Amicus Curiae Brief — AMG Capital Management, LLC, et al., Petitioners v. Federal Trade Commission

Nos. 19-508, 19-825

IN THE

Supreme Court of the United States

______________________

AMG CAPITAL MANAGEMENT, LLC,

Petitioner,

v.

FEDERAL TRADE COMMISSION,

Respondent.

__________________________

FEDERAL TRADE COMMISSION,

Petitioner,

v.

CREDIT BUREAU CENTER, LLC,

Respondent.

__________________________

On Writs of Certiorari to the United States

Courts of Appeals for the Ninth and Seventh Circuits

_____________

BRIEF OF THE PHARMACEUTICAL

RESEARCH AND MANUFACTURERS OF

AMERICA AS AMICUS CURIAE IN SUPPORT

OF AMG CAPITAL MANAGEMENT, LLC AND

CREDIT BUREAU CENTER, LLC

_____________

Melissa B. Kimmel

David E. Korn

PHARMACEUTICAL

RESEARCH AND

MANUFACTURERS OF

AMERICA

950 F Street, NW

Washington, DC 20004

(202) 835-3400

John D. Graubert

Counsel of Record

Andrew W. Chang

COVINGTON & BURLING LLP

One CityCenter

850 Tenth Street, NW

Washington, DC 20001

JGRAUBERT@COV.COM

(202) 662-6000

Counsel for Amicus Curiae

i

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ....................................... ii

INTEREST OF AMICUS CURIAE ............................1

INTRODUCTION AND SUMMARY OF

ARGUMENT ........................................................2

ARGUMENT ...............................................................3

I.

THE

FTC’S

UNRESTRAINED

INTERPRETATION OF SECTION 13(B)

IMPOSES SUBSTANTIAL COSTS ON

LEGITIMATE

COMPANIES

AND

DETERS

LAWFUL

COMPETITIVE

BEHAVIOR ..........................................................3

II.

THE

STATUTORY

SCHEME

ESTABLISHED BY CONGRESS IS

SUFFICIENT TO ADDRESS THE

GOVERNMENT’S

ENFORCEMENT

CONCERNS .......................................................11

CONCLUSION ..........................................................16

ii

TABLE OF AUTHORITIES

Page(s)

Cases

FTC v. AbbVie, Inc.,

107 F. Supp. 3d 428 (E.D. Pa. 2015) ..................... 5

FTC v. AbbVie, Inc.,

2020 WL 5807873 (3d Cir. Sept. 30,

2020) ..................................................................... 15

FTC v. Actavis, Inc.,

570 U.S. 136 (2013) ............................................ 1, 5

FTC v. Credit Bureau Ctr.,

937 F.3d 764 (7th Cir. 2019) ................................ 11

FTC v. Libbey, Inc.,

211 F. Supp. 2d 34 (D.D.C. 2002) ........................ 14

FTC v. Mylan Labs., Inc.,

62 F. Supp. 2d 25 (D.D.C. 1999) ............................ 8

FTC v. Mylan Labs., Inc.,

99 F. Supp. 2d 1 (D.D.C. 1999) .............................. 8

FTC v. Shire ViroPharma, Inc.,

917 F.3d 147 (3d Cir. 2019) ................................. 15

FTC v. Southwest Sunsites, Inc.,

665 F.2d 711 (5th Cir. 1982) ................................ 13

FTC v. Staples, Inc.,

970 F. Supp. 1066 (D.D.C. 1997) ......................... 14

iii

FTC v. Swedish Match,

131 F. Supp. 2d 151 (D.D.C. 2000) ...................... 14

In re Ciprofloxacin Hydrochloride Antitrust

Litig., 544 F.3d 1323 (Fed. Cir. 2008) ................... 5

In re Pfizer, Inc.,

81 F.T.C. 23 (1972) ................................................. 6

In re Polygram Holding, Inc.,

136 F.T.C. 310 (2003) ........................................... 15

In re Tamoxifen Citrate Antitrust Litig.,

466 F.3d 187 (2d Cir. 2006) ................................... 5

In the Matter of Chevron Corp.,

140 F.T.C. 100 (2005) ........................................... 15

Schering-Plough Corp. v. FTC,

402 F.3d 1056 (11th Cir. 2005) .............................. 5

Statutes

Federal Trade Commission Act,

Pub L. No. 93-153, 38 Stat. 717 (1914):

