In this episode of Unwritten Law, Mark Chenoweth and John Vecchione are joined by Peggy Little, Senior Litigation Counsel at NCLA, to discuss NCLA’s amicus brief in Media Matters v. Federal Trade Commission, currently before the U.S. Court of Appeals for the D.C. Circuit.

The conversation focuses on the FTC’s use of civil investigative demands (CIDs) and a fundamental constitutional question: must individuals and organizations have access to an independent court before complying with sweeping agency demands? Peggy explains why allowing agencies to issue broad investigative orders without meaningful judicial review threatens First Amendment rights of speech and association.

Drawing on Supreme Court precedents including NAACP v. Alabama, Americans for Prosperity Foundation v. Bonta, Axon Enterprise v. FTC, and SEC v. Jarkesy, the episode examines why constitutional challenges cannot be forced through agency-controlled processes. The hosts also discuss the dangers of agencies “holding the keys to the courthouse,” the structural bias built into self-review, and how repeated investigative demands can be used to pressure or dismantle organizations without ever filing charges.

Mark Chenoweth: Welcome to Unwritten Law with Mark Chenoweth and John Vecchione. We are pleased to be joined by our colleague, Senior Litigation Counsel Peggy Little to talk about an amicus brief that NCLA filed this month. And the case is in the U.S. Court of Appeals in the D.C. Circuit. The case name is Media Matters v. FTC. And there's a lot of issues in this case, Peggy, but why don’t you explain why NCLA cared about this or what got you interested in it.

Peggy Little: Sure. I think there are two main areas of concern. The first is actually whether CID’s can be issued without some sort of judicial review.

Mark Chenoweth: Now, what's a CID?

Peggy Little: A civil investigative demand by the FTC. They served it on Media Matters and it was very, very broad. It sought production of their financial records, their organizational records, their editorial processes, the organizational structure, their outside associations…

Mark Chenoweth: And they didn't just wanna turn all that information over to the government?

Peggy Little: And this is a very important point for NCLA because we had participated in a case called Americans for Prosperity Foundation v. Bonta at the Supreme Court. But we were involved in that case back when it was something that had been initiated by the then California Attorney General Kamala Harris in which she had sought donor identification. That case went all the way up to the Supreme Court and importantly affirmed a Civil Rights Era precedent called NAACP v. Alabama in which, back in the Civil Rights Era –

Peggy Little: – the Alabama Attorney General wanted to know membership lists, donor identification, et cetera of the NAACP. And the Supreme Court even then unanimously held that that violated their rights of association. It’s a huge issue, hugely important issue to us. And that was really our stake in this dispute is can a power government agency issue a CID as to which they claim there's no judicial review and just ask you to turn over the shop?

Mark Chenoweth: And so, Media Matters went to court to fight this, right? They sort of turned the tables on the FTC and sued, or was this in the posture of enforcing the CID?

Peggy Little: Well, actually they did go through, the D.C. Circuit said, what little internal procedure there is at the FTC on this…

John Vecchione: That's a good line.

Mark Chenoweth: Right.

Peggy Little: But they did go through that first. There's something called a motion to quash. And so, if you get served with one of these there is a procedure established by regulation –

Mark Chenoweth: Not statute.

Peggy Little: – not law. And that’s an important distinction here, but the FTC does have a way you can go to court…

Peggy Little: Well, actually you can go to them; you can go to the commission –

Mark Chenoweth: Right.

Peggy Little: – not to court and ask them to quash because it’s over broad or has other problems. And not surprisingly, the very agency issuing this CID decided it was perfectly fine. “Well, what kinda defects are you –

Mark Chenoweth: That's right.

Peggy Little: – complaining about?”

John Vecchione: “If it was wrong, we wouldn’t have done it.”

Peggy Little: Exactly.

Mark Chenoweth: “It was a perfect CID.”

John Vecchione: Exactly.

Peggy Little: Wonderful.

John Vecchione: That was good.

