Issue : Whether Section 13(b) of the Federal Trade Commission Act authorizes district courts to enter an injunction that orders the return of unlawfully obtained funds.
The following is quoted from the above linked article and details the factual background of this case:
The scheme was ingenious.
Marketers posted ads on Craigslist for bargain-priced rentals in hot areas like Logan Square or downtown Evanston.
When apartment hunters responded, they’d get an email offering a tour — but first they needed to click a link to get their free credit score.
The catch? The rental ads were fake. And consumers who applied for the “free credit score” were signed up for $29.94-a-month credit monitoring, a recurring charge disclosed in small print and missed by many applicants, government lawyers said.
Many consumers, disappointed when the apartment tours fell through, were surprised when the credit monitoring fees hit their accounts.
The Federal Trade Commission estimates that Credit Bureau Center LLC, which did business as MyScore, eFreeScore and other names, took in millions of dollars between 2014 and 2017.
The agency got a federal judge in Chicago to halt the scheme and order website owner Michael Brown to pay $5.2 million in restitution. Brown’s co-defendants, who placed the fake ads, separately were ordered to pay $762,000.
As detailed in the last paragraph, the FTC filed suit in District Court and got the scheme permanently enjoined and got a restitution order on behalf of the victims. And as is typical in these kind of cases, that normally is where this would have ended.
But not this time.
Instead, Michael Brown appealed this to the 7th Circuit. The case heard by Senior United States Circuit Judge Daniel Anthony Manion and United States Circuit Judges Diane S. Sykes and Michael B. Brennan. Judge Sykes wrote for the unanimous 3 Judge panel. They ruled that the statute authorizing the Federal Trade Commission does not authorize it to seek monetary restitution for victims, but merely enjoin the offending conduct. In making this decision, the 7th Circuit has taken a contrary approach to 8 other Circuits which have ruled the opposite way and has upset what has been a long accepted norm that the Federal Trade Commission can seek monetary restitution.
If this was to stand, it would make life much harder for victims of scams. Right now, they can seek restitution through the Federal Trade Commission and do so before the defendants can bleed off the assets. If the 7th Circuit’s approach stands, victims will have to hire their own attorneys and seek restitution, a time consuming process, during which scammers can move and hide assets. Not to mention that private actions are an expense on the victims, which the previous approach spared them.
An attempt to have the 7th Circuit reconsider this case en banc failed. We don’t know the vote, but three Judges did write a dissent from denial, Chief United States Circuit Judge Diane Wood and United States Circuit Judges Ilana Rovner and David F. Hamilton.
Following completion of review at the 7th Circuit, attorneys for the Federal Trade Commission filed a Petition for a Writ of Certiorari with the Supreme Court. And it is significant the FTC attorney’s filed it and NOT the Office of the Solicitor General, who would normally defend government agencies. It is possible that the Solicitor General supports the judgement of the 7th Circuit and refused take action on behalf of the FTC. However, the FTC has statutory authority from Congress to file its own Petition, independent of the Solicitor General.
The above link is to the Federal Trade Commission’s Petition for a Writ of Certiorari. Additionally, in its appendix, it contains the ruling of the District Court, the ruling of the 7th Circuit and the dissent from denial of rehearing en banc at the 7th Circuit.
Respondent Credit Bureau Center LLC did not filed a Response in this case. Instead, they filed a Cross-Petition for a Writ of Certiorari.
Issue : Whether the second proviso of Section 13(b) of the Federal Trade Commission Act, providing that the Federal Trade Commission “may seek” a permanent injunction, is an independent grant of authority to “file suit” seeking implied consumer redress remedies circumventing the elaborate enforcement scheme set by Congress.
The FTC did file a Response to the Cross-Petition.
The Supreme Court WILL grant the Petition in this case and hear it in the October 2020 term. No way they step around this one. And most likely they will grant the Cross-Petition as well and consolidate the cases for hearing and decision.
I do not see 5 Justices voting to essentially knee cap the FTC. I think the Supreme Court will rule for Petitioner FTC and reverse the 7th Circuit and restore the judgement of the District Court.
Another interesting question is whether the Solicitor General’s Office will file an amicus curiae brief in this case in opposition to the FTC.
