## Facts

- The Federal Trade Commission (FTC) charged Cinderella Career and Finishing Schools, Inc., its operating corporation, and its owner with unfair or deceptive advertising under § 5 of the Federal Trade Commission Act.
- The complaint alleged multiple misrepresentations about the schools’ training and job-placement benefits, including suggestions concerning financing, governmental connection, and graduate outcomes.
- A hearing examiner conducted a trial-type evidentiary hearing spanning 16 days and a record exceeding 1,800 transcript pages, with extensive witness testimony and exhibits from both sides.
- The hearing examiner issued an initial decision dismissing all charges for lack of proof.
- On appeal within the agency, the full Commission reversed the examiner on six counts and entered a cease-and-desist order, largely treating the advertisements as determinative and giving little weight to the hearing record and the examiner’s findings.
- While the administrative appeal was pending, the FTC Chairman made public statements criticizing “obviously deceptive” advertisers of a type understood to include schools like the petitioners, and urging newspapers not to run such ads.
- The petitioners sought judicial review of the FTC’s final order.

## Issues

1. Whether the FTC denied due process by reversing the hearing examiner through a de novo evaluation of the advertisements while effectively disregarding the evidentiary record developed at the hearing.
2. Whether the FTC Chairman’s public comments created an appearance of prejudgment requiring his disqualification from participating in the Commission’s adjudicatory decision.

## Decision

- The court vacated the FTC’s cease-and-desist order and remanded for further proceedings.
- The court held that the Commission’s approach to review failed to comport with due process because it did not meaningfully evaluate the examiner’s decision in light of the evidentiary record.
- The court held that the Chairman should have recused himself because his public statements created an appearance of prejudgment inconsistent with an impartial administrative adjudication.

## Legal Principles

- When an agency provides a trial-type hearing and builds an evidentiary record, final agency decision-making must be based on review of the whole record, including due regard for the hearing examiner’s findings; an agency may not proceed as though the record does not exist.
- An agency must follow its own procedural rules in adjudication; departure from required review procedures can constitute a denial of due process.
- Administrative adjudicators must be impartial in fact and in appearance; public statements that reasonably suggest prejudgment of pending matters, or of an identifiable class of pending cases, require recusal to preserve the appearance of justice.

## Conclusion

The court set aside the FTC’s order because the Commission’s reversal was not grounded in a proper record-based review of the hearing examiner’s decision and because the participation of the FTC Chairman, after public remarks indicating apparent prejudgment, violated the requirement of an impartial administrative tribunal.


Cinderella Career & Finishing Schs., Inc. v. FTC, 425 F.2d 583 (D.C. Cir. 1970)