Today was supposed to be my first day of vacation, but since the FTC dropped stuff at 10 pm last night, I spent the morning reading documents and taking a trip down memory lane to the 1980s.
AMREP Corporation = American Realty & Petroleum Corporation. It started out as an oil and gas leasing company in Oklahoma but then started buying up unused land and reselling it to potential homebuyers to build suburban subdivision.
In 1975, the FTC sued AMREP for false and misleading sales practices. The FTC said AMREP misrepresented the growth rates of the areas where these subdivisions were located to make these lands seems more attractive as investments than they were.
The FTC brought the case in its in-house court (Part 3), so a trial was held before its administrative law judge. Back then there weren't as strict timelines on these proceedings. So while the trial started in June 1976, it didn't end until May 1978.
The ALJ issued a decision in July 1979 finding that AMREP had engaged in unfair and deceptive practices and issued a cease and desist order. At that point, AMREP appealed to the commission.
The way the FTC's in-house court works: 1) trial before ALJ; 2) appeal to the commission; then 3) appeal to a federal court.
This brings us to 1983. The commission has heard the appeal by AMREP and is working on its opinion in the case. The president is Ronald Reagan and the FTC's Chair is Jim Miller, Republican and the first economist to helm the agency.
The other commissioners in 1983: Mike Pertschuk (D), the former chair under Carter; George Douglas (D); Patricia Bailey (R); and David Clanton (R)
Clanton's term has expired but per FTC rules, he can remain at the agency until his successor is confirmed. Reagan has nominated Terry Calvani (R) to succeed him and Calvani is awaiting Senate confirmation.
The commissioners are having a tense disagreement over what standard should apply to AMREP's conduct (for the very nerdy among you "tendency or capacity to mislead" vs the new "reasonable consumer" test)
The Dems are for one, the Rs are for the other, though everyone agrees that AMREP's conduct is bad and would be illegal under either test. This debate is still going on Oct. 14, 1983 when the Senate finally gets around to confirming Calvani
By that point, everyone has already written their opinions and the commissioners begin debating whether to count Clanton's vote (remember everyone agrees that AMREP violated the law, just disagree on the proper test)
Pertschuk argues that a commissioner's vote should only count if they are still at the commission when voting is completed. He doesn't have the votes.
Miller makes a motion that votes of departing commissioners always count, except in instances where they are displaced by the votes of their successor. That motion passes 3-2 with Pertschuk (D) and Bailey (R) dissenting.
Bailey issued a written dissent that she asked to be placed on the public record. The FTC didn't release it last night, but I've asked them for a copy.
In the meantime, the FTC released its opinion in AMREP with David Clanton's opinion and vote. AMREP appealed to the 10th Circuit. One of its appeal arguments was that Clanton's vote shouldn't have vounted.
The 10th Circuit says it doesn't matter because even if you subtract Clanton's vote a majority still found its conduct was unfair and deceptive.
The next year (1986), the FTC adopts a new rule -- votes can only stay open for three months and then they fail if they haven't gotten a majority.
In 1994, the FTC shortens that to one month so things don't linger forever.
There's some debate still about whether you can get around that. A motion itself lives for one month, but that month can get extended by a "topping motion" -- essentially an amendment or modification to the original motion
A topping motion suspends the deadlines on the underlying motion while the commissioners debate it. And it also only needs two people, the commissioner proposing it and a second. Can the FTC effectively keep something alive by repeatedly topping it? Unclear for the rules.
Feel free to get your nerd on with the intricacies of FTC voting procedures here: ftc.gov/system/files/d…
And now I'm really going on vacation.
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