Zen Magnets v. Consumer Product Safety ( 2020 )

FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS August 4, 2020
Christopher M. Wolpert
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________________
ZEN MAGNETS, LLC,
Plaintiff - Appellee/Cross-
Appellant,
v. Nos. 19-1168, 19-1186
CONSUMER PRODUCT SAFETY
COMMISSION,
Defendant - Appellant/Cross-
Appellee.
_________________________________________
Appeal from the United States District Court
for the District of Colorado
(D.C. No. 1:17-CV-02645-RBJ)
_________________________________________
David C. Japha, Levin Jacobson Japha, PC, Denver, Colorado (Evan House
with him on the briefs), for Plaintiff-Appellee/Cross-Appellant.
Jaynie Lilley, Attorney, Appellate Staff, United States Department of
Justice, Civil Division, Washington, DC (Joseph H. Hunt, Assistant
Attorney General; Jason R. Dunn, United States Attorney; Daniel Tenny
and Patrick G. Nemeroff, Attorneys, Appellate Staff, on the briefs), for
Defendant-Appellant/Cross-Appellee.
_________________________________________
Before BACHARACH, McHUGH, and EID, Circuit Judges.
_________________________________________
BACHARACH, Circuit Judge.
_________________________________________
The Consumer Product Safety Commission conducted two
proceedings involving the making of small rare-earth magnets. The first
proceeding consisted of a rulemaking affecting all manufacturers of these
magnets. The second proceeding consisted of an adjudication affecting
only one manufacturer: Zen Magnets, LLC. For the adjudication, the
Commission needed to provide Zen with a fair proceeding under the Fifth
Amendment’s Due Process Clause. Withrow v. Larkin, 421 U.S. 35, 46–47
(1975).
Zen contends that the adjudication was unfair for two reasons:
1. The Commissioners conducted the adjudication after engaging
in a rulemaking on closely related issues.
2. Three Commissioners participated in the adjudication after
making public statements showing bias.
The district court concluded that
• the Commission hadn’t denied due process by simultaneously
conducting the adjudication after a related rulemaking,
• two of the Commissioners (Kaye and Robinson) had not shown
bias through their public statements, and
• one Commissioner (Adler) had shown bias through a public
statement about Zen.
Both parties appeal. The Commission appeals the district court’s
decision as to Commissioner Adler. Zen cross-appeals, arguing that
• three Commissioners had violated due process by prejudging
the issues and
2
• the district court had issued an advisory opinion on the merits.
Our jurisdiction extends to the parties’ contentions involving due
process. For these contentions, we conclude that the Commissioners’
participation in the rulemaking and their statements did not result in a
denial of due process. So we affirm the district court’s judgment as to
Commissioners Robinson and Kaye but reverse as to Commissioner Adler.
We lack jurisdiction to decide whether the district court rendered an
advisory opinion.
I. The Commission conducts a rulemaking and a related
adjudication.
Zen’s small rare-earth magnets are shiny and smooth, resembling
candies that commonly garnish cookies and desserts. The appearance
sometimes leads young children to put the magnets in their mouths. Older
children also sometimes put the magnets in their mouths to magnetize
braces or mimic facial piercings. When put in children’s mouths, the
magnets are sometimes swallowed, lodging in the digestive system and
causing serious injury or death.
The Consumer Product Safety Commission tried to address this
danger through both rulemaking and adjudication. Through rulemaking, the
Commission proposed a safety standard to either enlarge the magnets or
weaken their magnetic strength. See Safety Standard for Magnet Sets, 77
Fed. Reg. 53,781, 53,787–88 (Sept. 4, 2012); 15 U.S.C. §§ 2056(a), 2058
3
(2018). The Commission approved the final rule in a public hearing in
September 2014. 1 At that hearing, three of the Commission’s members
(Adler, Kaye, and Robinson) made statements about the risk posed by the
magnets, the impossibility of mitigating that risk, and Zen’s role as a
magnet distributor.
Shortly after proposing the safety standard, the Commission initiated
an adjudication by authorizing complaints against Zen and two other
distributors of small rare-earth magnets. The complaints alleged that the
magnets presented a “substantial product hazard.” See 15 U.S.C. § 2064(a)
(2018). The other two distributors entered into consent agreements with the
Commission, leaving Zen as the only remaining distributor in the
adjudication.
In that adjudication, an administrative law judge found that
• the magnets did not present a substantial product hazard when
accompanied by appropriate warnings and age
recommendations and
• the previous warnings had been inadequate.
Given these findings, the administrative law judge recalled the magnets
that Zen had sold without adequate warnings or age recommendations.
1
Our court later vacated the rule and remanded to the agency after a
challenge from Zen. See Zen Magnets, LLC v. CPSC, 841 F.3d 1141, 1144
(10th Cir. 2016).
4
Counsel for the agency appealed to the Consumer Product Safety
Commission, and Zen sought recusal of Commissioners Adler, Robinson,
and Kaye, arguing that they had improperly prejudged the adjudication
based on
• the overlap between the issues in the rulemaking and
adjudication and
• the Commissioners’ public statements.
The Commissioners declined to recuse. Three years after passing the final
magnet rule, the Commission decided that
• the magnets presented a substantial product hazard because a
defect created a substantial risk of public injury and
• no warnings could mitigate the risk of injury.
Zen appealed to federal district court, renewing challenges to the
participation of Commissioners Adler, Robinson, and Kaye and arguing
that the Commission’s decision was arbitrary and capricious under the
Administrative Procedure Act. The district court ruled that (1) the decision
was not arbitrary and capricious, (2) Commissioners Robinson and Kaye
had not violated due process by participating in the adjudication after
publicly remarking about Zen and its magnets, and (3) Commissioner Adler
had violated due process by participating in the adjudication after publicly
remarking about Zen and its magnets. The district court thus invalidated
the Commission’s final order.
