This morning, the Supreme Court released its long-awaited opinion in AMG Capital Management v. FTC. Judge Breyer issued the decision for a unanimous Court. As we had predicted following oral arguments, the Supreme Court found that Section 13(b) of the FTC Act does not allow for monetary remedies.

The Court’s conclusion, stated at the outset, is straightforward and unambiguous: “The question presented is whether th[e] statutory language” allowing the FTC to seek injunctive relief “authorizes the Commission to seek, and a court to award, equitable monetary relief such as restitution or disgorgement. We conclude that it does not.”

The first half of Justice Breyer’s AMG opinion details a history of the FTC’s enforcement capabilities. Justice Breyer points out that, historically, the FTC’s use of Section 13(b) to obtain monetary remedies is an aberration. To the contrary, “[e]ver since the Commission’s creation in 1914, it has been authorized to enforce the Act through its own administrative proceedings.” It was only in the late 1970’s that the FTC started using Section 13(b) “without prior use of the administrative proceedings in §5.” While the FTC argued that its use of 13(b) to obtain monetary relief was a necessary norm, Justice Breyer’s thorough review of the historical record shows that that is not the case.

Whether or not the FTC’s use of Section 13(b) to bypass administrative proceedings and go directly to Federal Court is good policy, the unanimous Court concluded that it is not good law. Most importantly, in reaching its decision, the Court noted that the statutory “language refers only to injunctions . . . An ‘injunction’ is not the same as an award of equitable monetary relief.” If that was not enough, the context of the statutory provision confirms that it does not extend to non-injunctive remedies. As Justice Breyer explained, “The 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.”

Justice Breyer concluded that reading Section 13(b) the way the FTC seeks to would be illogical. By contrast, the logical textual reading is also the most coherent: “to read §13(b) to mean what it says, as authorizing injunctive but not monetary relief, produces a coherent enforcement scheme: The Commission may obtain monetary relief by first invoking its administrative procedures and then §19’s redress provisions (which include limitations). And the Commission may use §13(b) to obtain injunctive relief while administrative proceedings are foreseen or in progress, or when it seeks only injunctive relief. By contrast, the Commission’s broad reading would allow it to use §13(b) as a substitute for §5 and §19.”

Shortly after the Court released its opinion, Acting FTC Chairwoman Rebecca Kelly Slaughter issued a highly critical statement. Ignoring the historical record Justice Breyer relied on, Slaughter attempted to reframe the High Court’s decision as a victory for scammers. Slaughter’s press release is surely directed at Congress, where the FTC is already lobbying to reinvigorate Section 13(b), with circulated language that would, if adopted, increase the FTC’s 13(b) enforcement authority.

As the Supreme Court has now gutted Section 13(b), it will be up to Congress to revitalize the statutory provision with stronger enforcement mechanisms. Of course, Congress can also choose to do nothing. In that case, the FTC will have to take to heart the Supreme Court’s recommendation that it make more use of the traditional—and statutorily founded—administrative enforcement procedures found in Sections 5 and 19 of the Act.

Supreme Court Finds Section 13(b) Does Not Allow for Monetary Remedies