AMG Capital Management, LLC v. Federal Trade Commission
 | |
| AMG Capital Management, LLC v. Federal Trade Commission | |
| Term: 2020 | |
| Important Dates | |
| Argument: January 13, 2021 Decided: April 22, 2021 | |
| Outcome | |
| Reversed and remanded | |
| Vote | |
| 9-0 | |
| Majority | |
| Stephen Breyer • Chief Justice John G. Roberts • Clarence Thomas • Samuel Alito • Sonia Sotomayor • Elena Kagan • Neil Gorsuch • Brett Kavanaugh • Amy Coney Barrett | |
AMG Capital Management, LLC v. Federal Trade Commission is a U.S. Supreme Court case about whether Congress gave the Federal Trade Commission (FTC) the power to request that a federal court order people who violate the Federal Trade Commission Act (FTCA) to pay equitable monetary relief in the form of restitution or disgorgement.[1] In a unanimous ruling, the court held that Section 13b of the FTCA does not authorize the FTC to seek equitable monetary relief, nor does it authorize courts to award such relief. Justice Stephen Breyer delivered the majority opinion.[1]
The court reversed the U.S. Court of Appeals for the 9th Circuit and remanded the case for further consideration.
The case was argued before the Supreme Court of the United States on January 13, 2021, during the court's October 2020-2021 term.
When the Supreme Court granted review in the case on July 9, 2020, the case was consolidated with Federal Trade Commission v. Credit Bureau Center, LLC. On November 9, 2020, the cases were no longer consolidated.[2] Click here to learn more about the case's background.
The case came on a writ of certiorari to the United States Court of Appeals for the 9th Circuit. Click here to review the lower court's opinion.[4]
Why it matters: The decision clarified the extent of the Federal Trade Commission's enforcement powers.[1]
Timeline
The following timeline details key events in the case:
- April 22, 2021: The U.S. Supreme Court reversed the U.S. Court of Appeals for the 9th Circuit's ruling and remanded the case for further consideration.
- January 13, 2021: The U.S. Supreme Court heard oral argument.
- November 9, 2020: The case was no longer consolidated with Federal Trade Commission v. Credit Bureau Center, LLC
- July 9, 2020: The U.S. Supreme Court agreed to hear the case. The case was consolidated with Federal Trade Commission v. Credit Bureau Center, LLC.
- October 18, 2019: AMG Capital Management, LLC filed a petition with the U.S. Supreme Court.
- December 3, 2018: The United States Court of Appeals for the 9th Circuit affirmed the U.S. District Court for the District of Nevada's ruling.
Background
Procedural background
Scott Tucker owned several companies that offered high-interest, short-term loans to customers, also known as payday loans.[5] The loans were offered through multiple proprietary websites that each disclosed the same loan information in an identical set of loan documents. Between 2008 and 2012, Tucker's businesses originated more than 5 million of these loans. The disbursements of these loans were generally between $150 and $800 with a triple-digit interest rate. To apply for a loan, applicants entered information into one of the websites. Approved borrowers were directed to a web page disclosing the loan's terms and conditions, including the Loan Note and Disclosure ("Loan Note") which outlined the terms of the loan as was required by the Truth in Lending Act ("TILA").[4]
In April 2012, the Federal Trade Commission filed suit against Tucker and his businesses with the United States District Court for the District of Nevada. The FTC's amended complaint alleged that Tucker's business practices violated the Federal Trade Commission Act's prohibition against "unfair or deceptive acts or practices in or affecting commerce" because the terms disclosed in the Loan Note did not reflect the terms that were actually enforced.[6] The FTC asked the court to permanently prohibit Tucker from engaging in consumer lending and to order him to forfeit, or disgorge any ill-gotten monies.[4]
In December 2012, the parties agreed to split the proceedings in the district court into two phases, a liability phase and a relief phase. During the liability phase, the FTC moved for summary judgment on the FTC Act claim. The District of Nevada granted the motion. In the relief phase, the court enjoined, or prohibited Tucker from assisting any consumer in applying for or receiving any loan or other consumer credit product, and ordered Tucker to pay equitable monetary relief to the FTC, amounting to approximately $1.27 billion. The court ordered the FTC to direct as much money as was reasonably possible to direct remedy to consumers affected, then to other equitable relief that was reasonably related to the defendants' alleged practices in the complaint, then to the United States Treasury as disgorgement. Tucker appealed to the United States Court of Appeals for the 9th Circuit, challenging both the relief order and the entry of summary judgment.[4]