5
After the district court issued its order, Zen filed a Rule 59(e) motion
to alter or amend the judgment. In this motion, Zen asked the district court
to vacate its conclusion that the Commission’s reasoning was not arbitrary
and capricious, characterizing this conclusion as an impermissible advisory
opinion. The district court rejected this request.
II. We conduct de novo review.
Our review is de novo. N. M. Cattle Growers Ass’n v. U.S. Fish &
Wildlife Serv., 248 F.3d 1277, 1281 (10th Cir. 2001). The Commission’s
opening brief cites the standard to review a summary-judgment ruling, and
the parties refer to their briefs in district court as cross-motions for
summary judgment. See First Br. at 17; Appellant’s App’x, vol. 2, at 398,
419. But the summary-judgment standard doesn’t apply because the district
court’s decision involved an administrative appeal. See Olenhouse v.
Commodity Credit Corp., 42 F.3d 1560, 1579–80 (10th Cir. 1994) (stating
that district courts reviewing agency actions should function like appellate
courts and “motions for summary judgment are conceptually incompatible
with the very nature and purpose of an appeal”).
III. We have jurisdiction over the Commission’s appeal and part of
Zen’s cross-appeal.
Every appellant bears the burden of proving appellate jurisdiction by
demonstrating the finality of the challenged decision or identifying a
specific grant of jurisdiction. EEOC v. PJ Utah, LLC, 822 F.3d 536, 542
6
n.7 (10th Cir. 2016); see 28 U.S.C. § 1291 (2018). An administrative
remand is not ordinarily considered a final decision. Western Energy All. v.
Salazar, 709 F.3d 1040, 1047 (10th Cir. 2013). We thus generally lack
jurisdiction over remands to administrative agencies. Id.
Both parties invoke the practical-finality exception for their appeals.
We conclude that the exception applies to the Commission’s appeal as to
the disqualification of Commissioner Adler, and we exercise pendent
appellate jurisdiction over Zen’s cross-appeal as to the participation of
Commissioners Kaye and Robinson. But we lack jurisdiction over Zen’s
cross-appeal on the refusal to vacate the district court’s opinion as an
advisory opinion.
A. We have jurisdiction over the Commission’s appeal under
the practical-finality exception.
Though appellate jurisdiction requires finality, we construe the term
“finality” based on practicality. Gillespie v. U.S. Steel Corp., 379 U.S.
148, 152 (1964). With this lens of practicality, we sometimes regard a
district court’s remand to an agency as “practically final.” Western Energy
All. v. Salazar, 709 F.3d 1040, 1049–50 (10th Cir. 2013). A district court’s
remand is practically final when it is urgent that an issue be decided
because it is important, serious, and unsettled. Bender v. Clark, 744 F.2d
1424, 1427 (10th Cir. 2013).
7
To decide whether a decision is practically final, we ask whether “the
danger of injustice by delaying appellate review outweighs the
inconvenience and costs of piecemeal review.” New Mexico v. Trujillo, 813
F.3d 1308, 1317 (10th Cir. 2016) (quoting United States v. Copar Pumice
Co., 714 F.3d 1197, 1209 (10th Cir. 2013)).
Practical finality is particularly appropriate when an agency may be
foreclosed from appellate review. Id. at 1318 n.4; Bender v. Clark, 744
F.2d 1424, 1428 (10th Cir. 2013). For example, we found the ruling
practically final in Bender v. Clark, 744 F.3d 1424, 1427–28 (10th Cir.
2013). In Bender, a district court remanded after concluding that the
Interior Board of Land Appeals had applied the wrong standard of proof.
744 F.2d at 1426. In exercising jurisdiction, we emphasized the importance
of applying the correct standard of proof. Id. at 1428. Though the issue
was important, it was unlikely to return if we did not undertake appellate
review. Id. So deferring appellate jurisdiction would have threatened our
ability to address an important issue involving the standard of proof. Id.
Deferring jurisdiction here could similarly threaten our ability to
address the Commission’s appellate issue involving due process. This issue
is serious and important, for due process is an “absolute” and “important”
constitutional right. Carey v. Piphus, 435 U.S. 247, 266 (1978).
If we were to decline appellate jurisdiction, the Commission’s due-
process issue would likely escape review in the future. Dismissal of the
8
appeal would spark new administrative proceedings before a new panel,
and the resulting order would supersede the Commission’s existing order.
So any challenge to the district court’s ruling on due process would likely
become moot, and the Commission would likely lose the chance to appeal.
Reviewing the issue now may also help avoid piecemeal litigation. If
we decline review and Zen loses again in administrative proceedings, Zen
could again appeal to the district court based on a denial of due process.
And if the district court were to rule against Zen, it could appeal. If Zen
again appealed, we could invalidate the decision for lack of due process,
triggering a new round of litigation. By addressing the due process claim
now, we may avoid multiple rounds of litigation.
Given the need for immediate review, we consider the district court’s
ruling on Commissioner Adler as practically final.
B. We lack independent jurisdiction over Zen’s cross-appeal.
Our appellate jurisdiction over the Commission’s appeal does not
encompass Zen’s cross-appeal. So Zen bears the burden of proving
appellate jurisdiction over the cross-appeal. See pp. 6–7, above. Zen tries
to satisfy this burden with three arguments:
1. We have jurisdiction over the cross-appeal as a matter of
practical finality.
2. We have jurisdiction under the collateral-order doctrine.
3. The denial of Zen’s motion to alter or amend is a final
judgment.
9
We reject these arguments.
First, the district court’s decision was not “practically final” for Zen.
