The Collateral Order Doctrine and Interlocutory Review of Agency Decisions

by Bernard Bell — Tuesday, Mar. 5, 2019

Summary: Last week a Fifth Circuit panel held the collateral order doctrine inapplicable to interlocutory appellate review of Federal Trade Commission decisions.  As a result state professional board’s petition to review of the FTC’s denial of its antitrust immunity defense was dismissed for lack of appellate jurisdiction, and will be reviewable only after the FTC enters a cease-and-desist order.

 

The collateral order doctrine is judicial gloss upon 28 U.S.C. § 1291, which confers upon the courts of appeals “jurisdiction of appeals from all final decisions from the district courts.”  In Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949), the Supreme Court held that some district court decisions were subject to interlocutory review because they finally resolved certain “claims of right separable from, and collateral to, rights asserted in the action,” for which appellate consideration should not be “deferred until the whole case is adjudicated.”  Id. at 546.  The Court emphasized that it had long given the provision governing appellate jurisdiction “a practical rather than a technical construction.” Id.  Under the collateral order doctrine, a district court’s order is reviewable if it conclusively determines an important issue completely separate from the merits of the action that would effectively be unreviewable on appeal after entry of a final judgment. Will v. Hallock, 546 U.S. 345, 349 (2006).

In May 2017, the Federal Trade Commission (“FTC”) issued an administrative complaint against the Louisiana Real Estate Appraisers Board (“LREAB”), alleging that it had “unreasonably restrain[ed] competition” among real estate appraisers in the state “by displacing a marketplace determination of appraisal fees.” The Complaint is accessible here.  The FTC’s docket case for the page is available here.  The LREAB had adopted a rule, Rule 31101, requiring that licensees “compensate fee appraisers at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised,” and prescribed three methods by which a licensed appraisal management company can establish the rate’s appropriateness.

The LREAB interposed the state-action antitrust immunity defense.  In North Carolina State Board of Dental Examiners v. FTC, 135 S. Ct. 1101 (2015), the Supreme Court held that state professional boards composed of a controlling number of active participants in the regulated profession can invoke state-action antitrust immunity only if they are subject to active state supervision.[1]  Louisiana’s Governor John Edwards issued an executive order enhancing oversight over the LREAB (accessible here).  The Board then issued a revised Rule 31101, complying with the enhanced oversight requirements.  The FTC nevertheless rejected the board’s antitrust immunity defense (order available here). LREAB sought interlocutory review in the Fifth Circuit.

Section 45(c) of Title 15 provides that “[a]ny person, partnership, or corporation required by an order of the Commission to cease and desist from using any method of competition or act or practice may obtain a review of such order in the court of appeals of the United States.”  Does the collateral order doctrine apply to interlocutory appellate review from the FTC’s rejection of a defense prior to fully adjudicating an unfair trade practices complaint and entering a cease and desist order?

In a decision filed on February 28, 2019, a Fifth Circuit panel answered in the negative.  Louisiana Real Estate Appraisers Board v. FTC, 2019 WL 973136 (per curiam).   The panel focused intently on the textual differences between 28 U.S.C. §1291 and 15 U.S.C. §45(c).  Acknowledging that the collateral order doctrine could be appropriately be applied to appellate review of agency decisions, the Fifth Circuit panel noted that section 45(c) was written much more narrowly than 28 U.S.C. §1291.  The latter made final “decisions” reviewable, section 45(c) did not.  Rather section 45(c) made only cease‑and‑desist orders appealable.  The dismissal of a defense could well constitute a decision, but clearly was not by itself a cease-and-desist order.

The panel expressed its disagreement with the First Circuit’s approach in Rhode Island v. EPA, 378 F.3d 19 (1st Cir. 2004), where the Court held that the collateral-order doctrine is “generally applicable” to administrative decisions.  In that case, the First Circuit had applied the collateral order doctrine to appellate review under the Clean Water Act, even though the Act conferred appellate jurisdiction only over the “issuance or denial” of pollution-discharge permits, see, 33 U.S.C. § 1369(b)(1)(F).

The Fifth Circuit panel acknowledged practical reasons for permitting collateral-order review in the administrative context,[2] but explained that it could not exercise jurisdiction no conferred upon it by statute.  Among the powerful arguments it disregarded are the analogies to denials of official immunity defenses in civil rights cases and denials of invocations of Eleventh Amendment immunity, both of which are subject to the collateral order doctrine as applied to the district courts.  Mitchell v. Forsythe, 472 U.S. 511 (1985)(denials of absolute and qualified immunity); Puerto Rico Aqueduct and Sewer Authority v. Metcalf & Eddy, Inc., 506 U.S. 139, 144-47 (1993)(denial of Eleventh Amendment immunity).  As in those contexts, antitrust immunity may serve the purpose of protecting states from the burden of having to justify regulatory choices if they are indeed the state’s policy choices and not self-dealing choices of industry participants.  Indeed, the Fifth Circuit itself had previously held that a district court’s rejection of a state-action antitrust defense is an immediately appealable collateral order. Martin v. Memorial Hospital, 86 F.3d 1391, 1395 (5th Cir. 1996)(citing Mitchell v. Forsythe and Puerto Rico Aqueduct).

Moreover, the panel seemed to suggest that the LREAB could perhaps seek review of the FTC’s decision under the Administrative Procedure Act, which makes any “final agency action for which there is no other adequate remedy in a court are subject to judicial review” in the district courts.  5 U.S.C. §704.  Agency action includes the whole or part of any agency order.  5 U.S.C. §551(13); see, id. at §551(6) (definition of agency order).  Despite the greater amenability of the term “agency action” to encompassing interlocutory determinations resolving collateral issues, Congress would hardly have preferred challenges to the rejection of antitrust immunity defenses be brought it the district courts rather than in the courts of appeal.

The decision may reflect the increasingly textualist turn of the federal courts.  It will be interesting to see whether the Louisiana Board seeks certiorari in light of the potential Circuit conflict in approaching the collateral order doctrine in an administrative context.

*******

[1] For a scholarly discussion of this issue, se Aaron Edlin & Rebecca Haw, Cartels By Another Name: Should Licensed Occupations Face Antitrust Scrutiny?, 162 U. PA. L. REV. 1093 (2014); accord, Rebecca Haw Allensworth, Foxes at the Henhouse: Occupational Licensing Boards Up Close, 105 CALIF. L. REV. 1567 (2017).

[2] It referenced arguments made by both the LREAB  and a coalition of states, see Brief for the States of Mississippi, Idaho, Iowa, Rhode Island, and Utah as Amici Curiae In Support of the Petitioner and, in Support of a Reversal, 2018 WL 3477302 (July 11, 2018).

Leave a Reply

Your email address will not be published. Required fields are marked *