Posted Thu, Jan 14th 2021 3:16 PM by Ronald Mann
If you’re arguing on behalf of a federal regulator to protect consumers from businesses and Justice Stephen Breyer turns his face against you, your day is probably not going well. But that’s exactly what happened on Wednesday morning when Joel Marcus stood up against the Federal Trade Commission on behalf of the FTC in AMG Capital Management.
The case concerns Section 13 of the Federal Trade Commission Act, which enables the FTC to obtain an “injunction” against a company that “violates or is about to violate an enforced law [the FTC]. The FTC commonly uses this power to seek what it calls “restorative” monetary rewards for the theory (backed by old Supreme Court cases and dominant in appellate courts for half a century) that the legal power, implicitly, is one Obtaining “injunction” includes all traditional forms of just relief. In this case, for example, the FTC received an “injunction” asking the defendants to pay more than $ 1 billion based on a finding of deception in various aspects of short-term micro-credit programs in which the defendants were involved.
The lynchpin of the hearing was a lengthy monologue from Breyer, who began his questioning of Marcus by directly contradicting the FTC’s position with a perspective on the historical “compromise” of FTC law. As Breyer put it:
History matters. I think Justice Brandeis when he started [working on the FTC Act]faced a business community that was very suspicious of the FTC’s power and thought it was being abused and a progressive community that felt it was imperative to bring bad business practices under control. So they made compromises.
And Breyer found the terms of that compromise easy to explain: “The compromise was that you have to do what the FTC says, but before you are asked to do anything, what you are doing now will turn out to be wrong is. It will find that. It will be an injunction. “As he further explained, section 5 of the law provides for an” injunction or violation of a rule “as a predicate for the award of damages. In section 19, Breyer saw “the same thing”. According to Marcus, Breyer said, Section 13 allows the FTC to seek damages without “any protection” – based on an unsolicited lawsuit alleging that a previously unregulated and unexplored practice is primarily misleading .
Breyer was also not convinced that the FTC only uses the agency in exceptional or unusual circumstances: “Don’t worry,” says the FTC, “we will only use it in exceptional cases.” Ha! … I’ve read that 100 cases under this provision are on trial compared to 10 or 12 under the regular one [procedures]. “Summing up his views, Breyer stated,” If we take it this way, we are saying that your concerns, the business community, were absolutely correct. … Before you know the thing is wrong, you have been severely damaged. “A billion dollars in this case, as I mentioned above.
Breyer wasn’t alone. From one end of the bank to the other, the judges found the FTC’s reading of Section 13 staggering. For example, at the beginning of Marcus’s presentation, Justice Clarence Thomas noted that the text of 13 (b) (1) “seems to suggest so [it] focuses on anticipatory action to prevent future or present action. It seems that you are using it here for something that has already happened. “Judge Samuel Alito – not the biggest fan in legislative history – read a lengthy statement from David Fitzgerald, who served as a litigator for the FTC in the 1970s and 1980s. As Alito explained, Fitzgerald understood that the FTC “decided that [the limitations in] § 19 [made it] too time consuming so looked for a workaround and [found one]. Indeed, in the passage read by Alito, then FTC attorney, Fitzgerald stated that “these arguments would not work, but to their surprise they did succeed.” These recordings, Alito told Marcus, “are quite damaging to your position.”
Judge Elena Kagan’s comments took into account the same tension between the “Protection” Congress mentioned in Sections 5 and 19 and the broad authority that the FTC seeks under Section 13. As she put it:
[I]It seems to me that the best argument against your position, and it is a strong one, comes from Section 5 and Section 19, which contain this protection, which Section 13 does not have that there must be a repeated violation there is a certain one Kind of man real and so on. And it seems like your interpretation of section 13 makes this pretty irrelevant.
Judge Neil Gorsuch continued the sharp reaction and welcomed Breyer’s understanding of the story.[t]The FTC was set up in part to establish rules on misleading behavior. “This would have given companies advance notice of the behavior that needs to be sanctioned
[i]t chose not to go that route, preferred an enforcement route. … I think our main concern is that you make these safeguards obsolete, that there is little incentive for the agency to ever comply, and it is just another step away from what Congress expected for a regulatory regime, that never comes about. “
I could elaborate on the point, but I’m just going to offer one more excerpt from the comments made by Justice Brett Kavanaugh, who recalled his work in the Justice Department and the White House early in his career:
I’ve worked in the executive branch for many years to understand how this happens. When you’re in the executive or independent agency, you want to do good things and prevent or punish bad things, and sometimes your legal authority is borderline. And it could be war politics, or immigration, or the environment, or what have you, but with good intentions the agency pushes the envelope and stretches the legal language to do the good or prevent the bad.
For Kavanaugh this dynamic
This leads to a transfer of power from Congress to the Executive to decide whether to exercise this new authority. At least for me, that is a special concern of independent agencies. [W]Why isn’t the answer here for the agency to get this new authority from Congress so that we can maintain the principle that … the agency should stick to the authority in the text and not go beyond it?
In my preview, I suggested AMG was one of the easiest cases the Supreme Court would hear this year. I read the argument in such a way that the main question remains whether AMG will be the first opinion from the January argumentation calendar or whether the judges will find another case that seems even more obvious to them.
Ronald Mann, argument analysis: judges question the authority of the FTC to enforce monetary relief,
SCOTUSblog (January 14, 2021, 3:16 p.m.), https://www.scotusblog.com/2021/01/argument-analysis-justices-doubt-ftcs-authority-to-compel-monetary-relief/