For administrative agencies, a remand prevents a later appeal of the initial
decision. Sierra Club v. U.S. Dep’t of Agric., 716 F.3d 653, 656–57 (D.C.
Cir. 2013). But private parties can freely challenge the initial decision
after the agency carries out the remand order. Id. So the remand order did
not prevent eventual appellate review of Zen’s arguments.
Second, the collateral-order doctrine does not apply. Under this
doctrine, the collateral issue must be subject to a conclusive determination,
be important and separate from the merits of the action, and be effectively
unreviewable after a final judgment. Mesa Oil, Inc. v. United States, 467
F.3d 1252, 1254 (10th Cir. 2006). Zen argues that it satisfies these
requirements with respect to the bias of two Commissioners and the district
court’s refusal to vacate language constituting an advisory opinion. We
disagree.
Even if we decline to exercise jurisdiction over the cross-appeal, Zen
could eventually appeal based on the participation of Commissioners Kaye
and Robinson. The eventual availability of judicial review prevents
reliance on the collateral-order doctrine.
Zen also argues that if this appeal is dismissed, we could never
consider whether the district court’s discussion on the merits constituted
10
an advisory opinion. But the district court’s ruling hasn’t been vacated. So
when a final order is eventually issued, Zen could appeal and argue that
the merits discussion was advisory. See 28 U.S.C. § 1291 (2018).
Third, Zen argues that the denial of its motion to alter or amend
constituted a final judgment. But the administrative remand order did not
constitute a “final order,” Western Energy All. v. Salazar, 709 F.3d 1040,
1047 (10th Cir. 1984), so “the denial of a motion to alter such judgment
cannot be final for such purposes either,” Branson v. City of Los Angeles,
912 F.2d 334, 336 (9th Cir. 1990). 2
Even if the denial of the motion to alter or amend had constituted a
final judgment, we would lack appellate jurisdiction over the issue
involving an advisory opinion. In Zen’s motion to alter or amend the
judgment, Zen characterizes the district court’s prior assessment of the
Commission’s decision as an advisory opinion. Even if this assessment
constituted an advisory opinion, the district court’s prior language did not
constitute a judgment, and the entry of judgment is what triggers appellate
jurisdiction. See Jennings v. Stephens, 574 U.S. 271, 277 (2015) (“This
2
Zen points out that the Ninth Circuit has characterized the denial of a
Rule 59(e) motion as an appealable judgment. Second Br. at 12 (quoting
Balla v. Idaho State Bd. of Corrs., 869 F.2d 461, 467 (9th Cir. 1989)). But
the Ninth Circuit made this characterization while observing that a final
judgment is required for a motion under Rule 59(e). Balla, 869 F.2d at 467.
A judgment is final only if it ends the litigation and leaves only the
execution of the judgment. Catlin v. United States, 324 U.S. 229, 233
(1945).
11
Court, like all federal appellate courts, does not review lower courts’
opinions, but their judgments.”); Chevron, U.S.A., Inc. v. Nat. Res. Def.
Council, Inc., 467 U.S. 837, 842 (1984) (“[T]his Court reviews judgments,
not opinions.”).
C. We exercise pendent appellate jurisdiction over Zen’s due
process claims.
Although we lack jurisdiction over the cross-appeal, we exercise
pendent appellate jurisdiction over Zen’s due process claims.
We may exercise pendent appellate jurisdiction over non-appealable
decisions “that overlap[] with an appealable decision.” Moore v. City of
Wynnewood, 57 F.3d 924, 929 (10th Cir. 1995). Though pendent appellate
jurisdiction is disfavored, it is discretionary. Id. We may exercise that
discretion when the non-appealable and appealable decisions are
“inextricably intertwined.” Id. at 930. Claims are “inextricably
intertwined” when “the pendent claim is coterminous with, or subsumed in,
the claim before the court on interlocutory appeal.” United Transp. Union
Loc. 1745 v. City of Albuquerque, 178 F.3d 1109, 1114 (10th Cir. 1999)
(quoting Moore, 57 F.3d at 930).
Only Zen’s due process claims are intertwined with the
Commission’s appeal. Zen contends that the district court improperly
issued an advisory opinion, but this contention does not bear on the
Commission’s argument about disqualification of Commissioner Adler.
12
Zen’s contentions about Commissioners Robinson and Kaye are
different. Zen bases these contentions on the same legal standard and
analysis underlying the appeal as to Commissioner Adler’s participation.
Given this overlap, we exercise pendent appellate jurisdiction over Zen’s
cross-appeal on the due process issues.
IV. The Commissioners did not violate Zen’s right to due process.
Zen argues that it suffered a denial of due process from
• the Commissioners’ participation in an adjudication after a
related rulemaking and
• the public statements by three Commissioners (Adler,
Robinson, and Kaye) showing bias.
We reject both contentions.
A. The Commissioners did not violate due process by
participating in an adjudication during the related
rulemaking.
Zen admits that agencies can conduct simultaneous rulemakings and
adjudications, but insists that the Commission’s simultaneous rulemaking
and adjudication violated due process in this case. Compare Oral Arg. at
31:14–23 (“We are not saying that there’s anything inherently wrong with
conducting a rulemaking at the same time as undergoing an adjudication.”),
with Second Br. at 21 (“Zen argue[s] that because there was such a high
degree of overlap concerning the facts and laws at issue, the Commission
did necessarily prejudge those matters in advance.” (emphasis in original)).
