Axon Enterprise, Inc. v. Federal Trade Commission, No. 20-15662 (9th Cir. 2021)
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The Ninth Circuit affirmed the district court's dismissal, based on lack of subject matter jurisdiction, of Axon's action alleging that the FTC's administrative enforcement process violated the company's constitutional rights. In this case, the FTC investigated and filed an administrative complaint challenging Axon's acquisition of a competitor, demanding that Axon spin-off its newly acquired company and provide it with Axon's own intellectual property. The district court dismissed the complaint after determining that the FTC's statutory scheme requires Axon to raise its constitutional challenge first in the administrative proceeding.
The panel held that the Supreme Court's Thunder Basin trilogy of cases mandates dismissal. The panel explained that the structure of the Federal Trade Commission Act suggests that Congress impliedly barred jurisdiction in district court and required parties to move forward first in the agency proceeding. Because the FTC statutory scheme ultimately allows Axon to present its constitutional challenges to a federal court of appeals after the administrative proceeding, the panel concluded that Axon has not suffered any cognizable harm. Therefore, the panel joined every other circuit that has addressed a similar issue in ruling that Congress impliedly stripped the district court of jurisdiction.
Court Description: Federal Trade Commission The panel affirmed the district court’s dismissal for lack of subject matter jurisdiction of an action filed by Axon Enterprises, Inc. arguing that the Federal Trade Commission (“FTC”)’s administrative enforcement process violated Axon’s constitutional rights. The FTC investigated and filed an administrative complaint challenging Axon’s acquisition of a competitor. The FTC demanded that Axon spin-off its newly acquired company and provide it with Axon’s intellectual property. Axon responded by filing this lawsuit. Axon alleged that the FTC’s administrative enforcement process violated its due process rights, and ran afoul of separation-of-powers principles. The panel held that the district court did not have jurisdiction to hear Axon’s constitutional challenges to the * The Honorable Eugene E. Siler, United States Circuit Judge for the U.S. Court of Appeals for the Sixth Circuit, sitting by designation. AXON ENTERPRISE V. FTC 3 FTC’s structure. Specifically, the panel affirmed the district court’s dismissal because the Supreme Court’s Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994), trilogy of cases mandated that result. The panel further held that Congress and the FTC Act impliedly barred jurisdiction in the district court and required parties to move forward first in the agency proceeding. Because the FTC statutory scheme ultimately allowed Axon to present its constitutional challenges to a federal court of appeals after the administrative proceeding, Axon did not suffer any cognizable injury. The panel joined every other circuit that considered a similar issue, and held that Congress impliedly stripped the district court of jurisdiction. Judge Bumatay concurred in the judgment and dissented in part. He would hold that Axon was entitled to bring its claims representing broad constitutional claims not requiring review of the merits on individual agency action before the district court, and the district court erred in dismissing them at the outset. In contrast, Axon’s claim against the FTC’s adjudicatory structure contested the agency’s antitrust determinations and must be brought before the FTC.
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