The Impact of the Election on the FTC

Consumer Finance Monitor

Today’s podcast features Stephen Calkins, a law professor at Wayne State University in Detroit and former General Counsel of the Federal Trade Commission (the “FTC”).

President Trump recently fired, without good cause, the two Democratic members of the FTC, leaving only two Republican members as commissioners. He did this even though the FTC Act provides that a commissioner may be fired by the President only for good cause and that the commission is to be governed by a bi-partisan 5-member commission This is the third time in the past few weeks that Trump has fired without good cause democratic members of other federal agencies; the other two being the National Labor Relations Board (The “NLRB”) and the Merit Selection Protection Board (The “MSPB”). The statutes governing those two agencies, like the FTC Act, allow the President to fire a member of the governing board for good cause only.

The fired members of all three agencies initiated lawsuits in federal district court for the District of Columbia, seeking mandatory preliminary injunctions requiring those agencies to reinstate them with back pay. We discuss the status of the two lawsuits and how the outcome will turn on whether the Supreme Court will apply or overrule a 1935 Supreme Court opinion in Humphrey’s Executor, which held that the provision in the Constitution allowing the President to fire an FTC commissioner for good cause only did not run afoul of the separation of powers clause in the Constitution. Conversely, the Supreme Court will need to determine whether the Supreme Court opinion in Seila Law, LLC V. Consumer Financial Protection Bureau should apply to these two new cases. In Seila Law, the Supreme Court held on Constitutional grounds, that the President could fire without good cause the sole director of the CFPB even though the Dodd-Frank Act allowed the President to fire the sole director of the CFPB for good cause only.

Until this gets resolved, the FTC will be governed only by two Republican commissioners who will constitute a quorum for purposes of conducting official business. Professor Calkins explains how a Supreme Court ruling in these two new cases upholding Trump’s firing of the Democratic members of the agencies could enable the President to fire without good cause members of other multiple-member agencies, like the Federal Reserve Board.

We then discuss the status of the following four final controversial FTC rule, some of which were challenged in court: the CARS Rule, the Click-to-Cancel Rule, the Junk Fee Rule, and the Non-Compete Rule. We also discuss the impact of President Trump’s Executive Order requiring that all federal agencies, including so-called “independent” agencies, must obtain approval from the White House before taking any significant actions, like proposing or finalizing rules.

Then, we discuss the status of enforcement investigations and litigation and whether any of them have been voluntarily dismissed with prejudice by the FTC under Trump 2.0, whether any new enforcement lawsuits been filed, and what they involve. We discuss our expectation that the FTC will be a lot less active in the consumer protection enforcement area during Trump 2.0.

We then discuss the impact on staffing because of DOGE-imposed reductions-in-force. Finally, we touch upon the status of pending antitrust enforcement lawsuits.

Alan Kaplinsky, former practice group leader for 25 years of the Consumer Financial Services Group and now Senior Counsel, hosts the discussion.