In our view, the Commission’s simultaneous use of rulemaking and
13
adjudication did not violate due process. See Stephanie W. Kanwit, Federal
Trade Commission § 1:3 (2019) (“The courts have also generally upheld
the commission when it has simultaneously conducted industry-wide
investigations and adjudicative proceedings involving the same general
subject matter.” (footnote omitted)). 3
Agency officials can undertake multiple roles when carrying out their
statutory duties, and the occupation of different roles is not necessarily
problematic. For example, administrative officials could participate in an
administrative adjudication even after investigating and testifying about
their opinions on the underlying conduct. FTC v. Cement Inst., 333 U.S.
3
Although the Commission simultaneously conducted the rulemaking
and adjudication, the individual Commissioners did not. In 2012, the
Commission proposed the product safety standard and authorized complaint
counsel to issue an administrative complaint against the magnet
distributors. The Commissioners voted over two years later on approval of
the final rule. Roughly two more years passed before the adjudication was
appealed to the Commission.
Zen’s briefing does not clearly identify whether its due process
challenge is based on
• the Commission’s simultaneous participation in the proceedings
or
• the Commissioners’ participation in the adjudication after
engagement in the rulemaking.
Despite this ambiguity, either challenge would fail because simultaneous
rulemaking and adjudication would not violate due process.
14
683, 700 (1948). 4 And a medical examining board’s investigation of a
doctor did not preclude the board from later holding a hearing on whether
to suspend the doctor’s license. Withrow v. Larkin, 421 U.S. 35, 46 (1975).
Occupying multiple roles is ordinarily permissible even when an
administrative official enters an adjudication familiar with the facts. After
all, judges need not ordinarily recuse after ruling on similar issues in other
cases involving the same parties. See Frey v. EPA, 751 F.3d 461, 472 (7th
Cir. 2014) (concluding that the district judge’s prior ruling on similar
issues in an enforcement action did not require recusal in a citizen suit);
Steering Comm. v. Mead Corp. (In re Corrugated Container Antitrust
Litig.), 614 F.2d 958, 964 (5th Cir. 1980) (stating that “overwhelming
authority” relieves judges of the need to recuse when presiding over a case
involving the same parties and facts even after forming pertinent
conclusions in prior cases). Recusal is required only if familiarity with the
facts would prevent an administrator from “judging a particular
controversy fairly on the basis of its own circumstances.” Hortonville Joint
Sch. Dist. No. 1. v. Hortonville Educ. Ass’n, 426 U.S. 482, 493 (1976)
(quoting United States v. Morgan, 313 U.S. 409, 421 (1941)).
4
Zen points out that in Cement Institute, the adjudication addressed
whether the defendants had engaged in conduct previously deemed illegal.
333 U.S. at 700. But Cement Institute clarifies that agency officials can
simultaneously undertake multiple roles in related matters without
violating due process. Id.
15
 Zen does not show any circumstances suggesting the Commissioners’
inability to remain impartial after addressing related issues in the
rulemaking. Without such a showing, we conclude that the Commissioners
did not deny Zen’s right to due process by serving first as rulemakers and
then as adjudicators. See Ash Grove Cement Co. v. FTC, 577 F.2d 1368,
1373–77 (9th Cir. 1978) (concluding that the FTC’s expression of
conclusions in an enforcement policy, which resulted from an investigation
through rulemaking, did not show prejudgment of related issues in an
adjudication).
B. The Commissioners’ statements do not reflect prejudgment
of the issues or a reasonable appearance of prejudgment.
Though agencies may undertake overlapping rulemakings and
adjudications, commissioners may still be disqualified for bias if they have
“prejudged the case or . . . given a reasonable appearance of having
prejudged it.” Kennecott Copper Corp. v. FTC, 467 F.2d 67, 80 (10th Cir.
1972). But challengers must overcome a presumption that adjudicators are
neutral, for we assume that adjudicators are people “of conscience and
intellectual discipline, capable of judging a particular controversy fairly on
the basis of its own circumstances.” United States v. Morgan, 313 U.S.
409, 421 (1941); see p. 34, below.
To determine whether Zen has overcome this presumption, we
consider the context and content of the Commissioners’ statements. The
16
context can include a variety of circumstances, including whether the
statements
• involved legal or factual issues 5 or
• occurred within the course of performing official duties. 6
The Commissioners addressed factual issues, and the factual nature
of these issues supports Zen. But the parties disagree on whether the
statements constituted part of the rulemaking proceedings. Zen contends
that the Commissioners made four statements that
• appeared in press releases after the Commission had already
voted to approve a proposed version of the eventual rule and
• were made to “commend[] the righteousness of [the
Commissioners’] actions.”
5
See 2 Charles H. Koch, Jr., Administrative Law & Practice § 6:10, at
359 (3d ed. 2010) (“Bias as to legal theory or policy cannot be attacked
because bias as to policy or theory does not create a defect in the
decisionmaking.”); Kenneth Culp Davis, Administrative Law Text 245 (3d
ed. 1972) (“Bias in the sense of crystallized point of view about issues of
law or policy is almost universally deemed no ground for
disqualification.”).
6
See 2 Charles H. Koch, Jr., Administrative Law & Practice § 6:10, at
362 (3d ed. 2010) (“Where the potential bias, even as to specific facts,
occurs within an institutionalized decisionmaking context, it may be
permitted unless it strikes at the very integrity of that process.”). These
circumstances are not exhaustive. For example, a commissioner’s personal
stake in the outcome could substantially affect the need for
disqualification. See 7 Charles H. Koch, Jr., Federal Administrative
Practice § 8302, at 592 (3d ed. 2001) (stating that “[t]he highest
probability” of actual bias comes when the decisionmaker has a personal
stake in the outcome).
17
Second Br. at 24. But the Commissioners made three of these statements in
the rulemaking to explain their votes for the rule. The fourth statement was
issued by the Department of Justice. In this statement, the Department of
Justice included a comment by Commissioner Kaye about a ruling
unrelated to the pending adjudication against Zen.
