,” Deputy U.S. Solicitor General Malcolm Stewart said. 

While critical of the government’s arguments, the justices were not all in on Axon’s claims either. 

“It seems to be that you’re saying this is unfair because, 'I have to go through the process,' but going through the process is what due process is all about,” Justice Sonia Sotomayor told Clement. 

Justice Ketanji Brown Jackson worried about the broader implications of a ruling that might superintend agency procedures. 

“What I’m concerned about is the interpretation that allows you to take certain claims over to the district court and have it impact the ongoing agency proceeding in a way that makes it unclear that that’s what Congress intended,” the Biden appointee said. 

Also on Monday, the justices heard a challenge involving administrative proceedings from the Securities and Exchange Commission, specifically the SEC’s process for appointing administrative law judges. 

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