On April 22, 2021, the U.S. Supreme Court unanimously reversed the Ninth Circuit Court of Appeals in AMG Capital Management, LLC v. Federal Trade Commission, No. 19-508, holding that the FTC cannot seek — and courts cannot award — equitable monetary relief under Section 13(b) of the FTC Act, which authorizes the Commission to seek permanent injunctions directly in federal court without prior administrative proceedings, and which the FTC has relied on extensively over the past 40 years.
Under Section 13(b), 15 U.S.C. § 53(b), the FTC may proceed directly to federal courts, without utilizing the administrative law process that it would otherwise follow, to seek a permanent injunction “against ‘any person, partnership, or corporation’ that it believes ‘is violating, or is about to violate, any provision of law’ that the Commission enforces.” “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,” including monetary relief, “in consumer protection cases — without prior use of the administrative proceedings” called for by Sections 5 and 19 of the FTC Act, which expressly authorize and set forth requirements for the imposition of monetary penalties. Likewise, “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.” In recent years, the FTC has “use[d] §13(b) to win equitable monetary relief directly in court with great frequency,” filing dozens of such federal cases every year “seeking a permanent injunction and the return of illegally obtained funds.”
Petitioner Scott Tucker and his payday loan company, AMG Capital Management, argued that the FTC is not permitted to use Section 13(b)’s permanent injunction to impose monetary penalties. Following the district court’s order directing Tucker and his companies to pay the FTC $1.27 billion in restitution and disgorgement for deceptive payday loan charges (and that the FTC provide direct redress to defrauded consumers), the Ninth Circuit rejected Tucker’s argument, pointing “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.’”
The Supreme Court reversed, holding “that §13(b)’s ‘permanent injunction’ language does not authorize the Commission directly to obtain court-ordered monetary relief.” The Court reasoned that not only is an “‘injunction’ not the same as an award of equitable monetary relief,” but the “language and structure of §13(b), taken as a whole, indicate that the words ‘permanent injunction’ have a limited purpose — a purpose that does not extend to the grant of monetary relief,” and that contemplates “prospective,” not monetary, or “retrospective,” relief. The Court also pointed to the provisions of the Act that do expressly allow monetary relief following administrative proceedings, some of which were enacted after Section 13(b), and reasoned that “[s]ince in these provisions Congress explicitly provided for ‘other further and equitable relief’ . . . and for the ‘refund of money or return of property,’ . . . it likely did not intend for §13(b)’s more cabined ‘permanent injunction’ language to have similarly broad scope.” Thus, the Court concluded it “could not have been Congress’ intent” that Section 13(b) should act “as a substitute” for those other provisions.
The Court rejected the FTC’s argument that prior Supreme Court cases interpreting different statutes’ injunctive relief provisions to also allow for monetary relief, reasoning that “a provision’s grant of an ‘injunction’ or other equitable powers does not automatically authorize a court to provide monetary relief.” What is more, the Court pointed out that the FTC can still use its powers under Sections 5 and 19 “to obtain restitution on behalf of consumers” and the FTC was “free to ask Congress to grant it further remedial authority.”
Accordingly, the Court concluded “that §13(b) as currently written does not grant the [FTC] authority to obtain equitable monetary relief.”
The Court’s unanimous opinion was authored by Justice Breyer.