On Wednesday, January 13, the Supreme Court heard arguments in AMG Capital Management LLC v. Federal Trade Commission.  This case raises the question whether the Federal Trade Commission (FTC) has been properly using Section 13(b) of the FTC Act, the provision authorizing requests for preliminary and permanent injunctions where the FTC believes the defendant “is violating, or is about to violate, any provision of law enforced by the Federal Trade Commission,” to obtain monetary relief such as disgorgement or restitution.  Covington submitted an amicus brief supporting AMG’s challenge to the FTC’s use of Section 13(b).

Although predicting the outcome of any case from the oral argument is notoriously tricky, a majority of Justices appear to have serious questions about the FTC’s interpretation of the statute.  In particular, a number of Justices observed that the FTC’s readiness to resort to the relatively quick Section 13(b) route to a broad remedy award renders “irrelevant” or “superfluous” the specific limitations built into other sections of the statute that expressly deal with monetary recovery, in particular Sections 5(l) and 19.  Justices also raised concerns about the use of Section 13(b) in cases in which the theory of liability may not have been clearly articulated in advance by the agency, and whether the FTC’s interpretation of the statute raises separation of powers issues for independent agencies.

A decision will be issued by June of this year.  In the meantime, efforts have already been launched in Congress to amend the statute to address the issues raised in this litigation.

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Photo of John Graubert John Graubert

John Graubert has more than 30 years of experience in a wide range of complex antitrust and consumer law matters. Mr. Graubert came to the firm after serving for ten years as Principal Deputy General Counsel of the Federal Trade Commission. Mr. Graubert…

John Graubert has more than 30 years of experience in a wide range of complex antitrust and consumer law matters. Mr. Graubert came to the firm after serving for ten years as Principal Deputy General Counsel of the Federal Trade Commission. Mr. Graubert is chair of the firm’s Advertising and Consumer Protection practice group, an Adjunct Professor at the Georgetown University Law Center, and a vice-chair of the Federal Civil Enforcement Committee of the ABA Antitrust Section.

Photo of Laura Kim Laura Kim

Laura Kim draws upon her experience in senior positions at the Federal Trade Commission to advise clients across industries on complex advertising, privacy, and data security matters. She provides practical compliance advice and represents clients in FTC and State AG investigations. Ms. Kim…

Laura Kim draws upon her experience in senior positions at the Federal Trade Commission to advise clients across industries on complex advertising, privacy, and data security matters. She provides practical compliance advice and represents clients in FTC and State AG investigations. Ms. Kim advises on a wide range of consumer protection issues, including green claims, influencers, native advertising, claim substantiation, Made in USA claims, children’s privacy, subscription auto-renewal marketing, and other digital advertising matters. In addition, Ms. Kim actively practices before the NAD, including recent successful resolution of matters for both challengers and advertisers. She co-chairs Covington’s Advertising and Consumer Protection Practice Group and participates in the firm’s Internet of Things Initiative.

Ms. Kim re-joined Covington after a twelve-year tenure at the FTC, where she served as Assistant Director in two divisions of the Bureau of Consumer Protection, as well as Chief of Staff in the Bureau of Consumer Protection and Attorney Advisor to former Chairman William E. Kovacic. She worked on key FTC Rules and Guides such as the Green Guides, Jewelry Guides, and the Telemarketing Sales Rule. She supervised these and other rule making proceedings and oversaw dozens of the Commission’s investigations and enforcement actions involving compliance with these rules. Ms. Kim also supervised compliance monitoring for companies under federal court or Commission order.

Ms. Kim also served as Deputy Chief Enforcement Officer at the U.S. Department of Education, where she helped establish a new Enforcement Office within Federal Student Aid. In this role, she managed investigations of higher education institutions and oversaw issuance of fines and adverse actions for institutions in violation of federal student aid regulations. Ms. Kim also supervised the borrower defense to repayment division and the Clery campus safety and security division.