Antitrust Law Daily Fifth Circuit lacks jurisdiction over Louisiana Real Estate Board appeal of FTC state action decision
Friday, March 1, 2019

Fifth Circuit lacks jurisdiction over Louisiana Real Estate Board appeal of FTC state action decision

By Peter Reap, J.D., LL.M.

Federal appellate court lacked jurisdiction to hear appeal of FTC decision regarding a state-action immunity defense.

The U.S. Court of Appeals in New Orleans did not possess jurisdiction, either expressly under the Federal Trade Commission Act (FTCA), or under the collateral-order doctrine, to hear an appeal by the Louisiana Real Estate Appraisers Board (LREAB) of an FTC decision holding that the State of Louisiana could not claim state action immunity, the appellate court decided. The Fifth Circuit declined to hold that the collateral order doctrine applies to the FTCA’s limitation of judicial review to cease and desist orders. Therefore, the court dismissed the LREAB’s petition for review for lack of jurisdiction (Louisiana Real Estate Appraisers Board v. FTC, February 28, 2019, per curiam).

The action began last year with the FTC’s issuance of a complaint accusing the LREAB—a body that regulates the practice of real estate appraisals in Louisiana—of unlawfully restraining price competition for appraisal services provided to appraisal management companies (AMCs) by adopting a rule requiring AMCs to pay appraisers a customary and reasonable fee for real estate appraisal services. The rule, Rule 31101, provides that AMCs can demonstrate compliance with the customary and reasonable requirement by using objective third-party information such as government agency fee schedules, academic studies, and independent private sector surveys or by using a schedule of fees established by the LREAB.

The FTC alleged in its complaint that Rule 31101 prohibited AMCs from arriving at an appraisal fee through the operation of the free market. It also alleged that the LREAB unlawfully restrained price competition through its enforcement of the Rule, because it effectively required AMCs to set rates at least as high as those set forth in a specified survey.

Following the complaint, the LREAB revoked the original Rule 31101, reissued it in identical form under the new procedures, and entered into a contract with a state administrative agency to review certain of its enforcement decisions. The LREAB then argued that the complaint should be dismissed as moot, since the state had established additional review procedures for the enforcement of Rule 31101.

In April 2017, the FTC decided that the LREAB’s demonstration of active supervision was insufficient for state action immunity to apply, declaring the Commissioner of Administration’s participation in the review process a "rubber stamp" and finding that the legislation had not played an active role in supervising the reissuance of the rule by allowing its adoption as proposed, without hearings or questions. The Board appealed to the Fifth Circuit.

In its brief to the Fifth Circuit, the FTC argued that the court Circuit should dismiss the petition for lack of jurisdiction given that the FTC Act grants appellate jurisdiction only from "cease and desist" orders and the LREAB was asking the court to review an interlocutory decision. Collateral rulings may be appealed where the ruling: (1) "conclusively determine the disputed question;" (2) "resolve an important issue completely separate from the merits of the action;" and (3) is "effectively unreviewable on appeal from a final judgment." The FTC stated that the case does not meet those requirements. The FTC argued that state-action determinations are not effectively unreviewable on appeal from a final judgment, that state-action issues are intertwined with the antitrust merits, that the LREAB lose any rights in the meantime, because the state-action doctrine does not protect a right to avoid trial. State-action protection defines the reach of the antitrust laws and does not give states "immunity" like the Eleventh Amendment.

The court agreed with the FTC. Noting that the Board conceded that the FTCA does not expressly authorize the court to hear the appeal, the Fifth Circuit reiterated its earlier finding that "[t]he jurisdiction of this Court to review an order of the Federal Trade Commission . . . . arises only from a cease and desist order entered by the Commission." Texaco, Inc. v. FTC, 301 F.2d 662, 663 (5th Cir. 1962) (emphasis added).

However, the LRAEB contended that the court had jurisdiction under the collateral-order doctrine. The U.S. Supreme Court created the collateral-order doctrine in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949). In Cohen, the Court rejected the argument that 28 U.S.C. § 1291, which provides that courts of appeals "shall have jurisdiction of appeals from all final decisions from the district courts," allows appeals only from final judgments. In Cohen, the Court ruled that, when a district court’s decision is final, a court of appeals may undertake review of that decision, even if that decision does not end the litigation. But the Court emphasized that § 1291 only permits review of final decisions; when a district court’s decision is "but steps towards final judgment," the statute does not permit an appeal. Id.

But Cohen only holds that § 1291 permits collateral review of district court decisions, and the issue here was whether the FTCA permits collateral review of the FTC’s decisions, the court observed. The Fifth Circuit held that it did not. The FTCA’s language is narrow, only authorizing the courts of appeals to review "cease and desist" orders. 15 U.S.C. § 45(c). This language was plainly more restrictive than statutes authorizing judicial review of "final decisions," "final agency action," or "an order." Given that Congress expressly limited appellate jurisdiction to review of cease-and-desist orders, the court could not consider the LREAB’s petition for review of the Commission’s denial of its motion to dismiss and granting of the FTC’s motion for partial summary decision.

The appellate court went on to note that other circuits have taken a different approach when considering whether the collateral-order doctrine applies to similarly restrictive statutes. For example, in Rhode Island v. EPA, 378 F.3d 19 (1st Cir. 2004), the First Circuit exercised jurisdiction to hear an appeal of a collateral order rendered under the Clean Water Act. In doing so, the court held that the collateral-order doctrine is "generally applicable" to administrative decisions. The Fifth Circuit declined to adopt the First Circuit’s reasoning. Although the court agreed that the collateral-order doctrine may apply to judicial review of some administrative decisions, it disagreed that courts of appeals may intervene in administrative proceedings as a general matter.

This case is No. 18-60291.

Attorneys: Seth David Greenstein (Constantine Cannon, L.L.P.) for Louisiana Real Estate Appraisers Board. Mark Stephen Hegedus for the FTC.

Companies: Louisiana Real Estate Appraisers Board

MainStory: TopStory Antitrust LouisianaNews MississippiNews TexasNews

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