A U.S. Appeals Court yesterday ruled that Federal Trade Commission Chairman Michael Pertschuk may participate in his agency's investigation into children's television advertising, despite his outspoken opinions in the case.
The U.S. Court of Appeals for the District of Columbia, voting 2 to 1, overturned a lower court ruling ordering Pertschuk to disqualify himself from the controversial "kidvid" probe because it found that he had prematurely and unfairly made up his mind that a ban on children's television advertising was necessary.
In that ruling, U.S. District Court Judge Gerhard Gesell said Pertschuk "has conclusively prejudged factual issues which will be disputed in the [FTC's] rulemaking proceeding."
But the appellate court said, "A commissioner should be disqualified only when there has been a clear and convincing showing that the agency member has an unalterably closed mind on matters critical to the disposition of the hearings."
The record of Pertschuk statements supplied to the court by the plaintiffs as proof of his bias in the case does "not demonstrate that Chairman Pertschuk is unwilling or unable to consider rationally [an] argument that a final rule [ban] is unnecessary," the appeals court found.
"The [Trade associations that filed suit to disqualify Pertschuk] have failed to make a clear and convincing showing" that he "has an unalterably closed mind on matters critical to the children's television proceeding," the opinion said.
"The legitimate functions of a policymaker, unlike an adjudicator, demand interchange and discussion about important issues," the appeals court said in its 48-page ruling. "We must not impose judicial roles upon administrators when they perform functions very different from those of judges."
The FTC had voted 3 to 0, with Pertschuk abstaining, to appeal the lower court's ruling.
Pertschuk said yesterday he was "gratified" that the appeals court "has fashioned a standard which recognizes the need of the rulemaking process."
He said the ruling affirms his view that "an administrator can engage in . . . a dialogue [about a proposed rulemaking] while maintaining an open mind as to what action, if any, must ultimately be taken."
Spokesmen for the plaintiffs said they would appeal the case to the Supreme Court.
Three national advertising industry groups, the Kellogg Co. and the Toy Manufacturers of America had sought Pertschunk's disqualification after he made a series of statements indicating that "children's advertising is inherently unfair" because youngsters are not capable of understanding commercials' intent to sell products.
Pertschuk, a former chief counsel for the Senate Commerce Committee, argued at the time that, despite previous statements, "my mind remains open on the important issues raised" by the official proceeding.
The appeals court said the most important evidence submitted by the industry groups was a November 1977 speech by Pertschuk to a research conference held by Action for Children's Television, a consumer group seeking limits on children's television advertising.
The other Pertschuk statements cited by the plaintiffs "generally derive from this speech," the court found.
In the speech, Pertschuk said children have only a minimal understanding of television commercials and are unable to distinguish between advertising and other forms of communication.
He then quoted a Federal Communications Commission finding that "many children do not have the sophistication or experience needed to understand that advertising is not just another form of informational programming."
In conclusion, he explored the legal issues surrounding a possible ban or limit on children's advertising, and pointed out that any such attempt would be opposed by the affected economic interests.
"Pertschuk's remarks, considered as a whole, represent discussion, and perhaps advocacy of the legal theory that might support exercise of the commission's jurisdiction over children's advertising," the appeals court said. But discussion of policy or even advocacy of a legal question "is not sufficient to disqualify an administrator," the court found.
Robert Purcell, a vice president with the American Association of Advertising Agencise, one of the plaintiffs, said that "obviously we are unhappy about the decision. The kind of standard of judgment that would be needed to disqualify a commissioner under the court's ruling is entirely new and tougher than anything we have ever seen."
The FTC staff proposals in the case include blocking any TV advertising aimed at children and banning ads for sugary foods from programs seen by a "significant portion" of children under 12.
The "kidvid" investigation could be derailed by pending legislation that would prohibit the FTC from regulating in this area.