Axon Enterprise v. FTC/Opinion of Justice Gorsuch
SUPREME COURT OF THE UNITED STATES
Nos. 21–86 and 21–1239
AXON ENTERPRISE, INC., PETITIONER
21–86v.21–86
FEDERAL TRADE COMMISSION, ET AL.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
SECURITIES AND EXCHANGE COMMISSION, ET AL., PETITIONERS
21–1239v.21–1239
MICHELLE COCHRAN
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
[April 14, 2023]
Justice Gorsuch, concurring in judgment.
I agree with the Court that Michelle Cochran and Axon Enterprise are entitled to their day in court. But to my mind the reason why has nothing to do with the “Thunder Basin factors.” Ante, at 8. Instead, it follows directly from 28 U. S. C. §1331.
I
The Constitution vests in Congress the power to create and organize lower federal courts. See Art. I, §8, cl. 9; Art. III, §1; Sheldon v. Sill, 49 U. S. 441, 449 (1850). Exercising that power, for the last 150 years Congress has afforded lower federal courts jurisdiction to hear civil disputes arising under the Constitution or laws of the United States. Act of Mar. 3, 1875, ch. 137, §1, 18 Stat. 470; see also Act of Dec. 1, 1980, 94 Stat. 2369 (eliminating amount-in-controversy requirement). Today, §1331 provides that “district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” Not may have jurisdiction, but shall. Not some civil actions arising under federal law, but all. The statute is as clear as statutes get, and everyone agrees it encompasses the claims Ms. Cochran and Axon seek to pursue. See ante, at 7. End of case, right?
Not so fast. As the Court sees it, Ms. Cochran, Axon, and others like them must satisfy not only §1331. They must also satisfy a judge-made, multi-factor balancing test. One assembled from remarks scattered here and there across the pages of Thunder Basin Coal Co. v. Reich, 510 U. S. 200 (1994). And one, we are told, designed to ferret out whether the legislators who adopted the Federal Trade Commission Act in 1914 and the Securities Exchange Act in 1934 harbored an “implici[t]” wish to “ous[t]” district courts of jurisdiction in favor of agency proceedings. Ante, at 7. So, yes, the law on the books may promise you the right to be heard in a court of law. But sometimes that doesn’t count for much. Sometimes judges can shunt you to an agency instead—so long as a test we have fabricated suggests to us that is what Congress really wanted.
There are many problems with the Thunder Basin project, but start with its sheer incoherence. At the outset, Thunder Basin requires litigants and courts to ask whether a “ ‘comprehensive review process’ ” exists. Ante, at 7. What does that mean? It seems a review process will “typically” qualify as “comprehensive” when “review in a court of appeals follow[s] the agency’s own review.” Ibid. But “typically” does not mean “necessarily.” Ibid. Just because an agency can hear a case does not mean a district court cannot. To decide whether a particular case belongs in an agency rather than a court, you must consult three further “considerations … commonly known now as the Thunder Basin factors.” Ante, at 7–8.
That’s where the magic happens. The Thunder Basin factors require assessing whether: (1) “precluding district court jurisdiction” would “foreclose all meaningful judicial review”; (2) the plaintiff ’s claims are “wholly collateral” to the statutory review scheme; and (3) the claims are “outside the agency’s expertise.” Ante, at 8 (internal quotation marks omitted); see generally 510 U. S., at 207–215. Harnessing the energy of these various factors, we are assured, will allow anyone to detect a latent congressional intent to oust district courts of their jurisdiction in any given case. See ante, at 8–10.
