Professional Documents
Culture Documents
5
5
R. Civ. P. 12(b)(1), (4) and (5),1 to dismiss the complaint filed by Whole Foods Markets, Inc.
(“Whole Foods”). Only if the Court declines to dismiss the action, Defendant moves, pursuant to
Fed. R. Civ. P. 7 and 28 U.S.C. § 1631, to transfer this action to the United States Court of Appeals
for the District of Columbia Circuit.2 The complaint challenges certain procedural steps taken
during an administrative proceeding now being conducted before the Commission, and asserts that
any final Commission order in that proceeding will be the result of prejudgment. Even if there were
1
Dismissal pursuant to Rule 12(4) and (5) is premised on Plaintiff’s failure to effect proper
service in this action. Defendant recognizes that Fed. R. Civ. P. 4(m) permits 120 days to effect
service, but nevertheless raises this issue in order that the issue is not deemed waived. See Fed.
R. Civ. P. 12(h)(1).
2
Defendant submits that the action is premature in any event and as such, would not support
jurisdiction in the Court of Appeals. For this reason, dismissal rather than transfer is warranted.
Nevertheless, the Court of Appeals would be the proper forum to make such a determination.
See Jamison v. FTC, 628 F. Supp. 1548, 1552 n.4 (D.D.C. 1986).
Case 1:08-cv-02121-PLF Document 5 Filed 12/12/2008 Page 2 of 10
any merit to Whole Foods’ hodgepodge of complaints about the ongoing administrative proceedings
-- and there is not -- the only conceivable forum for pursuing such claims is in the Court of Appeals,
which has exclusive jurisdiction over final Commission orders. This Court therefore lacks subject
matter jurisdiction, and must dismiss this action or, if not, transfer it to the Court of Appeals.
Respectfully submitted,
/s/
W. MARK NEBEKER, DC Bar #396739
Assistant United States Attorney
WILLIAM BLUMENTHAL
General Counsel (D.C. Bar No. 339283)
JOHN F. DALY
Deputy General Counsel for Litigation
(D.C. Bar No. 250217)
LAWRENCE DeMILLE-WAGMAN
Assistant General Counsel for Litigation (D.C. Bar No.
929950)
FEDERAL TRADE COMMISSION
600 Pennsylvania Ave., N.W.
Washington, D.C. 20580
(202) 326-2448
Email: [email protected]
-2-
Case 1:08-cv-02121-PLF Document 5 Filed 12/12/2008 Page 3 of 10
BACKGROUND
13(b) of the FTC Act, 15 U.S.C. § 53(b)) to prevent Whole Foods from acquiring Wild Oats
Markets, Inc. (“Wild Oats”). The Commission sought this injunction so that the parties would
not consummate the acquisition pending an administrative proceeding that the Commission
initiated to determine whether the acquisition would violate either Section 7 of the Clayton Act,
15 U.S.C. § 18, or Section 5 of the FTC Act, 15 U.S.C. § 45. On August 16, 2007, this Court
denied the Commission’s request for the injunction, FTC v. Whole Foods Market, Inc., 502 F.
Supp.2d 1 (D.D.C. 2007). Whole Foods consummated the acquisition on August 28, 2007.
Subsequently, the D.C. Circuit reversed this Court’s conclusion that the Commission failed to
show a likelihood of success, 533 F.3d 869 (D.C. Cir. 2008), amended and reissued, F.3d ,
2008 WL 5101226 (D.C. Cir. November 21, 2008). As a result of the Court of Appeals’
Case 1:08-cv-02121-PLF Document 5 Filed 12/12/2008 Page 4 of 10
decision, the Commission’s request for an injunction is once again before this Court on remand
in Civil Action No. 07-1021 PLF. However, Whole Foods’ Complaint in the instant action does
not involve the preliminary injunction proceedings; it involves instead the Commission’s
administrative proceeding.
The Commission issued its administrative complaint on June 27, 2007, alleging that
Whole Foods’ acquisition of Wild Oats violated both Section 7 of the Clayton Act, 15 U.S.C.
§ 18, and Section 5 of the FTC Act, 15 U.S.C. § 45.1 In the Matter of Whole Foods Market, Inc.,
D-9324. During this Court’s consideration of the Commission’s request for a preliminary
injunction, the Commission sua sponte stayed its administrative proceedings. D-9324, Order of
August 7, 2007. After the decision by the D.C. Circuit, the Commission rescinded that stay, D-
9324, Order of August 8, 2008, and proceedings, which are conducted pursuant to Part 3 of the
Whole Foods filed its Complaint in this case on December 8, 2008, but has not yet
effected service of the Complaint as required by Fed. R. Civ. P. 4(i). See Docket in Civil Action
No. 08-2121. The first four counts of the complaint allege that, in connection with the
administrative proceeding, the Commission has violated Whole Foods’ due process rights, as set
1
Section 7 of the Clayton Act prohibits, inter alia, any acquisition of stock where “the effect of
such acquisition may be substantially to lessen competition, or to tend to create a monopoly.”
