Ninth Circuit Rules on Congress's Implied Preclusion of District Court Jurisdiction over Agency Enforcement Proceedings | Practical Law

Ninth Circuit Rules on Congress's Implied Preclusion of District Court Jurisdiction over Agency Enforcement Proceedings | Practical Law

In Axon Enterprise, Inc. v. Federal Trade Commission, the US Court of Appeals for the Ninth Circuit considered Congress's implied preclusion of district court jurisdiction over an agency enforcement proceeding under the US Supreme Court's "Thunder Basin" factors, and affirmed the district court's dismissal for lack of subject matter jurisdiction.

Ninth Circuit Rules on Congress's Implied Preclusion of District Court Jurisdiction over Agency Enforcement Proceedings

by Practical Law Litigation
Published on 01 Feb 2021USA (National/Federal)
In Axon Enterprise, Inc. v. Federal Trade Commission, the US Court of Appeals for the Ninth Circuit considered Congress's implied preclusion of district court jurisdiction over an agency enforcement proceeding under the US Supreme Court's "Thunder Basin" factors, and affirmed the district court's dismissal for lack of subject matter jurisdiction.
On January 28, 2021, in Axon Enterprise, Inc. v. Federal Trade Commission, the US Court of Appeals for the Ninth Circuit considered Congress's implied preclusion of district court jurisdiction over an agency enforcement proceeding under the US Supreme Court's "Thunder Basin" factors. It affirmed the district court's dismissal of the case for lack of subject matter jurisdiction. The court joined every other circuit to address a similar issue in ruling that Congress impliedly stripped the district court of jurisdiction. ( (9th Cir. Jan. 28, 2021).)
The Federal Trade Commission (FTC) filed an administrative complaint challenging Axon Enterprise, Inc.'s acquisition of a competitor based on antitrust concerns. The FTC demanded that Axon spin off the newly acquired company and provide it with Axon's intellectual property. Axon filed a lawsuit in federal district court, arguing that the FTC's administrative enforcement process violates Axon's due process rights. The district court dismissed Axon's complaint, finding that the FTC's statutory scheme requires Axon to raise its challenge first in the administrative proceeding. Axon timely appealed.
The Ninth Circuit affirmed. It held that the FTC Act's structure suggests that Congress impliedly barred jurisdiction in district court and required the parties to seek relief first in the agency proceeding. In rejecting Axon's argument, the court ruled that, because Axon can present any unsuccessful challenge to an appellate court after the administrative hearing, Axon can ultimately obtain meaningful judicial review of its claims.
The Ninth Circuit followed the factors set out in the Thunder Basin trilogy of cases (including Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994); Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477 (2010); and Elgin v. Dep't of Treasury, 567 U.S. 1 (2012)), which consider whether:
  • The plaintiff can obtain meaningful judicial review in the statutory scheme.
  • The claim is "wholly collateral" to the statutory scheme.
  • The claim is outside the agency's expertise.
The court held that the Thunder Basin factors favor preclusion of the district court's jurisdiction, and notably: