Consumers v. FTC

Consumers v. FTC

Opinion

MEMORANDUM OPINION

In 2016, the Federal Trade Commission ("FTC") pursued enforcement actions against six large car manufacturers/dealerships related to certain marketing practices that those dealers employed with respect to "Certified Pre-Owned" vehicles that are subject to outstanding National Highway Traffic Safety Administration ("NHTSA") safety recalls. The FTC and the dealers settled the claims by entering into six separate consent orders, each of which prohibited the subject dealer from "[r]epresent[ing] that used motor vehicles . . . are safe, have been repaired for safety issues, [*2]  or have been subject to a rigorous inspection" if said motor vehicle is "subject to any open recalls relating to safety," unless the subject dealer "discloses, clearly and conspicuously, and in close proximity to such representation, any qualifying information related to open recalls" concerning the vehicle, and the advertisement is not otherwise misleading. Gen. Motors LLC, Decision & Order, FTC Matter No. 152 3101 (Dec. 8, 2016) ¶ I.A ("GM Consent Order").¹ Plaintiffs Consumers for Auto Reliability and Safety ("CARS"), the Center for Auto Safety, and U.S. Public Interest Research Group ("U.S. PIRG") (collectively, "Plaintiffs") are consumer advocacy organizations that believe that cars that have outstanding recalls are not, in fact, safe, and that the FTC should not have permitted dealers to advertise cars in the manner provided for in the Consent Orders. Accordingly, Plaintiffs have filed a complaint that alleges that the Consent Orders both violate the Administrative Procedure Act ("APA"), 5 U.S.C. § 551, et seq., and authorize advertisements that are impermissibly deceptive in violation of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 45(a)(1), and FTC regulations. (See Am. Compl., ECF. No 7, ¶¶ 65-67.)

Before this Court at present is the [*3]  FTC's motion to dismiss Plaintiffs' pleading. (See FTC's Mot. to Dismiss ("FTC's Mot."), ECF No. 17.) As relevant here, the FTC argues, first and foremost, that this Court lacks subject-matter jurisdiction over Plaintiffs' complaint both because Congress has vested the courts of appeal with "exclusive jurisdiction over FTC adjudicatory orders[,]" and also because Plaintiffs lack Article III standing to challenge the Consent Orders, given that the Consent Orders do not injure Plaintiffs in any way and any relief that could result from this litigation is entirely speculative. (See Mem. in Supp. of FTC's Mot. ("FTC's Mem."), ECF No. 17-1, at 9, 11-14.)² The FTC further asserts that the Consent Orders are exempt from APA review. (See id. at 14-17.) Plaintiffs respond that there is no jurisdictional impediment to this Court's review of their challenge to the Consent Orders—which is brought under the APA and not under the FTC Act itself—and they steadfastly maintain that their members have an injury in fact that is traceable to the FTC's entry of these Consent Orders and that can be redressed if the Court rules in their favor.

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