Reply Brief — Federal Trade Commission, Petitioner v. Credit Bureau Center, LLC, et al.

No. 19-825

IN THE

Supreme Court of the United States

—————

FEDERAL TRADE COMMISSION,

PETITIONER

v.

CREDIT BUREAU CENTER, LLC AND MICHAEL BROWN

—————

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

—————

REPLY BRIEF FOR PETITIONER

—————

ALDEN F. ABBOTT*

General Counsel

JOEL MARCUS

Deputy General Counsel

for Litigation

MICHAEL BERGMAN

THEODORE (JACK) METZLER

MATTHEW M. HOFFMAN

Attorneys

FEDERAL TRADE COMMISSION

600 Pennsylvania Ave. NW

Washington, D.C. 20580

(202) 326-2505

aabbott@ftc.gov

* Counsel of Record

TABLE OF CONTENTS

Page

A.

The Question Presented Merits Review Now. ....... 3

B.

The Court of Appeals’ Decision is Wrong. .............. 8

Conclusion ............................................................................ 12

(I)

II

TABLE OF AUTHORITIES

Page

Cases:

Arizona v. Evans, 514 U.S. 1 (1995) .................................... 4

FTC v. AMG Capital Management, LLC,

910 F.3d 417 (9th Cir. 2018) ............................................ 7

FTC v. Amy Travel Service, Inc.,

875 F.2d 564 (7th Cir. 1989) ............................................ 5

FTC v. Bronson Partners, LLC,

654 F.3d 359 (2d Cir. 2011) .......................................... 5, 6

FTC v. Commerce Planet, Inc.,

815 F.3d 593 (9th Cir. 2016) ............................................ 6

FTC v. H.N. Singer, Inc.,

668 F.2d 1107 (9th Cir. 1982) .......................................... 5

FTC v. Ross, 743 F.3d 886 (4th Cir. 2014) ........................... 5

FTC v. Security Rare Coin & Bullion Corp.,

931 F.2d 1312 (8th Cir. 1991) ...................................... 5, 6

FTC v. U.S. Oil & Gas Corp.,

748 F.2d 1431 (11th Cir. 1984) ........................................ 5

McCray v. New York, 461 U.S. 961 (1983) .......................... 4

Meghrig v. KFC Western, Inc.,

516 U.S. 479 (1996) .......................................................... 6

Mitchell v. Robert DeMario Jewelry, Inc.,

361 U.S. 288 (1960) ................................................ 5, 8, 10

Porter v. Warner Holding Co.,

328 U.S. 395 (1946) ...................................................... 5, 8

United States v. Lane Labs-USA, Inc.,

427 F.3d 219 (3d Cir. 2005) .............................................. 6

United States v. Rx Depot, Inc.,

438 F.3d 1052 (10th Cir. 2006) ........................................ 6

III

Statutes, Court Rules, Legislative Materials:

15 U.S.C. 45(g) ....................................................................... 9

15 U.S.C. 45(l) ............................................................ 9, 10, 11

15 U.S.C. 53(b) ................................................................. 1, 11

15 U.S.C. 57b(d) ..................................................................... 9

15 U.S.C. 57b(e) ................................................................... 10

S. Rep. No. 103-130 (1993).................................................... 9

Supreme Court of the United States

—————

NO. 19-825

FEDERAL TRADE COMMISSION,

PETITIONER

v.

CREDIT BUREAU CENTER, LLC AND MICHAEL BROWN

—————

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

—————

REPLY BRIEF FOR PETITIONER

—————

Respondents agree that the decision below created a

split with seven other circuits on the question presented:

whether a permanent injunction entered under Section

13(b) of the FTC Act, 15 U.S.C. 53(b), may require the

return of unlawfully taken money to injured victims. Br. in

Opp. 2, 14. They do not deny that the issue is recurring;

that its resolution is vitally important to the effective enforcement of the FTC Act; or that allowing the law to mean

one thing in some circuits and something else in others

causes substantial uncertainty and spurs wasteful, timeconsuming litigation. See Pet. 12-13, 25. They also agree

that the Court’s decision in No. 18-1501, Liu v. SEC, will

not resolve the question, and that this case is the best

vehicle to decide it. Br. in Opp. 17-20.

