As beforehand blogged about right here, the FTC’s enforcement authority has been beneath assault. The company authority to acquire disgorgement beneath a concept of “ancillary equitable aid” acquired clipped by the U.S. Court docket of Appeals for the Seventh Circuit.
What’s extra, the courtroom ignored long-standing precedent in doing so.
The problem is that this. Does the FTC have the statutory proper to hunt cash damages (e.g., restitution, disgorgement, asset freezes, and many others.) beneath the statute upon which it routinely depends – Part 13(b) of the FTC Act?
Make no mistake. The FTC’s remedial authority is now doubtful.
The choice in Federal Commerce Fee v. Credit score Bureau Middle stands for the concept the FTC attorneys could not get hold of financial aid within the type of “equitable restitution” beneath Part 13(b) when it initiates misleading promoting actions in federal courtroom.
Multiple courtroom has already held that the FTC can’t provoke federal courtroom litigation in search of an injunction beneath Part 13(b) until it plausibly alleges defendant “is violating” or “is about to violate” the legislation.
The importance of the Seventh Circuit ruling is deeper as a result of it goes on to the guts of the kind of aid that the FTC is entitled to.
The opinion analyzes the wording of Part 13(b) and concludes that long-standing precedents had been incorrect. It held that neither the textual content nor construction of the availability permits for financial treatments.
The courtroom defined that “when deciding whether or not we must always overturn precedent, ‘[w]e usually are not merely to rely noses. The events are entitled to our unbiased judgment….’ We’re effectively conscious that we’d like a compelling purpose to overturn circuit precedent. ‘Nevertheless, vital as stare decisis is, it’s equally vital for us to respect the statutes that Congress has handed and to right any issues we see in our prior interpretations of these statutes.’”
The dissenting opinion states that “[t]he majority’s interpretation upends what the company and Congress have understood to be the established order for thirty years, and in so doing grants a pointless measure of impunity to brazen scammers.”
The potential impression of this choice is critical and has probably introduced fascinating alternatives for defendants dealing with FTC enforcement lawsuits.
Question whether or not FTC attorneys will search Congressional intervention of search assessment by the Supreme Court docket. Given the circuit break up, the latter seems seemingly.
Richard B. Newman is an Web advertising and marketing legal professional specializing in federal company litigation at Hinch Newman LLP. Observe him on Twitter @ FTC Protection Attorneys.
Informational functions solely. Not authorized recommendation. Legal professional promoting.