## Facts

- Axon Enterprise, Inc. acquired a competitor, prompting an FTC antitrust investigation and the threat of an FTC administrative enforcement proceeding.
- Axon sued in federal district court under 28 U.S.C. § 1331 to stop the administrative case, alleging (1) due process violations from the FTC’s combined prosecutorial and adjudicatory roles and (2) Article II violations from ALJs’ multilayer for-cause removal protections; it also disputed the antitrust merits.
- The SEC initiated an administrative enforcement action against Michelle Cochran, resulting in an ALJ decision imposing a civil penalty and a temporary bar from practicing before the SEC.
- After the SEC remanded pending ALJ matters for rehearing following a Supreme Court decision requiring proper ALJ appointments, Cochran sued in federal district court under § 1331 to enjoin further proceedings, alleging the ALJs’ multilayer for-cause removal protections violate Article II.
- In both matters, the regulated parties sought immediate district-court review of constitutional challenges to the agencies’ adjudicatory structures rather than waiting for final agency orders and court-of-appeals review.

## Issues

1. Whether the FTC Act and Securities Exchange Act review schemes implicitly preclude federal district-court jurisdiction under 28 U.S.C. § 1331 over structural constitutional challenges to ongoing FTC or SEC administrative enforcement proceedings.

## Decision

- The Supreme Court held that the FTC Act and Exchange Act review schemes do not displace district-court federal-question jurisdiction over these structural constitutional claims.
- The Court reversed the Ninth Circuit in Axon and affirmed the en banc Fifth Circuit in Cochran, remanding both cases.
- The Court did not decide the merits of the due process or Article II challenges; it resolved only the proper forum for initial adjudication.

## Legal Principles

- Specialized statutory review schemes culminating in court-of-appeals review do not automatically imply the elimination of district-court jurisdiction for all claims arising in agency proceedings.
- Under the Thunder Basin implied-preclusion framework, district-court jurisdiction is appropriate when, considered together:
  - Channeling the claims through the administrative process would foreclose meaningful judicial review because the asserted injury is being subjected to an allegedly unconstitutional proceeding itself.
  - The claims are wholly collateral to the merits of the enforcement action, attacking the agency’s authority to proceed rather than contesting case-specific facts or legal applications.
  - The claims fall outside the agency’s expertise because they present structural constitutional questions (e.g., separation of powers and adjudicator independence).
- Courts do not lightly infer congressional withdrawal of ordinary § 1331 jurisdiction absent a clear indication that the statutory scheme supplies an adequate path for the type of claim asserted.

## Conclusion

Federal district courts may hear “front-end” structural constitutional challenges to FTC and SEC administrative enforcement systems notwithstanding the statutes’ post-final-order review paths, because delaying review would not meaningfully remedy the claimed injury, the challenges are collateral to enforcement merits, and they lie outside agency competence.


Axon Enter., Inc. v. Fed. Trade Comm'n, 143 S. Ct. 890 (2023)