Section 5 of the FTC Act prohibits, inter alia, “unfair methods of competition in or affecting
commerce.”
-2-
Case 1:08-cv-02121-PLF Document 5 Filed 12/12/2008 Page 5 of 10
of September 10, 2008, which provides that fact discovery must be completed by
December 19, and depositions must be completed by January 30, 2009, does not
allow Whole Foods sufficient time to prepare its defense; and
3. The Commission failed to recuse itself sua sponte (Whole Foods never sought
recusal).2
Count 5 of the complaint alleges that the discovery schedule set forth in the scheduling order is
arbitrary and capricious, and that it violates Whole Foods’ rights under the Administrative
Procedure Act. Count 6 seeks declaratory relief, reiterating the theories of the prior counts.
In its Prayer for Relief, Whole Foods requests that this Court order the Commission to
terminate its ongoing administrative proceeding. It also requests an order providing that, if the
Commission chooses to challenge Whole Foods’ acquisition of Wild Oats, the Commission be
§ 53(b).
ARGUMENT
This Court should dismiss Whole Foods’ complaint because the Court of Appeals has
exclusive jurisdiction over the issues raised in the Complaint. In Telecommunications Research
and Action Center v. FCC, 750 F.2d 70, 78-79 (D.C. Cir. 1984) (“TRAC”), the D.C. Circuit held
that “where a statute commits review of agency action to the Court of Appeals, any suit seeking
relief that might affect the Circuit Court’s future jurisdiction is subject to the exclusive review of
2
On August 8, 2008, when it resumed its administrative proceeding, the Commission designated
Commissioner Thomas Rosch to preside over the administrative pretrial scheduling conference.
D-9324, Order of August 8, 2008. Whole Foods moved that “the Commission” recuse itself
from serving as the administrative law judge in the administrative proceeding. D-9324, Motion
filed August 22, 2008. The Commission denied that motion on September 5. However, on
October 20, the Commission designated administrative law judge D. Michael Chappell to
preside over the adjudication of the Commission’s administrative complaint. Whole Foods
never requested that the Commission recuse itself from all aspects of the administrative
proceeding.
-3-
Case 1:08-cv-02121-PLF Document 5 Filed 12/12/2008 Page 6 of 10
the Court of Appeals”;3 see Daniels v. Union Pacific Railroad Co., 530 F.3d 936, 942 (D.C. Cir.
First, the FTC Act provides for exclusive review of administrative decisions (such as any
decision that the Commission might issue at the conclusion of the proceeding against Whole
Foods) in a court of appeals. In particular, Section 5(c) of the FTC Act, 15 U.S.C. § 45(c),
provides:
Further, the jurisdiction of the courts of appeals to review Commission administrative decisions
is exclusive because, as the court explained in TRAC, “[i]t is well settled that even where
Congress has not expressly stated that statutory jurisdiction is ‘exclusive,’ . . . a statute which
vests jurisdiction in a particular court cuts off original jurisdiction in other courts in all cases
Second, the relief Whole Foods seeks in its complaint would, most certainly, affect the
future jurisdiction of the courts of appeals. In particular, Whole Foods asks this Court to order
the Commission to dismiss its administrative action. If that relief were granted, there would be
nothing for a court of appeals to review. A fortiori, this affects the future jurisdiction of the
3
With respect to this jurisdictional holding, the court stated, “[b]ecause this holding resolves
inconsistencies among our prior decisions, this part of our decision has been considered
separately and approved by the whole court, and thus constitutes the law of the circuit.” TRAC,
750 F.2d at 75 n.24.
-4-
Case 1:08-cv-02121-PLF Document 5 Filed 12/12/2008 Page 7 of 10
courts of appeals. See Marchiano v. National Assoc. of Securities Dealers, Inc., 134 F. Supp.2d
90, 93 (D.D.C. 2001) (TRAC applies because request to enjoin NASD disciplinary proceeding
would prevent NASD from issuing a final order, and there would be no review by a court of
appeals); Jamison v. FTC, 628 F. Supp. 1548, 1551 (D.D.C. 1986) (holding that the district court
lacked jurisdiction under TRAC because plaintiff sought an injunction of the Commission’s
administrative proceedings, and this would eliminate the possibility of review by a court of
appeals); see also Ohio Edison Co. v. Zech, 701 F. Supp. 4, 6-7 (D.D.C. 1988) (TRAC applied
Indeed, district courts have granted motions to dismiss for lack of subject matter
jurisdiction based on TRAC in cases involving every issue that plaintiff has raised here: bias,
Zech, 701 F. Supp. at 6 (“it is now well recognized that TRAC applies to cases in which there are
allegations of bias within an agency”); Marchiano, 134 F. Supp.2d at 94; Jamison, 628 F. Supp.
