Deep Dive Episode 158 – Courthouse Steps Oral Arguments: AMG Capital Management v. FTC

On January 13, the Supreme Court heard oral arguments in AMG Capital Management v. FTC, a case that could define the scope of the FTC’s remedial authority and explore the limits of textualism. The FTC Act authorizes the Commission to seek a “permanent injunction” in federal court to stop “unfair methods of competition” and “unfair or deceptive acts or practices.” For many years, the FTC and most courts have interpreted “permanent injunction” to give the FTC the power to require defendants to return money to victims. The Seventh Circuit recently disagreed and held that the term “permanent injunction” does not encompass equitable monetary relief for past misconduct.

To cover the oral arguments, Asheesh Agarwal, Deputy General Counsel at TechFreedom and an alumnus of the FTC, moderated a distinguished panel featuring Alden Abbott, the FTC’s General Counsel, and Corbin Barthold, TechFreedom’s Director of Appellate Litigation.

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Transcript

Although this transcript is largely accurate, in some cases it could be incomplete or inaccurate due to inaudible passages or transcription errors.

[Music]

Nick Marr:  Welcome, everyone, to The Federalist Society’s Teleforum conference call as today, January 13, 2021, we have a Courthouse Steps Oral Argument Teleforum, a panel discussion on AMG Capital Management v. FTC. I’m Nick Marr, Assistant Director of Practice Groups here at The Federalist Society.

 

      As always, please note that all expressions of opinion on today’s call are those of our experts.

 

      I’m just going to introduce our moderator before he introduces the panel and takes off with the discussion. We’re very pleased to be joined this afternoon by Mr. Asheesh Agarwal. He’s Deputy General Counsel at TechFreedom. He recently served as Assistant Director of the Office of Policy Planning at the Federal Trade Commission. And so we’re pleased to be joined by Asheesh. He’ll introduce our panelists, we’ll have a moderated discussions, then we’ll have a portion for audience questions later, so be thinking of those as we go along, have them in mind for when we get to that portion of the call.

 

      With that, thanks very much for being with us, Asheesh. The floor is yours.

 

Asheesh Agarwal:  Thank you, Nick, and thank you to The Federalist Society for hosting this teleforum. Earlier today, the Supreme Court heard oral argument in AMG Capital Management v. FTC, a case that could define the scope of the FTC’s remedial authority and also shed light on how the new Roberts Court will weigh textualism as a value against precedent and consistency in the law.

 

      The FTC Act authorizes the Commission to seek a, quote, “permanent injunction,” close quote, in federal court to stop unfair methods of competition and unfair or deceptive acts or practices. For many years, the FTC and most circuit courts have interpreted permanent injunction to give the FTC the power to require defendants to return money to victims. The Seventh Circuit recently disagreed and held that the term permanent injunction does not encompass equitable monetary relief for past misconduct.

 

      To discuss the case and today’s argument, we’re going by two distinguished panelists. Corbin Barthold is the Director of Appellate Litigation for TechFreedom, which is a think tank that advocates for free market principles in the tech sector. Corbin has also been Senior Litigation Counsel at the Washington Legal Foundation and a partner at Browne George Ross, a litigation boutique in Los Angeles.

 

      Alden Abbott is the General Counsel of the FTC. As the Commission’s chief legal officer, he represents the agency in court and provided legal counsel to the Commission and its bureaus and offices. Prior to rejoining the FTC, Alden served in executive positions at The Heritage Foundation and BlackBerry. He has held a variety of other senior positions in the government at the FTC, Commerce, and the Justice Department. Fun fact: Alden speaks French, Spanish, and Italian, which I didn’t know. I’m going to give a standard FTC disclaimer for Alden, which is that his comments today at this teleforum are his own and not that of the FTC.

 

      As Nick mentioned, I’m your moderator, Asheesh Agarwal, myself an alumnus of the FTC and DOJ and a former colleague of Alden’s. I should note that TechFreedom filed an amicus brief in this case arguing that the FTC currently lacks remedial authority, but that Congress should give it the authority expressly. But notwithstanding my very obvious conflict of interest in this case, Alden has graciously agreed to let me moderate today’s panel, and I thank him for that.

 

      So with that, before we get to today’s argument, let’s frame the discussion a little. Alden, could you tell us how the FTC obtains remedial relief for consumers now? As I understand it, there are two mechanisms under the FTC Act, one via Section 13 and one via Section 19, and there’s also a Section 5(l). Could you talk about the statute for us, please?

 

Hon. Alden Abbott:  Thanks very much, Asheesh. Let me turn right to Section 13, which is the subject of the argument, first. Congress added Section 13(b) of the FTC Act in 1973, and it provided both temporary and permanent injunctive authority. I won’t get to provisions dealing with temporary injunctions, which were really aimed at preventing dissipation of fruits of illegal conduct while an administrative adjudication was pending.

 

      But the Section 13(b) permanent injunction provision added in ’73 addressed the ABA’s generalized concern mentioned in an American Bar Association report about ineffective administrative enforcement by giving the FTC the means to enforce the act directly as an alternative to administrative cease and desist orders which could subsequently be enforced if they violate it. But the statute effective language reads, “The Commission may seek, and after proper proof, the court may issue a permanent injunction,” again, for violations of the FTC Act. And so that’s Section 13 (b).

