On April 22, 2021, the US Supreme Court decided AMG Capital Management, LLC, et al. v. Federal Trade Commission.  The case involved a complaint filed in district court by the Federal Trade Commission (the “Commission”) against Scott Tucker and his companies alleging deceptive payday lending practices in violation of §5(a) of the Federal Trade Commission Act (the “Act”).  The FTC did not seek administrative relief under §19 of the Act.

The District Court granted the Commission’s request pursuant to §13(b) of the Act for a permanent injunction to prevent Tucker from committing future violations and to direct Tucker to pay $1.27 billion in restitution and disgorgement.  The Ninth Circuit upheld the District Court’s ruling. Tucker appealed to the US Supreme Court arguing that §13(b) of the Act does not authorize the award of equitable monetary relief and is limited to injunctive relief.  A unanimous Court agreed.

The Court noted that:

“Beginning in the late 1970s, the Commission began to use §13(b), and in particular the words “permanent injunction,” to obtain court orders for redress of various kinds in consumer protection cases—without prior use of the administrative proceedings in §5.”

“The result is that the Commission presently uses §13(b) to win equitable monetary relief directly in court with great frequency.”

“The Commission may obtain monetary relief by first invoking its administrative procedures and then §19’s redress provisions (which include limitations).  And the Commission may use §13(b) to obtain injunctive relief while administrative proceedings are foreseen or in progress, or when it seeks only injunctive relief. By contrast, the Commission’s broad reading would allow it to use §13(b) as a substitute for §5 and §19.”

The Court further explained that its decision did not foreclose the Commission from seeking restitution:

“Nothing we say today, however, prohibits the Commission from using its authority under §5 and §19 to obtain restitution on behalf of consumers. If the Commission believes that authority too cumbersome or otherwise inadequate, it is, of course, free to ask Congress to grant it further remedial authority.”

A copy of the Court’s opinion can be found here: https://spelusolawoffice.com/wp-content/uploads/2021/05/19-508_l6gn-1.pdf.