None of the four statements show that the Commissioners prejudged
the adjudication or gave a reasonable appearance of prejudgment. 7
7
In its reply brief, Zen also relies on another statement by
Commissioner Robinson. On May 14, 2014, Commissioner Robinson made
a written statement about the Commission’s vote to enter into a consent
agreement with another firm that had sold high-powered magnet sets.
Commissioner Robinson stated that “[h]igh-powered magnets [were]
responsible for horrific, long-term, and life threatening injuries in infants
and children estimated to be in the thousands.” Appellant’s App’x, vol. 1,
at 268. In a reply brief, Zen criticized the May 14 statement. But in the
opening brief, Zen had focused only on two other statements that
Commissioner Robinson had made in a separate hearing.
We decline to consider the statement on May 14 because Zen did not
challenge this statement in the opening brief. See State Farm Fire & Cas.
Co. v. Mhoon, 31 F.3d 979, 984 n.7 (10th Cir. 1993) (“Appellant failed to
raise this issue in his opening brief and, hence, has waived the point.”);
Third Br. at 1 n.1 (explaining Zen’s waiver); Second Br. at 28–29 (quoting
Commissioner Robinson’s first and second statements but not her third
statement).
Zen contends that it preserved this argument because the second brief
repeatedly referred to Commissioner Robinson’s comments, signaling that
all of the comments were involved in the appeal. Fourth Br. at 24. The use
of the plural was not enough to alert us to the third statement made on May
14. As noted above, Zen’s opening brief had focused on two separate
statements that Commissioner Robinson had made in a separate hearing.
Without identifying the third statement in the opening brief, Zen failed to
preserve this argument.
18
1. The three statements made during the rulemaking and one
statement made outside the rulemaking do not show
prejudgment or its appearance.
The Commissioners’ three statements in the rulemaking do not
suggest prejudgment or an appearance of prejudgment. The same is true of
Commissioner Kaye’s statement outside the rulemaking.
a. To determine whether a statement shows prejudgment or its
appearance, we consider the statement’s context and
content.
The Commission encourages us to approve of each statement made
during the rulemaking without considering the content. For example, the
Commission contends that “[b]ecause Commissioner Adler was not
disqualified from the adjudication by virtue of his participation in the
rulemaking, he also was not disqualified by virtue of opinions he
appropriately formed and expressed in connection with that rulemaking.”
First Br. at 16–17.
Zen responds that this argument is unpreserved because the
Commission did not make it in district court. We disagree. The
Commission raised this argument in district court, though the wording was
different.
We generally decline to consider arguments that were not made in
district court. We decline consideration even if the appellant makes an
argument falling “under the same general category as
an argument presented at trial.” McDonald v. Kinder-Morgan, Inc., 287
19
F.3d 992, 999 (10th Cir. 2002) (citing Lyons v. Jefferson Bank &
Trust, 994 F.2d 716, 722 (10th Cir. 1993)). But we focus on the theories
that the parties raise, not “the . . . legal rubrics that provide the foundation
for them.” Ave. Capital Mgmt. II, L.P. v. Schaden, 843 F.3d 876, 885 (10th
Cir. 2016) (quoting Fish v. Kobach, 840 F.3d 710, 730 (10th Cir. 2016)).
In framing its argument to our Court, the Commission contends that
administrators can adjudicate issues even when they have expressed strong
views on the subject. The Commission made the same argument in district
court when insisting that Commissioner Adler could participate in both the
rulemaking and the adjudication. See Appellant’s App’x, vol. 2, at 464
(“Time and time again, the Supreme Court has held there is no violation of
due process even if officials have already considered similar facts, reached
legal conclusions about those facts, and publicly discussed those
conclusions.”); id. at 470 (“Engaging in a Rulemaking and Adjudication
Does Not Demonstrate Bias”). The phrasing is new, but the argument is
not.
Though the Commission’s argument isn’t new, it is invalid. Just
because a commissioner can participate in both a rulemaking and an
adjudication doesn’t mean that the commissioner’s statements are insulated
from scrutiny. To decide whether a commissioner has prejudged the matter
or given the appearance of prejudgment, we consider the circumstances.
See Kennecott Copper Corp. v. FTC, 467 F.2d 67, 80 (10th Cir. 1972). The
20
circumstances include whether the commissioner made the statements
while carrying out an official duty.
The Supreme Court addressed this issue in Federal Trade
Commission v. Cement Institute, 333 U.S. 683 (1948). There the FTC
condemned a pricing system before conducting an adjudication against
various companies for using this pricing system. 333 U.S. at 700. The
Supreme Court held that the right to due process did not prevent the FTC
from adjudicating the case after deciding that the pricing system was
illegal:
[No] decision of this Court would require us to hold that it
would be a violation of procedural due process for a judge to sit
in a case after he had expressed an opinion as to whether certain
types of conduct were prohibited by law. In fact, judges
frequently try the same case more than once and decide identical
issues each time, although these issues involved questions both
of law and fact. Certainly, the Federal Trade Commission cannot
possibly be under stronger constitutional compulsions in this
respect than a court.
Id. at 702–03. 8
We addressed a different situation in Staton v. Mayes, 552 F.2d 908
(10th Cir. 1977). There we considered an administrator’s comments while
8
Zen argues that Cement Institute is distinguishable because the FTC
did not “conclude, as a matter of law and fact, that the respondents in that
case had engaged in an illegal multiple basing point system.” Second Br. at
22. But like the agency in Cement Institute, the Commission here
confronted different issues in the rulemaking and adjudication. See pp. 26–
27, 29–30, below.