On appeal, the 9th Circuit affirmed the District of Nevada's ruling in terms of relief and the entry of summary judgment.[4] On October 18, 2019, Tucker petitioned the Supreme Court of the United States for review. The court granted review on July 9, 2020, and consolidated the case with Federal Trade Commission v. Credit Bureau Center, LLC. On November 9, 2020, the cases were no longer consolidated.[2]
Legal definitions
Truth in Lending Act
- See also: Truth in Lending Act
The Truth in Lending Act (TILA) is a federal financial regulation law passed in 1968. According to the Office of the Comptroller of the Currency, the act was intended to promote accurate credit billing and credit card practices. TILA mandated that all consumer lenders disclose to borrowers the annual percentage rate, or APR, of loans. TILA also required lenders to provide consumers with loan cost information, including the length of the loan and total costs, and mandated that loans covered under the act be subject to a three-day period during which a customer could back out of the loan process. The act granted regulatory authority to the Federal Reserve Board. This authority was transferred to the Consumer Financial Protection Bureau in July 2011 as part of the Dodd-Frank Act.[7][8][9]
Federal Trade Commission Act
The following subsections of the Federal Trade Commission Act state:[6]
15 U.S.C. § 45(a)(1)
| “ | (a) Declaration of unlawfulness; power to prohibit unfair practices; inapplicability to foreign trade
|
” |
| —Federal Trade Commission Act | ||
15 U.S.C. § 53(b)
| “ | (b) Temporary restraining orders; preliminary injunctions
Whenever the Commission has reason to believe-
the Commission by any of its attorneys designated by it for such purpose may bring suit in a district court of the United States to enjoin any such act or practice. Upon a proper showing that, weighing the equities and considering the Commission's likelihood of ultimate success, such action would be in the public interest, and after notice to the defendant, a temporary restraining order or a preliminary injunction may be granted without bond: Provided, however, That if a complaint is not filed within such period (not exceeding 20 days) as may be specified by the court after issuance of the temporary restraining order or preliminary injunction, the order or injunction shall be dissolved by the court and be of no further force and effect: Provided further, That in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction. Any suit may be brought where such person, partnership, or corporation resides or transacts business, or wherever venue is proper under section 1391 of title 28. In addition, the court may, if the court determines that the interests of justice require that any other person, partnership, or corporation should be a party in such suit, cause such other person, partnership, or corporation to be added as a party without regard to whether venue is otherwise proper in the district in which the suit is brought. In any suit under this section, process may be served on any person, partnership, or corporation wherever it may be found.[10] |
” |
| —Federal Trade Commission Act | ||
Questions presented
The petitioner presented the following questions to the court:[3]
Questions presented:
|
Oral argument
Audio
Audio of oral argument:[11]
Transcript
Transcript of oral argument:
Outcome
In a unanimous ruling, the court reversed the U.S. Court of Appeals for the 9th Circuit's ruling and remanded the case for further consideration, holding that Section 13b of the Federal Trade Commission Act does not authorize the Federal Trade Commission to seek equitable monetary relief such as restitution or disgorgement, nor does it authorize a court to award such relief. Justice Stephen Breyer delivered the majority opinion of the court.[1]
Opinion
In the court's majority opinion, Justice Stephen Breyer wrote:[1]
| “ | 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. ...
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. Indeed, the Commission has recently asked Congress for that very authority, see Hearing before the Senate Committee on Commerce, Science, and Transportation on Oversight of the Federal Trade Commission, Prepared Statement of the FTC, 116th Cong., 2d Sess., 3–5 (2020), and Congress has considered at least one bill that would do so, see S. 4626, 116th Cong., 2d Sess., §403 (2020) (revising §13 to expressly authorize restitution and disgorgement). We must conclude, however, that §13(b) as currently written does not grant the Commission authority to obtain equitable monetary relief.[10] |
” |
| —Justice Stephen Breyer | ||
Text of the opinion
Read the full opinion here.
Commentary about the case
This section contains a selection of opinions from scholars, journalists, and others about the potential implications of this court case.
