Opinion

Hunt v. Commodity Futures Trading Commission

  • 591 F.2d 1234
Court
Court of Appeals for the Seventh Circuit
Filed
Jan 8, 1979
Status
Published
Author
Swygert
On the bench
Markey, Swygert
Cited by
4 cases
Authority
More cited than 52.5%

The opinion

SWYGERT, Circuit Judge.

The principal question before us is whether parties involved in administrative proceedings before the Commodity Futures Trading Commission must exhaust their administrative remedies prior to seeking judicial review of the Commission’s authority to bring the administrative action when the Commission has previously brought a similar, court enforcement action against the same parties. We hold that administrative remedies must be exhausted and sustain the district court’s denial of the appellants’ motion for a preliminary injunction halting the administrative proceedings.

On November 28, 1977 the Commodity Futures Trading Commission instituted administrative proceedings against seven members of the Hunt family and an affiliated company for violating the speculative trading limits for soybean futures set by the Commission pursuant to section 4a(l) of the Commodity Exchange Act, 7 U.S.C. § 6a(l) (1976). The transactions that constitute the factual basis for the Commission’s action are chronicled in a companion case decided today. Commodity Futures Trading Comm. v. Hunt, 591 F.2d 1211 (7th Cir. 1978) (“Hunt I”). 2 In that case the Commission brought an action in the United States district court based on the same violations of law involved in the administrative proceedings, but seeking different relief. 7 U.S.C. § 13a-l. The district court found that the Hunts had violated provisions of the Commodity Exchange Act, but denied the Commission’s motions for an injunction and ancillary relief. Commodity Futures Trading Comm. v. Hunt, No. 77-C-1489 (N.D.Ill., Sept. 28, 1977). On appeal we upheld the trial court’s conclusion that the Hunts had violated the statute. We reversed, however, the trial court’s denial of injunctive and ancillary relief and remanded those issues for proceedings not inconsistent with our opinion. Hunt I, supra.

On December 13, 1977 the Hunts filed a complaint in support of their request that the district court enjoin the administrative proceedings before the Commodity Futures Trading Commission. At a hearing held December 14, the district court denied the Hunts’ request for a temporary restraining order. On December 23, 1977 the district court denied their motion for a preliminary injunction.

On appeal the Hunts offer several grounds for their contention that the administrative proceedings should be enjoined. Most importantly, the Hunts argue that because the Commission previously decided to bring an enforcement action in district court, it is barred from initiating administrative proceedings pursuant to section 6(c) of the Act. 7 U.S.C. § 13b (1967). They also contend that the Commission has vio *1236 lated its own discovery rules by adopting the evidentiary record developed in the district court for use in the administrative proceedings. None of the arguments advanced by the Hunts, however, is sufficient to overturn the deference courts ordinarily extend to ongoing administrative proceedings.

Judicial review of administrative actions of the Commodity Futures Exchange Commission is provided for in section 6(b) of the Commodity Exchange Act, 7 U.S.C. § 9 (1976). See Frey v. Commodity Exchange Authority, 547 F.2d 46, 49 (7th Cir. 1976). 3 The Hunts can present their claims regarding the illegitimacy of the Commission’s actions for judicial review after the completion of the administrative process and the entry of a Commission order. Absent special circumstances, the courts will not provide declaratory or injunctive relief interrupting administrative proceedings.

It is a “long-settled rule of judicial administration that no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted.” Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41 , 50-51, 58 S.Ct. 459, 463 , 82 L.Ed. 638 (1938). See also, e. g., Rosenthal & Co. v. Bagley, 581 F.2d 1258 at 1259 (7th Cir. 1978). Squillacote v. International Brotherhood of Teamsters (Teamsters I), 561 F.2d 31 , 37-40 (7th Cir. 1977); Grutka v. Barbour, 549 F.2d 5 (7th Cir.), cert. denied, 431 U.S. 908 , 97 S.Ct. 1706 , 52 L.Ed.2d 394 (1977); Frey, supra at 49-50 . This rule prevents courts from precipitously reviewing cases which, if the administrative process is allowed to run its course, may result in determinations favorable to a petitioner, thereby rendering his objections moot. See Rosenthal, supra at 1261 ; Frey, supra at 49 . Awaiting the conclusion of the administrative proceedings also insures that a record will be developed — including conclusions reached by the agency in its area of expertise — which can facilitate judicial review. See Teamsters I, supra at 39. And the exhaustion doctrine curbs frequent, litigious interference with the administrative procedures established by Congress for achieving the agency’s goals. Rosenthal, supra at 1261 ; Teamsters I, supra at 38-39 .