15 U.S.C. § 45 ....................................................... 12

15 U.S.C. § 53 ............................................... passim

15 U.S.C. § 57b ............................................... 11, 14

15 U.S.C. § 45(l) ................................................... 15

Trans-Alaska Pipeline Authorization Act,

Pub. L. No. 93-153, 87 Stat. 576 (1973) .............. 11

Magnuson-Moss Warranty—Federal Trade

Commission Improvement Act, Pub. L.

No. 963-637, 88 Stat. 2183 (1975) ....................... 11

iv

Other Authorities

16 C.F.R. pt. 3 ............................................................ 12

16 C.F.R. § 3.11(b)(4) ................................................. 12

16 C.F.R. § 3.51(a) ..................................................... 13

16 C.F.R. §§ 3.52(b), (d), (h) ...................................... 13

Brief for PhRMA as Amicus Curiae Supporting Appellees/Cross-Appellants, FTC

v. AbbVie Inc., 2020 WL 5807873 (3d

Cir. Sept. 30, 2020) (Nos. 18-2621, 182748, 18-2758) ........................................................ 1

Brief for PhRMA as Amicus Curiae Supporting Respondents, FTC v. Actavis,

570 U.S. 136 (2013) (No. 12-416) ........................... 1

Complaint, FTC v. Allergan plc (N.D. Cal.

Jan, 23, 2017) (No. 17-cv-00312) ........................... 5

Fed. Trade Comm’n, 2019 Annual Highlights (Apr. 23, 2020) ............................................. 6

J. Howard Beales III & Timothy J. Muris,

FTC Consumer Protection at 100: 1970s

Redux or Protecting Markets to Protect

Consumers?, 83 G.W. L. Rev. 2157

(2015) ...................................................................... 6

J. Howard Beales III & Timothy J. Muris,

Striking the Proper Balance: Redress Under Section 13(b) of the FTC Act, 79

Antitrust L.J. 1 (2013) ......................................... 12

v

J. Howard Beales III & Timothy J. Muris,

The Obama FTC Departed from Its

Predecessors to the Detriment of

Consumers, 31 Antitrust 66 (2017) ............. 6, 7, 12

Joshua D. Wright, Comm’r, Fed. Trade

Comm’n, Remarks at the 18th Annual

Competition Law and Policy Workshop

in Florence, Italy (July 19, 2013) ........................ 10

M. Sean Royall et al., Seventh Circuit Sets

Up Potential Supreme Court Review of

FTC Monetary Relief Authority, 34

Antitrust 54 (2019) .............................................. 10

Policy Statement on Monetary Equitable

Remedies in Competition Cases, 68 Fed.

Reg. 45,820 (Aug. 4, 2003) ........................... passim

Press Release, Fed. Trade Comm’n, FTC

Settlement of Cephalon Pay for Delay

Case Ensures $1.2 Billion in Ill-Gotten

Gains Relinquished; Refunds Will Go to

Purchasers Affected by Anticompetitive

Tactics (May 28, 2015) ........................................... 5

Press Release, Fed. Trade Comm’n,

Separate Statement of Commissioners

Maureen K. Ohlhausen and Joshua D.

Wright on FTC v. Cephalon, Inc. (May

28, 2015) ................................................................. 4

vi

Press Release, Fed. Trade Comm’n,

Withdrawal of the Commission’s Policy

Statement on Monetary Equitable

Remedies in Competition Cases (July 31,

2012) ....................................................................... 4

Rules of Practice, 63 Fed. Reg. 7526 (Feb.

13, 1998) ............................................................... 12

Rules of Practice, 66 Fed. Reg. 17,622 (Apr.

3, 2001) ................................................................ 12

Rules of Practice, 74 Fed. Reg. 1804 (Jan.

