SCOTUS Rules FTC Can Not Pursue Equitable Relief

The Court’s decision, which signifies a setback to the FTC’s enforcement plan, was unanimous.

Facts of this Case

In claiming that Tucker’s clinics were likely to mislead consumers, the Commission failed to use its own administrative event. Rather, the Commission registered a complaint against Tucker right in court. The Commission, relying upon Section 13(b) of the FTC Act, requested the court to issue a permanent injunction to stop Tucker from commit- ting future violations of this Act. Relying on exactly the exact identical provision, the Commission also requested the court to order monetary relief, in particular, restitution and disgorgement. Section 13(b) authorizes the Commission to get,”in appropriate cases,” that a”permanent injunction” in federal court against”any individual, partnership, or company” that it believes”is violating, or is about to violate, any provision of law” that the Commission enforces.

On appeal, the Ninth Circuit Court of Appeals rejected Tucker’s argument that §13(b) doesn’t authorize the award of equitable monetary relief.

Supreme Court’s Conclusion

The Supreme Court reversed, holding that Section 13(b) doesn’t authorize the FTC to search, or a court to award, equitable monetary relief like restitution or disgorgement. Justice Stephen Breyer wrote on behalf of the unanimous Court.

Since Justice Breyer explained, the central question was whether Congress, by enacting §13(b) and using the phrases”permanent injunction,” granted the Commission authority to get monetary relief directly in courts and efficiently bypass the necessities of the administrative procedure. The Court concluded that it didn’t.

“Several factors, taken together, convince us that §13(b)’s’permanent injunction’ language doesn’t authorize the Commission directly to get court-ordered monetary relief,” Justice Breyer wrote. The Court first noted the Section 13(b) provides that the

“Commission may find… a permanent injunction.” Since Justice Breyer said,”An’injunction’ isn’t the same as the award of equitable monetary relief.”

The Court further reasoned that the”terminology and structure of §13(b), taken as a whole, indicate that the phrases’permanent injunction’ have a restricted purpose–a goal that doesn’t stretch into the grant of monetary relief.” In support, Justice Breyer mentioned language, such as”is violating” and”is about to violate” (not”has violated”), indicating that the provision concentrates upon relief that’s prospective, not retrospective, i.e. stopping seemingly unfair practices from occurring while the Commission decides their lawfulness.

[T]o read those words as letting what they do not say, namely, as permitting the Commission to dispense with administrative proceedings to obtain monetary relief as well, is to read the exact words going well beyond the provision’s subject matter,” Justice Breyer wrote. “In light of the historical importance of administrative proceedings, that reading would allow a tiny statutory tail to wag a huge dog.”

The Court also found that the structure of this Act past §13(b) affirmed its conclusion. Justice Breyer wrote:

Congress at §5(l) and §19 gave district courts the jurisdiction to impose restricted monetary penalties and to award monetary relief in cases in which the Commission has issued cease and desist orders, i.e., in which the Commission has participated in administrative proceedings. Since in those terms Congress explicitly provided for”other and additional equitable relief,” 15 U. S. C. §45(l), also for the”refund of money or return of land,” §57b(b), it likely didn’t intend for §13(b)’s longer cabined”permanent injunction” terminology to get similarly broad range.

The Court proceeded to deny the FTC’s arguments concerning why it needs to be entitled to obtain monetary relief. In so ruling, the Court emphasized that the FTC can nevertheless find restitution and disgorgement under other terms of the FTC Act.

“Nothing we say now, however, prohibits the Commission from utilizing its authority under §5 and §19 to obtain restitution on behalf of consumers,” Justice Breyer wrote. “If the Commission believes that jurisdiction overly cumbersome or inadequate, it’s, obviously, free to ask Congress to grant it additional remedial authority.” Legislation has been introduced in Congress that would authorize the FTC to find monetary equitable relief.
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