Zen Magnets v. Consumer Product Safety

968 F.3d 1156

• Court: Court of Appeals for the Tenth Circuit
• Decided: August 4, 2020
• Docket: 19-1168
• Status: Published

Opinion

FILED United States Court of Appeals PUBLISH Tenth Circuit

UNITED STATES COURT OF APPEALS August 4, 2020 Christopher M. Wolpert FOR THE TENTH CIRCUIT Clerk of Court _________________________________________

ZEN MAGNETS, LLC,

Plaintiff - Appellee/Cross- Appellant,

v. Nos. 19-1168, 19-1186

CONSUMER PRODUCT SAFETY COMMISSION,

Defendant - Appellant/Cross- Appellee. _________________________________________

Appeal from the United States District Court for the District of Colorado (D.C. No. 1:17-CV-02645-RBJ) _________________________________________

David C. Japha, Levin Jacobson Japha, PC, Denver, Colorado (Evan House with him on the briefs), for Plaintiff-Appellee/Cross-Appellant.

Jaynie Lilley, Attorney, Appellate Staff, United States Department of Justice, Civil Division, Washington, DC (Joseph H. Hunt, Assistant Attorney General; Jason R. Dunn, United States Attorney; Daniel Tenny and Patrick G. Nemeroff, Attorneys, Appellate Staff, on the briefs), for Defendant-Appellant/Cross-Appellee. _________________________________________

Before BACHARACH, McHUGH, and EID, Circuit Judges. _________________________________________

BACHARACH, Circuit Judge. _________________________________________ The Consumer Product Safety Commission conducted two

proceedings involving the making of small rare-earth magnets. The first

proceeding consisted of a rulemaking affecting all manufacturers of these

magnets. The second proceeding consisted of an adjudication affecting

only one manufacturer: Zen Magnets, LLC. For the adjudication, the

Commission needed to provide Zen with a fair proceeding under the Fifth

Amendment’s Due Process Clause. Withrow v. Larkin, 421 U.S. 35, 46–47

(1975).

Zen contends that the adjudication was unfair for two reasons:

1. The Commissioners conducted the adjudication after engaging in a rulemaking on closely related issues.

2. Three Commissioners participated in the adjudication after making public statements showing bias.

The district court concluded that

• the Commission hadn’t denied due process by simultaneously conducting the adjudication after a related rulemaking,

• two of the Commissioners (Kaye and Robinson) had not shown bias through their public statements, and

• one Commissioner (Adler) had shown bias through a public statement about Zen.

Both parties appeal. The Commission appeals the district court’s

decision as to Commissioner Adler. Zen cross-appeals, arguing that

• three Commissioners had violated due process by prejudging the issues and

2 • the district court had issued an advisory opinion on the merits.

Our jurisdiction extends to the parties’ contentions involving due

process. For these contentions, we conclude that the Commissioners’

participation in the rulemaking and their statements did not result in a

denial of due process. So we affirm the district court’s judgment as to

Commissioners Robinson and Kaye but reverse as to Commissioner Adler.

We lack jurisdiction to decide whether the district court rendered an

advisory opinion.

I. The Commission conducts a rulemaking and a related adjudication.

Zen’s small rare-earth magnets are shiny and smooth, resembling

candies that commonly garnish cookies and desserts. The appearance

sometimes leads young children to put the magnets in their mouths. Older

children also sometimes put the magnets in their mouths to magnetize

braces or mimic facial piercings. When put in children’s mouths, the

magnets are sometimes swallowed, lodging in the digestive system and

causing serious injury or death.

The Consumer Product Safety Commission tried to address this

danger through both rulemaking and adjudication. Through rulemaking, the

Commission proposed a safety standard to either enlarge the magnets or

weaken their magnetic strength. See Safety Standard for Magnet Sets, 77

Fed. Reg. 53,781, 53,787–88 (Sept. 4, 2012); 15 U.S.C. §§ 2056(a), 2058

3 (2018). The Commission approved the final rule in a public hearing in

September 2014. 1 At that hearing, three of the Commission’s members

(Adler, Kaye, and Robinson) made statements about the risk posed by the

magnets, the impossibility of mitigating that risk, and Zen’s role as a

magnet distributor.

Shortly after proposing the safety standard, the Commission initiated

an adjudication by authorizing complaints against Zen and two other

distributors of small rare-earth magnets. The complaints alleged that the

magnets presented a “substantial product hazard.” See 15 U.S.C. § 2064(a)

(2018). The other two distributors entered into consent agreements with the

Commission, leaving Zen as the only remaining distributor in the

adjudication.

In that adjudication, an administrative law judge found that

• the magnets did not present a substantial product hazard when accompanied by appropriate warnings and age recommendations and

• the previous warnings had been inadequate.

Given these findings, the administrative law judge recalled the magnets

that Zen had sold without adequate warnings or age recommendations.

1 Our court later vacated the rule and remanded to the agency after a challenge from Zen. See Zen Magnets, LLC v. CPSC, 841 F.3d 1141, 1144 (10th Cir. 2016). 4 Counsel for the agency appealed to the Consumer Product Safety

Commission, and Zen sought recusal of Commissioners Adler, Robinson,

and Kaye, arguing that they had improperly prejudged the adjudication

based on

• the overlap between the issues in the rulemaking and adjudication and

• the Commissioners’ public statements.

The Commissioners declined to recuse. Three years after passing the final

magnet rule, the Commission decided that

• the magnets presented a substantial product hazard because a defect created a substantial risk of public injury and

• no warnings could mitigate the risk of injury.

