By Bryan Koenig

Law360 (March 10, 2020, 6:40 PM EDT) -- Axon Enterprise Inc. has urged an Arizona federal judge not to give the Federal Trade Commission a reprieve on responding to the company's constitutional challenge to the agency, accusing the FTC of hypocritically trying to slow down the district court case while speeding up its own in-house proceeding against Axon's merger.

In an opposition brief Sunday, the body camera manufacturer said the FTC's March 6 request to reset the deadline for the agency's response to the company's complaint simply represents the FTC's "latest avoidance attempt." The accusation goes to the heart of Axon's suit, which alleges the FTC violates due process rights through its in-house merger challenge system, the same system that the agency says should preempt the district court proceedings as the commission seeks to unwind Axon's tie-up with a competitor.

Axon said it's "ironic" that the FTC wants to delay its response deadline until two weeks after the court rules on the company's preliminary injunction bid seeking to put the administrative merger challenge process on ice. The current deadline is March 13 and the FTC says a delay is called for because the judge could agree the court lacks subject matter jurisdiction over the constitutional challenge.

The FTC is seeking that delay even though it refused Axon's bid to pause the in-house process until there is a ruling on the preliminary injunction motion, the company said.

"Axon has therefore been forced to proceed in both actions simultaneously and at tremendous expense. At every turn, the FTC has sought to delay any merits filing in this court while at the same time fast-tracking everything in its administrative home court where it hasn't lost in 25 years," Axon said.

Axon sued the commission on Jan. 3, hours before the agency lodged an administrative complaint over its 2018 purchase of Vievu. Axon manufacturers nonlethal weapons and body cameras used by police departments, and the FTC says its purchase of Vievu eliminated competition on price and innovation, particularly for the supply of body cameras and related systems to large metropolitan police departments.

The company's suit alleges the FTC's in-house administrative proceedings violate due process and equal protection rights, contending that the results are fixed in the commission's favor, because it effectively serves as prosecutor, judge and jury. The lawsuit also contends that the commission's structure violates the Constitution, arguing the agency lacks any political accountability because its commissioners are neither democratically elected nor easily removed by the president.

Axon asked the district court for a preliminary injunction to pause the in-house merger challenge on Jan. 10, saying the move was needed to prevent exposure to "an unconstitutional process and forum." The FTC pushed back, contending the body camera market and police departments would be harmed if its efforts to unwind the merger were put on ice.

The commission also argued that the district court lacks jurisdiction to hear the suit because the FTC Act lays out a comprehensive review scheme that allows appeals to the circuit courts after a final decision is issued. Axon, the agency said, is attempting to avoid the system set out by Congress to resolve the commission's cases.

Axon argued in a reply brief to the district court that the FTC was making the "remarkable" suggestion that parties must endure an unconstitutional process before gaining access to the federal courts for a constitutional challenge. Axon also noted that its suit was filed before the commission's enforcement action and said it was challenging, among other things, the "uncodified, black box" clearance process used to decide whether the FTC or the U.S. Department of Justice handles a particular merger in the first place.

The latest dispute over timing springs from the FTC's request last week for a reprieve from the upcoming deadline. According to the agency's brief, it plans to file a motion to dismiss citing the same jurisdictional grounds it is using to try to beat Axon's bid for a preliminary injunction. It noted that a ruling on the preliminary injunction probably won't come before April 1.

"Thus, to spare the parties and the court the burden and expense of duplicative and potentially unnecessary briefing, extending defendants' responsive pleading deadline until fourteen days after the court has ruled on plaintiff's motion for preliminary injunction will best serve the interests of judicial economy," the FTC said. "Of course, if the court finds that it does not have subject matter jurisdiction, there would be no reason for the parties to brief a motion to dismiss."

Axon blasted those assertions days later, arguing that they stand "in stark contrast" to "an aggressive 5-month fast track" for the in-house challenge rather than the eight-month schedule permitted under FTC rules.

Axon said the FTC in-house trial is slated for May 19, with a discovery deadline on April 3, just days after oral argument is set in the district court. The company said that means it has been "engrossed in massive document processing and production" that it must navigate even as coronavirus fears force travel restrictions, office closures and other hurdles.

An Axon spokesperson assailed the FTC for trying "to have it both ways," accusing the commission of hurrying along to try to unwind a merger that was completed almost two years earlier.

"And no wonder: using its own captive process, the FTC gets to serve as prosecutor, judge, jury, and first line court of appeals and knows it has never lost in this process in the last 25 years," the spokesperson said in a statement.

The FTC declined to comment Tuesday.

In federal court, the FTC is represented by Joseph H. Hunt, Christopher R. Hall, Chetan A. Patil, Rebecca Cutri-Kohart and Bradley Craigmyle of the U.S. Department of Justice's Civil Division. In the administrative case, the FTC is represented by its own Jennifer Milici.

In federal court, Axon is represented by its own Pamela B. Petersen and by Garret G. Rasmussen, Antony P. Kim, Jonathan A. Direnfeld and Thomas Fu of Orrick Herrington & Sutcliffe LLP. In the administrative case, Axon is represented by Julie E. McEvoy, Michael H. Knight, Louis K. Fisher, Debra R. Belott, Jeremy P. Morrison and Aaron M. Healey of Jones Day.

The federal court case is Axon Enterprise Inc. v. Federal Trade Commission et al., case number 2:20-cv-00014, in the U.S. District Court for the District of Arizona. The administrative case is In the Matter of Axon Enterprise Inc., docket number 9389, before the Federal Trade Commission.

--Additional reporting by Matthew Perlman and Anne Cullen. Editing by Marygrace Murphy.

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