For the most part, the hearing was about restoring bipartisanship, and the FTC nominees (current Democratic Commissioner Rebecca Kelly Slaughter and Republican nominees Andrew Ferguson and Melissa Holyoak) all pledged earnestly to do so. They also appeared to agree on most issues, although the devil will be in the details if and when they are confirmed.

The Nominees

Rebecca Kelly Slaughter is being considered for a second term, having served at the FTC since 2018. In her opening statement, she stressed the benefits of bipartisanship and of considering different viewpoints, and said she would welcome Holyoak and Ferguson to the FTC line-up. Although Slaughter took fire on some issues, the fire was mostly directly at Khan as noted, and Slaughter was well-prepared to handle it.

Melissa Holyoak is currently the Solicitor General (SG) of Utah. In her opening statement, she echoed the bipartisanship theme, as well as the important role of the FTC on issues that impact consumers’ daily lives. She zeroed in on the privacy and safety of children as a particular area of focus if she is confirmed. She also cited her work to date on cases to rein in the big tech companies, as did Ferguson.

Andrew Ferguson is the SG of Virginia. In his opening statement, he discussed the importance of the free enterprise system, but said that it only works if it’s protected from fraud and monopolies. He stressed bipartisanship but also stated that agencies like the FTC need to “enforce the laws as Congress has written them, respect the separation of powers, and obey the constraints Congress imposes on their authority.”

All of the nominees brought their families to the hearing, and Sens. McConnell (R-KY) and Lee (R-UT), who are not Committee members, made guest appearances to introduce Ferguson (who had worked for McConnell) and Holyoak (who collaborated with Lee on issues affecting Utahans). Lee mentioned that Holyoak would bring litigation experience to the FTC that its current members lack.

If the nominees are confirmed, the FTC would have a full complement of five Commissioners (three Democrats and two Republicans) after operating for six months with just three Democrats (following the fiery resignation of former Commissioner Christine Wilson).

Opening Statements from the Chair and Ranking Member

Chair Cantwell (D-WA) invited Ranking Member Cruz (R-TX) to start the hearing, and start he did by railing against the FTC – saying that its current political approach departs from its bipartisan traditions; that it has weaponized law enforcement, undermined mergers, and engaged in unprecedented regulation; that it has destroyed documents and conspired with the EU on regulations; and that it has interfered with free speech and innovation. He also discussed the dramatic drop in morale under Khan’s leadership. Cruz concluded his remarks by stating that the FTC must restore bipartisanship. He also said later that all of the nominees are well-qualified, suggesting that all of them will ultimately get his vote.

Chair Cantwell emphasized the important role of the FTC in fighting fraud, dealing with the harmful effects of consolidation (including high prices and supply chain issues), protecting privacy, and tackling concerns related to AI and PBMs. Not unexpectedly, she made clear that she would vote for Slaughter.

Questions

The Q&A suggested surprising agreement among the nominees on most issues, though there were differences in emphasis and they spoke in generalities, as nominees typically do. Here’s a quick run-down of the highlights, with the Senator(s) who did the main questioning on each issue noted in brackets. Note that not every nominee answered every question.

• Restoring the FTC’s Section 13(b) authority. [Sen. Cantwell] All nominees said they supported it, and generally indicated they would do so without limits, though Ferguson left himself a little wiggle room.

• Action against abuses by PBMs. [Sen. Cantwell] Slaughter said she supported such action. Ferguson and Holyoak said they want to see the results of a PBM study now underway, but generally support action here.

• Disregard of ethical advice. [Sens. Cruz and Sullivan (R-AK)] The underlying facts here are fairly detailed but, in short, there’s a dispute about whether Khan disregarded advice from an FTC ethics official to recuse herself in the Meta-Within matter, and whether Slaughter and Bedoya voted to shield the facts from the public. While the Senators directed their questions to Slaughter, their ire (again) seemed directed at Khan. Cruz also said that the FTC had not responded to his letters and had deleted emails sought by Congress.

• Role of FTC in fighting robocalls. [Sen. Tester (D-MT)] Holyoak and Ferguson agreed this is an important problem. Slaughter said the FTC needs to focus on the “pipes” – e.g., by targeting VOIP services that enable robocalls.

• Regulation of AI. [Sens. Thune (R-SD) and Blackburn (R-TN)] Questioned about the FTC’s authority to regulate AI, Slaughter said that existing laws apply to new technology, but that additional legislation would be needed to go beyond those laws. Ferguson and Holyoak agreed, emphasizing that any “grand scheme” to regulate AI should be left to Congress. All said they would stay within the bounds of the law in addressing AI.

• Section 230. [Sen. Thune] All nominees said they supported removing Section 230 immunity from suits by the government.

• FTC’s role in privacy [Sen. Hickenlooper (D-CO)] All nominees said they supported federal privacy legislation, though Slaughter emphasized the need to use existing tools until that happens, and Holyoak and Ferguson emphasized the need for Congress to set the standards here.

• Merger review workload. [Sen. Klobuchar (D-MN)] Ferguson and Holyoak agreed that the volume is concerning.

• Whether the FTC’s “commercial surveillance” rulemaking exceeds the FTC’s authority [Sen. Blackburn] Slaughter said no. Holyoak and Ferguson said they didn’t know.

• Whether the FTC should table the FTC’s rulemaking until Congress provides clear legislative authority on privacy. [Sen. Blackburn] Holyoak and Ferguson both said yes. Slaughter said no.

• Commitment to enforcing the Better Online Ticket Sales (BOTS) Act. [Sen. Blackburn] All nominees said yes.

• Privacy protection for kids and teens. [Sens. Markey (D-MA) and Schmitt (R-MO)] All nominees said they supported strong protections in this area, and agreed, in response to Markey, that targeted advertising “can be” inherently manipulative for kids and teens. Holyoak mentioned that she has particular concerns about Ed Tech companies that force children to give up their privacy.

• Data broker regulation. [Sen. Peters (D-MI)] Asked about the value of a federal data broker registry, all nominees said that greater transparency in the industry would be a good idea. Slaughter mentioned the FTC’s case against data broker Kochava, as did Holyoak, with apparent approval.

• Considerations of race, sexual orientation, viewpoints, and other “progressive priorities” in antitrust enforcement. [Sen. Vance (R-OH)] As to mergers, Slaughter said that all Americans deserve equal protection under the laws and that just focusing on the highest dollar mergers, for example, would protect cities and not rural areas. She said she would think about the concerns that Vance raised about “organized advertiser boycotts.”

• Remote work policy. [Sens. Capito (R-WV) and Cruz] Asked about the FTC’s policy, Slaughter said FTC employees must come to the office two days every two weeks. Capito said that may account for the low morale and reduced sense of camaraderie at the FTC, and noted that the private sector is now returning to work. Cruz pressed further, stating that the “Biden Administration has decided that federal employees don’t need to show up for work.” Slaughter was left to defend the FTC, while stating that the Chair sets the policy in conjunction with OPM.

• Staying within the bounds of the FTC’s legal authority. [Sen. Sullivan (R-AK)] This theme came up multiple times but Sullivan was especially focused on it. He emphasized that the FTC’s power comes from the laws passed by Congress, and asked the nominees to commit to beginning ever FTC opinion with a detailed discussion of the legal basis for the FTC’s action. All committed to following the law but not to crafting FTC opinions in a particular way.

• Committing to bipartisanship. [Sen. Fischer (R-NE) and many others] Asked multiple times about this issue, the nominees said yes, yes, and yes.

* * *

Based on the hearing, one would expect these nominees to be confirmed fairly handily. Whether the FTC will truly return to its bipartisan traditions, and whether Khan will get 5-0 votes on controversial matters pending at the agency, are another matter. Still, having two Republican Commissioners on board should provide a diversity of views and greater visibility into agency decision-making (through their speeches, votes, and written statements). We will see soon enough.

The Fifth Circuit is probably not the venue administrative agencies would choose to hear these issues, having recently handed down decisions in Jarkesy (vacating a SEC administrative order on the ground that it was unconstitutional because: the petitioners were deprived of the right to a jury trial where the agency sought penalties; the congressional delegation of power permitting the SEC to determine whether it brought cases administratively or in district court was unintelligible; and the ALJ’s removal restrictions were unconstitutional) and Community Financial Services Association of America (finding the funding structure of the CFPB unconstitutional). But, nonetheless, on May 3, 2023, a three-judge panel of the Fifth Circuit heard oral argument in Traffic Jam Events LLC v. FTC.

The road to the Fifth Circuit was circuitous, and began in June 2020, when the FTC filed a complaint in the U.S. District Court for the Eastern District of Louisiana against the marketing services company and its owner. Traffic Jam specialized in providing marketing materials for auto dealerships. The complaint alleged that the company misled consumers by sending deceptive mailings suggesting that the company was affiliated with a government COVID-19 stimulus program, and indicated that consumers had won specific, valuable prizes that they could collect once they visited car dealership. The District Court denied the FTC’s Motion for a Temporary Restraining Order.

Subsequently, in August 2020, the FTC filed an administrative complaint mirroring the prior federal court complaint. Traffic Jam challenged the filing on the grounds that the injunctive order was not based on substantial evidence, that the alleged acts or practices did not involve interstate commerce, that it was not a creditor subject to the Truth in Lending Act, and finally, that the Commission lacked substantial evidence to hold Jeansonne individually liable. Traffic Jam lost before the Commission on summary decision, and the Commission entered an order that, among other things, banned Traffic Jam and Jeansonne from virtually all commercial activity pertaining to the auto industry.

Traffic Jam then appealed to the Fifth Circuit, challenging the constitutionality of the FTC’s entire administrative process, as well as the validity of the broad-sweeping injunctive order. Traffic Jam argued that the FTC’s administrative process denied petitioners their due process rights. In addition, Traffic Jam alleged that the ALJ and Commissioners enjoy unconstitutional removal protections (i.e., they can only be removed for cause). Finally, in the wake of Jarkesy, Traffic Jam argued that the order’s ban on allowing the company or Jeansonne to operate in the auto industry was akin to the issuance of a civil penalty and, therefore, the administrative process deprived them of their Seventh Amendment right to a jury trial.

The oral argument focused on whether Traffic Jam had waived these constitutional challenges, as well as its challenge to the order, by failing to raise them below in the administrative proceeding. The panel was relatively quiet, and its limited questions to Traffic Jam primarily focused on whether they even had jurisdiction over such claims.

Although there’s always some danger in making predictions based on oral arguments, the judges did not seem particularly keen to use this case to further weaken the FTC. While the FTC may prevail in this matter, the case itself is just the latest in a long (and growing) chain of cases challenging the authority of administrative agencies writ large. We’ve written about the recent judicial chipping away at what some call the administrative state here, here, and here. We’ll continue to watch this case closely and post updates here.

The case marks two important firsts for advertisers offering products or services through automatic renewal terms and for companies making money-making claims or using endorsements and testimonials. Specifically, the action is the first time the FTC has obtained civil penalties under the Restore Online Shoppers’ Confidence Act (ROSCA). The FTC also made good on its promise to bring cases under its Penalty Offense Authority, marking the first time the FTC has obtained civil penalties from a recipient of its Penalty Offense Notice for Money-Making Claims.

Civil Penalties for Misrepresentations related to Automatic Renewal Terms under ROSCA

The FTC previously laid the groundwork for the ROSCA count against WealthPress in its 2021 action against MoviePass, which we discussed here. In that case, the FTC alleged that MoviePass violated ROSCA by deceptively advertising its passes as offering “one movie per day” and then preventing subscribers from using the service as advertised. While that settlement did not include civil penalties, then-Commissioner Phillips dissented on the grounds that ROSCA could not be fairly interpreted as addressing any claim about the characteristics of a product/service subject to an automatic renewal term. Instead, ROSCA authorizes civil penalties for failure to clearly and conspicuously disclose “all material terms of the transaction” before obtaining a consumer’s express informed consent to the negative option offer.

That tension is also present in the WealthPress case – with Commissioner Wilson issuing a concurring statement on the 4-0 vote (Commissioner Phillips’ former slot remains open) stating that she supports “the inclusion of a ROSCA count in this complaint under the highly specific circumstances presented here.” Commissioner Wilson goes on to explain that the defendant made the deceptive claims “part of the terms of sale” by including a disclosure about profitability in the Terms and Conditions that consumers consented to at purchase. She notes that “[i]nformation of this type that appears in another format, though, may more appropriately be viewed as a claim about the good or service and not a term of the transaction,” which would render it outside the scope of ROSCA.

Other Commissioners appear to be less cognizant of that distinction, such that any advertiser offering an automatic renewal feature could be on the hook for civil penalties for alleged misrepresentations if the FTC views the misrepresentation as part of the “material terms of the transaction.”

Civil Penalties under Penalty Offense Authority

While the FTC has brought many actions involving earnings and opportunity claims (including one in November that explicitly references the Penalty Offense Notices), the WealthPress case marks the first time that the FTC has obtained civil penalties against an advertiser following receipt of its Penalty Offense Notice for Money-Making Claims.

Many of the claims identified in the complaint are quintessential examples of aggressive claims likely to garner regulatory scrutiny, whereas others are more mundane, such as “we give you everything you need, and if you’re a beginner not a problem.” The FTC also notes that disclaimers in the Terms and Conditions (for example, “The past performance of any trading system or methodology is not necessarily indicative of future results”) were incapable of qualifying the aggressive earnings claims made elsewhere.

In addition to Penalty Offense Notices concerning Money-Making Claims, the FTC has issued notices concerning Endorsements and Testimonials and For-Profit Educational Institutions, which may be the next target for civil penalties under the Penalty Offense Authority.

On Wednesday, we described draft legislation circulating in the Senate Commerce Committee that would have given the Federal Trade Commission almost unfettered authority to enjoin permanently any act, practice or method of competition that did not meet its approval. https://www.adlawaccess.com/2022/05/articles/senate-commerce-committee-chair-pushes-one-sided-13b-fix/ All the Commission would need to do is show that a reasonable person had fair notice that the conduct “could” violate the FTC Act.

Senator Cantwell has now introduced the bill and it’s more one-sided today than it was in draft form. The need to show fair notice of even a possible violation is gone.

S. 4145, the “Consumer Protection Remedies Act,” was introduced by Chair Cantwell last night, with co-sponsors Senators Klobuchar (D-MN), Warnock (D-GA), and Lujan (D-NM). If this bill becomes law, to stop a practice, the Commission would merely need to persuade a judge that “the public interest” is on its FTC’s side . That is effectively no standard at all.

At least defendants will have an opportunity to argue that the Commission cannot obtain money until it proves a violation of some law the FTC enforces. The bill says that restitution, disgorgement, and rescission or reformation of contracts are available only in suits with respect to a violation of a provision of law enforced by the Commission.”

The Cantwell bill no longer confines relief under Section 13(b) to violations that are occurring or about to occur. Any violation within the past ten years remains exposed to monetary recovery. This doubles or triples the period for which the Commission can seek money.