 

      Now, the permanent injunction created a new judicial enforcement pathway in which the FTC may forego its own adjudicative process and instead seek the aid of the judiciary. Now, Section 5(l), which Asheesh mentioned, had, since decades earlier, authorized civil penalties for the violation of a cease and desist order. In addition to that authority, Congress in 1973 authorized courts in civil penalty cases to impose mandatory injunctions—this is the term they used—and such other and further equitable relief as courts deem appropriate. Again, this is not to be confused with the permanent injunction language of Section 13. This deals with violations of final cease and desist orders by the Commission.

 

      Finally, in 1975, the FTC added the new Section 19 of the FTC Act dealing with consumer redress. Congress added it because the Ninth Circuit had held in the Heater case in 1974 that the Commission could not order consumer redress on its own authority. And the language was if a reasonable person would have known certain conduct was illegal or fraudulent, in such cases, a court could, quote, “grant such relief as the court finds necessary to redress injury to consumers or other persons,” close quote. So the ’75 act also codified the Commission’s authority to promulgate rules defending unfair deceptive acts or practices. That’s beyond the scope of our discussion today.

 

      But significantly, in Section 19 right at the end, Congress said nothing in Section 19, quote, “shall be construed to affect any authority of the Commission under any other provision of law,” close quote. Obviously, Section 13(b), the permanent injunction provision, is another provision of law.

 

      All told, again, we have now two pathways, an administrative pathway under Section 5(l), and Section 19 whereby the Commission can use administrative process to seek consumer relief, and the permanent injunction provision, Section 13(b), where the Commission doesn’t go through the administrative process but goes directly to federal court.

 

Asheesh Agarwal:  Alden, thank you for that overview. Could you tell us a little bit about the underlying facts of this case? The conduct at issue does seem problematic.

 

Hon. Alden Abbott:  Yes. In this case, Scott Tucker ran a deceptive payday lending scheme so egregious that he ultimately went to prison for it. He stole over $1.3 billion from consumers by misrepresenting loan terms. This is, again, payday lending loan terms, and causing borrowers to pay more than seven times the interest they expected to pay, more than seven times.

 

      In this civil case, Tucker and his companies were found to have violated the FTC Act prohibition on deceptive practices and enjoined from further consumer lending in order to pay back the victims. And I’d just mention Tucker’s scam was the court example of the many sorts of scams under which fraudsters operate throughout the economy, which the FTC has been very concerned about in recent years.

 

Asheesh Agarwal:  Thanks, Alden. Corbin, it sounds like the FTC is tackling problematic conduct here. What are the legal concerns with what the FTC is doing?

 

Corbin Barthold:  Thank you, Asheesh, and thank you, Alden. That was such a great setup of the statute. I think the main issue we saw, or the main question that interested the Supreme Court during the oral argument, is why did Congress set up the statute in the way that it did, in the way that Alden described? And to give credit where it’s due, the FTC has good arguments for why it is set up in a way that permanent injunction allows the FTC to get a wider range of remedies besides just what maybe all of us in law school thought of as an injunction, which is some kind of forward-looking remedy that tells you to stop acting in a certain way or to undertake a very discrete act.

 

      They claim that the term permanent injunction unlocks the ancillary jurisdiction of an equity court, which allows it to do what was known as a cleanup doctrine. If you go into equity court during the days of the divided bench and you can justify getting an equitable remedy, the equity court can then also give legal remedies basically to ensure that a litigant doesn’t have to go and file a second case in a law court. And they say that this makes sense as an interpretation precisely because Congress gave them two routes to relief, an administrative route through Section 19 or through Section 5(l), and then a court route through Section 13(b).

 

      There are problems with this, however. As pointed out by AMG during the oral argument, Section 13(b) specifically says that it is triggered only when a defendant is violating or is about to violate the act. And you might actually be able to argue that that only applies to the preliminary and TRO part of the section and not the permanent injunction part, but that didn’t seem to come up at the argument. Justice Alito certainly suggested or raised the problem of why would Congress be okay with you getting this panoply of remedies if somebody is violating the statute, but so long as they’ve wrapped up their nefarious plan, they escape 13(b)? So that’s one problem.

 

      Another problem, as Alden mentioned, 5(l) was passed the same year as 13(b). When it says equitable relief is something that is distinct from an injunction, which the FTC has counterarguments to this, but certainly it suggests that Congress knows how to distinguish between wider equitable relief and an injunction when it wants to. And it didn’t do that in 13(b).

 

      And then, finally, Section 19, you could argue that the FTC has these two separate avenues that both give it money, or you could argue that it’s specifically supposed to get money in 19 and that’s why there are these additional safeguards. It has to promulgate a rule before going to court to get money, or it has to show that the defendant intentionally acted in a way that was dishonest or fraudulent. So it raises the bar. It requires the FTC to put meat on the rather vague terms unfair or deceptive, and it has to do that in order to get money, and it doesn’t have to do that to get an injunction. Those are the signs that AMG is arguing show that 13(b) uses the word injunction to mean what we conventionally think it means.

 

Asheesh Agarwal:  Corbin, what have the lower courts said about this prior to today’s argument?

