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Price v. Philip Morris12/15/2005
the Act.
Further, while an agency has the discretion to use adjudicatory proceedings to announce a sectorwide substantive principle or standard of conduct, it must be remembered that the consent orders upon which PMUSA relies are not directed at PMUSA. The court reasons:
"The FTC's observation that adjudication could be used to announce `a substantive principle or standard of conduct having general application' suggests that a consent order may serve as authorization for nonparties to the order to follow its directives." (Emphases added.) Slip op. at 59.
This reasoning, by its own terms, is based on mere conjecture and suggestion. The proof to which the court points in support of this conclusion-two FTC reports to Congress (slip op at 61)-is, in my opinion, insufficient to show that these two consent orders establish sectorwide policy. I view these reports as the FTC describing its efforts to obtain voluntary compliance with the two consent orders. Negotiations to obtain voluntary compliance from individual parties do not equate with announcing an industrywide substantive principle or standard of conduct.
Federal courts share my view of consent orders. An administrative consent order is an agreement reached in an administrative proceeding between parties, one of which is usually the agency's litigation staff. If the agency accepts the agreement, the agency issues an order as a court issues a consent decree. A.R. ex rel. R.V. v. New York City Department of Education, 407 F.3d 65, 77 n.12 (2nd Cir. 2005) (and authorities cited therein). While the interpretation of a statute by the agency charged with its administration is accorded deference, a consent order simply memorializes an agreement of the parties to end litigation upon certain terms. An unsubstantiated assertion of a legal proposition in an administrative consent order is untested in the adversarial crucible. It reflects nothing more than the drafting or view of an agency staff member that has not been considered carefully by the agency itself. "Hence, it is not necessarily reliable evidence of an agency's considered view of the issue." Commodity Futures Trading Comm'n v. Hanover Trading Corp., 34 F. Supp. 2d 203, 206 n.19 (S.D.N.Y. 1999).
Continuing with the accepted analogy between administrative consent orders and judicial consent decrees, it is clear that the 1971 and 1995 FTC orders cannot be considered to have industrywide legal force. The United States Supreme Court has explained:
"Consent decrees are entered into by parties to a case after careful negotiation has produced agreement on their precise terms. The parties waive their right to litigate the issues involved in the case and thus save themselves the time, expense, and inevitable risk of litigation. Naturally, the agreement reached normally embodies a compromise; in exchange for the saving of cost and elimination of risk, the parties each give up something they might have won had they proceeded with the litigation. Thus the decree itself cannot be said to have a purpose; rather the parties have purposes, generally opposed to each other, and the resultant decree embodies as much of those opposing purposes as the respective parties have the bargaining power and skill to achieve. For these reasons, the scope of a consent decree must be discerned within its four corners, and not by reference to what might satisfy the purposes of one of the parties to it." (Emphases in original.) United States v. Armour & Co., 402 U.S. 673, 681-82, 29 L.Ed. 2d 256, 263, 91 S.Ct. 1752, 1757 (1971).
Thus, a court has no authority to expand or contract a consent order's terms to reflect "what might have been." Willie M. v. Hunt
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