In short, S. 4145 gives the Commission virtually unlimited authority to enjoin methods of competition, marketing practices, privacy protections, and information-security practices. And it would expose a decade of revenues to the agency’s monetary demands. The “Consumer Protection Remedies Act” would not simply streamline the procedures in the FTC Act; it would expand the Commission’s powers, handcuff the courts, and leave American businesses wondering when their conduct might run afoul of three Commissioners’ interpretation of the public interest.

Expect some movement next week in advance of the Commerce Committee markup, with Senator Lee likely to offer an amendment in the nature of a substitute. With 14 Democrats and 14 Republicans on the Committee, however, a party line vote would allow the Cantwell bill to advance. But once it does, it likely loses traction. Without 60 votes as a stand-alone on the Senate floor, Chair Cantwell would need to slip this into must-pass legislation for it to become law.

The one-year anniversary of the Supreme Court’s decision in AMG Capital Management, LLC v. FTC has renewed calls for Congressional action to expand and codify the Federal Trade Commission’s enforcement authority under Section 13(b) of the FTC Act. Last Thursday, we wrote here about the agency’s most recent open meeting, during which Commissioners heard from a key Senate staffer that Senate Commerce Committee Chair Maria Cantwell (D-WA) intended to introduce what she hoped would be a bipartisan fix. Yesterday, Chair Cantwell’s bill was made public, and its terms render any hope of bipartisan support a long-shot, at best, with little likelihood of garnering the Republican support needed to clear the chamber.

The bill’s release followed the May 2 release of a Senate Commerce Committee report entitled Restoring the Federal Trade Commission’s Authority to Protect Consumers and the Marketplace – an 80-page report, more than 50 pages of which purported to list dollar amounts received in each state due to “FTC cases resulting in significant refunds” (many of which were settlements never actually litigated under Section 13(b)). The report echoed much of what we heard from Commissioners last week – that AMG has created an enforcement void for the agency and no alternative enforcement approaches come close to 13(b)’s ability to protect consumers and provide monetary redress. The report couched the court’s decision as particularly damaging to the agency’s efforts to curtail “Big Tech and Pharma’s ability to harm consumers and fledgling businesses.”

In unveiling the report, Chair Cantwell said, “Congress can act to stop this from happening in the future and restore this vital authority to the FTC so it can help return money back to consumers’ pockets.”

As an initial matter, it’s important to emphasize that the Supreme Court did not take any authority away from the FTC that needs to be “restored”; it concluded 9-0 that the FTC did not have the authority in the first place. A remarkable result given the fractiousness of this Court, fully on display in recent days.

More importantly, not mentioned anywhere in the report is the Commission’s highly creative, year-long response to the AMG decision. Chair Cantwell should expect Republicans to ask why a Section 13(b) fix is even necessary, given the muscularity shown by this Commission in seeking other ways to pursue monetary remedies by relying on (and stretching) existing statutes, coordinating with State AGs, and loudly proclaiming its Penalty Offense Authority through the issuance of 1,870+ notices to U.S. businesses. And, of course, as Justice Breyer put it, reliance on Section 19’s “coherent enforcement scheme,” which allows the Commission to obtain monetary relief by first invoking its administrative procedures and then Section 19’s redress provisions.

Much like the House-passed Consumer Protection and Recovery Act (which we wrote about here), Senator Cantwell’s bill would explicitly authorize the FTC to seek permanent injunctions and other equitable relief, including restitution and disgorgement, to redress perceived consumer injury, when it is in the public interest. And, much like the House bill, it would vastly expand the FTC’s enforcement authority, far surpassing what the agency thought it had pre-AMG.

Notably, Senator Cantwell’s bill would broaden Section 5 of the FTC Act by inviting the Commission to cast off the constraints of its unfairness, deception, and substantiation policy statements and turn the courts into instruments of its agenda to rewrite the law:

“(3) Limitation.—For a violation of Section 45(a)(1) of this Title, the Commission may seek, and the court may order, equitable relief under paragraphs (1) or (2) only if the violation involved the type of conduct that a reasonable person would have fair notice, consistent with due process requirements, could constitute an unfair or deceptive act or practice or an unfair method of competition (within the meaning of Section 45(a)(1) of this Title)."

It will take years of court decisions to flesh out what “fair notice” and “public interest” mean, but the answer probably won’t matter since “could constitute” is a license to substitute possibilities for probabilities in the elements of all violations. The central achievement of the unfairness policy statement was to commit the Commission to applying a cost-benefit analysis before condemning an act or practice. The deception policy statement stopped the Commission from finding fault with any statement that had a “tendency or capacity” to mislead. Now the Commission has to prove a likelihood. The new 13(b) would be easier to prove than the old Section 5.

Another consequence of this language would be to consign Section 19’s “coherent enforcement scheme,” to history. And the new 13(b) would be easier to invoke than most of the specific statutes the FTC enforces. Truth in Lending Act? COPPA? Who needs them?

Fanciful? Hardly. The Commission showed the way with its antitrust authority. Last year it rescinded its competition policy statement and said the antitrust laws no longer defined unfair methods of competition. From now on, competition at the Commission means equity for employees and marginalized constituencies. We’ve already heard Chair Khan complain that predatory pricing is too hard to prove. If local stores can’t compete with a national retailer, enjoin the chain. This bill would give the agency a license to enjoin competition itself.

The FTC Act already has a standard that is well understood for granting redress. Section 19(b) authorizes compensation to consumers for conduct that a reasonable person should know is dishonest or fraudulent. There is no lobby for scammers, and Republicans would likely support a 13(b) fix that targeted dishonest or fraudulent conduct, and included other guardrails (e.g., Senator Lee’s (R-UT) S. 3410, the Consumer Protection and Due Process Act). Apparently, however, the Commission’s allies aren’t ready to settle for sensible solutions, as evidenced by the Cantwell bill, which seeks power without limits.

Following a presentation from Bureau of Consumer Protection Acting Deputy Director Audrey Austin, the Commissioners opined on the loss of – in Chair Lina Kahn’s words – “the key engine of our law enforcement efforts for four decades” and the inability to adequately obtain monetary relief for consumers.

Chair Kahn and fellow Democratic Commissioner Rebecca Slaughter commended the agency’s alternative enforcement approaches over the past year in AMG’s wake. They highlighted the use of Section 19; new rulemakings to codify conduct that the courts had already determined was unfair or deceptive; additional administrative proceedings to “preserve a pathway” for monetary relief; warning letters to businesses and the threat of civil penalties; and coordination with State Attorneys General. Under those alternative enforcement pathways, however, Commissioner Slaughter said the agency’s “best outcomes are still justice diminished or delayed.”

While all four current Commissioners indicated support for legislation to clarify the agency’s enforcement authority under Section 13(b), comments from Republican Commissioner Christine Wilson reflect ongoing stakeholder concerns that appear to have stood in the way of Senate action following the House’s passage last summer of Representative Cárdenas’s (D-CA) Consumer Protection and Recovery Act on a nearly party-line vote (see more on the Cárdenas bill here).

Specifically, Commissioner Wilson stressed the need for statutory guardrails to address: (1) the absence of a statute of limitations; (2) the potential “unbounded” use of Section 13(b) to achieve disgorgement in antitrust cases; and (3) the application of Section 13(b) in consumer protection cases involving legitimate businesses selling legitimate products and services, albeit with deceptive claims. Another potential legislative flash point is the possible retroactive application of any new penalty authority. Today, Commissioner Slaughter noted that $1 billion in relief “could be preserved if action were taken now to restore 13(b) to all current and future cases.” While one can imagine a legislative framework that satisfies both sides, such a framework has not yet materialized.

Further, the agency’s internal politics could portend trouble for champions of an expeditious legislative solution. In a broad rebuke of Chair Kahn’s Federal Trade Commission, Commissioner Wilson warned that Congress may be wary to expand the FTC’s power given recent examples of the agency using its authority in a way that exceeds statutory boundaries or undermines Congressional intent. She urged her colleagues to “tread carefully” and noted the importance of demonstrating the agency will be “careful stewards” of any new enforcement authority bestowed upon it.

As we have written before, while there is bipartisan support for holding “scammers and fraudsters” accountable and providing for consumer redress, Congress’s sense of urgency to pass legislation clarifying the FTC’s authority under Section 13(b) seems to have waned as partisan tensions – both in Congress and the agency – have intensified.

Meanwhile, the Senate may vote as soon as next week on Alvaro Bedoya’s nomination to serve on the Federal Trade Commission. The confirmation vote had originally been expected this week, but was delayed due to the absence of two Democratic Senators. Perhaps reflective of those above-mentioned partisan tensions, Commissioner-designate Bedoya is expected to need the votes of all 50 Senate Democrats, in addition to the tie-breaking vote of Vice President Kamala Harris.

A: As an initial matter, it’s Important to emphasize that the Supreme Court did not take any authority away from the FTC; it concluded 9-0 that the FTC did not have the authority in the first place. Justice Breyer put it this way: Section 13(b) produces a “coherent enforcement scheme. The Commission may obtain monetary relief by first invoking its administrative procedures and then Section 19’s redress provisions; it can use Section 13(b) to obtain injunctive relief while administrative proceedings are foreseen or in progress, or when it seeks only injunctive relief.”

The inability to obtain equitable monetary relief under Section 13(b) has taken away the FTC’s weapon of choice, but it has not left it without other means to carry the attack, and it continues to push the boundaries of its authority. Chair Khan has made clear that it will litigate on principle, and that often means without regard for litigation risk. In many ways, the agency is less predictable and, from a respondent’s or defendant’s perspective, dangerous. I had expected more restraint, given the AMG decision.

During oral argument, Justice Kavanaugh commented that, as former Executive Branch employee, he understands how “with good intentions the agency pushes the envelope and stretches the statutory language to do the good or prevent the bad – the problem is it results in a transfer of power from Congress to the Executive Branch.”

I heard something similar from Commissioner Wilson, in her concurring opinion in Resident Home. There, she said that AMG “should have been a wake-up call, a reminder to the Commission that, no matter how egregious the conduct or righteous our cause, the Commission is not entitled to go beyond the bounds of what the law permits.” Despite these warnings, in response to AMG, continues to explore the frontiers of its authority.

This means that the FTC has assumed an aggressive adversarial position, using all means at its disposal in an attempt to redress what it perceives to be consumer injury, even if it means advancing a litigation position that is ultimately unsuccessful. In short, I doubt that companies currently adverse to the FTC consider the agency to be compromised to any significant extent – in many ways, it is emboldened.

Q: Last Spring, many practitioners speculated that the FTC would shift strategies in existing cases and new matters by tying their requests for relief to different statutory provisions like ROSCA or TCPA or focus enforcement activity on statutory violations that provide for monetary relief. Has this happened?

A: One of the first cases was FTC v. Cardiff. There, the FTC attempted to pursue monetary relief post-AMG by way of a different statute: The Restore Online Shoppers’ Confidence Act (ROSCA). While the court agreed with the FTC that it could have pursued monetary relief under ROSCA, it held the FTC had waived the right to request such relief by not including the ROSCA theory of recovery in its Rule 26 disclosures, and had only disclosed its ROSCA expert after discovery closed (and, conveniently, after AMG was decided).

While the defendants in Cardiff were no doubt pleased with the result, what is really important here is the ROSCA allegation. This case signaled that the FTC would stretch for any plausible authority that will allow the agency to pursue monetary relief. Could be ROSCA, TCPA, HBNR, etc.

And it is exactly what they did in the MoviePass settlement, which was the first time the Commission alleged a violation of ROSCA when the “undisclosed material terms do not relate specifically to the negative option feature but, instead, to the underlying good or service marketed through the feature.”

In his MoviePass dissent, Commissioner Phillips commented that the Commission’s decision to apply ROSCA broadly and expand its reach “comes just weeks after the Supreme Court’s decision in AMG” but the FTC’s “loss of authority under one statute does not somehow create authority elsewhere.”

Interestingly, the Cardiff case recently settled. In its press release, the FTC pulled no punches, expressly stating that, despite having presented evidence that consumers lost $18.2 million, no money could be returned to consumers, because of last year’s ruling in AMG Capital. A message that seemed intended for Congress.

Q: What can we expect with regard to Section 19 actions?

A: There is very little law that helps us understand the contours of Section 19 for a simple reason: the FTC has not historically relied on Section 19 to obtain monetary relief – they have relied almost exclusively on Section 13(b). That is all about to change, and we have already seen some interesting developments.

For example, in FleetCor [Disclosure: I am counsel to the CEO in FleeetCor], with discovery complete in federal court litigation and summary judgment motions on Judge Tottenberg’s desk, the Commission voted to file an administrative complaint under Section 19, while moving to stay or dismiss without prejudice the federal court complaint. The FTC intended to then file for summary judgment in the administrative proceeding, which would be heard by virtually the same Commission that voted out the complaint in the first place. They would then pursue redress under Section 19.

Judge Tottenberg denied the FTC’s request, stating that “under the totality of the circumstances, the most equitable course is to promptly move forward with adjudicating the merits in the proceeding.” Despite the FTC’s efforts to put the case on an administrative fast-track, where it would hope to establish liability and then pursue redress under Section 19, the case remains in federal court, with trial scheduled to begin first week of June.

There is also the issue of what measure of damages is appropriate under Section 19, with disagreement among Commissioners on display in statements issued in Resident Home: In simple terms, Chair Khan, along with Commissioners Chopra and Slaughter, asserted that Section 19 expressly authorizes payment of redress and damages, including consequential damages to consumers and “honest businesses that lose out on sales.” The Commission did not deem proof of injury to be a necessary predicate for monetary penalties.

Commissioners Wilson and Phillips disagreed with the majority’s position. In dissent, the two Commissioners contended that Section 19 does not permit the Commission to accept monetary remedies in an administrative settlement. More specifically, according to Commissioners Wilson and Phillips, the settlement amount “exceeds any injury suffered by those consumers who saw the deceptive statement and purchased a DreamCloud mattress or any reasonable estimate of damages.” The dissenting commissioners highlighted the absence of evidence of injury to “other persons,” rendering the payment a penalty or disgorgement of ill-gotten gains, which the Commission has no authority to obtain under the applicable statute.

Another Section 19 issue that I expect will be hotly contested concerns the Section 19 “dishonest or fraudulent” standard, more specifically, whether conduct could be “dishonest” without being “fraudulent,” and if so, how would “dishonest” be defined. Defendants will argue that the terms should be read together to set a single standard, and there is support for that contention. In Figgie, the Ninth Circuit described a fraudulent scheme – the marketing of heat detectors as equal in efficacy to smoke detectors – in order to define “dishonest,” and goes on to state that such conduct would be either “dishonest or fraudulent.”

