August 4, 2021

Volume XI, Number 216

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August 03, 2021

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August 02, 2021

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SCOTUS to the FTC: No More Line-Jumping in Seeking Equitable Monetary Relief

On Thursday, the Supreme Court ripped away from the Federal Trade Commission’s preferred method of obtaining restitution and disgorgement from bad marketplace actors, ruling that § 13(b) of the Federal Trade Commission Act did not permit the FTC to directly seek court orders for monetary relief. Instead, the Court ruled in AMG Capital v. FTC, the FTC must first go through the administrative procedures set forth in § 5 of the Act. Only once the administrative procedures have been satisfied can the FTC seek civil penalties, or other monetary relief under the consumer redress provision at § 19 of the Act.

The FTC has long used § 13(b), which authorizes the Commission to apply directly to a district court for a permanent injunction, to obtain court orders for restitution and other kinds of equitable monetary relief without first using the administrative procedures set forth in § 5 of the Act. The Supreme Court’s unanimous decision ended a circuit split and reversed the Ninth Circuit ruling that the FTC’s direct appeal to the district court under § 13(b) and that court’s subsequent award of $1.27 billion in restitution and disgorgement were proper, despite the FTC’s failure to go through the administrative proceedings set forth in the Act first. 

As a result of Thursday’s ruling, the Commission will now face larger hurdles in seeking monetary relief. The Commission will first have to file a complaint and obtain a cease and desist order from an Administrative Law Judge, and such complaint must be filed within three years of the underlying violation in order for monetary relief to be ordered under § 19. Additionally, § 19 monetary redress can only be ordered within one year of a final cease and desist order, and only where “a reasonable man would have known under the circumstances” that the conduct at issue was “dishonest or fraudulent.” Such limitations are not present in § 13(b). The FTC has recently requested broader remedial authority from Congress than that currently authorized by the Act, but until such time as Congress grants that authority, “§ 13(b) as currently written does not grant the Commission authority to obtain equitable monetary relief.”

For those ensnared in FTC investigations, this ruling is nothing short of a victory as the hurdles now faced by the FTC in obtaining monetary relief will limit the amount and frequency of such monetary awards. 

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume XI, Number 116
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About this Author

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As a shareholder in the Government Investigations practice, Brian Rafferty leverages a distinguished background serving as Chief of the Criminal Division of the United States Attorney’s Office for the Southern District of Georgia. In his more than ten years of experience as a federal prosecutor, Brian oversaw and managed some of the most high-profile and complex investigations in the Southern District of Georgia. Before his work as a federal prosecutor, Brian was a partner at white collar criminal litigation boutique in New York, where he represented individuals in government...

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Brea M. Croteau Government Investigations Attorney Polsinelli Atlanta, GA
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Brea Croteau focuses her practice on internal investigations and white collar crime. She represents corporations and individuals in federal and state regulatory investigations and enforcement matters. Brea’s experience includes assisting clients in responding to government investigations based on alleged violations of civil and criminal laws, including the False Claims Act, and representing both plaintiffs and defendants in a wide variety of civil litigation matters including breach of contract, business torts, fraud and misrepresentation claims.

Prior to joining Polsinelli, Brea...

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