AMG Capital Mgmt., LLC v. Fed. Trade Comm'n

• Decision Date: 22 April 2021
• Docket Number: No. 19-508,19-508
• Citation: 141 S.Ct. 1341,209 L.Ed.2d 361
• Parties: AMG CAPITAL MANAGEMENT, LLC, et al., Petitioners v. FEDERAL TRADE COMMISSION
• Court: U.S. Supreme Court

141 S.Ct. 1341

209 L.Ed.2d 361

AMG CAPITAL MANAGEMENT, LLC, et al., Petitioners

v.FEDERAL TRADE COMMISSION

No. 19-508

Supreme Court of the United States.

Argued January 13, 2021

Decided April 22, 2021

Michael Pattillo, Washington, DC, for the petitioners.

Joel R. Marcus, Washington, DC, for the respondent.

Paul C. Ray, Paul C. Ray, Chtd, Las Vegas, NV, Jeffrey A. Lamken, Michael G. Pattillo, Jr. Sarah J. Newman, Mololamken LLP, Washington, D.C., Jennifer E. Fischell, Mololamken LLP, New York, NY, Matthew J. Fisher, Mololamken LLP, Chicago, IL, for Petitioners.

Alden F. Abbott, General Counsel, Counsel of Record, Joel Marcus, Deputy General Counsel for Litigation, Michael Bergman, Theodore (Jack) Metzler Matthew M. Hoffman, Washington, D.C., for Respondent.

Justice BREYER delivered the opinion of the Court.

Section 13(b) of the Federal Trade Commission Act authorizes the Commission to obtain, "in proper cases," a "permanent injunction" in federal court against "any person, partnership, or corporation" that it believes "is violating, or is about to violate, any provision of law" that the Commission enforces. 87 Stat. 592, 15 U. S. C. § 53(b). The question presented is whether this statutory language authorizes the Commission to seek, and a court to award, equitable monetary relief such as restitution or disgorgement. We conclude that it does not.

I

Petitioner Scott Tucker controlled several companies that provided borrowers with short-term payday loans. The companies, operating online, would show a potential customer a loan's essential terms. When the companies explained those terms, they misled many customers. The companies’ written explanations seemed to say that customers could normally repay a loan by making a single payment. And that payment would cost a person who, for example, borrowed $300 an extra $90. (The customer would likely repay a total of $390.) But in fine print the explanations said that the loan would be automatically renewed unless the customer took affirmative steps to opt out. Thus, unless the customer who borrowed $300 was aware of the fine print and actively prevented the loan's automatic renewal, he or she could end up having to pay $975, not $390. Between 2008 and 2012, Tucker's businesses made more than 5 million payday loans, amounting to more than $1.3 billion in deceptive charges.

In 2012 the Federal Trade Commission filed suit and claimed that Tucker and his companies were engaging in "unfair or deceptive acts or practices in or affecting commerce," in violation of § 5(a) of the Act. 15 U. S. C. § 45(a)(1). (We shall refer to all of the defendants collectively as Tucker.) In asserting that Tucker's practices were likely to mislead consumers, the Commission did not first use its own administrative proceedings. Rather, the Commission filed a complaint against Tucker directly in federal court. The Commission, relying upon § 13(b), asked the court to issue a permanent injunction to prevent Tucker from committing future violations of the Act. Relying on the same provision, the Commission also asked the court to order monetary relief, in particular, restitution and disgorgement. The Commission moved for summary judgment.

The District Court granted the Commission's summary judgment motion. The court also granted the Commission's request for an injunction and directed Tucker to pay $1.27 billion in restitution and disgorgement. The court ordered the Commission to use these funds first to provide "direct redress to consumers" and then to provide "other equitable relief " reasonably related to Tucker's alleged business practices. Finally, the court ordered the Commission to deposit any remaining funds in the United States Treasury as disgorgement.

On appeal, Tucker argued that § 13(b) does not authorize the monetary relief the District Court had granted. The Ninth Circuit rejected Tucker's claim. 910 F.3d 417 (2018). It pointed to Circuit precedent that had interpreted § 13(b) as "empower[ing] district courts to grant any ancillary relief necessary to accomplish complete justice, including restitution." FTC v. Commerce Planet, Inc. , 815 F.3d 593, 598 (2016) ; see also FTC v. H. N. Singer, Inc. , 668 F.2d 1107, 1113 (C.A.9 1982). Two judges, while recognizing that precedent in many Circuits supported that use of § 13(b), expressed doubt as to the correctness of that precedent.

Tucker then sought certiorari in this Court. In light of recent differences that have emerged among the Circuits as to the scope of § 13(b), we granted his petition.