Similarly, Macmillian and Turner both hold that “fraudulent or dishonest” conduct must, at a minimum, fall “within the scope of the activities which would be deemed fraudulent for purposes of the mail fraud statute” and must be “calculated to deceive.” The case law is consistent with the dictionary definitions of dishonest conduct, which are defined interchangeably with “fraudulent. This strongly suggests that, for purposes of Section 19, the inclusion of “dishonest” is not intended to establish a separate lower standard, but is meant to be read in conjunction and interchangeably with the term “fraudulent.”

Finally, with regard to Section 19, the Intuit (Turbo Tax) filing last week is of note. There, the FTC is pursuing its case in under Section 19, while simultaneously seeking a temporary restraining order (TRO) under Section 13(b) – exactly the “coherent enforcement scheme” Justice Breyer and his Supreme Court colleagues believed Congress intended. It will be interesting to see how the court rules on the motion for a TRO, given that the FTC’s filing was almost certainly pre-dated by a lengthy Part 2 investigation, which may cause the court to question whether harm is actually imminent, thus justifying extraordinary relief.

Q: When the Supreme Court determined that that the FTC didn’t have authority to obtain equitable monetary relief under Section 13(b), many expected Congress to implement a fix. Why hasn’t this occurred?

A: There was a whole lot of momentum in Congress immediately after AMG, with Commissioners beating the drum on the Hill and Democrats empowered, while Republicans were not paying close attention. Many, including me, thought that legislation would come quickly, providing the FTC with even more authority under Section 13(b).

It seemed so certain that Congress would act, in the aftermath of AMG, that a principal question was whether Congress would make the amendment retroactive -- allow for monetary remedies against companies whose alleged wrongful actions pre-dated the statutory change? This was a big deal for the defendants in the approximately numerous pending federal court cases that alleged Section 13(b) violations.

We even saw the Commission in Quincy (disclosure, our case) unsuccessfully urge a judge Louis Stanton in the SDNY to exercise “discretion” and not rule on motions to dismiss pending what Complaint Counsel hoped would be passage of a bill by Congress that would authorize the FTC to obtain monetary relief to redress consumer injury.

But the Republicans woke up and, like so many issues in Congress, nothing is moving on 13(b) reform now. Many Republicans are asking why a 13(b) fix is even necessary, given the muscularity and dexterity shown by this Commission in seeking other ways to pursue monetary remedies by relying on existing statutes, coordinating with State AGs, and loudly proclaiming its Penalty Offense Authority through the issuance of nearly 2,000 notices to U.S. businesses.

Q: Many practitioners speculated that the FTC will engage in more rulemaking under Section 18, which would give the FTC the ability to seek redress, damages and penalties. The FTC indicated in its 2022 Statement of Priorities that rulemaking will be high priority for the FTC with no Congressional fix in sight. What is the outlook?

A: The FTC’s July rule changes stripped away some steps that had been added to the statutory requirements – including the need for a written staff report and provisions allowing the presiding officer to compel in-person attendance and production of documents and written answers to questions. Even without these added steps, however, Mag-Moss remains a long road, especially for (1) complex rules with dozens of mandates, each of which must be shown to be unfair or deceptive, as well as prevalent and (2) controversial matters, which are likely to prompt multiple requests for hearings, cross examinations, rebuttals, exemptions, and court review.

Q: Do you expect the FTC to rely on its recently issued Penalty Offense Authority notice letters in an enforcement matter?

A: I can’t imagine the FTC would start down this road and issue nearly 2,000 notices and not test this authority. I expect that many of these notices were precursors to Part 2 investigations, which are currently underway. My guess is that they are carefully considering their targets right now, looking for the lowest hanging fruit. Whoever that may be, they will not be without available defenses. We would expect these companies to allege a lack of due process. FTC case decisions are not written like a rule, and facts are contested and often complex. One would expect subsequent defendants to distinguish the underlying case – some dating back to the 1940s! -- and claim that it did not give them adequate notice that their activity was also unlawful.

Also, keep in mind that, unlike 13(b) actions, which the FTC can bring on its own, it will have to persuade DOJ to bring civil penalty cases. And as we know, there is not always agreement between the FTC and DOJ.

In practical terms, however, these notices likely have their greatest value in consent negotiations. The FTC will dangle the sword of the synopses and astronomical penalties ($43,280 for every time a false or deceptive claim is made) over everyone who received the notice and whose claims vaguely resemble the generic nuggets the Commission delivered. But I do think that we can expect that these efforts could generate more Hopkins and AMG-like decisions if the Commission attempts to press its position in the courts.

Q: Many consumer protection lawyers also speculated that the FTC would increase coordination with state attorneys general. Has this happened?

A: We saw this in Frontier, where the Commission filed a complaint in California federal court along with Attorneys General from six states. That did not work out too well, at least in terms of FTC/multi-state cooperation, as the claims made by five states other than California based on pendent jurisdiction were dismissed. It now appears that that case is headed for settlement. In mid-March, the court entered an order to continue the case pending the Commission’s review of a proposed settlement.

Q: Final thoughts?

A: There is an expression, understood to have originated as a Chinese curse, “may you live in interesting times.” Well, from the perspective of FTC enforcement, we are doing just that.

Beyond Democrats’ pending budget reconciliation legislation, Congress’s focus through the end of the year is on deadlines for several “must-pass” bills (e.g., government funding, the debt ceiling, and the annual defense authorization bill). While attaching policy riders to these year-end legislative initiatives is standard practice, it is unclear how hard Democrats may be pushing to include a 13(b) fix in the face of myriad legislative distractions, nor is it clear that Senate Republicans are ready to play ball.

Yes, there is always next year, but 2022 is projecting to be an even uglier legislative environment (if it could be imagined). And while this could work either way for 13(b) – Democrats may be more desperate to make a deal (if they think they won’t be in power come 2023) and Republicans may be less willing to compromise (for the same reason) – it is unlikely that any legislative fix will include the exact language preferred by the FTC. The end result could be that nothing happens here, with Republicans content to sit tight, and Democrats unwilling to beat their chests about 13(b) on the campaign trail.

Since most of our readers don’t regularly swim in these waters, let’s recap –

On July 20, the House passed H.R. 2668, the Consumer Protection and Recovery Act (Rep. Cárdenas (D-CA)) on a largely party-line vote. H.R. 2668 would explicitly authorize the FTC to seek permanent injunctions and other equitable relief, including restitution and disgorgement, to redress perceived consumer injury – the authorities would apply to pending cases (making it retroactive) and future cases. Ahead of the floor vote, the White House issued a statement in support of the legislation.

While bipartisan Members of the Senate Commerce Committee have expressed varying levels of interest in 13(b) legislation, a legislative framework has not yet come together, suggesting that the legislation may have hit its high-water mark. At the time it was introduced, the Supreme Court had recently ruled in AMG, certain Commissioners were declaring the Court’s decision to be an existential threat to the FTC’s enforcement program, President Biden’s first 100 days were winding down, and reconciliation and infrastructure weren’t ready yet. The timing favored the FTC, but that no longer is the case. Recent bickering at high levels at the Commission has shown this FTC to be highly partisan, making Republicans on the Hill much less likely to provide blank-check authority. It seems like the air has gone out of the tire.

So where does that leave Congressional Democrats? With budget reconciliation the lone exception (discussed below), Democrats will need the support of at least ten Republicans to move a 13(b) fix in the Senate. A tall order, indeed.

What’s more, procedural reasons make it unlikely that the Senate takes up a stand-alone bill, meaning Democrats are almost certainly eyeing a larger vehicle to which they can attach a 13(b) fix. A glimmer of hope, right? Remember, legislation clarifying the SEC’s penalty authority was enacted as part of an annual defense authorization at the end of the last Congress.

At this point, however, Democrats have given no indication that they will try to include a 13(b) fix in their pending budget reconciliation bill – the only legislative vehicle that can move through the Senate on a simple majority vote (i.e., with no Republican support).

You may correctly point out, there is more than one way to arrive at the desired outcome. After all, House Democrats have included two FTC enforcement-related provisions in their version of the bill:

• $500 million in funding to establish a new privacy bureau; and
• New authority under Section 5 of the FTC Act to seek civil penalties for “unfair or deceptive acts or practices.”

Democrats could seek to add the 13(b) fix to other year-end legislation, with the most-likely vehicle a government funding bill. If this were to occur, however, Democrats would likely need to acquiesce to at least some Republican demands for guardrails. A recent privacy and data security discussion draft makes clear that House Energy and Commerce Committee Republicans – who unanimously rejected the Cárdenas bill in committee – intend to address 13(b) on their terms: in the context of a broader FTC/privacy bill with provisions intended to protect legitimate businesses (e.g., restitution and disgorgement limitations, a shorter statute of limitations, no retroactivity, etc.).

But many of those same Republicans might ask why a 13(b) fix is even necessary, given the muscularity and dexterity shown by this Commission in seeking out other ways to pursue monetary remedies by relying on existing statutes, coordinating with State AGs, and loudly proclaiming its Penalty Offense Authority through the issuance of 1,870 notices to U.S. businesses in recent weeks (even if the recent use of POA might be DOA when it is challenged in court).

Nevertheless, as we bear down on year-end, it is increasingly seeming like Democrats will have to balance the need for an expeditious fix with their underlying desire to provide the FTC with more sweeping authorities, particularly when there is no consensus among FTC commissioners on what form that authority should take.

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Given the Commission’s newfound interest in exploring non-13(b) statutory avenues to obtain monetary remedies, we have expanded our Post-AMG chart to include a wider swath of ongoing cases in which the FTC is attempting to collect money absent the use of 13(b). The latest version of our expanded chart follows.

