Danny K Melton and Nellie H. Melton
CFTC Docket No. 99-R061


Keith Pasqua, Carl Robert Saathoff, and
Universal Commodity Corporation
Danny K. Melton CFTC Docket No. 99-R062


Keith Pasqua, Carl Robert Saathoff, and Universal Commodity Corporation


On October 24, 1999, on the eve of a hearing scheduled for October 25, 1999, counsel for respondents represented that all issues had been settled. Upon receipt of a Stipulation of Voluntary Dismissal filed by all of the parties, the Administrative Law Judge ("ALJ") assigned to the case cancelled the hearing and issued an Order of Dismissal on October 26, 1999. Citing Commission Rule 12.21 (17 CFR 12.21), the ALJ dismissed the matter with prejudice. On October 27, 1999 complainant telephoned the ALJ claiming that respondents had failed to comply with the terms of the settlement. The next day, the ALJ conducted a telephone conference, ascertained that the parties had not reached a settlement, and directed the parties to show cause why the settlement should not be vacated. On October 28, 1999, the ALJ vacated his order of dismissal, vacated the settlement, and ordered the hearing to begin November 3, 1999. On November 2, 1999, respondents filed a request for interlocutory review and a motion for stay of the hearing.

Citing Murphy v. Madsen, CFTC Docket No. 89-23, CFTC LEXIS 157 (CFTC Apr. 1992), respondents argue that once the ALJ dismissed the proceeding on the basis of a settlement by the parties, he lacked jurisdiction to vacate the dismissal. Respondents argue that complainant's remedy is in contract and that the reparations proceeding cannot be reopened. Respondents contend that jurisdiction is a controlling question of law and policy and presents an extraordinary circumstance warranting interlocutory review.

Under Commission Rule 12.309, 17 C.F.R. 12.309, the Commission reviews rulings by an ALJ before a final decision on the merits only under extraordinary circumstances. FDIC v. Shearson Lehman Hutton, [1994-1996 Transfer Binder] Comm. Fut. L. Rep. (CCH) 26,731 (CFTC July 1, 1996). In determining whether extraordinary circumstances exist, the Commission balances the benefits of immediate intervention against those flowing from its policy of discouraging piecemeal appeals, including the conservation of Commission resources and the preservation of the orderly conduct of Commission proceedings. Id.

The burden of establishing extraordinary circumstances is on the party seeking review. Id. To meet that burden, the petitioning party must demonstrate that there is a compelling need to correct an alleged error of judgment prior to the presiding officer's completion of his initial decision. Id. The presence of an important legal issue that might benefit from Commission clarification does not, by itself, rise to the level of extraordinary circumstances justifying expedited review of a ruling. Id.

In Murphy v. Madsen, an ALJ vacated his order dismissing the complaint because the respondent had not complied with the settlement agreement and then defaulted the respondent. The Commission vacated the default order stating that Section 14(a) of the Commodity Exchange Act ("Act") limits the Commission's reparations jurisdiction to complaints alleging a violation of the Act. The Commission held that the complainant's claim under the Act was extinguished when he accepted an offer of settlement and the ALJ issued the order of unconditional order of voluntary dismissal. The Commission therefore found that the ALJ lacked jurisdiction to reopen the matter and that the complainant was free to enforce the settlement agreement in an appropriate forum.

The facts of the instant case seem to be different. The ALJ did not vacate his order because of respondent's failure to comply but rather because "[a] telephone conference [the ALJ conducted with the parties] establishe[d] that the parties have not reached a settlement." If there was in fact no settlement, Murphy v. Madsen is not apposite. Consequently, respondents have not raised a legal issue that needs clarification at this time, nor have they demonstrated a compelling need to correct an error. Accordingly, respondents have not shown that there is an extraordinary circumstance warranting interlocutory review.

Concerning respondents' request for a stay of the hearing, under Commission Rule 12.309(d), 17 C.F.R. 12.309(d), the Commission will not consider a motion for a stay unless the motion has first been made to the ALJ and denied. Respondents have not represented that the ALJ has denied such a motion. Thus, respondents have not met the necessary threshold for the Commission to consider a stay of the proceeding.

Litigants requesting a stay also must show that they are likely to succeed on the merits, that they will suffer irreparable harm if a stay is denied, and that neither the public interest nor the interests of any other party will be adversely affected if a stay is granted. In re Slusser, [Current Transfer Binder] Comm. Fut. L. Rep. 27,743 (CFTC Aug. 19, 1999). Because respondents do not contend that appearing at the hearing would cause irreparable harm and have cited no authority to support such a proposition, it is not necessary to consider the other elements that would have to be shown to obtain a stay.

Accordingly, interlocutory review and stay of the proceedings is denied.


J. Douglas Richards
Deputy General Counsel
Commodity Futures Trading Commission

Dated: November 3, 1999

1 For the Commission pursuant to delegated authority. 17 C.F.R. 12.408(a)(3).