Just see how easy it is. To apply the first factor, all you have to do is ask a few more questions. They include whether the plaintiff could “eventually” obtain review in some federal court; whether that court’s review “would come too late to be meaningful”; and (maybe) how analogous the plaintiff ’s plea for immediate review is to a governmental official’s plea for qualified immunity. Ante, at 12–14. If this is starting to seem more confounding than clarifying, do not worry. The first factor is the “least straightforward” anyway. Ante, at 11. When it comes to the second factor, you only need to evaluate the “collateralism” of the plaintiff’s claim. Ante, at 14. Apparently, that “requires considering the nature of the claim, not the status (pending or not) of an agency proceeding.” Ante, at 16. The third factor is just one easy question too, focused on whether the plaintiff’s claim is “intertwined with or embedded in matters on which the [agency is] expert.” Ante, at 17. If that does not help, try asking if the claim is “entangled” with the agency’s expertise, ibid., or if the agency can bring to bear “distinctive knowledge,” ante, at 8.
Even after you make it through these twists and turns, a final surprise sometimes awaits. The Court holds that all three Thunder Basin factors favor Ms. Cochran and Axon, so their cases may proceed in district court. Ante, at 17–18. But what happens when the factors point in different directions, some in favor and others against immediate judicial review? No one knows. You get to guess.[1]
II
Putting aside these problems with the Thunder Basin project serves only to expose others. We are told that consulting so many disparate factors is essential if we are to divine and give effect to “implici[t]” congressional “inten[tions]” to divest district courts of jurisdiction in favor of certain agency proceedings. Ante, at 7 (internal quotation marks omitted). But what gives courts authority to engage in this business of jurisdiction-stripping-by-implication?
The answer, of course, is nothing. Under our Constitution, “Congress, and not the Judiciary, defines the scope of federal jurisdiction.” New Orleans Public Service, Inc. v. Council of City of New Orleans, 491 U. S. 350, 359 (1989). Federal courts “have no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not given.” Cohens v. Virginia, 6 Wheat. 264, 404 (1821) (Marshall, C. J., for the Court). That is why we have called it the “true rule” that “statutes clearly defining the jurisdiction of the courts … must control … in the absence of subsequent legislation equally express.” Rosencrans v. United States, 165 U. S. 257, 262 (1897). And why we have said that “jurisdiction conferred by 28 U. S. C. §1331,” in particular, “should hold firm against mere implication[s]” from other laws. Mims v. Arrow Financial Services, LLC, 565 U. S. 368, 383 (2012) (internal quotation marks omitted).
Thunder Basin defies these foundational rules. Maybe worse, it exhibits familiarity with none of them. No one disputes that §1331 represents a valid exercise of Congress’s authority to regulate the jurisdiction of the district courts. No one questions that §1331 permits cases like those before us to proceed. No Member of the Court points to any statute Congress has adopted that speaks otherwise. Under the law, that should be the end of the matter. But under Thunder Basin, courts may refuse individuals their right to a judicial forum based on nothing more than suppositions about “implici[t]” congressional “inten[tions].” Ante, at 7. Divesting jurisdiction by mere implication goes from out-of-bounds to the name of the game. Along the way, this Court arrogates to itself a power to control the jurisdiction of lower federal courts that the Constitution reserves to Congress.
All to what end? At bottom, Thunder Basin rests on a view that it is sometimes more important to allow agencies to work without the bother of having to answer suits against them than it is to allow individuals their day in court. But when Congress holds that view, it does not ask us to juggle a variety of factors and then guess at the implicit intentions of legislators past. It simply tells us. See, e.g., 12 U. S. C. §1818(i)(1) (“[E]xcept as otherwise provided in this section or under section 1831o or 1831p–1 of this title no court shall have jurisdiction to affect by injunction or otherwise the issuance or enforcement of any notice or order under any such section”); 42 U. S. C. §405(h) (“No action against the United States, the Commissioner of Social Security, or any officer or employee thereof shall be brought under section 1331 or 1346 of title 28 to recover on any claim arising under this subchapter”).[2]
III
There is a better way. Our job is to interpret the laws Congress has adopted. It is a task that “begins with the language of the [relevant] statute[s]” and, when “the statutory language provides a clear answer, it ends there as well.” Hughes Aircraft Co. v. Jacobson, 525 U. S. 432, 438 (1999) (internal quotation marks omitted). Because no one doubts that §1331 vests district courts with jurisdiction to hear these cases, the only question properly before us is whether Congress has actually carved out some exception in some other statute. The government points to two candidates. But the government’s arguments from those laws are so improbable that the Court barely mentions them. I pause to walk through each only to illustrate how these cases should have been resolved.