CASE	RELEVANT POST-AMG ACTION
FTC v. 8 Figure Dream Lifestyle LLC, No. 19-01165 (C.D. Cal.)	There has been no 13(b)-related post-AMG action on this docket. However, in its Complaint, the FTC brought its action under Section 13(b) and 19 of the FTC Act as well as the Telemarketing Act. The FTC seeks injunctive relief pursuant to the FTC Act, and still seeks monetary relief pursuant to the Telemarketing Act.
FTC v. AbbVie Inc., et al., No. 14-5151 (E.D. Pa.)	On July 30, 2021, the FTC requested that the Court grant its Unopposed Motion to Voluntarily Dismiss the Reverse Payment Claims with Prejudice, as the Supreme Court held “that the FTC does not have authority to seek monetary relief in federal court under Section 13(b) of the Federal Trade Commission Act.” On August 2, 2021, the Court granted that motion.
FTC v. Adept Management, Inc., Nos. 19-35668, 19-35669 (9th Cir.)	Following AMG, the parties filed supplemental briefs detailing their respective positions how the appeal should proceed. Both the FTC and defendants conceded that monetary judgment under 13(b) should be vacated. On June 11, 2021, the Ninth Circuit vacated the district court’s judgment granting monetary relief in light of AMG.
FTC v. Age of Learning, Inc. (ABCmouse), No. 20-07996 (C.D. Cal.)	There has been no 13(b)-related post-AMG action on this docket. However, on September 1, 2020, the FTC filed its Complaint under Section 13(b) and 19 of the FTC Act and ROSCA. The FTC seeks injunctive relief pursuant to the FTC Act, and still seeks monetary relief pursuant to ROSCA. After a stipulated order for permanent injunction, on September 8, 2020, the court entered a stipulated order for permanent injunction and monetary judgment in the amount of $10M.
FTC v. American Future Systems, Inc., No. 20-cv-02266 (E.D. Pa.)	On April 30, 2021, defendants filed a notice of supplemental authority notifying the court of the AMG decision, and arguing that significant portions of the FTC’s complaint should be stricken. On May 17, 2021, defendants filed their answers to the (pre-AMG) complaint, making the same requests. On June 24, 2021, American Future filed a motion for judgment on the pleadings, to which the FTC filed a response in opposition on July 7, 2021. American Future raised the issue that the Supreme Court’s ruling in AMG bars the FTC from monetary damages in this case, and that the FTC improperly invoked Section 13(b) of the FTC Act to evade the administrative procedures established by Section 19 of the FTC Act. In its opposition, the FTC noted that “the FTC has already ceased its pursuit of monetary relief in this matter.” Further, the FTC only sought a permanent injunction under Section 13(b). On July 26, 2021, the Court issued an Order denying Defendants’ motion for judgment on the pleadings, noting that AMG does not “Preclude FTC’s Section 13(b) Claims for Permanent Injunctive Relief.” Discovery in this case is ongoing.
FTC v. American Screening, LLC, No. 20-cv-1021 (E.D. Mo.)	There has been no 13(b)-related post-AMG action on this docket. However, on August 4, 2020, the FTC filed its Complaint under Section 13(b) and 19 of the FTC Act and MITOR. The FTC seeks injunctive relief pursuant to the FTC Act, and still seeks monetary relief pursuant to MITOR. On October 1, 2021, the FTC filed a motion for summary judgment against all defendants, asserting that it is entitled to summary judgment on all counts. That motion is still pending.
AMG Capital Management, INC. v. FTC, No. 19-508 (U.S. S. Ct.), No. 16-17197 (9th Cir.), No. 12-cv-00536 (D. Nev.)	On June 8, 2021, the 9th Circuit vacated its December 3, 2018 order and reversed the district court’s order awarding equitable monetary relief to the FTC. The 9th Circuit then remanded the case to the district court for further proceedings consistent with the Supreme Court’s opinion. On July 13, 2021, a status conference was held in the District Court. The Court indicated it would issue an order terminating the asset freeze. On September 3, 2021, the Court entered a Second Amended Order granting the Defendants’ Motion for Summary Judgment to the extent that it opposes an award of equitable monetary relief to the FTC, and denied the FTC’s Motion for Summary Judgment to the extent that it requests equitable monetary relief.
FTC v. Cardiff, Nos. 20-55858, 20-55397, 20-55066, 19-56397 (9th Cir.); No. 18-2104 (C.D. Cal)	On April 28, in a brief, three-paragraph order, a per curiam panel vacated the district court’s preliminary injunction order that had been entered into “to preserve assets pending a final judgment that could include equitable monetary relief in this action under § 13(b) of the FTC.” Given AMG, the panel explained that the injunction was no longer necessary, and remanded the case to the district court. Before the district court, the parties filed expedited briefing regarding the import of AMG on the FTC’s complaint, with the FTC arguing it can obtain monetary redress by way of ROSCA. Defendants argued that the FTC had always been seeking monetary relief under 13(b), and cannot change its position after the fact. On May 26, 2021, the District Court noted that it had to rule on the effect of AMG on the 2018 preliminary injunction and what remedies remain. On June 29, 2021, the District Court issued an Order, granting summary judgment, barring the FTC from recalculating and modifying how it would seek damages, if initially, it had sought monetary relief under Section 13(b). While the court agreed with the FTC that it could have pursued monetary relief under an alternative statute, it found that the FTC had waived the right to request such relief in this case, largely because in the FTC’s Rule 26 disclosures, the FTC had only calculated damages under 13(b). The Court noted that the FTC only pivoted to attempt to obtain statutory fees under ROSCA at the eleventh hour, following AMG. On August 26, 2021, the Court concluded that as Section 13(b) of the FTC Act does not permit monetary restitution, “there will be no monetary judgment” in favor of the FTC. Because no monetary relief can be had, the Cardiff Order requires the FTC to provide the Court with a date certain by which the receivership should be terminated.
FTC v. Credit Bureau Center LLC, No. 17-cv-194 (N.D. Ill.)	On May 6, 2021, the FTC filed a Motion to Amend Judgment. The FTC claims it now seeks monetary relief under ROSCA and Section 19 of the FTC Act, as opposed to Section 13(b). The defendant filed its response on May 28, 2021 calling the FTC’s motion a “desperate attempt to overturn AMG.” On June 11, 2021, the FTC filed its reply, stating that ROSCA and Section 19 provide an independent statutory basis apart from 13(b) to obtain a monetary judgment. On September 13, 2021, the Court issued a memorandum opinion and order granting the FTC’s motion to alter or amend its judgment, reimposing the prior judgment of a permanent injunction and over $5M in monetary relief under Section 19 of the Act, 15 U.S.C. Section 8404, and Section 5 of ROSCA. On October 22, 2021, Defendants filed a notice of appeal of the district court’s ruling to the Seventh Circuit.
FTC v. Disruption Theory LLC, No. 20-cv-06919 (N.D. Cal.)	Following AMG the parties stipulated, and on May 18, 2021 the Court issued an order, “dissolving the asset freeze entered in the Court’s October 6, 2020 Ex Parte Temporary Restraining Order.” On June 24, 2021, the FTC moved for summary judgment and a permanent injunction against Marc Grisham, but did not seek damages for violations of 13(b). That same day, the FTC also moved for default judgment and a permanent injunction against the “defaulting defendants.” The defendants opposed the motions. On September 1, 2021, the Court granted the motion for default judgment. On October 6, 2021, the FTC filed a Stipulated Settlement Agreement and Proposed Order for a Permanent Injunction.
FTC v. Electronic Payment Solutions of America, Inc., No. 17-02535 (D. Ariz.)	On May 3, 2021, the FTC filed a Motion to Withdraw the pending summary judgment motion requesting the Court provide monetary relief through 13(b), due to AMG. On May 10, 2021, defendants filed a motion for reconsideration of the denial for a Judgment of the Pleadings based on the new authority provided by AMG. At a status conference on June 14, 2021, the Court ordered the FTC to file a response to this motion. On July 2, 2021, in its response, the FTC noted that “[a]lthough the FTC concedes that AMG precludes its recovery of equitable monetary relief in this action, the language of AMG itself, as well as subsequent authority, make clear that the FTC is still entitled to injunctive relief …” On August 11, 2021, the Court issued an Order on summary judgment. In it, the Court noted that the FTC seeks both equitable monetary relief and a permanent injunction. “The parties agree that the FTC can no longer obtain equitable monetary relief under AMG Capital.” The Court dismissed the FTC’s claim for equitable monetary relief without prejudice.
FTC v. Elegant Solutions, Inc., No. 20-55766 (9th Cir.); No. 19-cv-01333 (C.D. Cal.)	Although Ninth Circuit briefs had already been filed, the Ninth Circuit required new briefing following AMG. Appellants filed their revised brief on June 1, 2021, in which they argued that the FTC does not have the authority to impose some of the remedies. On July 30, 2021, the FTC filed its Answering Brief. For AMG-related issues, the FTC argued that for a permanent injunction, it did not need to file an administrative complaint seeking the same relief, and that the court did not abuse its discretion in issuing an injunction. The FTC conceded that “the Supreme Court’s recent decision in AMG, holding that Section 13(b) does not authorize monetary relief, does not undermine this longstanding precedent regarding the availability of injunctive relief.”
FTC v. F&G International Group Holdings, LLC, No. 20-cv-73 (S.D. Ga.)	On August 5, 2021, the FTC filed a supplemental notice in anticipation of summary judgment filings, noting that, post-AMG, the FTC would only seek injunctive conduct relief under Section 13(b) and does not seeking equitable monetary relief. On October 5, 2021, the FTC filed its motion for summary judgment, seeking a permanent injunction under Section 5(a) of the FTC Act and not seeking monetary restitution. On October 26, 2021, defendants filed their opposition to the FTC’s motion for summary judgment, arguing that the defendants have not violated the FTC Act, but consenting to minimal future marketing changes. The outstanding issues are solely about injunctive relief that the FTC seeks.
FTC v. Facebook, Inc., No. 20-cv-03590 (D.D.C.)	On April 27, 2021, Facebook filed a notice of supplemental authority regarding AMG, arguing that, following the Supreme Court’s decision “the FTC lacks statutory authority to maintain its lawsuit in federal district court.” On May 3, 2021, the FTC filed a Response, arguing that the action is still appropriate because Section 13(b) still empowers the FTC to seek a permanent injunction.” Of course, the statutory text only speaks of preliminary injunctive relief. On June 28, 2021 the court granted Facebook’s motion to dismiss and dismissed the complaint without prejudice. Section 13(b) was not a basis of the motion to dismiss, but the court did note that “an injunction under Section 13(b) is a theoretically available remedy in a Section 2 challenge to long-ago mergers…” The FTC publicly filed an Amended Complaint on September 8, 2021. The Commission only sought a permanent injunction and other equitable relief under Sections 13(b) and 15 U.S.C. section 53(b). The FTC noted that Section 13(b) of the FTC Act “empowers this Court . . . in the exercise of its equitable jurisdiction, to order equitable relief to remedy the injury caused by Facebook’s violations.” On October 4, 2021, Facebook filed a motion to dismiss the Amended Complaint.
FTC v. FleetCor Technologies, Inc., No. 19-cv-05727 (N.D. Ga.)	On May 17, 2021, defendants filed a motion for partial summary judgment, asserting that, following AMG, “the FTC is not entitled to relief on its claim for equitable monetary relief, and [] the FTC is not entitled to relief on its claim for prospective injunctive relief.” In reply, the FTC noted that it only seeks injunctive relief: “In its opening brief, the FTC did argue that FleetCor’s challenged statements were ‘widely disseminated’ as a proxy for reliance . . . but that showing is necessary only to obtain monetary relief, which the FTC concedes it cannot obtain at this time”. On July 12, 2021, Defendants filed their reply brief, arguing that the FTC is not entitled to injunctive relief that that the FTC lacks authority to enjoin past conduct. On August 13, 2021, the FTC filed a motion to stay pending the resolution of administrative litigation, or in the alternative, to dismiss without prejudice. The FTC indicated its intention to file a Section 19 administrative claim in order to obtain monetary relief. On August 27, 2021, the defendants filed a response, arguing that the FTC is using Section 19 to forum shop so that the Commission itself can decide the motions pending before the Court. There will be oral arguments on FTC’s motion to stay or voluntarily dismiss on December 10, 2021.
FTC v. Frontier Communications Corp., No. 21-04155 (C.D. Cal.)	On May 19, 2021, the FTC, along with the attorneys general of Arizona, Indiana, Michigan, North Carolina, and Wisconsin, and the People of the State of California, filed a Complaint against Frontier Communications Corporation. The Complaint seeks a temporary and permanent injunction by the FTC under Section 13(b). The attorneys general of Arizona, Indiana, Michigan, North Carolina, and Wisconsin also seek monetary remedies pursuant to consumer protection and business regulation authority. On July 20, 2021, Defendant filed a motion to dismiss the Complaint, noting that the Court lacks jurisdiction and that plaintiffs fail to state a deceptive advertising claim. The motion to dismiss also argues that the FTC had been pressuring Frontier to pay a monetary penalty under the FTC Act, but since AMG and the filing of this Complaint, the FTC seeks only injunctive relief for itself and has recruited 6 states to join its lawsuit so that the complaint can include demands for money. On October 3, 2021, the Court granted in part and denied in part Frontier’s motion to dismiss. The Court granted the motion and dismissed the claims alleged by Arizona, Indiana, Michigan, North Carolina and Wisconsin, but denied the motion as to the FTC and the State of California.
FTC v. Hornbeam Special Situations, LLC, No. 17-cv-03094 (N.D. Ga.)	On July 2, 2021, the FTC filed a notice of supplemental authority re AMG, noting that “the FTC hereby provides notice to the Court and Defendants that it is not currently seeking equitable monetary relief under Section 13(b) of the FTC Act as to any defendant in this matter. However, the FTC continues to seek injunctive conduct relief under Section 13(b), as well as equitable monetary relief under Section 19.” On August 10, 2021, the FTC filed motions for summary judgment. The FTC only sought permanent injunction under Section 13(b), but also sought summary judgment on the fact that the defendants violated Section 5(a) of the FTC Act, ROSCA, and the Telemarking Sales Rule. The FTC sought equitable monetary relief against the estate of one defendant. Defendants filed motions for summary judgment on that same day, the estate argued that AMG barred monetary relief. All motions remain pending. A video hearing is set for December 21, 2021.
FTC v. Lending Club Corp., No. 18-cv-02454 (N.D. Cal.)	Following AMG the parties stipulated, and on May 14, 2021 the Magistrate Judge ordered, “that the demand for equitable monetary relief in the FTC’s First Amended Complaint should be stricken.” On June 10, 2021, the parties filed a case management statement in which they agreed that settlement discussions would be more “fruitful” based on AMG’s holding. On July 7, 2021, the Court was notified that the parties “settled the case subject to the contingency of approval of the Commission.”
FTC v. Mail Tree Inc., No. 15-cv-61034 (S.D. Fla.)	On April 30, 2021, the FTC filed a Notice of Supplemental Authority informing the Court that, per AMG, 13(b) does not allow for monetary relief.
FTC v. Neora, LLC, No. 20-cv-01979 (N.D. Tex.)	On April 30, 2021, the FTC filed a Notice of Supplemental Authority informing the Court that, per AMG, 13(b) does not allow for monetary relief. On May 10, 2021, the FTC and defendants filed dueling statements contesting the breadth of AMG’s repercussions. On May 17, 2021, the defendants filed a Motion for Judgment on the Pleadings, arguing that the FTC cannot prevail now that it cannot obtain 13(b) monetary relief. On June 7, 2021, the FTC filed its response to the Motion, arguing that AMG only applies to a very narrow issue, and that Neora is trying to use the ruling to dismiss the entire case, when 13(b) still allows the FTC to bring cases in federal court to obtain injunctive relief. The FTC did agree to dismiss the claims for monetary restitution and disgorgement, directly acknowledging that AMG “currently prevents the FTC from recovering equitable monetary relief under Section 13(b) in this case.” On June 14, 2021, defendants filed a Motion for a Protective Order and a Motion to Quash a Subpoena, arguing that per the holding in AMG, the FTC cannot look at past conduct and prescribe retrospective relief, they can only provide relief for future actions. On July 1, 2021, defendants filed a notice of supplemental authority, noting that the United States District Court for the District of Columbia in FTC v. Facebook, Inc., held that the FTC may not seek injunctive relief in federal courts under Section 13(b) of the FTC Act for long-past conduct without some evidence that the defendant is committing or is about to commit another violation. On August 2, 2021, the Court issued an Order on the Motion for Judgment on the Pleadings. The Court noted, “in light of the unambiguous pronouncement from the Supreme Court in AMG Capital regarding the unavailability of monetary relief under § 13(b), Defendants’ Motion as to FTC’s claim for monetary relief is granted. The remainder of Defendants’ Motion is denied.” The Court was not persuaded that the FTC needed to file an administrative proceeding before obtaining a preliminary injunction.
FTC v. Netforce Seminars, No. 00-cv-02260 (D. Ariz.)	On May 4, 2021, the FTC filed an unopposed Motion to extend the summary judgment briefing schedule in light of AMG, explaining “that the priority for all parties is to address the continuing application of the Preliminary Injunction in light of AMG.” That Motion was granted. On June 23, 2021, the FTC filed a motion for sanctions for contempt, alleging that the defendants violated the Final Order (by not tracking consumer complaints, discouraging consumer complaints, not responding to consumer complaints, and not investigating consumer complaints), and are in contempt of the Final Order by running prohibited marketing schemes, and misrepresenting potential income to consumers.
FTC v. Noland, No. 20-cv-00047 (D. Ariz.)	Due to AMG, a motion to lift the asset freeze remains pending. On May 21, 2021, defendants filed a motion entitled “The Effect of AMG Capital on This Case.” In the filing, defendants stated, “The FTC’s wanton approach and this court’s complaisance approach has resulted in an illegal prejudgment attachment and dissipation of assets under the guise of equity. But it is a farce. This court was duped. The FTC’s unclean hands entitles it to nothing. Its complaint should be dismissed.” On June 1, 2021, proposed intervenors, who had previously been denied intervention, filed a motion to intervene saying they have been harmed by the FTCs unlawful reading of 13(b) as held by AMG and should thus be allowed to intervene. The FTC responded on June 4, 2021 calling the motion untimely and calls AMG “irrelevant” to the court’s prior ruling. On June 14, 2021, the proposed intervenors filed a reply reiterating that their motion is timely and that they are affected by the holding in AMG. This motion was denied. On June 15, 2021, the Court issued an Order: “in the wake of the Supreme Court’s decision in AMG […], the Court issued an order requiring the parties to file a joint memorandum setting forth their views on ‘whether the asset freeze and receivership in this action should be modified or vacated in light of AMG Capital.’ After the parties filed their joint memorandum …, the Court held a hearing. IT IS SO ORDERED that the Court will take no action in response to the individual Defendants’ memorandum.” On June 23, 2021, the FTC filed a motion for summary judgment as to monetary remedies. The FTC did not base this motion on 13(b), instead citing to Section 19 of the FTC Act and 15 U.S.C. Section 57b. On July 30, 2021, defendants filed a Motion to Dismiss Case, Motion to Dissolve the Preliminary Injunction Order and Motion to Stay or Dismiss Section 13(b) Proceedings. Defendants argued that the FTC must first file an administrative complaint before seeking a TRO or preliminary injunction. On August 6, 2021, the FTC filed its response noting that AMG permits it to get permanent injunctive relief. On September 9, 2021, the Court granted the FTC’s motion for summary judgment on liability, noting that AMG does not “disturb the FTC’s ability to seek a permanent injunction pursuant to § 13(b) in this case”. On September 23, 2021, the Court granted the FTC’s motion to preliminary injunction with asset freeze and receivership based on the FTC’s Section 19 claims. On October 8, 2021, the defendants filed a notice of interlocutory appeal to the 9th Circuit Court of Appeals.
FTC v. Nudge LLC, No. 19-cv-00867 (D. Utah)	On May 5, 2021, the defendants filed a motion for partial summary judgment in light of AMG. The defendants asked the court to rule that the FTC “is not entitled to equitable monetary relief under Section 13(b) of the FTC Act.” On June 2, 2021, the FTC filed a non-opposition response to defendants’ Motion for partial summary judgment, noting that it does not oppose Nudge’s Motion “to the extent it requests ‘an order stating that the FTC is not entitled to any equitable monetary relief under Section 13(b)’ of the FTC Act.” The hearing on the motions was held on July 9, 2021. FTC’s motion for partial summary judgment and the cross motion for partial summary judgment by defendants were both denied. On July 26, 2021, the Court issued an Order denying the Motion to Dismiss for failure to state a claim, noting that the complaint adequately alleges a Telemarketing and Consumer Fraud and Abuse Prevention Act claim. On September 15, 2021, the Court granted the defendants motion for partial summary judgment on the issue that the FTC may not seek equitable monetary relief under Section 13(b) or fines or penalties under BODA. The Court noted that the Utah Consumer Protection Division could seek fines or penalties under BODA where it can prove the violation of a cease and desist order, but it did not pursue that route in this matter. On October 18, 2021, Plaintiffs filed a motion for summary judgment against all defendants, seeking an injunction under the FTC Act, and seeking consumer redress in the amount of over $102M against the Nudge defendants for violating the FTC Act, the Telemarking Sales Rule, the Consumer Sales Practices Act, the Business Opportunity Disclosure Act, and the Telephone Fraud Prevention Act.
FTC v. Publishers Business Services, Inc., No. 19-507 (S. Ct.); Nos. 17-15600; 11-17270 (9th Cir.); No. 08-cv-00620 (D. Nev.)	The case was remanded from the Supreme Court to the Ninth Circuit in light of AMG. The case is currently pending before the Ninth Circuit. On June 4, 2021, the FTC sent a letter to the 9th Circuit explaining that it sought money under Section 19 as well as Section 13(b), so AMG does not affect them and that Publishers Business Services already waived their 13(b) challenge. On June 9, 2021, defendants responded saying they did not waive this claim and argued that the FTC actually waived any §19 claim because they stopped arguing that. On June 10, 2021, the 9th Circuit affirmed the District Court’s order that granted the permanent injunction, and vacated the District Court’s order that awarded equitable monetary relief under Section 13(b).
FTC v. Quincy Bioscience Holding Co., No. 17-cv-00124 (S.D.N.Y.)	On April 27, 2021, defendants filed a letter requesting “a pre-motion conference concerning Defendants’ anticipated motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) dismissing with prejudice plaintiff the [FTC’s] request for monetary relief.” On May 10, 2021, the FTC filed a response, claiming that judgment on the pleadings would be premature, because “Congress is considering changes to the Federal Trade Commission Act in response to AMG Capital.” On May 11, 2021, defendants filed a reply, explaining that the FTC’s “speculative hope that the House and Senate may agree upon and pass legislation, at some unspecified future time” is an insufficient basis to delay ruling. On September 17, 2021, the Court issued an Order, dismissing the FTC’s claim for monetary relief under Section 13(b).
FTC v. QYK Brands, LLC, No. 20-cv-1431 (C.D. Cal.)	The parties stipulated to allow the FTC to amend its complaint shortly following AMG. On May 19, 2021, the FTC filed an Amended Complaint, striking all requests for 13(b) monetary relief, and instead requesting monetary relief pursuant to the FTC’s Trade Regulation Rule Concerning the Sale of Mail, Internet, or Telephone Order Merchandise (“MITOR”). On June 23, 2021, Defendants filed a motion to dismiss each of the FTC’s claims, stating: “On April 22, 2021, the Supreme Court published AMG …, which significantly limits the FTC’s ability to obtain damages. Defendants move to dismiss all the FTC’s claims on the grounds that (1) the FTC is not entitled to monetary relief…” The motion to dismiss also argued that MITOR does not authorize the FTC to obtain monetary relief because MITOR is a regulation, not a statute, and thus provides no authority for the FTC to obtain damages.
FTC v. Ragingbull.com, LLC, No. 20-cv-3538 (D. Md.)	The FTC filed a motion to stay the case in order to obtain approval to file an Amended Complaint, in order to file new claims to stand in for the current 13(b) claims. On May 18, 2021 in a related filing, the FTC conceded that it chose to voluntary dismiss a number of defendants because the “FTC no longer has the ability to recover those assets as equitable monetary relief under Section 13(b) of the FTC Act, due to the Supreme Court’s decision in AMG.” On June 11, 2021, the FTC filed a motion for leave to file an amended complaint. This amended complaint could “remove the FTC’s request for equitable monetary relief under Section 13(b) of the FTC Act, in light of the Supreme Court’s recent decision in AMG Capital…” Responses in opposition and replies by the FTC have been filed. There has not been an order on this motion yet.
FTC v. RCG Advances LLC, No. 20-cv-04432 (S.D.N.Y.)	On May 10, 2021, the defendants wrote to the Court requesting the Court set a settlement conference in light of AMG. Defendants averred that as part of a settlement, they “will agree to the issuance of a permanent injunction preventing any future violations of the FTC Act as well as paying the amount of all costs accrued in favor of the Plaintiff to date.” On May 11, 2021, the FTC filed a responsive letter, stating its intention to file an Amended Complaint replacing the prior requested 13(b) monetary relief with a new “claim and seek civil penalties for Defendants’ violations of Section 521 of the Gramm-Leach-Bliley Act, 15 U.S.C. § 6821.” On May 14, 2021, the FTC filed a Motion for Leave to file the Amended Complaint. On June 10, 2021, the FTC filed an Amended Complaint where it sought to bring monetary penalties and a permanent injunction under Sections 5(a), 5(m)(1)(A), 13(b), 16(a), and 19 of the FTC Act, 15 U.S.C. §§ 45(a), 45(m)(1)(A), 53(b), 56(a), and 57b, and Section 522(a) of the Gramm-Leach-Bliley Act, 15 U.S.C. §6822(a).
FTC v. Simple Health Plans LLC, No. 18-cv-62593 (S.D. Fla.)	On April 22, 2021, one of the individual defendants filed an Emergency Motion to Dissolve the Preliminary Injunction, due to the Supreme Court’s ruling in AMG. That defendant submitted two notices of supplemental authority referencing other lower court cases dissolving preliminary injunctions following AMG. The FTC filed a response to the Motion on April 30, 2021, arguing that the Motion was not ripe and that the FTC still had Section 19 authority. On June 10, 2021, defendants filed a response to an order of supplemental briefing regarding AMG and their April 22 Motion to Dissolve. They argued that the situation in AMG is analogous to their situation. The FTC also filed its response, in which it argued that the Agency retains the power to issue preliminary injunctive relief and monetary relief under Section 19 of the Act. On September 5, 2021, the Court denied the defendant’s motion to dissolve preliminary injunction, finding that under Section 19 of the Act, it had authority to issue the preliminary injunction, order the asset freeze, and appoint the Receiver.
FTC v. SPM Thermo-Shield, Inc., No. 20-cv-542 (M.D. Fla.)	On May 14, 2021, the defendants filed a Motion to Dismiss the FTC’s claims for equitable monetary relief, due to AMG. On May 24, 2021, the FTC filed a response to the Motion to Dismiss, in which the FTC stated: “In AMG, the U.S. Supreme Court addressed the narrow question of whether Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), authorized retrospective monetary relief. The Court held that Section 13(b) did not authorize such relief. Slip op. at 1, 14. At this time, in light of the AMG decision, the FTC does not seek such relief.” On May 26, 2021 the court granted SPM’s Motion to Dismiss on all parts relating to AMG. On June 2, 2021, the FTC filed its First Amended Complaint for permanent injunction and other equitable relief, but kept their claim under Section 13(b). In the Amended Complaint, the FTC asks only for injunctive relief under Section 13(b).
FTC v. Stem Cell Institute of America, LLC, No. 21-03329 (N.D. Ga.)	On August 16, 2021, the FTC and the State of Georgia filed a Complaint against the Stem Cell Institute of America and other Defendants. The FTC seeks a permanent injunction under Section 13(b). The State of Georgia seems monetary relief under the Georgia Fair Business Practices Act.
FTC v. Supergooddeals.com, Inc., No. 20-cv-3027 (E.D.N.Y.)	In a July 8, 2020 Complaint, the FTC brings its action under Sections 13(b) and 19 of the FTC Act and MITOR to obtain permanent injunctive relief, restitution, rescission or reformation of contracts, the refund of money or return of property, the payment of damages, and other equitable relief.
FTC v. Superior Products International II, Inc., No. 20-cv-2366 (D. Kans.)	On May 6, 2021, defendants filed a motion to dismiss the FTC’s request for equitable monetary relief in light of AMG. On May 10, 2021, the FTC withdrew its request for equitable monetary relief, and informed the Court of its intent to seek leave to file an Amended Complaint seeking monetary relief on other grounds. On June 9, 2021, the Court found the defendants’ motion to dismiss moot due to the FTC’s withdrawal of claims regarding monetary relief under 13(b). On June 22, 2021, the FTC filed a motion and memorandum in support of its motion for leave to Amend Complaint. On August 30, 2021, the FTC filed its Amended Complaint. In the Amended Complaint, the FTC brought claims under Section 5(a), 13(b) and 19 of the FTC Act, as well as 15 U.S.C. Section 53(b) and 57(b), and the R-value Rule.The FTC seeks a permanent injunction, monetary relief, and costs.
FTC v. Surescripts, LLC, No. 19-cv-01080 (D.D.C.)	On May 14, 2021, the parties filed a joint stipulation, stating that, due to AMG, the FTC withdraws its request for equitable monetary relief under 13(b). The Court adopted the stipulation on May 17, 2021. A status conference is scheduled for December 1, 2021.
FTC v. Trend Deploy, No. 21-00343 (M.D. Fla.)	In a post-AMG Complaint, the FTC brings claims under Sections 5(a), 5(m)(1)(A), 12, 13(b), 16(a)(1), and 19 of the FTC Act, 15 U.S.C. Sections 45(a), 45(m)(1)(A), 52, 53(b), 56(a)(1), 57b, MITOR, and CCPA, seeking permanent injunctive relief, rescission or reformation of contracts, the refund of monies paid, civil penalties, and other relief. On August 30, 2021, Defendants filed their motion to dismiss, noting that under Section 13(b) the Commission may only seek a temporary restraining order or a preliminary injunction. Defendants noted that Sections 5 and 19 would permit the FTC to seek monetary relief.
FTC v. Zurixx, LLC, No. 19-00713 (D. Utah)	On May 6, 2021, the court requested that the parties submit briefing to discuss how the AMG ruling impacts and applies to their case. On May 12, 2021, Defendants filed a motion for partial summary judgment and memorandum in support as to relief under Section 13(b), arguing that the FTC is not entitled to equitable monetary relief under Section 13(b) (citing AMG) and that the Utah Division of Consumer Protection is not entitled to any monetary relief under BODA. On May 28, 2021, the Utah Division of Consumer Protection filed its brief on how AMG impacts this litigation, noting that it did not assert a claim under Section 13(b) and that the Utah Code Section 13-11-17(1)(c) is not affected by AMG. On June 9, 2021, the Utah Division of Consumer Protection filed its memorandum in opposition to Defendants’ motion for partial summary judgment, making the same arguments that AMG does not impact BODA. All motions for summary judgment and partial summary judgment remain pending.

