Case Information
IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TYLER DIVISION
§
CONSUMERS’ RESEARCH, and BY §
TWO LP, §
§
Plaintiffs, §
§ v. § Case No. 6:21-cv-256-JDK
§
CONSUMER PRODUCT SAFETY §
COMMISSION, §
§
Defendant. §
§ MEMORANDUM OPINION AND ORDER
The Constitution vests all power—and responsibility—to execute the law in a
single President. Because this monumental responsibility is too great for any one
person, the President must delegate power to subordinate officers. For a century, the
Supreme Court has recognized that this ability to delegate executive power implies a
right to remove subordinates for any reason to ensure that “the chain of dependence
be preserved; the lowest officers, the middle grade, and the highest, will depend, as
they ought, on the President, and the President on the community.”
Free Enter. Fund
v. Pub. Co. Acct. Oversight Bd.
,
499 (1789) (J. Madison)).
Here, Plaintiffs challenge a restriction on the President’s power to remove members of the Consumer Product Safety Commission. Plaintiffs argue that the restriction is unconstitutional because the Commission exercises substantial executive power without proper presidential oversight. For the reasons discussed below, the Court agrees. Accordingly, Plaintiffs’ Motion for Partial Summary Judgment as to Count I (Docket No. 14) is GRANTED . The Government’s Motion to Dismiss (Docket No. 24) is DENIED in part. Additionally, finding no just reason for delay, the Court GRANTS Plaintiffs’ request for entry of a partial final judgment under Federal Rule of Civil Procedure 54(b).
I.
A. Plaintiffs are two educational organizations focused on product safety issues. Consumers’ Research is a 501(c)(3) nonprofit organization that researches and publishes reports on policies, products, and services relevant to consumers. Docket No. 1 ¶ 10. Plaintiff By Two LP (“By Two”) is a limited partnership that also researches consumer products. Docket No. 1 ¶ 11. The limited partnership is comprised of parents of young children who research children’s products regulated by the Commission. Id.
B. Defendant, the Consumer Product Safety Commission (“the Commission” or “CPSC”), is a federal agency charged with “protect[ing] the public against unreasonable risks of injury associated with consumer products.” 15 U.S.C.
§§ 2051(b)(1), 2053(a). The Commission consists of five commissioners, each appointed by the President with the advice and consent of the Senate. Id. § 2053(a).
Each commissioner serves a seven-year term. Id. § 2053(B)(1). No more than three commissioners may be members of the same political party, and only an individual with a “background and expertise in areas related to consumer products and protection of the public from risks to safety” is qualified to serve as a commissioner.
Id. § 2053(a), (c). Before the expiration of a seven-year term, the President may remove a commissioner “for neglect of duty or malfeasance in office but for no other cause.” Id. § 2053(a).
Congress gave the Commission broad executive powers to regulate consumer products. The Commission may promulgate binding regulations, initiate civil enforcement actions in district court, and conduct administrative adjudications. Id.
§ 2056(a) (authorizing the Commission to “promulgate consumer product safety standards”); id. § 2076(b)(7)(A) (authorizing the Commission to bring civil actions to enforce “laws subject to its jurisdiction”); id. § 2076(a) (“The Commission may . . .
conduct any hearing or other inquiry necessary or appropriate to its functions.”).
C. Both Plaintiffs frequently request information relevant to their research and work from the Commission under the Freedom of Information Act (“FOIA”). Docket No. 1 ¶ 10–11.
“[T]he basic purpose of the Freedom of Information Act [is] ‘to open agency
action to the light of public scrutiny.’”
Dep’t of Air Force v. Rose
,
§ 552(a)(3)(A). [1] Every agency must promulgate regulations “specifying the schedule of fees applicable to the processing of requests under” FOIA and “establishing procedures and guidelines for determining when such fees should be waived or reduced.” Id. § 552(a)(4)(A)(i). FOIA mandates that agencies provide fee waivers “if disclosure of the information is in the public interest because it is likely to contribute significantly to public understanding of the operations or activities of the government.” Id. § 552(a)(4)(A)(iii).
FOIA requests filed with the Commission are initially reviewed by FOIA officers, and denials are reviewed on administrative appeal by the Commission’s General Counsel. 16 C.F.R. §§ 1015.4, .7. After exhausting administrative remedies, requesters may challenge an agency’s denial of records in district court. 5 U.S.C.
§ 552(a)(4)(B); see also id. § 552(a)(6)(A), (a)(6)(C)(i).
Pursuant to FOIA, the Commission adopted a rule (“the Final Rule”) updating the fee schedule for CPSC FOIA requests in January 2021. See Fees for Production of Records, 86 Fed. Reg. 7499-01, 7499 (Jan. 29, 2021) (to be codified at 16 C.F.R. pt.
1015). The Final Rule increased the fees the Commission charges to duplicate, search for, and review requested documents. See id. at 7500–01. The Final Rule took effect on March 1, 2021. Id. at 7499.
D. This case challenges the Commission’s structure when it promulgated the Final Rule and as it processes Plaintiffs’ FOIA requests. Plaintiffs’ claims are based on a series of FOIA requests they each filed with the Commission after the adoption of the Final Rule, as well as additional requests Plaintiffs expect to file in the future.
Requests 277 and 278 . On March 1, 2021, Plaintiff By Two filed FOIA Request 277 seeking records related to Bassettbaby Drop-Side Cribs and Request 278 seeking records related to Angel Line Longwood Forest Drop-Side Cribs. Docket No. 14-1, Exs. E, H. By Two included public interest fee waiver requests with both FOIA requests. Id . The Commission’s FOIA officer denied the requests for fee waivers. Id. , Exs. F, J. In interim response letters dated September 22, 2021—after Plaintiffs filed both their complaint and partial motion for summary judgment and two days before the Government filed its motion to dismiss—the Chief FOIA officer informed By Two that, although the Commission had “not granted a public interest fee waiver,” the Commission would not assess FOIA-request fees since the Commission had failed to respond within the twenty-day deadline. Docket No. 24-1, Exs. 13, 14.