II

The Federal Trade Commission Act prohibits, and authorizes the Commission to prevent, "[u]nfair methods of competition" and "unfair or deceptive acts or practices." 15 U. S. C. §§ 45(a)(1)–(2). The Act permits the Commission to use both its own administrative proceedings (set forth in § 5 of the Act) and court actions in exercising this authority. In construing § 13(b), it is helpful to understand how the Commission's authority (and its interpretation of that authority) has evolved over time.

Ever since the Commission's creation in 1914, it has been authorized to enforce the Act through its own administrative proceedings. Section 5 of the Act describes the relevant administrative proceedings in some detail. If the Commission has "reason to believe" that a party "has been or is using any unfair method of competition or unfair or deceptive act or practice," it can file a complaint against the claimed violator and adjudicate its claim before an Administrative Law Judge. § 45(b). The ALJ then conducts a hearing and writes a report setting forth findings of fact and reaching a legal conclusion. Ibid. If the ALJ concludes that the conduct at issue was unfair or misleading, the ALJ will issue an order requiring the party to cease and desist from engaging in the unlawful conduct. Ibid. The party may then seek review before the Commission and eventually in a court of appeals, where the "findings of the Commission as to the facts" (if supported by the evidence) "shall be conclusive." § 45(c). If judicial review favors the Commission (or if the time to seek judicial review expires), the Commission's order normally becomes final (and enforceable). § 45(g).

In the 1970s Congress authorized the Commission to seek additional remedies in court. In 1973 Congress added § 13(b), the provision at issue here. That provision permits the Commission to proceed directly to court (prior to issuing a cease and desist order) to obtain a "temporary restraining order or a preliminary injunction," and also allows the Commission, "in proper cases," to obtain a court-ordered "permanent injunction." 15 U. S. C. § 53(b). In the same legislation, Congress also amended § 5(l ) of the Act to authorize district courts to award civil penalties against respondents who violate final cease and desist orders, and to "grant mandatory injunctions and such other and further equitable relief as they deem appropriate in the enforcement of such final orders of the Commission." § 45(l ). Two years later, Congress enacted § 19 of the Act, which authorizes district courts to grant "such relief as the court finds necessary to redress injury to consumers," including through the "refund of money or return of property." § 57b(b). However, Congress specified that the consumer redress available under § 19 could be sought only (as relevant here, and subject to various conditions and limitations) against those who have "engage[d] in any unfair or deceptive act or practice ... with respect to which the Commission has issued a final cease and desist order which is applicable to such person." § 57b(a)(2).

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. See, e.g. , FTC v. Virginia Homes Mfg. Corp. , 509 F.Supp. 51, 59 (D.Md. 1981) (relying on § 13(b) to order the defendant to notify past customers of their warranty rights); see also D. FitzGerald, The Genesis of Consumer Protection Remedies Under Section 13(b) of the FTC Act 1–2, Paper at FTC 90th Anniversary Symposium, Sept. 23, 2004 (FitzGerald); Beales & Muris, Striking the Proper Balance: Redress Under Section 13(b) of the FTC Act, 79 Antitrust L. J. 1, 3–4 (2013). The Commission used this authority to seek and win restitution and other forms of equitable monetary relief directly in court.

Similarly, in the late 1990s the Commission began to use § 13(b)’s "permanent injunction" authority in antitrust cases to seek monetary awards, such as restitution and disgorgement—again without prior use of traditional administrative proceedings. See Complaint in FTC v. Mylan Labs. , Inc. , No. 98–3114 (DC); Complaint in FTC v. The Hearst Trust , No. 01–734 (DC). In 2003 the Commission issued guidance that limited its use of § 13(b) to obtain monetary relief to "exceptional cases" involving a "[c]lear [v]iolation" of the antitrust laws. Policy Statement on Monetary Equitable Remedies in Competition Cases, 68 Fed. Reg. 45821 (emphasis deleted). But in 2012 the Commission withdrew its policy statement and the limitations it imposed. See Withdrawal of the Commission Policy Statement on Monetary Equitable Remedies in Competition Cases, 77 Fed. Reg. 47071.

The result is that the Commission presently uses § 13(b) to win equitable monetary relief directly in court with great frequency. The Commission tells us that "the agency [now] brings dozens of [§ 13(b)] cases every year seeking a permanent injunction and the return of illegally obtained funds." Brief for Respondent 8; see also, e.g. , Ohlhausen, Dollars, Doctrine, and Damage Control: How Disgorgement Affects the FTC's Antitrust Mission 7, Speech at Dechert LLP, NY, Apr. 20, 2016 (Commission sought disgorgement in antitrust cases four times between 2012 and 2016, which is "as many times as the [Commission] pursued such relief in the...