U.S. Supreme Court Unanimously Narrows The FTC’s Enforcement Powers
Antitrust Litigation
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  • U.S. Supreme Court Unanimously Narrows The FTC’s Enforcement Powers

    On April 22, 2021, the U.S. Supreme Court abated the Federal Trade Commission’s (“FTC”) restitution power in a unanimous opinion delivered by Justice Stephen Breyer.  AMG Cap. Mgmt., LLC v. Fed. Trade Comm’n, 141 S. Ct. 1341 (2021).  Notably, the Court declared that the language of Section 13(b) of the FTC Act does not empower the FTC to obtain court-ordered equitable monetary relief such as restitution or disgorgement.  In so doing, the Court resolved a circuit split on the issue and reversed the Ninth Circuit’s decision.
    At issue was the petitioner’s control over several short-term payday loan companies which operated online.  The FTC alleged that the way these companies explained the loan’s essential terms to borrowers was misleading due to an automatic renewal provision buried in the fine print.  In 2012, the FTC brought an action against the petitioner and his companies under Section 5(a) of the FTC Act.  The FTC sought to utilize Section 13(b), to among other things, obtain restitution and disgorgement of ill-gotten gains.  The district court granted the FTC’s motion for summary judgment and ordered $1.27 billion to be paid to the FTC in restitution and disgorgement.  The Ninth Circuit affirmed this award.  The Court granted this writ to resolve the circuit split over the FTC’s ability to utilize Section 13(b) to seek and obtain monetary equitable relief.
    The Court held that “[s]everal considerations, taken together, convince us that § 13(b)’s ‘permanent injunction’ language does not authorize the Commission directly to obtain court-ordered monetary relief.  For one thing, the language refers only to injunctions.”  The Court acknowledged that it has held similar language to empower judges to order equitable monetary relief but that “[t]he language and structure of § 13(b), taken as a whole, indicate that the words ‘permanent injunction’ have a limited purpose—a purpose that does not extend to the grant of monetary relief.  Those words are buried in a lengthy provision that focuses upon purely injunctive, not monetary, relief.”  But the Court noted that the language taken as a whole focuses on the prospective—aimed at stopping a specific action—not retrospective actions.  If the Court were to read the statute to do more, it “would allow a small statutory tail to wag a very large dog.”
    The Court noted that its opinion did not impact the FTC’s authority under Sections 5 and 19 of the FTC Act to enforce the FTC Act and collect restitution and disgorgement through administrative proceedings.
    This decision is expected to change how the FTC deploys its enforcement arsenal in enforcement actions under Section 13(b), though calls for Congress to revise the FTC Act have already begun.  This decision also does not entirely foreclose the FTC’s ability to seek monetary relief, it only creates additional substantive and procedural hurdles.  The FTC, for example, can still use § 19 of the FTC Act to pursue monetary relief, but only after it first obtains a cease and desist order in an administrative proceeding.

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