In Ms. Cochran’s case, the government directs our attention to §78y(a)(1) of the Exchange Act. That provision says that “[a] person aggrieved by a final order of the Commission … may obtain review of the order in the United States Court of Appeals … by filing in such court … a written petition requesting that the order be modified or set aside in whole or in part.” 15 U. S. C. §78y(a)(1). Plainly, the statute promises jurisdiction in a court of appeals for those hoping to contest “a final order of the Commission.” But just as plainly, Ms. Cochran does not seek to challenge an SEC final order. Nor could she, because the agency has not entered one in her case. Ms. Cochran does not even seek relief in anticipation of a final agency order. Instead, she seeks to avoid being hauled before an agency that she alleges is unconstitutionally structured. See ante, at 4. That is exactly the kind of “here-and-now injury” this Court has held “can be remedied by a court” without regard to the eventual outcome of agency proceedings. Seila Law LLC v. Consumer Financial Protection Bureau, 591 U. S. ___, ___ (2020) (internal quotation marks omitted) (slip op., at 10).
If all that were not enough, there is more. A neighboring statutory provision says that “the rights and remedies” the Exchange Act authorizes “shall be in addition to any and all other rights and remedies that may exist at law or in equity.” §78bb(a)(2). This Court has explained that a “saving clause” of this sort “strongly buttresse[s]” the conclusion that a review provision such as §78y(a)(1) does not preclude “traditional avenues of judicial relief.” Abbott Laboratories v. Gardner, 387 U. S. 136, 142, 144 (1967). And, of course, one traditional avenue of relief is a suit in district court under §1331 seeking to enjoin unconstitutional conduct. See Free Enterprise Fund v. Public Company Accounting Oversight Bd., 561 U. S. 477, 491, n. 2 (2010). Far from barring Ms. Cochran’s path to court, then, the Exchange Act expressly preserves it.
The story repeats itself when it comes to Axon. The government insists that §5(c) of the FTC Act precludes district courts from entertaining constitutional challenges to the agency’s structure. But §5(c) provides only that parties subject to “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.” 15 U. S. C. §45(c). And, here again, we have nothing like that. The FTC has not ordered Axon to cease and desist from anything. That §5(c) does not foreclose Axon’s case finds reinforcement next door too. Section 5(d) holds that, “[u]pon the filing of the record … the jurisdiction of the court of appeals of the United States to affirm, enforce, modify, or set aside orders of the Commission shall be exclusive.” §45(d). So until an administrative record is lodged in the court of appeals—something that hasn’t happened here either—the appellate court’s jurisdiction is not exclusive and a plaintiff like Axon remains free to proceed in district court.
In both cases, the relevant statutes guide the way. Section 1331 grants district courts the power to hear Ms. Cochran’s and Axon’s claims and no other law takes that power away. Resolving jurisdictional disputes by looking to the terms of the statutes Congress has adopted may hold none of the suspense that comes with a ride on the Thunder Basin roller coaster. But that is as it should be. “Where the statutory language is clear, our sole function … is to enforce it according to its terms.” Rake v. Wade, 508 U. S. 464, 471 (1993) (internal quotation marks omitted).[3]
IV
While the Court reaches the right result today, its choice of the wrong path matters. Not just because continuing to apply the Thunder Basin factors leaves the law badly distorted. It also matters because Thunder Basin’s throw-it-in-a-blender approach to jurisdiction imposes serious and needless costs on litigants and lower courts alike.