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But what if parties resist and the Commission were forced to litigate? There, a third objective – to convince a court that the FTC’s Penalty Offense Authority entitles it to civil penalties based on these notices – is much less likely to be realized.

Hopkins Dodge is on point, and it is not favorable to the Commission. [Blog note: Bill MacLeod was the FTC’s Director of the Bureau of Consumer Protection during the Hopkins litigation.] In that case, the First Circuit affirmed the district court’s motion for summary judgment “on the ground that the F.T.C. had failed to make specific findings as required by 15 U.S.C. 45(m) (1) (B).” https://law.justia.com/cases/federal/appellate-courts/F2/849/311/37136/

Why does it matter here? Well, have a look at the language of 5(m)(1)(b):

(B) If the Commission determines in a proceeding under subsection (b) of this section that any act or practice is unfair or deceptive, and issues a final cease and desist order, other than a consent order, with respect to such act or practice, then the Commission may commence a civil action to obtain a civil penalty in a district court of the United States against any person, partnership, or corporation which engages in such act or practice--

If upon such hearing the Commission shall be of the opinion that the method of competition or the act or practice in question is prohibited by this subchapter, it shall make a report in writing in which it shall state its findings as to the facts and shall issue and cause to be served on such person, partnership, or corporation an order requiring such person, partnership, or corporation to cease and desist from using such method of competition or such act or practice.

The Commission said this:

FINAL ORDER On June 12, 1980 the Commission stayed the effective date of the unappealed Initial Decision in this matter, pending a determination whether or not the matter should be docketed for review. After further consideration, the Commission has decided not to place the case on its docket, but instead to lift the stay and allow the Initial Decision to become the decision of the Commission. It is hereby ordered, That the Initial Decision become the decision of the Commission, and that the order to cease and desist be entered.

Now consider 5(m)(2). It entitles anyone not a party to the prior administrative proceeding(s) to both a de novo trial of issues of fact, including whether the non-party's conduct is sufficiently similar to the conduct in the underlying proceeding(s) and a review, by the court in which the penalty is sought, of the Agency's prior determination that a particular act or practice is unfair or deceptive.

The cases the FTC cites in its notices are decades old and deal with practices and industries that are far different from today’s practices and industries. The 1984 Cliffdale decision, for example, the most recent case on the list, dealt with car mileage-boosting claims. How will that apply to claims for internet access, smart devices, tech services, and other products and services that didn’t exist when the cases were brought? Seems a stretch, to say the least.

Yet another hurdle: unlike 13(b) actions, which the FTC can bring on its own, it will have to persuade DOJ to bring civil penalty cases.

In short, we can be confident that the FTC will dangle the sword of the synopses and astronomical penalties ($43,280 for every time a false or deceptive claim is made) over everyone who got the notice and whose claims vaguely resemble the generic nuggets the Commission delivered. We can also expect that these efforts could generate more Hopkins and AMG-like decisions if the Commission attempts to press its position in the courts.

One also must wonder how this appears to Congress, which has been told repeatedly that, without 13(b) monetary authority, the Commission is nearly powerless to pursue its enforcement agenda. It will be interesting to see whether this flexing of muscle might undermine that assertion, making it less likely that we will see a change in the law by the end of the congressional session, either as a stand-alone measure or as part of the budget reconciliation package.

That provision, which has rarely been used, authorizes the Commission to seek civil penalties against other parties where (1) a final cease and desist order has been entered against a party in an administrative proceeding under Section 5(b) of the FTC Act, (2) there is a Commission determination that a specific practice is unfair or deceptive, as part of that order, and (3) a party with actual knowledge that the practice is unfair or deceptive has engaged in that practice after the order became final. Civil penalties can add up quickly – potentially nearly $44,000 per violation.

