On December 19, 2019, the Federal Trade Commission (“FTC” or the “Agency”) filed a petition for writ of certiorari in the Supreme Court seeking review of a ruling by the Seventh Circuit case FTC v. Credit Bureau Center, LLC. A detailed overview of the background and reasoning in the appellate decision can be found in our prior post. For present purposes what matters is that the FTC originally sought an injunction and restitution under section 13(b) of the Federal Trade Commission Act (“FTCA”). Section 13(b) allows the FTC to seek an injunction whenever it has reason to believe one of its laws has been or may be violated. After the FTC was initially successful in the district court, it suffered a setback on appeal when the Seventh Circuit held that section 13(b) allows the FTC to seek an injunction but does not allow for restitution as a remedy. According to the Agency, the Seventh Circuit’s ruling “threatens the FTC’s ability to carry out its mission by eliminating one of its most important and effective enforcement tools.” Petition for Writ of Certiorari at 1, FTC v. Credit Bureau Ctr., LLC, No. 19-825 (Dec. 19, 2019)
The Seventh Circuit’s holding created a circuit split on this issue, and, unsurprisingly, the FTC petitioned the Court to review. If the Supreme Court grants cert. and on the merits agrees with the Seventh Circuit’s ruling, the FTC would be precluded from seeking restitution under section 13(b). Instead, the Agency would only be able to obtain monetary relief in a court action following a successful administrative cease and desist order and full administrative trial.
Notably, another case challenging the FTC’s ability to collect restitution has also sought Supreme Court review. The petition in Publishers Business Services, Inc. v. FTC, filed in October of 2019, seeks review of a Ninth Circuit ruling upholding an award to the FTC of nearly $24 million in “equitable monetary relief” for a company’s operation of a telemarketing scheme. See Petition for Writ of Certiorari, Publishers Business Services, Inc. v. FTC, No. 19-507 (Oct. 18, 2019). Because the company did not raise the issue of whether section 13(b) allows for restitution during the proceedings below, the government argued that the issue could not be reviewed by the Supreme Court. Brief for the Resp’t in Opp’n at 4, Publishers Business Services, Inc. v. FTC, No. 19-507 (Dec. 13, 2019). The government’s brief described both the Ninth Circuit’s holding and the reasoning of the dissent, while acknowledging that the interpretation of section 13(b) has created a circuit split that may otherwise warrant review by the Supreme Court. In the alternative, the government argued that this petition should be held pending the disposition of Liu v. SEC, cert. granted, No. 18-1501 (Nov. 1, 2019). This case asks the Supreme Court to decide whether district courts may award disgorgement to the Securities and Exchange Commission under provisions of the securities laws analogous to the FTCA. Publishers Business Services v. FTC was distributed for discussion at conference on January 10, 2020.
As always, we will continue to monitor these cases and keep our readers updated of new developments.