Divided D.C. Circuit Rejects Airlines’ First Amendment Challenge Based on Agency’s Interpretation of its Own Rule

In Spirit Airlines v. Department of Transportation, a D.C. Circuit panel with the unlikely split of Judges Tatel and Henderson in the majority and Judge Randolph in dissent, engages in two parallel debates.  The first is constitutional, and the second is over the proper tools of judicial decisionmaking.  

On their surface, the opinions [pdf] showcase an excellent duel between Judge Tatel and Judge Randolph on the First Amendment’s tolerance for a new species of commercial-speech regulation.

Judge Tatel’s majority opinion upholds the DOT’s rule requiring that air travel ads feature the total, tax-inclusive price more prominently than its component parts. According to the majority, rather than imposing an “affirmative limitation” on the airlines’ speech, the rule merely mandates disclosure to avoid misleading consumers; thus Zauderer‘s lenient reasonableness review applies. In the alternative, the majority holds that the rule satisfies Central Hudson‘s more demanding intermediate scrutiny: Because “the rule simply regulates disclosure” and imposes no other “burden on speech,” according the majority, it is “reasonably tailored” to advance the government’s interest in ensuring commercial accuracy.

In dissent, Judge Randolph hints that the usual framework for evaluating restrictions on commercial speech may not apply where, as here, the speech in question is critical of the government.  “No Supreme Court decision has ever dealt with the sort of regulation we have here.”  But he says the DOT’s rule clearly flunks the Central Hudson test.  According to Judge Randolph, the Government provided no evidence that the sole justification DOT stated in its rulemaking–preventing consumer confusion–was advanced by the new typographical rule. The majority’s argument to the contrary is “to put it mildly, absolutely absurd,” especially since the DOT used to require airlines to disclose taxes in the same size type as “the price of the trip.”

Under this constitutional surface, the panel engages in a debate over judicial process that is just as interesting.

This is a case in which the framing of the regulation at issue makes all the difference. Although the Airfare Advertising Rule itself purports to prohibit any ad in which a government tax is “displayed prominently,” Judge Tatel’s majority opinion frames the rule as one that “just requires that the total, final price be the most prominently listed figure.” This subtle shift is critical to the majority’s alternative holdings–that the lenient Zauderer test applies, and that the new rule satisfies Central Hudson.

Judge Tatel accomplishes his charitable revision of the rule by reference to two agency interpretations, only the first of which is clearly part of the record.

First, Judge Tatel cites a collection of frequently asked questions about the rule’s enforcement [pdf], cited in the agency’s brief.  The FAQ document defines “prominent” to mean “in a more prominent place . . . than the advertised total fare.” But as Judge Randolph points out in dissent, this guidance does not purport to modify DOT’s statements in the rule’s preamble that taxes may be included “in fine print” and must “be presented in significantly smaller type” than the the total price. This sounds suspiciously like an affirmative limitation on speech, especially since, as Judge Randolph points out, no airline could communicate the tax portion of a fare to its customers and comply with the rule in single-font media like Twitter and Facebook.

Anticipating this line of argument, Judge Tatel also cites government counsel’s statement at oral argument that Spirit Airlines’ website satisfies the rule despite its “vivid” display of base fare and “the Government’s cut” as separate items along with the total fare in font that is only slightly larger [pdf screenshot at 23]. Thus, contrary to the guidance published in the Federal Register, an airline need not relegate its tax breakdown to fine print to satisfy the rule–a slightly smaller font size will do. (Judge Tatel does not address the Twitter/Facebook argument.).

Judge Randolph scoffs at the majority’s reliance on the Government’s eleventh hour clarification of its rule, especially since the website in question was not originally part of the record, and the lawyer who allegedly blessed it at oral argument may have never seen it:

The majority strains to support its ruling by reaching outside the record, in violation of the Administrative Procedure Act. See Camp v. Pitts, 411 U.S. 138, 142-43 (1973). It examines Spirit’s current website and proclaims that although taxes and fees are not displayed in fine print, Spirit is not violating the rule. And how exactly does the majority know this? Because the Department of Justice attorney supposedly said so during oral argument. But the Justice Department attorney said no such thing. How could he? There is no indication that the attorney had ever seen Spirit’s website (it was Judge Tatel who brought it up during Spirit’s argument).

The majority does not address this argument, so it is not clear whether the court intended to supplement the administrative record on appeal by asking the Government about Spirit Airlines’ website during oral argument.  Although the Supreme Court has interpreted the APA to limit judicial review to “the record the agency presents to the reviewing court,” the D.C. Circuit has stated in dicta that supplementation of the administrative record may be permissible “when agency action is not adequately explained in the record before the court” and in other circumstances not present here.  In the same case, however, the court indicated that the record rule “exerts its maximum force when the substantive soundness of the agency’s decision is under scrutiny.”

Another possibility is that the majority does not consider the Spirit Airlines website to be part of the record, and its inclusion in the court’s opinion is for the sole purpose of elucidating the government lawyer’s on-the-record concession.  Judge Tatel’s opinion quotes more than once the “rule,” now disfavored in some quarters, that courts “give substantial deference to an agency’s interpretation of its own regulations.” That rule is sometimes applied to an agency’s policy statement in an appellate brief, but relying on a DOJ attorney’s statement of DOT policy in oral argument would seem to push Auer deference to a new extreme. And the court’s decision not to quote the “supposed” concession would be hard to understand if the court intended to defer to it.  (In cases like this, the D.C. Circuit’s general policy of withholding oral argument recordings and transcripts from the public is particularly frustrating.)

A third possibility is that the majority opinion should be read as an exercise in constitutional avoidance.  On this reading, Judge Tatel construes the Airfare Advertising Rule liberally, using the Government’s litigating position and extra-record evidence as a helpful albeit unnecessary interpretive tools.  But the language of constitutional avoidance is found nowhere in  Judge Tatel’s opinion.

The D.C. Circuit will soon issue an opinion in another commercial speech First Amendment case–a challenge to the FDA’s proposed graphic cigarette carton labels.

Spirit Airlines v. Dep’t of Transp., No. 11-1219 (July 24, 2012) (Tatel, J., joined by Henderson, J., with Randolph, S.J., concurring in part and dissenting in part)

See also:

  • Ruthann Robson, DC Circuit Upholds Airline Fee Disclosure Regulation in First Amendment Challenge, Constitutional Law Prof Blog (July 24, 2012) (“The opinion, coincidentally rendered on the 115th birthday of aviator Amelia Earhart, . . . would make a great commercial speech problem for First Amendment class. It challenges students to consider the boundaries between political speech, commercial speech, and ‘mere’ disclosure.”)

But cf:

  • Venetian Casino Resort, LLC v. EEOC, 530 F.3d 925, 934 n.* (D.C. Cir. 2008) (Ginsburg, J.) (“At oral argument [EEOC] counsel also offered a pragmatic, albeit subjective, justification for the Commission’s failure to establish a formal policy . . . . We do not consider these assertions because we cannot be confident such apparently extemporaneous arguments, which appear nowhere in the Commission’s brief, ‘reflect the agency’s fair and considered judgment on the matter.’ ” (quoting Auer v. Robbins, 519 U.S. 452, 462 (1997))); accord U.S. Air Tour Ass’n v. F.A.A., 298 F.3d 997, 1016 n.15 (D.C. Cir. 2002) (Garland, J.).

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