Supreme Court: FTC May Well Not Seek Restitution Straight in Federal Court
Overview
We know from The First 100 Days,” on April 22, 2021 the US Supreme Court put an end to the Federal Trade Commission’s (FTC) longstanding practice under В§ 13(b) of the FTC Act of seeking disgorgement or restitution orders in cases brought by the agency in federal courts as we predicted in Steptoe’s client webinar last week on “Antitrust Enforcement in the Biden Administration – What.
Composing for a Court that is unanimous Breyer’s viewpoint in AMG Capital Management, LLC, et al. v. Federal Trade Commission reversed your decision associated with United States Court of Appeals for the Ninth Circuit and determined that the $1.27 billion restitution purchase against cash advance tycoon Scott Tucker ended up being beyond the abilities associated with the FTC.
The FTC had sued Tucker under В§ 13(b) regarding the FTC Act to acquire restitution of earnings Tucker had gained as a consequence of their fraudulent and misleading techniques in expanding after which gathering on low-dollar “payday” loans. After a federal region court ordered him to cover restitution towards the victims for the fraudulence, Tucker appealed into the Ninth Circuit claiming that because В§ 13(b) just authorizes a “permanent injunction,” why not look here a federal court could not purchase financial relief. The Ninth Circuit upheld the FTC’s usage of В§ 13(b) in Tucker’s situation (as six other appellate courts had done in comparable instances), however the FTC lost the same situation into the Seventh Circuit in 2019. The Supreme Court’s ruling resolves the split among the list of appellate circuits.
In performing this, the Court looked into the simple language associated with FTC Act, keeping that “В§ 13(b)’s ‘permanent injunction’ language will not authorize the Commission right to get court-ordered financial relief.” The Court included: “An ‘injunction’ is not the just like an prize of equitable relief that is monetary and determined that “[t]he language and structure of В§ 13(b), as a whole, indicate that the text “permanent injunction” have a small purpose—a purpose that will not extend to your grant of financial relief.”
Due to the Court’s viewpoint, the FTC can continue using its in-house administrative procedures under В§ 5 regarding the FTC Act to adjudicate claims to get restitution or disgorgement, nonetheless it cannot utilize the federal courts under В§ 13(b) to take action straight.
This choice may have broad implications for the FTC’s enforcement efforts because В§ 13(b) happens to be a valuable an element of the FTC’s toolbox in combatting not just unjust and misleading trade practices, but additionally antitrust violations.
Since the Court noted, in financial 12 months 2019, the Commission filed 49 complaints in federal court and obtained 81 permanent injunctions and instructions, causing over $723 million in restitution or disgorgement.
Rigtht after your choice, FTC Acting Chairwoman Rebecca Kelly Slaughter issued a declaration calling for Congress to give into the FTC the energy to find restitution and disgorgement straight in federal court: “with this particular ruling, the Court has deprived the FTC regarding the strongest device we needed to assist customers if they require it many. We urge Congress to do something swiftly to replace and fortify the abilities associated with agency therefore we could make consumers that are wronged.” And Democrats from the Hill have actually discussed a swift legislative fix to this problem.
Because of the alternative being an even more cumbersome administrative procedure in the FTC, there probably may be force on Congress to give such abilities into the FTC. See Lahlou, Luib, and Weiner, “High Stakes during the tall Court: The FTC’s Disgorgement works Before the Supreme Court,” ANTITRUST (autumn 2020). Exactly exactly How quickly the fix shall come continues to be to be noticed.