On Wednesday, we described draft legislation circulating in the Senate Commerce Committee that would have given the Federal Trade Commission almost unfettered authority to enjoin permanently any act, practice or method of competition that did not meet its approval. https://www.adlawaccess.com/2022/05/articles/senate-commerce-committee-chair-pushes-one-sided-13b-fix/  All the Commission would need to do is show that a reasonable person had fair

The one-year anniversary of the Supreme Court’s decision in AMG Capital Management, LLC v. FTC has renewed calls for Congressional action to expand and codify the Federal Trade Commission’s enforcement authority under Section 13(b) of the FTC Act. Last Thursday, we wrote here about the agency’s most recent open meeting, during which Commissioners heard from a key Senate staffer that Senate Commerce Committee Chair Maria Cantwell (D-WA) intended to introduce what she hoped would be a bipartisan fix. Yesterday, Chair Cantwell’s bill was made public, and its terms render any hope of bipartisan support a long-shot, at best, with little likelihood of garnering the Republican support needed to clear the chamber.

The bill’s release followed the May 2 release of a Senate Commerce Committee report entitled Restoring the Federal Trade Commission’s Authority to Protect Consumers and the Marketplace – an 80-page report, more than 50 pages of which purported to list dollar amounts received in each state due to “FTC cases resulting in significant refunds” (many of which were settlements never actually litigated under Section 13(b)). The report echoed much of what we heard from Commissioners last week – that AMG has created an enforcement void for the agency and no alternative enforcement approaches come close to 13(b)’s ability to protect consumers and provide monetary redress. The report couched the court’s decision as particularly damaging to the agency’s efforts to curtail “Big Tech and Pharma’s ability to harm consumers and fledgling businesses.”
Continue Reading Senate Commerce Committee Chair Pushes One-Sided 13(b) Fix

FTC Uses AMG Anniversary to Push for a Bipartisan 13(b) Legislative Fix in an Increasingly Partisan EnvironmentDuring the Federal Trade Commission’s April 28 open meeting, Commissioners utilized the one-year anniversary of the Supreme Court’s decision in AMG Capital Management, LLC v. FTC to highlight the implications of the ruling that gutted their enforcement authority under Section 13(b) of the FTC Act. Commissioners called yet again for a legislative fix and

Q: It has been nearly a year since the Supreme Court’s decision in AMG Capital Management, LLC v. FTC foreclosed the FTC’s ability to pursue monetary remedies under Section 13(b) of the FTC Act.  How has AMG affected the FTC’s enforcement program, particularly in consumer protection cases? 

A: As an initial matter, it’s Important to emphasize that the Supreme Court did not take any authority away from the FTC; it concluded 9-0 that the FTC did not have the authority in the first place.  Justice Breyer put it this way: Section 13(b) produces a “coherent enforcement scheme. The Commission may obtain monetary relief by first invoking its administrative procedures and then Section 19’s redress provisions; it can use Section 13(b) to obtain injunctive relief while administrative proceedings are foreseen or in progress, or when it seeks only injunctive relief.”

The inability to obtain equitable monetary relief under Section 13(b) has taken away the FTC’s weapon of choice, but it has not left it without other means to carry the attack, and it continues to push the boundaries of its authority.  Chair Khan has made clear that it will litigate on principle, and that often means without regard for litigation risk.  In many ways, the agency is less predictable and, from a respondent’s or defendant’s perspective, dangerous. I had expected more restraint, given the AMG decision.

During oral argument, Justice Kavanaugh commented that, as former Executive Branch employee, he understands how “with good intentions the agency pushes the envelope and stretches the statutory language to do the good or prevent the bad – the problem is it results in a transfer of power from Congress to the Executive Branch.”

I heard something similar from Commissioner Wilson, in her concurring opinion in Resident Home.  There, she said that AMG “should have been a wake-up call, a reminder to the Commission that, no matter how egregious the conduct or righteous our cause, the Commission is not entitled to go beyond the bounds of what the law permits.” Despite these warnings, in response to AMG, continues to explore the frontiers of its authority.

This means that the FTC has assumed an aggressive adversarial position, using all means at its disposal in an attempt to redress what it perceives to be consumer injury, even if it means advancing a litigation position that is ultimately unsuccessful.  In short, I doubt that companies currently adverse to the FTC consider the agency to be compromised to any significant extent – in many ways, it is emboldened.
Continue Reading ABA Antitrust Spring Meeting: John Villafranco On Monetary Redress and FTC Enforcement Post-AMG

The Section 13(b) Fix:  Stand-Still on the Hill?Following House passage of 13(b) legislation this summer, Congressional Democrats seem to have lost some of the urgency with which they were moving to strengthen the FTC’s penalty authorities in the wake of the Supreme Court’s AMG decision. This is partly due to their preoccupation with a months’-long effort to move President Biden’s “Build Back Better” agenda and partly due to the need for some degree of bipartisan consensus in the Senate.  With the caveat that Congress can – and often does – surprise us, the prospects for a 13(b) fix any time soon remain murky at best.