Request 324 . On March 22, 2021, By Two filed a FOIA request for several documents regarding American Society for Testing and Materials (“ASTM”) voluntary safety standards and requested a public interest fee waiver. Docket No. 14-1, Ex. K. In response, the Commission did not provide any documents, but directed By Two to ASTM’s website as a possible source of the requested documents.
Id. , Ex. L. On administrative appeal, the Commission’s General Counsel determined that the request was partially moot because the ASTM records could be obtained through third-party sources, but also partially remanded the request to determine whether the Commission possessed any records not otherwise publicly available and if “responsive records may be released.” Id. , Ex. N at 3. In a December 2, 2021 letter, after the parties had completed briefing on the pending motions, the Commission provided By Two physical copies of responsive ASTM records. Docket No. 35-2, Ex. 2.
Request 330. On March 23, 2021, Plaintiff Consumers’ Research filed a FOIA
request for several ASTM documents and requested a public interest fee waiver.
Docket No. 14-1, Ex. A. As with By Two’s Request 324, the Commission provided no documents, but directed Consumers’ Research to ASTM’s website. Id. , Ex. B. On administrative appeal, the Commission’s General Counsel remanded the request to the FOIA officers with instructions to search for the documents and “determine whether these records may be released.” Id. , Ex. D at 7–8. The Commission sent Consumers’ Research a letter on December 2 stating that it could not locate any responsive records. Docket No. 35-1, Ex. 1.
Recent Requests . Both Plaintiffs plead that they are frequent FOIA requesters and will “submit additional FOIA requests and requests for fee waivers to the Commission in the future.” Docket No. 1 ¶¶ 10–11. Between the filing of this lawsuit and Plaintiffs’ motion for summary judgment, each Plaintiff has filed three additional FOIA requests. See Docket No. 14-1, Exs. R–T, O–Q. In response to the Government’s motion to dismiss, Plaintiffs supplemented the record with seventeen pending requests filed between March 1, 2021, and October 18, 2021. See Docket No. 29-1, Exs. OO–EEE.
E. Having exhausted their administrative appeals, Plaintiffs filed this suit on July 2, 2021. Docket No. 1. Plaintiffs allege informational injury and imminent financial injury due to the increased fee schedule to obtain documents responsive to pending requests “and to obtain the documents they will request in the future.” Id.
¶ 52; see also id. ¶ 51. Plaintiffs also seek to have their FOIA requests processed by a Commission properly structured under Article II of the U.S. Constitution. See id.
¶ 54.
Specifically, Plaintiffs plead three claims for relief. Under Count I, Plaintiffs seek to have the Court declare that the Commission’s structure violates Article II and the separation of powers by insulating the commissioners from presidential removal.
Id. ¶ 57–63. Under Count II, Plaintiffs ask the Court to set aside the Final Rule as contrary to a constitutional right under the Administrative Procedure Act. Id.
¶ 64–67. Finally, under Count III, Plaintiffs ask the Court to enjoin the Commission from enforcing the Final Rule or withholding documents pursuant to § 552(a)(4)(B) of the Freedom of Information Act, on the grounds that the Commission’s actions are unlawful under Article II. Id. ¶¶ 68–78.
Plaintiffs now move for partial summary judgment as to Count I. Docket No. 14. Plaintiffs argue that whether Article II prevents the removal restriction on the commissioners is a purely legal question fit for review without further factual development and is a prerequisite finding to the claims in Counts II and III. Id.
at 28–29. The Government filed a combined response and motion to dismiss. Docket No. 24. The Government does not argue that any material fact dispute precludes partial summary judgment, but instead contends that Plaintiffs are wrong on the law.
The Government also moves to dismiss all three Counts for lack of subject matter jurisdiction and for failure to state a claim. Id . The Court heard oral argument on the motions on December 15, 2021. Docket No. 38.
Under Federal Rule of Civil Procedure 56(c), summary judgment is proper
when the pleadings, depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine issue of material
fact and that the moving party is entitled to judgment as a matter of law.
Celotex
Corp. v. Catrett
,
II. The Government argues that Plaintiffs lack standing because they “have not suffered any concrete injury.” Docket No. 24 at 10. The Government also contends that Plaintiffs’ claims are moot because the Commission has produced some of the requested records. Docket No. 35 at 2. As explained below, the Court concludes that Plaintiffs have alleged several distinct injuries and that Plaintiffs’ claims are not moot.
A.
“[A]n essential and unchanging part of the case-or-controversy requirement of
Article III” is that the plaintiff has standing.
Lujan v. Defs. Of Wildlife
,
Servs. (TOC), Inc
., 528 U.S. 167, 180–81 (2000)). “The party invoking federal
jurisdiction bears the burden of establishing these elements,” and “each element must
be supported in the same way as any other matter on which the plaintiff bears the
burden of proof,
i.e.
, with the manner and degree of evidence required at the
successive stages of the litigation.”
Lujan
,
Here, Plaintiffs allege several distinct injuries, each of which satisfies Article III standing.
First , Plaintiffs allege informational injuries resulting from the Commission’s withholding of documents to which Plaintiffs claim entitlement under FOIA. Docket No. 1 ¶ 51. As the Government concedes, Plaintiffs had standing when they filed the complaint to challenge the initial decision to deny their ASTM requests. See Docket No. 24 at 17 n.7. Further, although the Commission has since produced some of those records, the Government concedes that it has yet to release documents responsive to Requests 277 and 278. See Docket No. 37 at 2. “The agency’s failure to provide information to which the Requesters are statutorily entitled is a quintessential form of concrete and particularized injury within the meaning of Article III.” Maloney v.
Murphy
,
BP Am. Prod. Co. , 704 F.3d 413, 429 (5th Cir. 2013) (“This is the kind of concrete informational injury that the statute was designed to redress.”).
