Nerium International, LLC v. Federal Trade Commission, 1:19-cv-07189

Background:

Nerium (now Neora) is an MLM investigated by the FTC starting in 2016 for allegedly operating an illegal pyramid scheme; the FTC issued civil investigative demands and Nerium produced documents.
Beginning in 2018 the FTC allegedly threatened suit and urged that targets accept so-called "fencing in" remedies; Nerium contends the FTC’s new interpretation of pyramid conduct is unlawful and based on nonbinding guidance.
On November 1, 2019 Nerium and its CEO Jeffrey Olson sued the FTC in the Northern District of Illinois seeking declaratory relief that (among other things) Nerium is not a pyramid scheme and the FTC’s interpretation is unlawful; the FTC filed a parallel enforcement action the same day in New Jersey.
The FTC moved to dismiss in Illinois for lack of subject-matter jurisdiction, arguing (1) APA review is unavailable because there is no final agency action and another adequate remedy exists, and (2) any declaratory-judgment claim is not ripe.
The court found no final agency action (investigation and filing of an enforcement complaint are not "final") and that plaintiffs may raise identical defenses in the FTC enforcement action, so APA review is unavailable.
The court further held the declaratory-judgment claim is unripe (issues are factbound, and plaintiffs suffer no hardship warranting premature review) and dismissed the complaint without prejudice for lack of subject-matter jurisdiction.

Issues:

Issue	Plaintiff's Argument	Defendant's Argument	Held
1) Whether APA authorizes this suit (final agency action)	Nerium argues FTC actions (threats, investigation, and filing) are reviewable and that FTC guidance practice is unlawful	FTC says investigatory activity and filing an enforcement complaint are not final agency action	Court: No final agency action; investigation and complaint filing are not final under Bennett/Hawkes/Standard Oil
2) Whether another adequate remedy exists under APA	Nerium contends it needs pre-enforcement relief and cannot vindicate rights later	FTC says plaintiffs can raise defenses and obtain relief in the pending enforcement action	Court: Adequate remedy exists—plaintiffs can defend in FTC enforcement, so APA review improper
3) Whether plaintiffs may "borrow" the FTCA to invoke the Declaratory Judgment Act	Nerium contends threats under FTCA permit borrowing that statute as jurisdictional basis	FTC contends DJA cannot be used to evade APA limits and jurisdiction is lacking or unripe	Court: Even if FTCA could supply a federal question, DJA jurisdiction is discretionary and cannot be exercised because the dispute is unripe
4) Ripeness and hardship for DJA relief	Nerium stresses burden/uncertainty from investigation and alleged threats justify immediate declaratory relief	FTC argues issues are fact-specific, non-final, and plaintiffs can litigate defenses in enforcement action; mere defense costs not enough hardship	Court: Not ripe—issues not purely legal, factual determination required, and no sufficient hardship; DJA declined

Key Cases Cited

U.S. Army Corps of Eng’rs v. Hawkes Co., 136 S. Ct. 1807 (2016) (defining final agency action elements)
Bennett v. Spear, 520 U.S. 154 (1997) (agency action finality test)
Standard Oil Co. of Cal. v. F.T.C., 449 U.S. 232 (1980) (issuance of FTC complaint not final agency action)
Heckler v. Chaney, 470 U.S. 821 (1985) (discretionary enforcement decisions presumptively not reviewable)
Gen. Fin. Corp. v. F.T.C., 700 F.2d 366 (7th Cir. 1983) (targets must await enforcement proceedings; APA review is limited)
Abbs v. Sullivan, 963 F.2d 918 (7th Cir. 1992) (judicial review confined to final agency action under APA)
Dhakal v. Sessions, 895 F.3d 532 (7th Cir. 2018) (discussing APA jurisdictional framework)
Buntrock v. S.E.C., 347 F.3d 995 (7th Cir. 2003) (improper way to challenge agency decision to sue)
Nat’l Park Hosp. Ass’n v. Dep’t of Interior, 538 U.S. 803 (2003) (ripeness factors: fitness and hardship)
Abbott Laboratories v. Gardner, 387 U.S. 136 (1967) (ripeness and immediate impact on regulated parties)