13, 2009) ............................................................... 12

Rules of Practice, 74 Fed. Reg. 20,205 (May

1, 2009) ................................................................. 12

Rules of Practice, 76 Fed. Reg. 52,249 (Aug.

22, 2011) ............................................................... 12

U.S. Dep’t of Justice, Antitrust Division Update 2020

(June 23, 2020) ....................................................... 6

Withdrawal of the Commission Policy Statement on

Monetary Equitable Remedies in Competition

Cases, 77 Fed. Reg. 47,070 (Aug. 7, 2012) ...... 9, 10

1

INTEREST OF AMICUS CURIAE1

The Pharmaceutical Research and Manufacturers of America (PhRMA) is a voluntary, non-profit

association representing the country’s leading biopharmaceutical research companies.

PhRMA’s

members are devoted to developing innovative medicines, treatments, and vaccines which save, prolong,

and improve the quality of the lives of countless individuals around the world every day. Over the past

two decades, these member companies have contributed nearly $1 trillion to the research and

development of new medicines. In the interest of ensuring a robust, competitive, and efficient

marketplace for its members, PhRMA has previously

submitted briefs as amicus curiae in cases involving

the FTC’s enforcement activity with respect to the biopharmaceutical industry. See, e.g., Brief for PhRMA

as Amicus Curiae Supporting Appellees/Cross-Appellants, FTC v. AbbVie Inc., 2020 WL 5807873 (3d Cir.

Sept. 30, 2020) (Nos. 18-2621, 18-2748, 18-2758); Brief

for PhRMA as Amicus Curiae Supporting Respondents, FTC v. Actavis, 570 U.S. 136 (2013) (No. 12-416).

The question presented in this case—whether

Section 13(b) of the FTC Act can be properly read to

1 Pursuant to Supreme Court Rule 37.6, amicus affirms that no

counsel for a party authored this brief in whole or in part, that

no counsel or party made a monetary contribution intended to

fund the preparation or submission of this brief, and that no person other than the amicus or their counsel made such a monetary

contribution. Counsel for all parties have consented to the filing

of amicus briefs.

2

encompass monetary judgments—is of substantial

concern to PhRMA and its members. The FTC’s current interpretation of Section 13(b) engenders both

market uncertainty and a risk of disproportionate liability, seriously jeopardizing PhRMA’s mission of

fostering efficient investment and innovation for patients. PhRMA members rely on the FTC to provide

tailored, consistent guidance on unfair and deceptive

business practices. But through its imposition of significant

monetary

remedies

without

the

commensurate protections required by the plain language of the FTC Act, the FTC threatens to upend a

statutory scheme that protects and facilitates efficient

investment by lawful market actors. PhRMA’s members have been the subjects of the FTC’s assertions of

monetary remedy authority, and the organization is

uniquely positioned to provide insight into the realworld consequences of the Agency’s interpretation of

Section 13(b).

INTRODUCTION AND

SUMMARY OF ARGUMENT

PhRMA agrees with the AMG and Credit Bureau

Center parties that the legal theory underlying the

FTC’s position on Section 13(b) has become untenable.

PhRMA’s concern is not only that the Agency’s reading of the FTC Act is problematic, but that the

Agency’s resort to Section 13(b) to permit monetary

recovery is without any meaningful limiting principle.

The Agency’s indiscriminate demand for substantial

monetary payments in cases of all kinds creates uncertainty and unwarranted burden for companies, and

may inhibit their efficient provision of information,

goods, and services to consumers due to the excessive

3

and unpredictable risks threatened by the FTC’s policy.

In contrast, the enforcement framework that Congress did provide furthers the underlying purpose of

the FTC Act: that the Agency serve as an expert, specialized body, and that it be subject to an appropriate

second “screen” before monetary remedies come into

play. This screen, the “dishonest or fraudulent” provision of Section 19, is a necessary check on the

Agency’s ability to seek monetary remedies, and is effectively read out of the process by the Agency’s

reliance on Section 13(b).

ARGUMENT

I.