Jurisdictional rules, this Court has often said, should be “clear and easy to apply.” Hamer v. Neighborhood Housing Servs. of Chicago, 583 U. S. 17, ___ (2017) (slip op., at 8); see also Sisson v. Ruby, 497 U. S. 358, 364, n. 2 (1990); Foremost Ins. Co. v. Richardson, 457 U. S. 668, 676–677 (1982). For parties, “[c]omplex jurisdictional tests complicate a case, eating up time and money as [they] litigate, not the merits of their claims, but which court is the right court to decide those claims.” Hertz Corp. v. Friend, 559 U. S. 77, 94 (2010). For courts, jurisdictional rules “mark the bounds” of their “ ‘adjudicatory authority.’ ” Boechler v. Commissioner, 596 U. S. ___, ___ (2022) (slip op., at 2). Judges therefore “benefit from straightforward rules under which they can readily assure themselves of their power to hear a case,” Hertz, 559 U. S., at 94, while “adventitious” rules leave them with “almost impossible” tasks to perform that squander their limited resources, Executive Jet Aviation, Inc. v. Cleveland, 409 U. S. 249, 266 (1972).
There are many words to describe the Thunder Basin factors, but “clear and easy to apply” are not among them. To appreciate the trouble Thunder Basin can generate for litigants and lower courts alike, consider some of the facts of Ms. Cochran’s case that do not find their way into the Court’s opinion.
A single mother of two and a certified public accountant, Ms. Cochran began looking for part-time work in 2007. Eventually, she found a position at a small company called The Hall Group. Soon, however, she discovered that the owner, David Hall, was not just abrasive but dishonest. At one point, he even added Ms. Cochran’s name to the firm’s business license without her permission, all to facilitate his idea of rebranding his company as “The Hall Group CPAs.” When Ms. Cochran protested, Mr. Hall offered her a choice: become a nonequity partner with no increase in pay so that he could use the new name or leave the firm. Ms. Cochran chose to quit and put the whole ordeal behind her.
Or so she thought. Years later, in 2016, Ms. Cochran learned that the SEC had initiated an enforcement proceeding against Mr. Hall, another of his former employees, and herself. The SEC charged Ms. Cochran with violating “Rule 2–02(b)(1) of Regulation S-X and Section 13(a) of the Securities Exchange Act of 1934 and Rules 13a–1 and 13a–13 thereunder,” as well as “aid[ing] and abett[ing] … Rule 2–02(b)(1) violations.” In re Hall, SEC Release No. 3–17228, p. 1 (2017). In English, the SEC alleged that Ms. Cochran had failed to complete auditing checklists, leaving certain sections of certain forms “blank.” Id., at 12–13. The agency brought these charges even though there was “no evidence” that the incomplete paperwork had resulted in any “monetary harm to clients or investors.” Id., at 28.
The SEC elected to proceed against Ms. Cochran before its own internal tribunal rather than (as it could have) a court of law. The agency assigned the case to one of its hearing officers (an “administrative law judge” or “ALJ”). Reportedly, that ALJ made a practice of warning defendants during settlement discussions that he had “never ruled against the agency’s enforcement division.” J. Eaglesham, SEC Judges’ Fairness Is in Spotlight, Wall St. J., Nov. 23, 2015, p. C6. It seems, though, Ms. Cochran didn’t take the hint. She refused to settle and sought to represent herself in the hearing that followed. It did not go well. Just as her hearing was about to start, her former boss settled his own case and then turned about to testify against Ms. Cochran. In the end, the ALJ fined Ms. Cochran $22,500 and banned her from practicing before the SEC as an accountant for at least five years.
Ms. Cochran responded by asking the full Commission to review the ALJ’s decision. Around the same time, this Court held in an unrelated case that the ALJ who presided over Ms. Cochran’s case had been unconstitutionally appointed. See Lucia v. SEC, 585 U. S. ___, ___ (2018) (slip. op., at 2). Ms. Cochran might have thought that would bring her own case to a close. But the SEC chose instead to take a mulligan. In 2018, the agency vacated the initial decision against Ms. Cochran and assigned a different, properly appointed ALJ to retry the case. So two years after her administrative proceedings began, they began again.
