La. Real Estate Appraisers Bd. v. U.S. Fed. Trade Comm'n

976 F.3d 597

LOUISIANA REAL ESTATE APPRAISERS BOARD, Plaintiff—Appellee,

v.UNITED STATES FEDERAL TRADE COMMISSION, Defendant—Appellant.

No. 19-30796

United States Court of Appeals, Fifth Circuit.

FILED October 2, 2020

Seth David Greenstein, Constantine Cannon, L.L.P., Washington, DC, Arlene C. Edwards, Delatte, Edwards & Marcantel, Baton Rouge, LA, for Plaintiff-Appellee.

Daniel Winik, Mark Bernard Stern, Esq., U.S. Department of Justice, Civil Division, Appellate Section, Mark Stephen Hegedus, Esq., Federal Trade Commission, Washington, DC, for Defendant-Appellant.

Jack R. Bierig, Esq., Schiff Hardin, L.L.P., Chicago, IL, for Amicus Curiae Federation of State Medical Boards.

Before Jones, Elrod, and Higginson, Circuit Judges.

Edith H. Jones, Circuit Judge:

This is an appeal of a district court order staying administrative proceedings that were initiated by appellant the Federal Trade Commission¹ against appellee the Louisiana Real Estate Appraisers Board (the "Board") pursuant to the Federal Trade Commission Act. Because the district court lacked jurisdiction, we vacate its stay order and remand with instructions to dismiss.

I. BACKGROUND

The Board is a state agency tasked with licensing and regulating commercial and residential real estate appraisers and management companies in Louisiana. La. Stat. Ann. §§ 37:3395 ; 37:3415.21. Each of the Board's ten members is appointed by the Governor and confirmed by the state senate, and members are removable by the Governor for cause. Id . § 37:3394. Of the ten members, eight must be "licensed as certified real estate appraisers." Id . § 37:3394(B)(1)(c), (b).

In 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires lenders to compensate fee appraisers "at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised." 15 U.S.C. § 1639e(i)(1). In response, the Louisiana legislature amended its own law, the Appraisal Management Company Licensing and Regulation Act (the "AMC Act"), to require that appraisal rates be consistent with Section 1639e and its implementing regulations. See La. Stat. Ann. § 37:3415:15(A). The legislature also gave the Board the authority to "adopt any rules and regulations in accordance with the [Louisiana] Administrative Procedure Act necessary for the enforcement of [the AMC Act]." Id . § 37:3415.21.

Accordingly, the Board adopted Rule 31101, requiring that licensees "compensate fee appraisers at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised and as prescribed by La. Stat. Ann. § 34:3415.15(A)." La. Admin. Code tit. 46 § 31101. Unlike the federal regulations, which instruct that appraisal fees are "presumptively" customary and reasonable if they meet certain market conditions, Rule 31101 prescribed its own methods by which a licensed appraisal management company can establish that a rate is customary and reasonable. Compare id. , with 12 C.F.R. § 226.42(f)(2), (3).

In 2017, the FTC filed an administrative complaint against the Board, asserting the Board had engaged in "concerted action that unreasonably restrains trade" in violation of the FTC Act's prohibition on unfair methods of competition. The complaint alleged Rule 31101 "unlawfully restrains competition on its face by prohibiting [appraisal management companies] from arriving at an appraisal fee through the operation of the free market." The FTC also alleged that the Board's enforcement of Rule 31101 unlawfully restrained price competition. In response, the Board denied the FTC's allegations and argued that it was entitled to immunity from antitrust liability under the state action doctrine.

Following the FTC's initiation of proceedings against the Board, the Governor of Louisiana issued an executive order purporting to enhance state oversight of the Board. The Board also revised Rule 31101 in accordance with the Governor's executive order. Based on those changes, the Board moved to dismiss the FTC's complaint in the administrative proceedings, arguing that the executive order and revision of Rule 31101 mooted the FTC's claims. The same day, the FTC cross-moved for summary judgment on the Board's state action immunity defense. On April 10, 2018, the Commission denied the Board's motion and granted the FTC's, rejecting the Board's assertion of state action immunity.

