Less than two years after the Supreme Court's decision in SEC v. Jarkesy, the Fifth Circuit has applied the same constitutional logic to the FTC — and the implications are far bigger than one agency.
In Intuit v. FTC, the court vacated a cease-and-desist order against TurboTax's "free" advertising, holding that the FTC's in-house adjudication of deceptive advertising claims violates the separation of powers. The agency that Congress deliberately designed in 1914 to adjudicate cases in-house — with bipartisan structure, Senate-debated architecture, and over a century of practice — just had that design declared unconstitutional in the Fifth Circuit.
In this episode, Gwen and Marc break down:
- Why deceptive advertising under Section 5 shares enough of a "common core" with common law fraud to require an Article III court
- The Fifth Circuit's significant extension of Jarkesy: the private rights analysis follows the claim, not the remedy — meaning even cease-and-desist orders (equitable relief) can trigger the Article III requirement
- Why the FTC's 110-year history of in-house adjudication didn't save it
- The deception/unfairness distinction — and why how the FTC frames a complaint may now be the constitutional question
- The real-world tradeoff: more process for regulated parties means slower, costlier, and fewer enforcement actions for consumers
This decision is binding only in the Fifth Circuit, but it's grounded in Supreme Court precedent — giving any respondent in an FTC administrative proceeding nationwide a roadmap to challenge in-house adjudication of deception claims.
Jarkesy was never just an SEC case. The next domino could be the CFPB, the FDA, or any agency whose enforcement authority traces back to common law wrongs.
Released the day before Tax Day — which, for the record, hasn't actually fallen on April 15th since 2021.
00:00:14 --> 00:00:17 Hello, and welcome to Administrative Remedies,
00:00:17 --> 00:00:19 because you can't fix what you don't understand.
00:00:19 --> 00:00:21 Brought to you in part by the University of Tulsa
00:00:21 --> 00:00:24 College of Law. I'm Gwendolyn Savitz, an associate
00:00:24 --> 00:00:26 professor here at TU and the associate dean of
00:00:26 --> 00:00:28 research and intellectual life. And I'm Mark
00:00:28 --> 00:00:31 Rourke. I'm the dean of the College of Law. We'll
00:00:31 --> 00:00:33 be breaking down complex doctrines with real
00:00:33 --> 00:00:35 -life analogies and examples to demystify the
00:00:35 --> 00:00:37 world of administrative law for everyone trying
00:00:37 --> 00:00:39 to understand how government actually works.
00:00:40 --> 00:00:41 Agencies are the main way the federal government
00:00:41 --> 00:00:44 gets things done. It's not through Congress for
00:00:44 --> 00:00:46 reasons we'll be addressing over the course of
00:00:46 --> 00:00:49 this series. Mark, last time we talked about
00:00:49 --> 00:00:52 jargsy. The SEC case where the Supreme Court
00:00:52 --> 00:00:54 said that securities fraud claims have to go
00:00:54 --> 00:00:57 to federal court with a jury because they're
00:00:57 --> 00:00:59 too close to common law fraud for agency adjudication.
00:00:59 --> 00:01:02 Yeah, the private rights problem. If the underlying
00:01:02 --> 00:01:05 claim looks like something courts handled at
00:01:05 --> 00:01:07 common law, the agency can't adjudicate it in
00:01:07 --> 00:01:11 -house. Yes. So we've seen it applied. And it's
00:01:11 --> 00:01:12 actually the perfect case to be talking about
00:01:12 --> 00:01:16 the day before tax day. On March 20th, the Fifth
00:01:16 --> 00:01:19 Circuit decided to intuit the FTC and vacated
00:01:19 --> 00:01:22 a cease and desist order against TurboTax's advertising.
