Supreme Court Eliminates Federal Trade Commission Ability to Scorched Earth Prosecutions…For Now…

The U.S. Supreme Court on Thursday essentially gutted the Federal Trade Commission's power to seek federal court orders seizing all assets of a company or individual prior to a full administrative trial. Not only has it eliminated the threat of immediate seizure, the Supreme Court stripped away the Commissions power to seek federal court orders forcing payment of restitution at all unless or until the FTC undertook its own administrative proceeding under Section 5, which sets out a process to adjudicate its claim before an in house administrative law judge. Clearly an additional unwanted burden by the Commission. The unanimous opinion was written by Justice Stephen G. Breyer, and made clear that Congress never intended for the FTC to wield the authority to collect restitution or disgorgement of ill-gotten gains as an equitable relief power under the Federal Trade Commission Act's Section 13(b), which was added to the statute by amendment in the 1970’s and gave the agency authority to ask district courts for injunctions against illegal conduct. Such authority only granted the Commission the ability to seek a permanent injunction to stop the claimed illegal conduct. A remedy that would not be granted if the defendant voluntarily stopped the practice claimed to have been illegal.