Association of National Advertisers, Inc. v. Federal Trade Commission

United States Court of Appeals for the District of Columbia Circuit · 1979 · Administrative Law

Administrative LawAgency RulemakingBias and DisqualificationFTC RulemakingFTCsection 18Magnuson-Mossrulemaking

Facts

The FTC issued a notice of proposed rulemaking proposing restrictions on television advertising directed toward children after considering a staff report suggesting such advertising might be unfair or deceptive. Before the notice issued, Chairman Pertschuk had made speeches, media statements, interviews, press comments, and sent letters discussing children's advertising, including legal theories under which the FTC might regulate it. Industry groups petitioned him and then the Commission to require his recusal, but both rejected the request. The district court found prejudgment and disqualified him from the proceeding.

Issue

What standard governs disqualification of an agency member for prejudgment in a section 18 FTC rulemaking proceeding, and did Chairman Pertschuk's statements satisfy that standard? Also, could the court hear the disqualification claim before the rulemaking ended?

Rule

The Cinderella prejudgment standard for adjudication does not apply to section 18 FTC rulemaking. In rulemaking, an agency member may be disqualified only upon a clear and convincing showing that he has an unalterably closed mind on matters critical to the disposition of the proceeding.

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The Consumer Products Board begins a rulemaking in Washington, D.C. to restrict future labeling practices for all sellers of herbal sleep aids. Before the notice of proposed rulemaking issued, Board member Elena Cruz gave several speeches in Seattle and Atlanta arguing that some sleep-aid labels may mislead consumers and discussing studies suggesting likely health risks from overuse.

A trade association seeks Cruz's disqualification solely because those speeches show prejudgment. What is the best answer?

Explanation. In rulemaking, the strict prejudgment standard used for adjudication does not apply. A rulemaker may be disqualified only on a clear and convincing showing that the official has an unalterably closed mind on matters critical to the disposition. Public speeches discussing policy, legal theories, and general factual assumptions do not by themselves satisfy that demanding standard. (Derived from Association of National Advertisers, Inc. v. Federal Trade Commission (1979).)