The Supreme Court this morning issued a unanimous ruling in AMG Capital Management, LLC v. FTC, finding that Section 13(b) of the FTC Act does not authorize the Commission to seek, or a court to award, equitable monetary relief such as restitution or disgorgement. 539 U.S. ___ (2021), Slip Op. at 1. This ruling not only forecloses the FTC’s ability to obtain monetary remedies in deception cases without an administrative order but also stops its burgeoning efforts to obtain large disgorgement remedies in antitrust matters, which have often been in the hundreds of millions of dollars and reached over one billion dollars in one settlement.

The case at bar concerns the award of $1.27 billion in restitution and disgorgement damages ordered after AMG Capital Management was found liable for a payday lending scheme.  Slip Op. at 2-3.  However, this decision has broader implications for the FTC, which has regularly used Section 13(b) of the FTC Act to pursue and recover monetary damages, notwithstanding language limiting available remedies to injunctive relief, and other provisions in the FTC Act permitting monetary damages following administrative proceedings. See Slip Op. at 5-6, citing Ohlhausen, Dollars, Doctrine and Damage Control: How Disgorgement Affects the FTC’s Antitrust Mission 7, Speech at Dechert LLP, NY, Apr. 20, 2016.

Writing for the Court, Justice Breyer offered a straightforward read of the FTC Act, including Section 13(b) and Section 19, which authorizes district courts to grant relief “necessary to redress injury to consumers” in the event of violations following a final administrative cease and desist order. See Slip Op. at 4.  The Court concluded that by its terms, the prospective injunctive relief contemplated by Section 13(b), read in conjunction with the structure of the FTC Act as a whole and the import of administrative proceedings in the Commission’s mission, fails to authorize monetary relief. Slip Op. at 10.

The Court was not persuaded by the Commission’s arguments, including that prior Supreme Court holdings concerning other statutes support the proposition that the traditional injunctive authority “includes the power to grant restorative monetary remedies,” or that Sections 13(b) and 19 are merely “parallel enforcement paths.” Slip Op. at 11-12. Additionally, the Court did not find that limited amendments to the FTC Act over time constituted Congressional ratification of or acquiescence to the Commission’s recovery of monetary damages under Section 13(b), noting that Congress had not “comprehensively revised” the FTC Act, but made only isolated amendments. See Slip Op. at 13.  As to policy arguments that it is desirable and beneficial for the FTC to be able to recover monetary damages beyond those available in administrative proceedings, the Court concluded that this is best left to Congress. See Slip Op. at 14.

As discussed in a Senate hearing on Tuesday on this issue and in a response issued today by FTC Acting Chair Rebecca Kelly Slaughter, the FTC will continue to push Congress for quick action to “restore and strengthen” the FTC’s ability to seek monetary damages under Section 13(b).

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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.

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