21
campaigning for office. 552 F.2d at 913–14. We concluded that the
comments showed prejudgment in a later adjudication, and we observed
that the administrator had made the statements outside his official
capacity. Id. at 914 (“These were not mere statements on a policy issue
related to the dispute, leaving the decision maker capable of judging a
particular controversy fairly on the basis of its own circumstances.”). 9
Cement Institute and Staton mark opposite sides of the spectrum.
Under Cement Institute, an administrator can ordinarily participate in an
adjudication after opining on disputed issues in the course of other
proceedings. After all, judges must often decide issues after squarely
deciding the same issues in other proceedings. But Staton shows that when
an administrator unnecessarily makes prejudicial remarks outside an
authorized proceeding, the court is more likely to find a violation of due
process.
9
The D.C. Circuit addressed an analogous issue in Cinderella Career
& Finishing Schools, Inc. v. FTC. 425 F.2d 583 (D.C. Cir. 1970). There the
FTC issued a complaint against a charm school for unfair or deceptive
marketing. Id. at 584. After the FTC reviewed an administrative law
judge’s decision, Cinderella moved to disqualify one of the commissioners
based on his public statements about Cinderella’s advertising. Id. at 584–
85, 589–90. The D.C. Circuit held that the commissioner’s statements
showed bias and that he should have been disqualified, emphasizing that
the commissioner had made the pertinent comments outside his official
duties. Id. at 590–91.
22
 Under Cement Institute and Staton, we ask whether administrators
made the prior statements in the course of an authorized proceeding. If
they did so, we are less likely to consider the prior statements as evidence
of prejudgment or its appearance. 10
But even when statements take place in the course of an authorized
proceeding, the statements may reflect prejudgment or its appearance. See
Kristin E. Hickman & Richard J. Pierce, Jr., Administrative Law Treatise
§ 7.7, at 868 (6th ed. 2019) (“It is conceivable that a decisionmaker can
form an opinion of a party so extreme that it renders the decisionmaker
impermissibly biased, even though the sole source of the facts that form
the basis for the opinion is a judicial proceeding in which the
decisionmaker presided.”). So the court must consider not only the
statements’ context but also their content.
10
The Commission also refers to Liteky v. United States, 510 U.S. 540
(1994). Liteky held that 28 U.S.C. § 455(a) requires federal judges and
justices to recuse from subsequent judicial proceedings based on
statements in previous judicial proceedings only when the statements are
“so extreme as to display clear inability to render fair judgment.” 510 U.S.
at 551. But Liteky bears little consequence here; that case relied on the
requirements of 28 U.S.C. § 455(a), which arguably differ from the
requirements for due process. See United States v. Couch, 896 F.2d 78, 81
(5th Cir. 1978) (“[S]ection 455 and the Due Process Clause are not
coterminous.”).
23
b. Commissioner Adler’s statement during the rulemaking does
not show prejudgment or its appearance.
Commissioner Adler made his statement during the rulemaking when
explaining his vote. In the hearing on rulemaking, Commissioner Adler
stated that “if these magnet sets remain on the market irrespective of how
strong the warnings on the boxes in which they’re sold or how narrowly
they are marketed to adults, children will continue to be at risk of
debilitating harm or death from this product.” Appellant’s App’x, vol. 2, at
422.
Zen argues that this statement was made in a press release. But this
statement is audible in the video recording of the rulemaking proceeding.
U.S. Consumer Product Safety Commission, Commission Meeting:
Decisional Matter - Safety Standard for Magnet Sets Final Rule [“Hearing
Video”], YouTube, at 22:20–22:36 (Oct. 2, 2019),
https://www.youtube.com/watch?v=nyomlgxgQeU&feature=youtube. The
Commission later printed Commissioner Adler’s statement and put it on the
Commission’s website. But Commissioner Adler made this statement in the
rulemaking itself, not afterward.
Zen analogizes the statement to comments made following a
proceeding when an adjudication is pending on the same issues. The
analogy is inapt because Commissioner Adler didn’t make the statement
after the rulemaking. If a newspaper had printed the comments after the
24
rulemaking, few would characterize the newspaper account as a new
statement made outside of the rulemaking. Here the publication appeared
on the Commission’s website rather than in a newspaper, but this
distinction does not give us any reason to treat the statement differently.
Because Commissioner Adler made the statement in the rulemaking itself,
this factor weighs for the Commission. But this factor does not end the
inquiry; we must still consider the content of Commissioner Adler’s
statement.
The right to due process is violated when a commissioner’s remarks
demonstrate prejudgment or the appearance of prejudgment. See Part
IV(B), above. Zen argues that the statement shows Commissioner Adler’s
predisposition to find the magnets dangerous even with warnings. For three
reasons, we disagree.
First, Commissioner Adler was directly addressing an issue before
the Commission in the rulemaking: whether the risk could be addressed
through alternatives like warnings. See 15 U.S.C. § 2058(f)(3) (2018).
Commissioner Adler had to decide the issue in order to resolve the
rulemaking.
Second, the statement was measured. Commissioner Adler said only
that he didn’t think that warnings could mitigate the harm. This statement
resembles the Commission’s explanation for the rule, which casts doubt on
the impact of warning labels on the risk of injury. See Safety Standard for
25
Magnet Sets, 77 Fed. Reg. 53,781, 53,789 (Sept. 4, 2012). So
Commissioner Adler’s statements do not show prejudgment or its
appearance.