THE FTC’S UNRESTRAINED INTERPRETATION OF SECTION 13(B)

IMPOSES SUBSTANTIAL COSTS ON

LEGITIMATE COMPANIES AND DETERS

LAWFUL

COMPETITIVE

BEHAVIOR

It has become routine for parties engaging with

the Agency under both its competition and consumer

protection missions to encounter very substantial demands for monetary payments as part of settlements

of Agency enforcement actions as well as remedies

sought in litigation. This practice creates unfair and

unjustified problems for PhRMA and its members not

only because of the magnitude of these demands—

which is staggering—but perhaps more importantly,

the indiscriminate nature of the demands. The

Agency appears to make no distinction between types

4

of cases and other relevant circumstances in determining whether a monetary recovery would be

appropriate in its view. To the contrary, the Agency

has affirmatively stated that equitable monetary remedies should be broadly available in both competition

and consumer protection cases, and, as discussed further infra, has rejected a number of reasonable

guidelines for the imposition of these remedies.2 In

response, several dissenting Commissioners have observed that “firms subject to our jurisdiction have no

meaningful guidance on when they will be forced to

disgorge their profits.”3 Apart from a formalistic invocation of its duty to protect consumers, there is no

apparent pattern to these monetary demands that

might be attributable to equitable principles, despite

the ostensibly equitable nature of these monetary

remedies.

For example, under the banner of its competition

mission, the Agency has demanded and obtained very

substantial payments in cases in which the underlying legal theory was far from settled and where the

defendants had a well-founded belief that the conduct

was lawful. The “reverse payment” cases provide a

2 See Press Release, Fed. Trade Comm’n, Withdrawal of the Com-

mission’s Policy Statement on Monetary Equitable Remedies in

Competition Cases (July 31, 2012), https://www.ftc.gov/system/files/documents/public_statements/296171/120731commst

mt-monetaryremedies.pdf.

Press Release, Fed. Trade Comm’n, Separate Statement of

Commissioners Maureen K. Ohlhausen and Joshua D. Wright on

FTC v. Cephalon, Inc. (May 28, 2015), https://www.ftc.gov/system/files/documents/public_statements/645501/150528cephalon

ohlhausenwright1.pdf.

3

5

pointed example. In these cases, the Agency alleged

that an incumbent pharmaceutical manufacturer who

exercised its patent rights in accordance with the special procedures of the Hatch-Waxman Act was in fact

paying a generic competitor not to enter the market.4

The Agency has obtained some of its largest 13(b) payments under this theory.5 The Agency’s theory of

liability, however, was far from clear from the outset,

and was in fact rejected in its first visit to an appellate

court,6 and in several other appellate courts thereafter.7 The controversy was eventually resolved by this

Court, but even then, the standard of liability imposed

was (appropriately) the “rule of reason,” introducing

further fact-specific considerations into the liability

analysis. See Actavis, 570 U.S. at 156. Subjecting

law-abiding companies to dramatic financial consequences under such an uncertain legal regime is an

4 See, e.g., FTC v. Actavis, Inc., 570 U.S. 136, 140 (2013); FTC v.

AbbVie, Inc., 107 F. Supp. 3d 428, 430 (E.D. Pa. 2015); see also

Complaint, FTC v. Allergan plc (N.D. Cal. Jan. 23, 2017) (No. 17cv-00312).

5 See, e.g., Press Release, Fed. Trade Comm’n, FTC Settlement of

Cephalon Pay for Delay Case Ensures $1.2 Billion in Ill-Gotten

Gains Relinquished; Refunds Will Go to Purchasers Affected by

Anticompetitive

Tactics

(May

28,

2015),

https://www.ftc.gov/news-events/press-releases/2015/05/ftc-settlement-cephalon-pay-delay-case-ensures-12-billion-ill

($1.2

billion award).

6 See Schering-Plough Corp. v. FTC, 402 F.3d 1056, 1076 (11th

Cir. 2005).

7 See In re Tamoxifen Citrate Antitrust Litig., 466 F.3d 187, 216

(2d Cir. 2006) (applying “scope of the patent” rule to permit reverse payment settlement); In re Ciprofloxacin Hydrochloride

Antitrust Litig., 544 F.3d 1323, 1336 (Fed. Cir. 2008) (same).

