Consumers Union of U.S., Inc. v. Federal Trade Commission

801 F.2d 417, 255 U.S. App. D.C. 203
CourtCourt of Appeals for the D.C. Circuit
DecidedSeptember 2, 1986
DocketNo. 85-1032
StatusPublished
Cited by11 cases

This text of 801 F.2d 417 (Consumers Union of U.S., Inc. v. Federal Trade Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Consumers Union of U.S., Inc. v. Federal Trade Commission, 801 F.2d 417, 255 U.S. App. D.C. 203 (D.C. Cir. 1986).

Opinions

Opinion of the Court filed by Circuit Judge SCALIA.

Concurring opinion filed by Chief Judge WALD.

SCALIA, Circuit Judge:

Petitioner, Consumers Union of U.S., Inc., challenges the Federal Trade Commission’s “Used Car Rule,” a Trade Regulation Rule governing the sale of used motor vehicles. See 16 C.F.R. Part 455 (1986). Petitioner objects to the Commission’s decision to omit from the final rule the so-called “known-defects provision,” which would have required used-car dealers to list on the window sticker affixed to any used car offered for sale the presence of certain mechanical defects of which they have knowledge. The principal issues addressed are the legality of the procedures by which the Commission withdrew the known-defects provision following remand of the initial rule by a reviewing court, and the substantive validity of the withdrawal.

[205]*205I

The tumultuous history of the Used Car Rule began in 1975, with the enactment of the Magnuson-Moss Trade Commission Improvement Act (“Magnuson-Moss Act”), Pub.L. No. 93-637, 88 Stat. 2183 (1975) (codified at 15 U.S.C. §§ 2301-2312 (1982) and other scattered sections of 15 U.S.C.), which, in § 109(b), directed the Commission to promulgate a rule regulating “warranties and warranty practices in connection with the sale of used motor vehicles,” 15 U.S.C. § 2309(b). In 1981, relying upon § 109(b) and upon § 18(a)(1) of the Federal Trade Commission Act (“FTC Act”), ch. 311, 38 Stat. 717 (1914), as added by the Magnuson-Moss Act, § 202, 88 Stat. 2193 (codified as amended at 15 U.S.C. § 57a(a)(1) (1982)), which grants the Commission rulemaking authority to regulate “unfair or deceptive” trade practices, the Commission promulgated a rule that required used-car1 dealers to post on a standard window sticker several consumer warnings, the terms of any warranty, and a list of certain specific mechanical defects known to the dealer. 46 Fed.Reg. 41,328 (1981) (“Initial Rule”).

Timely petitions for review of the Initial Rule were filed in the United States Court of Appeals for the Second Circuit, pursuant to § 18(e) of the FTC Act, 15 U.S.C. § 57a(e), attacking primarily the known-defects provision. Miller Motor Car Corp. v. FTC, Nos. 81-4144, 81-4172, 81-4216. A lengthy delay interrupted the case, during which Congress vetoed the Initial Rule, see 128 Cong.Rec. 10,343-44 (1982); 128 Cong. Rec. H2856-58 (daily ed. May 26,1982), and the Supreme Court, in turn, declared the legislative veto unconstitutional, see United States Senate v. FTC, 463 U.S. 1216, 103 S.Ct. 3556, 77 L.Ed.2d 1402, 1403, 1413 (1983); United States House of Representatives v. FTC, 463 U.S. 1216, 103 S.Ct. 3556, 77 L.Ed.2d 1402, 1403, 1413 (1983). While Miller was pending, the Commission announced its intention to consider modifying the Initial Rule. 48 Fed.Reg. 36,096 (1983). Shortly thereafter, alleging that the Commission had never afforded them the requisite opportunity to comment on the known-defects provision, the Miller petitioners moved the court to remand the case to the Commission pursuant to § 18(e)(2) of the FTC Act, 15 U.S.C. § 57a(e)(2), for additional oral and written presentations on the Initial Rule. By stipulation of the parties, in which the Commission disputed the alleged procedural irregularity, the court remanded the case pursuant to § 18(e)(2), retaining jurisdiction.

After soliciting further evidence and comments on the Initial Rule, and particularly comments on the know-defects provision, 48 Fed.Reg. 55,874 (1983), the Commission (in addition to making minor changes not relevant here) revised the Initial Rule to delete the known-defects provision. 49 Fed.Reg. 45,692 (1984) (“Revised Rule”).

Petitioner sought review of the Revised Rule in this court, challenging both the Commission’s decision to omit the known-defects provision and the procedures it followed in arriving at that decision. The Second Circuit transferred Miller to this court and we designated the National Automobile Dealers Association (“NADA”) and the National Independent Automobile Dealers Association, which were petitioners in Miller, as intervenors in this case.

II

We address first petitioner’s contention that the Commission, in promulgating the Revised Rule, neglected to provide statutorily required procedures. The essence of the dispute is this: Section 18(e)(2) of the FTC Act, pursuant to which the Second Circuit remanded the Initial Rule to the Commission, provides that the reviewing court may, at the request of either the petitioner or the Commission, order the Commission to provide opportunity for “additional oral submissions or written presentations” if “there were reasonable grounds for ... failure to make such submissions [206]*206and presentations in the proceeding before the Commission.” 15 U.S.C. § 57a(e)(2). It continues:

The Commission may modify or set aside its rule or make a new rule by reason of the additional submissions and presentations and shall file such modified or new rule, and the rule's statement of basis of [sic] purpose, with the return of such submissions and presentations. The court shall thereafter review such new or modified rule.

Id. By contrast, § 18(d)(2)(B) of the FTC Act, 15 U.S.C. § 57a(d)(2)(B), requires that “[a] substantive amendment to, or repeal of, a rule promulgated under subsection (a)(1)(B) of this section [as was the Initial Rule in the present case] shall be prescribed ... in the same manner as a rule prescribed under such subsection.” That manner of prescription includes not merely the opportunity for oral presentation and written submission, 15 U.S.C. § 57a(c)(2)(A), but also opportunity “to present such rebuttal submissions and to conduct (or have conducted ...) such cross-examination of persons as the Commission determines (i) to be appropriate, and (ii) to be required for a full and true disclosure” with respect to disputed issues of material fact, 15 U.S.C. § 57a(c)(2)(B). Rebuttal submissions were permitted in the present case. The Commission did not, however, either permit cross-examination or determine that it was not “appropriate” or not “required for a full and true disclosure” with respect to disputed issues of material fact.

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CONSUMERS UNION OF v. FEDERAL TRADE COMMISSION
801 F.2d 417 (D.C. Circuit, 1986)

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Bluebook (online)
801 F.2d 417, 255 U.S. App. D.C. 203, Counsel Stack Legal Research, https://law.counselstack.com/opinion/consumers-union-of-us-inc-v-federal-trade-commission-cadc-1986.