Zen appealed to federal district court, renewing challenges to the

participation of Commissioners Adler, Robinson, and Kaye and arguing

that the Commission’s decision was arbitrary and capricious under the

Administrative Procedure Act. The district court ruled that (1) the decision

was not arbitrary and capricious, (2) Commissioners Robinson and Kaye

had not violated due process by participating in the adjudication after

publicly remarking about Zen and its magnets, and (3) Commissioner Adler

had violated due process by participating in the adjudication after publicly

remarking about Zen and its magnets. The district court thus invalidated

the Commission’s final order.

5 After the district court issued its order, Zen filed a Rule 59(e) motion

to alter or amend the judgment. In this motion, Zen asked the district court

to vacate its conclusion that the Commission’s reasoning was not arbitrary

and capricious, characterizing this conclusion as an impermissible advisory

opinion. The district court rejected this request.

II. We conduct de novo review.

Our review is de novo. N. M. Cattle Growers Ass’n v. U.S. Fish &

Wildlife Serv., 248 F.3d 1277, 1281 (10th Cir. 2001). The Commission’s

opening brief cites the standard to review a summary-judgment ruling, and

the parties refer to their briefs in district court as cross-motions for

summary judgment. See First Br. at 17; Appellant’s App’x, vol. 2, at 398,

419. But the summary-judgment standard doesn’t apply because the district

court’s decision involved an administrative appeal. See Olenhouse v.

Commodity Credit Corp., 42 F.3d 1560, 1579–80 (10th Cir. 1994) (stating

that district courts reviewing agency actions should function like appellate

courts and “motions for summary judgment are conceptually incompatible

with the very nature and purpose of an appeal”).

III. We have jurisdiction over the Commission’s appeal and part of Zen’s cross-appeal.

Every appellant bears the burden of proving appellate jurisdiction by

demonstrating the finality of the challenged decision or identifying a

specific grant of jurisdiction. EEOC v. PJ Utah, LLC, 822 F.3d 536, 542

6 n.7 (10th Cir. 2016); see 28 U.S.C. § 1291 (2018). An administrative

remand is not ordinarily considered a final decision. Western Energy All. v.

Salazar, 709 F.3d 1040, 1047 (10th Cir. 2013). We thus generally lack

jurisdiction over remands to administrative agencies. Id.

Both parties invoke the practical-finality exception for their appeals.

We conclude that the exception applies to the Commission’s appeal as to

the disqualification of Commissioner Adler, and we exercise pendent

appellate jurisdiction over Zen’s cross-appeal as to the participation of

Commissioners Kaye and Robinson. But we lack jurisdiction over Zen’s

cross-appeal on the refusal to vacate the district court’s opinion as an

A. We have jurisdiction over the Commission’s appeal under the practical-finality exception.

Though appellate jurisdiction requires finality, we construe the term

“finality” based on practicality. Gillespie v. U.S. Steel Corp., 379 U.S.

148, 152 (1964). With this lens of practicality, we sometimes regard a

district court’s remand to an agency as “practically final.” Western Energy

All. v. Salazar, 709 F.3d 1040, 1049–50 (10th Cir. 2013). A district court’s

remand is practically final when it is urgent that an issue be decided

because it is important, serious, and unsettled. Bender v. Clark, 744 F.2d

1424, 1427 (10th Cir. 2013).

7 To decide whether a decision is practically final, we ask whether “the

danger of injustice by delaying appellate review outweighs the

inconvenience and costs of piecemeal review.” New Mexico v. Trujillo, 813

F.3d 1308, 1317 (10th Cir. 2016) (quoting United States v. Copar Pumice

Co., 714 F.3d 1197, 1209 (10th Cir. 2013)).

Practical finality is particularly appropriate when an agency may be

foreclosed from appellate review. Id. at 1318 n.4; Bender v. Clark, 744

F.2d 1424, 1428 (10th Cir. 2013). For example, we found the ruling

practically final in Bender v. Clark, 744 F.3d 1424, 1427–28 (10th Cir.

2013). In Bender, a district court remanded after concluding that the

Interior Board of Land Appeals had applied the wrong standard of proof.

744 F.2d at 1426. In exercising jurisdiction, we emphasized the importance

of applying the correct standard of proof. Id. at 1428. Though the issue

was important, it was unlikely to return if we did not undertake appellate

review. Id. So deferring appellate jurisdiction would have threatened our

ability to address an important issue involving the standard of proof. Id.

Deferring jurisdiction here could similarly threaten our ability to

address the Commission’s appellate issue involving due process. This issue

is serious and important, for due process is an “absolute” and “important”

constitutional right. Carey v. Piphus, 435 U.S. 247, 266 (1978).

If we were to decline appellate jurisdiction, the Commission’s due-

process issue would likely escape review in the future. Dismissal of the

8 appeal would spark new administrative proceedings before a new panel,

and the resulting order would supersede the Commission’s existing order.

So any challenge to the district court’s ruling on due process would likely

become moot, and the Commission would likely lose the chance to appeal.

Reviewing the issue now may also help avoid piecemeal litigation. If

we decline review and Zen loses again in administrative proceedings, Zen

could again appeal to the district court based on a denial of due process.

And if the district court were to rule against Zen, it could appeal. If Zen

again appealed, we could invalidate the decision for lack of due process,

triggering a new round of litigation. By addressing the due process claim

now, we may avoid multiple rounds of litigation.

Given the need for immediate review, we consider the district court’s

ruling on Commissioner Adler as practically final.

B. We lack independent jurisdiction over Zen’s cross-appeal.

Our appellate jurisdiction over the Commission’s appeal does not

encompass Zen’s cross-appeal. So Zen bears the burden of proving

appellate jurisdiction over the cross-appeal. See pp. 6–7, above. Zen tries

to satisfy this burden with three arguments:

1. We have jurisdiction over the cross-appeal as a matter of practical finality.

2. We have jurisdiction under the collateral-order doctrine.

3. The denial of Zen’s motion to alter or amend is a final judgment.

9 We reject these arguments.

First, the district court’s decision was not “practically final” for Zen.

