Amazon is moving to recuse Federal Trade Commission (FTC) Chair Lina Khan from any antitrust investigation, adjudication, litigation, or other proceedings related to Amazon. The notion is that Chair Khan has made up her mind, according to Amazon’s motion:
Chair Khan has made numerous and highly detailed public pronouncements regarding Amazon, including on market definition, specific conduct and theories of harm, and the purpose, effects, and legality of such conduct. Indeed, she has on numerous occasions argued that Amazon is guilty of antitrust violations and should be broken up. These statements convey to any reasonable observer the clear impression that she has already made up her mind about many material facts relevant to Amazon’s antitrust culpability as well as about the ultimate issue of culpability itself.
This is not the first time a company has sought to remove a Commissioner for bias. It is a long and time-honored tradition to seek such recusal, even where, as in this case, it is unfounded.
What follows is a brief and incomplete discussion of such attempts in the context of some general principles of administrative law, which hopes to paint a picture of some of the difficulties.
1. Commissioners should be presumed to operate with honesty and integrity.
As the Supreme Court pointed out in Withrow v. Larkin, prior investigation in itself by a Commission hardly suggests bias.
The contention that the combination of investigative and adjudicative functions necessarily creates an unconstitutional risk of bias in administrative adjudication has a much more difficult burden of persuasion to carry. It must overcome a presumption of honesty and integrity in those serving as adjudicators; and it must convince that, under a realistic appraisal of psychological tendencies and human weakness, conferring investigative and adjudicative powers on the same individuals poses such a risk of actual bias or prejudgment that the practice must be forbidden if the guarantee of due process is to be adequately implemented.
In FTC v. Cement Institute, the Cement Institute questioned the ability of the FTC to be impartial in adjudication when the agency had engaged in an investigation of the cement industry. The industry had the same delivered prices for cement, regardless of destination or source. This level of price matching may be viewed as a Festivus miracle, but it caught the eye of the FTC, which issued a report.
The FTC then brought an adjudicatory action, which caused the Cement Institute to question the Commission’s impartiality. The Cement Institute’s primary contention was that the FTC was biased because it had made reports and gave testimony before Congress that made clear that the FTC “were of the opinion that the operation of the multiple basing point system, as they had studied it, was the equivalent of a price-fixing restraint of trade in violation of the Sherman Act.”
The Supreme Court rejected the notion that this would lead to bias. First, the analysis of the Commission prior to adjudication did not mean that the minds of the Commissioners were “irrevocably closed on the subject of the respondents’ basing point practices.” Because the Cement Industry members were legally authorized participants in the hearings, producing volumes of evidence, they sufficiently availed themselves to due process.
Moreover, the whole point of expertise as a Commissioner would be thwarted. “If the Commission’s opinions expressed in congressionally required reports would bar its members from acting in unfair trade proceedings, it would appear that opinions expressed in the first basing point unfair trade proceeding would similarly disqualify them from ever passing on another.” Thus, experience acquired from their work as commissioners would be a handicap, instead of an advantage. Such was not the intendment of Congress, for Congress acted on a committee report stating: “It is manifestly desirable that the terms of the commissioners shall be long enough to give them an opportunity to acquire the expertness in dealing with these special questions concerning industry that comes from experience.”
Also, there were no mechanisms contemplated for recusal of the whole Commission.
This could have been a problem in FTC v. Pillsbury. A Congressional hearing caused FTC Chairman Howrey to discuss the pending matter of Pillsbury’s flour mill acquisitions, largely at the behest of Senator Kefauver. Keep that name in mind for later as I walk through Amazon’s contentions. By the time the case percolated up to the DC Circuit, Howrey was gone. The question arose as to whether staff that had accompanied Howrey to the hearing were biased in violation of Due Process as they themselves became Commissioners. The Court, while finding violation of Due Process, had a convenient out: “We are convinced that the passage of time, coupled with the changes in personnel on the Commission, sufficiently insulate the present members from any outward effect from what occurred in 1955.” This made sense given the Court’s decision was in 1966.
2. Usually, recusal occurs when the Commissioner has worked as counsel on a substantially related matter.
In Re Intel Corp., Intel sought to recuse Commissioner Rosch. Rosch had “served as Intel’s primary outside antitrust counsel from about 1987 until Intel decided to change antitrust counsel in mid-1993.” The motion was suspicious in its timing, perhaps because Intel was hoping Rosch would lean their way. Regardless, the FTC considered the motion under judicial recusal standards. See 28 USC 455(a), “Any justice, judge, or magistrate judge of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned.” The question arose in the context of Commissioner Rosch’s representation of Intel in a prior FTC investigation. The FTC denied the recusal, largely because the judicial gloss on 455(a) looks to participation in a substantially related matter, largely on the grounds of representation as a lawyer. The FTC continued, “Antitrust matters generally, and in technology industries specifically, often involve similar theories of wrongdoing, such as economic tying, applied to a variety of factual circumstances. However, prior familiarity with legal theories is not enough to disqualify Commissioner Rosch.”
Prior knowledge of the type of case or the defences presented is insufficient to justify recusal. If recusal were automatically to follow such tangential commonalities, the Commission would be unable to rely upon experienced, well-informed professionals to decide complex matters. See also Cipollone v. Liggett Group: “If Judges could be disqualified because their background in the practice of law gave them knowledge of the legal issues which might be presented in cases coming before them, then only the least-informed and worst-prepared lawyers could be appointed to the bench.”
The regulations here are fairly sparse.