Third, Commissioner Adler clarified that his comments at the hearing
did not bear on his judgment in the adjudication. Right after making his
statement, Commissioner Adler emphasized that
• he was not “passing judgment on whether magnets present [a
substantial product] hazard” for the adjudication because “[he]
ha[d] not seen the case before [him],” Hearing Video at 24:38–
24:43, and
• “[e]ach type of proceeding carries different factual elements
and different standards of proof,” id. at 25:41–25:46. 11
Commissioner Adler then repeated these comments in a written
statement on the rulemaking, acknowledging “that a product found to
present an unreasonable risk of injury” in a rulemaking “might be
11
Zen points out that the district court concluded that the “role of
warnings and marketing efforts [had been] of central relevance in the
adjudication.” Appellant’s App’x, vol 1, at 521. But the issues in the
rulemaking and adjudication differed. See pp. 26–27, 29–30, below.
Zen also argues that Commissioner Adler’s statement was
extrajudicial because the rulemaking did not address the need to remove
the magnets from the market. But Commissioner Adler made the statement
• during the rulemaking
• about issues involved in the rulemaking.
So his statement was not extrajudicial. See pp. 24–25, above.
26
completely exonerated as a substantial risk of injury” in an adjudication.
Appellant’s App’x, vol. 1, at 269. 12
Given the context and content of Commissioner Adler’s statements,
we conclude that they did not show prejudgment or the appearance of
prejudgment.
c. Commissioner Robinson’s statements during the rulemaking
do not show prejudgment or its appearance.
Zen also addresses two of Commissioner Robinson’s remarks during
the rulemaking:
1. “The problem was however that however they were
marketed that these were items that were being swallowed
by young children and ingested by teenagers and were
causing some very, very serious injuries and even
deaths.”
2. “With the data that we had even though it made a
compelling case for this being an unreasonable risk of
injury it was understated so the risk was even higher.”
Appellant’s App’x, vol. 2, at 423 (emphasis in original). 13
12
Indeed, the Commission used different reasoning in the adjudication
and final rulemaking. See, e.g., id. at 69 n.28 (noting that in the
adjudication, the Commission declined to rely on emergency-room injury
reports for injury estimates even though the Commission had relied in the
rulemaking on these reports).
13
Although Commissioner Robinson is no longer on the Commission,
her departure does not moot the issue. See Second Br. at 25 n.12. If
Commissioner Robinson’s participation violated Zen’s right to due process,
her participation would invalidate the Commission’s decision because the
Court would have no way of knowing whether she had influenced the other
27
Zen again says that the statements came in a press release. But
Commissioner Robinson’s statements are recorded in a videotape of the
rulemaking as she explained her decision. The first statement came in
Commissioner Robinson’s opening remarks, Hearing Video at 1:40–1:59;
the second statement came when Commissioner Robinson explained her
vote for the rule, id. at 30:14–30:24.
The Commission later printed Commissioner Robinson’s statement
and put a written version on the Commission’s website. But just like
Commissioner Adler, Commissioner Robinson didn’t make any new
statements for the website; the Commission simply printed the statements
that Commissioner Robinson had made during the rulemaking itself. So the
context of the statements supports the Commission.
But we must still consider whether the statements’ contents show
prejudgment or the appearance of prejudgment. The district court answered
“no,” and we agree.
In her opening remarks, Commissioner Robinson suggested that no
marketing could mitigate the risk. See p. 27, above. But the statement did
not show that the Commissioner’s mind was closed to the possibility of
mitigating the risk through better instructions.
two Commissioners’ decisions. See Cinderella Career & Finishing Schs.,
Inc v. FTC, 425 F.2d 583, 592 (D.C. Cir. 1970).
28
In her second statement, Commissioner Robinson also distinguished
between the standards used in rulemaking and adjudication. The
rulemaking required the Commission to make specific findings, including
the necessity of eliminating or reducing the risk of injury. 15 U.S.C.
§ 2058(f)(3) (2018). By contrast, the adjudication required the Commission
to decide whether the magnets constituted a “substantial product hazard.”
15 U.S.C. § 2064(a) (2018). The term “substantial product hazard” refers
to either
• a failure to comply with consumer product safety rules “which
creates a substantial risk of injury to the public” or
• “a product defect which (because of the pattern of defect, the
number of defective products distributed in commerce, the
severity of the risk, or otherwise) creates a substantial risk of
injury to the public.”
Id.
In explaining her vote for the rule, Commissioner Robinson
reiterated the elements necessary for rulemaking under 15 U.S.C.
§ 2058(f)(3). See Hearing Video at 27:30–27:38 (“In approaching my
decision in this matter, I very much looked carefully at the statutes under
which we operate in rulemaking.”). Commissioner Robinson noted that the
data had “made a compelling case for this being an unreasonable risk of
injury” but hadn’t shown whether a potential product hazard would have
been substantial. See Appellant’s App’x, vol. 2, at 423. So Commissioner
29
Robinson’s statement does not bear on the issue underlying the
adjudication.
** *
Given the context and content of Commission Robinson’s statements,
we conclude that they do not show prejudgment or the appearance of
prejudgment.
d. Commissioner Kaye’s statements (one made during the
rulemaking and one made outside the rulemaking) do not
show prejudgment or its appearance.
Zen also points to an impassioned statement at the rulemaking by
then-Chairman Kaye about the magnets’ dangers:
We all have fears in life. Every single one of us. For me, the
biggest without any question, is something tragic happening to
one of my boys. Every night, EVERY NIGHT, long after we have
put them to bed, I sneak back into their rooms to kiss them one
more time. As I do that, I feel tremendous gratitude they are alive
and well, and that I am so blessed to have the privilege of hearing
in the dark of their rooms the soothing and rhythmic sound of
their breathing. I hug them tight, trying not to wake them, all the
while knowing that, as long as I might hang on that particular
evening, that moment is rather fleeting. And I also know each
night that there is certainly no guarantee I will have even one
more night to hold onto them tight.
