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''AMG Capital Management, LLC v. Federal Trade Commission'', 593 U.S. ___ (2021), was a
U.S. Supreme Court The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that turn on question ...
case dealing with the ability of the
Federal Trade Commission The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) United States antitrust law, antitrust law and the promotion of consumer protection. It ...
(FTC) to seek monetary relief for
restitution Restitution and unjust enrichment is the field of law relating to gains-based recovery. In contrast with damages (the law of compensation), restitution is a claim or remedy requiring a defendant to give up benefits wrongfully obtained. Liability ...
or disgorgement from those that it found in violation of trade practices. The Court ruled unanimously that the FTC had misused its authority granted by the
Federal Trade Commission Act The Federal Trade Commission Act of 1914 is a United States federal law which established the Federal Trade Commission. The Act was signed into law by US President Woodrow Wilson in 1914 and outlaws unfair methods of competition and unfair acts ...
under Section 13(b) to obtain monetary relief.


Background

Scott Tucker ran several
payday loan A payday loan (also called a payday advance, salary loan, payroll loan, small dollar loan, short term, or cash advance loan) is a short-term unsecured loan, often characterized by high interest rates. These loans are typically designed to cover ...
service companies under several different names (including AMG Capital Management) over a fifteen-year period. The companies drew consumer complaints for charging excessively-high interest rates on the loans, with those using their services paying nearly triple what they had taken as a loan, charged through undisclosed fees. The
Federal Trade Commission The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) United States antitrust law, antitrust law and the promotion of consumer protection. It ...
filed a formal civil suit against Tucker's companies in 2012 that asserted that the companies were deceiving consumers, and it sought to recover money that consumers had lost to those practices. Separately, Tucker was also criminally charged under
RICO The Racketeer Influenced and Corrupt Organizations (RICO) Act is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. RICO was ...
and TILA statutes. He was estimated to have cost over to over 4.5 million consumers and was convicted on 17 counts in October 2017. The civil case against Tucker's businesses was heard in the District Court of Nevada by Judge Gloria Navarro. Judge Navarro ruled in October 2016 against Tucker's businesses, granting the (equivalent to $ billion in ) in fees that the FTC had sought in monetary relief for consumers that were harmed by the businesses' practices. The ruling also barred Tucker from engaging in any further consumer lending. Legal counsel for Tucker appealed the decision to the Ninth Circuit. In additional to challenging the legality of the lending practices, the counsel also questioned the authority of the FTC to seek monetary damages for restitution under their charter, the
Federal Trade Commission Act The Federal Trade Commission Act of 1914 is a United States federal law which established the Federal Trade Commission. The Act was signed into law by US President Woodrow Wilson in 1914 and outlaws unfair methods of competition and unfair acts ...
(FTC Act). Tucker's counsel referred to (also known as Section 13(b) of the FTC Act), which grants the ability to seek injunctive relief in court against those found violating trade practices, a measure added by 1973 amendment to the FTC Act. Tucker's counsel questioned if the amendment was intended to include seeking equitable relief for restitution or disgorgement. The FTC had presumed ยง13(b) provided that allowance and heavily used the amended language since its introduction to seek monetary relief for consumers that were financially impacted by those the agency had found in violation of fair trade practices. The practice had been backed by prior case laws at lower courts, including ''FTC v. Cephalon, Inc.'' and ''FTC v. Mylan Labs., Inc.''. The three-judge panel ruled unanimously to uphold the District Court's ruling, rejecting the counsel's argument about the legality of their lending practices and asserting that the FTC had the authority to seek monetary relief under the FTC Act.


Supreme Court

Tucker's counsel petitioned the Supreme Court to hear the case against the FTC, specifically on the question of whether Section 13(b) of the FTC Act allows for the FTC to seek monetary relief. The Ninth Circuit's decision was in alignment with most other circuit courts and numerous FTC cases before, but Tucker's counsel had found that the
Seventh Circuit The United States Court of Appeals for the Seventh Circuit (in case citations, 7th Cir.) is the U.S. federal court with appellate jurisdiction over the courts in the following districts: * Central District of Illinois * Northern District of Ill ...
had ruled in the 2019 case ''FTC v. Credit Bureau Center'' that Section 13(b) does not give the FTC that authority, which created a circuit split. The Supreme Court granted certiorari to the case in July 2020. Oral arguments were heard on January 13, 2021. Court observers stated that the Justices appeared to be concerned that ruling in favor of Tucker although an appropriate
textualist Textualism is a formalist theory in which the interpretation of the law is based exclusively on the ordinary meaning of the legal text, where no consideration is given to non-textual sources, such as intention of the law when passed, th ...
interpretation of the FTC Act would upend decades of precedent set by the courts. The Supreme Court issued its decision on April 22, 2021. In a unanimous decision authored by Justice
Stephen Breyer Stephen Gerald Breyer ( ; born August 15, 1938) is an American lawyer and retired jurist who served as an associate justice of the U.S. Supreme Court from 1994 until his retirement in 2022. He was nominated by President Bill Clinton, and r ...
, the Court found that the FTC did not have the authority under Section 13(b) of the FTC Act to seek equitable monetary relief, overturned the lower court decisions, and remanded the case for review. Breyer wrote that the FTC could engage in other processes to seek monetary relief for consumers, or "it is, of course, free to ask Congress to grant it further remedial authority."


Reaction to decision

The ''
National Law Review ''The National Law Review'' is an American law journal, daily legal news website and legal analysis content-aggregating database. In 2020 and 2021, ''The National Law Review'' published over 20,000 legal news articles and experienced an uptick ...
'' said that the decision will curtail the FTC's powers to seek
restitution Restitution and unjust enrichment is the field of law relating to gains-based recovery. In contrast with damages (the law of compensation), restitution is a claim or remedy requiring a defendant to give up benefits wrongfully obtained. Liability ...
in court. Acting FTC Chair Rebecca Slaughter said that the Supreme Court had "ruled in favor of scam artists" and called on Congress to strengthen the FTC's powers. Senate Commerce Committee Chair Maria Cantwell also called for new legislation in the wake of the decision.


References


External links

* {{caselaw source , case = ''AMG Capital Management, LLC v. FTC'', {{ussc, 593, ___, 2021, el=no , googlescholar = https://scholar.google.com/scholar_case?case=4368175431588697072 , justia = https://supreme.justia.com/cases/federal/us/593/19-508/ , oyez = https://www.oyez.org/cases/2020/19-508 , other_source1 = Supreme Court (slip opinion) , other_url1 = https://www.supremecourt.gov/opinions/20pdf/19-508_l6gn.pdf 2021 in United States case law United States Supreme Court cases United States Supreme Court cases of the Roberts Court