6

excessive exercise of agency authority that may discourage otherwise pro-consumer behavior. 8

Similarly, in consumer protection cases, commentators have pointed to several areas in which

automatic recourse to substantial monetary payments

appears unwarranted. Advertising substantiation

cases are one such example.9 Determining what

claims an advertisement makes and how consumers

perceive and interpret such claims are complicated

enough. But the next question in an advertising case,

the degree of substantiation required for particular

claims, is a complex, case-specific issue10 that may require evaluation of sophisticated scientific principles

and technical research, as well as testimony from experts in various scientific fields. Cases like these

present an opportunity for the FTC to apply its expertise through administrative litigation (see Section II,

below) and produce opinions that provide guidance to

the business community as well as consumers on how

8 The size of these payments is comparable to those the Depart-

ment of Justice often obtains in criminal price-fixing

conspiracies, which involve the most egregious per se illegal conduct under the antitrust laws. Compare, e.g., U.S. Dep’t of

Justice, Antitrust Division Update 2020 (June 23, 2020) (identifying criminal penalties from $100 to $195 million), with Fed.

Trade Comm’n, supra n.5 ($1.2 billion award), and Fed. Trade

Comm’n, 2019 Annual Highlights (Apr. 23, 2020) ($191 million

award against deceptive advertising by for-profit school).

9 See J. Howard Beales III & Timothy J. Muris, The Obama FTC

Departed from Its Predecessors to the Detriment of Consumers, 31

Antitrust 66, 68 (2017); see also J. Howard Beales III & Timothy

J. Muris, FTC Consumer Protection at 100: 1970s Redux or Protecting Markets to Protect Consumers?, 83 G.W. L. Rev. 2157,

2200–04 (2015).

10 See, e.g., In re Pfizer, Inc., 81 F.T.C. 23 (1972).

7

to assure advertising is truthful and informative.

Cease and desist orders are the appropriate and traditional remedy in such cases.

Instead, by bringing the majority of their advertising cases directly in federal district court under

Section 13(b) and immediately seeking massive monetary awards, the FTC has dramatically altered the

enforcement environment and parties’ expectations.

Cases of clear fraud aside, the Agency also targets

law-abiding companies that have a good-faith basis

for the belief in the truth of their claims. But how a

fact-finder will ultimately evaluate the adequacy of

their evidence remains a troubling and difficult question, and adding the prospect of substantial monetary

sanctions—indeed, costs that could threaten the viability of the company going forward—to the decision

calculus may lead a company away from making the

claims and in doing so giving consumers products and

information that could be beneficial.11

At one time, the Agency acknowledged and attempted to mitigate these concerns by articulating

prosecutorial guidelines. Responding in part to an

outcry following the Agency’s reliance on Section 13(b)

11 See Beales & Muris, The Obama FTC Departed from Its Prede-

cessors, supra n.9, at 68 (explaining that the FTC’s aggressive

stance toward advertising substantiation claims “will likely

leave most consumers in relative ignorance about useful product

information, the opposite of what the Commission should accomplish”).

8

to obtain $100 million in the Mylan case,12 the Commission issued the Policy Statement on Monetary

Equitable Remedies in Competition Cases, 68 Fed.

Reg. 45,820, 45,821 (Aug. 4, 2003) (the “Policy Statement”). The Policy Statement dealt with three key

areas of concern:

1. Clear Violation: The Agency stated it would

seek monetary remedies “when, based on existing

precedent, a reasonable party should expect that

the conduct at issue would likely be found to be

illegal.” 68 Fed. Reg. at 45,821. This standard,

the Agency said, would serve a deterrence goal

and appropriately focus the Agency on removing

ill-gotten gains from actors who had a reasonable

expectation that their conduct would be found to

be unlawful.

2. Reasonable Basis for Calculating the Remedy: The Agency assured the public that it would

“not seek restitution unless it can offer a reasonable gauge of the amount of injury from a

violation.” 68 Fed. Reg. at 45,822. Recognizing

the uncertainty that would result from damage

awards untethered to any predictable basis for

“calculating the amount of the disgorgement or

restitution to be ordered,” id., the Policy Statement sought to assure market actors that the

Agency would exercise its 13(b) authority in a

measured and transparent way.