Second , Plaintiffs allege the increased fees under the Final Rule cause financial injury. Docket No. 1 ¶ 52. The Final Rule raised the fee for print duplications from $0.10 per page to $0.15 per page. Fees for Production of Records, 86 Fed. Reg. 7499-01, 7500 (Jan. 29, 2021) (to be codified at 16 C.F.R. pt. 1015); see also 16 C.F.R. § 1015.9(e)(1). And it increased search and review fees from rates between $3.00–$4.90 per quarter-hour to rates between $10.31–$15.11 per quarter-hour, to be adjusted annually. 86 Fed. Reg. at 7500–01; 16 C.F.R. § 1015.9(e)(2)–(3); see also U NITED S TATES C ONSUMER P RODUCT S AFETY C OMMISSION , FOIA Fees , https://www.cpsc.gov/Newsroom/FOIA/FOIA-Fees. “[T]hat sort of pocketbook injury is a prototypical form of injury in fact.” Collins v. Yellen , 141 S. Ct. 1761, 1779 (2021); see also McGowan v. Maryland , 366 U.S. 420, 424, 430–31 (1961) (holding plaintiffs had standing to challenge a $5.00 fine). The Government claims “Plaintiffs did not plead any injury from the imposition of search and review fees.” Docket No. 31 at 2 n.2 (citing Docket No. 1 ¶ 52). But the complaint cites 16 C.F.R. § 1015.9(e)(2) and (3) as injurious alongside § 1015.9(e)(1). Docket No.1 ¶ 52; see also id. ¶ 31.
The Government also argues that Plaintiffs have not “been assessed increased
fees under the Final Rule.” Docket No. 24 at 11. But it is undisputed that at the time
of filing, the Commission’s FOIA officer had denied By Two’s request for fee waivers
and both Plaintiffs’ requests for ASTM documents. Docket No. 1 ¶¶ 36, 39–43;
see
also
Docket No. 24 at 17 n.7 (conceding standing to challenge initial decisions). The
Commission’s initial denial of fee waivers created an immediate threat of paying the
fees. And the Commission’s initial denial of the requests for ASTM documents forced
Plaintiffs to choose between going without the information or paying third parties for
the documents at higher rates. Docket No. 1 ¶¶ 36, 39–43;
see also, e.g.
, Docket
No. 14-1, Ex. V. Thus, when Plaintiffs filed the complaint, their injury was “certainly
impending.”
See McCardell v. HUD
,
Plaintiffs also repeatedly allege they suffer an ongoing injury by facing future
liability for the increased FOIA fees. The complaint is replete with details alleging
that Plaintiffs have an established history of filing FOIA requests with the
Commission and have specific plans to do so again in the future.
See, e.g.
, Docket
No. 1 ¶¶ 10–11, 52 (alleging “imminent financial injury” from the increased cost “to
obtain the documents they will request in the future”). Indeed, as the summary
judgment record indicates, Plaintiffs have filed additional FOIA requests with the
Commission since this suit began.
See
Docket No. 14-1, Exs. O–T. Far from being
“‘some day’ intentions,” Plaintiffs’ habitually engaging in th e regulated conduct at
issue in this case demonstrates the concrete plans necessary to establish an injury in
fact.
See Ghedi v. Mayorkas
,
Third , Plaintiffs allege an ongoing constitutional injury by pleading that they remain subject to regulations promulgated by an unconstitutionally structured agency. Docket No. 29 at 7–8; Docket No. 1 ¶¶ 1–3, 10–12, 26–34. T he Supreme Court has held that parties alleging such injury have standing to challenge removal restrictions “because when such a provision violates the separation of powers it inflicts a ‘here-and-now’ injury on affected third parties that can be remedied by a court.” Seila L. L.L.C. v. CFPB , 140 S. Ct. 2183, 2196 (2020) (quoting Bowsher v.
Synar
,
Further, “‘ there is ordinarily little question’ that a regulated individual or
entity has standing to challenge an allegedly illegal statute or rule under which it is
regulated.”
State Nat. Bank of Big Spring v. Lew
,
U.S. Dep’t of Agric.
,
§ 1015.9(e); see also id. § 1015.9(g)(1)(iv). Subjecting Plaintiffs to such regulation in the alleged absence of Article II oversight directly injures Plaintiffs. See Cochran v.
SEC
,
The Government’s myriad objections to this constitutional injury ignore the
fact that Plaintiffs allege they are frequently subject to the Final Rule. A regulated
party may object to the existence of a regulation that may otherwise be a generalized
grievance.
See Contender Farms
, 779 F.3d at 264–65 (noting that subjects of
regulations generally have standing to challenge the rule or statute). Further, the
fact that Plaintiffs choose to subject themselves to FOIA regulations is immaterial
because, as explained above, FOIA requests are a common and habitual part of
Plaintiffs’ business models.
See id.
at 266 (“[Plaintiffs] suggest that they could
neither earn a living nor compete recreationally without participating in these
events.”);
cf. Cochran
,
Co. Acct. Oversight Bd.
,
* * * In sum, the Court finds that Plaintiffs have pleaded a concrete and imminent injury in fact and that the summary judgment record establishes that this injury is ongoing. Further, Plaintiffs have demonstrated the injuries caused by processing FOIA requests under the Final Rule are traceable to the Commission’s conduct and that the Court can redress these injuries with a declaration that the removal restriction is unconstitutional or by setting aside the Final Rule. See Docket No. 1 ¶¶ 53–54; Docket No. 29 at 8–10. [3] Plaintiffs therefore have standing.
B. In notices filed post briefing, the Government contends that its release of records responsive to Requests 324 and 330 moots the case. See Docket No. 35. [4] Typically, a FOIA request becomes moot once it is resolved. Payne Enterprises, Inc.
v. United States
,
III. Plaintiffs contend that the removal restriction in 15 U.S.C. § 2053(a) is unconstitutional because the commissioners are executive officers wielding substantial executive power. Docket No. 14 at 11–26. The Government contends that the Supreme Court has “uniformly affirmed” that removal restrictions on multimember agencies like the Commission are constitutional. See Docket No. 24 at 17.
