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Louisiana Real Estate Appraisers Board v. United States Federal Trade Commission

United States District Court, M.D. Louisiana

July 29, 2019




         Before the Court is Petitioner's Motion to Stay Administrative Proceedings (Doc. 9-1 at p. 1). Defendants oppose this motion. (Doc. 23-2). Oral argument is not required. For the reasons stated herein, Petitioner's motion is GRANTED.

         I. BACKGROUND

         This matter arises from allegations that the United States Federal Trade Commission ("FTC" or "Defendant") is unlawfully attempting to force the Louisiana Real Estate Appraisers Board ("Board" or "Petitioner") to undergo federal antitrust enforcement proceedings. (Doc. 1 at ¶ 1). The Board is a state governmental regulatory agency empowered to regulate appraisal management companies which secure appraisals that support residential mortgage transactions. See La. Stat. Ann. § 37:3394, et seq. (Doc. 9-1 at p. 3). The Board is also empowered to collect "customary and reasonable" fees for the agents of mortgage lenders. (Id.).

         On or about May 30, 2017, the FTC filed an administrative complaint against the Board, alleging that setting certain "customary and reasonable" fees for mortgage lenders' agents violated certain federal antitrust rules (Doc. 1 at par. 4). In particular, the FTC alleges that the Board is controlled by active market participants, not the state, and that the manner in which fees are set amounts to unlawful price fixing. (Doc. 1 at ¶ 4). In response to the complaint, the Governor's Office issued Executive Order 17-16, which re-promulgated the manner in which fees are fixed.[1] The Board moved for a dismissal of the administrative complaint based on its assertation that the alleged impropriety identified by the FTC had been rectified. (Id.). The Board claimed that all branches of Louisiana government accepted a supervisory role and "political accountability" for the alleged anti-competitive practices cited by the FTC, as required under N.C. S. Bd. of Dental Exam'rs v FTC, 135 S.Ct. 1101, 1111 (2015), and that it is therefore entitled to be relieved from participation in the administrative proceedings on the basis of the "state-action immunity" defense. (Doc. 1 at ¶ 5). State-action immunity from suit is applicable when a state establishes that anticompetitive conduct is created, overseen, and guided by the state, without the influence or control of parties who have not been conferred regulatory powers by the state. F.T.C. v. Phoebe Putney Health Sys., Inc., 568 U.S. 216, 225 (2013). To qualify for state-action immunity, a state must establish that the anticompetitive act is a clearly articulated state policy, and that such activity is actively supervised by the state.[2] (Id.).

         On April 10, 2018, the FTC issued an order ("FTC Order") rejecting the Board's state-action immunity defense. (Id. at ¶ 6). The Board then filed a lawsuit requesting that the Court set aside the FTC Order on the grounds that it was issued in an arbitrary and capricious manner. (Id. at ¶ 9).

         Initially, the Board filed a petition for review of the FTC Order before the United States Court of Appeals for the Fifth Circuit, claiming that the FTC Order was an appealable collateral order under the FTC Act.[3] (Doc. 9-1 at p. 14). The Fifth Circuit granted the Board's request to stay administrative proceedings pending appellate review, but ultimately found that the FTC Act did not allow direct appeals from collateral orders. (Id.). The Fifth Circuit opined that the "final agency action" language of the Administrative Procedure Act ("APA")[4] may allow a district court to review the FTC Order prior to the final administrative adjudication of the action. Louisiana Real Estate Appraisers Bd. v. Fed. Trade Comm'n, 917 F.3d 389, n.3 (5th Cir. 2019). Following the Fifth Circuit ruling, the Board moved for rehearing en banc, and urged the FTC to stay its administrative proceeding pending a resolution of the petition. (Doc 9-1 at p. 14.). The Fifth Circuit denied rehearing, and the FTC denied Petitioner's request to stay the administrative proceedings. (Id.). The Board now seeks relief under the APA to stay the FTC administrative proceedings until such time as this Court completes a review of the merits of the FTC Order. (Doc. 1).


         A. Jurisdiction

         The Code of Federal Regulations gives the FTC and a court of competent jurisdiction the power to stay an administrative proceeding. 16 C.F.R. § 3.41 (f)(1)(i). Additionally, Section 705 of the APA allows a reviewing court to "issue all necessary and appropriate process to postpone the effective date of an agency action or to preserve status or rights pending conclusion of the review proceedings." 5 U.S.C. §705.

         The Supreme Court of the United States found that the term "court of competent jurisdiction" is any state or federal court already endowed with subject-matter jurisdiction over the suit. "Lightfoot v. Cendant Mortg. Corp., 137 S.Ct. 553, 561 (2017).

         B. Administrative Procedure Act

         The APA provides:

[a]gency action[s] made reviewable by statute[, ] and final agency aetion[s] for which there is no other adequate remedy in a court[, ] are subject to judicial review. A preliminary, procedural, or intermediate agency action or ruling not directly reviewable is subject to review [only] on the review of the final agency action. 5 U.S.C. § 704.

         Thus, under normal circumstances, agency actions are only reviewable at such time as the ...

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