12 FTC v. Mylan Labs., Inc., 62 F. Supp. 2d 25, 32 (D.D.C. 1999);

see also FTC v. Mylan Labs., Inc., 99 F. Supp. 2d 1, 4 (D.D.C.

1999).

9

3. Value of Commission Participation in Litigation: Perhaps most importantly, the Agency

stated that its exercise of monetary remedy authority would be constrained by “the interest in

avoiding duplicative recoveries by injured persons

or ‘excessive’ multiple payments by defendants for

the same injury.” 68 Fed. Reg. at 45,823. Numerous parties had complained that with the

proliferation of private litigation and enforcement

actions by State Attorneys General, defendants

were subjected to potential multiple and duplicative monetary awards, in addition to the added

litigation costs and burdens of duplicative actions.

To address that concern, the Agency made clear

that it would evaluate whether its participation

would add anything of additional value to consumers that the other available legal actions could not

provide.

Although the Policy Statement did not eliminate

all concerns surrounding the FTC’s use of Section

13(b), the Agency’s adoption of these guidelines was a

significant signal to the business community that it

would try to act in a reasonable, prudent and predictable manner. The abrupt withdrawal of the Policy

Statement in 2012 was therefore a significant setback.

See Withdrawal of the Commission Policy Statement

on Monetary Equitable Remedies in Competition

Cases, 77 Fed. Reg. 47,070, 47,070 (Aug. 7, 2012) (asserting that “existing law” provides “sufficient

10

guidance on the use of monetary equitable remedies”).13 The Agency abandoned the reasonable

guidelines of the original Policy Statement, and indeed any articulated guidelines. Monetary recoveries

under Section 13(b) dramatically increased in size and

number after this action in 2012.14

The problems that the Commission addressed in

the original Policy Statement, however, remain. The

problem of duplicative litigation discussed in the third

factor, for example, is a recurring issue. Although in

theory courts could permit set-offs or credits to reduce

the likelihood of multiple, duplicative payments, the

additional cost and administrative burden of dealing

with the problems of parallel litigation is significant.

As discussed in the following section, this unwarranted burden on lawful behavior could be reduced if

the FTC focused its efforts on the enforcement tools

13 See Joshua D. Wright, Comm’r, Fed. Trade Comm’n, Remarks

at the 18th Annual Competition Law and Policy Workshop in

Florence, Italy (July 19, 2013) (after withdrawal of the Policy

Statement, “the absence of guidance creates uncertainty within

the business community, which will undoubtedly affect firms’ behavior in ways that are unpredictable and will unnecessarily run

the risk of harming the consumers we are charged with protecting”).

14 M. Sean Royall et al., Seventh Circuit Sets Up Potential Supreme Court Review of FTC Monetary Relief Authority, 34

Antitrust 54, 54 & n.1 (2019) (describing, after the rescission of

the Policy Statement, “a $1.2 billion settlement with Teva Pharmaceutical Industries in a matter involving pay-for-delay

allegations; up to $1.2 billion in a settlement with Volkswagen

relating to allegedly misleading claims about “clean diesel”; at

least $575 million in a settlement with Equifax relating to a 2017

data breach; and $448 million in a district court judgment

against AbbVie for alleged antitrust violations”).

11

given to it by Congress, rather than asserting additional ones.

II.

THE STATUTORY SCHEME ESTABLISHED

BY

CONGRESS

IS

SUFFICIENT TO ADDRESS THE GOVERNMENT’S

ENFORCEMENT

CONCERNS

The parties have ably and amply demonstrated

that Section 13(b) does not support the creation of an

independent monetary enforcement mechanism not

specified in the terms of the statute. PhRMA agrees.

