Podcast - The Future Of The FTC: In The Hands Of The Supreme Court

In this episode of "Clearly Conspicuous," consumer protection attorney Anthony DiResta unpacks a recent update in Trump v. Slaughter, in which the U.S. Supreme Court issued a stay allowing President Donald Trump's removal of Federal Trade Commission (FTC) Commissioner Rebecca Slaughter to stand while the case makes its way through the appeals process. He previews full arguments in December of this year that could revisit – and even overturn – Humphrey's Executor. Mr. DiResta explains the FTC's origins, structure and independence, as well as the 1935 precedent set in Humphrey's Executor limiting presidential removal of FTC commissioners. He additionally reviews Justice Elena Kagan's dissent in the court's order and analyzes how the move signals a potential recalibration of separation of powers. The episode outlines far-reaching implications if removal protections are narrowed: greater presidential control over independent agencies (FTC, National Labor Relations Board (NLRB), Federal Communications Commission (FCC), Consumer Product Safety Commission (CPSC) and Merit Systems Protection Board (MSPB)), reduced institutional independence, more litigation over "for cause" standards and broader precedent shifts affecting agency governance. The discussion closes with key questions for businesses and counsel to monitor as the future of the FTC, and independent commissions more broadly, may be shaped by the court's forthcoming decision.

Podcast Transcript

Anthony DiResta: Good day and welcome to another podcast of Clearly Conspicuous. As we've noted in previous sessions, our goal in these podcasts is to make you succeed in this current regulatory environment – it's very progressive actually – make you aware of what's going on with the federal and state consumer protection agencies and give you practical tips for success. As always, it's a privilege to be with you today.

Today we discuss the U.S. Supreme Court's recent order in Trump v. Slaughter, allowing President Donald Trump to remove Federal Trade Commissioner (FTC) Rebecca Slaughter without cause.

The U.S. Supreme Court on September the 22 issued an order staying a lower court's order to reinstate FTC Commissioner Slaughter over President Trump's decision to remove her without cause. The court also directed that the case be heard on its merits in December of this year. The court issued similar orders earlier in May and June of this year, staying reinstatements of members of the National Labor Relations Board, Merit Systems Protection Board and Consumer Product Safety Commission. So let's dive into and discuss the Supreme Court's decision.

Supreme Court's Decision in Trump v. Slaughter

President Trump removed Slaughter, as well as Commissioner Bedoya, in March of this year. Slaughter sued to challenge the action, citing a 1935 Supreme Court precedent (Humphrey's Executor v. United States), which held that presidents cannot remove FTC commissioners except for the reasons specified by Congress, which are inefficiency, neglect of duty or malfeasance. Trump did not cite any of these reasons, only policy differences. A federal judge ordered Slaughter's reinstatement, and an appeals court denied the government's motion to stay the decision.

The government then made an emergency request to the Supreme Court to temporarily stay the district court's order. The administration argued that the FTC in the days of Humphrey's Executor is far different from the FTC today. By a 6-3 vote, the Supreme Court granted the stay, allowing President Trump's removal of Slaughter to stand while the justices consider the broader legal questions in the case.

Procedurally, the court treated the application as a request to hear the case on the merits, and they granted the request. The court will review whether the FTC's removal protections violate the constitutional separation of powers and whether Humphrey's Executor should be overruled. The case will be scheduled for oral argument in December of this year.

Justice Elena Kagan authored a dissenting opinion, joined by Justices Sotomayor and Jackson. In her dissent, Kagan cited to 15 U.S.C. Section 41, which bars the president from discharging FTC commissioners except for "inefficiency, neglect of duty, or malfeasance in office," and she noted that the FTC is a "classic independent agency" with "multi-member, bipartisan commissioners … whose members serve staggered terms and cannot be removed except for good reason." So with that court's decision, let's now focus on having a brief background of the FTC's history.

Background on the FTC: Establishment, Purpose and Structure

The FTC Act of 1914 was enacted in response to growing public concern about monopolies, trusts and unfair methods of competition during the Progressive Era. Congress sought to create an expert, independent body that could address complex economic practices in ways the courts could not easily manage. The FTC [was] established with two primary goals: 1) to protect competition by prohibiting "unfair methods of competition" and 2) to safeguard consumers by later expanding authority to cover "unfair or deceptive acts or practices."

