TR Daily Filers Urge High Court to End FTC's Use of 13(b) for Monetary Relief
Friday, October 2, 2020

Filers Urge High Court to End FTC's Use of 13(b) for Monetary Relief

In separate amicus curiae briefs filed with the Supreme Court today, TechFreedom and joint filers Washington Legal Foundation and Allied Educational Foundation urged the Supreme Court to limit the Federal Trade Commission's remedy powers under section 13(b) of the FTC Act to obtaining an injunction from a federal court, rather than expanding the statutory reference to an injunction to encompass other forms of relief, including monetary payments.

FTC Chairman Joe Simons urged Congress to clarify the commission's authority under section 13(b) of the FTC Act "to get money back for consumers" in light of "recent court decisions [that] threaten this authority" (TR Daily, Aug. 5).

In an amicus brief filed in consolidated cases beginning with AMG Capital Management LLC et al. v. Federal Trade Commission (case 19-508), on review from the Ninth and Seventh circuits, WLF and AEF told the Supreme Court that "[m]ost of the courts of appeals have ruled that the word 'injunction,' in §13(b) of the FTC Act, unlocks the entire vault of equitable remedies. Rather than ground this conclusion in a rigorous analysis of the FTC Act's text and structure, these courts—egged on by the FTC—have simply relied on Porter v. Warner Holding Co., 328 U.S. 395 (1946), a case that reads another statute's use of the phrase 'permanent or temporary injunction, restraining order, or other order' to encompass any equitable remedy."

They added, "An English judge plucked from the Late Middle Ages would recognize Porter's approach to statutory interpretation. He would say that Porter employs the 'equity of the statute,' a doctrine that the king's judges used, in a time before government became regularized, accountable, or democratic, to revise statutes at will. Although this Court briefly wielded a freestanding power of this kind in Porter and a few other decisions, it had already largely discarded it by the time the courts of appeals began relying on Porter to expand §13(b) beyond its text.

"This Court has now fully sworn off using anything like the equity of the statute. Taking heed of this, one of the two courts below—the Seventh Circuit—tied its reading of §13(b) to §13(b) itself. Concluding that 'injunction' does not mean 'injunction (and some other stuff),' it vacated a $5 million restitution award. Shortly before the Seventh Circuit adopted a proper reading of §13(b), however, the other court below, the Ninth Circuit, stuck to its guns, standing its affirmance of a $1.27 billion restitution award on its old misreading of that provision," WLF and AEF continued.

"When they apply §13(b), the courts of appeals should read 'injunction' to mean 'injunction.' No more, no less. WLF urges the Court to affirm the Seventh Circuit and reverse the Ninth," they said.

Similarly, TechFreedom said, "We are not here to hurt the FTC. The agency protects consumers from deceptive or unfair business practices. As part of that laudable work, it collects ill-gotten gains from fraudsters and returns them to ordinary Americans. This is all to the good. No, we are here merely to insist that the FTC obtain its powers the proper way—the constitutional way. When seeking monetary awards in federal court, the FTC has not done things the proper way. That is what this case is about."

TechFreedom continued, "The FTC has been using Section 13(b)'s permanent-injunction clause to obtain equitable monetary relief. We do not object to the FTC's obtaining such relief in federal court, nor to its having an efficient process for doing so. We have a problem, however, with the FTC using a statute that says 'injunction' to obtain money. An injunction is a prospective form of relief; it cannot be used as a substitute for a money judgment. If the FTC wants to use Section 13(b) to collect assets, our lawmakers must rewrite the statute."

It said that only Congress—not the FTC or the courts—has the authority to grant the FTC this power. —Lynn Stanton, [email protected]

MainStory: FederalNews Courts FTC

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