00:01:23 --> 00:01:26 The court held that the FTC's in -house adjudication
00:01:26 --> 00:01:29 of deceptive advertising claims was unconstitutional
00:01:29 --> 00:01:32 under jargonsy. So Jarkesee jumped from the SEC
00:01:32 --> 00:01:35 now to the FTC. Yes, in less than two years,
00:01:35 --> 00:01:39 and not just to any agency, to the FTC, the agency
00:01:39 --> 00:01:41 we spent an entire episode on in season one,
00:01:41 --> 00:01:43 talking about how Congress deliberately designed
00:01:43 --> 00:01:47 it to adjudicate cases in -house. We talked about
00:01:47 --> 00:01:49 the Senate reports from 1914, the bipartisan
00:01:49 --> 00:01:52 structure, the whole architecture of independent
00:01:52 --> 00:01:55 enforcement. A federal court just said that 110
00:01:55 --> 00:01:58 -year -old design is unconstitutional for deceptive
00:01:58 --> 00:02:00 advertising cases. So that doesn't sound like
00:02:00 --> 00:02:02 a crack of the foundation. That sounds like tearing
00:02:02 --> 00:02:05 down an entire load -bearing wall. It really
00:02:05 --> 00:02:07 is. But before we get into the case, we should
00:02:07 --> 00:02:10 do a quick framework for anyone who's new or
00:02:10 --> 00:02:13 missed the last episode. So when the government
00:02:13 --> 00:02:16 wants to enforce a law, like punish a company
00:02:16 --> 00:02:18 for deceptive advertising, there are two places
00:02:18 --> 00:02:21 it can do it. One is regular federal court with
00:02:21 --> 00:02:24 an independent judge, potentially a jury, formal
00:02:24 --> 00:02:26 rules of evidence. These are called Article III
00:02:26 --> 00:02:28 courts after the part of the Constitution that
00:02:28 --> 00:02:31 creates the federal judiciary. The other option
00:02:31 --> 00:02:33 is in -house. The agency brings the case before
00:02:33 --> 00:02:36 its own administrative law judge, an ALJ who
00:02:36 --> 00:02:39 works for the agency. And the constitutional
00:02:39 --> 00:02:42 question then is which cases can go in -house
00:02:42 --> 00:02:45 and which ones have to go to a real courthouse.
00:02:45 --> 00:02:47 Exactly. So the Supreme Court drew the line using
00:02:47 --> 00:02:50 two categories. Public rights are obligations
00:02:50 --> 00:02:53 the government creates from scratch. Things like
00:02:53 --> 00:02:55 workplace safety standards at specific levels
00:02:55 --> 00:02:59 or tax obligations or licensing requirements.
00:02:59 --> 00:03:02 Those didn't exist at common law. That's the
00:03:02 --> 00:03:05 body of judge -made law that developed over centuries
00:03:05 --> 00:03:07 in English and American courts. Congress invented
00:03:07 --> 00:03:10 those obligations, and Congress can assign them
00:03:10 --> 00:03:12 to agencies to enforce in -house. Private rights
00:03:12 --> 00:03:14 are claims that look like the kind of disputes
00:03:14 --> 00:03:17 courts have always handled. Fraud, property disputes,
00:03:17 --> 00:03:20 breach of contract. These have to go to Article
00:03:20 --> 00:03:22 III courts. That's the framework. The question
00:03:22 --> 00:03:24 is always, which category does this case fall
00:03:24 --> 00:03:28 into? So, the facts here are pretty straightforward.
00:03:29 --> 00:03:32 Intuit sells TurboTax. And they advertised their
00:03:32 --> 00:03:35 product as free, but it wasn't actually free
00:03:35 --> 00:03:37 for most people. The free version only worked
00:03:37 --> 00:03:40 for taxpayers with super simple returns. If you
00:03:40 --> 00:03:42 had student loan interest or freelance income
00:03:42 --> 00:03:45 or you were itemizing deductions, you'd get partway
00:03:45 --> 00:03:47 through your taxes and find out actually you
00:03:47 --> 00:03:49 would need to pay. Yeah, I think a lot of people
00:03:49 --> 00:03:51 have experienced that exact bait and switch.
00:03:51 --> 00:03:54 Yes, the FTC agreed with you. So they initially
00:03:54 --> 00:03:57 went to federal court in 2022 trying to get a
00:03:57 --> 00:04:00 preliminary injunction. The court denied it,
00:04:00 --> 00:04:02 and here's where things started to get interesting.
00:04:02 --> 00:04:05 After losing in federal court, the FTC dropped
00:04:05 --> 00:04:07 the federal case and brought the exact same claims
00:04:07 --> 00:04:11 in -house before its own ALJ. Okay, they forum
00:04:11 --> 00:04:13 shopped then. So they lost in federal court,
00:04:13 --> 00:04:15 and then they moved it into their own tribunal?
00:04:16 --> 00:04:18 Yes, and this is exactly the dynamic we were
00:04:18 --> 00:04:21 talking about in the last episode. The agency
00:04:21 --> 00:04:23 choosing between two forums and potentially picking
00:04:23 --> 00:04:26 one where it's more likely to win. OK, I assume
00:04:26 --> 00:04:28 the second time around, then, they did better.
