Supreme Court References Plain Language of FTC Act Section 13(b) During Oral Argument

As previously blogged about here, here and here, the FTC’s remedial authority is under attack.

Recently, the Supreme Court has heard long-awaited oral arguments in the AMG Capital Management, LLC v. Federal Trade Commission matter.  The issue in AMG is whether the FTC is statutorily entitled to use Section 13(b) of the FTC Act to obtain monetary remedies in federal court.

In AMG, the FTC sued the defendants under Section 13(b) of the Act.  Ultimately, the court awarded $1B in “equitable monetary relief.”  The case was appealed, the legal argument being that Section 13(b) permits equitable, injunctive relief, not monetary relief in federal court.  The Ninth Circuit affirmed.  AMG’s petitioned the Supreme Court.  The petition was granted.

As anticipated, the FTC argued that legislative intent was that the FTC possesses the ability to seek and obtain broad “equitable monetary relief” in federal court along with equitable, injunctive relief.  As anticipated, counsel for AMG argued that the “way we determine Congress’s intent is by looking at the words on the page.

The Justices balanced concerns about providing defendants with a windfall of ill-gotten gains with a narrow interpretation of the plain statutory text against Sections 19 and 5(l) of the FTC Act which provide the Agency with remedial alternatives.

Perhaps most telling are comments made by Justice Kavanaugh, who stated that “it seems the problem you have is the text.”

While the result is impossible to predict, that comment might cause the FTC some concern.  As might him asking “Why isn’t the answer here for the Agency to seek this new authority from Congress for us to maintain a principle of separation of powers?”  Relief for the FTC may ultimately have to take the form of a legislative fix.

Richard B. Newman is an FTC advertising practices attorney at Hinch Newman LLP. 

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