Posted Tue, Jan 12th 2021 9:08 am by Ronald Mann
Wednesday’s argument in AMG Capital Management v Federal Trade Commission includes the power of the FTC to seek financial relief when using litigation to enforce its powers under Section 5 of the Federal Trade Commission Act to “unfair or misleading Actions … that affect trade ”.
The specific question is whether the power to apply for an “interim injunction” under Section 13 of the Act extends to a monetary relief order. In this case, for example, the FTC filed a lawsuit against Scott Tucker, a prominent (possibly infamous) figure linked to the involvement of Native American tribes in granting short-term loans to individuals at rates that are almost always illegal under the laws of the states, where the borrowers lived. The FTC’s complaint alleged that various aspects of the loan transactions were unfair or misleading and eventually the District Court accepted the FTC’s allegations and issued an injunction against practices it deemed unfair or misleading. Significantly, the court upheld the FTC’s motion to hold Tucker and its affiliates (including AMG Capital) liable for a “refund” of more than $ 1 billion.
AMG Capital is one of the easiest cases the Supreme Court will consider this year. The briefing creates a classic and uncomplicated conflict between textual and historical arguments. The defendants emphasize the text of Section 13, which sets the relief available to the FTC as “injunction”, “injunction” and “standing order”. Various other provisions of the Act expand the powers, such as a provision in Section 5 that provides “other and other just facilities” and one in Section 19 that requires “money back or property returned”. The restriction of Section 13 to injunctive relief alone speaks strongly against the FTC’s permission to use it for conventional awarding of damages.
The FTC makes a largely historical argument, claiming that legal restraint has always included what the FTC calls “restorative money relief.” With that in mind, in a 1946 case (Porter v Warner Holding), the Supreme Court enacted what is known as a clear rule: an injunctive relief law would include “all inherent fair powers” available to the courts.[u]unless otherwise provided by law. “The court expanded the Porter’s rule in a 1960 decision (Mitchell v. Robert DeMario Jewelry) stating that a law” entrusted[ing] Before an equity court, enforcement of prohibitions contained in a government decree should be read on the assumption that Congress “recognized the historic power of equity to fully relieve the burden”. More broadly, an amicus letter from an impressive group of scholars locates the broad concept of just authority reflected in Porter in its historical context and argues that the FTC’s application of the statute should be considered routine and not exceptional.
It helps the FTC a lot that it has been using this bill to obtain financial relief since shortly after it was passed in 1973. In fact, the power to do so has been unanimously approved by all federal appeals courts to review the matter for more than 30 years until a 2019 U.S. Court of Appeal decision for the 7th Circuit denied that authority and caused the circuit conflict here for review led by the Supreme Court.
We should get a fairly clear idea from the argument of the extent to which the judges are inclined to appreciate Porter’s clear testimony rule. I suspect the fine in this instance is not helping the FTC. Another issue that will interest some of the judges is the extent to which the FTC will deposit these “restorative cash prizes” with the Treasury Department instead of handing them over to the victims of the “unfair and misleading” activities. AMG Capital claims that the FTC routinely holds them at the Treasury Department, but the FTC claims (unlike the Securities and Exchange Commission) it is giving almost all of them back to the victims. I expect at least some of the judges will find these questions important in deciding whether the FTC should wait for more explicit approval from Congress before enforcing these rulings. But we’ll know more by Wednesday afternoon.
Update (11:00 AM): This article has been updated with additional information on how the FTC uses monetary damage.
Ronald Mann, Case Preview: Judges Examining FTC’s Authority to Enforce Money Discharges (Updated),
SCOTUSblog (January 12, 2021, 9:08 a.m.), https://www.scotusblog.com/2021/01/case-preview-justices-to-consider-ftcs-authority-to-compel-monetary-relief/