As explained below, the Court holds that the restriction on the President’s power to remove the commissioners violates Article II.
A.
Article II states: “The executive Power shall be vested in a President,” who
must “take Care that the Laws be faithfully executed.” U.S. C ONST . art. II, § 1, cl. 1;
id
., § 3. Unlike Article I, which vests the legislative power in a multibody Congress,
Article II vests in a single President not “
some of
the executive power, but
all of
the
executive power.”
Morrison v. Olson
,
at 2197 (cleaned up) (quoting 30 Writings of George Washington 334 (J. Fitzpatrick ed. 1939)).
These officers “must remain accountable to the President, whose authority
they wield.”
Id
. As the first Congress recognized: “If any power whatsoever is in its
nature Executive, it is the power of appointing, overseeing, and controlling those who
execute the laws.”
Id.
(cleaned up) (quoting 1 Annals of Cong. 463 (1789)). “Since
1789, the Constitution has been understood to empower the President to keep these
officers accountable—by removing them from office, if necessary.”
Free Enter. Fund
,
Limiting the President’s removal power insulates executive officers from accountability—both to the President and the governed. If the removal power is restricted, the President “can neither ensure that the laws are faithfully executed, nor be held responsible for [executive officers’] breach of faith.” Free Enter. Fund , 561 U.S. at 496. Such officers “would be immune from Presidential oversight, even as they exercised power in the people’s name.” Id . at 497. They would also be unaccountable to the people, who “do not vote for the ‘Officers of the United States.’” Id . at 497–98 (quoting U.S. C ONST . art. II, § 2, cl. 2). “That is why the Framers sought to ensure that ‘those who are employed in the execution of the law will be in their proper situation, and the chain of dependence preserved; the lowest officers, the middle grade, and the highest, will depend, as they ought, on the President, and the President on the community.’” Id . at 498 (quoting 1 Annals of Cong., at 499 (J.
Madison));
accord Kisor v. Wilkie
,
This fundamental first principle is as critical today as it was in 1789. The
Supreme Court has rejected the argument that “the times demand” limiting the
President’s removal power “in the interest of enhancing independence from politics
in regulatory bodies.”
See Seila Law
,
at 513–14).
Indeed, “the President’s removal power is the rule, not the exception.” Id. at 2206. And the exceptions are narrow and limited—with the Supreme Court recognizing only two. Id. at 2199–200. One, stated in Morrison v. Olson , 489 U.S.
654 (1988), allows removal restrictions on “inferior officers with limited duties and no policymaking or administrative authority.” Id. The other, recognized in Humphrey’s Executor v. United States , 295 U.S. 602 (1935), allows removal restrictions on members of “multimember expert agencies that do not wield substantial executive power.” Id. “These two exceptions . . . ‘represent what up to now have been the outermost constitutional limits of permissible congressional restrictions on the President’s removal power.’” Id. (quoting PHH Corp. v. CFBP , 881 F.3d 75, 196 (D.C. Cir. 2018) (Kavanaugh, J., dissenting)).
The parties agree that the Morrison exception is inapplicable. Here, the commissioners shielded from removal by 15 U.S.C. § 2053(a) are principal, rather than inferior, officers under the Appointments Clause, and hold significant policymaking and administrative authority. See Free Enter. Fund , 561 U.S.
at 510–11 (citing
Freytag v. Comm’r
,
This case therefore turns on the Humphrey’s Executor exception.
B. Plaintiffs argue that Humphrey’s Executor does not apply here because the Commission exercises substantial executive power, unlike the agency in that case.
Docket No. 14 at 20. The Government counters that the exception applies to any multimember, nonpartisan structure regardless of function and power. Docket No. 24 at 18–22. Based on nearly a century of precedent, the Court holds that the Humphrey’s Executor exception does not apply to the Commission.
1. Humphrey’s Executor involved the Federal Trade Commission (“FTC”), a commission of five members appointed by the President with the advice and consent of the Senate. 295 U.S. at 619–20. By statute, no more than three of the commissioners could be members of the same political party. See id . And each member’s term was staggered to ensure new vacancies for the President to fill each presidential term. See id . at 620. Congress created the commission as a “body of experts who shall gain experience by length of service; a body which shall be independent of executive authority, except in its selection, and free to exercise its judgment without the leave or hindrance of any other official or any department of the government.” Id . at 625–26. Accordingly, the President could remove commissioners only “for inefficiency, neglect of duty, or malfeasance in office.” Id .
at 620.
The Supreme Court upheld the removal restriction. The Court reasoned that the FTC “is an administrative body created by Congress to carry into effect legislative policies embodied in the statute . . . and to perform other specified duties as a legislative or as a judicial aid.” Id . at 628. “Such a body cannot in any proper sense be characterized as an arm or an eye of the executive.” Id . In performing its statutory duties, the FTC “acts in part quasi legislatively and quasi judicially.” Id . The commission “acts as a legislative agency” when it investigates and reports to Congress, and “it acts as an agency of the judiciary” when it serves as a master in chancery under court procedures. Id .
The Court also distinguished the FTC from the postmaster at issue in
Myers v.
United States
,
Since 1935, the Supreme Court has upheld removal restrictions under the Humphrey’s Executor exception only once—for the almost purely adjudicatory War Claims Commission established after the Second World War. See Wiener v. United States , 357 U.S. 349, 354–55 (1958) (“The Commission was established as an adjudicating body with all the paraphernalia by which legal claims are put to the test of proof.”). Instead, the Court has repeatedly refused to apply the exception to various bodies exercising executive power.