In the face of those compelling reasons for this Court’s

review, respondents argue largely that the Court should

simply allow the issue to “percolate” in the courts of ap(1)

2

peals. But courts have been considering this issue for more

than three decades, and eight of them have already decided

it; further consideration is unnecessary. Respondents’

position boils down to the implausible assertion that the

circuit split will disappear when seven courts of appeals

reverse their existing precedent after reading the decision

below. Br. in Opp. 14-16. There is no reason to think that

will happen. One court has already denied rehearing en

banc on this issue despite a concurring panel opinion urging review for reasons similar to those in the decision below. Other courts will likely continue to follow their existing

precedent; several have already considered and rejected

arguments accepted below. And even if respondents were

right that seven courts of appeals would abandon their

precedents en masse, that would take years, if not decades.

In the meantime, the Commission and the consumers it

protects would be left in an untenable position. The circuit

split warrants the Court’s review now.

The decision below is wrong. As explained in the petition, the word “injunction” has been understood to include

orders requiring the return of unlawfully obtained property since the founding of the Republic. That understanding

had been endorsed by this Court and applied in the lower

courts when Congress enacted Section 13(b). And nothing

in the FTC Act suggests that Congress intended something other than the historical understanding. To the contrary, Congress deliberately created multiple enforcement

tools, each tailored to its particular purpose and cabined by

appropriate procedures. Pet. 20-22. The court of appeals’

decision upsets Congress’s design by treating those tools

as if they must be identical, dismissing them as redundant

if they overlap, and ignoring Congress’s express direction

to the contrary. This Court’s review is necessary to correct

3

the court of appeals’ error and restore the uniformity of

federal law.

A. The Question Presented Merits Review Now.

1. Respondents agree that the court of appeals’ decision

“that section 13(b)’s permanent-injunction provision does

not authorize monetary relief,” Pet App. 40a, conflicts with

the decisions of seven other courts of appeals. Br. in Opp.

14; see Pet. 11-13.

The issue is important and recurring. The return of illegally obtained funds to consumers as part of a permanent

injunction is essential to the effective enforcement of the

FTC Act and other laws enforced by the Commission, and

the Commission brings dozens of cases seeking such relief

every year. Pet. 12-13. Respondents do not disagree. Nor

do they deny that a failure to restore uniformity would

leave the FTC Act meaning one thing in one circuit and

something else in others, perpetuate uncertainty, and spur

unnecessary and expensive litigation as parties seek to

take advantage of the Seventh Circuit’s outlier holding. See

Pet. 25.

2. Respondents also agree that this case is ideally suited to resolve the question presented.

a. This case presents a superior vehicle to the other two

petitions presenting the same question. As explained in the

Solicitor General’s response in Publishers Business Services v. FTC, petitioners there waived the issue by failing

to raise it properly below. 19-507 Br. in Opp. 4. This case is

also preferable to No. 19-508, AMG Capital Management

v. FTC. As Respondents suggest (Br. in Opp. 19-20), the

facts here more closely resemble those in typical 13(b)

cases than AMG, and the briefing is more fully developed

in this case.

4

b. Respondents agree further that there is no need to

await the outcome of Liu, which presents a different question from this case. Br. in Opp. 16-17. Liu involves whether

an order directing disgorgement of a defendant’s ill-gotten

gains to the Treasury constitutes “equitable relief ” under

the securities laws, not whether a statute that authorizes a

permanent injunction allows an order to repay consumer

victims. See Pet. 24. The cases involve different statutory

language (“permanent injunction” versus “equitable relief ”), different forms of relief (repayment of consumer

losses versus disgorgement to the Treasury), and different

statutes (the FTC Act versus the securities laws). The

Court’s decision in Liu is unlikely to affect the outcome in

this case.

3. The question presented has been addressed by eight

courts of appeals and needs no further percolation.

a. When the Court encounters “frontier legal problems,” it sometimes allows the courts of appeals consider

the matter further, which can lead to “a better informed

and more enduring final pronouncement by this Court.”

