Acting Chair Rebecca Slaughter and Chamber of Commerce Spar Over a New 13(b)

Kelley Drye & Warren LLP
Contact

Recently, the U.S. Chamber of Commerce published a letter to the Committee on Commerce, Science, and Transportation, the Congressional Committee currently working on draft language for a new Section 13(b) of the FTC Act. The Chamber’s letter cautions Congress to ensure that any new statutory language not give the FTC too much authority, effectively providing more than what the Supreme Court took away last month.

The Chamber’s letter noted that the legislative history of the FTC Act requires the Commission to use Section 19’s administrative processes to obtain monetary relief for past violations. There is no reason that Congress should provide the FTC with additional powers, according to the Chamber, when the FTC already has an avenue to seek monetary relief.

The Chamber’s argument here largely mimics the position of Justice Breyer, who authored the AMG decision from a unanimous Court, concluding that the current version of 13(b) does not allow monetary relief. In AMG, Justice Breyer explained that “[t]he Commission may obtain monetary relief by first invoking its administrative procedures and then § 19’s redress provisions (which include limitations) . . . By contrast, the Commission’s broad reading would allow it to use §13(b) as a substitute for §5 and §19.”

The Chamber’s letter urged Congress not to upset the fine balance the FTC Act originally envisioned. While the Chamber agreed that the FTC should be able to go immediately to Court “to seek appropriate equitable monetary relief for clearly fraudulent cases that are found to be in violation of the law,” it explained that “[m]onetary relief should not be available for every consumer protection violation but should be reserved for the most egregious types of cases.”

Last week, FTC Acting Chairwoman Rebecca Slaughter responded with a letter of her own. The Acting Chairwoman presented her view that “the Chamber’s position is based on a fundamental misunderstanding of the history and function of Section 13(b).” In order to prove her point, Acting Chair Slaughter restates arguments the AMG Court rejected four weeks ago.

The letter argued that “Congress never intended” to limit the statute to its plain language, and that Congress should therefore broaden that plain language now. But FTC counsel made the exact same argument to the Supreme Court in AMG, and the Court addressed and rejected it. See AMG, at 13 (“The Commission first points to amendments that Congress made to the Act in 1994. Those two amendments, however, simply revised §13(b)’s venue, joinder, and service rules, not its remedial provisions. They tell us nothing about the words ‘permanent injunction’ in §13(b).”).

The letter also asserted that a new Section 13(b) should allow the FTC to pursue monetary remedies for past action, stating, “[a]s the Chamber would have it, the Commission should be powerless to do anything if the defendant stopped making sales before the Commission sued.” Of course, this argument ignores the FTC’s authority under Section 19; an absence made all the more noticeable, as the Chamber’s letter focused on the FTC’s ongoing “statutory authority under Section 19.”

It is hoped that Congress will carefully consider whether Section 19 can be an appropriate alternative in certain types of cases, and look critically at all the talk about how AMG is a victory for scammers at the expense of consumers.  While this may be true in some cases, it is not true in cases that do not involve scammers — where there is a legitimate, good faith disagreement whether a claim has been properly substantiated or a material limitation clearly and conspicuously disclosed.  How can we truly know whether cases such as these can be effectively litigated administratively, as Congress intended and the Supreme Court affirmed in its decision, until we try?

Yes, there are concerns about the Section 19 process.  Timing, for one.  But the Commission has taken steps to speed up its administrative litigation, and it is not likely that the glacial pace of a case like Figgie would be repeated.  And while the FTC is correct that there is not a whole lot of law that would explain what exactly is “dishonest or fraudulent” conduct, the dearth of cases presents an opportunity to flesh out exactly what is meant by this standard.  In any event, it feels   questionable to complain about the lack of cases when the Agency has largely chosen to ignore administrative litigation in consumer protection cases over the past 40 years.  To paraphrase Ruby Thewes in Cold Mountain, you can’t bring the clouds and complain about the rain.

The weeks ahead will determine whether the Acting Chair’s or the Chamber’s position will hold, and it will be up to Congress to act (or not to act). Congress will have to decide whether the FTC should be able to use Section 13(b) to pursue “monetary and injunctive relief for all violations, whether past, ongoing, or imminent,” as the Acting Chair would have it, or whether, as the Chamber envisions, the monetary power of 13(b) should extend only to “clearly fraudulent cases that are found to be in violation of the law.”

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Kelley Drye & Warren LLP | Attorney Advertising

Written by:

Kelley Drye & Warren LLP
Contact
more
less

Kelley Drye & Warren LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.