For Ms. Cochran, that was enough. She sued the SEC in federal district court. She sought to enjoin the agency’s proceedings on the ground that all of its ALJs are unconstitutionally insulated from presidential supervision, pointing to this Court’s decisions in Lucia and Free Enterprise Fund. Lucia held that SEC ALJs are inferior officers under the Constitution’s Appointments Clause. 585 U. S., at ___ (slip op., at 8). And Free Enterprise Fund held that the President must retain adequate authority to supervise and even remove such officers. 561 U. S., at 492.
In 2019, the district court dismissed Ms. Cochran’s suit without reaching its merits. 2019 WL 1359252 (ND Tex., Mar. 25, 2019). The court did so because it thought Thunder Basin required that result. Id., at *1. A year and a half later, a panel of the Fifth Circuit ran through the Thunder Basin factors and affirmed. 969 F. 3d 507 (2020). A year and a half after that, the en banc Fifth Circuit took another look and largely reversed. 20 F. 4th 194 (2021). Now, more than four years after Ms. Cochran filed her complaint, this Court balances the Thunder Basin factors anew and holds that her case belonged in district court all along. Ante, at 17–18. For its part, Axon has endured a similarly tortuous path. Over the course of three years, the district court dismissed its case, 452 F. Supp. 3d 882 (Ariz. 2020), and the court of appeals affirmed, 986 F. 3d 1173 (CA9 2021), only to have this Court reverse that judgment today.
This is what a win looks like under Thunder Basin. When you replace clear jurisdictional rules with a jumble of factors, the room for disagreement grows. The incentive to litigate increases. Years and fortunes are lost just figuring out where a case belongs. Ms. Cochran and Axon have already endured multi-year odysseys through the entire federal judicial system—and no judge yet has breathed a word about the merits of their claims. Nor can I fault the district court in Ms. Cochran’s case, or all of the lower courts in Axon’s case, for thinking the Thunder Basin factors required dismissal. When we give our lower-court colleagues such confused instructions, we guarantee different courts will regularly reach different outcomes on the same facts.
Maybe even worse is what Thunder Basin means for others. Not many possess the perseverance of Ms. Cochran and Axon. The cost, time, and uncertainty associated with litigating a raft of opaque jurisdictional factors will deter many people from even trying to reach the court of law to which they are entitled. Nor is the loss of a day in court in favor of one before an agency a small thing. Agencies like the SEC and FTC combine the functions of investigator, prosecutor, and judge under one roof. They employ relaxed rules of procedure and evidence—rules they make for themselves. The numbers reveal just how tilted this game is. From 2010 to 2015, the SEC won 90% of its contested in-house proceedings compared to 69% of the cases it brought in federal court. See G. Mark, Response: SEC Enforcement Discretion, 94 Texas L. Rev. 261, 262 (2016). Meanwhile, some say the FTC has not lost an in-house proceeding in 25 years. See Brief for Petitioner in No. 21–86, p. 47. But see Brief for American Antitrust Institute as Amicus Curiae in No. 21–86, p. 18 (suggesting the FTC has won more like 90% of the time).
That review is available in a court of appeals after an agency completes its work hardly makes up for a day in court before an agency says it’s done. When a case eventually makes its way to an appellate court, judges sometimes defer to the agency’s conclusions (especially when it comes to disputed questions of fact). And how many people can afford to carry a case that far anyway? Ms. Cochran’s administrative proceedings have already dragged on for seven years. Thanks in part to these realities, the bulk of agency cases settle. See Tilton v. SEC, 824 F. 3d 276, 298, n. 5 (CA2 2016) (Droney, J., dissenting) (“vast majority” of SEC cases settle); Tr. of Oral Arg. in No. 21–1239, p. 6 (“more than 90 percent” of such cases settle). Aware, too, that few can outlast or outspend the federal government, agencies sometimes use this as leverage to extract settlement terms they could not lawfully obtain any other way.[4] Like any needlessly unclear jurisdictional test, Thunder Basin carries with it real costs—for individuals seeking to vindicate their rights, for lower courts who deserve better guidance, and for our legal system’s promise of a “just, speedy, and inexpensive determination of every” case, Fed. Rule Civ. Proc. 1. * When Congress withholds jurisdiction, we must respect its choice. But when Congress grants jurisdiction to the Nation’s courts, we must respect that choice too. We have no authority to froth plain statutory text with factors of our own design, all with an eye to denying some people the day in court the law promises them. Respectfully, this Court should be done with the Thunder Basin project. I hope it will be soon.