The Commission has not issued a final cease and desist order, but the Board has twice challenged the April 10, 2018 order in federal court to claim immunity. First, in late April, the Board petitioned this court directly for review of the Commission's order. In a published opinion, this court dismissed the petition for lack of jurisdiction. La. Real Estate Appraisers Bd. v. F.T.C. , 917 F.3d 389, 393 (5th Cir. 2019) ( LREAB I ). Second, and relevant here, the day after this court denied the Board's petition for en banc rehearing, the Board sued the FTC in a federal district court, alleging the Commission's April 10, 2018 order violated the Administrative Procedure Act. The Board also moved to stay the ongoing Commission proceedings. The district court granted the Board's motion and stayed the Commission proceedings pending the resolution of the Board's APA claim. On appeal, the FTC principally contends that the district court lacked jurisdiction.

II. DISCUSSION

We review questions of jurisdiction de novo , with the "burden of establishing federal jurisdiction rest[ing] on the party seeking the federal forum." Gonzalez v. Limon , 926 F.3d 186, 188 (5th Cir. 2019).

The FTC contends the district court lacked jurisdiction over the Board's lawsuit because the FTC Act vests exclusive jurisdiction to review challenges to Commission proceedings in the courts of appeals. 15 U.S.C. § 45(d) ("Upon the filing of the record with it the jurisdiction of the court of appeals of the Unites States to affirm, enforce, modify, or set aside orders of the Commission shall be exclusive."). The Board counters that the district court had jurisdiction pursuant to the APA's default review provision, 5 U.S.C. § 704, regardless of the FTC Act's judicial review scheme. We agree with the FTC that the district court lacked jurisdiction but for a different reason: Even if the FTC Act does not preclude Section 704 review—an issue we need not address—the Board fails to meet Section 704 ’s jurisdictional prerequisites.²

Section 704 of the APA permits non-statutory judicial review of certain "final agency action." 5 U.S.C. § 704 ("Agency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review."). Absent a showing of finality, a district court lacks jurisdiction to review APA challenges to administrative proceedings. Am. Airlines, Inc. v. Herman , 176 F.3d 283, 287 (5th Cir. 1999). Here, the Board relies on the collateral order doctrine as an expansion of the finality requirement of Section 704. Because the April 10, 2018 order meets the doctrine's predicates, the Board contends, the order should be treated as final and subject to challenge under the APA. The FTC disagrees with this approach, and so do we.

The collateral order doctrine is a judicially created exception to the "final decision" requirement of 28 U.S.C. § 1291, which governs appellate jurisdiction over appeals of final district court decisions. See Exxon Chemicals Am. v. Chao , 298 F.3d 464, 469 (5th Cir. 2002). The doctrine provides that an interlocutory decision is immediately appealable "as a final decision under § 1291 if it (1) conclusively determines the disputed question; (2) resolves an important issue completely separate from the merits of the action; and (3) is effectively unreviewable on appeal from a final judgment." Acoustic Sys., Inc. v. Wenger Corp. , 207 F.3d 287, 290 (5th Cir. 2000). This court has recognized that "the requirement of ‘final agency action’ in [ Section 704 ]" is analogous "to the final judgment requirement of 28 U.S.C. § 1291." Am. Airlines , 176 F.3d at 288 ; see also LREAB I , 917 F.3d at 392 ("[C]ourts have recognized that the [APA's] ‘final agency action’ requirement is analogous to § 1291 ’s ‘final decision’ requirement.").³ We assume arguendo that equating finality under Sections 1291 and 704 imports the collateral order doctrine into the Section 704 analysis.⁴ Nevertheless, the Board fails to show that the Commission's interlocutory denial of state action immunity in this case meets the doctrine's requirements. As to the first prong of the doctrine, there is no dispute that the Commission's rejection of state action immunity was "conclusive." Problems arise concerning the second prong, whether the issue of state action immunity is "completely separate from the merits" of the FTC's antitrust action, and the third prong, whether the decision is "effectively unreviewable on appeal."

The parties square off in differing interpretations of our case law that has applied the collateral order doctrine to denials of claims of state action immunity. To begin our analysis, however, the background of the substantive issues must be briefly recapitulated. "The state action doctrine was first espoused by the Supreme Court in Parker v. Brown , 317 U.S. 341, 63 S. Ct. 307, 87 L.Ed. 315 [ ] (1943) as an immunity for state regulatory programs from antitrust claims." Acoustic Systems , 207 F.3d at 292. In Parker , the Court considered whether a state statute that authorized state officials to issue regulations restricting certain agricultural competition violated antitrust law. 317 U.S. at 350–51, 63 S. Ct. at 313–14. The Court found "nothing in the language of the Sherman Act or in its history which suggests that its purpose was to restrain a state or its officers or agents from activities directed by its legislature." Id . Accordingly, the Court concluded that state regulatory programs cannot violate the Sherman...