How much deference must courts give federal consumer protection agency determinations that conduct is unfair after Loper Bright?

Yesterday, the Supreme Court decided Loper Bright, in which it proclaimed that “Chevron is overruled.” But now we have to figure out what that means in particular contexts. One such context is federal consumer protection agency UDAAP statutes, like the FTC Act and Consumer Financial Protection Act. When those statutes give the agencies the power to bring claims against companies for engaging in an unfair practice, and so the agencies determine that specific conduct is unfair, how much deference must the courts give them?

I think the answer is a lot. At pages 17-18 of the linked slip opinion, the court discusses cases in which a “statute’s meaning may well be that the agency is authorized to exercise a degree of discretion.” And the Court refers to statutes that “empower an agency to * * * regulate subject to the limits imposed by a term or phrase that ‘leaves agencies with flexibility,’ Michigan v. EPA, 576 U. S. 743, 752 (2015), such as ‘appropriate” or “reasonable.”” First, how different from appropriate or reasonable is unfair? To be sure, the statute in Michigan explicitly spoke of the judgment of the EPA Administrator, but isn’t it implicit in UDAP statutes that the conduct must violate a UDAP provision in the judgment of the agency? After all, the agency is the only entity that can bring a claim under its UDAAP statute, and the only agency that has the power to issue regulations declaring the conduct within its jurisdiction to be unfair.

Other evidence that Congress wanted the consumer protection agencies to be able to use their unfairness power flexibly is quite strong. In 1918, when Congress bestowed upon the FTC the power to bar unfair methods of competition, it observed in a conference report: ‘It is impossible to frame definitions which embrace all unfair practices. There is no limit to human inventiveness in this field. Even if all known unfair practices were specifically defined and prohibited, it would be at once necessary to begin over again. If Congress were to adopt the method of definition, it would undertake an endless task.’ See H.R. Conf. Rep. No.1142, 63d Cong., 2d Sess., 19 (1914). The Supreme Court took notice of this. See FTC v. Bunte Bros., 312 U.S. 349, 353 (1941) (“‘[U]nfair competition’ was designed by Congress as a flexible concept with evolving content.”); Atlantic Ref. Co. v. FTC, 381 U.S. 357, 367 (1965) (“Section 5 of the Federal Trade Commission Act declares ‘[u]nfair methods of competition in commerce, and unfair . . . acts or practices in commerce . . . unlawful.’ In a broad delegation of power it empowers the Commission, in the first instance, to determine whether a method of competition or the act or practice complained of is unfair. The Congress intentionally left development of the term ‘unfair’ to the Commission rather than attempting to define ‘the many and variable unfair practices which prevail in commerce . . . .’”) (alterations in original) (quoting S. Rep. No. 592, 63d Cong., 2d Sess. 13).

When Congress added the current UDAP powers to the FTC Act in the 1938 Wheeler-Lea Amendments, it again deliberately used the word, “unfair” to convey flexibility. See Neil Averitt, The Meaning of “Unfair Acts or Practices” in Section 5 of the Federal Trade Commission Act, 70 Georgetown L.J. 225, (1981) (including among the lessons of the FTC Act’s legislative history that “the substantive scope of [the section containing the FTC’s UDAP power] should be determined primarily by reference to the original 1914 legislation rather than to the Wheeler-Lea Amendment [and] the original legislation gave the Commission considerable discretion in identifying unfair consumer practices.”); FTC v. Wyndham Worldwide Corp., 799 F.3d 236, 243 (3d Cir. 2015). And then Congress copied that statutory authority into the CFPA.

Now back to Loper Bright to see what the standard of review is in cases in which the legislature intended the agency to exercise discretion. The Court explains:

When the best reading of a statute is that it delegates discretionary authority to an agency, the role of the reviewing court under the APA is, as always, to independently interpret the statute and effectuate the will of Congress subject to constitutional limits. The court fulfills that role by recognizing constitutional delegations, “fix[ing] the boundaries of [the] delegated authority,” H. Monaghan, Marbury and the Administrative State, 83 Colum. L. Rev. 1, 27 (1983), and ensuring the agency has engaged in “‘reasoned decisionmaking’ ” within those boundaries, Michigan, 576 U. S., at 750 * * *  By doing so, a court upholds the traditional conception of the judicial function that the APA adopts.

So a reviewing court would have to make sure that the conduct causes a substantial injury that consumers can’t reasonably avoid and that isn’t offset by countervailing benefits to consumer or competition–as the relevant UDAAP statute requires–and that the determination that the conduct is unfair is not arbitrary or capricious. And if it meets that standard, the court has to uphold the determination that the conduct is unfair. Whatever effect Loper Bright has on other statutes the FTC and CFPB enforce, it shouldn’t diminish their fairness powers at all.

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