00:04:28 --> 00:04:32 They did indeed. So in -house, ALJ found that
00:04:32 --> 00:04:34 Intuit's ads were likely to mislead a significant
00:04:34 --> 00:04:37 minority of consumers. The full commission affirmed
00:04:37 --> 00:04:39 and issued a cease and desist order that was
00:04:39 --> 00:04:42 remarkably broad. It prohibited Intuit from advertising
00:04:42 --> 00:04:45 any goods or services as free for the next 20
00:04:45 --> 00:04:48 years unless it met specific requirements. Not
00:04:48 --> 00:04:50 just TurboTax, everything that Intuit sells.
00:04:50 --> 00:04:54 A 20 year order covering all products based on
00:04:54 --> 00:04:57 one advertising claim? Yeah. So Intuit petitioned
00:04:57 --> 00:04:59 the Fifth Circuit for review and the court never
00:04:59 --> 00:05:02 got to whether the advertising was actually deceptive.
00:05:02 --> 00:05:04 It stopped at the threshold that the FTC had
00:05:04 --> 00:05:07 used the wrong form to decide the case. Here,
00:05:07 --> 00:05:09 the court was applying the same private rights
00:05:09 --> 00:05:11 analysis that the Supreme Court used in jargonsy.
00:05:11 --> 00:05:14 The question is whether the FTC's deceptive advertising
00:05:14 --> 00:05:17 claim shows enough of a common core with traditional
00:05:17 --> 00:05:19 common law actions that it had to be adjudicated
00:05:19 --> 00:05:22 in an Article III court. Here's the holding.
00:05:22 --> 00:05:24 Following the Supreme Court's decision in SEC
00:05:24 --> 00:05:28 v. Jargonsy, we hold the adjudication of a deceptive
00:05:28 --> 00:05:30 advertising claim before an administrative law
00:05:30 --> 00:05:32 judge violated the constitutional separation
00:05:32 --> 00:05:36 of powers. We're going to walk through the analysis.
00:05:36 --> 00:05:38 The first question was whether the claim targets
00:05:38 --> 00:05:40 the same basic conduct as a common law cause
00:05:40 --> 00:05:43 of action. The court found that deceptive advertising
00:05:43 --> 00:05:46 under Section 5 targets the same conduct as common
00:05:46 --> 00:05:49 law fraud and deceit, a material false representation
00:05:49 --> 00:05:52 that was likely to mislead. OK, but hold on.
00:05:52 --> 00:05:55 What the FTC was enforcing goes well beyond common
00:05:55 --> 00:05:58 law fraud. At common law, fraud required proof
00:05:58 --> 00:06:01 of an intent to deceive. It required proof that
00:06:01 --> 00:06:03 the victim actually relied on the misrepresentation,
00:06:03 --> 00:06:07 and it required proof of damages. Section 5 requires
00:06:07 --> 00:06:10 none of those things. The FTC just has to show
00:06:10 --> 00:06:13 the practice is likely to mislead. If Congress
00:06:13 --> 00:06:17 deliberately lowered the bar that far, isn't
00:06:17 --> 00:06:20 that creating something new? So it is definitely
00:06:20 --> 00:06:22 a valid argument. It was the argument the FTC
00:06:22 --> 00:06:25 made. But the court's answer was that those were
00:06:25 --> 00:06:27 just modifications to the elements of fraud.
00:06:28 --> 00:06:30 They weren't a transformation of the claim itself.
00:06:31 --> 00:06:33 Lowering the burden of proof or removing a reliance
00:06:33 --> 00:06:36 element didn't change the fundamental nature
00:06:36 --> 00:06:38 of what was being alleged. You lied to people
00:06:38 --> 00:06:40 to try and get their money. The court said that
00:06:40 --> 00:06:43 modifying the common law cause of action or expanding
00:06:43 --> 00:06:46 the remedies available wasn't enough for Congress
00:06:46 --> 00:06:48 to relegate claims of common law pedigree to
00:06:48 --> 00:06:51 adjudication by these non -Article 3 judges.