Earlier today, the FTC sent warning letters to more than 700 companies recommending that recipients review their practices related to endorsements and reviews to ensure that those practices comply with the law. The warning letters are explicitly meant to serve as a predicate for what could be a sweep of civil penalty investigations of advertisers. In the Commission’s announcement of the warning letters, it emphasized that, in the Commission’s view, the blanket warning letter to over 700 companies in nearly every industrial sector “puts those businesses on notice that deceptive practices in the future could result in penalties of up to $43,792 per violation.”

The warning letters outline a broad array of purportedly deceptive practices the FTC has determined to be unfair or deceptive in prior administrative cases, including:

• claiming – directly or by implication – that a third party has endorsed a product or its performance when that’s not the case (this includes fake reviews);
• misrepresenting that an endorsement reflects the experience, views, or opinions of users or purported users;
• misrepresenting an endorser as an actual, current, or recent user of a product;
• continuing to advertise an endorsement unless the advertiser has good reason to believe the endorser continues to subscribe to the views presented in the endorsement;
• using testimonials to make unsubstantiated or otherwise deceptive performance claims – even if the testimonial is genuine;
• failing to disclose a connection between an endorser and seller of a product if that connection might materially affect the weight or credibility of the endorsement or review and if consumers wouldn’t reasonably expect that connection; and
• misrepresenting – explicitly or implicitly – that the experience of an endorser represents the typical or ordinary experience of users of the product.

These types of letters are usually precursors to investigations. The FTC recently passed resolutions giving staff wide latitude in issuing Civil Investigative Demands, so now may be a good time to review your practices. Be sure to read our other posts on endorsements, reviews, and influencers for tips on how to comply with the law.

• Amend complaints to allege ROSCA violations (unsuccessfully, in FTC v. Cardiff, No. 18-2104 (C.D. Cal.));
• File an administrative complaint while moving to stay or dismiss without prejudice a federal court complaint (motion pending in FTC v. FleetCor Technologies, Inc., No. 19-cv-05727 (N.D. Ga.));
• Bring a complaint in California federal court along with Attorneys General from six states (claims made by five states based on pendent jurisdiction dismissed in FTC v. v. Frontier Comm. Corp., No. 21-cv-04155 (C.D. Cal.));
• Urge federal judges to exercise “discretion” and not rule on motions to dismiss pending what is hoped will be passage of a bill by Congress that would authorize the FTC to obtain monetary relief to redress consumer injury (unsuccessfully, in a number of cases, including FTC v. Neora, No. 20-cv-01979 (N.D. Tex.)); and

In settlements, parties can save time and resources by making the best estimates – adjusted for risk – on the right resolution. It would have been costly to specifically identify each harmed consumer and business, but it is clear the proposed monetary relief is reasonable, given our legal authority.

I worked in the Executive Branch for many years, so I understand how this happens. When you are in the Executive Branch or an independent agency, you want to do good things and prevent or punish bad things, and sometimes your statutory authority is borderline. And it could be war policy or immigration or environmental or what have you, but with good intentions the agency pushes the envelope and stretches the statutory language to do the good or prevent the bad. The problem is this results in a transfer of power from Congress to the Executive Branch to decide whether to exercise this new authority. That’s a particular concern, at least for me, with independent agencies.

That didn’t take long. Soon after the Supreme Court unanimously rebuked the Federal Trade Commission for seeking monetary remedies not permitted by Section 13(b) of the FTC Act — remedies that, in fairness to the agency, were blessed by appellate courts for decades—the Commission now votes to accept monetary remedies not permitted by Section 19.

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The Supreme Court handed down its decision in AMG Capital Management, LLC v. FTC in April and made clear that the words of a statute matter. Those words trump the policy preferences of commissioners. That decision should have been a wake-up call, a reminder to the Commission that, no matter how egregious the conduct or righteous our cause, the Commission is not entitled to go beyond the bounds of what the law permits. If we continue to flout the limits of our authority, the Commission should fully expect additional rebukes from the courts.

The AMG decision has significantly impacted the ability of the FTC to pursue wrongdoers and remediate law violations through the imposition of monetary relief. So we reiterate our call to Congress to pass legislation to restore the ability of the FTC to seek monetary remedies under Section 13(b) of the FTC Act in appropriate circumstances. But the law says what it says, and we do not support using the cloak of a settlement to overstep the authority we have.

The FTC has a troubling history of strong-arming small and independent business owners – including church organists and skating teachers– into settlements, while allowing those who repeatedly break the law to escape unscathed, often with the help of high-priced FTC alumni.

Commissioner Chopra also claims that we do not support consequences for Made in the U.S.A. fraud. By that logic, Commissioner Chopra’s votes against privacy enforcement in cases like Facebook and Google/YouTube show his enthusiasm for their business models and distaste for enforcement against large technology platforms. The issue here is the Commission trying to eat its Section 19 cake and have its civil penalties too. We cannot do both, however we feel about policy.

Latest update follows.