 

Corbin Barthold:  The lower courts — this case — or sorry, this issue has taken twists and turns. I believe the right number is eight courts of appeal had determined that permanent injunction in 13(b) unlocks the panoply of equitable remedies before anybody really took seriously the position that injunction might have a narrower definition. They relied on a pair of Supreme Court cases called Porter and Mitchell that we’ll probably talk about more. Porter was decided in 1946. And these are the cases that make this point that if you have a word like injunction in a statute, that opens the panoply of equitable remedies.

 

      Over that time as those courts were making those decisions, the Supreme Court shifted the way it interprets statutes to a more textual position. You’ll note the word injunction is not literally the words equitable relief. Certainly, you could write the words equitable relief if you wanted to. You’re making a logical leap to read this unlocking of a jurisdiction into injunction, and I would say today the Supreme Court does not interpret statutes generally in ways like that where they infuse words with this broader meaning.

 

      But Judge O’Scannlain joined by Judge Bea in this case in the Ninth Circuit wrote a special concurrence arguing that the eight courts of appeals that interpreted the statute in a way that was out of step with current Supreme Court thinking on statutory interpretation. They were not joined in the Ninth Circuit, and the Ninth Circuit applied its precedent. But then the Seventh Circuit in an opinion by Judge Sykes adopted this position and became the first court to break with the standard interpretation. And then after this case was accepted by the Supreme Court, Judge Hardiman on the Third Circuit also joined the more textualist school.

 

      The final thing I’ll point out on this is even those courts, the eight who took injunction to unlock more equitable remedies, are not necessarily uniform. Some of those courts have said exactly what the FTC says here, which is that the reason injunction has a broader meaning is because the word unlocks a court’s equitable jurisdiction, which, as I said, the cleanup doctrine, that opens up the way for damages and basically means all relief.

 

      There are other courts, though. The Second Circuit — and this is the way Judge O’Scannlain interpreted the other side as well, that say, well, really, no. It just means traditional equitable remedies, which is, of course, much narrower. And maybe we’ll get into that later. They were looking at the ERISA jurisprudence of the Supreme Court. So those are actually the three different ways that the statute can be interpreted.

 

Asheesh Agarwal:  Well, great. Let’s go ahead and move forward and talk about today’s argument. Alden, I’m going to start with you. It was a very active bench. We had a reference to Scott Tucker in a Netflix documentary from Justice Barrett. What struck you about the argument today?

 

Hon. Alden Abbott:  Well, clearly, it doesn’t make sense. It’s a hot bench because now under a new rule, a justice is given a couple minutes to question each side separately. But I think that certainly there was an interest in the interplay among Sections 5(l) and 19 and Section 13. As was mentioned, Justice Roberts mentioned the new interpretations, but I think it was also a recognition that there is a serious problem here in harm to consumers that arises in these cases. And I don’t want to try and characterize specifically because lots of different things were said by different justices. I think perhaps I will just pause at this point, and we can go on to more specific questions.

 

      I do think that the interplay among the statutes, the meaning of permanent injunction got illuminated, I think, by our counsel, Joel Marcus-Kurn, who explained that. It had been understood for centuries, actually, that the term permanent injunction incorporated implicitly within it other monetary relief. And the fact that you have different language in Section 5(l) — equitable remedies is comparing apples and oranges because 5(l) deals with the offshoot of administrative actions which have been brought by the Commission, and administrative actions are not equitable actions. They are a creature of statute. You have to spell out what kind of after-the-fact relief courts might want to take.

 

      But under 13(b), you go directly to federal court. You have the direct common law non-statutory permanent injunction authority. And to understand that authority, you want to look at the original public meaning as it would have been understood in 1973. And I think the FTC explained that based upon what Justice Story had written, what courts said since the 18th century, and certainly in the 19th century in patent cases and other cases that that had been incorporated the notion of monetary relief, including restitution for past harm.

 

      But we will see what the Court does with it. It’s not my job to predict. I think arguments of all sides were put forth well, and we’ll just have to wait and see.

 

Asheesh Agarwal:  Well, Alden, you put your finger on one of the core issues in the case, the meaning of the phrase permanent injunction.

 

      Now, Corbin, in your opening remarks, you mentioned that it is your understanding, and a common understanding in your view, that injunction means prospective relief. And that’s something that Justice Thomas alluded to in his questioning. Alden just laid out a very historical reading as to why injunction can mean something broader than that. So talk about that difference of opinion a little bit.

 

Corbin Barthold:  Sure. The blurring a little bit, at least in the case law—not on appeal, I don’t think—about you put the word injunction in a statute and you get more remedies, you get a panoply of remedies. Well, why? And one route is to argue that the word injunction itself just inherently, the word injunction means injunction and other remedies. The other argument is the word injunction is a trigger. It’s a signal that the wider ancillary jurisdiction of an equity court has been opened up.

 

      And although the FTC nobly argues for the wider definition of injunction, I don’t quite share Alden’s opinion that that was taken terribly seriously by the justices. I think if you look back at Justice Story, it’s pretty clear that an injunction was an order to refrain from doing something, or at most to return some traceable form of property, and that wider remedies were very much the exception rather than the rule.

