Federal Trade Commission v. Flotill Products, Inc.
Headline: FTC can enforce cease-and-desist orders based on a majority of its quorum, allowing two-of-three decisions to bind companies during vacancies and making it easier for the agency to act.
Holding: The Court held that an FTC cease-and-desist order is enforceable when supported by a majority of the quorum that decided the case, so two of three participating commissioners can issue a binding order.
- Allows FTC orders to bind when a majority of the quorum supports them.
- Makes businesses subject to FTC decisions despite commissioner vacancies.
- Encourages agencies to rely on quorum rules to decide cases.
Summary
Background
The dispute was between the Federal Trade Commission and a business accused of two violations of the Robinson-Patman Act: making payments in lieu of brokerage and granting unlawful promotional allowances. The full five-member Commission heard argument, but two Commissioners retired before the decision. One new Commissioner declined to participate because he had not heard oral argument, so three Commissioners decided the case; all three agreed on the promotional-allowance violation, but only two supported the payments-in-lieu-of-brokerage finding. A Court of Appeals panel enforced the order on the promotional-allowance finding but refused to enforce the payments-in-lieu finding, concluding that more than two votes were required to bind the Commission.
Reasoning
The Court addressed whether an enforceable FTC order must be supported by a majority of the full five-member Commission or only by a majority of the quorum that acted. The Trade Commission Act is silent on the point, and the Commission’s Rule 1.7 defines a quorum as a majority of its members. The Court applied the common-law rule that, absent a statutory command otherwise, a majority of a quorum may act for a collective body. Because Congress had treated quorum voting differently across agencies and had not clearly required full-Commission majorities for the FTC, the Court reversed the Court of Appeals and held the two-of-three decision on the payments issue could be valid.
Real world impact
The ruling means FTC orders can be binding even when the Commission is reduced by vacancies or nonparticipation, so regulated businesses must treat majority-of-quorum decisions as enforceable. The case was sent back for the lower court to decide the payments-in-lieu claim on its merits.
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