In AMG Capital Management LLC v. FTC, No. 19-508, the Supreme Court is reviewing the FTC’s practice, under Section 13(b) of the Federal Trade Commission Act, (FTCA) of seeking monetary awards styled “equitable restitution” by co-opting the power of a court sitting in equity to garner monetary judgments, a power not conferred on the FTC by Congress.
The question before the Court is,
Whether § 13(b) of the Act, by authorizing “injunction[s],” also authorizes the Commission to demand monetary relief such as restitution — and if so, the scope of the limits or requirements for such relief.
This question implicates not only the scope of enforcement action under Section 13(b), but also the separation of powers, the inherent power of courts sitting in equity, philosophies of statutory interpretation, and whether the Supreme Court should defer to lower court decisions in cases where the scope of agency power has taken decades to reach the Supreme Court.
Oral argument in the case took place on January 13. Petitioners’ argument was based on the plain text and structure of the FTCA and highlighted the fact that Section13(b)’s provision for injunctions addresses only ongoing or future harms. Other sections of the Act expressly allow for other forms of relief. For example, Section 19 allows for monetary awards and provides procedural safeguards such as a statute of limitations, a heightened proof requirement, a scienter requirement, and notice to victims. By contrast, the FTC’s argument was based largely on the assertion that Section 13(b) was enacted against a background understanding that a court sitting in equity has broad powers to grant equitable relief, so Section 13(b) should be read relative the courts’ known powers and not limited to power granted to the commission in the statute.
The Justices’ questions to the petitioner focused largely on historical context, including the FTC’s longstanding practice of seeking to develop precedent granting monetary awards, the historical understanding of courts of equity, and the evolution in the Court’s philosophy of statutory interpretation away from divining congressional intent in favor of a more “disciplined” approach based on the text of the statute. There was also the practical question of what happens to all the money the FTC has collected if the Court rules that the FTC was not authorized to seek the money in the first place. The questioning was largely practical — relating to where the lines of equity should be drawn in cases such as this one and whether it would be necessary to overrule the WWII-era case, Porter v. Warner Holding Co., that has been used by both the FTC and the SEC to persuade courts to let them pursue monetary awards in the name of equity.
The contours of Porter are relevant because the FTC’s argument relied heavily on Porter’s reasoning that the court’s general equitable power to grant “complete relief” allows it to grant monetary awards even where, as here, the statute only provides for injunctions. This subtle point was the FTC’s response to the Court’s questions about the text and structure of the FTCA, which indisputably does not grant any form of relief under Section 13(b) except injunctive relief. Thus, under the FTC’s theory, the road to monetary awards does not run through the authority granted to the FTC by Congress, but rather through the power of the courts to grant, if they will, requests for monetary awards by the commission.
Last term, the Court decided a similar question in Liu v. SEC, regarding the SEC’s authority to seek monetary awards under a statute that provides for “any equitable relief that may be appropriate or necessary.” In that case, the Court held that the SEC could seek and be granted the limited equitable remedy of disgorgement. From a textual standpoint, AMG’s case against the FTC is stronger and more straightforward than that of the appellant in Liu because, where the SEC could point to statutory authority to seek “appropriate or necessary” equitable relief, and the statute at issue in Porter also authorized courts to grant additional relief, Section 13(b) includes no such authority. Thus, unlike in Liu, AMG does not turn on the definition of any specific equitable remedy but rather on the fact that the FTCA does not authorize the FTC to pursue any monetary award under Section13(b).
Agencies are creatures of statute and have only those powers Congress conferred on them. By allowing for billions of dollars in monetary awards beyond what Congress authorized, courts risk blurring the separation of powers and assisting enterprising agencies in expanding their authority. AMG provides an opportunity for the Court to apply the statute as written, curtail agency overreach, and uphold separation of powers.