Fallout from AMG Ruling – One Year Later

Last week marked one year since the Supreme Court’s ruling in AMG Capital Management, LLC v. FTC, in April of 2022, limiting the FTC’s ability to seek monetary relief for restitution or disgorgement. Specifically, the Court held that the FTC was misusing its authority to obtain monetary relief under Section 13(b), a practice that had gone on for decades.

The FTC has adapted. While the AMG ruling stopped monetary relief under 13(b) it is still a means of obtaining injunctive relief and the FTC and other federal and state authorities have other means of seeking monetary relief and imposing monetary penalties. For example, Section 19 clearly allows monetary remedies, it just provides some additional hoops. And the CFPB statutes clearly allow for monetary relief as well.

Further, importantly, states have similar legislation for remedying unfair and deceptive acts and practices (UDAPs), many of which allow for monetary enforcement. And the FTC often partners with state AGs to go after what it considers bad actors. And states’ AGs have jurisdiction and authority for what is known as concurrent enforcement to prosecute federal legislation against entities and individuals in their states. The reasoning behind this is to assist resources constrained federal agencies.

There are several critical issues to be aware of with respect to concurrent enforcement. One is that state AGs don’t necessarily use the ability to enforce federal legislation as often as was contemplated by Congress when the ability was put into law. There are several theories for why this is the case. State AGs are more familiar and comfortable with similar states-level legislation, which they often authored. strained resources and large dockets of state AGs, causing them to prioritize state matters. When use of federal courts is a necessary component of prosecuting federal laws it can be a deterrent to the state AGs because they are more comfortable in state courts. And, finally, some of the federal regulations require the states’ AGs to get federal authorization before enforcing, often a deterrent.

Another complication and consideration when facing or potentially facing concurrent enforcement is that the state-level enforcement may have a different focus when it comes to the enforcement and investigation than the federal-level authority. There can therefore be inconsistent requests for information as well as inconsistent and/or competing timelines. So it is important to plan internal investigations with that in mind. It is equally important to have that in mind when approaching settlement discussions. Inconsistent and competing terms and requirements can potentially create an existential threat to ongoing operations and functionality. It might be helpful to seek a master settlement in those circumstances.

Concurrent enforcement can also create unusual results and challenges due to the autonomy of the state AGs and the FTC. For example, in the Equifax matter from 2019, the FTC teamed with several state AGs for a nearly universal enforcement, except that Indiana and Massachusetts declined to join with both reaching separate settlements totaling nearly $40 million combined. And state AGs often collaborate via coalitions. This was done for data breaches against Target (2013 data breach) and Home Depot (2014 data breach) in 2017 and 2020, respectively, without the involvement of the FTC. More recent FTC-involved enforcements are Prevagen and Napoleon Auto, both of which the FTC appears to be teaming up with states’ AGs due to the AMG ruling.

About the Author

Bradley Crosley is a seasoned attorney with a successful background of guiding clients through a wide array of transactional and courtroom challenges. In addition to litigating countless subject matters, including electronic payment processing and complex business disputes, Brad has served as general counsel for a nationally operating corporation in complex real estate financing and development projects including public private partnerships and infrastructure development ventures. These experiences allow him to see matters from the perspective of the client and create pragmatic solutions and strategies that are custom suited to the wants and needs of the individual client. Brad serves our clients in planning, compliance and transactions, as well as advocating on their behalf in litigated matters.