For administrative agencies, a remand prevents a later appeal of the initial

decision. Sierra Club v. U.S. Dep’t of Agric., 716 F.3d 653, 656–57 (D.C.

Cir. 2013). But private parties can freely challenge the initial decision

after the agency carries out the remand order. Id. So the remand order did

not prevent eventual appellate review of Zen’s arguments.

Second, the collateral-order doctrine does not apply. Under this

doctrine, the collateral issue must be subject to a conclusive determination,

be important and separate from the merits of the action, and be effectively

unreviewable after a final judgment. Mesa Oil, Inc. v. United States, 467

F.3d 1252, 1254 (10th Cir. 2006). Zen argues that it satisfies these

requirements with respect to the bias of two Commissioners and the district

court’s refusal to vacate language constituting an advisory opinion. We

disagree.

Even if we decline to exercise jurisdiction over the cross-appeal, Zen

could eventually appeal based on the participation of Commissioners Kaye

and Robinson. The eventual availability of judicial review prevents

reliance on the collateral-order doctrine.

Zen also argues that if this appeal is dismissed, we could never

consider whether the district court’s discussion on the merits constituted

10 an advisory opinion. But the district court’s ruling hasn’t been vacated. So

when a final order is eventually issued, Zen could appeal and argue that

the merits discussion was advisory. See 28 U.S.C. § 1291 (2018).

Third, Zen argues that the denial of its motion to alter or amend

constituted a final judgment. But the administrative remand order did not

constitute a “final order,” Western Energy All. v. Salazar, 709 F.3d 1040,

1047 (10th Cir. 1984), so “the denial of a motion to alter such judgment

cannot be final for such purposes either,” Branson v. City of Los Angeles,

912 F.2d 334, 336 (9th Cir. 1990). 2

Even if the denial of the motion to alter or amend had constituted a

final judgment, we would lack appellate jurisdiction over the issue

involving an advisory opinion. In Zen’s motion to alter or amend the

judgment, Zen characterizes the district court’s prior assessment of the

Commission’s decision as an advisory opinion. Even if this assessment

constituted an advisory opinion, the district court’s prior language did not

constitute a judgment, and the entry of judgment is what triggers appellate

jurisdiction. See Jennings v. Stephens, 574 U.S. 271, 277 (2015) (“This

2 Zen points out that the Ninth Circuit has characterized the denial of a Rule 59(e) motion as an appealable judgment. Second Br. at 12 (quoting Balla v. Idaho State Bd. of Corrs., 869 F.2d 461, 467 (9th Cir. 1989)). But the Ninth Circuit made this characterization while observing that a final judgment is required for a motion under Rule 59(e). Balla, 869 F.2d at 467. A judgment is final only if it ends the litigation and leaves only the execution of the judgment. Catlin v. United States, 324 U.S. 229, 233 (1945). 11 Court, like all federal appellate courts, does not review lower courts’

opinions, but their judgments.”); Chevron, U.S.A., Inc. v. Nat. Res. Def.

Council, Inc., 467 U.S. 837, 842 (1984) (“[T]his Court reviews judgments,

not opinions.”).

C. We exercise pendent appellate jurisdiction over Zen’s due process claims.

Although we lack jurisdiction over the cross-appeal, we exercise

pendent appellate jurisdiction over Zen’s due process claims.

We may exercise pendent appellate jurisdiction over non-appealable

decisions “that overlap[] with an appealable decision.” Moore v. City of

Wynnewood, 57 F.3d 924, 929 (10th Cir. 1995). Though pendent appellate

jurisdiction is disfavored, it is discretionary. Id. We may exercise that

discretion when the non-appealable and appealable decisions are

“inextricably intertwined.” Id. at 930. Claims are “inextricably

intertwined” when “the pendent claim is coterminous with, or subsumed in,

the claim before the court on interlocutory appeal.” United Transp. Union

Loc. 1745 v. City of Albuquerque, 178 F.3d 1109, 1114 (10th Cir. 1999)

(quoting Moore, 57 F.3d at 930).

Only Zen’s due process claims are intertwined with the

Commission’s appeal. Zen contends that the district court improperly

issued an advisory opinion, but this contention does not bear on the

Commission’s argument about disqualification of Commissioner Adler.

12 Zen’s contentions about Commissioners Robinson and Kaye are

different. Zen bases these contentions on the same legal standard and

analysis underlying the appeal as to Commissioner Adler’s participation.

Given this overlap, we exercise pendent appellate jurisdiction over Zen’s

cross-appeal on the due process issues.

IV. The Commissioners did not violate Zen’s right to due process.

Zen argues that it suffered a denial of due process from

• the Commissioners’ participation in an adjudication after a related rulemaking and

• the public statements by three Commissioners (Adler, Robinson, and Kaye) showing bias.

We reject both contentions.

A. The Commissioners did not violate due process by participating in an adjudication during the related rulemaking.

Zen admits that agencies can conduct simultaneous rulemakings and

adjudications, but insists that the Commission’s simultaneous rulemaking

and adjudication violated due process in this case. Compare Oral Arg. at

31:14–23 (“We are not saying that there’s anything inherently wrong with

conducting a rulemaking at the same time as undergoing an adjudication.”),

with Second Br. at 21 (“Zen argue[s] that because there was such a high

degree of overlap concerning the facts and laws at issue, the Commission

did necessarily prejudge those matters in advance.” (emphasis in original)).

