Administrative Law

Professor Raful
Student ID# 71334
11/05/2015

The main issue that Gregs Gadgets must raise is whether ex

parte communications between a member of the opposing
counsel and the presiding officers violated 554, 556, and 557 of
the APA.
In short, the rule depicted in 554 (d) and 557 (d)(1) of the
APA require that Presiding officers cannot have ex parte
communications. Citizens Awareness Network v. United States,
391 F.3d 338 (1st Cir. 2004). More specifically, 557 (d)(1)
subsections (A) through (E) go into detail explaining the multiple
forms of prohibited contact between parties, members of the
agency, administrative law judges, and members of the body
comprising the agency with people outside of the agency.
In the present case, Gregs Gadgets is challenging the
Commissions decision based upon the communications between
the staff lawyers and the Commissioners. Gregs Gadgets
argument should be focused on the fact that an ex parte
communication took place between the staff lawyers and the

presiding officers, the Commissioners. The staff lawyers handling

the cases sent several memos to the Commissioners and the
memos discussed various legal and factual aspects of the case
against Walts Widgets. The memos also discussed, and
presumably presented a one sided argument, about the basis for
the staffs settlement recommendation. This applies directly to
Gregs Gadgets because the legal and factual issues were either
the same as, or comparable to, the issues in the case against
Gregs Gadgets. The fact that they were identical cases was the
basis by which the cases were consolidated together for
adjudication. This type of communication between the
Commission and the staff lawyers does not actually appear to be
in violation of 557 since the ex parte contact is within the
agency. However, it still is in violation of 554, which governs the
contact between employees presiding over the proceedings who
are under direct supervision of the Commission.
Section 554 further requires that an employee who is
presiding over the adjudication cannot consult a person or party
on a fact in issue, unless on notice and opportunity for all parties
to participate. Gregs Gadgets main opposition to the

Commissions ruling is that there was ex parte communication

between presiding officers and staff lawyers involved in
prosecuting functions for the agency. This not only is in violation
of the principles of 557, but is in direct violation of 554
because the action failed to give notice and opportunity for all
parties to participate, specifically Gregs Gadgets.
While the ex parte communication appears to be a blatant
violation of the APA, there is an exception noted in the rules. This
exception is referred to in both 554 and 557. It is stated in
554 (d)(2)(C): An employee or agent engaged in the performance
of investigative or prosecuting function for an agency in a case
may not participate or advise in the decision, recommended
decision, or agency review pursuant to section 557 of this title,
except as witness or counsel in public proceedings. This
subsection does not apply-(Subsection C) to the agency or a
member or members of the body comprising the agency. This
seems to imply that as long as the communication is within the
agency or members comprising the agency, then it is ok.

In 557 (C)-(E) the APA rules suggest that if this violation of

ex parte communication occurs, as long as this communication is
on the record, and the opposing party has an opportunity to
comment on such communication, then the communication does
not necessarily offend traditional notions of justice.
In Home Box Office, Inc v. F.C.C, the DC Circuit took a strong
stance against ex parte communication with the FCC and made
several points concerning private communications serving
contrary to the interests of justice. 567 F.2d 9 (D.C. Cir. 1977).
The court pointed out that information in agency files or
consultants reports which the agency has identified as relevant
information to the proceeding be disclosed to the parties for
adversarial comment. Home Box Office, 567 F.2d 11. The court
was clear in its opposition to ex parte proceedings and that the
APA, and administrative law in general, was inherently opposed to
the idea of private communications influencing agency
rulemaking.
The case of Garys Gadgets is distinguishable to Home Box
Office because the FCC in that case was involved in rulemaking

and the FTC is involved in a specific case of adjudication. Another

distinguishable point is that in Home Box Office the outside
influence of individuals and companies that were not within the
same agency were conducting ex parte communications. This is
far more concerning to the court and could have more detrimental
effects on a rulemaking proceeding. Because the ex parte
communication in Garys Gadgets was between staff lawyers and
the Commission, there is less concern for foul play and over
representation of private interests.
In Sierra Club v. Costle, the violation of ex parte proceedings
was at issue and the court was faced with ruling on whether intra
agency communication was a violation of ex parte prohibitions.
The analogous aspect of the case to Garys Gadgets concerned
the courts finding that additional parties had a strong interest in
voicing their opinions when it came to agency adjudication.
Similar to the present case with Garys Gadgets, the staff lawyers
had an interest in communicating the basis of their settlement
with the Commission, and as such they wrote memos to the
Commission explaining legal and factual bases for their
settlement. Although it is not explicitly stated in the record,

presumably Garys Gadgets was given the opportunity to discover

these communications because the agency placed all
communications on the record and informed the opposing party of
the memos and advisement. Because the agency made it clear to
Garys Gadgets, and the communication occurred within the
agency between members of staff and the Commission, Garys
Gadgets will probably not have a strong case by which to
command review of the Commissions decision.
If Gregs requests that the Commission take action against
other companies involved in similar acts, does the commission
need to respond to the petition? Because the present process
involves adjudication and not rulemaking, the FTC is not
formulating a rule for all other companies to follow or face similar
adjudication. However, the present adjudication against Gregs
can be used by the agency as it sees fit to represent a form of
precedent that would allow the FTC to engage other companies in
adjudication based on similar acts.
Assuming that the FTC rejects Gregs petition, may Gregs
obtain review? This is up to the FTC. However, it is the main

function of the agency to hold formal hearings to adjudicate unfair

methods of competition, or unfair or deceptive acts or practices.
Gregs petition for review to the FTC could be used by the FTC to
present reason to believe to the Commissioners which would
then lead to a complaint. The other companies would then be
offered an opportunity to settle. If they do not, then the formal
hearing process begins with an ALJ being assigned and both sides
are given the opportunity to present evidence to prove their case.
After the hearing the ALJ issues an initial decision. If the initial
decision is appealed, the case would first go to the five
commissioners of the FTC and would be given an appellate review
after which it issues a final order and decision. This decision may
be appealed to a Federal Circuit Court of Appeals, and then if
necessary, that can be appealed all the way to the Supreme
Court.