Case preview: Justices to consider FTC’s authority to compel monetary relief (updated)
on Jan 12, 2021 at 9:08 am
Wednesday’s argument in AMG Capital Management v. Federal Trade Commission involves the FTC’s authority to seek monetary relief when it uses litigation to enforce its power under Section 5 of the Federal Trade Commission Act to prevent “unfair or deceptive acts … affecting commerce.”
The specific question is whether the power to seek an “injunction” under Section 13 of the act extends to an order for monetary relief. In this case, for example, the FTC brought suit against Scott Tucker, a prominent (perhaps notorious) figure associated with the involvement of Native American tribes in the extension of short-term loans to individuals at interest rates almost invariably unlawful under the laws of the states where the borrowers resided. The FTC’s complaint contended that various aspects of the loan transactions were unfair or deceptive, and eventually the district court accepted the FTC’s allegations and issued an injunction against practices it found to be unfair or deceptive. Of importance here, the court also granted the FTC’s request that it hold Tucker and related entities (including AMG Capital) liable for “restitution” of more than a billion dollars.
AMG Capital is one of the simplest cases that the Supreme Court will consider this year. The briefing sets up a classic and straightforward conflict between textual and historical arguments. The defendants emphasize the text of Section 13, which specifies the relief available to the FTC as a “temporary restraining order,” a “preliminary injunction,” and a “permanent injunction.” Various other provisions of the act extend broader authority, such as a provision in Section 5 contemplating “other and further equitable relief” and one in Section 19 calling for “the refund of money or return of property.” The limitation of Section 13 to injunctive relief alone provides a strong argument against allowing the FTC to use it for what looks like a conventional award of damages.
The FTC presents a largely historical argument, contending that statutory authority to seek injunctions always has included what the FTC calls “restorative monetary relief.” In that vein, the Supreme Court in a 1946 case (Porter v. Warner Holding) adopted what we would now call a clear-statement rule: that a statute authorizing injunctive relief would include “all inherent equitable powers” available to trial courts “[u]nless otherwise provided by statute.” The court extended the Porter rule in a 1960 decision (Mitchell v. Robert DeMario Jewelry) explaining that a statute “entrust[ing] to an equity court the enforcement of prohibitions contained in a regulatory enactment” should be read assuming that Congress was “cognizant of the historic power of equity to provide complete relief.” More generally, an amicus brief from an impressive group of scholars situates the broad conception of equitable authority reflected in Porter in historical context, contending that the FTC’s use of the statute should be regarded as routine and unexceptionable.
It helps the FTC a great deal that it has used this statute to seek monetary relief since shortly after its adoption in 1973. Indeed, the power to do so was unanimously approved by all of the federal courts of appeals to consider the matter for more than 30 years, until a 2019 decision of the U.S. Court of Appeals for the 7th Circuit rejected that authority, creating the circuit conflict that led to Supreme Court review here.
We should get a pretty clear idea from the argument the extent to which the justices are inclined to credit the clear-statement rule from Porter. My guess is that the size of the fine in this case won’t help the FTC. Another issue that will interest some of the justices is the extent to which the FTC deposits these “restorative monetary awards” in the U.S. treasury rather than turning them over to the victims of the “unfair and deceptive” activity; AMG Capital claims that the FTC routinely retains them in the treasury, but the FTC contends that it (unlike the Securities and Exchange Commission) returns almost all of them to victims. I expect that at least a few of the justices will think those issues important in deciding whether the FTC should wait for more express authorization of Congress before it can enforce these judgments. But we’ll know more by Wednesday afternoon.
Update (11:00 a.m.): This article was updated with additional information about the use of monetary damages obtained by the FTC.