The exhaustion doctrine, of course, is not absolute. There are exceptional circumstances in which courts will interrupt administrative proceedings. The Hunts argue that their claims fall within such an exception to the exhaustion requirement. One exception, long recognized by the courts, is the “clear right” exception: if an agency would violate a clear right of a petitioner by disregarding a specific and unambiguous statutory, regulatory, or constitutional directive, a court will not require the petitioners to exhaust his administrative remedies and will intervene immediately. Rosenthal, supra at 1261 ; Teamsters I, supra at 36 . See Leedom v. Kyne, 358 U.S. 184 , 79 S.Ct. 180 , 3 L.Ed.2d 210 (1958).

The Hunts, however, have failed to establish that the Commission has violated a “clear right.” Neither the Commission’s decision to institute administrative proceedings after its previous enforcement efforts before the district court nor its incorporation of the record of the civil action into the administrative proceedings constitute such a violation. There is nothing in the statutory language of the Commodity Exchange *1237 Act which indicates that the Commission’s initial election of remedies is exclusive, and the legislative history provides little support for the Hunts’ position. See, e. g., H.R.Rep.No.95-1181, 95th Cong., 2d Sess. 51 (1978). The Hunts’ allegations regarding the Commission’s disregard of its own discovery rules also fail to demonstrate that the Commission has violated a clear right. When the implications of one of an agency’s own rules is in question, a court should be hesitant to conclude that the agency has disregarded a specific and unambiguous directive warranting judicial intervention in the administrative proceedings. See Borden, Inc. v. FTC, 495 F.2d 785, 789 (7th Cir. 1974). And while the Commission’s discovery procedures are limited, there is nothing in the Commission’s rules explicitly prohibiting the incorporation of evidence compiled in a prior judicial proceeding. See also 17 C.F.R. § 10.42 (b) (1977). Thus the “clear right” exception does not apply.

The Hunts also contend that the instant ease comes within other exceptions to the exhaustion doctrine. One other exception applies to cases in which judicial review effectively will be foreclosed if the court does not intervene in the administrative proceedings. See Jewel Companies, Inc. v. FTC, 432 F.2d 1155 (7th Cir. 1970). In the instant case, however, the Hunts will have an opportunity to assert their claims, if necessary, in an appeal from the Commission’s final order. 7 U.S.C. § 9 (1976).

The Hunts also argue that the only questions at issue in their appeal are matters of law, not of fact, and therefore the exhaustion requirement does not apply. This argument can be disposed of without determining whether any factual disputes are at issue in the Hunts’ appeal. The supposed doctrine which the Hunts employ to advance their position has been explicitly rejected by this court. In Teamsters I, supra at 39, we said that the conclusion that a dispute was a “matter of law” would be insufficient in and of itself to trigger an exception to the exhaustion requirement. See also Rosenthal, supra. In the instant case, where no clear right has been violated and judicial review will be available to the petitioners in accordance with the statutory framework of the Commission’s proceedings, the exhaustion requirement applies.

The judgment of the district court accordingly is affirmed.

. The record from the three appeals consolidated for hearing in Hunt I was made part of the record in this case in April 1978.

. Section 6(b), 7 U.S.C. § 9 (1976), states in relevant part:

After the issuance of the order by the Commission, the person against whom it is issued may obtain a review of such order or such other equitable relief as to the court may seem just by filing in the United States court of appeals of the circuit in which the petitioner is doing business a written petition, within fifteen days after the notice of such order is given to the offending person praying that the order of the Commission be set aside. A copy of such petition shall be forthwith transmitted by the clerk of the court to the Commission and thereupon the Commission shall file in the court the record theretofore made, as provided in section 2112 of Title 28. Upon the filing of the petition the court shall have jurisdiction to affirm, to set aside, or modify the order of the Commission, and the findings of the Commission as to the facts, if supported by the weight of the evidence, shall in like manner be conclusive.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.

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