Cinderella Career and Finishing Schools, Inc. v. Federal Trade Commission

The Federal Trade Commission (FTC) (plaintiff) filed a complaint against Cinderella Career and Finishing Schools, Inc. (Cinderella) (defendant), charging Cinderella with 13 counts of unfair and deceptive advertising and marketing practices. An FTC hearing examiner conducted a 16-day hearing that involved 52 witnesses and 247 exhibits. The hearing examiner then issued a 93-page ruling, holding that the charges should be dismissed. FTC counsel appealed the hearing examiner’s ruling to the FTC’s five commissioners, including chairman Paul Rand Dixon (the commissioners). While the appeal was pending, Dixon gave a speech to a newspaper association in which he suggested that businesses like Cinderella were obviously deceptive and newspapers should therefore refuse to publish their advertisements. When deciding the case, the commissioners criticized the hearing examiner’s assessments and then opted to evaluate the challenged advertisements de novo and without considering the witness testimony. The commissioners ultimately reversed the hearing officer on six of the 13 counts and issued a cease-and-desist order. Cinderella appealed to the District of Columbia Circuit, arguing that the commissioners violated due process by reviewing the advertisements de novo and that Dixon should have been disqualified from participating in the appeal because his statement to the newspaper association evinced prejudgment.