Beyond Democrats’ pending budget reconciliation legislation, Congress’s focus through the end of the year is on deadlines for several “must-pass” bills (e.g., government funding, the debt ceiling, and the annual defense authorization bill).  While attaching policy riders to these year-end legislative initiatives is standard practice, it is unclear how hard Democrats may be pushing to include a 13(b) fix in the face of myriad legislative distractions, nor is it clear that Senate Republicans are ready to play ball.

Yes, there is always next year, but 2022 is projecting to be an even uglier legislative environment (if it could be imagined).  And while this could work either way for 13(b) – Democrats may be more desperate to make a deal (if they think they won’t be in power come 2023) and Republicans may be less willing to compromise (for the same reason) – it is unlikely that any legislative fix will include the exact language preferred by the FTC.  The end result could be that nothing happens here, with Republicans content to sit tight, and Democrats unwilling to beat their chests about 13(b) on the campaign trail.

Since most of our readers don’t regularly swim in these waters, let’s recap –
Continue Reading The Section 13(b) Fix:  Stand-Still on the Hill?

The Supreme Court in AMG foreclosed the FTC’s ability to pursue monetary remedies under Section 13(b) of the FTC Act. That, however, AMG has not stopped the FTC from pursuing monetary relief directly in court, while attempting to bypass the statutory prerequisite of an administrative proceeding. The FTC is continuing to use Section 13(b) of the Act to attempt to obtain preliminary and permanent injunctive relief. At the same time, the Commission is coupling its 13(b) requests for injunctive relief with other (sometimes creative) statutory requests for money.

Given the Commission’s newfound interest in exploring non-13(b) statutory avenues to obtain monetary remedies, we have expanded our Post-AMG chart to include a wider swath of ongoing cases in which the FTC is attempting to collect money absent the use of 13(b). The latest version of our expanded chart follows.

Continue Reading Post-AMG Scorecard: The FTC Pivots to Other Statutory Bases for Monetary Relief

Flexing the Agency’s Muscles: What FTC Notice of Penalty Offenses Really Means for AdvertisersOver the last ten days, 700 companies and 70 for-profit colleges received notice of the FTC’s intent to pursue civil penalties under Section 5(m)(1)(b), if these companies and colleges engage in certain conduct deemed by the FTC to be unfair or deceptive.  The notices sought to achieve two important Agency objectives: first, force addressees to consider their marketing messages and compliance programs; and second, reintroduce (or reinforce) the threat of significant monetary penalties for those who need discipline.  The warnings will undoubtedly alter the dynamic of new investigations as parties consider the costs and benefits of negotiating consent orders that include payment of consumer redress.

But what if parties resist and the Commission were forced to litigate?  There, a third objective – to convince a court that the FTC’s Penalty Offense Authority entitles it to civil penalties based on these notices – is much less likely to be realized.
Continue Reading Flexing the Agency’s Muscles: What FTC Notice of Penalty Offenses Really Means for Advertisers

FTC Blankets Companies With Warning Letters Over Endorsements and ReviewsAs we have noted in earlier posts, in the wake of the Supreme Court’s holding that Section 13(b) of the FTC Act does not allow for monetary restitution, the Federal Trade Commission has been attempting to creatively utilize other provisions of the Act in order to obtain money from the companies and individuals it

It was an extraordinary week as the FTC continued to press the frontier of the post-AMG Capital Management landscape.

On Friday, the Commission, making good on promises to creatively explore all of its options for enforcement, announced by a 3-2 vote that it had reached a settlement pursuant to Section 19 of the FTC Act with Resident Home LLC and its owner Ran Reske.  At issue were allegedly false claims that the company’s imported mattresses are made from materials fully manufactured in the United States. As part of the settlement, Resident Home and Reske agreed to pay $753,000.

This action follows the FTC’s announcement earlier in the week that it had notified 70 for-profit higher educational institutions that it intends to make use of its long dormant Penalty Offense Authority.  As contemplated by the FTC, the Penalty Offense Authority would allow the Agency to obtain civil penalties when institutions make misrepresentations about their programs, and job and earnings prospects.
Continue Reading Pushing the Boundaries of Existing Authority: Section 19 Post-AMG Capital Management

As AMG recedes further into the past, lower courts are becoming more comfortable disposing of 13(b) actions where the proceedings are attempting to obtain monetary restitution as a matter of course. In many instances below, the FTC has conceded its inability to obtain monetary relief and has focused on the injunctive relief it seeks. However, there are still outstanding cases wherein, despite AMG, the FTC refuses to concede defeat on the issue of monetary relief under Section 13(b).

Latest update follows.
Continue Reading Post-AMG Scorecard (Updated): FTC Claims for Monetary Relief in 13(b) Actions Dwindle