 

      But these things are hard to parse out precisely because here we are arguing about the meaning of equity many years after the divided benches ceased to be. So a lot of these cases blur injunction and, say, an accounting. And it’s not entirely clear whether they clearly had in their own mind at the time that they were engaging in the cleanup doctrine, or giving other remedies, or doing complete relief, or whether that’s really what they thought an injunction meant.

 

      One example would be the FTC—I was really impressed with this—they dug up some old intellectual property cases from the 19th century, and one of them deals with the Patent Act of 1819. And it mentions an injunction, and they argue that this is an example of a fully — opening up all those remedies. But it also says that a court can grant injunctions according to the course and principle of courts of equity. So does that open up ancillary jurisdiction? Is that the wider definition of injunctions that the FTC has in its mind? I genuinely am not sure.

 

      But the bottom line for the oral argument—and this is just my impression, to be sure—but I thought the courts took the ancillary jurisdiction doctrine more seriously. I thought that’s what they had in mind, although, frankly, and if I may just open it out to my broader thoughts on the oral argument, a lot of interest was just in do we just leave this dog lie regardless of what injunction should mean? I thought one of the most interesting exchanges in the oral argument was Chief Justice Roberts and Justice Breyer making points about, well, this has been pretty settled for a long time, and should we just let it be rather than do something drastic because we have a very specific injunction?

 

Asheesh Agarwal:  Well, Corbin, what about that? Justice Breyer did make that point that the FTC has been using the statute this way for years supported by the lower courts. Regulated parties have had plenty of notice about this. Corbin, in your brief and TechFreedom’s brief, you acknowledge that the FTC should have this authority. So why not continue with settled expectations and let the FTC do its job?

 

Corbin Barthold:  That’s a great question, and I think that is a very strong argument that Justice Roberts touched on. One of the things I like about the current format having the seriatim questioning, Chief Justice Roberts — and I’m not — part of it’s just that he gets to go first, but he has a great way of just cutting to the core issue right at the outset of an argument. And he just came straight in and said, “We’ve interpreted the statue this way,”—not we, the Supreme Court, but courts—“for 50 years. Why should we not just treat this as settled?”

 

      And Justice Breyer added to that point by noting judges get things wrong, and if we, the Supreme Court, are going to try to fix errors, we’ll be here all day. I think he said, “All the way back to Marbury v. Madison,” he said. And my — basically what that is saying is past something — let’s call this a cascade effect where if one court maybe doesn’t have full information or gets it wrong, and other courts then just follow the leader, you can end up with a bad interpretation that gets universally adopted even though it’s not necessarily the best one.

 

      And it’s almost an invitation to incorporate that into statutory interpretation. I have two thoughts on that. Number one, several of the justices harped — or raised the point that the whole idea is that you have to put meat on the bones of unfair or deceptive conduct. You need to make the FTC define what that means. That’s what Section 19 is for. And if you let them use Section 13(b) to get money, you’re actually short-circuiting the statute in a way that is harmful to defendants. It gets rid of their notice that they’re supposed to be given of what they are not to do.

 

      And then the second thing I would say — and this is not really an argument but just an observation. Justice Roberts and Justice Breyer gave this argument of, well, should we just let the statute mean what it now means because of what people assumed it meant, even if that’s not what it actually says? And then Justice Kagan during the questioning actually took the more textualist line at one point. She questioned both sides and said, “Shouldn’t we fix it? Shouldn’t we fix it and apply the statute as the way it means?”

 

      The devoted fan will note this sounds a lot like what was at issue in Bostock v. Clayton County recently, the case over Title VII and its meaning of the word sex in employment discrimination. And we got a pretty clear answer in that case. Justice Gorsuch wrote, “When the express terms of a statute give us an answer and extratextual consideration suggests another, it’s no contest.” So although I think it’s a really interesting point, I’ll be very curious to see if they adopt it as the ruling, how they deal with Bostock.

 

Asheesh Agarwal:  Alden, I’m sure you’re very sympathetic to the idea of keeping settled expectations in place in this matter. As you comment on what Corbin just said, talk a little bit about why this enforcement authority is important to the FTC and what would happen to the FTC’s ability to seek redress for consumers if it were to lose.

 

Hon. Alden Abbott:  Well, I think that it’s very important because the FTC has admittedly used Section 13(b) a fair number of times in recent years to go after consumer protection frauds. Many matters or cases of fraudulent conduct didn’t have to go to federal court. And this is, I think, a case where the question about full understanding of what violates Section 5, we’re talking about fraud, hardcore fraud, akin on the antitrust side to secret hardcore price fixing. These things cost consumers many, many billions of dollars. And without the permanent injunctive authority, I think there would be consumers — many consumers would be harmed.

 

      As the internet economy, of course,  continues to grow, the volume of scams, fraudulent scams through the internet also grows apace. And the notion that you should take away a form of redress that’s very, very important — and many billions, I should say, have been — there’s a question about what has happened to funds that are being held in escrow. But over recent years many, many billions of dollars of funds have been returned to defrauded consumers, in no small part due to the existence and the interpretation of 13(b).