In
Free Enterprise Fund
, the Court held that
Humphrey’s Executor
could not
save restrictions on removing officers who “determine[] the policy and enforce[] the
laws of the United States.”
Congress “created the Board as a private ‘nonprofit corporation,’” empowered it to enforce securities laws, and placed it under the SEC’s oversight. Id . at 484–86. By statute, the SEC could not “remove Board members at will, but only ‘for good cause shown.’” Id . at 486. The Court held that this “arrangement [was] contrary to Article II’s vesting of the executive power in the President.” Id. at 496. Unlike Humphrey’s Executor , which did not involve an executive officer, the Board members were “Officers of the United States” executing significant executive authority. See id .
at 486, 493. And the governing statute “not only protects Board members from removal except for good cause, but [it] withdraws from the President any decision on whether that good cause exists.” Id . at 495. “That [removal] decision is vested instead in . . . the [SEC] Commissioners—none of whom is subject to the President’s direct control.” Id . at 496.
A decade later, the Court in Seila Law again refused to extend the Humphrey’s Executor exception—this time to “an independent agency led by a single Director and vested with significant executive power.” 140 S. Ct. at 2201. The agency was the Consumer Financial Protection Bureau, a regulatory agency tasked with implementing and enforcing consumer protection laws, conducting investigations, prosecuting civil actions in federal court, and exercising adjudicatory authority. See id . at 2193. Rather than creating “a traditional independent agency headed by a multimember board or commission,” however, Congress placed the Bureau under the leadership of a single Director. Id . The Director is appointed by the President for a term of five years but may be removed only for “inefficiency, neglect of duty, or malfeasance in office.” Id .
In holding this removal restriction unconstitutional, the Court distinguished the Bureau from the FTC in Humphrey’s Executor . Unlike the FTC, the Bureau “is led by a single Director who cannot be described as a ‘body of experts’ and cannot be considered ‘non-partisan.’” Id . at 2200. FTC commissioners, moreover, served staggered terms “prevent[ing] complete turnovers in agency leadership,” while the Director’s five-year term would “guarantee abrupt shifts in agency leadership and with it the loss of accumulated expertise.” Id . Further, the Director “is hardly a mere legislative or judicial aid,” but rather, “possesses the authority to promulgate binding rules fleshing out 19 federal statutes, including a broad prohibition on unfair and deceptive practices in a major segment of the U.S. economy.” Id . The Director may “unilaterally issue final decisions . . . in administrative adjudications” and exercises “a quintessentially executive power”—enforcing monetary penalties—that was “not considered in Humphrey’s Executor .” Id . Lingering on this last point, the Court emphasized that whether the 1935 FTC possessed other “latent powers” was irrelevant: “what matters is the set of powers the Court considered as the basis for its decision.” Id. at 2200 n.4.
Finally, last year the Court held in
Collins v. Yellen
, that
Humphrey’s Executor
did not save a removal restriction on the Director of the Federal Housing Finance
Agency (“FHFA”).
Like the Bureau in Seila Law , the FHFA is tasked with “broad investigative and enforcement authority” and may hold hearings, issue subpoenas, remove or suspend corporate officers, issue cease-and-desist orders, and bring civil actions in federal court. Id . at 1772. Also like the Bureau, the FHFA “is an agency led by a single Director,” and the statute “restricts the President’s removal power.” Id . at 1784. The removal restriction was thus unconstitutional, even if the FHFA exercised less executive power than the Director of the Bureau in Seila Law . See id. at 1785 (“Courts are not well-suited to weigh the relative importance of the regulatory and enforcement authority of disparate agencies, and we do not think that the constitutionality of removal restrictions hinges on such an inquiry.”).
In sum, the Supreme Court has applied the Humphrey’s Executor exception only twice—in Humphrey’s Executor and Wiener , where the multimember commissions did not exercise substantial executive power.
2. Turning to this case, the Court concludes that the Commission exercises substantial executive power and therefore does not fall within the Humphrey’s Executor exception.
Similar to the Bureau in
Seila Law
, the Commission “may promulgate
consumer product safety standards” affecting a wide range of consumer products on
the market. 15 U.S.C. § 2056(a);
Seila Law
,
The Commission also holds the power to “unilaterally issue final decisions awarding legal and equitable relief in administrative adjudications.” See 140 S. Ct.
at 2200. Indeed, the Commission “by one or more of its members” may “conduct any
hearing or other inquiry necessary or appropriate to its functions anywhere in the
United States.” 15 U.S.C. § 2076(a);
see also
16 C.F.R. § 1025.1 (establishing rules
for adjudication). And as the Supreme Court said in
Seila Law
, agency adjudication
in this form “
must be
” an exercise of executive authority. 140 S. Ct. at 2198 n.2
(quoting
City of Arlington v. FCC
,
Finally, the Commission holds the “quintessentially executive power not
considered in
Humphrey’s Executor
” to file suit in federal court “to seek daunting
monetary penalties against private parties” as a means of enforcement.
Seila Law
,
The Commission may also bring actions for injunctive enforcement in district court.
Id.
§ 2071(a). And the Commission can initiate and prosecute criminal actions “with
the concurrence of the Attorney General.”
Id.
§ 2076(b)(7)(B). Finally, the
Commission has the power to issue subpoenas,
see id.
§ 2076(b)(3), an additional
executive power recognized in
Collins. See
The Government does not dispute that these are executive powers. Rather, the
Government argues that the 1935 FTC may have exercised similar powers.
See
Docket No. 24 at 24–25. This argument was raised by the dissenting Justices in
Seila
Law
and rejected by a majority of the Court.
See
The Court thus concludes that the Commission exercises substantial executive power, and Humphrey’s Executor does not apply.