In our view, the Commission’s simultaneous use of rulemaking and 13 adjudication did not violate due process. See Stephanie W. Kanwit, Federal

Trade Commission § 1:3 (2019) (“The courts have also generally upheld

the commission when it has simultaneously conducted industry-wide

investigations and adjudicative proceedings involving the same general

subject matter.” (footnote omitted)). 3

Agency officials can undertake multiple roles when carrying out their

statutory duties, and the occupation of different roles is not necessarily

problematic. For example, administrative officials could participate in an

administrative adjudication even after investigating and testifying about

their opinions on the underlying conduct. FTC v. Cement Inst., 333 U.S.

3 Although the Commission simultaneously conducted the rulemaking and adjudication, the individual Commissioners did not. In 2012, the Commission proposed the product safety standard and authorized complaint counsel to issue an administrative complaint against the magnet distributors. The Commissioners voted over two years later on approval of the final rule. Roughly two more years passed before the adjudication was appealed to the Commission.

Zen’s briefing does not clearly identify whether its due process challenge is based on

• the Commission’s simultaneous participation in the proceedings or

• the Commissioners’ participation in the adjudication after engagement in the rulemaking.

Despite this ambiguity, either challenge would fail because simultaneous rulemaking and adjudication would not violate due process.

14 683, 700 (1948). 4 And a medical examining board’s investigation of a

doctor did not preclude the board from later holding a hearing on whether

to suspend the doctor’s license. Withrow v. Larkin, 421 U.S. 35, 46 (1975).

Occupying multiple roles is ordinarily permissible even when an

administrative official enters an adjudication familiar with the facts. After

all, judges need not ordinarily recuse after ruling on similar issues in other

cases involving the same parties. See Frey v. EPA, 751 F.3d 461, 472 (7th

Cir. 2014) (concluding that the district judge’s prior ruling on similar

issues in an enforcement action did not require recusal in a citizen suit);

Steering Comm. v. Mead Corp. (In re Corrugated Container Antitrust

Litig.), 614 F.2d 958, 964 (5th Cir. 1980) (stating that “overwhelming

authority” relieves judges of the need to recuse when presiding over a case

involving the same parties and facts even after forming pertinent

conclusions in prior cases). Recusal is required only if familiarity with the

facts would prevent an administrator from “judging a particular

controversy fairly on the basis of its own circumstances.” Hortonville Joint

Sch. Dist. No. 1. v. Hortonville Educ. Ass’n, 426 U.S. 482, 493 (1976)

(quoting United States v. Morgan, 313 U.S. 409, 421 (1941)).

4 Zen points out that in Cement Institute, the adjudication addressed whether the defendants had engaged in conduct previously deemed illegal. 333 U.S. at 700. But Cement Institute clarifies that agency officials can simultaneously undertake multiple roles in related matters without violating due process. Id.

15 Zen does not show any circumstances suggesting the Commissioners’

inability to remain impartial after addressing related issues in the

rulemaking. Without such a showing, we conclude that the Commissioners

did not deny Zen’s right to due process by serving first as rulemakers and

then as adjudicators. See Ash Grove Cement Co. v. FTC, 577 F.2d 1368,

1373–77 (9th Cir. 1978) (concluding that the FTC’s expression of

conclusions in an enforcement policy, which resulted from an investigation

through rulemaking, did not show prejudgment of related issues in an

adjudication).

B. The Commissioners’ statements do not reflect prejudgment of the issues or a reasonable appearance of prejudgment.

Though agencies may undertake overlapping rulemakings and

adjudications, commissioners may still be disqualified for bias if they have

“prejudged the case or . . . given a reasonable appearance of having

prejudged it.” Kennecott Copper Corp. v. FTC, 467 F.2d 67, 80 (10th Cir.

1972). But challengers must overcome a presumption that adjudicators are

neutral, for we assume that adjudicators are people “of conscience and

intellectual discipline, capable of judging a particular controversy fairly on

the basis of its own circumstances.” United States v. Morgan, 313 U.S.

409, 421 (1941); see p. 34, below.

To determine whether Zen has overcome this presumption, we

consider the context and content of the Commissioners’ statements. The

16 context can include a variety of circumstances, including whether the

statements

• involved legal or factual issues 5 or

• occurred within the course of performing official duties. 6

The Commissioners addressed factual issues, and the factual nature

of these issues supports Zen. But the parties disagree on whether the

statements constituted part of the rulemaking proceedings. Zen contends

that the Commissioners made four statements that

• appeared in press releases after the Commission had already voted to approve a proposed version of the eventual rule and

• were made to “commend[] the righteousness of [the Commissioners’] actions.”

5 See 2 Charles H. Koch, Jr., Administrative Law & Practice § 6:10, at 359 (3d ed. 2010) (“Bias as to legal theory or policy cannot be attacked because bias as to policy or theory does not create a defect in the decisionmaking.”); Kenneth Culp Davis, Administrative Law Text 245 (3d ed. 1972) (“Bias in the sense of crystallized point of view about issues of law or policy is almost universally deemed no ground for disqualification.”). 6 See 2 Charles H. Koch, Jr., Administrative Law & Practice § 6:10, at 362 (3d ed. 2010) (“Where the potential bias, even as to specific facts, occurs within an institutionalized decisionmaking context, it may be permitted unless it strikes at the very integrity of that process.”). These circumstances are not exhaustive. For example, a commissioner’s personal stake in the outcome could substantially affect the need for disqualification. See 7 Charles H. Koch, Jr., Federal Administrative Practice § 8302, at 592 (3d ed. 2001) (stating that “[t]he highest probability” of actual bias comes when the decisionmaker has a personal stake in the outcome).

