Supreme Court Hears Case on FTC’s Enforcement Power
Case law and statute appear to clash when it comes to FTC’s right to restitution under Section 13(b)

by Jessica Folker

The U.S. Supreme Court on Jan. 13 heard oral arguments in a case questioning the Federal Trade Commission’s ability to seek monetary relief when it takes companies to court over consumer protection violations.

At issue in AMG Capital Management v. FTC is whether Section 13(b) of the FTC Act, which authorizes the commission to seek injunctive relief when it enforces the act in federal court, allows the FTC to demand monetary relief in the form of restitution and disgorgement.

In 2012, the FTC sued several payday loan companies owned by Scott Tucker, including AMG Capital, alleging unfair and deceptive practices in violation of the FTC Act. The FTC sought injunctions to stop the companies from engaging in the alleged illegal activity as well as restitution and disgorgement under Section 13(b). A federal district court in Nevada issued a permanent injunction and ordered Tucker to pay the FTC equitable monetary relief of more than $1.2 billion.

Tucker appealed, arguing that while Section 13(b) allows for injunctive relief, the plain text of the statute doesn’t authorize monetary relief. The 9th Circuit Court of Appeals affirmed the lower court’s ruling, citing its own precedent.

Holland & Hart partner Paul Swanson said that for decades, federal appellate courts had interpreted the FTC’s injunctive power to include broader equitable powers, including restitution. “The Supreme Court now is faced with decades of pretty consistent case law that says injunctive power includes power to do other equitable remedies, including restitution,” Swanson said. “Yet the statute on its face really only talks about injunctions and does not speak more broadly about all equitable powers

“So that’s the dilemma that the Supreme Court is facing, and billions and billions of dollars in enforcement powers hang in the balance,” he added.

 

This complete article appears in the Jan. 18 issue of Law Week Colorado. To read other articles from that issue, order a copy online. Subscribers can request a digital PDF of the issue.