Peggy Little: Very well done. Anyway, so they this procedure but the way the procedure works is Media Matters has almost no recourse because, if they don’t comply, it’s the FTC alone that has the right to take it to court and get judicial review on that. So, they hold the keys to the courthouse. Now, under our precedent that we set in Axon-Cochran, what that case held was that in fact if you have a constitutional issue here, and we do think it is a constitutional issue of that magnitude, you have a right to go to court in the first instance under the general federal question jurisdiction for constitutional matters. And so, that was the sole aspect of this case that we weighed in on.

Mark Chenoweth: And that's what Media Matters did in the D.C. District Court. One of the questions on appeal in the D.C. Circuit is whether the D.C. District Court had jurisdiction to hear that complaint from Media Matters?

Peggy Little: Exactly. And so, we think the district judge got the jurisdictional question correct. Indeed, there was an appeal on an emergency stay, and the three-judge panel there also looked at these questions. And even Judge Walker who had dissented as to other aspects of their case felt there was no real jurisdictional problem here. I think it's a exceedingly weak jurisdictional defense that the FTC is trying to assert here, A.) because there is no statute that displaces the otherwise available constitutional jurisdiction to hear this question, and certainly the regulation doesn’t do it, especially as it leaves the keys to the courthouse in the hands of the very agency who has already decided that there's nothing wrong with this CID in the first place.

So, I think it’s a important point and it’s important to educate the courts that the Axon-Cochran decision means what it says, and you don’t have to go through these administrative processes, comply with an unlawful CID, and then wait for eventual judicial review. What Axon-Cochran said is judicial review has to take place before it is too late to not be meaningful. And so, those were the aspects of this case that we briefed.

Mark Chenoweth: So, the amicus brief also made an argument that the Supreme Court’s Jarkesy decision supports district court jurisdiction here. You’ve explained why Axon-Cochran supports jurisdiction. Why does Jarkesy support district court jurisdiction in this case?

Peggy Little: Because the language in which it says you have a right to go to court on constitutional questions before an “impartial adjudicator.” And so, it’s those two words in Jarkesy that also support Media Matters ability to get into a district court.

Mark Chenoweth: In an Article III tribunal, right?

Peggy Little: Yes.

Mark Chenoweth: So, you're not limited to just whatever sort of tribunal that the Executive branch wants you to be in.

Peggy Little: Right, and those are always internal. There wasn’t even such a procedure in this particular statute. It was just that motion to quash procedure, which is something that the agency set up. It controls it with an iron hand and you have to raise all the objections before them. You have to abide by their decision. They're the one who gets to decide when you go to court, and that is simply not sufficient process to protect your interests.

Mark Chenoweth: Can you explain that last piece a little bit more because I’m not sure people necessarily understand? So, if you go through the agency process and you say, “Oh, I think this should be modified in some way or restricted in some way,” and the agency says, “No,” then, as you say, they hold the keys to the kingdom. That means that it’s just sort of the Sword of Damocles hanging over your head. They can go and enforce it at any time? And do those penalties add up before they go to court, or how does that process work exactly?

Peggy Little: And we know this from a case that we handled called Crystal Moroney who was hit with CID after CID after CID from the Consumer Finance Protection Bureau. And I don’t think the people, outside those who actually deal with the administration –

Mark Chenoweth: Who have had to answer CIDs.

Peggy Little: – exactly, understand just how onerous that can be. She was subjected to, I think it was, around five years of these continuing CIDs. So, even if they don’t take you to court on the first one, they can follow up with more and more detailed ones. And so, you are, under that system, really helpless and without judicial recourse.

John Vecchione: And I’ll note, in that case, they didn't accept attorney/client privilege as a reason not to turn over documents, and she was a lawyer in a law firm.

Peggy Little: It was shocking. Shocking. No one even explained to her what the charges even were against her…

Mark Chenoweth: Well, there were no charges against her.

Peggy Little: Exactly.

Mark Chenoweth: In her case, there were against somebody else but they thought that she might have documents in her possession that would help them make a case against some third party; and so, they were relentless –

Peggy Little: Correct.

Mark Chenoweth: – to use a word against her in trying to get that information. So, we agree with Media Matters that in this sort of posture, they can go directly to district court and sue the agency and say, “No, we don't have to comply with the CID” or “We don’t have to comply with a CID to the full extent that you're asking us to” or something along those lines.