The use of Section 13(b) to erect such an alternative

enforcement scheme is particularly problematic when

Congress did, in fact, provide a straightforward enforcement process in the Act. This roadmap was

provided in Section 5 of the original Act and refined

and re-affirmed by Congress since that time, particularly in the 1973 and 1975 amendments to Sections 5,

13(b) and 19.15 The enumerated enforcement plan

supports the Agency’s purpose and mission to provide

guidance in complex or new areas. It also reflects, in

15 See Trans-Alaska Pipeline Authorization Act, Pub. L. No. 93-

153, tit. IV, 87 Stat. 576, 591–92 (1973) (amendment permitting

“other and further equitable relief” for violations of cease-anddesist orders); Magnuson-Moss Warranty—Federal Trade Commission Improvement Act, Pub. L. No. 92-637, tit. II, 88 Stat.

2183, 2193–201 (1975) (enacting 15 U.S.C. § 57b to permit restitution for violations of FTC rules). As the Seventh Circuit

recognized in the decision below, "[i]f Section 13(b) permitted restitution as a general matter, Congress would have no reason to

enact Section 57b, which authorizes restitution under narrower

circumstances." FTC v. Credit Bureau Ctr., 937 F.3d 764, 774

(7th Cir. 2019).

12

Section 19, a reasonable compromise in the fierce debate about the Agency’s ability to seek monetary

relief.16

The core of the administrative adjudication process is a hearing before an Administrative Law Judge.

This hearing is governed by Section 5(b) of the FTC

Act and the rules set forth in Part 3 of the Agency’s

Rules of Practice.17 The Agency has devoted a substantial amount of time and effort over the past two

decades to improving these rules to make the adjudication process more efficient and productive.18 For

example, the rules now specify that the hearing must

begin 5 months after the Agency issues a complaint in

cases where the Agency is also seeking a preliminary

injunction under Section 13(b) (most often invoked, for

example, in a merger case), or 8 months in all other

cases.19 The rules also specify time limits for appeals

to the full Commission, oral argument, and issuance

16 After Section 13(b) was enacted, significant public debate arose

as to whether the FTC should be granted the authority to obtain

monetary awards. See Beales & Muris, The Obama FTC Departed from Its Predecessors, supra n.9, at 68–69. Congress

expressly declined to allow “open-ended” monetary relief, opting

instead to permit such relief under the narrow conditions of an

administrative adjudication and with the additional “dishonest

or fraudulent” test. Id. at 69; see also J. Howard Beales III &

Timothy J. Muris, Striking the Proper Balance: Redress Under

Section 13(b) of the FTC Act, 79 Antitrust L.J. 1, 33 (2013).

17 15 U.S.C. § 45(b); 16 C.F.R. pt. 3.

18 See, e.g., Amendments to 16 C.F.R. pts. 3, 4 at 76 Fed. Reg.

52,249 (Aug. 22, 2011); 74 Fed. Reg. 20,205 (May 1, 2009); 74

Fed. Reg. 1804 (Jan. 13, 2009); 66 Fed. Reg. 17,622 (Apr. 3,

2001); 63 Fed. Reg. 7526 (Feb. 13, 1998).

19 16 C.F.R. § 3.11(b)(4).

13

of a Commission decision.20 In general, the amendments to the rules have greatly expedited the

administrative adjudication process, while still allowing the Commission to fulfill its intended role as an

expert agency providing guidance in difficult cases.

The FTC Act provides two specific opportunities

for federal courts to support this process, before and

after the administrative adjudication. In appropriate

cases, when the Agency has reason to believe that a

potential defendant “is violating, or is about to violate

any provision of law enforced by the Federal Trade

Commission,” it may seek a preliminary injunction

under Section 13(b). (Indeed, the title of this section

is “Temporary Restraining Orders; preliminary injunctions”).

Such a preliminary injunction can

include asset freezes and other steps necessary to preserve the possibility of effective relief at the conclusion

of the administrative adjudication process.21 In consumer protection matters, this relief may be

appropriate when there is a serious risk that a wrongdoer will dissipate or hide assets that would be part of

an eventual judgment. In merger cases, such an order

typically states that the status quo should be preserved pending administrative litigation because it

may be infeasible to unwind a transaction that has

20 16 C.F.R. § 3.51(a); 16 C.F.R. §§ 3.52(b), (d), (h).

21 See FTC v. Southwest Sunsites, Inc., 665 F.2d 711, 719 (5th

Cir. 1982) (“[S]uch an order may be required to preserve the status quo so that an ultimate decision by the Commission may be

effective.” (citation omitted)).