3. The Government argues that the removal restriction in § 2053(a) is nonetheless constitutional because the Commission’s “structure is in all material respects identical to the FTC’s structure the Supreme Court unanimously upheld in Humphrey’s Executor .” Docket No. 24 at 18. The Government contends that this “structure”—with five members serving staggered seven-year terms—is a “Congressionally crafted and constitutionally permissible” expert agency whose officers may be removed by the President only for good cause. Id . at 19. The Government, however, ignores a significant basis of the Supreme Court’s holding in Humphrey’s Executor —that the FTC exercised “no part of the executive power.” 295 U.S. at 628.
To be sure,
Humphrey’s Executor
discussed the multimember structure of the
FTC in addressing the removal restriction.
at 2199 (noting that these features demonstrated that the FTC’s duties “were neither
political nor executive” (quoting
Humphrey’s Executor
, 295 U.S. at 624)). The fact
that an agency is structured as a nonpartisan “body of experts” is a necessary
indication
that the agency does not wield executive power.
See Humphrey’s Executor
,
Ct. at 2199 (“The Court acknowledged that between purely executive officers on the one hand, and officers that closely resembled the FTC Commissioners on the other, there existed ‘a field of doubt’ that the Court left ‘for future consideration.’”).
The Government also attempts to distinguish
Seila Law
and
Collins
as cases
involving agencies “led by a single Director,” not multimember commissions. Docket
No. 24 at 22–23 (quoting
Collins
,
at 2211). But that is not what the Court said. Rather, in addressing severability, the
Court noted in dictum that one remedy to the removal-restriction problem “may be”
“converting the CFPB into a multimember agency.”
Seila Law
,
The Court did not hold that Congress could create multimember agencies wielding substantial executive power and then restrict the President’s power to remove their members. See id .
Rather, in each of the removal cases discussed above, the Supreme Court relied on first principles. Article II vests the executive power in the President, who must “take Care that the Laws be faithfully executed.” See, e.g. , Humphrey’s Executor , 295 U.S. at 627 (citing the “illimitable power of removal by the Chief Executive.”); Free Enter. Fund , 561 U.S. at 492 (citing the Take Care Clause); Seila Law , 140 S. Ct.
at 2197 (same). The President cannot effectively fulfill that duty when Congress
restricts his removal power.
Myers
,
Fund
,
The Government also argues that the Commission and other “similarly
structured agencies . . . . are longstanding and accepted pillars of American
governance.” Docket No. 24 at 17. But Article II of the Constitution demands that
agencies exercising executive authority be fully accountable to the President, and the
Constitution remains the supreme law of the land.
See
U.S. C ONST . art. II, § 1, cl. 1;
id
., § 3;
id.
art. VI § 2;
see also I.N.S. v. Chadha
,
at 2207 (cleaned up) (quoting
Free Enter. Fund
,
*
*
*
“T he President’s removal power is the rule, not the exception.”
Seila Law
,
140 S. Ct. at 2206;
see also Free Enter. Fund
,
§ 2053(a) violates Article II of the U.S. Constitution.
IV. The Court now turns to the remedy. Plaintiffs seek a declaratory judgment that the removal restriction in 15 U.S.C. § 2053(a) violates Article II of the Constitution. Docket No. 1, Prayer for Relief ¶¶ 1–2; see also Docket No. 14 at 29.
The Government argues that Plaintiffs are not entitled to this relief because (1) they cannot show that the removal restriction caused them harm and (2) a declaratory judgment is improper here. Docket No. 24 at 11–17, 28–32. As explained below, the Government’s arguments fail.
A.
Citing
Collins v. Yellen
, the Government contends that Plaintiffs may not
“obtain relief for their alleged injuries” unless they identify a “plausible nexus”
between the removal restriction in § 2053(a) and the decisions regarding their FOIA
requests and the adoption of the Final Rule.
See
Docket No. 24 at 11–13 (citing
Collins
,
In Collins , plaintiff shareholders of Fannie Mae and Freddie Mac sought to rescind a stock purchasing agreement (known as the third amendment) between the Federal Housing Finance Agency (“FHFA”) and the Department of Treasury. 141 S.
Ct. at 1772–75. The shareholders argued that recission of the third amendment would also require the disgorgement of dividend payments worth billions of dollars.
Id. By the time the case reached the Supreme Court, however, the third amendment had been repealed. Id. at 1779–80. “And because the shareholders no longer ha[d] a live claim for prospective relief, the only remaining remedial question concern[ed] retrospective relief.” Id. at 1787 (citation omitted). The Court held that the shareholders were not entitled to such retrospective relief without demonstrating that the removal restriction “inflict[ed] compensable harm”—by, for example, preventing the President from removing a Director who supervised the implementation of the third amendment. Id. at 1787–89. [5]
Collins does not address requests for prospective relief. Instead, Free Enterprise Fund governs. In that case, the Supreme Court squarely held that plaintiffs challenging removal restrictions could obtain declaratory relief without demonstrating the restrictions inflicted “compensable harm” or identifying a “plausible nexus” between the restrictions and the challenged action. See 561 U.S.
at 513; see also id. at 491 n.2. The Court stated: “[Petitioners] are entitled to declaratory relief sufficient to ensure that the reporting requirements and auditing standards to which they are subject will be enforced only by a constitutional agency accountable to the Executive.” Id . at 513. This type of equitable relief “has long been recognized as the proper means for preventing entities from acting unconstitutionally.” Id. at 491 n.2 (quoting Corr. Servs. Corp. v. Malesko , 534 U.S.
61, 74 (2001)).
Indeed, the Fifth Circuit held in Cochran v. SEC that Collins does not apply to plaintiffs seeking prospective relief. See 20 F.4th at 210 n.16 (“ Collins does not impact our conclusion in this case because Cochran does not seek to ‘void’ the acts of any SEC official. Rather, she seeks an administrative adjudication untainted by separation-of-powers violations.”).
Accordingly, the Court denies the Government’s motion to dismiss the claims seeking prospective relief. [6]
B. Next, the Government argues that Plaintiffs are not entitled to a declaratory judgment because they lack a “private cause of action” and because the “requested declaratory relief would not remedy [Plaintiffs’] injuries.” Docket No. 24 at 28–32.