17 Second Br. at 24. But the Commissioners made three of these statements in

the rulemaking to explain their votes for the rule. The fourth statement was

issued by the Department of Justice. In this statement, the Department of

Justice included a comment by Commissioner Kaye about a ruling

unrelated to the pending adjudication against Zen.

None of the four statements show that the Commissioners prejudged

the adjudication or gave a reasonable appearance of prejudgment. 7

7 In its reply brief, Zen also relies on another statement by Commissioner Robinson. On May 14, 2014, Commissioner Robinson made a written statement about the Commission’s vote to enter into a consent agreement with another firm that had sold high-powered magnet sets. Commissioner Robinson stated that “[h]igh-powered magnets [were] responsible for horrific, long-term, and life threatening injuries in infants and children estimated to be in the thousands.” Appellant’s App’x, vol. 1, at 268. In a reply brief, Zen criticized the May 14 statement. But in the opening brief, Zen had focused only on two other statements that Commissioner Robinson had made in a separate hearing.

We decline to consider the statement on May 14 because Zen did not challenge this statement in the opening brief. See State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d 979, 984 n.7 (10th Cir. 1993) (“Appellant failed to raise this issue in his opening brief and, hence, has waived the point.”); Third Br. at 1 n.1 (explaining Zen’s waiver); Second Br. at 28–29 (quoting Commissioner Robinson’s first and second statements but not her third statement).

Zen contends that it preserved this argument because the second brief repeatedly referred to Commissioner Robinson’s comments, signaling that all of the comments were involved in the appeal. Fourth Br. at 24. The use of the plural was not enough to alert us to the third statement made on May 14. As noted above, Zen’s opening brief had focused on two separate statements that Commissioner Robinson had made in a separate hearing. Without identifying the third statement in the opening brief, Zen failed to preserve this argument.

18 1. The three statements made during the rulemaking and one statement made outside the rulemaking do not show prejudgment or its appearance.

The Commissioners’ three statements in the rulemaking do not

suggest prejudgment or an appearance of prejudgment. The same is true of

Commissioner Kaye’s statement outside the rulemaking.

a. To determine whether a statement shows prejudgment or its appearance, we consider the statement’s context and content.

The Commission encourages us to approve of each statement made

during the rulemaking without considering the content. For example, the

Commission contends that “[b]ecause Commissioner Adler was not

disqualified from the adjudication by virtue of his participation in the

rulemaking, he also was not disqualified by virtue of opinions he

appropriately formed and expressed in connection with that rulemaking.”

First Br. at 16–17.

Zen responds that this argument is unpreserved because the

Commission did not make it in district court. We disagree. The

Commission raised this argument in district court, though the wording was

different.

We generally decline to consider arguments that were not made in

district court. We decline consideration even if the appellant makes an

argument falling “under the same general category as

an argument presented at trial.” McDonald v. Kinder-Morgan, Inc., 287

19 F.3d 992, 999 (10th Cir. 2002) (citing Lyons v. Jefferson Bank &

Trust, 994 F.2d 716, 722 (10th Cir. 1993)). But we focus on the theories

that the parties raise, not “the . . . legal rubrics that provide the foundation

for them.” Ave. Capital Mgmt. II, L.P. v. Schaden, 843 F.3d 876, 885 (10th

Cir. 2016) (quoting Fish v. Kobach, 840 F.3d 710, 730 (10th Cir. 2016)).

In framing its argument to our Court, the Commission contends that

administrators can adjudicate issues even when they have expressed strong

views on the subject. The Commission made the same argument in district

court when insisting that Commissioner Adler could participate in both the

rulemaking and the adjudication. See Appellant’s App’x, vol. 2, at 464

(“Time and time again, the Supreme Court has held there is no violation of

due process even if officials have already considered similar facts, reached

legal conclusions about those facts, and publicly discussed those

conclusions.”); id. at 470 (“Engaging in a Rulemaking and Adjudication

Does Not Demonstrate Bias”). The phrasing is new, but the argument is

not.

Though the Commission’s argument isn’t new, it is invalid. Just

because a commissioner can participate in both a rulemaking and an

adjudication doesn’t mean that the commissioner’s statements are insulated

from scrutiny. To decide whether a commissioner has prejudged the matter

or given the appearance of prejudgment, we consider the circumstances.

See Kennecott Copper Corp. v. FTC, 467 F.2d 67, 80 (10th Cir. 1972). The

20 circumstances include whether the commissioner made the statements

while carrying out an official duty.

The Supreme Court addressed this issue in Federal Trade

Commission v. Cement Institute, 333 U.S. 683 (1948). There the FTC

condemned a pricing system before conducting an adjudication against

various companies for using this pricing system. 333 U.S. at 700. The

Supreme Court held that the right to due process did not prevent the FTC

from adjudicating the case after deciding that the pricing system was

illegal:

[No] decision of this Court would require us to hold that it would be a violation of procedural due process for a judge to sit in a case after he had expressed an opinion as to whether certain types of conduct were prohibited by law. In fact, judges frequently try the same case more than once and decide identical issues each time, although these issues involved questions both of law and fact. Certainly, the Federal Trade Commission cannot possibly be under stronger constitutional compulsions in this respect than a court.

Id. at 702–03. 8

We addressed a different situation in Staton v. Mayes, 552 F.2d 908

(10th Cir. 1977). There we considered an administrator’s comments while

8 Zen argues that Cement Institute is distinguishable because the FTC did not “conclude, as a matter of law and fact, that the respondents in that case had engaged in an illegal multiple basing point system.” Second Br. at 22. But like the agency in Cement Institute, the Commission here confronted different issues in the rulemaking and adjudication. See pp. 26– 27, 29–30, below.