00:06:52 --> 00:06:54 So then the court is saying, look at the core
00:06:54 --> 00:06:56 of the claim, not the technical modifications
00:06:56 --> 00:06:58 Congress made around the edges. Right. And the
00:06:58 --> 00:07:01 FTC's own complaint made the common law connection
00:07:01 --> 00:07:03 fairly straightforward. The court pointed out
00:07:03 --> 00:07:06 that the complaint used classic terms of art
00:07:06 --> 00:07:08 associated with fraud. So there were references
00:07:08 --> 00:07:11 to Intuit's deceptive business practices, their
00:07:11 --> 00:07:14 false claims, and broad, enduring and willful
00:07:14 --> 00:07:17 deceptive ad campaign. The agency was describing
00:07:17 --> 00:07:19 fraud. It just didn't want the constitutional
00:07:19 --> 00:07:23 consequences of calling it fraud. Okay, but what
00:07:23 --> 00:07:25 about the Atlas roofing distinction? OSHA can
00:07:25 --> 00:07:29 still adjudicate in -house. Yes, and the court
00:07:29 --> 00:07:31 drew that line explicitly. Here's what it said.
00:07:31 --> 00:07:34 Okay, the court said a blanket prohibition on
00:07:34 --> 00:07:37 unfair deceptive acts or practices does not remotely
00:07:37 --> 00:07:41 resemble a detailed building code like the workplace
00:07:41 --> 00:07:44 safety standards promulgated under the Occupational
00:07:44 --> 00:07:48 Safety and Health Act. So that's the key distinction.
00:07:48 --> 00:07:51 They said that OSHA created specific novel regulatory
00:07:51 --> 00:07:54 requirements, workplace safety standards at particular
00:07:54 --> 00:07:57 levels that just didn't exist at common law.
00:07:57 --> 00:07:59 The duty not to deceive people when selling them
00:07:59 --> 00:08:02 things, that's been actionable since before the
00:08:02 --> 00:08:05 Constitution was written. The FTC Act didn't
00:08:05 --> 00:08:07 create a new obligation. It gave a government
00:08:07 --> 00:08:10 agency authority to enforce an old one. Okay.
00:08:10 --> 00:08:13 But here's what I want to understand. Jerkacy
00:08:13 --> 00:08:16 was about civil penalties, money the SEC was
00:08:16 --> 00:08:17 trying to take from Jerkacy as a punishment.
00:08:18 --> 00:08:21 The FTC wasn't seeking civil penalties here.
00:08:21 --> 00:08:24 It was seeking a cease and desist order, a stop
00:08:24 --> 00:08:27 doing this. That's an equitable remedy, not a
00:08:27 --> 00:08:29 legal one. How does the Seventh Amendment jury
00:08:29 --> 00:08:33 trial right apply to an equitable remedy? So
00:08:33 --> 00:08:35 that's the important extension they're doing
00:08:35 --> 00:08:37 here. Here is what the court said about this
00:08:37 --> 00:08:41 in a footnote. Most cases concerning the private
00:08:41 --> 00:08:43 -public rights distinction involve claims that
00:08:43 --> 00:08:45 might have traditionally sounded at common law
00:08:45 --> 00:08:49 rather than at equity. Because Article 3 expressly
00:08:49 --> 00:08:51 confers exclusive jurisdiction on federal courts
00:08:51 --> 00:08:54 over cases that sound in law and equity, any
00:08:54 --> 00:08:57 distinction would only become relevant if Intuit
00:08:57 --> 00:08:59 claimed a right to a jury trial under the Seventh
00:08:59 --> 00:09:02 Amendment. So the court was saying Article 3
00:09:02 --> 00:09:04 here isn't just about law, it's about law and
00:09:04 --> 00:09:07 equity. So the private rights analysis doesn't
00:09:07 --> 00:09:09 stop at the remedy. It's going to follow the
00:09:09 --> 00:09:12 claim. Even though a cease and desist order looks
00:09:12 --> 00:09:14 like an injunction, the underlying claim is still
00:09:14 --> 00:09:16 a private right if it shares a common core with
00:09:16 --> 00:09:19 common law fraud. So the court is saying Jarkese's
00:09:19 --> 00:09:22 logic isn't limited to cases where the agency
00:09:22 --> 00:09:25 seeks money damages, then? Right. It says if
00:09:25 --> 00:09:27 the claim itself involves private rights, the
00:09:27 --> 00:09:30 form has to be an Article III court. It doesn't
00:09:30 --> 00:09:31 matter whether the remedy that the agency is
00:09:31 --> 00:09:35 seeking is legal or equitable. And that's a significant
00:09:35 --> 00:09:38 expansion. Under Jarcusy alone, an agency might
00:09:38 --> 00:09:40 have argued, we're not seeking civil penalties.
00:09:40 --> 00:09:42 We just want an injunction so the Seventh Amendment
00:09:42 --> 00:09:45 doesn't apply. The Fifth Circuit closed that
00:09:45 --> 00:09:47 door. Which means the private rights analysis
00:09:47 --> 00:09:50 controls the forum question independent of the
00:09:50 --> 00:09:53 remedy. Yes, and the implications here are significant.