As a parent and as the Chairman of the CPSC, I hurt so much for
[AC’s] family. I was so deeply moved that [AC’s] mother,
brothers, grandmother, aunt, and cousin took the time to drive
from Ohio to attend the Commission’s vote. I will always think
of [AC] when it comes to this rule and the action the Commission
has approved, and I am so deeply sorry for [AC’s] family’s loss.
Id. at 422 (emphasis in original).
30
Zen again alleges that this statement was made in a press release
after the rulemaking. But Commissioner Kaye made this statement in the
rulemaking as he explained his vote. Hearing Video at 15:19–16:37. The
making of this statement in the rulemaking favors the Commission.
But we must also consider whether the contents of the statement
reflect prejudgment or the appearance of prejudgment. Like the district
court, we conclude that the statement does not show prejudgment. The
statement was passionate, but this passion is not disqualifying. See United
States v. Morgan, 313 U.S. 409, 421 (1941) (concluding that the Secretary
of Agriculture’s expression of “strong views” on an issue did not require
disqualification from participating in related proceedings). In the same
speech, Commissioner Kaye attributed his vote and his remarks to the
Commission’s mandate to protect consumers. Hearing Video at 9:35–9:43
(“I have not seen a better example of the Commission, in particular CPSC
staff, responding and proceeding in a manner true to our mission and
purpose.”)
Zen argues that Commissioner Kaye’s statement went too far and
showed “a personal stake in the outcome of both proceedings,”
demonstrating that he was “removing the Subject Products from the market
in order to protect his own children.” Fourth Br. at 10 (emphasis in
original). We disagree. Commissioner Kaye never said that his children
had used the magnets. He was simply expressing sympathy for the family
31
of a child who had died from swallowing the magnets. This expression of
sympathy did not reflect prejudgment of the issues. See United States v.
Rangel, 697 F.3d 795, 804–05 (9th Cir. 2012) (holding that a district
judge’s expression of sympathy for crime victims did not require
disqualification from sentencing). 14
Commissioner Kaye made another statement unrelated to the
rulemaking process. In general, comments by adjudicators outside their
official duties are not enough, standing alone, to require disqualification.
For example, in Kennecott Copper Corp. v. FTC, a copper corporation
acquired one of the two leading coal corporations in the country. 467 F.2d
67, 69 (10th Cir. 1972). The FTC alleged that this acquisition had violated
the Clayton Act. Id. The copper corporation argued that it had not received
due process because one of the Commissioners had given a public
interview using the copper corporation’s case as an example. Id. at 80. In
evaluating the claim, we considered not only the Commissioner’s decision
to give an interview but also what she had said. Id. We concluded that the
comments did not infringe the right to due process. Id.
Given Kennecott, we consider the context of Commissioner Kaye’s
statement. It was disconnected from the rulemaking but not from his duties
14
In Rangel, the district judge expressed sympathy for the victims after
hearing them recount their hardships. 697 F.3d at 804–05. Similarly,
Commissioner Kaye expressed sympathy for the child’s family after seeing
that they had attended the vote for the rulemaking. See p. 30, above.
32
as a Commissioner. In March 2016, a district court enjoined Zen from
selling certain rare-earth magnets. Zen had purchased hundreds of
thousands of small rare-earth magnets at a discount from another magnet
company. One week later, the seller agreed to recall the magnets as part of
an agreement with the Commission. Following this agreement, Zen was
enjoined from reselling the magnets.
The Department of Justice issued a press release about the injunction
and included an official statement by Commissioner Kaye. In the press
release, Commissioner Kaye stated:
Today’s decision puts the rule of law and the safety of children
above the profits sought by Zen . . . . Far too many children have
been rushed into hospital emergency rooms to have multiple,
high-powered magnets surgically removed from their stomachs.
Young children have suffered infections and one child tragically
died from swallowing loose magnets that often look like candy.
The ruling is a major victory for the safety of consumers. Our
pursuit of this case makes clear we will not tolerate the sale of
recalled goods in any form. I am pleased that Judge Arguello
ordered Zen to issue refunds to consumers, and I urge anyone
who purchased these magnets to immediately seek a refund from
Zen.
Appellant’s App’x, vol. 1, at 275–76. Zen objects to the accusation that it
elevated profit over “the rule of law” and “the safety of children.” Second
Br. at 30 (quoting Appellant’s App’x, vol. 1, at 275).
This statement does not show that Commissioner Kaye prejudged the
adjudication. Enforcing the recall order was unrelated to the adjudication.
Appellant’s App’x, vol. 2, at 524. And Commissioner Kaye was simply
33
addressing Zen’s decision to sell magnets that had been recalled. The
statement did not bear on the issue involved in the adjudication (whether
unrecalled magnets posed a substantial product hazard).
Commissioner Kaye’s comments were also measured. Though
Commissioner Kaye lauded the court for prioritizing safety over Zen’s
profits, the statement focused on the injury from selling magnets that had
already been recalled. The message is not enough to overcome the
presumption that agency adjudicators are “capable of judging a particular
controversy fairly on the basis of its own circumstances.” United States v.
Morgan, 313 U.S. 409, 421 (1941); see p. 16, above. 15
V. Conclusion
Because Zen did not suffer a violation of due process from the
Commissioners’ participation in the adjudication, we
• reverse the district court’s exclusion of Commissioner Adler
and conclude that his participation in the adjudication did not
violate due process and
• affirm the district court’s rejection of Zen’s challenges to the
participation of Commissioners Kaye and Robinson based on
bias.
15
Zen also argues that we should exclude the Commissioners from
participating in the adjudication because the Commission’s chairperson
thought that her colleagues had prejudged the issues. But we must make
our own independent determination on the issue of due process. We can
evaluate the entirety of the Commissioners’ statements as they appear in
the videotape of the rulemaking. We have no need to defer to a
characterization by another participant in the rulemaking.
34