14

closed in the interim if it is later found to be unlawful.22

At the conclusion of the administrative adjudication process, including all appeals, if the Commission

has issued a cease and desist order finding that the

practices at issue were “unfair or deceptive” as provided in Section 5(a) of the Act, the Commission may

then seek further, monetary relief from a federal district court under Section 19(a)(2) of the Act.

Significantly, in such an action the Commission must

demonstrate that the conduct at issue not only violated Section 5(a) of the Act, but was conduct “which

a reasonable man would have known under the circumstances was dishonest or fraudulent.”23 As the

Commission noted in the original Policy Statement,

the equitable purpose of a monetary award is best

served when the actor had reason to expect at the time

of the conduct that it was likely unlawful and could be

clawed back. Section 19 accordingly provides a final

guardrail that gives the federal district court an opportunity to determine whether monetary relief is

22 See, e.g., FTC v. Libbey, Inc., 211 F. Supp. 2d 34, 43 (D.D.C.

2002) (granting preliminary injunction because merger could not

be efficiently undone); FTC v. Swedish Match, 131 F. Supp. 2d

151, 173 (D.D.C. 2000) (identifying risk that the “eggs will be irreparably scrambled” absent preliminary injunctive relief); FTC

v. Staples, Inc., 970 F. Supp. 1066, 1091 (D.D.C. 1997) (noting

“practical difficulties of undoing the merger” and “risk of serious

anti-competitive harm in the interim” as reasons to grant preliminary injunction).

23 15 U.S.C. § 57b(a)(2).

15

truly appropriate under the circumstances of the

case.24

These provisions of the FTC Act lay out a wellconsidered and complete path for FTC enforcement

actions: preliminary injunctions if needed to preserve

the status quo, a tightly-controlled administrative

trial and appeal, and then measured attention to the

question of damages. The Agency has invested substantial resources towards making this process viable.

In the cases where it has availed itself of the process

that Congress intended, the Agency has produced a

number of landmark opinions that had significant influence on the law.25 Against this statutory and

historical backdrop, “there is no reason to believe

that . . . [holding the Agency to a literal interpretation

of the Act] unnecessarily restricts the FTC’s ability to

address wrongdoing.”26 As courts have recognized,

precluding restitution under Section 13(b) would not

“eviscerate” the FTC Act; rather, such an interpretation giving Congress’s words their intended meaning

“harmonizes” the FTC Act’s multiple enforcement provisions.27

24 See also Section 5(l), 15 U.S.C. §45(l) (permitting action for civil

penalties for violation of cease and desist order).

25 See, e.g., In re Polygram Holding, Inc., 136 F.T.C. 310 (2003),

aff’d, 416 F.3d 29, 31 (D.C. Cir. 2005) (test for horizontal restraints); In the Matter of Chevron Corp., 140 F.T.C. 100 (2005)

(limits of Noerr-Pennington doctrine).

26 See FTC v. Shire ViroPharma, Inc., 917 F.3d 147, 158–59 (3d

Cir. 2019) (construing “is violating or about to violate” language

in 13(b) literally).

27 FTC v. AbbVie, Inc., 2020 WL 5807873, at *32 (3d Cir. Sept.

30, 2020).

16

CONCLUSION

For the foregoing reasons, as well as those reasons

set forth in the non-governmental parties’ briefs, the

Ninth Circuit’s judgment in AMG Capital Management should be reversed, and the Seventh Circuit’s

judgment in Credit Bureau Center should be affirmed.

Respectfully submitted,

Melissa B. Kimmel

David E. Korn

PHARMACEUTICAL

RESEARCH AND

MANUFACTURERS OF

AMERICA

950 F Street, NW

Washington, DC 20004

(202) 835-3400

Counsel for Amicus Curiae

October 2, 2020

John D. Graubert

Counsel of Record

Andrew Chang

COVINGTON & BURLING LLP

One CityCenter

850 Tenth Street, NW

Washington, DC 20001

JGRAUBERT@COV.COM

(202) 662-6000