00:09:53 --> 00:09:56 A lot of agency enforcement actions are seeking
00:09:56 --> 00:09:59 equitable relief, like cease and desist orders
00:09:59 --> 00:10:01 and injunctions and compliance requirements.
00:10:02 --> 00:10:04 If the underlying claims share a common core
00:10:04 --> 00:10:06 with a common law action, the agency may not
00:10:06 --> 00:10:09 be able to adjudicate it in -house even when
00:10:09 --> 00:10:11 it's only seeking equitable relief. That is a
00:10:11 --> 00:10:13 much bigger universe of cases than when jargsy
00:10:13 --> 00:10:16 alone was decided. We're going to spend a little
00:10:16 --> 00:10:18 bit of time on the FTC's strongest argument because
00:10:18 --> 00:10:20 it connects directly to what we covered in Season
00:10:20 --> 00:10:24 1. The FTC argued that Congress authorized in
00:10:24 --> 00:10:27 -house adjudication for this agency in 1914.
00:10:27 --> 00:10:31 That was more than 110 years ago. that this isn't
00:10:31 --> 00:10:33 some recent expansion of power. It's the original
00:10:33 --> 00:10:36 design. And we read the legislative history last
00:10:36 --> 00:10:39 season. The Senate reports were explicit. Congress
00:10:39 --> 00:10:41 wanted an independent bipartisan body with the
00:10:41 --> 00:10:44 prestige and permanence to adjudicate impartially.
00:10:45 --> 00:10:48 In -house adjudicative authority wasn't an afterthought.
00:10:48 --> 00:10:51 It was the whole point of creating the FTC. Yeah,
00:10:51 --> 00:10:53 they were deliberately constructing an agency
00:10:53 --> 00:10:55 that could investigate and decide cases independently
00:10:55 --> 00:10:58 of political pressure. The in -house enforcement
00:10:58 --> 00:11:01 model wasn't a modern overreach. It was the founding
00:11:01 --> 00:11:03 architecture of one of the oldest independent
00:11:03 --> 00:11:06 agencies in the country. Okay, so what did the
00:11:06 --> 00:11:08 court say to that? Well, they just quoted jargonsy
00:11:08 --> 00:11:12 here. It's unclear how practice could transmute
00:11:12 --> 00:11:14 a private right into a public one, and practical
00:11:14 --> 00:11:17 considerations alone cannot justify extending
00:11:17 --> 00:11:19 the scope of the public rights exception. So
00:11:19 --> 00:11:21 just because the FTC has been doing this for
00:11:21 --> 00:11:24 110 years doesn't make it constitutional. The
00:11:24 --> 00:11:26 length of the practice doesn't change the nature
00:11:26 --> 00:11:30 of the right. That's a remarkable position. The
00:11:30 --> 00:11:32 court is saying Congress got the constitutional
00:11:32 --> 00:11:36 analysis wrong in 1914. And every Congress since
00:11:36 --> 00:11:39 then that left the system in place also got it
00:11:39 --> 00:11:42 wrong. And every court that upheld the FTC adjudication
00:11:42 --> 00:11:45 over the last century was working from the wrong
00:11:45 --> 00:11:49 framework. Right. So the Fifth Circuit. did talk
00:11:49 --> 00:11:52 about these prior decisions. It said earlier
00:11:52 --> 00:11:54 circuit court opinions upholding this didn't
00:11:54 --> 00:11:56 analyze the issues through the public rights,
00:11:56 --> 00:11:59 private rights framework. And jargsy is only
00:11:59 --> 00:12:03 now bringing that to everyone's attention. File
00:12:03 --> 00:12:06 this under the how to win friends and influence
00:12:06 --> 00:12:10 people argument of the Fifth Circuit. Jargsy
00:12:10 --> 00:12:14 decides to undermine an entire century of precedent.
00:12:14 --> 00:12:17 Yes. And the court also pointed something that's.
00:12:17 --> 00:12:20 Pretty significant. The FTC did already have
00:12:20 --> 00:12:23 the authority to go to federal court. Since the
00:12:23 --> 00:12:25 1970s, they've been able to seek preliminary
00:12:25 --> 00:12:28 and permanent injunctions in federal court. This
00:12:28 --> 00:12:30 isn't a case where they're taking away the only
00:12:30 --> 00:12:33 possible option and leaving the agency with no
00:12:33 --> 00:12:35 enforcement mechanism. They can still pursue
00:12:35 --> 00:12:37 deceptive advertising. They just have to do it
00:12:37 --> 00:12:40 in a real courthouse. But that's a fundamentally
00:12:40 --> 00:12:43 different kind of enforcement. It is. And that's
00:12:43 --> 00:12:46 why this matters beyond the legal doctrine. OK.
