National Automobile Dealers As v. FTC
Filing
OPINION filed [1362073] (Pages: 8) for the Court by Judge Garland [11-1313]
USCA Case #11-1313
Document #1362073
Filed: 03/06/2012
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Decided March 6, 2012
No. 11-1313
NATIONAL AUTOMOBILE DEALERS ASSOCIATION,
PETITIONER
v.
FEDERAL TRADE COMMISSION,
RESPONDENT
On Motion To Dismiss For Lack of Jurisdiction
Willard K. Tom, John F. Daly, and David L. Sieradzki filed
the motion to dismiss for respondent Federal Trade
Commission.
Gabriel A. Crowson, Gerard E. Wimberly, Jr., Daniel T.
Plunkett, and Michael G. Charapp filed the response for
petitioner National Automobile Dealers Association.
Before: ROGERS, GARLAND, and BROWN, Circuit Judges.
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Opinion for the Court filed by Circuit Judge GARLAND.
GARLAND, Circuit Judge: The National Automobile
Dealers Association petitions for review of the Federal Trade
Commission’s interpretation of statutory language contained in
a provision of the amended Fair Credit Reporting Act, 15 U.S.C.
§ 1681m(h). The Commission announced this interpretation in
a Federal Register notice accompanying its promulgation of an
amended rule regulating “risk-based pricing” of consumer
credit. Because a challenge to such an interpretation must begin
in the district court, we dismiss the Association’s petition for
lack of jurisdiction.
I
In 2003, Congress passed the Fair and Accurate Credit
Transactions Act (FACT Act), Pub. L. No. 108-159, 117 Stat.
1952 (2003), as an amendment to the Fair Credit Reporting Act
(FCRA), 15 U.S.C. §§ 1681 et seq. Among other things, FACT
Act § 311 inserted into the FCRA a new section 615(h), a
provision that governs the “[d]uties of users in certain
[consumer] credit transactions.” 15 U.S.C. § 1681m(h). That
provision addresses a practice known as “risk-based pricing,”
and provides statutory protections for consumers who, based on
information contained in their “consumer report[s],” are offered
credit at “materially less favorable [terms] than the most
favorable terms available to a substantial proportion of
consumers.” Id. § 1681m(h)(1).1 In such circumstances, the
1
“Risk-based pricing” refers to the practice of setting or adjusting
the terms of credit offered to a consumer to reflect the risk of
nonpayment by that consumer. “Creditors that engage in risk-based
pricing generally offer more favorable terms to consumers with good
credit histories and less favorable terms to consumers with poor credit
histories.” Fair Credit Reporting Risk-Based Pricing Regulations,
Final Rules, 76 Fed. Reg. 41,602, 41,603 (July 15, 2011).
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amended FCRA entitles prospective buyers to receive a “riskbased pricing notice” alerting them to the potential existence of
negative information in their credit reports, so that they can
check their credit histories and correct any inaccuracies. See
Fair Credit Reporting Risk-Based Pricing Regulations, Final
Rules, 76 Fed. Reg. 41,602, 41,603 (July 15, 2011). Under the
FCRA, “any person” who “uses a consumer report in connection
with an application for, or a grant, extension, or other provision
of, credit” is required to provide risk-based pricing notices. 15
U.S.C. § 1681m(h)(1) (emphasis added).
The Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act), Pub. L. No. 111-203, 124
Stat. 1376 (2010), signed into law on July 21, 2010, amended
the FCRA’s risk-based pricing protections. In particular, section
1100F of the Dodd-Frank Act strengthened consumers’ rights by
requiring that risk-based pricing notices include a consumer’s
credit score if that credit score was used in making the credit
decision. To implement this change, the Federal Trade
Commission (FTC) and the Board of Governors of the Federal
Reserve System promulgated amendments to their respective
risk-based pricing rules on July 15, 2011. The amendments,
codified at 16 C.F.R. Part 640, “require disclosure of credit
scores and information relating to credit scores in risk-based
pricing notices if a credit score of the consumer is used in setting
the material terms of credit.” 76 Fed. Reg. 41,602.
Accompanying the promulgation of its amended rule, the
FTC published “Supplementary Information” in the Federal
Register that included the Commission’s responses to various
comments received during the notice-and-comment period. See
76 Fed. Reg. 41,606-07 & nn.5-9. Within this Supplementary
Information was the Commission’s interpretation of the scope
of the word “uses” as it is employed in the FCRA, 15 U.S.C.
