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In-class Exercise No. 2
In-class Exercise No. 2
In-class Exercise No. 2
In-class Exercise No. 2
In-class Exercise No. 2
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In-class Exercise No. 2

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  • 1. In-class Exercise #2 In response to mounting concerns about unscrupulous telemarketing tactics, Congress enacts the “Fair Marketing Act of 2000” (FMA). The FMA reads as follows: § 1. Findings: The Congress hereby finds: 1. Telemarketing can bring many economic benefits to the nation, but only if properly and fairly conducted. 2. Unscrupulous and unfair telemarketing erodes public confidence in the economic system, with serious effects on national prosperity. 3. Prompt adjudication of claims of unfair telemarketing will encourage private enforcement of the statute. Such prompt adjudication can be best accomplished through the more streamlined procedures available to agency courts. § 2. Goals It is the policy of the Congress of the United States to further public confidence in the economic system, and to ensure national prosperity. § 3. Unfair and Unscrupulous Telemarketing Prohibited: It shall be a violation of federal law for any individual or business entity to propose a business transaction to a stranger over the telephone, if such proposal is conveyed in a misleading, unfair or unscrupulous manner. § 4. Federal Fair Marketing Agency 1. There is hereby created within the existing Federal Trade Commission an office entitled the Federal Fair Marketing Agency (“Agency” or FFMA). The head of the FFMA shall be appointed by the Director of the FTC, and shall serve for a five-year term, and shall be removable by the President before the end of that term only for good cause, or by Congress, via impeachment. 2. The FFMA shall have the authority to promulgate regulations implementing section 2 of the statute. GO ON TO THE NEXT PAGE.
  • 2. 3. The FFMA shall also have the authority to adjudicate claims, whether brought by its own prosecutors or by private parties, that an individual or business entity has violated section 2. FFMA adjudicators, who shall serve for five year terms after which they shall return to their other jobs within the agency, shall not have the power to enforce their own orders. To enforce an order, the party prevailing before the FFMA shall apply to any federal court where venue is proper. The results of such adjudications may be appealed to any federal court where venue is proper. When a federal court reviews an appeal from an FFMA order, or a request to enforce such an order, it shall review the agency’s fact findings under the “weight of the evidence” standard, and shall review its legal conclusions de novo. § 5. Legislative Oversight Congress may overturn any regulation promulgated by the FFMA, upon a majority vote of both the Senate and House of Representatives. Identify and analyze the constitutional issues raised by this statute. You may assume that the head of the FFMA is an “inferior officer” of the United States. END OF EXERCISE
  • 3. ANALYSIS 1. Does the statute include an excessive delegation of legislative power? Congress is prohibited from delegating its legislative power to another branch. The modern rule is that this non-delegation principle is satisfied as long as the statute contains an “intelligible principle” that guides the discretion of the agency. One way to understand this requirement is that statutes must not give agencies excessively broad tools to carry out excessively broad goals. These facts probably do not reveal a violation of the non-delegation principle. Here, the ends are fairly broad – to further public confidence in the economic system, and to ensure national prosperity. But the means the agency has to accomplish those ends are relatively limited: to promulgate regulations implementing the prohibition on misleading, unfair or unscrupulous telemarketing techniques. Just like in Yakus, where Congress had fairly broad goals – to control price inflation during wartime – but gave the agency relatively narrow authority – to promulgate price controls consistent with several guidelines given in the statute – so too here the Congress sufficiently limits the agency’s discretion so as to defeat a non-delegation claim. Compare this statute to that in Schechter: in that case, Congress gave the agency nearly unlimited power (the power to promulgate codes of fair competition, with basically no standards governing what they were to include) in order to achieve an extremely broad goal (to improve the national economy). This statute is clearly more limited, both in its ends and especially in its means. For this reason there is probably no violation of the non-delegation principle. 