1935 SCOTUS Decision Forecloses Meta’s Unconstitutionality Claim, Says FTC

Meta’s claim that the removal protections of FTC commissioners are unconstitutional is “foreclosed” by the U.S. Supreme Court’s 1935 decision in Humphrey’s Executor v. U.S., according to the FTC’s response Thursday (docket 1:23-cv-03562) in U.S. District Court for the District of Columbia to Meta’s Jan. 25 sur-reply in opposition to the commission’s motion to dismiss.

Meta’s complaint seeks to block the FTC from modifying its 2020 privacy consent order with new restrictions on Meta’s business activities (see 2311300039). In addition, Meta is asking that the court declare “fundamental aspects” of the FTC’s structure violate the Constitution. Those violations “render unlawful” the FTC’s proceeding against Meta, the company said.

Should the court agree with the FTC on its primary foreclosure argument, “it need not address the severability argument in Meta’s sur-reply,” said the commission’s response. But if the court reaches severability, it should sever the commissioners’ removal protections “rather than certain enforcement powers given by Congress to the FTC,” it said. That would be consistent with SCOTUS case law, and also with “longstanding severability principles that courts should limit the solution to the problem and do the least damage possible to Congress’s enactments,” it said.

Meta’s complaint argues that FTC commissioners exercise executive authority while being unconstitutionally insulated from presidential removal. Under the FTC Act, a president can remove a commissioner only “for inefficiency, neglect of duty, or malfeasance in office.”

After taking office in 1933, President Franklin Roosevelt tried to have William Humphrey, whom President Calvin Coolidge appointed to the FTC, removed for political reasons. SCOTUS ruled the president wasn’t permitted to do so without cause. Humphrey died a year before the SCOTUS decision. An executor from his estate pursued the case in Humphrey's name.

Courts repeatedly rejected arguments that Humphrey’s Executor “no longer applies to the FTC or similar agencies,” said the commission’s response. The 5th Circuit has done so twice in the past two months. In Illumina v. FTC, it rejected an argument, like Meta’s, that the FTC’s post-1935 enforcement powers rendered the commissioners’ removal protections unconstitutional, it said. In Consumers’ Research v. Consumer Product Safety Commission, “it rejected a similar argument related to the CPSC,” it said. Those decisions “expressly declined” to revisit Humphrey’s Executor, it said.

That suggests the 5th Circuit intended for Congress and the lower courts to continue treating Humphrey’s Executor “as good law for multimember agencies exercising enforcement powers, like the FTC,” said the commission’s response. Based on those authorities, the D.C. district court “should dismiss Meta’s removal claim, rendering it unnecessary to reach severability,” it said.

Should the D.C. district court reach severability, it should sever the commissioners’ removal protections and “not the FTC’s enforcement powers,” said the response. Like its removal claim generally, Meta’s approach to severability “goes against Supreme Court precedent,” it said.

The 2010 SCOTUS decision in Free Enterprise Fund v. Public Company Accounting Oversight Board is one of the most “analogous severability cases,” said the response. In that decision, the court “severed the officers’ removal protections, but left intact the officers’ authority to act,” it said. Lower courts have concluded that, should there be a problem with the commissioners’ removal protections, “severing that provision would be the appropriate remedy, not stripping the FTC of its ability to bring enforcement cases,” it said.