The Court disagrees on both points.
1.
The Declaratory Judgment Act provides that “any court of the United States,
upon the filing of an appropriate pleading, may declare the rights and other legal
relations of any interested party seeking such declaration, whether or not further
relief is or could be sought.” 28 U.S.C. § 2201(a). Of course, “the law makes clear
that—although the Declaratory Judgment Act provides a
remedy
different from an
injunction—it does not provide an additional cause of action with respect to the
underlying claim.”
Okpalobi v. Foster
, 244 F.3d 405, 423 n.31 (5th Cir. 2001) (en
banc). Here, Plaintiffs seek a declaratory judgment on Count I, which alleges “an
implied private right of action directly under the Constitution to challenge
governmental action under”
Free Enterprise Fund
and separation-of-powers
principles. Docket No. 1, Count I, ¶ 57 (quoting
Free Enter. Fund
,
As noted above, Free Enterprise Fund held that plaintiffs challenging the removal restriction on Public Company Accounting Oversight Board members were entitled to a declaratory judgment to ensure that “the reporting requirements and auditing standards to which they are subject will be enforced only by a constitutional agency accountable to the Executive.” 561 U.S. at 513. There, as here, the Government argued that the plaintiffs lacked a private right of action to challenge a removal restriction under “the Appointments Clause or separation-of-powers principles.” Id . at 491 n.2. The Supreme Court rejected the argument, holding that it has long recognized a right of action to challenge unconstitutional governmental action and that there was “no reason” why “an Appointments Clause or separation- of-powers claim should be treated differently than every other constitutional claim.” Id.
The Government argues that the right of action recognized in
Free Enterprise
Fund
is available only to plaintiffs facing a civil or criminal enforcement action.
[7]
Docket No. 24 at 29–30. But
Free Enterprise Fund
is not so limited. Rather, the
Court held that the right of action extends generally to those challenging
“governmental action under . . . separation-of-powers principles.”
at 487–91), aff’d in part and vacated and rev’d in part on other grounds , 141 S. Ct.
1761; LaRoque v. Holder , 650 F.3d 777, 792–93 (D.C. Cir. 2011) (holding that a plaintiff not directly subject to an enforcement proceeding could bring a constitutional challenge under Free Enterprise Fund ). And here, Plaintiffs are challenging the Commission’s actions implementing and enforcing FOIA and processing their FOIA requests—under “Article II of the U.S. Constitution” and “Separation of Powers.” Docket No. 1, Count I.
Article II, moreover, does not distinguish between “enforcement” authority and
other types of executive power exercised by the President.
See
U.S. C ONST . art. II,
§ 1, cl. 1. Rather, “[i]nterpreting a law enacted by Congress to implement the
legislative mandate”—similar to the power challenged here—“is the very essence of
‘execution’ of the law.”
Bowsher
,
Finally, the type of harm faced by the plaintiffs in
Free Enterprise Fund
is no
different from the type of harm alleged by Plaintiffs here. Both groups of plaintiffs
are subject to governmental action by executive officials who are not properly
accountable to the President.
See Free Enter. Fund
, 561 U.S. at 485. In
Free
Enterprise Fund
, the plaintiffs were firms whose right to operate an accounting
business was subject to the Board’s regulations and decisions governing the
accounting industry.
See id.
at 488. Plaintiffs here are organizations whose right to
obtain information through FOIA—a right essential to their operations—is subject to
the Commission’s regulations and decisions governing FOIA requests.
See
Docket
No. 14-1, Exs. O–T.
[8]
Both groups have a right to ensure that these regulations and
decisions are issued by officials who answer to the President.
See Free Enter. Fund
,
Accordingly, Plaintiffs have alleged a private right of action entitling them to declaratory relief.
2.
The Government also argues that declaratory relief “would not remedy
[Plaintiffs’] injuries” because it would not “vacate the Final Rule” or “undo any
decision of the FOIA Office.” Docket No. 24 at 31. But Plaintiffs seek prospective
relief from the Commission’s ongoing processing of their FOIA requests without
proper presidential oversight.
See
Docket No. 1 ¶ 54;
see also supra
Sections II.A,
IV.B.1. A declaration stating that the removal restriction in 15 U.S.C. § 2053(a) is
unconstitutional would “ensure that [the Commission’s actions] to which [Plaintiffs]
are subject will be enforced only by a constitutional agency accountable to the
Executive.”
Free Enter. Fund
, 561 U.S. at 513. The declaration would clarify the
President’s power under Article II to remove commissioners at will.
See id
. And it
would remove any commissioner’s self-perceived job security that might cause him to
resist presidential oversight.
See Bowsher
,
* * * The Court therefore holds that Plaintiffs are entitled to a declaratory judgment that the removal restriction in 15 U.S.C. § 2053(a) violates Article II of the Constitution.
V. Plaintiffs request a partial final judgment on the declaratory relief sought in Count I to “tee up the constitutional removal question for immediate appeal.” Docket No. 14 at 26.
Federal Rule of Civil Procedure 54(b) provides that, “[w]hen an action presents more than one claim for relief—whether as a claim, counterclaim, crossclaim, or third-party claim—or when multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay.” F ED . R. C IV .
P. 54(b). Thus, the Court must determine (1) whether there is “more than one claim
for relief” and (2) whether there is any “just reason for delay.”
Samaad v. City of
Dallas
, 940 F.2d 925, 930 (5th Cir. 1991),
abrogated on other grounds by Stop the
Beach Renourishment, Inc. v. Fla. Dep’t of Envtl. Prot
.,
The parties do not dispute that Count I is an independent claim and that
declaring the removal restriction unconstitutional is an “ultimate disposition” of that
claim.
Briargrove Shopping Ctr. Joint Venture v. Pilgrim Enters., Inc.