- ↑ See Tr. of Oral Arg. in No. 21–86, p. 81 (“Justice Alito: … Does Axon have to win on all three? Do you have to win on all three? Or can either of you win if one or more factors go in one direction and the other factor or factors go in the other direction? [Deputy Solicitor General]: … I’m not trying to be obstreperous, but I think it would depend …”).
- ↑ These are only a few of the conceptual problems with the Thunder Basin project. Here’s another: If the Thunder Basin factors really did delineate the bounds of §1331 jurisdiction, a district court would have to balance them in every case where there is even the possibility of parallel agency proceedings. That would hold true regardless of whether the agency invokes Thunder Basin and regardless of whether the agency itself may prefer to proceed in court. See Wilkins v. United States, 598 U. S. ___, ___ (2023) (slip op., at 4) (“courts have a duty to consider [jurisdictional bars] sua sponte”). But this Court has never said Thunder Basin commands anything like that. At the very least, then, the Court should acknowledge Thunder Basin for what it truly is: a judge-made exhaustion requirement, not a jurisdictional rule. Even that much candor, however, would not rescue the contrivance. As this Court has recognized, we possess no more authority to “impos[e] extra-statutory limitations” on the “capacity to sue” than we do to impose extra-statutory limitations on the jurisdiction of the lower federal courts. Ross v. Blake, 578 U. S. 632, 640, n. 1 (2016); see Jones v. Bock, 549 U. S. 199, 203 (2007) (“crafting and imposing” exhaustion rules “not required by” statute “exceeds the proper limits on the judicial role”).
- ↑ The parties spar over whether the government forfeited different arguments against district court jurisdiction premised on two provisions of the Administrative Procedure Act (APA). E.g., Reply Brief for Respondent in No. 21–1239, p. 21. Forfeited or not, these arguments hardly help the government. One of the APA provisions the government cites concerns review of “preliminary, procedural, or intermediate agency action.” 5 U. S. C. §704. The government assumes we have “agency action” by dint of the “initiation” or “commencement” of agency proceedings against Ms. Cochran and Axon. Tr. of Oral Arg. in No. 21–86, p. 51; Tr. of Oral Arg. in No. 21–1239, p. 67. But “agency action” is a defined term, one that embraces “the whole or a part of an agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act.” 5 U. S. C. §551(13). Ms. Cochran and Axon are not subject to, and do not seek review of, any of those things. The other APA provision says “[t]he form of proceeding for judicial review is the special statutory review proceeding relevant to the subject matter in a court specified by statute.” §703. But as we have seen, Ms. Cochran and Axon do not seek judicial review of an SEC final order or an FTC cease-and-desist order—and both the Exchange Act and the FTC Act preserve their right to proceed in district court to address the here-and-now injuries they assert.
- ↑ See P. Hamburger, Purchasing Submission: Conditions, Power, and Freedom 223 (2021) (describing this as “regulatory extortion”); D. Ginsburg & J. Wright, Antitrust Settlement: The Culture of Consent, in 1 W. Kovacic: An Antitrust Tribute 177 (N. Charbit et al. eds. 2013) (“Consent decrees create potential for an enforcement agency to extract from parties under investigation commitments well beyond what the agency could obtain in litigation”).