3. It’s not clear what Amazon means by “other proceedings,” but that too is unlikely to result in recusal.
It is difficult to contemplate what other proceedings Amazon contemplates, but for purposes of this article let’s assume it is rule-making. It would be difficult indeed to preclude Chair Khan from rule-making proceedings, because a Commissioner may only be disqualified only upon clear and convincing evidence of an unalterably closed mind.
In C & W Fish Co. v. Fox, the Department of Commerce (Department), National Oceanic and Atmospheric Administration (NOAA) issued a drift gillnet ban. Regional Administrator Fox’s decision regarding the ban was challenged for bias. Prior to serving at NOAA, Fox was an outspoken critic of drift gillnets. Also, in an article that was published after his appointment but prior to the rule-making, Fox suggested there was “no question” drift gillnets should be eliminated. The court noted elimination of an Administrator on such a basis would eradicate the whole principle of agency expertise.
4. Chair Khan’s “bias” isn’t bias: it is expertise.
Amazon’s claim is based in part on Khan’s article in the Yale Law Journal, titled “Amazon’s Antitrust Paradox.” As Amazon notes, she published the article as a student. Were it not for Chair Khan’s continued interest in Amazon, seeking recusal on the basis of a student paper by itself would be a ridiculous claim, lest we start cautioning students as to what they write in law school.
But, Amazon continues, because Chair Khan also wrote papers for Open Markets, a pro-antitrust advocacy group, her writing continued to target Amazon and demonstrate she has made up her mind. Some of Amazon’s claims are interesting in that they would eliminate many law professors from hearing the Amazon case. According to Amazon’s motion, Chair Khan publicly stated that Amazon engaged in pricing books “significantly below what you paid for them—for the sake of establishing dominance or driving out your competitors—is known as ‘predatory pricing,’ conduct that antitrust authorities once policed.”
Other articles and contentions by the Chair which Amazon claims demonstrated that she has “made up her mind,” run into similar issues. But again, none of these contentions are idiosyncratic to Chair Khan. They are not uncommonly held beliefs within the antitrust community.
To claim that articles and policy pieces were evidence of an unalterably closed mind would foreclose intellectual discovery and information gathering, precluding the acquisition of the very expertise that agencies seek to gather. This is why Cement Institute could not recuse the FTC for writing a report. It should also be the reason Amazon cannot recuse Chair Khan.
Perhaps the most interesting claim is that Chair Khan’s work on behalf of the House Majority in the investigation of Amazon demonstrates that she has “made up her mind.” Amazon points out that Chair Khan served in that role “not as a career official working for the federal government, but rather as a member of the political staff,” a hair so finely split one might need a microscope shipped by Amazon Prime to discern the difference. It’s not clear what the claim is here. Is the claim that Congressional reports are otherwise completely balanced? Is the claim that in writing the report, she is locked into the opinion of those for whom she wrote the report?
Amazon cites a couple of 50+ year old cases, but context matters. And that appears lost in Amazon’s motion. One case Amazon cites, FTC v. Cinderella Career & Finishing Schools, involved a Commissioner making a public statement in a matter pending before him. It did not involve the question of Chair Dixon’s prior employments or roles.
A prior case involved the same individual’s prior work as “Chief Counsel and Staff Director of the Subcommittee on Antitrust and Monopoly.” One of the key contentions here is the influence Senator Kefauver played in interfering with the FTC. “The letter of Senator Kefauver to the then Chairman of the Federal Trade Commission dated July 19, 1960 … expressed the view that the proposed findings of fact and conclusions of fact and law in the present proceedings ‘appear to be firmly based upon a large body of persuasive evidence’ and that ‘I am confident that ultimately the Commission will reverse the hearing examiner’s decisions.’ Petitioners charge that this letter was either prepared by Mr. Dixon or by someone on his staff at his direction or with his approval. This charge is not denied in the record before this court.”
As mentioned earlier, Senator Kefauver was also instrumental in the recusal of the Commission in the FTC v. Pillsbury matter. His interactions with Chair Howrey are quoted at length in the court’s decision. One almost gets the impression, given these cases, that the DC Circuit was keenly away of Senator Kefauver’s attempts to influence the FTC and was equally keen to put the brakes on it. In that event, the cases share a common theme of Congressional intrusion into the adjudicatory function of the agency.
5. What’s REALLY going on here?
More than likely, the game that Amazon is playing is to preserve some claims on appeal. And perhaps Amazon seeks to box Chair Khan into less draconian remedies, should the FTC emerge victorious against the company. That is perhaps a very good reason not to encourage this type of petition.
But bias only works one way. If Chair Khan’s writings have described no circumstance in which Amazon would be liable, there would be no grounds for recusal. If Chair Khan had accepted a grant from Google to write an antitrust article, there would be no cause for recusal. Either scenario would be a violation of due process, and it isn’t likely that FTC staff would successfully prod the Chair to recuse by arguing she had an “irrevocably closed mind.”
Nor do we recuse lawyers from serving as Commissioners who have uniformly evinced a pro-defense position. A lawyer could serve as counsel to a variety of antitrust violators, naked price fixers and other business crime criminals, and not be accused of having “made up their mind.”
Dr. Darren Bush is a Leonard B. Rosenberg College Professor of Law at the University of Houston Law Center. He obtained his JD and PhD in Economics from the University of Utah.
Suggested citation: Darren Bush, The Curious Case of FTC Chair Khan’s Recusal, JURIST – Academic Commentary, July 30, 2021, https://www.jurist.org/commentary/2021/07/darren-bush-curious-case-of-khans-recusal/.
This article was prepared for publication by Heidi J. T. Exner, JURIST’s Community Engagement Director. Please direct any questions or comments to her at commentary@jurist.org