Post-decision commentary
The decision reduced the power of the Federal Trade Commission
"The U.S. Supreme Court slashed the Federal Trade Commission’s power to seek monetary awards in court, throwing out a legal tool the consumer-protection agency has used to collect billions of dollars over the past decade," according to a report from Bloomberg Law.[12]
According to Rebecca Kelly Slaughter, acting chairwoman of the FTC, “With this ruling, the Court has deprived the FTC of the strongest tool we had to help consumers when they need it most. "[13]
According to lawyers Jeremy Rist and Jennifer Short, "Contrary to some breathless commentary since the decision was issued suggesting that the FTC is now practically toothless to seek monetary redress for consumer injuries, however, the core of the FTC’s traditional powers remain intact." They added that "although AMG Capital might frustrate and delay the FTC’s ability to pursue monetary relief, the decision does not eradicate it altogether, at least in consumer protection cases."[14]
Congress can give the FTC more power to seek monetary awards
Justice Breyer suggested that the Federal Trade Commission ask Congress to grant it more authority to seek monetary remedies if its current process is too cumbersome, according to law professor Ronald Mann, writing for SCOTUSblog.[15]
According to the editorial board of The Wall Street Journal, "the Court has simply told the FTC to pursue scam artists within the confines of the law or ask Congress to change the law if it wants more power."[16]
October term 2020-2021
The Supreme Court began hearing cases for the term on October 5, 2020. The court's yearly term begins on the first Monday in October and lasts until the first Monday in October the following year. The court generally releases the majority of its decisions in mid-June.[17]
The court issued 67 opinions during its 2020-2021 term. Two cases were decided in one consolidated opinion. Ten cases were decided without argument. Click here for more information on the court's opinions.
The court agreed to hear 62 cases during its 2020-2021 term. Of those, 12 were originally scheduled for the 2019-2020 term but were delayed due to the coronavirus pandemic. Five cases were removed from the argument calendar.
See also
External links
- Search Google News for this topic
- U.S. Supreme Court docket file - AMG Capital Management, LLC v. Federal Trade Commission (petitions, motions, briefs, opinions, and attorneys)
- SCOTUSblog case file for AMG Capital Management, LLC v. Federal Trade Commission
Footnotes
- ↑ 1.0 1.1 1.2 1.3 1.4 U.S. Supreme Court, AMG Capital Management, LLC v. Federal Trade Commission, decided April 22, 2021
- ↑ 2.0 2.1 SCOTUSblog, "AMG Capital Management, LLC v. Federal Trade Commission," accessed December 10, 2020
- ↑ 3.0 3.1 Supreme Court of the United States, "19-508 AMG Capital Management, LLC v. FTC," accessed July 13, 2020
- ↑ 4.0 4.1 4.2 4.3 4.4 United States Court of Appeals for the 9th Circuit, Fed. Trade Comm'n v. AMG Capital Mgmt., LLC, decided December 3, 2018
- ↑ Investopedia, "Payday Loan," accessed July 13, 2020
- ↑ 6.0 6.1 Casetext, "15 U.S.C. § 45," accessed July 13, 2020
- ↑ Office of the Comptroller of the Currency, "Truth in Lending," accessed September 29, 2016
- ↑ Consumer Finance Protection Board, "Truth in Lending Act," accessed September 29, 2016
- ↑ Investopedia, "Truth In Lending Act - TILA," accessed September 29, 2016
- ↑ 10.0 10.1 10.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ Supreme Court of the United States, "Oral Argument - Audio," accessed January 14, 2021
- ↑ Bloomberg Law, "Supreme Court Slashes FTC’s Power to Seek Monetary Awards (2)," April 22, 2021
- ↑ Federal Trade Commission, "Statement by FTC Acting Chairwoman Rebecca Kelly Slaughter on the U.S. Supreme Court Ruling in AMG Capital Management LLC v. FTC," April 22, 2021
- ↑ JDSUPRA, "The Supreme Court Curtails, But Does Not Dismantle, The FTC’s Ability to Seek Monetary Recoveries," April 28, 2021
- ↑ SCOTUSblog, "Justices unanimously reject FTC’s authority to compel monetary relief," April 23, 2021
- ↑ The Wall Street Journal, "A 9-0 Defeat for the FTC," April 23, 2021
- ↑ SupremeCourt.gov, "A Brief Overview of the Supreme Court," accessed April 20, 2015