CASE	RELEVANT POST-AMG ACTION
FTC v. Adept Management, Inc., Nos. 19-35668, 19-35669 (9th Cir.)	The pending Ninth Circuit appeal was held in abeyance pending AMG’s outcome. Following the AMG decision, the parties filed supplemental briefs regarding how the appeal should proceed. Both the FTC and defendants conceded that the monetary judgment under 13(b) should be vacated. The FTC argued AMG has no other effect; defendants disagree. The appeal remains pending and oral arguments scheduled for June 9, 2021 were cancelled. The Ninth Cir. noted that the issue was adequately presented in the briefs and oral argument would not significantly aid the decisional process. On June 11, 2021, the Ninth Circuit vacated the district court’s judgment granting monetary relief in light of AMG.
FTC v. American Future Systems, Inc., No. 20-cv-02266 (E.D. Pa.)	On April 30, defendants filed a notice of supplemental authority notifying the court of the AMG decision, and arguing that significant portions of the FTC’s complaint should be stricken. On May 17, 2021, defendants filed their answers to the (pre-AMG) complaint, making the same requests. On June 24, 2021, American Future filed a motion for judgment on the pleadings, to which the FTC filed a response in opposition on July 7, 2021. American Future raised the issue that the Supreme Court’s ruling in AMG bars the FTC from monetary damages in this case, and that the FTC improperly invoked Section 13(b) of the FTC Act to evade the administrative procedures established by Section 19 of the FTC Act. In its opposition, the FTC notes that “the FTC has already ceased its pursuit of monetary relief in this matter.” American Future filed its response in support of its motion on July 8, 2021. On July 26, 2021, the Court issued an Order denying Defendants’ motion for judgment on the pleadings, noting that AMG Capital does not “Preclude FTC’s Section 13(b) Claims for Permanent Injunctive Relief.”
FTC v. American Screening, LLC, No. 20-cv-1021 (E.D. Mo.)	There have been no AMG-related filings on this docket.
AMG Capital Management, INC. v. FTC, No. 19-508 (U.S. S. Ct.), No. 16-17197 (9th Cir.), No. 12-cv-00536 (D. Nev.)	On June 8, 2021, the 9th Circuit vacated its December 3, 2018 order and reversed the district court’s order awarding equitable monetary relief to the FTC. The 9th Circuit then remanded the case to the district court for further proceedings consistent with the Supreme Court’s opinion. On July 13, 2021, a status conference was held in the District Court. The Court indicated that it intends to issue an order terminating the asset freeze.
FTC v. Cardiff, Nos. 20-55858, 20-55397, 20-55066, 19-56397 (9th Cir.); No. 18-2104 (C.D. Cal)	On April 28, in a brief, three-paragraph order, a per curiam panel vacated the district court’s preliminary injunction order that had been entered into “to preserve assets pending a final judgment that could include equitable monetary relief in this action under § 13(b) of the FTC.” Given AMG, the panel explained that the injunction was no longer necessary, and remanded the case to the district court. Before the district court, the parties filed expedited briefing regarding the import of AMG on the FTC’s complaint, with the FTC arguing it can obtain monetary redress by way of ROSCA. Defendants argued that the FTC had always been seeking monetary relief under 13(b), and cannot change its position now. On May 24, 2021, the District Court ordered the FTC to pay the Receiver’s fees, from the date of the AMG ruling going forward. The Court explained that it would be inequitable to force defendants to pay these fees now that the Supreme Court has established that 13(b) does not allow for monetary relief. On May 26, 2021, the District Court noted that it had to rule on the effect of AMG on the 2018 preliminary injunction and what remedies remain. This issue is fully briefed, but no order has yet issued. On June 29, 2021, the District Court issued an Order, granting summary judgment, barring the FTC from recalculating and modifying how it would seek damages, if initially, it had sought monetary relief under Section 13(b). The FTC attempted to recover monetary penalties under a separate statutory provision. While the court agreed with the FTC that it could have pursued monetary relief under an alternative statute, the FTC had waived the right to request such relief in this case, largely because in the FTC’s Rule 26 disclosures, the FTC had only calculated damages under 13(b).
FTC v. Credit Bureau Center LLC, No. 17-cv-194 (N.D. Ill.)	On May 6, 2021, the FTC filed a Motion to Amend Judgment. The FTC claims it now seeks monetary relief under ROSCA and Section 19 of the FTC Act, as opposed to Section 13(b). The defendant filed their response on May 28, 2021 calling the FTC’s motion a “desperate attempt to overturn AMG.” On June 11, 2021, the FTC filed their reply, stating that ROSCA and Section 19 provide an independent statutory basis apart from 13(b) to obtain a monetary judgment. On June 23, 2021, the court set an oral argument for July 14, 2021 on the FTC’s motion to alter judgment. No order has yet been issued.
FTC v. Disruption Theory LLC, No. 20-cv-06919 (N.D. Cal.)	Following AMG the parties stipulated, and on May 18, 2021 the Court issued an order, “dissolving the asset freeze entered in the Court’s October 6, 2020 Ex Parte Temporary Restraining Order.” On June 24, 2021, the FTC moved for summary judgment and a permanent injunction against Marc Grisham, but did not seek damages for violations of 13(b). On the same day, the FTC also moved for default judgment and a permanent injunction against the “defaulting defendants.” The defendants opposed the motions. No order has yet been issued.
FTC v. Electronic Payment Solutions of America, Inc., No. 17-02535 (D. Ariz.)	On April 26, 2021, defendants asked the Court in a Motion for Reconsideration “to reconsider its denial of [the] motion to dismiss the FTC’s monetary claim [] for consumer redress, disgorgement and restitution as set forth in the FTC’s first amended complaint.” On May 3, 2021, the FTC filed a Motion to Withdraw the pending Summary Judgment Motion, requesting the Court provide monetary relief through 13(b), due to AMG. On May 10, 2021, defendants filed a Motion for Reconsideration of the denial for a Judgment of the Pleadings based on the new authority provided by AMG. At a status conference on June 14, 2021, the judge ordered the FTC to file a response to this motion. On July 2, 2021, the FTC filed a response in opposition to the motion for reconsideration. In its response, the FTC notes that “[a]lthough the FTC concedes that AMG precludes its recovery of equitable monetary relief in this action, the language of AMG itself, as well as subsequent authority, make clear that the FTC is still entitled to injunctive relief …” On July 21, 2021, the Court issued an Order noting that the motion for summary judgment “will be dealt with in due course.”
FTC v. Elegant Solutions, Inc., No. 20-55766 (9th Cir.); No. 19-cv-01333 (C.D. Cal.)	While Ninth Circuit briefs had already been filed prior to AMG, the Ninth Circuit is requiring new briefing following AMG. Appellants filed their revised brief on June 1, 2021 in which they argue that the FTC does not have the authority to impose some of the remedies that the FTC has imposed. On July 30, 2021, the FTC filed its Answering Brief. For AMG related issues, the FTC argued that for a permanent injunction, it did not need to file an administrative complaint seeking the same relief, and that the court did not abuse its discretion in issuing an injunction. The FTC conceded that “the Supreme Court’s recent decision in AMG, holding that Section 13(b) does not authorize monetary relief, does not undermine this longstanding precedent regarding the availability of injunctive relief.”
FTC v. F&G International Group Holdings, LLC, No. 20-cv-73 (S.D. Ga.)	In a May 11, 2021 status report, the defendants stated their intent to file a dispositive motion striking the FTC’s claim for monetary relief following AMG. On May 20, 2021, the District Court stayed dispositive motions pending a settlement conference. On July 1, 2021, the stay was lifted.
FTC v. Facebook, Inc., No. 20-cv-03590 (D.D.C.)	On April 27, 2021, Facebook filed a notice of supplemental authority regarding AMG, arguing that, following the Supreme Court’s decision “the FTC lacks statutory authority to maintain its lawsuit in federal district court.” On May 3, 2021, the FTC filed a Response. The FTC’s response argues that the action is still appropriate because, the FTC asserts, Section 13(b) still empowers the FTC to seek a permanent injunction.” Of course, the statutory text only speaks of preliminary injunctive relief. On June 28, 2021 the court granted Facebook’s motion to dismiss and dismissed the complaint without prejudice. Section 13(b) was not a basis of the motion to dismiss, but the court did note that “an injunction under Section 13(b) is a theoretically available remedy in a Section 2 challenge to long-ago mergers…” On July 23, 2021, the Court granted the FTC’s motion for an extension of time to file an Amended Complaint, which is due to be filed before August 19, 2021.
FTC v. FleetCor Technologies, Inc., No. 19-cv-05727 (N.D. Ga.)	On May 17, 2021, defendants filed a partial motion for summary judgment, asserting that, following AMG, “the FTC is not entitled to relief on its claim for equitable monetary relief, and [] the FTC is not entitled to relief on its claim for prospective injunctive relief.” On June 18, 2021, the FTC filed its reply in support of its motion for summary judgment and opposition to defendant’s cross-motion for summary judgment. In the reply, the FTC does not seek monetary relief, only injunctive relief. On July 12, 2021, Defendants filed their reply brief, arguing that the FTC is not entitled to injunctive relief that that the FTC lacks authority to enjoin past conduct. No order has been issued.
FTC v. Golden Sunrise Nutraceutical, Inc., No. 20-cv-01060 (E.D. Cal.)	Despite AMG, on June 6, 2021 the parties entered a stipulation and proposed order, granting the FTC a permanent injunction and monetary remedies, pursuant to Sections 13(b) of the FTC Act and 15 U.S.C. § 53(b). On June 11, 2021, the district court entered the stipulated order.
FTC v. Hornbeam Special Situations, LLC, No. 17-cv-03094 (N.D. Ga.)	On April 22, 2021, the FTC filed a Notice with the Court of the AMG decision. On June 21, 2021, the court terminated without prejudice the motions for summary judgment. On July 2, 2021, the FTC filed a notice of supplemental authority re AMG, noting that “the FTC hereby provides notice to the Court and Defendants that it is not currently seeking equitable monetary relief under Section 13(b) of the FTC Act as to any defendant in this matter. However, the FTC continues to seek injunctive conduct relief under Section 13(b), as well as equitable monetary relief under Section 19…” Motions for summary judgment are to be filed before August 10, 2021.
FTC v. Innovative Designs, Inc., Nos. 20-3379 (3d Cir.); 16-cv-01669 (W.D. Pa.)	There have been no AMG-related filings on this docket.
FTC v. Noland, No. 20-cv-00047 (D. Ariz.)	There is a motion to lift the asset freeze pending due to AMG. On May 21, 2021, defendants filed a motion entitled “The Effect of AMG Capital on This Case.” In the filing, defendants stated, “The FTC’s wanton approach and this court’s complaisance approach has resulted in an illegal prejudgment attachment and dissipation of assets under the guise of equity. But it is a farce. This court was duped. The FTC’s unclean hands entitles it to nothing. Its complaint should be dismissed.” On May 28, 2021, the FTC filed a response to defendant’s memo calling it a “fanciful reading of AMG . . . untethered from its holding.” On June 1, 2021, proposed intervenors, who had previously been denied intervention, filed a motion to intervene saying they have been harmed by the FTCs unlawful reading of 13(b) as held by AMG and should thus be allowed to intervene. The FTC responded on June 4, 2021 calling the motion untimely and calls AMG “irrelevant” to the court’s prior ruling. On June 14, 2021, the proposed intervenors filed a reply reiterating that their motion is timely and that they are affected by the holding in AMG. On June 11, 2021, Defendants filed a Reply in Response to the Motion for Preliminary Injunction, noting that “Section 13 has always been the FTC’s focus in this case, even though this court recognized the FTC sought relief not found in the text of the FTCA.” On June 15, 2021, the Court issued an Order: “in the wake of the Supreme Court’s decision in AMG […], the Court issued an order requiring the parties to file a joint memorandum setting forth their views on ‘whether the asset freeze and receivership in this action should be modified or vacated in light of AMG Capital.’ After the parties filed their joint memorandum …, the Court held a hearing. IT IS SO ORDERED that the Court will take no action in response to the individual Defendants’ memorandum.” On June 23, 2021, the FTC filed a motion for summary judgment as to monetary remedies. The FTC did not base this motion on 13(b). A telephonic status conference was held on July 7, 2021. On June 30, 2021, defendants filed a Motion to Dismiss Case, Motion to Dissolve the Preliminary Injunction Order and Motion to Stay or Dismiss Section 13(b) Proceedings. Defendants argue that the FTC must first file an administrative complaint before seeking a TRO or preliminary injunction.
FTC v. Lending Club Corp., No. 18-cv-02454 (N.D. Cal.)	Following AMG the parties stipulated, and on May 14, 2021 the Magistrate Judge ordered, “that the demand for equitable monetary relief in the FTC’s First Amended Complaint should be stricken.” On June 10, 2021, the parties filed a case management statement in which they agreed that settlement discussions would now be more “fruitful” based on AMG’s holding. On July 7, 2021, the Court was notified that the parties “settled the case subject to the contingency of approval of the Commission.”
FTC v. Mail Tree Inc., No. 15-cv-61034 (S.D. Fla.)	On April 30, 2021, the FTC filed a Notice of Supplemental Authority informing the Court that, per AMG, 13(b) does not allow for monetary relief.
FTC v. Neora, LLC, No. 20-cv-01979 (N.D. Tex.)	On April 30, 2021, the FTC filed a Notice of Supplemental Authority informing the Court that, per AMG, 13(b) does not allow for monetary relief. On May 10, 2021, the FTC and defendants filed dueling statements contesting the breadth of AMG’s repercussions. On May 17, 2021, the defendants filed a Motion for Judgment on the Pleadings, arguing that the FTC cannot prevail now that it cannot obtain 13(b) monetary relief. That Motion is pending. On June 7, 2021, the FTC filed their response to the May 17th Motion, arguing that AMG only applies to a very narrow issue, and that Neora is trying to use the ruling to dismiss the entire case, when 13(b) still allows the FTC to bring cases in federal court to obtain injunctive relief. The FTC accused Neora of “doing violence to the language of the Supreme Court’s decision.” The FTC did agree to dismiss the claims for monetary restitution and disgorgement, directly acknowledging that AMG “currently prevents the FTC from recovering equitable monetary relief under Section 13(b) in this case.” On June 14, 2021, defendants filed a Motion for a Protective Order and a Motion to Quash a Subpoena, arguing that per the holding in AMG, the FTC cannot look at past conduct and prescribe retrospective relief, they can only provide relief for future actions. On June 29, 2021, the Court set the motion hearing for judgment on the pleadings for July 16, 2021. On July 1, 2021, defendants filed a notice of supplemental authority, noting that the United States District Court for the District of Columbia in FTC v. Facebook, Inc., held that the FTC may not seek injunctive relief in federal courts under Section 13(b) of the FTC Act for long-past conduct without some evidence that the defendant is committing or is about to commit another violation. On August 2, 2021, the Court issued an Order on the Motion for Judgment on the Pleadings. The motion was granted in part and denied in part. The Court noted, “in light of the unambiguous pronouncement from the Supreme Court in AMG Capital regarding the unavailability of monetary relief under § 13(b), Defendants’ Motion as to FTC’s claim for monetary relief is granted. The remainder of Defendants’ Motion is denied.” The Court was not persuaded that the FTC needed to file an administrative proceeding before obtaining a preliminary injunction.
FTC v. Netforce Seminars, No. 00-cv-02260 (D. Ariz.)	On May 4, 2021 FTC filed an unopposed Motion to extend the summary judgment briefing schedule in light of AMG, explaining “that the priority for all parties is to address the continuing application of the Preliminary Injunction in light of AMG.” That Motion was granted. The FTC’s Summary Judgment Motion is due on June 23, 2021. On June 23, 2021, the FTC filed a motion for sanctions for contempt, alleging that the defendants violated the Final Order (by not tracking consumer complaints, discouraging consumer complaints, not responding to consumer complaints, and not investigating consumer complaints), and are in contempt of the Final Order by running prohibited marketing schemes, and misrepresenting potential income to consumers.
FTC v. Nudge LLC, No. 19-cv-00867 (D. Utah)	On May 5, 2021, the defendants filed a partial Summary Judgment Motion in light of AMG. The defendants asked the court to rule that the FTC “is not entitled to equitable monetary relief under Section 13(b) of the FTC Act.” The motion remains pending. On June 2, 2021, the FTC filed a non-opposition response to Nudge’s May 5th Motion for partial summary judgment, noting that it does not oppose Nudge’s Motion “to the extent it requests ‘an order stating that the FTC is not entitled to any equitable monetary relief under Section 13(b)’ of the FTC Act.” The hearing on the motions was held on July 9, 2021. FTC’s motion for partial summary judgment and the cross motion for partial summary judgment by defendants were both denied. On July 26, 2021, the Court issued an Order denying the Motion to Dismiss for failure to state a claim, nothing that the complaint adequately alleges a Telemarketing and Consumer Fraud and Abuse Prevention Act claim. The Order makes no mention of Section 13(b).
FTC v. Publishers Business Services, Inc., No. 19-507 (S. Ct.); Nos. 17-15600; 11-17270 (9th Cir.); No. 08-cv-00620 (D. Nev.)	The case was remanded from the Supreme Court to the Ninth Circuit in light of AMG. The case is currently pending before the Ninth Circuit. On June 4, 2021, the FTC sent a letter to the 9th Circuit explaining that it sought money under Section 19 as well as Section 13(b), so AMG does not affect them and that Publishers Business Services already waived their 13(b) challenge. On June 9, 2021, defendants responded saying they did not waive this claim and argued that the FTC actually waived any §19 claim because they stopped arguing that. On June 10, 2021, the 9th Circuit affirmed the District Court’s order that granted the permanent injunction, and vacated the District Court’s order that awarded equitable monetary relief under Section 13(b).
FTC v. Quincy Bioscience Holding Co., No. 17-cv-00124 (S.D.N.Y.)	On April 27, 2021, defendants filed a letter requesting “a pre-motion conference concerning Defendants’ anticipated motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) dismissing with prejudice plaintiff the [FTC’s] request for monetary relief.” On May 10, 2021, the FTC filed a response, claiming that judgment on the pleadings would be premature, because “Congress is considering changes to the Federal Trade Commission Act in response to AMG Capital.” On May 11, 2021, defendants filed a reply, explaining that the FTC’s “speculative hope that the House and Senate may agree upon and pass legislation, at some unspecified future time” is an insufficient basis to delay ruling.
FTC v. QYK Brands, LLC, No. 20-cv-1431 (C.D. Cal.)	The parties stipulated to allow the FTC to amend its complaint shortly following AMG, presumably so the FTC could include an alternative basis for monetary relief. The district court granted the FTC’s request on May 18. On May 19, the FTC filed an Amended Complaint, striking all requests for 13(b) monetary relief, and instead requesting monetary relief pursuant to the FTC’s Trade Regulation Rule Concerning the Sale of Mail, Internet, or Telephone Order Merchandise (“MITOR”). On June 23, 2021, Defendants filed a motion to dismiss each of the FTC’s claims, stating: “On April 22, 2021, the Supreme Court published AMG …, which significantly limits the FTC’s ability to obtain damages. Defendants move to dismiss all the FTC’s claims on the grounds that (1) the FTC is not entitled to monetary relief…”
FTC v. Ragingbull.com, LLC, No. 20-cv-3538 (D. Md.)	The FTC filed a motion to stay the case in order to obtain approval to file an Amended Complaint, in order to file new claims to stand in for the current 13(b) claims. That motion was granted on April 30. On May 18, in a related filing, the FTC conceded that it chose to voluntary dismiss a number of defendants because the “FTC no longer has the ability to recover those assets as equitable monetary relief under Section 13(b) of the FTC Act, due to the Supreme Court’s decision in AMG.” On June 11, 2021, the FTC filed a motion for leave to file an amended complaint. This amended complaint could “remove the FTC’s request for equitable monetary relief under Section 13(b) of the FTC Act, in light of the Supreme Court’s recent decision in AMG Capital…” Responses in opposition and replies by the FTC have been filed. That motion is still pending and an amended complaint has not yet been filed.
FTC v. RCG Advances LLC, No. 20-cv-04432 (S.D.N.Y.)	On May 10, 2021, the defendants wrote to the Court requesting the Court set a settlement conference in light of AMG. Defendants averred that as part of a settlement, they “will agree to the issuance of a permanent injunction preventing any future violations of the FTC Act as well as paying the amount of all costs accrued in favor of the Plaintiff to date.” On May 11, 2021, the FTC filed a responsive letter, stating its intention to file an Amended Complaint replacing the prior requested 13(b) monetary relief with a new “claim and seek civil penalties for Defendants’ violations of Section 521 of the Gramm-Leach-Bliley Act, 15 U.S.C. § 6821.” On May 14, 2021, the FTC filed a Motion for Leave to file the aforementioned Amended Complaint. On June 10, 2021, the FTC filed an Amended Complaint where it seeks to bring monetary penalties and a permanent injunction under Sections 5(a), 5(m)(1)(A), 13(b), 16(a), and 19 of the FTC Act, 15 U.S.C. §§ 45(a), 45(m)(1)(A), 53(b), 56(a), and 57b, and Section 522(a) of the Gramm-Leach-Bliley Act, 15 U.S.C. §6822(a). On June 18, 2021, defendant Ram Capital Funding, LLC, filed its Answer to the Amended Complaint. On June 23, 2021, RCG Advances, LLC and other defendants filed their Answer to the Amended Complaint. On July 8, 2021, the FTC filed a motion to strike defendants’ affirmative defenses.
FTC v. Simple Health Plans LLC, No. 18-cv-62593 (S.D. Fla.)	On April 22, 2021, one of the individual defendants filed an Emergency Motion to Dissolve the Preliminary Injunction, due to the Supreme Court’s ruling in AMG. The defendant followed up with two notices of supplemental authority, on April 28 and 30, referencing other lower court cases dissolving preliminary injunctions following AMG. The FTC filed a response to the Motion on April 30, 2021, arguing that the Motion was not ripe and that the FTC still had Section 19 authority. A hearing on the Motion took place on May 14, 2021. The Motion remains pending. On June 10, 2021, defendants filed a response to an order of supplemental briefing regarding AMG and their April 22 Motion to Dissolve. They argued that the situation in AMG is analogous to their situation. The FTC also filed its response, in which it argued that the Agency retains the power to issue preliminary injunctive relief under Section 19 of the Act.
FTC v. SPM Thermo-Shield, Inc., No. 20-cv-542 (M.D. Fla.)	On May 14, 2021, the defendants filed a Motion to Dismiss the FTC’s claims for equitable monetary relief, due to AMG. The Motion remains pending. On May 24, 2021, the FTC filed a response to the Motion to Dismiss, in which the FTC states: “In AMG, the U.S. Supreme Court addressed the narrow question of whether Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), authorized retrospective monetary relief. The Court held that Section 13(b) did not authorize such relief. Slip op. at 1, 14. At this time, in light of the AMG decision, the FTC does not seek such relief.” On May 26, 2021 the court granted SPM’s Motion to Dismiss on all parts relating to AMG. On June 2, 2021, the FTC filed its First Amended Complaint for permanent injunction and other equitable relief., but kept their claim under Section 13(b). On June 2, 2021, the FTC filed an Amended Complaint. In the Amended Complaint, the FTC asks only for injunctive relief under Section 13(b). On June 16, 2021, defendant filed its Answer and affirmative defenses to the Amended Complaint. The FTC notes that it brought claims under other statutes, which entitle it to relief.
FTC v. Supergooddeals.com, Inc., No. 20-cv-3027 (E.D.N.Y.)	There have been no AMG-related filings on this docket.
FTC v. Superior Products International II, Inc., No. 20-cv-2366 (D. Kans.)	On May 6, 2021, defendants filed a motion to dismiss FTC’s request for equitable monetary relief in light of AMG. On May 10, 2021, the FTC withdrew its request for equitable monetary relief, and informed the Court of its intent to seek leave to file an Amended Complaint seeking monetary relief on other grounds. On June 9, 2021, the Court found the defendants’ motion to dismiss moot due to the FTC’s withdrawal of claims regarding monetary relief under 13(b). On June 22, the FTC filed a motion and memorandum in support of its motion for leave to Amend Complaint. Oral argument on the motion for leave to Amend Complaint is set for August 23, 2021. The proposed Amended Complaint includes allegations under multiple federal statutes (not only 13(b)), and the FTC still seeks monetary relief.
FTC v. Surescripts, LLC, 19-cv-01080 (D.D.C.)	On May 14, 2021, the parties filed a joint stipulation, stating that, due to AMG, the FTC withdraws its request for equitable monetary relief under 13(b). The Court adopted the stipulation on May 17, 2021.
FTC v. Unknown Parties Deceiving Consumers, No. 20-cv-2494 (N.D. Ohio)	There have been no AMG-related filings on this docket.
FTC v. ZAAPPAAZ, LLC, No. 20-cv-2717 (S.D. Tex.)	There have been no AMG-related filings on this docket.