 

      And free of the Supreme Court, it’s not direct contact, but I mention in Kansas v. Nebraska in 2015, the Court said the court of equity will shape its remedy so as to, quote, “accord full justice,” close quote. And often when you have massive scams of this sort, the only way to get justice is to have a mechanism which makes it easy to obtain restitution for consumers.

 

Asheesh Agarwal:  Alden, I just gave you a softball; now I’m going to give you a fastball. Several justices across the spectrum pointed out that the FTC Act has expressly allowed the Commission to seek equitable relief beyond injunctive relief in other provisions, specifically Sections 5 and 19, as we talked about, but the Commission has to jump through some additional procedural hurdles to get that additional equitable relief.

 

      Alden, this might be AMG’s strongest argument. Why should the Court read Section 13 to include non-injunctive equitable relief, given that it doesn’t expressly provide for that in Section 13, unlike in the other sections?

 

Hon. Alden Abbott:  Right. Well, I’ll just start initially from the point that, as I already mentioned, Section 19 is a savings clause. And that clearly points to the fact that the relief authorized under Section 19 in no way affects or detracts from the relief in other portions of the FTC Act.

 

      But I think more broadly, we’re talking about two different pathways with different costs and benefits. Note that under the Section 19 and Section 5, those provisions allow the Commission to set the record, establish the record, and to apply the law. The Commission does not have those advantages in going to federal court in 13(b). It is going directly to the court. The court may determine based upon that it does not accept the Commission’s version of the facts presented, or it may determine that it is not appropriate to provide an equitable remedy of financial restitution. Indeed, equity courts, district courts all the time may decide not to provide specific relief, and that’s very, very seldom overturned, absent abuse of discretion by courts of appeals.

 

      So the FTC is not — it’s not as if 13(b) is an easy way around the limitations of 19. Section 19, I think, is very useful in more complex cases where difficult facts have to be parsed, and it might be difficult to make a case before the federal court because of the factual complexity. So you develop a record that’s subject to being reviewed on appeal, of course, under due process.

 

      But Section 19 allows the FTC, precisely as I was mentioning earlier, to go after cases where you have manifest fraud on its face and to very quickly — first, some temporary provisions have an asset freeze. But then, more significantly, ensure that consumers are able to get relief so that indirectly, malefactors aren’t able to shift funds and so on despite the asset freeze and so on. So it’s really a powerful weapon, but the court does not have to accept the Commission’s version, and the court is in no way required to grant all the equitable monetary relief the Commission requested. It doesn’t always agree with the full amount.

 

      So I guess I’d just say they are two different methods. They are not precluded mutually inconsistent because Section 19 specifically says all other provisions apply independently. Section 19 had not said that, or it said that Section 19 cabins the ability of the FTC to get permanent injunctions for fraudulent conduct. That would be another thing. But it doesn’t. So I’ll leave it at that.

 

Asheesh Agarwal:  Corbin, do you buy Alden’s valiant efforts to explain away those differences between Section 13 and Section 19, and what do you make of the savings clause in Section 19?

 

Corbin Barthold:  Alden very well put the FTC’s strongest — the thrust of their case, which is that we have these two different avenues. Under Section 19, we get to frame the record and find the facts, which is surely an advantage.

 

      Justice Kagan, I think, put the response best, which is, okay, Congress created two different avenues, but the notion that you get a wide range of remedies in both is immediately open to question when you look at just how much more advantageous 13(b) is than 19. This was Justice Kagan asking this. And it ties into what I was talking about earlier about having to define something as dishonest or fraudulent is one way under 19, or to have already passed a rule. So it’s hoops that the FTC has to jump through to give notice to parties about what they’re not allowed to do.

 

      And you could respond, well, the FTC, really, we’re only dealing with cases of hardcore fraud. And maybe so, maybe not. The idea, though, is that the FTC is saying, “Trust us. We can use 13(b) in a way that was not intended.” The savings clause basically just begs the question. Section 13(b) allows an equitable relief beyond injunctions or it does not. And my reading of the savings clause is that 19 just says whatever exists, exists, and it does not take it away. So if you think that the word injunction in 13(b) means just injunction, you can point to the savings clause just as much as somebody who thinks it has a broader meaning.

 

      I actually just don’t think it helps one side or the other that much. That might explain why it was not brought up. At the very end of the case, what was brought up was the fact that Section 19 has a savings clause and Section 13(b) does not, which would actually be another indication that 19 deals with money and 13 doesn’t.

 

Asheesh Agarwal:  Alden, one of the things that AMG’s counsel brought up repeatedly is the idea that Section 13 lacks a statute of limitations. And this is in the context of talking about how Section 19, when the FTC wants to obtain the restitution or whatever you call it in terms of money damages, there are all these additional hoops that the FTC needs to go to. And in contrast in Section 13, what AMG would say is you don’t have either of the protections, and there’s also no statute of limitations. Is that something that should trouble the Court?

 

Hon. Alden Abbott:  To me, I cannot tell you why Congress decided not to include a statute of limitations, but I don’t think that should create an inference one way or another. The fact is, for example, it might be—and again, I’m just speculating here—that fraudulent activity might not have been concealed or might not be immediately obvious. But that would be speculation. I don’t think that the statute of limitations issue cuts one way or another, and speculating as to why Congress did or did not include that particular language I don’t think really clarifies the statutory analysis.

