FTC cannot receive monetary relief under FTC Section 13b

The Supreme Court unanimously ruled that Section 13 (b) of the Federal Trade Commission Act does not give the Commission the power to evade administrative procedures and seek fair monetary relief directly in the federal courts.

Section 13 (b) of the FTC Act provides that if the Commission “has reason to believe that any person, partnership, or corporation is violating, or about to violate, any law enforced by the Federal Trade Commission. . . in appropriate cases, the commission may seek an injunction and, upon proper evidence, the court may issue an injunction. ”For over four decades, the Commission has relied on this section to bring consumer and antitrust lawsuits directly to federal courts for interim relief Obtaining rulings and financial relief, such as reimbursement and levy, and brings “far more cases to court than through the administrative process”. And along the way, the Commission has received billions of dollars in discharge and has secured $ 11.2 billion in consumer refunds in the last five years alone.

In 2012, the commission filed a complaint in federal court against Scott Tucker and his companies, citing Section 13 (b), alleging that their short-term lending practices were deceptive and unfair and in violation of Section 5 (a) of the FTC Act. In a summary judgment, the District Court upheld the FTC’s motion for an injunction and financial appeal, ordering Tucker to pay $ 1.27 billion in refunds and levies to be used by the commission to “direct.” Consumer remedies “to provide. On appeal before the Ninth Ward, Tucker alleged that Section 13 (b) did not give the commission the power to seek the county court’s pecuniary relief. Following its precedent, the Ninth District stated that Section 13 (b) “empowers the district courts to provide any additional remedies necessary to achieve full justice, including redress.” The Supreme Court granted Tucker’s request for certiorari to address the recent split in the circuit regarding the “scope of section 13 (b)”.

As discussed here , During the oral argument, Tucker argued that because Section 5 (l) expressly empowers the Commission to seek “injunctions and other appropriate remedies” in the district courts against defendants who violate an administrative judge’s final injunction, and this provision has been changed Concurrently with the passage of Section 13 (b), Congress deliberately limited the Commission’s powers under Section 13 (b) to “permanent injunctions” only. On the other hand, the commission argued that the textual discrepancies reflected the functional differences between enforcing a lawsuit first through the administrative process or bringing it directly to the federal courts, and that Congress left the commission to choose by adopting Section 13 (b) , Enforcement options.

The Supreme Court eventually overturned the Ninth Ward ruling, concluding that Section 13 (b) “does not give the Commission any power to obtain fair monetary relief”.

In particular, the court found that Section 13 (b) not only refers to the ability to seek “injunctions” but, when looking at the rule as a whole, including its grammatical structure – “violated” and “about to violate” – 13 (b) “focuses on prospective and non-retrospective relief.” In addition, the court examined the structure of the law and the other provisions that expressly authorize the Commission to seek monetary relief in federal courts only after going through the administrative process and obtaining an injunction . This includes Section 5 (l), which authorizes the district courts to “provide other and other reasonable remedies as they deem appropriate,” and Section 19, which “permits such remedies as the court deems necessary to resolve the issue To repair consumer damage ”. On the basis of these provisions, the Court found it “very unlikely” that 13 (b) would enable the Commission “to obtain the same financial relief and more” without first meeting the conditions and restrictions for carrying out the administrative procedure under the Requirements to have to meet Sections 5 (l) and 19.

The Court concluded that the Commission’s competence gap created by its decision can be closed by a legal regulation. Following the decision, Acting FTC Chairperson Rebecca Kelly Slaughter issued a statement calling on Congress to “act quickly and restore and empower the agency so we can heal unjustified consumers.” Until Congress acts, advertisers are likely to see more administrative proceedings with the FTC, as well as the Commission seeking alternative ways to claim funds that are no longer available under Section 13 (b). Chairwoman Slaughter reiterated during her inaugural statement on April 27, 2021 before the US House of Representatives Consumer Protection and Commerce Subcommittee on Energy and Commerce: “[A] A word on the other FTC agencies: we will use them all – administrative procedures, the penal authorities, more rule-breaking cases, more rule-making, more civil sanctions when we have special legal powers. But without action by Congress, none of these options will come as close to consumer protection and compliance incentives as our lost authority under 13 (b). I hope you will act quickly to restore it. ”To be continued, now in the halls of Congress.

The case is AMG Capital Management, LLC v Federal Trade Commission, File No. 19-508, 593 US__ (April 22, 2021).