On February 22nd, 2021, the Supreme Court of the United States heard arguments from a Biden administration lawyer regarding a case that could potentially have far-reaching implications for the power of the Federal Trade Commission (FTC). During the hearing, the justices of the court asked pointed questions of the government’s representative, exploring the nuances of the case and attempting to understand the implications of their potential decision.
The case in question, AMG Capital Management v. Federal Trade Commission, centers around the FTC’s ability to obtain financial relief for victims of fraud and deceptive business practices. In 2012, the FTC filed a complaint against Scott Tucker and several of his payday lending companies, alleging that they had deceived and defrauded thousands of customers. The district court ruled in favor of the FTC, ordering Tucker and his companies to pay over $1.3 billion in restitution and penalties.
However, in 2018, the Ninth Circuit Court of Appeals overturned the district court’s ruling, arguing that the FTC did not have the authority to seek financial relief under Section 13(b) of the FTC Act. This decision was a significant blow to the FTC’s ability to hold fraudulent companies accountable, and the Supreme Court agreed to hear the case to determine the extent of the agency’s power.
During the hearing, the Biden administration’s lawyer, Malcolm Stewart, argued that the FTC’s authority to seek financial relief under Section 13(b) was essential to its mission of protecting consumers from deceptive and fraudulent business practices. He pointed out that the FTC had used this power to recover billions of dollars for consumers over the past several decades and that a ruling against the agency would severely limit its ability to pursue justice on behalf of the American people.
However, the justices of the court were not easily convinced. Justice Stephen Breyer, for example, asked Stewart whether the FTC’s interpretation of Section 13(b) was too broad, and whether it would allow the agency to seek financial relief for any violation of any law it enforces. Stewart responded that the FTC had never sought such broad relief and that the agency’s interpretation was consistent with Congress’s intent in passing the FTC Act.
Other justices expressed concern that the FTC’s ability to seek financial relief could be abused, with Justice Samuel Alito questioning whether the agency could use Section 13(b) to seek relief for violations that occurred years or even decades ago. Stewart responded that the FTC had never sought relief for violations that were too remote in time and that the agency’s use of Section 13(b) was always tied to ongoing harm to consumers.
Throughout the hearing, the justices probed the nuances of the case, seeking to understand the potential consequences of their decision. Justice Elena Kagan, for example, asked whether the court’s ruling would affect the FTC’s ability to seek injunctive relief against fraudulent companies, to which Stewart responded that it would not.
Justice Sonia Sotomayor, on the other hand, focused on the specific language of the FTC Act, questioning whether the phrase “permanent injunction” in Section 13(b) necessarily implied the power to seek financial relief. Stewart argued that the phrase was ambiguous and could be interpreted to include financial relief, but Sotomayor remained skeptical.
Overall, the hearing was a lively and engaging discussion of an issue with significant implications for consumer protection in the United States. The justices of the Supreme Court brought their extensive legal knowledge and experience to bear, seeking to understand the nuances of the case and the potential consequences of their decision. As the court prepares to issue its ruling, it remains to be seen how they will balance the FTC’s mission to protect consumers with concerns about the agency’s power and potential for abuse.