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Removal of Commissioners, ALJs Does Not Offend Separation of Powers: Tenth Circuit
Monday, June 10, 2024

When the CPSC finds that a product is defective and constitutes a substantial product hazard, it will ask a company to voluntarily undertake a corrective action, commonly called a recall. If the company refuses to take such action, a major recourse for the agency is to bring an administrative complaint or even a complaint in federal district court. In recent years, the Commission has most often opted to issue so-called “unilateral press releases” without issuing a judicial complaint. This is much cheaper and efficient, but an otherwise destructive and easily abused procedure which deserves separate commentary.

Leachco, Inc., finding itself in the CPSC crosshairs for an infant lounger that allegedly caused two infant deaths, filed for a preliminary injunction in the United States District Court for the Eastern District of Oklahoma, arguing that it should not be subject to the CPSC administrative procedure because it is constitutionally flawed. According to the company, the removal rules, for both the Commissioners and Administrative Law Judges (ALJs), were a violation of Article II of the Constitution (that’s the one that establishes the Executive branch) and the separation of powers (that’s the one where the Executive, Legislative, and Judicial branches are set up to function largely independently of each other). 

Under the law, the President can only remove a CPSC commissioner “for neglect of duty or malfeasance in office but for no other cause.” Also under the law, only the Commission can remove ALJs “for good cause established and determined by the Merit Systems Protection Board on the record after opportunity for hearing before the Board.” 

Leachco asked for an injunction, alleging that it would suffer irreparable harm because of (1) the purported “here-and-now” constitutional injury of being subjected to proceedings before an unconstitutionally structured agency, and (2) the time and expense of litigation. The District Court found both arguments unconvincing to necessitate a preliminary injunction and Leachco timely appealed.

Pointing to the Supreme Court and its own precedent, the Tenth Circuit also rejected the argument. As a practical matter, to get an injunction, a plaintiff has to show that if the Court doesn’t stop what the plaintiff is asking, the plaintiff will suffer irreparable harm. In this case, the Tenth Circuit refused to accept that the company would suffer “harm, let alone irreparable harm” even if it was right about the alleged unconstitutionality of the structure of, and presidential authority over, the Commissioners and ALJs. The Tenth Circuit further advised that it was skeptical about, for example, the purported unconstitutionality of the limited presidential power of removal of CPSC Commissioners. Courts consider historical practice and precedent when they decide separation of powers cases and, historical practice is that Congress and the President depend on independent agencies and their specialized expertise. Precedent also supports that the Tenth Circuit and SCOTUS have repeatedly decided in favor of the constitutionality of similar limited removal protections. 

So, Leachco doesn’t get its injunction and any further challenge of the unconstitutionality of the CPSC Commissioner removal rules will likely have to await any appeal of an adverse ALJ decision, which means the company must bear great expense and expenditure of resources, even if a court eventually finds merit in its constitutional arguments. As of this writing, there is not docket activity to indicate that Leachco filed a motion for a rehearing en banc, but the Product Safety Team at Mintz continues to monitor this case and other litigation activity in the Product Safety space.

According to Tuesday's opinion, Leachco did not properly raise its argument that it would suffer economic and reputational harm without an injunction at the lower court, so the panel focused on the company's argument that the allegedly unconstitutional structure of the CPSC sufficed to justify the injunction. The panel wrote that under current law, the mere subjection to administrative proceedings doesn't constitute irreparable harm. It said Leachco would have to show that the removal protections affected its case in some manner — such as by demonstrating if the president had removed the commissioners or the administrative law judge, the proceeding wouldn't be taking place.

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