21 campaigning for office. 552 F.2d at 913–14. We concluded that the

comments showed prejudgment in a later adjudication, and we observed

that the administrator had made the statements outside his official

capacity. Id. at 914 (“These were not mere statements on a policy issue

related to the dispute, leaving the decision maker capable of judging a

particular controversy fairly on the basis of its own circumstances.”). 9

Cement Institute and Staton mark opposite sides of the spectrum.

Under Cement Institute, an administrator can ordinarily participate in an

adjudication after opining on disputed issues in the course of other

proceedings. After all, judges must often decide issues after squarely

deciding the same issues in other proceedings. But Staton shows that when

an administrator unnecessarily makes prejudicial remarks outside an

authorized proceeding, the court is more likely to find a violation of due

process.

9 The D.C. Circuit addressed an analogous issue in Cinderella Career & Finishing Schools, Inc. v. FTC. 425 F.2d 583 (D.C. Cir. 1970). There the FTC issued a complaint against a charm school for unfair or deceptive marketing. Id. at 584. After the FTC reviewed an administrative law judge’s decision, Cinderella moved to disqualify one of the commissioners based on his public statements about Cinderella’s advertising. Id. at 584– 85, 589–90. The D.C. Circuit held that the commissioner’s statements showed bias and that he should have been disqualified, emphasizing that the commissioner had made the pertinent comments outside his official duties. Id. at 590–91.

22 Under Cement Institute and Staton, we ask whether administrators

made the prior statements in the course of an authorized proceeding. If

they did so, we are less likely to consider the prior statements as evidence

of prejudgment or its appearance. 10

But even when statements take place in the course of an authorized

proceeding, the statements may reflect prejudgment or its appearance. See

Kristin E. Hickman & Richard J. Pierce, Jr., Administrative Law Treatise

§ 7.7, at 868 (6th ed. 2019) (“It is conceivable that a decisionmaker can

form an opinion of a party so extreme that it renders the decisionmaker

impermissibly biased, even though the sole source of the facts that form

the basis for the opinion is a judicial proceeding in which the

decisionmaker presided.”). So the court must consider not only the

statements’ context but also their content.

10 The Commission also refers to Liteky v. United States, 510 U.S. 540 (1994). Liteky held that 28 U.S.C. § 455(a) requires federal judges and justices to recuse from subsequent judicial proceedings based on statements in previous judicial proceedings only when the statements are “so extreme as to display clear inability to render fair judgment.” 510 U.S. at 551. But Liteky bears little consequence here; that case relied on the requirements of 28 U.S.C. § 455(a), which arguably differ from the requirements for due process. See United States v. Couch, 896 F.2d 78, 81 (5th Cir. 1978) (“[S]ection 455 and the Due Process Clause are not coterminous.”). 23 b. Commissioner Adler’s statement during the rulemaking does not show prejudgment or its appearance.

Commissioner Adler made his statement during the rulemaking when

explaining his vote. In the hearing on rulemaking, Commissioner Adler

stated that “if these magnet sets remain on the market irrespective of how

strong the warnings on the boxes in which they’re sold or how narrowly

they are marketed to adults, children will continue to be at risk of

debilitating harm or death from this product.” Appellant’s App’x, vol. 2, at

422.

Zen argues that this statement was made in a press release. But this

statement is audible in the video recording of the rulemaking proceeding.

U.S. Consumer Product Safety Commission, Commission Meeting:

Decisional Matter - Safety Standard for Magnet Sets Final Rule [“Hearing

Video”], YouTube, at 22:20–22:36 (Oct. 2, 2019),

https://www.youtube.com/watch?v=nyomlgxgQeU&feature=youtube. The

Commission later printed Commissioner Adler’s statement and put it on the

Commission’s website. But Commissioner Adler made this statement in the

rulemaking itself, not afterward.

Zen analogizes the statement to comments made following a

proceeding when an adjudication is pending on the same issues. The

analogy is inapt because Commissioner Adler didn’t make the statement

after the rulemaking. If a newspaper had printed the comments after the

24 rulemaking, few would characterize the newspaper account as a new

statement made outside of the rulemaking. Here the publication appeared

on the Commission’s website rather than in a newspaper, but this

distinction does not give us any reason to treat the statement differently.

Because Commissioner Adler made the statement in the rulemaking itself,

this factor weighs for the Commission. But this factor does not end the

inquiry; we must still consider the content of Commissioner Adler’s

statement.

The right to due process is violated when a commissioner’s remarks

demonstrate prejudgment or the appearance of prejudgment. See Part

IV(B), above. Zen argues that the statement shows Commissioner Adler’s

predisposition to find the magnets dangerous even with warnings. For three

reasons, we disagree.

First, Commissioner Adler was directly addressing an issue before

the Commission in the rulemaking: whether the risk could be addressed

through alternatives like warnings. See 15 U.S.C. § 2058(f)(3) (2018).

Commissioner Adler had to decide the issue in order to resolve the

rulemaking.

Second, the statement was measured. Commissioner Adler said only

that he didn’t think that warnings could mitigate the harm. This statement

resembles the Commission’s explanation for the rule, which casts doubt on

the impact of warning labels on the risk of injury. See Safety Standard for

25 Magnet Sets, 77 Fed. Reg. 53,781, 53,789 (Sept. 4, 2012). So

Commissioner Adler’s statements do not show prejudgment or its

appearance.