The agency was envisioned as a preventive regulator, empowered to investigate, to study and stop harmful practices before they solidified into entrenched monopolies. Congress deliberately designed the FTC as an independent commission rather than a single-headed executive agency. Its features include:

• five commissioners appointed by the president and confirmed by the U.S. Senate
• bipartisan composition, with no more than three commissioners of the five belonging to the same political party to ensure a balance of perspectives
• staggered, fixed terms of seven years, staggered so that one seat expires each year, insulating the agency from short-term political shifts

 This structure was intended to foster apolitical, expert decision-making, modeled on a quasi-judicial, quasi-legislative body that combined economic expertise with legal authority. The legislative history shows Congress sought to create an independent "referee" in the economy. Then-President Woodrow Wilson, who signed the FTC Act into law, argued that monopolistic power should not be policed solely through the courts but also through a specialized, dispassionate commission capable of continuous oversight. With that background into the FTC, now let's look into that Humphrey's Executor decision.

Humphrey's Executor

In 1935, the Supreme Court decided Humphrey's Executor v. United States, a landmark case that has guided this aspect of constitutional law for nearly a century. The case arose when President Franklin Roosevelt removed FTC Commissioner William Humphrey for political and policy disagreements. Humphrey resisted, pointing to the FTC Act's requirement that commissioners could only be removed for cause. After Humphrey's death, his estate sued for back pay.

The Supreme Court unanimously ruled in favor of Humphrey's estate. It held that Congress had the authority to limit presidential removal power for independent regulatory commissions. The court distinguished the FTC from purely executive agencies, describing it as performing quasi-legislative and quasi-judicial functions. As such, the court concluded, Congress could validly restrict the president's removal authority to protect the agency's independence.

The court emphasized that the FTC was "neither political nor executive, but predominantly quasi-judicial and quasi-legislative." This reasoning entrenched the notion that independent commissions could be insulated from direct presidential control. Folks, with that background, now let's look at the impact of the court's decision.

Potential Implications of the Supreme Court's Decision in Trump v. Slaughter

The immediate effect of the Supreme Court's order is that Slaughter remains removed, pending a decision after a full hearing in December. There is no guarantee that the court's decision will keep Slaughter removed. In its earlier Wilcox stay decision, one of the court's reasons for permitting temporary removal was simply "to avoid the disruptive effect of the repeated removal and reinstatement of officers during the pendency of this litigation."

However, if the court overturns or narrows the decision in Humphrey's Executor, the implications may well be profound.

There would be more presidential control over independent agencies. Agencies such as the FTC, National Labor Relations Board (NLRB), Federal Communications Commission (FCC), Consumer Product Safety Commission (CPSC) and Merit Systems Protection Board (MSPB) could see their commissioners or leadership more vulnerable to removal for political or policy disagreements rather than misconduct. The president might have broader power to shape these agencies' policies by choosing to remove and replace non-aligned officials.

Then there’s reduced institutional independence. The role of independent regulatory bodies is often to counterbalance political influence, bring technical expertise and enforce laws consistently. Weakening removal protections could reduce that insulation, increasing politicization, and critics warn that independent agencies might become more beholden to whomever is [the] sitting president.

Then there's the issue of greater political responsiveness and accountability. The other side of a stronger removal power is a more politically responsive and accountable set of independent agencies. Advocates argue that these agencies should reflect the policies and priorities of the American people, as shown through their election of a president, rather than the aims of their own that are antithetical to their elected chief executive.

There's also going to be an impact on the dynamics in litigation and regulation. If removal protections are weakened, there may be more litigation over [whether] the removal was "for cause," what counts as "cause" and what statutory protections remain.

Then there's the issue of precedent shift. Overturning or further navigating Humphrey's Executor would continue the shift in legal and political understanding of the balance between Congress, independent agencies and the president. It might also affect separation of powers jurisprudence more broadly.

So with that, we've got some questions to consider.

Questions to Consider

• Just what counts as executive power or quasi-legislative or quasi-judicial power? If the court removes, redefines or shrinks the category of agencies that Humphrey's Executor protects, many agencies' leadership structure and traditions will have to be reevaluated.
• Are there other presidential removal or selection criteria [that are] constitutionally valid? For instance, courts may be asked to consider the constitutionality of partisan-balance requirements.
• If the court agrees that the president can remove FTC commissioners, how broad will its grounds be? It will be important to see if the Supreme Court relies on features unique to the FTC, facts of its operations today compared to the time of Humphrey’s Executor or more generally applicable constitutional interpretation. Those contours will help decide whether the court's forthcoming decision applies only to the FTC or other agencies, such as financial and labor regulators.
• Can Congress craft around removal protections (if they're allowed to) in ways that preserve some independence while respecting presidential removal power?

Conclusion

So folks, here's the key takeaway: The interim decision to let Slaughter's removal stand while the case proceeds signals the court's consideration of a potential major shift in the separation of powers structure of U.S. regulatory governance system. If Humphrey's Executor is overturned or sharply curtailed, it will give presidents much more authority over independent agencies — with both legal and political consequences.

Stay tuned to further programs as we identify and address the key issues and developments and provide strategies for success. I wish you continued success and a meaningful day. Thank you.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.