at 1551;4 violation of constitutional rights, Jamison, 628 F. Supp. at 1551; Marchiano, 134 F.
Supp. 2d at 94; Daniels v. Union Pacific Railroad Co., 530 F.3d at 942-43; violation of rights
under the Administrative Procedure Act, TRAC, 750 F.2d at 78 (“[n]or is district court review
permissible under section 703 of the APA”); Marchiano, supra; Chiron Corp. v. NTSB, 27 F.
In its complaint, Whole Foods alleges that this Court has jurisdiction pursuant to the
Administrative Procedure Act, 5 U.S.C. § 701 et seq., pursuant to 28 U.S.C. § 1331, and
4
In Association of Nat’l Advertisers v. FTC, 627 F.2d 1151 (D.C. Cir. 1979), decided five years
before TRAC, the panel held that the district court did have jurisdiction to consider an
interlocutory claim of bias by the Commission’s chairman. However, in TRAC, the court held
that the ANA panel’s conclusion was erroneous. 750 F.2d at 77 n.30. Because that portion of
TRAC was considered by the whole court, id. at 75 n.24, it constitutes the law of the circuit.
-5-
Case 1:08-cv-02121-PLF Document 5 Filed 12/12/2008 Page 8 of 10
pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201. As explained above, TRAC makes
clear that the Administrative Procedure Act does not provide district courts with jurisdiction
where, by statute, review of any final action by the agency must be sought in a court of appeals.
TRAC reached the same conclusion with respect to 28 U.S.C. § 1331. 750 F.2d at 77. And the
Declaratory Judgment Act is not an independent grant of jurisdiction. C&E Services, Inc. of
Washington v. District of Columbia Water and Sewer Authority, 310 F.3d 197, 201 (D.C. Cir.
2002) (“we begin with the well-established rule that the Declaratory Judgment Act is not an
basis for this Court to assert jurisdiction over Whole Foods’ Complaint.5
5
Although Whole Foods’ complaint describes no final agency action, and this would be an
independent basis for dismissing its complaint, this Court need not address that issue because, as
a result of TRAC, it lacks subject matter jurisdiction over the complaint. Zech, 701 F. Supp. at 7
(“[b]ecause TRAC divests this Court of jurisdiction over interlocutory review of NRC
proceedings, this Court, as a Court of limited jurisdiction ‘lack[s] the power to presume the
existence of jurisdiction in order to dispose of [this] case on any other grounds,’” quoting Tuck v.
Pan American Health Org., 668 F.2d 547, 549 (D.C. Cir. 1981)).
-6-
Case 1:08-cv-02121-PLF Document 5 Filed 12/12/2008 Page 9 of 10
CONCLUSION
For the reasons set forth above, this Court should dismiss Whole Foods’ Complaint, or in
the alternative, it should transfer the matter to the United States Court of Appeals for the District
of Columbia Circuit.
Respectfully submitted,
/s/
W. MARK NEBEKER, DC Bar #396739
Assistant United States Attorney
WILLIAM BLUMENTHAL
General Counsel (D.C. Bar No. 339283)
JOHN F. DALY
Deputy General Counsel for Litigation
(D.C. Bar No. 250217)
LAWRENCE DeMILLE-WAGMAN
Assistant General Counsel for Litigation (D.C. Bar No.
929950)
FEDERAL TRADE COMMISSION
600 Pennsylvania Ave., N.W.
Washington, D.C. 20580
(202) 326-2448
Email: [email protected]
-7-
Case 1:08-cv-02121-PLF Document 5 Filed 12/12/2008 Page 10 of 10
CERTIFICATE OF SERVICE
I hereby certify that service of the foregoing Defendant Federal Trade Commission’s
proposed order has been made through the Court’s electronic transmission facilities on this 12th
/s/
W. MARK NEBEKER, DC Bar #396739
Assistant United States Attorney
Civil Division
555 4th Street, N.W.
Washington, DC 20530
(202) 514-7230