Washington, D.C. (November 13, 2019) – Today, Cause of Action Institute (“CoA Institute”) filed an amicus brief in the U.S. Supreme Court supporting cert petitions filed by AMG Capital Management and Publishers Business Services. The petitions urge the Court to review the Federal Trade Commission’s (“FTC”) claim that Section 13(b) of the FTC Act, which authorizes injunctions, also grants the agency power to obtain money damages, raid businesses, and impose asset freezes and receiverships.
“It’s time to respect the separation of powers and interpret the FTC Act to impart only those powers authorized by Congress,” said Cindy Crawford, CoA Institute senior counsel. “The FTC’s quest for money damages in the guise of ‘equity’ has resulted in a shadow jurisprudence that allows the agency to violate Fourth, Fifth, Seventh, and Eighth Amendment rights.”
Read the brief here.
Background
Federal agencies only have the powers that Congress has given them in federal statutes. Section 13(b) of the FTC Act grants the FTC authority to obtain an “injunction” to restrain current or future unlawful business practices. However, over the years, the FTC has convinced courts to interpret the statute to let it obtain money damages by calling those monetary awards, “equitable monetary relief.” The FTC has also convinced courts that Section 13(b)’s “injunction” provision allows the agency to raid and shutter businesses, freeze assets, impose a receivership, seize records, and engage in other constitutionally dubious activities. Until recently, this tactic has worked, allowing the FTC to destroy companies and obtain billions of dollars in “restitution.”
Recently, however, cracks have appeared in the FTC’s carefully constructed façade. In AMG’s case, although the Ninth Circuit ruled in favor of the FTC, Judge O’Scannlain authored a special concurrence explaining that Section 13(b)’s so-called permanent injunction “proviso” does not authorize the FTC to seek monetary damages. More recently, in Credit Bureau v. FTC, the Seventh Circuit overruled thirty years of its precedent to hold that Section 13(b) only grants the FTC power to obtain a permanent injunction—not money damages.
CoA Institute’s Past FTC Work
CoA Institute’s amicus brief in support of the cert petitions marks the continuation of its efforts to rein in the FTC’s extra-statutory and unconstitutional actions. Over the past seven years, CoA Institute has worked tirelessly to stand up for the constitutional rights of innovative companies and small businesses confronted with ruinous FTC enforcement actions.
- CoA Institute’s Defense of Vylah Tec
- CoA Institute’s Defense of D-Link Systems
- CoA Institute’s Defense of LabMD
- CoA Institute’s Amicus Brief in FTC v. AMG Capital Management
- CoA Institute’s Amicus Brief in FTC v. Qualcomm Inc.
- CoA Institute’s Amicus Brief in FTC v. AT&T Mobility LLC
“We are grateful for the opportunity to work on these important issues pro bono and hope that our efforts have a lasting positive impact on public policy, particularly in the areas of technology and innovation,” Michael Pepson, CoA Institute counsel, added. “We urge the Court to grant the cert petitions and protect the separation of powers vital to liberty by ensuring that FTC respects statutory limits on its powers and complies with the U.S. Constitution moving forward.”
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Media Contact: James Valvo, james.valvo@causeofaction.org
(571) 482-4182
About Cause of Action Institute
CoA Institute is a 501(c)(3) nonprofit, nonpartisan government oversight organization that uses investigative, legal, and communications tools to educate the public about how government accountability, transparency, and the rule of law protect liberty and economic opportunity.
