Supreme Court Holds That FTC Cannot Sue for Monetary Relief: AMG Capital Management v. FTC

On April 22, 2021, the Supreme Court unanimously held that the FTC is not authorized to bring lawsuits seeking monetary relief in federal court. AMG Capital Management v. FTC, — U.S. — (2021). Justice Breyer wrote the opinion for the Court, which emphasizes the narrow language of the statute that authorizes the FTC to bring suit in federal court. This holding removes a powerful tool from the array of enforcement mechanisms available to the FTC and has prompted strong reactions from policymakers.

For most of its history, the FTC did not have the power to seek monetary relief. When the agency was founded in 1914, it could only bring enforcement actions as administrative proceedings. In 1973, Congress expanded the FTC’s enforcement authority by passing Section 13(b) of the FTC Act, which empowers the FTC to bring a lawsuit in federal court and, in “proper cases,” to seek “a permanent injunction.”

Despite the statute’s reference to “a permanent injunction,” for decades the courts broadly construed Section 13(b) as implicitly authorizing the FTC to seek monetary equitable relief as well—including disgorgement of ill-gotten gains and restitution for victims’ losses. This understanding of Section 13(b) is rooted, in large part, in a 1946 Supreme Court case, Porter v. Warner Holding Co., 328 U.S. 395 (1946), which held that once a court’s equitable powers are invoked—“[u]nless otherwise provided by statute”—the court can use the full range of those equitable powers, including the power to award monetary relief.

In the decades since Section 13(b) was passed, the FTC increasingly relied on this implied authority to bring suits for monetary relief. David Spiegel’s 2004 article, Chasing the Chameleons: History and Development of the FTC’s 13(b) Fraud Program, charts Section 13(b)’s growth through its first few decades. The FTC first used Section 13(b) as the basis for enforcement actions in major fraud cases in the early 1980s. By the end of that decade, the FTC had brought over one hundred Section 13(b) suits seeking a broad range of equitable remedies, including monetary relief in some cases. By 2004, it had brought nearly one thousand Section 13(b) cases. From 1997 to 2003 “[t]otal redress awards . . . exceeded $1.5 billion.” In a statement issued shortly after the AMG decision came down, FTC Acting Chairwoman Rebecca Slaughter reported that Section 13(b) cases have resulted in “$11.2 billion in refunds to consumers during just the past five years.”

In recent years, some courts and commentators have advocated that Section 13(b) should not be understood as authorizing suits for monetary relief. They argued that the holding from Porter does not apply to Section 13(b)—that by referring only to “permanent injunction[s],” Congress intended to provide less than the full range of equitable remedies. In other words, they reasoned, “section 13(b) doesn’t authorize restitution because it doesn’t mention restitution.” Federal Trade Commission v. Credit Bureau Center, 937 F.3d 764, 771 (7th Cir. 2019).

In 2019, the Seventh Circuit became the first federal court to hold that the FTC could not pursue monetary equitable relief under Section 13(b). The Supreme Court subsequently granted certiorari in AMG Capital Management v. FTC, a case out of the Ninth Circuit, to resolve this disagreement about whether Section 13(b) permits suits for monetary relief.

In AMG, the Supreme Court unanimously answered that question in the negative. The nine Justices agreed that, in light of its exclusive reference to “permanent injunction[s],” Section 13(b) cannot be construed as authorizing monetary equitable remedies. The Court recast Porter as a textual interpretation case, bound to the particularities of the statute in issue, explaining that lower courts had applied the decision too broadly. Porter did not “set forth a universal rule of interpretation,” Justice Breyer wrote. Instead, the holding in Porter depended on the ambiguity of the statute that granted the agency its authority in that case. That statute, unlike Section 13(b) of the FTC Act, authorized courts to issue “a permanent or temporary injunction, restraining order, or other order” (emphasis added). It was the phrase “other order” that led the Supreme Court to hold that courts could exercise the full range of equitable powers in suits brought under that statute. In AMG, by contrast, the Court held that the narrower and more precise language of Section 13(b) authorized only injunctive relief.

The Supreme Court’s decision in AMG could well prompt a sea change in FTC enforcement practices—and, potentially, new legislation. On April 20, 2021, one day before the Supreme Court decided AMG, all four currently sitting FTC Commissioners advocated for congressional action to protect the agency’s disgorgement power in a hearing before the Senate Committee on Commerce, Science, and Transportation. In her statement after the AMG decision, FTC Acting Chairwoman Slaughter likewise urged Congress “to act swiftly to restore and strengthen the powers of the agency so we can make wronged consumers whole.”

Even before the AMG decision, some legislators were considering changes that would expand the FTC’s enforcement authority and, in particular, the agency’s power to pursue monetary remedies. In February, Senator Amy Klobuchar (D-Minn.) introduced the Competition and Antitrust Law Enforcement Reform Act, a bill that would give the FTC new power to levy civil fines and increase its enforcement budget, among other changes to antitrust enforcement practices.

Whether or not Congress takes action, the Supreme Court’s decision in AMG has necessitated a rethinking of federal antitrust enforcement that will continue to reshape this area of law for the foreseeable future.

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