The Supreme Court today announced that it has consolidated and will hear arguments in two closely-watched cases concerning the  authority of the Federal Trade Commission (FTC or Commission) to seek monetary relief, AMG Capital Management, LLC v. FTC and FTC v. Credit Bureau. Section 13(b) of the FTC Act allows the Commission, under certain circumstances, to “bring suit in a district court of the United States to enjoin” any act or practice violative of any provision of law enforced by the FTC but it does not mention monetary relief.  The FTC has long claimed that Section 13(b)’s grant of a type of equitable relief, an injunction, means that a court may grant it all equitable remedies, including monetary relief. 

Both FTC cases at issue concern recovery against defendants accused of consumer protection violations:  the Seventh Circuit’s rejection of a restitution damages award in connection with a deceptive scheme to enroll consumers in credit-monitoring services in Credit Bureau and an award of $5.2 million in restitution for a payday lending fraud in AMG Capital.  The Court noted that “[s]even courts of appeals have held that district courts exercising [] authority [to issue a permanent injunction] may enter an injunction that requires defendants to return to the victims of their wrongdoing funds obtained through their illegal activity. One has held the opposite.”  In that context, the Court granted certiorari on two questions:  in Credit Bureau, “[w]hether Section 13(b) [of the FTC Act] authorizes district courts to enter an injunction that orders the return of unlawfully obtained funds,” and in AMG Capital, “[w]hether §13(b) of the [FTC] Act, by authorizing ‘injunction[s],’ also authorizes the Commission to demand monetary relief such as restitution—and if so, the scope of the limits or requirements for such relief.”

The Court’s grant of certiorari comes on the heels of its June 22 decision in Liu v. Securities and Exchange Commission, concerning remedies available to a different administrative agency, the Securities and Exchange Commission (SEC).  In Liu, the Court affirmed that the “Equitable Relief” provision of the SEC Act, Section 78u(d)(5), allows the SEC to recover disgorgement damages falling within certain parameters (read more on the Liu decision here).  Many questioned the applicability of Liu to the FTC’s different statutory language at issue in AMG Capital and Credit Bureau, and the Court will now take that question on directly.

In both AMG Capital and Credit Bureau, the parties opposing the FTC submitted Supplemental Briefs regarding Liu’s impact.  AMG Capital argued in its June 23 Supplemental Brief that the Liu decision’s limitation to the SEC Act rendered it “largely irrelevant” based on significant differences in statutory language; and noting that, unlike §78u(d)(5) of the SEC Act, Section 13(b) of the FTC Act does not purport to authorize “equitable relief,” and instead only provides for temporary restraining orders, preliminary injunctions, and permanent injunctions. In Credit Bureau, respondents submitted similar arguments in their Supplemental Brief on June 22, averring that the Liu decision fails to disrupt the Seventh Circuit’s “separate conclusion that a profits judgment is not an ‘injunction.’”

The FTC has faced internal and external calls to obtain monetary relief more frequently and in higher amounts.  Also, the pursuit of such relief has increasingly prompted the FTC to proceed in federal court, rather than though its own administrative process. Should the Court rule that it lacks this authority, it will have far-reaching impacts on the FTC’s litigation and remedial strategies.

These cases are set for argument in the Supreme Court’s October 2020 term.

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Baker Botts will continue to monitor this important area of the law and will provide future reports as that law continues to develop.  If you have any questions about these cases or the FTC’s enforcement powers, please do not hesitate to contact a member of our Antitrust & Competition Law team so that we may further assist you.

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