00:12:47 --> 00:12:50 So then what's left? Can the FTC adjudicate anything
00:12:50 --> 00:12:53 in -house? The court was careful to confine its
00:12:53 --> 00:12:55 holdings to deceptive advertising claims under
00:12:55 --> 00:12:58 Section 5. It didn't explicitly address whether
00:12:58 --> 00:13:00 other types of Section 5 enforcement would face
00:13:00 --> 00:13:03 the same problem. Okay, what's the key distinction
00:13:03 --> 00:13:06 here then? Section 5 prohibits both deceptive
00:13:06 --> 00:13:09 and unfair acts or practices. Deception maps
00:13:09 --> 00:13:12 onto fraud. That's what the court found. But
00:13:12 --> 00:13:15 unfairness is defined as practices causing substantial,
00:13:15 --> 00:13:17 unavoidable consumer injury not outweighed by
00:13:17 --> 00:13:20 benefits. And that's arguably a modern regulatory
00:13:20 --> 00:13:23 construct without a direct common law ancestor.
00:13:24 --> 00:13:26 OK, can you give me a concrete example of this?
00:13:26 --> 00:13:28 Yeah, it would certainly seem necessary after
00:13:28 --> 00:13:30 that kind of definition. So let's talk about
00:13:30 --> 00:13:33 data security. The FTC has brought enforcement
00:13:33 --> 00:13:35 actions against companies for failing to protect
00:13:35 --> 00:13:38 customer data, saying that there was inadequate
00:13:38 --> 00:13:41 encryption or poor password policies or sloppy
00:13:41 --> 00:13:44 data handling. So when the FTC brings these cases
00:13:44 --> 00:13:47 as unfairness cases, The company's practice caused
00:13:47 --> 00:13:49 substantial injury to consumers. There's still
00:13:49 --> 00:13:52 an argument that this is a genuinely modern regulatory
00:13:52 --> 00:13:55 obligation that doesn't have any corresponding
00:13:55 --> 00:13:59 common law analogy. OK, but what if the FTC frames
00:13:59 --> 00:14:02 it as a deception? If the company told customers
00:14:02 --> 00:14:05 in its privacy policy that it would protect their
00:14:05 --> 00:14:07 data and then it didn't? Now it starts to look
00:14:07 --> 00:14:09 like fraud again. You made a representation.
00:14:09 --> 00:14:13 It was false. Consumers relied on it. Same conduct,
00:14:13 --> 00:14:15 different legal theory and potentially different.
00:14:15 --> 00:14:18 constitutional answer. After Intuit, expect the
00:14:18 --> 00:14:20 FTC to think very carefully about how it's framing
00:14:20 --> 00:14:24 each case. Unfairness claims may survive in -house
00:14:24 --> 00:14:27 adjudication, and deception claims probably won't.
00:14:27 --> 00:14:30 So the framing of the complaint becomes the constitutional
00:14:30 --> 00:14:33 question. Yes. And outside the Fifth Circuit,
00:14:33 --> 00:14:36 this is still open. This ruling is only binding
00:14:36 --> 00:14:39 in Texas, Louisiana, and Mississippi. But because
00:14:39 --> 00:14:41 it's grounded in Supreme Court precedent, it's
00:14:41 --> 00:14:43 going to be persuasive everywhere. Any respondent
00:14:43 --> 00:14:45 in an FTC administrative proceeding anywhere
00:14:45 --> 00:14:48 in the country now has a roadmap for challenging
00:14:48 --> 00:14:50 any in -house adjudication of deception claims.
00:14:51 --> 00:14:54 And this will likely alter the strategy that
00:14:54 --> 00:14:55 the agency adopts through the whole country.
00:14:55 --> 00:14:58 Here's what most people won't realize about this
00:14:58 --> 00:15:00 decision. It may actually make it harder for
00:15:00 --> 00:15:02 the government to protect you from deceptive
00:15:02 --> 00:15:05 advertising. And that can seem quite backward.
