In Intuit, Inc. v. FTC, the Fifth Circuit held that the FTC’s internal adjudication “of a deceptive advertising claim  .   .  .  violated the separation of powers.”  The decision is a major win for the conservative legal movement, which has long fought to curb the administrative state.  Time will tell whether it is a loss for the Trump Administration.

The underlying dispute involves whether Intuit’s “TurboTax:  Free Edition” advertisements deceive consumers into thinking that all TurboTax products are free.  That is what the FTC alleged in its 2022 administrative and legal complaints against Intuit.  The complaints invoked Section 5 of the FTCA, which gives the FTC authority over “unfair or deceptive acts or practices.”  But after the Northern District of California declined to grant the FTC’s request for a preliminary injunction, the FTC abandoned its lawsuit and pursued only its internal adjudication.   

The internal adjudication went better for the FTC.  An administrative law judge determined that Intuit’s practices were likely to mislead consumers and, on appeal, three Commissioners agreed.  Those Commissioners included Rebecca Slaughter, Alvaro Bedoya, and then-Chair Lina Kahn.  The resulting cease-and-desist order set strict limits on Intuit’s ability later to describe any of its products as free.  

The Fifth Circuit vacated that order in an opinion written by Judge Jones and joined by Judges Barksdale and Ho.  The panel drew largely on the Supreme Court’s recent decision in SEC v. Jarkesy, which held that a securities fraud enforcement action implicated the respondents’ Seventh Amendment right to a jury trial.  The panel explained how the FTC’s deceptive advertising claims, like the enforcement action in Jarkesy, require showings similar to traditionally recognized torts.  Accordingly, those claims “are ‘in their nature’ traditional actions at law and equity and thus involve private rights that demand adjudication in an Article III court.”   

The panel also declined to hold that the FTC’s enforcement action fell within the public rights exception to Jarkesy.  The cases invoked by the FTC and amici, the panel reasoned, did not “concern, or [] even tangentially relate[] to, deceptive advertising actions,” and in some instances fell within categories of “traditional public rights recognized by Jarkesy.”

The decision is an obvious victory for the conservative legal movement—which has long prided itself on diminishing the power of, as Judge Jones calls them in her opinion, “non-Article III bureaucrats.”  But the decision delivers a technical loss to the Trump Administration.  To be sure, the Fifth Circuit heard oral argument in the case in November 2024, months before President Trump entered office.  And it is possible that the Administration did not withdraw its defense of the FTC order only because it anticipated this result.  But it is at least equally plausible that the Administration is choosing consciously to stand by an FTC order issued by three democratic Commissioners and called “remarkably broad” by the Fifth Circuit.  The latter possibility is all the more plausible given the Administration’s defense, also in the Fifth Circuit, of a new HSR form that Kahn had praised as “a generational upgrade.”

Judge Ho’s concurrence in Intuit seems to sense the mood.  He said he was “pleased to join the court’s decision  .   .   .  in full.”  Judge Ho similarly emphasized that “[o]ur Founders separated power to preserve liberty,” and compared the current FTC to “the three-headed beast that terrorized Harry Potter and his friends.”  That beast, Judge Ho pressed, “present[s] not one, but multiple constitutional challenges”—including “whether the insulation of FTC officials from Presidential removal can be reconciled with Article II.”  That is the very challenge before the Supreme Court in Trump v. Slaughter, and Judge Ho quotes his past writings to present what seems like a solution:  “[T]he President should possess the constitutional authority under Article II to remove his subordinates from office.” 

Though subtle, Judge Ho seems to be trying to woo the Administration into adopting a more traditionally conservative view of separation of powers.  His side, one could say, has milk and cookies—separation of powers for the judiciary, and separation of powers for the executive, too.  It remains to be seen whether that effort will succeed.

Mikaela Milligan (née Schulz) is an appellate litigator at a law firm in Washington, D.C.