Antitrust Law Daily High Court vacates order granting FTC petition for review in 13(b) case
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Monday, November 9, 2020

High Court vacates order granting FTC petition for review in 13(b) case

By Jeffrey May, J.D.

Agency’s ability to collect monetary relief under Section 13(b) of the FTC Act will instead be considered solely in connection with a Ninth Circuit decision upholding such an award.

The long and winding road to determining whether Section 13(b) of the FTC Act authorizes the agency to seek restitution, or is instead limited to seeking restraining orders and injunctions, has taken another turn. Today, the U.S. Supreme Court vacated its July 9 order granting the FTC’s petition for review of a decision of the U.S. Court of Appeals in Chicago. That decision limited the agency’s ability to require wrongdoers to return money that they illegally obtained. However, the Court will continue to proceed with its review of a decision of the U.S. Court of Appeals in San Francisco, upholding an award of equitable monetary relief under Section 13(b). In light of the order vacating certiorari in the Seventh Circuit case, the cases are no longer consolidated (FTC v. Credit Bureau Center, LLCDkt. 19-825AMG Capital Management, LLC v. FTCDkt. 19-508).

The Seventh Circuit decision no longer under review by the Supreme Court created a circuit split on whether Section 13(b) authorizes an award of restitution. In that case, a defending credit monitoring service and owner argued that the court's $5 million restitution fine is not authorized under the FTC Act, which only permits injunctive relief. The appellate court agreed, rejecting the FTC’s argument that restitution awards implicitly fall under the FTC Act's permanent injunctive relief process and under the FTC Act's saving clause. The court held that the FTC Act does not permit restitution awards and cannot be interpreted as implicitly allowing such awards. The court also held that to permit restitution would be procedurally incompatible with the stated statutory remedies.

The Ninth Circuit decision to be considered by the Court came into question following the creation of the circuit split. The appellate court affirmed a decision of the federal district court in Las Vegas ordering payday lenders to pay $1.27 billion in equitable monetary relief. The petitioners in that case pointed out that two of the three panel members joined a special concurrence to urge that the Ninth Circuit’s "interpretation" of Section 13(b) as authorizing monetary relief is "no longer tenable" and "wrongly authorizes" the Commission to wield "a power that the statute does not permit."

The remaining question presented is whether Section 13(b) empowers a district court to award equitable monetary relief in a civil enforcement action brought by the FTC.

The U.S. Chamber of Commerce and other business groups have urged the Court to "curtail the FTC’s recent assertion of expansive equitable powers." They argue that the effort to routinely seek retrospective monetary relief under Section 13(b) followed a 2012 policy change at the FTC, including the agency’s 2012 withdrawal of the 2003 Commission Policy Statement on Monetary Equitable Remedies in Competition Cases. According to these groups, "Section 13(b) grants the FTC the authority to seek injunctive relief to prevent harm from ongoing or imminent acts—but not to seek restitution and disgorgement." They further contend, that "[i]f the FTC wishes to seek retrospective monetary penalties, it must invoke its authority under Section 19, which contains safeguards ensuring that affected businesses receive fair notice and process before such penalties are imposed."

For details about these and other petitions and cases pending before the Supreme Court, please consult the Antitrust Law Daily Supreme Court Docket chart.

Attorneys: Neal Kumar Katyal (Hogan Lovells US LLP) and Stephen R. Cochell (Cochell Law Firm, P.C.) for Credit Bureau Center, LLC. Paul C. Ray (Paul C. Ray, Chtd.) and Jeffrey A. Lamken (MoloLamken LLP) for AMG Capital Management, LLC. Peter Winslow Homer (Homer Bonner Jacobs PA) for Publishers Business Services, Inc. Alden Francis Abbott for FTC.

Companies: AMG Capital Management, LLC; Credit Bureau Center, LLC; Publishers Business Services, Inc.

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