On July 20, the U.S. House of Representatives passed H.R. 2668, the Consumer Protection and Recovery Act, to clarify the Federal Trade Commission’s enforcement authority under Section 13(b) of the FTC Act. H.R. 2668, authored by Representative Tony Cárdenas (D-CA), would explicitly authorize the FTC to seek permanent injunctions and other equitable relief, including
The week started badly for the FTC when the U.S. District Court for the District of Columbia dismissed its antitrust complaint against Facebook (as well as a similar case brought by the attorneys general of 46 states). And things got a little worse yesterday for the FTC in FTC v. Cardiff – even if news…
TINA.org continues to aggressively beat the enforcement drum. Today, its leaders sent a letter to Acting Director of the Bureau of Consumer Protection Samuel Levine encouraging the FTC “to implement a penalty offense program targeting the direct selling industry and its market-wide practice of utilizing deceptive earnings representations and false health claims.”
As we discussed…
The ripple effects continue from the Supreme Court’s holding in AMG Capital Management, LLC v. FTC, explaining that Section 13(b) of the FTC Act does not allow (and never did allow) monetary remedies.
In some cases, the FTC has stricken equitable monetary remedies entirely by removing those requests for relief in amended complaints. In others, the FTC is attempting to retain its request for monetary relief by newly tying it to another statutory provision. In still others, the Agency has requested that courts ignore AMG, because Congress may, at some unspecified future date, amend the statute.
Latest update follows.…
The FTC yesterday took two actions that on their face seemed part of the regular course, but that could signal notable changes for financial institutions and multi-level marketing companies. First, the FTC filed an amended complaint against RCG Advances, a merchant cash advance provider, alleging that the company violated the Gramm-Leach-Bliley Act and seeking civil…
There are some really smart lawyers at the FTC. For over 40 years, they were able to convince the federal judiciary (and, let’s face it, most of us) that the FTC had an authority that a unanimous Supreme Court in AMG Capital Management concluded it did not have. Following the decision, there has been a…
On May 27, the House Energy and Commerce Committee’s Subcommittee on Consumer Protection and Commerce advanced by voice vote H.R. 2668, legislation to clarify the Federal Trade Commission’s authority under Section 13(b) of the Federal Trade Act, just five weeks after the Supreme Court gutted that authority in AMG Capital Management, LLC v. FTC. The subcommittee vote followed hours of political sparring, with Republicans accusing Democrats of pursuing a rushed, partisan process and Democrats accusing Republicans of ignoring the pleas of the FTC and refusing to engage on the issue.
As we’ve described previously, H.R. 2668, the Consumer Protection and Recovery Act, authored by Representative Tony Cárdenas (D-CA), would explicitly authorize the FTC to seek permanent injunctions and other equitable relief, including restitution and disgorgement, to redress perceived consumer injury. The subcommittee reported H.R. 2668 largely unchanged, save for a substitute amendment from Representative Cárdenas making minor changes to the bill. At the outset, subcommittee Democrats defeated two Republican motions to postpone consideration of the bill. Democrats subsequently voted down two Republican amendments: one delaying enactment of the bill until the FTC certifies that a 2003 policy statement on disgorgement in competition cases is more broadly applicable; and one prohibiting the Commission from seeking disgorgement unless it has conducted an economic analysis. Republicans also “offered and withdrew” an amendment to reduce the legislation’s proposed statute of limitations from 10 to five years.
Beyond 13(b)-specific guardrails, Republicans – including Subcommittee Ranking Member Gus Bilirakis (R-FL) – voiced their intent to address the agency’s 13(b) authority as part of a more holistic FTC policy revamp, including the establishment of a national privacy framework. To that end, another handful of Republican amendments – many dealing with FTC authorities beyond 13(b) – were offered and withdrawn.
Continue Reading Energy and Commerce Committee Democrats Advance 13(b) Reform Legislation through Subcommittee
Last Month, in AMG Capital Management, LLC v. FTC, the Supreme Court ruled that Section 13(b) of the FTC Act does not allow for monetary remedies. While the importance of this ruling is plain, its implications are only now becoming more clear. Just yesterday, for example, in FTC v. Cardiff, a California federal court found the FTC liable to pay all of the Receiver’s fees from the date of the AMG ruling going forward. The Court explained that it would be inequitable for the defendants to pay these fees, now that the Supreme Court has clarified that the 13(b) relief provided only allowed for an injunction.
This is the first instance we know of where the FTC has been required to pay a Receiver’s fees during the pendency of a 13(b) injunction.
As we’ve discussed in earlier posts, the FTC has asked Congress to rewrite the statute in a way that would allow it to unambiguously go straight to Federal Court to obtain money judgments. For now, however, the FTC can no longer rely on Section 13(b) to provide anything other than injunctive relief. As Cardiff illustrates, this will mean different things in the dozens of enforcement actions that are presently pending.
The following table summarizes relevant post-AMG action in these cases. Our team will provide periodic updates.
Continue Reading Post-AMG Scorecard: The FTC is Required to Pay Receiver’s fees in Cardiff
Recently, the U.S. Chamber of Commerce published a letter to the Committee on Commerce, Science, and Transportation, the Congressional Committee currently working on draft language for a new Section 13(b) of the FTC Act. The Chamber’s letter cautions Congress to ensure that any new statutory language not give the FTC too much authority. In advocating caution, the Chamber makes an important, if subtle, point. The FTC is now arguing that the Supreme Court “took away” 13(b) powers it had before. In reality, though, the Supreme Court in AMG explained that FTC never had the power it arrogated in the first place.
The Chamber’s letter noted that the legislative history of the FTC Act requires the Commission to use Section 19’s administrative processes to obtain monetary relief for past violations. There is no reason that Congress should provide the FTC with additional powers, according to the Chamber, when the FTC already has an avenue to seek monetary relief.
The Chamber’s argument here largely mimics the position of Justice Breyer, who authored the AMG decision from a unanimous Court, concluding that the current version of 13(b) does not allow monetary relief. In AMG, Justice Breyer explained that “[t]he Commission may obtain monetary relief by first invoking its administrative procedures and then § 19’s redress provisions (which include limitations) . . . By contrast, the Commission’s broad reading would allow it to use §13(b) as a substitute for §5 and §19.”
The Chamber’s letter urged Congress not to upset the fine balance the FTC Act originally envisioned. While the Chamber agreed that the FTC should be able to go immediately to Court “to seek appropriate equitable monetary relief for clearly fraudulent cases that are found to be in violation of the law,” it explained that “[m]onetary relief should not be available for every consumer protection violation but should be reserved for the most egregious types of cases.”…
Continue Reading Acting Chair Rebecca Slaughter and Chamber of Commerce Spar Over a New 13(b)
Yesterday, less than a week after the Supreme Court’s unanimous decision in AMG Capital Management v. FTC, two Congressional committees zeroed in on the FTC’s hollowed-out Section 13(b) authority, the fate of which now lies squarely with Congress. Leading Democrats in both chambers have expressed the urgent need for legislation to clarify and strengthen…