Thursday, February 22, 2024

Eleventh Circuit Says FTC Can Search Asset Freezes and Receivership Beneath Part 19


Because the mud settles from the Supreme Court docket’s determination in AMG Capital Administration, LLC v. FTC, 141 S. Ct. 1341 (2021), which gutted the Federal Commerce Fee’s authority to acquire equitable financial reduction in court docket, the contours of the FTC’s remedial authority proceed to be formed by the decrease courts.

Most just lately, the Eleventh Circuit weighed in on whether or not Part 19 of the FTC Act authorizes the FTC to acquire an asset freeze and impose a receiver. Previous to AMG, the FTC routinely obtained such preliminary reduction towards corporations and people the FTC believed had been partaking, or about to have interaction, in unfair misleading enterprise practices. In doing so, the FTC would depend on its authority beneath Part 13(b) of the FTC Act. Nevertheless, after AMG, the FTC can solely use Part 13(b) to acquire forward-looking injunctive reduction.

In an printed opinion, the Eleventh Circuit denied a movement to dissolve a preliminary injunction that was entered in 2018 towards an organization, Easy Well being Plans LLC, and its proprietor. On the time, the FTC invoked Part 13(b) as the idea for the injunction, asset freeze, and receivership. A couple of 12 months after the lawsuit was filed, the FTC amended its grievance and added Part 19 in its place foundation for reduction.

In denying the movement, the Court docket concluded that regardless that Part 19 doesn’t explicitly authorize preliminary measures of reduction, the statute provides courts broad authority to grant treatments which might be “essential to redress harm to shoppers.” The place, as right here, an asset freeze and receivership are essential to protect funds for a future financial judgment, such measures are approved by Part 19. The Court docket additionally reaffirmed that Part 19 applies to the Telemarketing Gross sales Rule.

This implies we will count on the FTC to ramp up its use of ex parte momentary restraining orders and different types of draconian preliminary reduction towards corporations and people who’re already beneath a consent order or who’re accused of violating a regulation, such because the TSR.

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