Third, Commissioner Adler clarified that his comments at the hearing

did not bear on his judgment in the adjudication. Right after making his

statement, Commissioner Adler emphasized that

• he was not “passing judgment on whether magnets present [a substantial product] hazard” for the adjudication because “[he] ha[d] not seen the case before [him],” Hearing Video at 24:38– 24:43, and

• “[e]ach type of proceeding carries different factual elements and different standards of proof,” id. at 25:41–25:46. 11

Commissioner Adler then repeated these comments in a written

statement on the rulemaking, acknowledging “that a product found to

present an unreasonable risk of injury” in a rulemaking “might be

11 Zen points out that the district court concluded that the “role of warnings and marketing efforts [had been] of central relevance in the adjudication.” Appellant’s App’x, vol 1, at 521. But the issues in the rulemaking and adjudication differed. See pp. 26–27, 29–30, below.

Zen also argues that Commissioner Adler’s statement was extrajudicial because the rulemaking did not address the need to remove the magnets from the market. But Commissioner Adler made the statement

• during the rulemaking

• about issues involved in the rulemaking.

So his statement was not extrajudicial. See pp. 24–25, above.

26 completely exonerated as a substantial risk of injury” in an adjudication.

Appellant’s App’x, vol. 1, at 269. 12

Given the context and content of Commissioner Adler’s statements,

we conclude that they did not show prejudgment or the appearance of

prejudgment.

c. Commissioner Robinson’s statements during the rulemaking do not show prejudgment or its appearance.

Zen also addresses two of Commissioner Robinson’s remarks during

the rulemaking:

1. “The problem was however that however they were marketed that these were items that were being swallowed by young children and ingested by teenagers and were causing some very, very serious injuries and even deaths.”

2. “With the data that we had even though it made a compelling case for this being an unreasonable risk of injury it was understated so the risk was even higher.” Appellant’s App’x, vol. 2, at 423 (emphasis in original). 13

12 Indeed, the Commission used different reasoning in the adjudication and final rulemaking. See, e.g., id. at 69 n.28 (noting that in the adjudication, the Commission declined to rely on emergency-room injury reports for injury estimates even though the Commission had relied in the rulemaking on these reports). 13 Although Commissioner Robinson is no longer on the Commission, her departure does not moot the issue. See Second Br. at 25 n.12. If Commissioner Robinson’s participation violated Zen’s right to due process, her participation would invalidate the Commission’s decision because the Court would have no way of knowing whether she had influenced the other

27 Zen again says that the statements came in a press release. But

Commissioner Robinson’s statements are recorded in a videotape of the

rulemaking as she explained her decision. The first statement came in

Commissioner Robinson’s opening remarks, Hearing Video at 1:40–1:59;

the second statement came when Commissioner Robinson explained her

vote for the rule, id. at 30:14–30:24.

The Commission later printed Commissioner Robinson’s statement

and put a written version on the Commission’s website. But just like

Commissioner Adler, Commissioner Robinson didn’t make any new

statements for the website; the Commission simply printed the statements

that Commissioner Robinson had made during the rulemaking itself. So the

context of the statements supports the Commission.

But we must still consider whether the statements’ contents show

prejudgment or the appearance of prejudgment. The district court answered

“no,” and we agree.

In her opening remarks, Commissioner Robinson suggested that no

marketing could mitigate the risk. See p. 27, above. But the statement did

not show that the Commissioner’s mind was closed to the possibility of

mitigating the risk through better instructions.

two Commissioners’ decisions. See Cinderella Career & Finishing Schs., Inc v. FTC, 425 F.2d 583, 592 (D.C. Cir. 1970).

28 In her second statement, Commissioner Robinson also distinguished

between the standards used in rulemaking and adjudication. The

rulemaking required the Commission to make specific findings, including

the necessity of eliminating or reducing the risk of injury. 15 U.S.C.

§ 2058(f)(3) (2018). By contrast, the adjudication required the Commission

to decide whether the magnets constituted a “substantial product hazard.”

15 U.S.C. § 2064(a) (2018). The term “substantial product hazard” refers

to either

• a failure to comply with consumer product safety rules “which creates a substantial risk of injury to the public” or

• “a product defect which (because of the pattern of defect, the number of defective products distributed in commerce, the severity of the risk, or otherwise) creates a substantial risk of injury to the public.”

Id.

In explaining her vote for the rule, Commissioner Robinson

reiterated the elements necessary for rulemaking under 15 U.S.C.

§ 2058(f)(3). See Hearing Video at 27:30–27:38 (“In approaching my

decision in this matter, I very much looked carefully at the statutes under

which we operate in rulemaking.”). Commissioner Robinson noted that the

data had “made a compelling case for this being an unreasonable risk of

injury” but hadn’t shown whether a potential product hazard would have

been substantial. See Appellant’s App’x, vol. 2, at 423. So Commissioner

29 Robinson’s statement does not bear on the issue underlying the

** *

Given the context and content of Commission Robinson’s statements,

we conclude that they do not show prejudgment or the appearance of

d. Commissioner Kaye’s statements (one made during the rulemaking and one made outside the rulemaking) do not show prejudgment or its appearance.

Zen also points to an impassioned statement at the rulemaking by

then-Chairman Kaye about the magnets’ dangers:

We all have fears in life. Every single one of us. For me, the biggest without any question, is something tragic happening to one of my boys. Every night, EVERY NIGHT, long after we have put them to bed, I sneak back into their rooms to kiss them one more time. As I do that, I feel tremendous gratitude they are alive and well, and that I am so blessed to have the privilege of hearing in the dark of their rooms the soothing and rhythmic sound of their breathing. I hug them tight, trying not to wake them, all the while knowing that, as long as I might hang on that particular evening, that moment is rather fleeting. And I also know each night that there is certainly no guarantee I will have even one more night to hold onto them tight.