Arizona v. Evans, 514 U.S. 1, 23 n.1 (1995) (Ginsburg, J.,

dissenting); see also McCray v. New York, 461 U.S. 961, 962

(1983) (Stephens, J., respecting the denial of certiorari)

(“further consideration of the . . . problem by other courts

will enable us to deal with the issue more wisely”). This is

not such a case. The question presented has been considered over more than three decades in eight circuits. Percolation will not lead to any greater elucidation of the issues

or a more-informed decision by the Court.

b. Nor will further consideration in the courts of appeals resolve the circuit split. Respondents suggest (Br. in

Opp. 14-16) that other courts will reverse themselves now

that the Seventh Circuit has overruled FTC v. Amy Travel

5

Service, Inc., 875 F.2d 564 (1989). That contention is farfetched.

The courts of appeals are not bound by the decisions of

their sister circuits. The decisions holding that Section

13(b) authorizes injunctions to repay consumers will remain the law of the respective circuits unless they are

overruled en banc or countermanded by this Court. Wholesale en banc reversal of those decisions is extraordinarily

unlikely. Respondents wrongly contend (Br. in Opp. 15)

that other courts “uncritically accepted” Amy Travel, but

despite later citations to that case, the consensus view of

Section 13(b) that emerged was grounded this Court’s

decisions: Porter v. Warner Holding Co., 328 U.S. 395

(1946), and Mitchell v. Robert DeMario Jewelry, Inc., 361

U.S. 288 (1960). See, e.g., FTC v. H.N. Singer, Inc., 668 F.2d

1107, 1112-1113 (9th Cir. 1982); FTC v. U.S. Oil & Gas

Corp., 748 F.2d 1431, 1434 (11th Cir. 1984); FTC v. Security

Rare Coin & Bullion Corp., 931 F.2d 1312, 1314-1315 (8th

Cir. 1991); FTC v. Bronson Partners, LLC, 654 F.3d 359,

365-366 (2d Cir. 2011); FTC v. Ross, 743 F.3d 886, 890-891

(4th Cir. 2014). Porter established that “nothing is more

clearly a part of the subject matter of a suit for an injunction than the recovery of that which has been illegally

acquired and which has given rise to the necessity for

injunctive relief.” 328 U.S. at 399. It is counterintuitive that

every court that relied on Porter will now determine, as the

Seventh Circuit did, that it is “obvious” that “[r]estitution

isn’t an injunction.” Pet. App. 12a.

Moreover, many courts have already rejected the Seventh Circuit’s reasoning in overturning Amy Travel. Three

circuits have rejected the argument that the availability of

monetary relief under Section 19 of the FTC Act precludes

the injunctions that order the return of unlawful proceeds.

6

Compare Pet. App. 16a with FTC v. Commerce Planet, Inc.,

815 F.3d 593, 599 (9th Cir. 2016); Bronson Partners, 654

F.3d at 366-367; Security Rare Coin, 931 F.2d at 1315.

Those courts held instead that Section 19’s savings clause

renders that reading untenable, a position rejected by the

Seventh Circuit. See Pet. App. 18a-19a.

The Eighth Circuit also rejected the argument (accepted below, Pet. App. 15a-16a) that Congress could not have

contemplated injunctions that order monetary relief under

Section 13(b) because that provision does not use language

such as “other and further equitable relief ” found in Section 5(l) of the FTC Act. Security Rare Coin, 931 F.2d at

1314-1315. The court correctly reasoned that under Porter

and Mitchell, the district court may exercise the full scope

of its equitable power unless the statute expressly limits

the scope of that jurisdiction, which Section 13(b) does not.

Ibid.

Similarly, two circuits have rejected the Seventh Circuit’s central premise that this Court’s decision in Meghrig

v. KFC Western, Inc., 516 U.S. 479 (1996), upended the

traditional understanding of permanent injunctions as

encompassing restitution. In United States v. Rx Depot,

Inc., the Tenth Circuit held that Meghrig did not overrule

or limit “Porter’s and Mitchell’s general rule that a grant

of equity jurisdiction enables courts to order any form of

equitable relief.” 438 F.3d 1052, 1057 (2006). Meghrig, the

court explained, “merely demonstrates that a statute’s

particular characteristics may preclude application of the

rule.” Ibid. The Third Circuit likewise found no “indication,

either in Meghrig or since, that the Court has abandoned

the holdings of Porter and Mitchell.” United States v. Lane

Labs-USA, Inc., 427 F.3d 219, 232 (2005).

