SCOTUS: FTC Has No Authority to Obtain Monetary Relief Under Section 13(b) of the FTC Act Friday, May 14, 2021
The Supreme Court unanimously held that Section 13(b) of the Federal Trade Commission Act does not give the Commission authority to bypass administrative proceedings and seek equitable monetary relief directly from the federal courts.
Section 13(b) of the FTC Act provides that when the Commission “has reason to believe that any person, partnership, or corporation is violating, or is about to violate, any provision of law enforced by the Federal Trade Commission . . . in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction.” For over four decades the Commission has relied on this Section to bring consumer protection and antitrust actions directly before federal courts seeking injunctions and monetary relief, such as restitution and disgorgement, bringing “far more cases in court than it does through the
To embed, copy and paste the code into your website or blog:
On April 27, 2021, the House Committee on Energy and Commerce held a hearing titled, “The Consumer Protection and Recovery Act: Returning Money to Defrauded Consumers.” This hearing was held five days after
the U.S. Supreme Court ruled that § 13(b) of the Federal Trade Commission Act (the “Act”) does not authorize the FTC to seek, or a court to award, equitable monetary relief such as restitution or disgorgement. Following the court’s decision, U.S. Representative Tony Cárdenas introduced H.R. 2688 (the “Consumer Protection and Recovery Act”). If enacted, the Consumer Protection and Recovery Act would amend §13(b) to expressly give the FTC authority to seek, and a court to award, equitable monetary relief. At the hearing, FTC Acting Chairwoman Rebecca Kelly Slaughter presented testimony urging members of the House to support and ratify the Consumer Protection and Recovery Act.
To embed, copy and paste the code into your website or blog:
On April 22, 2021, the Supreme Court issued a unanimous decision finding that the FTC lacks authority to pursue equitable monetary relief in federal court under Section 13(b) of the Federal Trade Commission Act (the “FTCA”). The result means that defendant Scott Tucker does not have to pay $1.27 billion in restitution and disgorgement, notwithstanding that his payday loan business was found to constitute an unfair and deceptive practice. The result also means that onlookers everywhere are scratching their heads thinking “what now?” If the FTC is stripped of its authority to pursue equitable monetary relief, then will unfair and deceptive practices run rampant, knowing that the “worst case” scenario is that they will be enjoined (but get to keep any ill-gotten profits earned in the interim)?
Professional Biography:
Sean Paisan is Of Counsel in the Orange County, California, office of Jackson Lewis P.C. His practice focuses on workplace safety and health (OSHA), data privacy, and traditional employment matters, including litigation and counseling.
Sean’s first exposure to OSHA regulations occurred during his undergraduate studies while working for a construction company that helped build Disney’s California Adventure. After attending law school and working for the Los Angeles County District Attorney’s Office and the United States Attorney’s Office, Sean moved into private practice, where he focused on general liability matters, including serious injuries and fatalities. Through this experience, Sean became very knowledgeable on the myriad of Cal/OSHA regulations imposed on businesses, especially in the construction, manufacturing, and healthcare industries, and the consequences for violations of those regulations. From there, Sean became OSHA 30 certified
On April 20, members of the Federal Trade Commission (FTC)
testified before the Senate Commerce Committee to update lawmakers of their efforts to curtail scams and other fraudulent consumer abuses related to the novel coronavirus (COVID-19). In addition to highlighting the abuses consumers have faced during COVID-19, the FTC reiterated its call for Congress to pass legislation reaffirming that the agency has authority to prohibit unlawful conduct and seek monetary relief for consumers who have lost money from illegal conduct. The FTC has historically relied on
Supreme Court ruled two days after this testimony that the agency does not have authority under the Federal Trade Commission Act – Section 13(b) to seek, nor a court to award, equitable monetary relief, such as restitution or disgorgement.