 

Asheesh Agarwal:  Well, that’s fair enough. One of the things that I really find fascinating about this case is the need to delve into the history of terms like injunction. So the Chief Justice in his opening—and this has been alluded to already—noted that the way that the Supreme Court interprets statutory language has changed over time. And he almost threw some shade on some of his predecessors and said that prior interpretive approaches were more freewheeling, not confined to specific language, and more about getting to congressional intent, whereas today’s approach—and these are all paraphrasing his words—there is a more disciplined approach that is more consistent with the role of the Court and the Constitution.

 

      With that in mind, he suggested that it might, in fact, be relevant if the word injunction as used in the early 1970s was understood by Congress at that time to include more than just prospective relief so that if, in fact, in the early 1970s Congress reasonably would have believed that the term permanent injunction included this other relief, the Court today should adopt that interpretation.

 

      Corbin, let me start with you. What do you make of Justice Roberts’s comments on this question, and what do you think about his specific point about what injunction might have meant 50 years ago?

 

Corbin Barthold:  Well, to start with a word in favor of the FTC, I thought that Alexander v. Sandoval and some of these cases that Roberts was obliquely referring to would play a role in this case. And my view from the oral argument is I’m probably wrong about that. So these cases say that you cannot imply a right of action into a statute anymore. This is something the Court did quite a bit back in the day. There’s a case called the Borak case which was at the height of it in which they implied a remedy into the — or applied a cause of action, I should say, into the Securities and Exchange Commission Act.

 

      The justices, both Justice Kagan and Chief Justice Roberts seemed to think that this case is distinct, that this is not a case of full blown reading right of action into a statute, which they’re not going to do anymore, no matter what. They said in Alexander, “Even though we did that before, we are not going to take one last drink and do that again.” And counsel for AMG brought up that line, and he basically got shot down, saying, well, that’s different, reading in a cause of action out of just whole cloth.

 

      So it does seem that we are now looking at the word injunction as a specific word that triggers something, either just an injunction or more, but we are not in the implied remedy jurisprudence land. And it looks like those cases are actually not going to get AMG where it wants to go. And that’s the segue into the really interesting argument we heard of, well, what was in Congress’s mind and how did they understand that word in 1973? And if their understanding of that word was wackadoodle, whatever, we should follow and find that definition and take it seriously.

 

      I think that’s a really interesting point. And Porter and Mitchell definitely are evidence that injunction, maybe we just need to treat it as this, in my opinion, this kind of gnostic term where you incant injunction and it opens up all these other remedies. But if that’s what it does, that’s what it does.

 

      I’m not sure that’s right, though. I’m not sure that’s how Congress really understood things. One example — apart from just 5(l), which we’ve already talked about, another example I would give is ERISA, and I’ll finally get to the ERISA jurisprudence. So in 1973, Congress passes Section 13(b), and in 1975, it passes Section 19 in the FTC Act. So smack in the middle in 1974, it passes the Employment Retirement Income Security Act. And in Section 502(a)(3) of that statute, Congress said that various people connected to a beneficiary plan can sue the plan to get them to enjoin violations, be enjoined from violating, or to get, quote, “other appropriate equitable relief.”

 

      And so we actually see it throughout the U.S. Code that Congress knows that injunction doesn’t mean equitable relief. That is a separate thing it needs to spell out. And expanding the word injunction actually causes confusion precisely because that doesn’t have  precise meaning. What happened with ERISA is in a case called Mertens, Justice Scalia said, “Well, appropriate equitable relief can’t just mean all relief.” What he basically did was reject the cleanup doctrine that I referred to earlier because really, what are you saying? If it’s all relief, then just say all relief. So equitable relief, he said, must mean traditional equitable relief, typical equitable relief, so things that actually were exclusively allowed in equity courts. And that’s caused all kinds of trouble.

 

      But you kind of have the same issue here. If injunction just means all relief, if it just triggers the cleanup doctrine, it’s a very weird way to go about things. If injunction just opens up a panoply of remedies, you’d think you might spell that out. It actually leads to the very weird anomaly that the term appropriate equitable relief in ERISA actually has a narrower meaning than the word injunction in the FTC Act. Appropriate equitable relief is this narrow — you only get traditional equitable relief, whereas injunction is this broader term that you get full ancillary jurisdiction, which is maybe not dispositive but certainly very strange.

 

Asheesh Agarwal:  Alden, what’s your take on all of that, and also on the Chief’s comments as to how the Court should interpret these statutes where the meaning of a word like injunction may have changed over the last half century?

 

Hon. Alden Abbott:  If one is a textualist, and I may be wrong, my understanding of textualism, and again, I may be entirely wrong, is when you’re looking at a statutory word or two words from an injunction here, you look at the original public understanding or the original public meaning of those words in the context of the statute at the time it was enacted. And it seems to me that that’s the strength of the FTC’s argument.

 

      Look, I’m looking at law dictionaries. I think injunction has been said to be the requirement not to do something or, as an adjunct to that, to do something. But there’s this long history of monetary relief that was understood as the backdrop. And as textualists might say, we don’t know what was exactly in Congress’s mind. If you’re not a legislative history buff, that’s not critical.