As a parent and as the Chairman of the CPSC, I hurt so much for [AC’s] family. I was so deeply moved that [AC’s] mother, brothers, grandmother, aunt, and cousin took the time to drive from Ohio to attend the Commission’s vote. I will always think of [AC] when it comes to this rule and the action the Commission has approved, and I am so deeply sorry for [AC’s] family’s loss.

Id. at 422 (emphasis in original).

30 Zen again alleges that this statement was made in a press release

after the rulemaking. But Commissioner Kaye made this statement in the

rulemaking as he explained his vote. Hearing Video at 15:19–16:37. The

making of this statement in the rulemaking favors the Commission.

But we must also consider whether the contents of the statement

reflect prejudgment or the appearance of prejudgment. Like the district

court, we conclude that the statement does not show prejudgment. The

statement was passionate, but this passion is not disqualifying. See United

States v. Morgan, 313 U.S. 409, 421 (1941) (concluding that the Secretary

of Agriculture’s expression of “strong views” on an issue did not require

disqualification from participating in related proceedings). In the same

speech, Commissioner Kaye attributed his vote and his remarks to the

Commission’s mandate to protect consumers. Hearing Video at 9:35–9:43

(“I have not seen a better example of the Commission, in particular CPSC

staff, responding and proceeding in a manner true to our mission and

purpose.”)

Zen argues that Commissioner Kaye’s statement went too far and

showed “a personal stake in the outcome of both proceedings,”

demonstrating that he was “removing the Subject Products from the market

in order to protect his own children.” Fourth Br. at 10 (emphasis in

original). We disagree. Commissioner Kaye never said that his children

had used the magnets. He was simply expressing sympathy for the family

31 of a child who had died from swallowing the magnets. This expression of

sympathy did not reflect prejudgment of the issues. See United States v.

Rangel, 697 F.3d 795, 804–05 (9th Cir. 2012) (holding that a district

judge’s expression of sympathy for crime victims did not require

disqualification from sentencing). 14

Commissioner Kaye made another statement unrelated to the

rulemaking process. In general, comments by adjudicators outside their

official duties are not enough, standing alone, to require disqualification.

For example, in Kennecott Copper Corp. v. FTC, a copper corporation

acquired one of the two leading coal corporations in the country. 467 F.2d

67, 69 (10th Cir. 1972). The FTC alleged that this acquisition had violated

the Clayton Act. Id. The copper corporation argued that it had not received

due process because one of the Commissioners had given a public

interview using the copper corporation’s case as an example. Id. at 80. In

evaluating the claim, we considered not only the Commissioner’s decision

to give an interview but also what she had said. Id. We concluded that the

comments did not infringe the right to due process. Id.

Given Kennecott, we consider the context of Commissioner Kaye’s

statement. It was disconnected from the rulemaking but not from his duties

14 In Rangel, the district judge expressed sympathy for the victims after hearing them recount their hardships. 697 F.3d at 804–05. Similarly, Commissioner Kaye expressed sympathy for the child’s family after seeing that they had attended the vote for the rulemaking. See p. 30, above. 32 as a Commissioner. In March 2016, a district court enjoined Zen from

selling certain rare-earth magnets. Zen had purchased hundreds of

thousands of small rare-earth magnets at a discount from another magnet

company. One week later, the seller agreed to recall the magnets as part of

an agreement with the Commission. Following this agreement, Zen was

enjoined from reselling the magnets.

The Department of Justice issued a press release about the injunction

and included an official statement by Commissioner Kaye. In the press

release, Commissioner Kaye stated:

Today’s decision puts the rule of law and the safety of children above the profits sought by Zen . . . . Far too many children have been rushed into hospital emergency rooms to have multiple, high-powered magnets surgically removed from their stomachs. Young children have suffered infections and one child tragically died from swallowing loose magnets that often look like candy. The ruling is a major victory for the safety of consumers. Our pursuit of this case makes clear we will not tolerate the sale of recalled goods in any form. I am pleased that Judge Arguello ordered Zen to issue refunds to consumers, and I urge anyone who purchased these magnets to immediately seek a refund from Zen.

Appellant’s App’x, vol. 1, at 275–76. Zen objects to the accusation that it

elevated profit over “the rule of law” and “the safety of children.” Second

Br. at 30 (quoting Appellant’s App’x, vol. 1, at 275).

This statement does not show that Commissioner Kaye prejudged the

adjudication. Enforcing the recall order was unrelated to the adjudication.

Appellant’s App’x, vol. 2, at 524. And Commissioner Kaye was simply

33 addressing Zen’s decision to sell magnets that had been recalled. The

statement did not bear on the issue involved in the adjudication (whether

unrecalled magnets posed a substantial product hazard).

Commissioner Kaye’s comments were also measured. Though

Commissioner Kaye lauded the court for prioritizing safety over Zen’s

profits, the statement focused on the injury from selling magnets that had

already been recalled. The message is not enough to overcome the

presumption that agency adjudicators are “capable of judging a particular

controversy fairly on the basis of its own circumstances.” United States v.

Morgan, 313 U.S. 409, 421 (1941); see p. 16, above. 15

V. Conclusion

Because Zen did not suffer a violation of due process from the

Commissioners’ participation in the adjudication, we

• reverse the district court’s exclusion of Commissioner Adler and conclude that his participation in the adjudication did not violate due process and

• affirm the district court’s rejection of Zen’s challenges to the participation of Commissioners Kaye and Robinson based on bias.

15 Zen also argues that we should exclude the Commissioners from participating in the adjudication because the Commission’s chairperson thought that her colleagues had prejudged the issues. But we must make our own independent determination on the issue of due process. We can evaluate the entirety of the Commissioners’ statements as they appear in the videotape of the rulemaking. We have no need to defer to a characterization by another participant in the rulemaking. 34