In a joint statement issued after the vote, House Energy and Commerce Committee Chair Frank Pallone (D-NJ) and Consumer Protection and Commerce Subcommittee Chair Jan Schakowsky (D-IL) said: “The Consumer Protection and Recovery Act will restore the FTC’s ability to force scammers that have broken the law to repay those who have been harmed or defrauded.” Chairs Pallone and Schakowsky moved quickly to usher the bill through their committee and the House just three months after the Supreme Court ruled in AMG Capital Management, LLC v. FTC that the Federal Trade Commission did not have the authority to pursue monetary penalties under Section 13(b).

Facing increasing legal uncertainty in the months leading up to the AMG decision, bipartisan FTC Commissioners had urged Congress to clarify the agency’s enforcement authority – and bipartisan Members of Congress expressed support, citing a shared desire to protect consumers and hold fraudsters accountable. Those bipartisan sentiments, however, did not translate to bipartisan legislative text. As we’ve written previously, House Energy and Commerce Committee Republicans have voiced process concerns, accusing Democrats of rushing the legislation through the House. Republicans have also stressed the need for statutory “guardrails” to ensure due process and protect legitimate businesses. Throughout the legislative process, for instance, Republicans have sought to amend the legislation to reduce the 10-year statute of limitations and to more narrowly tailor the language to target outright fraudulent acts. Republicans have also expressed concerns about retroactivity, questioning the legality of allowing the FTC to go after prior conduct with the expanded authorities included in H.R. 2668.

Ahead of the vote, Consumer Protection and Commerce Subcommittee Ranking Member Gus Bilirakis (R-FL) said, “…this bill before us will provide the FTC with new authorities that far outpace the need supported by a consensus of the FTC Commissioners.” He went on to say that the expanded authority granted to the agency in the legislation “signals a return to the broad overreach we saw with the FTC in previous decades – a situation so bad that a Democratic Congress crippled the FTC’s funding and stripped it of its authority at that time.”

Additionally, House Republicans argue that any 13(b) fix should be part of a broader package of FTC reforms and should move in concert with legislation establishing a national privacy framework – an issue itself full of partisan landmines.

H.R. 2668 now heads to the Senate, where bipartisan Members of the Commerce Committee have expressed interest in a legislative fix – and where Democrats don’t have the luxury of disregarding Republican opposition. Perhaps in a nod to that reality, ahead of the bill's passage, Representative Cárdenas said on the floor, “It’s unfortunate that we weren’t able to negotiate more into this bill and make it bipartisan, but there will be other opportunities as we are a two-chamber legislature, and I’m sure the Senate has some ideas about how to make this bill better. And we’re all open to that opportunity.”

For his part, President Biden appears ready to sign the bill, should it make it to his desk. Ahead of the House vote, the White House issued a strong statement of support: “The Administration applauds this step to expressly authorize the FTC to seek permanent injunctions and pursue equitable relief for all violations of law enforced by the Commission and ensure that the cost of illegal practices falls on bad actors, not consumers targeted by illegal scams.”

As readers of this blog know, we closely followed the aftermath of the Supreme Court’s AMG ruling, especially as it pertains to ongoing FTC actions. And we have seen the FTC make good on its promise to pursue a variety of theories in an attempt to recover monetary penalties intended to redress consumer injury.

In doing so, the FTC has taken varying positions as to whether and how it still seeks monetary remedies: in some cases, the FTC, acknowledging that 13(b) money remedies are no longer available post-AMG, has withdrawn its claim for monetary relief; in others, the FTC requests that the court delay decision on monetary relief in the light of the possibility of future congressional action providing 13(b) monetary powers; and in others still, the FTC has withdrawn its request for 13(b) monetary relief, but attempted to obtain money judgments through another statutory provision.

FTC v. Cardiff fits this third category. Pending in the Central District of California, the FTC attempted to pursue monetary relief post-AMG by way of a different statute: ROSCA. While the court agreed with the FTC that it could have pursued monetary relief under ROSCA, the court found the FTC had waived the right to request such relief in this case.

The court noted that, in the FTC’s Rule 26 disclosures, the Agency had only calculated damages under 13(b), not under ROSCA, and had only disclosed its ROSCA expert after discovery closed (and, conveniently, after AMG was decided). The court concluded that the FTC had forfeited its right to seek monetary relief under the alternate statutory provision, and granted Cardiff’s motion for summary judgment, confirming that the FTC was entitled to no monetary relief.

The court’s Cardiff decision is a significant blow to the FTC. Stephen Cochell, one of the party’s lawyers (who, by the way, has racked up an impressive 13(b) won-lost record), provided the following comment:

The Court's exclusion of evidence for violating Rule 26 sends a signal that the FTC is subject to the same rules as any other litigant in federal court litigation. Overcharging, under-disclosing or late-disclosing information in Rule 26 Disclosures will not be tolerated. The FTC will need to give more thought as to how they are going to establish damages and timely comply with Rule 26.

So while it is not Facebook, the Cardiff case is important for defendants that are already deeply enmeshed in litigation with the FTC. It strongly suggests that courts may not allow the FTC to change its legal theory for damages on such short notice, especially where such a modification could prejudice the defendant.

Coming Up: FTC Commissioners expected to testify before the Energy & Commerce Consumer Protection and Commerce Subcommittee on July 28^th.

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As we discussed in detail here, FTC Commissioner Rohit Chopra and his then attorney advisor Levine last year released a paper advocating for the Commission to resurrect the Penalty Offense Authority, which authorizes civil penalties where the following three conditions are met:

• a final cease and desist order has been entered against a party in an administrative proceeding under Section 5(b) of the FTC Act;
• there is a Commission determination that a specific practice is unfair or deceptive, as part of that order; and
• a party with actual knowledge that the practice is unfair or deceptive has engaged in that practice after the order became final.

Undeterred by this limitation, the TINA.org letter also provides a list of 660 direct selling companies with contact information “to assist the FTC in providing notice.” The organization’s efforts are the latest in a series of efforts that explore how the FTC can obtain money through enforcement in novel ways in the wake of the Supreme Court’s unanimous AMG Capital Management decision. For example, two weeks ago, the FTC filed an amended complaint against RCG Advances seeking civil penalties under the Gramm-Leach-Bliley Act under a new legal theory. Before that, the FTC brought an action against MoviePass seeking civil penalties under the Restore Online Shoppers’ Confidence Act (ROSCA), again under a novel theory of statutory interpretation.

The Commission has also signaled that it may seek to amend the Business Opportunity Role to cover direct sellers and others in the “gig economy.” The takeaway here is clear: even as the battle in Congress to pass legislation continues, the FTC and others are continuing to consider other methods to obtain money through enforcement.

The ripple effects continue from the Supreme Court’s holding in AMG Capital Management, LLC v. FTC, explaining that Section 13(b) of the FTC Act does not allow (and never did allow) monetary remedies.

In some cases, the FTC has stricken equitable monetary remedies entirely by removing those requests for relief in amended complaints. In others, the FTC is attempting to retain its request for monetary relief by newly tying it to another statutory provision. In still others, the Agency has requested that courts ignore AMG, because Congress may, at some unspecified future date, amend the statute.

Latest update follows.

Summer associate Darby Hobbs contributed to this article. Ms. Hobbs is not a practicing attorney and worked under the supervision of principals of the firm who are members of the D.C. Bar.

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Civil Penalties for GLBA Violations

The FTC first sued RCG Advances in June 2020, alleging that the company deceived small businesses by misrepresenting terms of cash advances and then using unfair collection practices to compel them to pay. The initial complaint also alleged that the companies made unauthorized withdrawals from consumers’ accounts and sought a permanent injunction and consumer redress under Section 13(b) of the FTC Act. As we’ve covered extensively in our 13(b) blog, the Supreme Court’s unanimous decision in AMG Capital Management foreclosed the capacity to seek consumer redress, and thus the amended complaint removes that reference while otherwise mirroring the substantive allegations of the initial complaint.

The new complaint also adds a count alleging violations of GLBA for use of fraudulent statements to customers in an attempt to obtain consumer information. GLBA is generally intended to protect consumer financial privacy by limiting when financial institutions can disclose consumers’ nonpublic personal information. In the amended complaint, the FTC cites a seldom cited provision of GLBA that prohibits any person from “obtain[ing] or attempt[ing] to obtain . . . customer information of a financial institution relating to another person . . . by making a false, fictitious, or fraudulent statement or representation to a customer of a financial institution.”

The FTC then advances a novel theory to assert that it has the authority to obtain civil penalties under GLBA because it empowers the FTC to enforce it “in the same manner and with the same power and authority as the [FTC] has under the Fair Debt Collection Practices Act [FDCPA].” The Dodd-Frank Act amended the FDCPA in 2010 to provide that violations may be enforced “in the same manner as if the violation had been a violation of a Federal Trade Commission trade regulation rule.” Notably, the GAO as recently as February 2019 issued a report noting that the “FTC does not have civil penalty authority for violations of requirements under the Gramm-Leach-Bliley Act (GLBA).”

The limits of this theory are likely to be tested in litigation, but it’s clear that the FTC continues to make good on its promise to push for creative monetary solutions in the wake of the AMG decision. Yesterday's action follows last week’s new use of the Restore Online Shoppers’ Confidence Act (ROSCA) to obtain civil penalties for alleged misrepresentations unrelated to negative option offers themselves, as we covered here.

Expanding Coverage of the Business Opportunity Rule

Within an hour of announcing the amended complaint against RCG seeking civil penalties, the FTC also signaled that it would seek to expand another civil penalty authority by altering the coverage of the Business Opportunity Rule. Published in 2011, the Business Opportunity Rule requires sellers of “business opportunities” to provide certain earnings disclosure documents in writing and prohibits specified misrepresentations related to earnings potential.

In the rulemaking record, the FTC considered and deliberately excluded MLMs from coverage on the grounds that “the varied and complex structure of MLMs makes it exceedingly difficult to make an accurate earnings disclosure and likely would require different disclosures for different levels of participation in the company.” In yesterday’s announcement, Commissioner Chopra issued a statement signaling that he supports reversing that decision and revising the Rule to cover MLMs and potentially others in what he refers to as the "gig economy," which would in turn open up the FTC's civil penalty authority for income misrepresentations by those entities.

With Chopra likely to depart the Commission soon to head the CFPB, the question is whether other commissioners, including now confirmed Commissioner Lina Khan, will take up the cause.

If you thought otherwise, you have not been paying attention. We have been told to expect more Section 19 cases, stepped-up rulemaking, collaboration with State Attorneys General, the dusting-off of the FTC’s Penalty Offense Authority, and reliance on other statutes enforced by the FTC that provide for civil penalties up to $43,280 per violation.

This week, with the announcement of the MoviePass settlement, the FTC made good on its word. In its complaint, the FTC alleged that MoviePass “violated the Restore Online Shoppers’ Confidence Act (ROSCA) [which] requires that firms be truthful with consumers when marketing negative option services—such as subscriptions—over the Internet.”

Republican Commissioner Christine Wilson agreed with her Democratic counterparts. In her concurring opinion, she conceded that post-AMG, “the temptation to test the limits of our remaining sources of authority is likely to be strong.” Nevertheless, she supported the Commission’s action, while acknowledging that the settlement is the first time the Commission alleged a violation of ROSCA when the “undisclosed material terms do not relate specifically to the negative option feature but, instead, to the underlying good or service marketed through the feature.” In her view, MoviePass’s conduct is consistent with congressional intent. She further noted:

Given the inaugural use of ROSCA for this purpose, it is appropriate that the Commission is foregoing civil penalties. Businesses need predictability about the manner in which laws will be enforced and should be afforded the ability to contest new uses of authority. This case will serve as notice to the market, and future violations of this type may warrant civil penalties.

In his conclusion, Commissioner Phillips recognized that the Commission’s decision to apply ROSCA broadly and expand its reach “comes just weeks after the Supreme Court’s decision in AMG” but he does not believe that the FTC’s “loss of authority under one statute somehow creates authority elsewhere.”

Back in January, during oral argument in AMG, Justice Kavanaugh touched on the temptation to interpret statutes broadly to achieve an end:

I worked in the Executive Branch for many years, so I understand how this happens. When you are in the Executive Branch or an independent agency, you want to do good things and prevent or punish bad things, and sometimes your statutory authority is borderline. And it could be war policy or immigration or environmental or what have you, but with good intentions the agency pushes the envelope and stretches the statutory language to do the good or prevent the bad. The problem is this results in a transfer of power from Congress to the Executive Branch to decide whether to exercise this new authority. That’s a particular concern, at least for me, with independent agencies. So – and why isn’t the answer here for the agency to seek this new authority from Congress for us to maintain the principle [of] separation of powers . . . ?

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As we’ve described previously, H.R. 2668, the Consumer Protection and Recovery Act, authored by Representative Tony Cárdenas (D-CA), would explicitly authorize the FTC to seek permanent injunctions and other equitable relief, including restitution and disgorgement, to redress perceived consumer injury. The subcommittee reported H.R. 2668 largely unchanged, save for a substitute amendment from Representative Cárdenas making minor changes to the bill. At the outset, subcommittee Democrats defeated two Republican motions to postpone consideration of the bill. Democrats subsequently voted down two Republican amendments: one delaying enactment of the bill until the FTC certifies that a 2003 policy statement on disgorgement in competition cases is more broadly applicable; and one prohibiting the Commission from seeking disgorgement unless it has conducted an economic analysis. Republicans also “offered and withdrew” an amendment to reduce the legislation’s proposed statute of limitations from 10 to five years.

Beyond 13(b)-specific guardrails, Republicans – including Subcommittee Ranking Member Gus Bilirakis (R-FL) – voiced their intent to address the agency’s 13(b) authority as part of a more holistic FTC policy revamp, including the establishment of a national privacy framework. To that end, another handful of Republican amendments – many dealing with FTC authorities beyond 13(b) – were offered and withdrawn.

Whether Rep. Cárdenas and his Democratic colleagues can assuage Republican concerns and arrive at a bipartisan solution remains to be seen. Notably, the bill must still be approved by the full Energy and Commerce Committee before receiving a vote in the House. And, as we’ve reported, the Senate is working on a legislative framework of its own, meaning the two versions may need to be reconciled prior to enactment. While Energy and Commerce Democrats and FTC Acting Chair Rebecca Slaughter continue to stress the urgency of the situation, a new law clarifying 13(b) is – at best – likely months away. Today, it’s still just a bill sitting here on Capitol Hill.

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Subscribe here to Kelley Drye’s Ad Law Access blog and here for our Ad Law News and Views newsletter. Visit the Advertising and Privacy Law Resource Center for update information on key legal topics relevant to advertising and marketing, privacy, data security, and consumer product safety and labeling.

Kelley Drye attorneys and industry experts provide timely insights on legal and regulatory issues that impact your business. Our thought leaders keep you updated through advisories and articles, blogs, newsletters, podcasts and resource centers. Sign up here to receive our email communications tailored to your interests.

Follow us on LinkedIn and Twitter for the latest updates.