 

      What’s critical is, what were the words? And for a non-lawyer, the term permanent injunction probably doesn’t mean a lot. But for judges and lawyers, how do they determine what that means? Well, they look at law dictionaries, but they also look at historical understanding, but also to see if that’s changed. And if you were to look at, say, cases in the 18th century, cases in the 19th century, cases in the mid-20th century, and dictionary definition, well, if all of those suggest that when you use the term permanent injunction, it includes implicitly monetary relief, well then, monetary relief is included, whatever the subjective thoughts or ideas of Congress might or might not have been.

 

      I know this — actually in passing, I think Justice Sotomayor said, “Well, actually, I do believe in legislative history.” And it was noted by the counsel of the FTC and by Sotomayor that there’s not really any discussion about the meaning of that. So I guess my response to that, well, again, you look to the original public meaning, the textualist meaning, and the fact that it’s not discussed may just mean that, well, everyone understood. Everyone understood that based on this history, based on law dictionaries, based on case law up to and including the 1960s, Porter and Mitchell, the last one was 1960, and other cases, of course, permanent injunction includes implicitly such relief.

 

      But again, it’s in the hands of the court. It’s not overly expansive because the court does justice sitting as a court of equity, and it’s not required to give — the FTC is not the one that has carte blanche to create all this relief. It is up to the court of equity. And the court of equity should not be restrained in its ability to grant relief.

 

Nick Marr:  Okay, caller with area code 202, you have the floor.

 

Caller 1:  Hi. Great discussion. The Court over the past couple of terms over, and over, and over, in just opinion after opinion has engaged in what I’d call the battle of the dictionaries. And you gentlemen have kind of circled around that. My own judgement is I don’t think they’ll pay any attention to legislative history, and it sounds like from what was just said, there’s nothing in legislative history that helps in terms of getting anything beyond a traditional injunction.

 

      So what I’ve said repeatedly over and over with respect to textualism and looking at dictionaries is what the heck did this word mean in the dictionary around the time that the statute was passed? And so my question is, is there any dictionary that was cited to the Court that says in, what, 1973 that the word injunction or permanent injunction means as broadly as the FTC has applied it since then?

 

Corbin Barthold:  I’m happy to dive in, Asheesh.

 

Asheesh Abbott:  Yes, Corbin, go ahead.

 

Corbin Barthold:  Okay, I’ll go ahead. Well, I disagree with the notion that textualism has been boiled down to look at the dictionary, although obviously dictionaries are worthwhile at checking in circumstantial. Judge Easterbrook, as he says, a dictionary is a museum of words. And I don’t think anybody would think that Frank Easterbrook is anything other than a textualist.

 

      Actually, though, it’s a great question. At least hypothetically, a dictionary did come up during oral argument. Justice Alito basically said, “Well, if congresspeople look at a dictionary and they look up injunction, and it says an order to do or not do something, then shouldn’t we just give them the definition they want?”, because, of course, that at a very high level was the definition of an injunction, but that definition in theory swallows everything. There’s a Supreme Court decision, Knudson, in which it says any creative lawyer can take legal relief and craft it as an injunction.

 

      So I don’t think that necessarily answers the question. I think you do have to go back into the history, as Alden discusses. And I do think there’s disagreement about what that history means that we’re not going to be able to unpack too much here. You’ll have to get into the briefing.

 

      But the point I would make is I think what often happens with equity is the point that the equity court was supposed to try and do complete justice swallows — that single phrase swallows the actual notions of what an equity court was. It’s so arcane. The equity courts arose because the chancellor, starting in about the 13th century, would give relief that the law courts with their abstruse array of writs and their very cramped rules of evidence couldn’t grant. And you get these weird things like the tracing rules that say the reason that you can get money in an equity court is because we’re going to uphold the legal fiction that the other person held property in trust for you, that you actually had it in possession the whole time, and so that you can now trace it and get it returned to you.

 

      What I’m getting at is even if you treat the word injunction as opening up more, we also may end up having a dispute over does that mean just anything goes? I can tell you that equity courts in history, that is not how they operated. Or does it mean that we still have to apply all these arcane rules? And, actually, Alden touched on this, that then there are all these hoops to jump through, and it’s a difficult process. And that could actually be a whole mess.

 

      In Liu v. SEC, recently decided by the Court, the Court suggested that they want to start loosening these equity requirements, which are kind of throwbacks. But my point is simply that if injunction means more than do or don’t do a certain thing, it still could mean something like you can get equitable restitution, and you have to show tracing. And actually, that could be a whole can of worms. So your question is a good one, and the answer is it could be very complex.

 

Asheesh Agarwal:  A very definitive answer, Corbin. Alden, any comment?

 

Hon. Alden Abbott:  I don’t think I’ll add to that. I think that was a very complex and nuanced answer.

 

Nick Marr:  All right. Caller with the area code 443, you have the floor.

 

Caller 2:  Yes, good afternoon, gentlemen. Thank you very much for this fascinating discussion. If you said it and I missed it, I apologize. And I guess at this point, if it’s not in the briefs, it may not be considered.