,
2019),
as revised
(Dec. 20, 2019),
as revised
(Jan. 9, 2020),
rev’d and remanded sub
nom. California v. Texas
,
And the declaratory judgment sought by Plaintiffs on Count I fully remedies their
ongoing constitutional injury.
See Free Enter. Fund
,
There is also no just reason for delay. In making that determination, the Court
considers both “judicial administrative interests as well as the equities involved.”
Curtiss-Wright Corp. v. Gen. Elec. Co.
,
Martin Marietta Corp
.,
1996)). Here, all three Counts assert that the removal restriction in 15 U.S.C.
§ 2053(a) is unconstitutional. But Counts II and III require addressing additional complex and novel questions about the appropriate relief. See Docket No. 1 ¶¶ 67, 77–78 (seeking to have the Final Rule and the Commission’s decisions to deny Plaintiffs’ FOIA requests “set aside”); see also supra note 6.
By entering final judgment on Count I, the Court allows the parties to immediately appeal the constitutional question and potentially avoid the time and resources necessary to address Counts II and III. See, e.g. , 10 C HARLES A LLEN W RIGHT , A RTHUR R. M ILLER , M ARY K AY K ANE , F EDERAL P RACTICE AND P ROCEDURE § 2659 (4th ed. 2014) (“[A]n early appeal may avoid the need for further proceedings in the district court or may ease significantly the difficulty and complexity of conducting the trial of the unadjudicated claims, thereby supporting immediate review. This may be true, for example, if the appeal will allow the court to rule on some novel or complex issue that will recur in the trial court.” (footnotes omitted)).
In fact, the Government does not dispute this point, arguing instead that Plaintiffs’ claims may be mooted as the Commission processes their FOIA requests. Docket No. 24 at 32–33. But Plaintiffs have demonstrated they are repeat-FOIA requesters and will continue to suffer ongoing injury until a declaratory judgment is entered.
See supra Section II.B.
Accordingly, Plaintiffs’ motion for partial final judgment as to Count I is GRANTED .
VI. In light of the foregoing, the Court resolves the pending motions as follows: The Government’s Motion to Dismiss (Docket No. 24) is DENIED in part. The motion is denied to the extent it seeks dismissal of the complaint for lack of standing, failure to state a meritorious separation-of-powers claim, and failure to state a claim for relief for Count I under Collins v. Yellen . The Court reserves ruling on whether Plaintiffs have stated a claim for retrospective relief under Collins , which they seek under Counts II and III only. Other than this issue relating to Counts II and III, the Court’s ruling resolves the remainder of the motion.
Plaintiffs’ Motion for Partial Summary Judgment as to Count I and Entry of Partial Final Judgment Under Rule 54(b) (Docket No. 14) is GRANTED . The Court holds that (1) the removal restriction in 15 U.S.C. § 2053(b) violates Article II of the Constitution; (2) Plaintiffs are entitled to declaratory judgment to ensure that future FOIA requests are administered by a Commission accountable to the President; So ORDERED and SIGNED thisday of ___________________________________ and (3) a partial final judgment as to Count I is proper under Rule 54(b).
Finally, the Court sets this matter for a telephonic status conference.
Information will be provided in a separate order. March, 2022.
18th
Notes
[1] FOIA provides certain exemptions from disclosure, none of which is relevant in this case. See 5 U.S.C. § 552(b).
[2] The Government’s argument that Plaintiffs should be required to pay the increased fees before
challenging the legality of the Final Rule, Docket No. 31 at 4, rests on a line of cases evaluating
ripeness
for purposes of a FOIA policy-or-practice challenge.
See, e.g.
,
Media Access Project v. F.C.C.
,
[3] The Government also argues that, to obtain relief, Plaintiffs must show that the Commission’s
actions are traceable directly to the removal restriction in § 2053(a).
See
Docket No. 24 at 11–17.
But the Government correctly frames this requirement as implicating the Plaintiffs’ ability to state
a claim on which relief may be granted, not the traceability element of standing.
See Collins
, 141
S. Ct. at 1788 n.24 (“What we said about standing in
Seila Law
should not be misunderstood as a
holding on a party’s entitlement to relief based on an unconstitutional removal restriction.”). To
show traceability for purposes of standing, “the relevant inquiry is whether the plaintiffs’ injury can
be traced to ‘allegedly unlawful conduct’ of the defendant, not to the provision of law that is
challenged.”
Id.
at 1779 (quoting
Allen v. Wright
,
[4] The Government does not claim the Commission has produced documents responsive to
Requests 277 and 278, but merely that the Commission has approved the requests and that the
proper course is to allow the Commission more time to review the records.
See
Docket No. 37 at 2.
Far from mooting the case, this development would at most justify an amended scheduling order.
See, e.g.
,
Huddleston v. FBI
,
[5] The Supreme Court remanded
Collins
to the Fifth Circuit to determine if the shareholders suffered
such harm. The Fifth Circuit, in turn, remanded to the district court “for further proceedings
consistent with the Supreme Court’s decision.”
Collins v. Yellen
, No. 17-20364,
[6] The Government moves to dismiss Plaintiffs’ entire complaint, including Counts II and III, which also seek retrospective relief. See Docket No. 24 at 11. The Court declines to address this argument at this time because (1) Plaintiffs have moved for partial summary judgment only on Count I and the request for prospective declaratory relief and (2) the Fifth Circuit has yet to clarify the requirements for obtaining retrospective relief post- Collins .
[7] The Government also argues that the Court should be “hesitant” to find new implied causes of
action, especially when the APA and FOIA provide a remedy for Plaintiffs’ injuries. Docket No. 24
at 30. But this cause of action is not new.
See Free Enter. Fund
,
[8] Here, since Plaintiffs rely “‘heavily and frequently on FOIA’ to conduct work that is ‘essential to the
performance of certain of their primary institutional activities,’” the Commission’s FOIA regulations
affect the Plaintiffs’ “‘daily conduct and decision-making.’”
See Payne Enterprises
,