00:15:05 --> 00:15:07 I mean, since we've been talking about constitutional
00:15:07 --> 00:15:09 rights. Yes. So we've been talking about rights
00:15:09 --> 00:15:11 and the rights are real, like the right to an
00:15:11 --> 00:15:13 Article 3 judge. and the structural protections
00:15:13 --> 00:15:16 of an independent court. And those matter, but
00:15:16 --> 00:15:19 think about what's happening on the ground. The
00:15:19 --> 00:15:21 FTC's in -house adjudication system was designed
00:15:21 --> 00:15:23 to be faster and cheaper than federal court.
00:15:23 --> 00:15:25 An administrative proceeding could be initiated,
00:15:26 --> 00:15:28 heard, and decided in a fraction of the time
00:15:28 --> 00:15:30 and a fraction of the cost of a federal lawsuit.
00:15:31 --> 00:15:33 So that speed meant that the FTC could pursue
00:15:33 --> 00:15:36 more cases, including cases against smaller companies
00:15:36 --> 00:15:39 engaged in clearly deceptive practices. And in
00:15:39 --> 00:15:42 federal court? So federal litigation is expensive.
00:15:42 --> 00:15:44 We have full discovery. We have jury trials.
00:15:44 --> 00:15:46 We can have proceedings that go on for years.
00:15:46 --> 00:15:50 The FTC has a limited enforcement budget. Every
00:15:50 --> 00:15:52 case that has to go to federal court costs more
00:15:52 --> 00:15:54 and takes longer. And that means fewer total
00:15:54 --> 00:15:57 enforcement actions. Some cases that were worth
00:15:57 --> 00:15:59 pursuing in -house won't be worth the cost and
00:15:59 --> 00:16:02 uncertainty of federal litigation. So the company
00:16:02 --> 00:16:04 that ran the deceptive ad campaign... Still ran
00:16:04 --> 00:16:06 it, still deceived people, but the government's
00:16:06 --> 00:16:08 ability to hold them accountable just got slower,
00:16:09 --> 00:16:11 more expensive, and less certain. The constitutional
00:16:11 --> 00:16:13 protection runs in favor of the company being
00:16:13 --> 00:16:16 investigated, not the consumers who were misled.
00:16:17 --> 00:16:20 So that is a real trade -off. It is, and it's
00:16:20 --> 00:16:22 the same trade -off that runs through everything
00:16:22 --> 00:16:24 we've been covering. More process for the regulated
00:16:24 --> 00:16:26 party, it also means less efficient enforcement.
00:16:27 --> 00:16:29 People who hear federal agency loses enforcement
00:16:29 --> 00:16:32 power. And cheer about that might feel differently
00:16:32 --> 00:16:34 when it's their misleading product experience
00:16:34 --> 00:16:36 that the FTC decides isn't worth the cost of
00:16:36 --> 00:16:40 investigating. So let's step back and take a
00:16:40 --> 00:16:42 look at the pattern, because this connects to
00:16:42 --> 00:16:43 a lot of what we've covered across both seasons.
00:16:44 --> 00:16:47 All right, let's do it. Okay, so in season one,
00:16:47 --> 00:16:49 we talked about the court limiting what agencies
00:16:49 --> 00:16:52 can do substantively. The major questions doctrine,
00:16:52 --> 00:16:55 Loper Bright, killing Chevron, corner post, opening
00:16:55 --> 00:16:58 old regulations to challenge. Now in season two,
00:16:59 --> 00:17:01 we're seeing limits on how agencies adjudicate.
00:17:01 --> 00:17:04 Jarkesee said the SEC can't try fraud cases in
00:17:04 --> 00:17:07 -house. Intuit says the FTC can't try deceptive
00:17:07 --> 00:17:10 advertising in -house. The removal power cases
00:17:10 --> 00:17:13 are challenging whether agency heads can be independent
00:17:13 --> 00:17:16 from the president. It all seems to be converging.
00:17:16 --> 00:17:19 It is. What's connecting all this is the court's
00:17:19 --> 00:17:22 major skepticism about agency power. And it's
00:17:22 --> 00:17:24 operating across multiple constitutional provisions
00:17:24 --> 00:17:28 simultaneously. Article 1, that Congress can't
00:17:28 --> 00:17:30 delegate too broadly. Article 2, that the president
00:17:30 --> 00:17:33 must control the people executing the laws. Article
00:17:33 --> 00:17:36 3, that agencies can't adjudicate claims that
00:17:36 --> 00:17:38 belong in court. And the Seventh Amendment, you
00:17:38 --> 00:17:40 have a right to a jury trial for certain claims.