Peggy Little: Otherwise, you are just at the mercy of whoever the agency thinks it would be really interesting to know: who gives money to you, what your editorial processes are, who supports you, who you associate with. And we certainly can’t live in a regime where if you have angered a particular powerful agency, they can just send a bunch of CIDs your way and have you dismantle your organization. And in the case of Crystal Moroney, they drove her out of business.

Mark Chenoweth: They sure did.

Mark Chenoweth: Well, speaking of anger, I’m gonna risk incurring your wrath here, Peggy, by asking you about Thunder Basin. I know this is maybe your least favorite precedent but that came into play here as well. Can you explain what that case is and how that either is or isn’t relevant to the analysis here?

Peggy Little: Yes, with a little caveat. I opened with Justice Gorsuch’s concurrence in Axon-Cochran, our case, in which he says we need to get rid of Thunder Basin and just do a statutory analysis that the general federal jurisdiction statute applies. That being said, Axon-Cochran did apply as Thunder Basin and there are basically three aspects of that case. You have to show that the issue you want the Court to decide is wholly collateral to whatever the dispute may be between the agency and you. You have to make the argument that there is meaningful judicial review.

And what Axon held was, and correctly, that Michelle Cochran and Axon both would not have meaningful judicial review both if they had to go through the whole unlawful proceeding first and only then get judicial review, which is how most of these statutes are set up. And as Justice Kagan said, in a unanimous decision, that kind of review comes too late to be meaningful. So, that aspect is also present here. And then, finally my favorite and one I really love to clarify, if we’re gonna go down the Thunder Basin here –

Mark Chenoweth: Down the slope of Thunder Basin.

[Crosstalk]

Mark Chenoweth: Sure. Almost never.

Peggy Little: Even Thunder Basin says in its dicta, they say normally, these are considered to be outside the purview of agency adjudication. And very clearly here too the administrative process such as it is is not something that the FTC is there to decide whether its own CIDs violate the First Amendment rights of speech or association. And I also made the point in our brief too that there's a built-in conflict of interest here, that you have the judge being a judge in his own case. You have a commission saying if “you have to comply by our decision that the CID is perfectly okay.” Well, the very person issuing the CID is deciding “Oh, it’s perfectly okay,” and that's such a built-in structural problem.

Mark Chenoweth: It’s a bias, a structural bias.

Peggy Little: It just is. You can’t get around it. And so, for that reason you have to be able to get before an unbiased, independent adjudicator who has the judicial power to decide constitutional questions.

Mark Chenoweth: Well, are you waiting on your “thank you” note from Media Matters for your successful victory in Cochran and Jarkesy that helped set the stage for their jurisdiction here?

Peggy Little: I hope to receive it any day now.

Mark Chenoweth: You may be waiting a long time. I like to think that Media Matters would come to NCLA’s defense if we were getting a CID from a hostile administration, but I’m not so sure that they would…

John Vecchione: We may yet see.

Mark Chenoweth: We may. I hope we don’t ever have the chance to find out…

Peggy Little: I’m not afraid to reach out.

Mark Chenoweth: Absolutely. But in any event, there are other issues in this case, but the jurisdictional one is what we focused on here.

Peggy Little: Exactly because the Court can reach those other issues, their important questions. There’s no record before us to really weigh in on that at this stage but the jurisdictional point, we think it’s a strong one and an important one for the very reasons I explained under the donor identification and intrusive CID problem.

Mark Chenoweth: You might say it’s within our expertise and competence to address the jurisdictional issues in this case.

Mark Chenoweth: That's right. If you have an Axon-Cochran issue, Jarkesy issue, let NCLA know. We may be able to help you out.

Peggy Little: …even the Jarkesy.

Mark Chenoweth: For sure. Well, thank you very much, Peggy. The case is Media Matters v. FTC. It’s at the U.S. Court of Appeals for the District of Columbia Circuit and appreciate your being here to enlighten our listeners on the stakes of that case, particularly as it relates to jurisdiction.

Peggy Little: Thank you for having me.

Mark Chenoweth: Absolutely. You’ve been listening to Unwritten Law.

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Duration: 16 minutes