WASHINGTON, D.C. The Washington Legal Foundation (WLF) today urged the U.S. Supreme Court to review (and ultimately overturn) a federal appeals court decision that authorizes the Federal Trade Commission (FTC) to file lawsuits seeking restitution from businesses alleged to have violated the FTC Act’s prohibition against “unfair or deceptive” trade practices. In a brief urging the Court to review a decision of the U.S. Court of Appeals for the Fourth Circuit, WLF argued that if the FTC seeks restitution for FTC Act violations, it must first file an administrative proceeding against the company alleged to have violated the Act, and then file a suit for restitution only after the administrative proceeding has culminated in issuance of a cease-and-desist order.
The FTC argued (and the appeals court agreed) that § 13(b) of the FTC Act authorizes the FTC to seek (and authorizes federal courts to grant) restitution in an action alleging violations of the FTC Act, even when the FTC has not previously considered the matter administratively. But § 13(b) authorizes the FTC to file suit to “enjoin” violations of the FTC Act and says nothing about monetary remedies. WLF argued that both the language and structure of the FTC Act indicate that Congress, in adopting § 13(b), did not intend to authorize suits for monetary relief in addition to the injunctive relief explicitly authorized under § 13(b).
Following its filing, WLF issued the following statement by Chief Counsel Richard Samp: “The FTC and other federal agencies should not be permitted to exercise powers that Congress cannot plausibly be understood to have granted. As the Supreme Court explained just last week in barring EPA from acting in excess of its delegated powers, judicial acquiescence to such power grabs would deal a ‘severe blow’ to the Constitution’s separation of powers. If the FTC alleges that restitution is warranted for FTC Act violations, it must prove its allegations under the procedures established for its own administrative hearings before seeking restitution in federal court.”
WLF is a public interest law firm and policy center that regularly litigates in support of tort reform, to ensure that the costs of unwarranted lawsuits do not drive up costs for all consumers.