§ 1681m(h)(1). As relevant here, the FTC construed the riskbased pricing notice requirements in section 1681m(h) to apply
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to an automobile dealer that uses consumer reports to offer
materially less favorable credit terms to car buyers -- even when
the dealer “does not directly obtain the consumer report[s]
and/or credit score[s] from a consumer reporting agency” but
instead relies upon information provided by third-party
financing sources. 76 Fed. Reg. 41,606.
The National Automobile Dealers Association (NADA)
disputes the FTC’s interpretation of section 1681m(h). In
September 2011, NADA filed a petition for review in this court,
as well as a complaint in the United States District Court for the
District of Columbia. See Nat’l Auto. Dealers Ass’n v. FTC, No.
11-1313 (D.C. Cir. Sept. 9, 2011); Nat’l Auto. Dealers Ass’n v.
FTC, No. 1:11-cv-1711 (D.D.C. Sept. 22, 2011). Although the
petition is silent as to the petitioner’s cause of action, the
complaint filed in district court makes clear that NADA’s
challenge is brought pursuant to the Administrative Procedure
Act (APA), 5 U.S.C. §§ 701 et seq. The FTC filed a motion to
dismiss the petition on the ground that we lack appellate
jurisdiction. In response, NADA does not dispute that we lack
jurisdiction, but states that it filed the petition as a “protective
measure,” to ensure compliance with the relevant jurisdictional
deadlines “in the event that this Court (or the district court in the
related proceeding)” determines that its challenge is subject to
direct appellate review. Pet’r Resp. to Resp’t Mot. to Dismiss
at 2-3.
II
In this circuit, “the ‘normal default rule’ is that ‘persons
seeking review of agency action go first to district court rather
than to a court of appeals.’” Watts v. SEC, 482 F.3d 501, 505
(D.C. Cir. 2007) (quoting Int’l Bhd. of Teamsters v. Pena, 17
F.3d 1478, 1481 (D.C. Cir. 1994)). Initial review of agency
decisions “occurs at the appellate level only when a directreview statute specifically gives the court of appeals subjectmatter jurisdiction to directly review agency action.” Id.; see
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Micei Int’l v. Dep’t of Commerce, 613 F.3d 1147, 1151 (D.C.
Cir. 2010); Pub. Citizen, Inc. v. NHTSA, 489 F.3d 1279, 1287
(D.C. Cir. 2007). However, when a statute does grant direct
review, but its application to the agency action in question is
“ambiguous,” we will “not presume” that “Congress intended to
locate initial APA review of agency action in the district courts”
rather than the courts of appeals -- “[a]bsent a firm indication
that Congress [so] intended.” Fla. Power & Light Co. v. Lorion,
470 U.S. 729, 737, 745 (1985).
In this case, the direct review provision of the applicable
statute is not “ambiguous in any sense relevant,” and because it
plainly does not apply to the agency action that NADA
challenges, we lack appellate jurisdiction. Five Flags Pipe Line
Co. v. DOT, 854 F.2d 1438, 1441 (D.C. Cir. 1988); see Micei
Int’l, 613 F.3d at 1154; Pub. Citizen v. NHTSA, 489 F.3d at
1287-89; Hazardous Waste Treatment Council v. EPA, 910 F.2d
974, 976 (D.C. Cir. 1990). NADA’s petition invokes section
18(e)(1)(A) of the Federal Trade Commission Act (FTCA), 15
U.S.C. § 57a(e)(1)(A), as the sole jurisdictional basis for our
review. Pet. for Review at 1. Section 18(e)(1)(A) provides for
direct appellate review of “rule[s] . . . promulgated under
subsection (a)(1)(B) of this section.” 15 U.S.C. § 57a(e)(1)(A).
“A substantive amendment to . . . a rule promulgated under
subsection (a)(1)(B)” is also subject to direct review. Id.
§ 57a(d)(2)(B). Subsection (a)(1)(B), in turn, deals with a
limited category of FTC rules, known as “trade regulation
rules,” that “define with specificity acts or practices which are
unfair or deceptive acts or practices in or affecting commerce
(within the meaning of section 45(a)(1) of [the FTCA]).” Id.
§ 57a(a)(1)(B); see Am. Optometric Ass’n v. FTC, 626 F.2d 896,
899 (D.C. Cir. 1980). Reading these FTCA provisions together,
we have held that “direct review in the courts of appeals [under
FTCA § 18(d) or (e)] is only available for challenges to trade
regulation rules or substantive amendments of such rules.
