The opinion of the Eleventh Circuit last month in FTC c. On Point Capital Partners LLC, et al., clarifies the ramifications of the Supreme Court ruling in AMG capital management regarding the prohibition of equitable monetary relief under Section 13 (b) of the Federal Trade Commission Act (âFTCAâ).
Section 13 (b) of the FTCA authorizes the Federal Trade Commission to obtain a preliminary injunction and, in appropriate cases, a permanent injunction in federal court against any person, partnership or company that the Commission considers to be violating, or is about. the point of violating, any provision of the law applied by the Commission.
But first, the Supreme Court decision in April 2021.. .
On April 22, 2021, the Supreme Court ruled on AMG that the power to obtain an injunction under section 13 (b) does not include the right to obtain equitable monetary relief, such as restitution or restitution. The Court described several considerations in support of this exclusion.
First, the Court noted that an âinjunctionâ is generally not the same as an award of equitable pecuniary relief.
Second, the wording and structure of the law provides for prospective relief, not retrospective relief, and specifically relief to prevent apparently unfair practices from taking place while the Commission determines their legality.
Third, other articles of the FTCA provide for conditional and limited monetary relief. Section 5 (l) authorizes district courts to impose civil penalties on defendants who violate the Commission’s final cease and desist orders, and to “grant binding injunctions and other equitable remedies they deem appropriate in the enforcement of such final orders of the Commission. “Section 19 authorizes district courts to grant” such remedies as the court deems necessary to redress the harm caused to consumers “, including through the” reimbursement of the ‘money or restitution of property’, but only when the Commission begins its Section 5 process within three years of the underlying violation and seeks monetary redress within one year of any cease and desist order. As such, the Supreme Court ruled that it was “highly unlikely” that Congress had enacted Article 13 (b) to allow procedural circumvention. The traditional administrative provisions of Article 5 or for the same monetary relief without the conditions and limitations found elsewhere in the law.
As a result, courts cannot award fair monetary relief, such as restitution or restitution, under Article 13 (b).
Now back to the recent Eleventh Circuit decision. . .
In this context, the Eleventh Circuit considered a preliminary injunction previously imposed in 2020, which ordered an asset freeze, receivership and injunction against appellants making substantial false statements about their services or disclosing material. consumer information obtained through their services.
The appellate court overturned the part of the order freezing the appellants’ assets and placing them in receivership, finding that such relief is not available under Article 13 (b) because it is not available. no longer necessary to preserve resources for a future pecuniary judgment under this provision. The Eleventh Circuit, however, made it clear that its advice is limited to the case on appeal and should not be construed as a comment or legal effect on an asset freeze order in another case (FTC v Acquinity Interactive, LLC, case no. 14-60166) with several of the same parties or their affiliates because this matter was not properly before the court.
In addition, the Eleventh Circuit announced the adoption of the Lanier Law test to determine if a joint venture exits under the FTCA for shares of legal persons. In an unpublished notice from 2017, FTC c. Lanier Law, LLC, 715 F. App’x 970, the Eleventh Circuit had held a legal person may be responsible for the actions of other companies in a commercial enterprise when “the structure, organization and model of a commercial enterprise reveal a joint enterprise or a maze of integrated business entities. Lanier Law, 715 F. App’x at 979-80. Factors to consider include whether businesses were operating under common control, shared office and employee spaces, mixed funds, and coordinated advertising. Identifier. to 980. This test was previously adopted by the Sixth Circuit and will now officially apply to the Eleventh Circuit.
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The About Capital partners The opinion not only provides important substantive guidance, but also procedural parameters for litigants in the FTCA landscape.