FTC Announces a Set of Procedural Rule Changes Designed to Streamline Administrative Trial Process

The Federal Trade Commission today announced a set of procedural rule changes designed to streamline the administrative trial process for cases involving violations of various statutes enforced by the agency. These statutes include the FTC Act, which prohibits unfair and deceptive practices and unfair methods of competition in the marketplace. The changes -- most of which are intended to reduce delays and costs -- include a new one-year deadline for administrative adjudications generally, as well as the establishment of a "fast track" option for adjudicative proceedings typically involving merger cases.

The FTC is seeking public comments on the changes, which will be published in a notice in the Federal Register shortly. Although the changes are effective upon publication, the Administrative Law Judge (ALJ) in a pending administrative case or any new case commenced before Jan. 1, 1997, may exercise his discretion to refrain from applying the amended rules if application would be infeasible or work an injustice. Public comments must be submitted to the agency within 60 days.

In taking today’s action, the Commission acted on numerous recommendations of a task force established by FTC Chairman Robert Pitofsky in May 1995 and chaired by FTC General Counsel Stephen Calkins. These changes, which focus primarily on administrative trials, follow earlier FTC efforts to address delay in adjudicative proceedings at the appellate stage before the Commission.

Those earlier efforts have resulted in the elimination of a backlog of cases pending on appeal and currently there is only one such case before the Commission.

The rule amendments establish new and shorter deadlines, streamline pre-trial discovery and speed up the trial itself, and enhance the case-management role of the ALJ. In addition, the FTC announced two improvements intended to make information relating to its adjudication docket more readily available to the public.

Creating New and Shorter Deadlines

The amendments establishing new and shorter deadlines include a requirement that the ALJ file an initial decision within one year after the Commission issues the administrative complaint. This deadline may be modified only in extraordinary circumstances. Parties retain their right to appeal an unfavorable decision by the ALJ to the full Commission and this appel late phase is not covered by the new one-year deadline. The rule amendments also clarify certain limitations on granting extensions of time to interim deadlines during the litigation process.

In addition, respondents in certain cases would have the option of placing the matter on a "fast track" for resolution. This new procedure provides for final Commission decisions within 13 months. The fast track schedule would be available to respondents in certain administrative litigation in which a federal district court has granted the FTC a preliminary injunction to enjoin some or all of the same conduct challenged in the administrative litigation. Under the fast track schedule, a final Commission decision in such a case must be issued within 13 months of the latest of three events: (1) the date the Commission issues its administrative complaint detailing the charges in the cases; (2) the date the federal district court enters the preliminary injunction; or (3) the date on which the respondent elects the fast track schedule. The Commission may amend this deadline in certain circumstances, including when adherence to the deadline would result in a miscarriage of justice due to circumstances unforseen at the time of respondent’s election of the fast track proceeding.

Streamlining Discovery and Promoting Expedition at Trial

Procedural changes affecting the discovery phase include a requirement that litigants exchange certain information early in the discovery process, without awaiting a formal discovery request. As in federal court practice, parties are expected to conduct discovery simultaneously, as well as to supplement discovery responses that are later determined to be incomplete. (Several of the FTC’s procedural amendments track the procedural rules that govern litigation in federal courts.) In addition, the agency has eliminated the longstanding procedural requirement that the parties exchange nonbinding statements of their theories of the case, evidence to be offered, and issues to be tried. Although the ALJ still may require the exchange of such statements in a particular proceeding, their submission is no longer mandatory in all cases. The agency’s procedural rules also now limit the number of interrogatories that a party may submit, and the parties are no longer required to obtain the judge’s pre-approval for all discovery requests.

Today’s action also includes several provisions directed toward encouraging speedier trial. The agency’s statement explaining the rule amendments encourages the ALJs to utilize consecutive trial days and to consider requiring litigants to submit the direct examination of expert witnesses in writing. Amended rules announced today also constrain the introduction of cumulative evidence at trial and require the judge to close the trial record upon the completion of trial.

ALJ’s Role as Case Manager and Institutional Improvements

In addition, today’s rule amendments encourage the administrative law judges to hold prehearing conferences with the parties. The rules also now require a final prehearing conference immediately before commencement of trial. The litigants are further required to meet before that final conference to finalize stipulations and witness lists, and to resolve outstanding evidentiary matters.

Other institutional improvements include making information concerning the FTC’s administrative litigation docket more readily available to the public. The agency has committed itself to making publicly available both interlocutory orders issued by the ALJs and a quarterly status report reflecting the progress of adjudications before agency ALJs. Finally, an additional rule amendment eliminates the practice of requiring the presence of an agency presiding official at investigational hearings conducted during the pre-complaint investigatory phase.

The Commission vote to accept these changes was 5-0. Commissioner Mary L. Azcuenaga issued a concurring statement in which she said she welcomed the amended rules as a first step in reforming the Commission's adjudicative process. She added: "Some of the amendments seem clearly to be good ideas and the others may be worth a try to help expedite the Commission's adjudicative proceedings. Whether they will result in net benefits remains to be seen. Although rule changes to expedite adjudications are a starting point for improving the adjudicative process, reform ultimately should focus on improving the quality of the adjudicative record and of adjudicative decisions to help ensure that they meet the test of appeal.

"I support further examination of the entire process, including how to focus discovery and hearings more precisely on the pertinent facts, and how best to prepare the record for efficient use in formulating reasoned and well supported decisions. I look forward to the next installment of this effort," Azcuenaga said.

Copies of the Federal Register notice announcing the changes and Commissioner Azcuenaga’s statement are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov

(FTC Matter No. P859907)