00:17:40 --> 00:17:43 Each doctrine is doing its own work, but the
00:17:43 --> 00:17:45 cumulative effect is a substantial rebalancing
00:17:45 --> 00:17:47 of power away from agencies and towards other
00:17:47 --> 00:17:51 branches. And the Sotomayor dissent and jargony
00:17:51 --> 00:17:54 warned about exactly this. Yes. She said the
00:17:54 --> 00:17:57 majority's reasoning imperils a vast swath of
00:17:57 --> 00:17:59 the administrative state. Less than two years
00:17:59 --> 00:18:02 later, the FTC's main enforcement model, a model
00:18:02 --> 00:18:05 that has existed since 1914 and that Congress
00:18:05 --> 00:18:07 deliberately designed with in -house adjudication.
00:18:08 --> 00:18:11 is being dismantled in the Fifth Circuit. It's
00:18:11 --> 00:18:13 happening and it's happening fast. So jargsy
00:18:13 --> 00:18:16 isn't just an SEC case anymore. It was never
00:18:16 --> 00:18:19 just an SEC case. The logic was always going
00:18:19 --> 00:18:21 to be a lot bigger than that. The question was
00:18:21 --> 00:18:23 how quickly it would spread and how far it would
00:18:23 --> 00:18:26 reach. And now we know. It's been less than two
00:18:26 --> 00:18:28 years and it's already reshaping how one of the
00:18:28 --> 00:18:30 oldest independent agencies in the country can
00:18:30 --> 00:18:34 enforce the law. And the next domino? It could
00:18:34 --> 00:18:37 be any agency whose enforcement authority traces
00:18:37 --> 00:18:40 back to common law wrongs. The CFPB's consumer
00:18:40 --> 00:18:42 protection enforcement overlaps significantly
00:18:42 --> 00:18:45 with fraud. The FDA's misbranding cases also
00:18:45 --> 00:18:47 look a lot like deceptive labeling at common
00:18:47 --> 00:18:50 law. Every agency with enforcement power is going
00:18:50 --> 00:18:52 to have to ask, does our claim share a common
00:18:52 --> 00:18:54 law core with something courts used to handle?
00:18:54 --> 00:18:57 And if the answer is yes, Intuit says you may
00:18:57 --> 00:18:59 need to take it to federal court. We'll be watching
00:18:59 --> 00:19:01 this as it develops. We interrupted the regular
00:19:01 --> 00:19:03 season because we didn't really feel like this
00:19:03 --> 00:19:05 could wait. This decision is a couple weeks old,
00:19:05 --> 00:19:08 and the implications are still unfolding. But
00:19:08 --> 00:19:10 we will be back next episode with our regular
00:19:10 --> 00:19:14 season arc on adjudication. Okay, that's it for
00:19:14 --> 00:19:16 the main substantive part of administrative remedies
00:19:16 --> 00:19:18 today. But, Savitz, I got another question for
00:19:18 --> 00:19:22 you. Yeah. Okay, so tax day is tomorrow, April
00:19:22 --> 00:19:26 15th. Yes. Do you know when the last time the
00:19:26 --> 00:19:29 IRS deadline was on April 15th to pay your taxes?
00:19:30 --> 00:19:34 Last year? No. Last year, the deadline was on
00:19:34 --> 00:19:37 April 18th. The last time the deadline was April
00:19:37 --> 00:19:41 15th was actually 2021. Because every year since
00:19:41 --> 00:19:44 then, April 15th has either been on a Friday,
00:19:44 --> 00:19:48 a Saturday, or a Monday in which the IRS, typically
00:19:48 --> 00:19:51 by practice, extends the deadline by a day. All
00:19:51 --> 00:19:53 right. Yeah. Interesting to know. All right.
00:19:53 --> 00:19:56 Okay. I don't know why I know this. I don't know
00:19:56 --> 00:19:58 why you know this either. Off the top of my head.
00:19:59 --> 00:20:01 So that does it for today's episode on administrative
00:20:01 --> 00:20:04 remedies. Thank you for joining us today. Please,
00:20:04 --> 00:20:07 if you enjoy this podcast, enjoy this episode,
00:20:07 --> 00:20:11 give us a like on Spotify, iTunes, or whatever
00:20:11 --> 00:20:13 platform you're listening on. And be sure to
00:20:13 --> 00:20:15 tune in next time where we'll continue to dive
00:20:15 --> 00:20:17 into the contours of administrative law, because
00:20:17 --> 00:20:20 remember, you can't fix what you don't understand.