2. Does the statute unconstitutionally impair the President’s enforcement power? Article II’s grant to the President of “the executive power” and the power “to take care that the laws are faithfully executed” requires that, at least to some degree, the President have control over the selection and the firing of important officials responsible for law execution. The rule from Morrison is that the constitutionality of congressional restrictions on presidential personnel control turns on whether the limitation is of such a nature as to impede the President’s ability to perform his constitutional duty. Hiring Power: The fact that the FFMA is an inferior officer means that there is no constitutional violation in giving the FTC head the power to appoint the FFMA head. Article II specifically allows the appointment of inferior officers to be placed, among other places, in the “heads of departments.” Firing Power: Here, the statutory restrictions on the President’s power to fire do not rise to the level of a constitutional violation of Article II. The job of drafting regulations to implement Congress’ policy can at least arguably be seen as executive in nature, but in Morrison the Supreme Court allowed Congress to limit the President’s authority to remove officers who execute federal law. The Court in Morrison concluded that the “good cause” provision gave the President sufficient control over the special prosecutor
  • 4. to allow the President to carry out his constitutional duty; that same provision exists in this statute. If a prosecutor who is an inferior officer can have his tenure immunized from presidential removal at will, it’s likely that a regulation drafter who is an inferior officer can be similarly immunized. Furthermore, the fact that the FFMA head is an inferior officer, who reports to another federal officer (the head of the FTC), would suggest that there is less reason to expect that the Constitution requires that the President have complete control over the FFMA head’s tenure. If the Constitution allows the courts or agency heads to hire the individual, there’s less reason to think the Constitution requires that the President have the power to fire. 3. Does the statute violate Article III by vesting some judicial power in the hands of non-Article III courts?: Article III specifies that “the judicial power of the United States” resides in Article III courts, which feature judges with life tenure. This issue is implicated here because the agency court judges do not have life tenure. Under CFTC v. Schor, the Court uses a multi-factor balancing test to determine whether an agency adjudication scheme unconstitutionally restricts the power of Article III courts. Those factors include: a. the degree to which the essential attributes of Article III jurisdiction remain in the hands of Article III courts. In Schor the Court considered the following issues to be relevant to this factor: i. Is there significant Article III court review of the agency’s decision? Here, the answer is yes; the standards of review are the same as those in Schor, which the Court found satisfactory. ii. To what extent does the agency court possess the broad-ranging jurisdiction of most Article III courts? Here, the agency court only adjudicates issues arising out of unfair telemarketing claims. That is a limited jurisdiction that again would satisfy Schor. iii. To what extent does the agency court possess the powers normally thought to rest in Article III courts? Here, the agency court does not have the power to enforce its own orders; again, this is significant under Schor’s analysis. b. The nature of the right, as private or public. Because the right is created by government, it is arguably closer to a public right than the right at issue in Schor. Remember that the reparations right created by statute in Schor was unquestionably adjudicable by the CFTC court; the right at issue here is analogous, as being Under the statute, sometimes an individual may bring a claim against another individual; that sort of claim is a bit closer to a classic private right, as compared to a situation where the government is a party to the action, either as a plaintiff or defendant. But the private/public right issue is not
  • 5. dispositive; again, in Schor the right at issue was a classic private right – a common law claim brought by one individual against another – and yet the Court allowed it to be heard in an agency court. c. The reasons Congress had for placing adjudication of this right in the agency court. Here, Congress found that prompt adjudication of such claims would assist in enforcement. For that reason, and given the lack of any facts suggesting Congress was seeking to punish or weaken Article III courts, this factor probably cuts in favor of the agency adjudication scheme. For these reasons, a court would probably uphold the scheme against this type of challenge. 4. Does the statute have an unconstitutional Legislative Veto?: INS v. Chadha struck down all legislative vetoes (with the possible exception of the War Powers Resolution) to the extent that the legislative veto in question attempted to alter the legal rights and duties of individuals outside the legislative branch. This is clearly a legislative veto, in that the reversal of agency regulations it contemplates lacks presentment to the President. Such an action overturning an agency regulation would be legislative in effect, as it would change the legal rights and duties of individuals (e.g., what would have been illegal under the regulation would not be so now). Because Congress is attempting to achieve that legislative effect without presentment to the President, it is unconstitutional.

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