 

      But I was just curious if the presupposition was advanced earlier that we’re talking about a judicial agent which there are no discrete courts of equity. But of course, there are a few jurisdictions in the United States where courts of equity, at least in name, continue to exist. And the argument can be made about how faithful they are to the chancery tradition and so forth. But I’m just curious if there was any consideration given to looking at their practice as a guide in this discussion.

 

Asheesh Agarwal:  This is Asheesh. I don’t recall seeing that in the briefs. Alden, Corbin, do you?

 

Corbin Barthold:  I’ve taken up a lot of time, and I’m happy to defer to you all.

 

Hon. Alden Abbott:  Yeah. I don’t believe so, I think is the answer, unless I’m missing something. But I think it is an interesting point, but perhaps it’s getting back to the question or the concern about overbreadth and overreading. District courts have a lot of discretion in granting equitable relief, but they are still subject to supervision by courts of appeals.

 

      I won’t say anything more than that, but the fact of the matter is that I think there’s a lot of discretion, although not total discretion, obviously, because they’re subject to — under which district courts are — to which district courts are subjected. And I think as a practical matter, getting to the practicalities, as I said, if you can prove up, say, that $1.3 billion in fraudulent payments were made and district court takes note of that, accepts those facts, and believes restitution in that amount, that would be different than demanding payments of $10 billion.

 

      That would be — but that’s not what we’re talking about in this case. In fact, we’re talking, I think, of the cases that the FTC is involved in that involve monetary relief in these fraud cases, the argument has always been, what is the accurate measure of the harm for which restitution is appropriate? And I’ll stop there.

 

Asheesh Agarwal:  Well, great. As we’re wrapping up, I’ve got my next-to-last question for both of you. I want to end on a different note, but on my next-to-last question for both of you, any  predictions as to the outcome of this case? And if you’re not willing to go that far, what do you think the decision, whichever way it comes out, could mean for other cases? Corbin, let’s start with you.

 

Corbin Barthold:  One of the things I like about this current format is it really gets the justices to come up with their best zinger question for each side in advance, and it’s very segmented. And one result of that is I personally find I have less of a read on what the outcome is going to be. I think when it’s freewheeling, the passionate justices who really are ardent for an outcome in an issue will shine forth in an argument. This leaves it way more — I really, even less than I normally would, would I want to predict the outcome here. I think it was a well-argued case. I think both sides had good arguments. I will just leave it at that. I think it was excellently done, and I am left in suspense.

 

      As for what the wider ramifications could be, certainly, if they go the route of writing a decision about how this is settled and so we’re not going to mess up the interpretation as the courts have construed it, of course, they could just say the FTC is correct in how the statute reads. I’m not saying that won’t happen. But if they were saying, “Well, we think it’s wrong, but we’re just going to leave it,” yeah, that could end up being a precedent that lives on in other cases with other statutes in interesting and unpredictable ways.

 

Asheesh Agarwal:  Alden?

 

Hon. Alden Abbott:  I’m not in the predictions business. I’ll just say that I believe that the FTC made its case in a compelling manner, and we’re hopeful that we will convince the Court to rule in our favor. But beyond that, I would not deign to make any prediction.

 

      And as to future consequences, as I think has been mentioned, the possibility of legislation in the event that the Court did not rule in the Commission’s favor has been raised. What that might — that’s a hypothetical I won’t get into, but certainly commissioners have — there’s been a public statement by the Commission which I think supports this legislation. But what it might or might not look like and what Congress might or might not do is beyond my pay grade.

 

Asheesh Agarwal:  Alden, you are a good company man, but not for much longer at the FTC. And this is what I’d like to close with. Alden, it’s now public that you will be leaving the Commission to join the Mercatus Center. Could you tell us just a little bit about that role?

 

Hon. Alden Abbott:  Yes. I’ll be starting on January 25 as Senior Research Fellow, and I will be asked to oversee work of dealing with antitrust and perhaps competition policy in general. So I’m looking forward to that, and I just should mention I was — these were my views, but obviously I’ve been honored to have been afforded the opportunity to be General Counsel of the FTC. And I also do think — and I think I agree, both sides made very good oral presentations, and I’m very proud of the excellent oral argument made by Deputy General Counsel Joel Marcus-Kurn in this case.

 

Asheesh Agarwal:  Well, thank you so much, Corbin and Alden, and to The Federalist Society. And with that, Nick, I’ll turn it back over to you.

 

Nick Marr:  Thanks very much, Asheesh. And with that, I’ll just thank the panel on behalf of The Federalist Society, to you, Asheesh, for moderating, and Alden and Corbin for calling in and participating. Thanks for a great call. Thanks to our audience for calling in, for your good questions.

 

      As always, we welcome your feedback by email at info@fedsoc.org. Be checking your emails and our website for announcements about upcoming teleforum calls. We have a few left this week to close out, so I hope to see you there. Thank you all for joining us today. We are adjourned. 

 

[Music]

Alden Abbott

Senior Research Fellow

Mercatus Center, George Mason University


Corbin Barthold

Director of Appellate Litigation and Internet Policy Counsel

TechFreedom


Asheesh Agarwal

Deputy General Counsel

TechFreedom


Antitrust & Consumer Protection
Financial Services & Corporate Governance

Federalist Society’s Corporations, Securities, & Antitrust Practice Group

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