Parties seeking review of other FTC actions must proceed . . . in
district court in the first instance.” Funeral Consumer Alliance,
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Inc. v. FTC, 481 F.3d 860, 862-63 (D.C. Cir. 2007) (internal
quotation marks omitted); see Pub. Citizen v. FTC, 829 F.2d
149, 150 (D.C. Cir. 1987) (per curiam).2
The interpretation that NADA challenges in this case is not
a trade regulation rule as defined by FTCA § 18(a)(1)(B). First,
NADA does not challenge a substantive rule (or a substantive
amendment) of any kind, but rather takes issue with the
Commission’s interpretation of a statutory term, offered in the
“Supplementary Information” accompanying the agency’s
promulgation of its amended risk-based pricing rule. Section
18(e)(1)(A) of the FTCA, however, makes clear that interpretive
rules are not included in its grant of direct appellate review. As
we have discussed, that section provides for direct appellate
review only of “rule[s] . . . promulgated under subsection
(a)(1)(B) of this section.” 15 U.S.C. § 57a(e)(1)(A) (emphasis
added). Subsection (a)(1)(B) authorizes the promulgation of
trade regulation rules. See id. § 57a(a)(1)(B). A different
subsection, subsection (a)(1)(A), authorizes the promulgation of
“interpretive rules . . . with respect to unfair or deceptive acts or
practices.” Id. § 57a(a)(1)(A). But that subsection is
conspicuously unmentioned in the direct review provision of
section 18(e)(1)(A). Accordingly, such interpretive rules may
not be challenged in this court in the first instance. Cf. Funeral
Consumer Alliance, 481 F.3d at 863 (holding that, because an
FTC letter was “at most” an “interpretation of [a] Rule rather
than a substantive amendment, . . . we thus lack jurisdiction over
the petition for review”).
2
See also Am. Optometric Ass’n, 626 F.2d at 905 (explaining that
Congress adopted special procedural protections and a unique avenue
of judicial review for trade regulation rules “[b]ecause of the
potentially pervasive and deep effect of rules defining what constitutes
unfair or deceptive acts or practices” (quoting H.R. Rep. No. 93-1107,
at 45-46 (1974))).
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Second, the interpretive statement that NADA challenges is
not even related to a trade regulation rule. As we have noted,
a trade regulation rule is one that “define[s] with specificity acts
or practices which are unfair or deceptive acts or practices . . .
within the meaning of” the FTCA. 15 U.S.C. § 57a(a)(1)(B).
The interpretation that NADA challenges, however, concerns the
meaning of the term “uses” in 15 U.S.C. § 1681m(h), which is
codified as part of the Dodd-Frank Act, the FACT Act, and the
FCRA -- but not the FTCA. Cf. Pub. Citizen v. FTC, 829 F.2d
at 150 (concluding that the review provision of FTCA
§ 18(e)(1)(A) “covers only review of rules promulgated under”
the FTCA). Moreover, the risk-based pricing requirements set
forth in section 1681m(h) and its implementing rules do not
“define with specificity acts or practices which are unfair or
deceptive.” 15 U.S.C. § 57a(a)(1)(B). Rather, they simply
mandate the provision of specified notices to consumers in order
to “alert[] [them] to the existence of negative information in
their consumer reports.” 76 Fed. Reg. 41,603.
There is, therefore, no statute that gives this court
jurisdiction to hear NADA’s petition on direct review.
Accordingly, we must dismiss the petition for lack of appellate
jurisdiction. And because the petitioner has -- quite
appropriately -- simultaneously filed a complaint in the district
court, we need not consider transferring the petition to that
court. See 28 U.S.C. § 1631; Five Flags, 854 F.2d at 1442. Our
dismissal of the petition is, of course, without prejudice to
NADA’s pursuit of its pending civil action in the district court.
See Micei Int’l, 613 F.3d at 1152 (noting that APA challenges
ordinarily “fall within the district court’s federal question
jurisdiction under 28 U.S.C. § 1331” (citing Bell v. New Jersey,
461 U.S. 773, 777 & n.3 (1983))); Funeral Consumer Alliance,
481 F.3d at 866 n.3 (“Although we do not have direct-review
jurisdiction over this petition under the FTCA, nothing in our
decision prevents petitioners from seeking review . . . in district
court under the Administrative Procedure Act.”).
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III
For the foregoing reasons, the FTC’s motion is granted and
the petition for review is
Dismissed.
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