7

Respondents’ speculation that other circuits “may be

willing to revisit” their precedents (Br. in Opp. 15-16) also

ignores structural considerations that make restoring

uniformity of the law highly improbable. The law could

change only if: the FTC brings a Section 13(b) lawsuit

leading to a monetary judgment; the defendant appeals;

the appellate panel affirms the judgment; the appellant

successfully petitions for rehearing en banc; and the en

banc court overturns existing law. The chance that those

events will transpire in each of seven circuits is zero. Indeed, the Ninth Circuit recently rejected an en banc rehearing petition in FTC v. AMG Capital Management,

LLC, 910 F.3d 417, 429 (2018), without any judge calling for

a vote, even though two judges on the panel urged the

court to overturn its existing precedent on Section 13(b).

19-508 Pet. App. 118a-119a.

Even if further percolation could eventually resolve the

circuit split, it would persist for years. The previously

unanimous body of Section 13(b) precedent took more than

30 years to develop, from the Ninth Circuit’s 1982 decision

in H.N. Singer to the Fourth Circuit’s 2014 decision in

Ross. There is no reason to think that the reverse process

would take less time, if it happened at all. In the meantime,

the uncertainty caused by the circuit split would burden

consumers, the Commission, and the courts. The FTC Act

would give consumers less protection from some illegal

scams than others, based solely on where the scam operated. Defendants would continue trying to force their cases

into courts favorable to them. The time to resolve this

matter is now.

8

B. The Court of Appeals’ Decision is Wrong.

The circuit split, the importance of the question, and

the superiority of this case as a vehicle are sufficient reasons to grant review. Beyond that, the decision below is

incorrect for the reasons set forth in the petition, and respondents do not show otherwise.

1. Respondents repeat the court of appeals’ ipse dixit

assertions that by its “plain text,” a “‘permanent injunction’ is not a monetary award,” and that an injunction can

involve only forward-looking relief. Br. in Opp. 9-11. As the

Commission showed, however, it is deeply rooted in the

common law and has long been understood by this Court

that an “injunction” can include monetary remedies meant

to undo harm caused by a defendant’s conduct. Pet. 13-15.

As the Court explained in Porter, the return of illegally

acquired funds is “clearly a part of the subject matter of a

suit for an injunction.” 328 U.S. at 399.

Although Section 13(b) expressly authorizes an injunction without qualification, respondents characterize the

return of illegally obtained funds as an “implication,” which

they claim “is rebutted” by the lack of affirmative authorization for monetary relief in Section 13(b). Br. in Opp. 10.

There is nothing implied about the monetary remedy; it is

an inherent aspect of the express authority to issue an

injunction. As the Court explained in Mitchell, the authority to issue an injunction includes monetary relief unless

Congress indicates otherwise “in so many words, or by a

necessary and inescapable inference.”1 361 U.S. at 291.

Respondents also seek to distinguish the prohibitory part of the

district court’s injunction and the order to repay consumers, characterizing the former as the “injunction” and the latter as a “monetary

judgment.” Br. in Opp. 10 n. 5. But the district court entered just one

order, with both commands. Pet. App. 100a-134a.

1

9

The principles set forth in Porter and Mitchell were actively being applied in the courts when Congress enacted

Section 13(b). See Pet. 16-17. Congress therefore is presumed to know the meaning of its chosen statutory language. Since then, Congress has repeatedly signaled its

acceptance of the judiciary’s reading of Section 13(b), and

has even acknowledged in a Senate Report that the Commission may “obtain consumer redress” under Section

13(b). S. Rep. No. 103-130, at 15-16 (1993); see Pet. 16-17.

2. Respondents reliance on the “structure” of the FTC

Act, Br. in Opp. 11-12, does not reflect a coherent understanding of the statute.

As explained in the petition, Congress provided the

Commission with multiple ways to fulfill its mission to

protect consumers from unfair and deceptive acts or practices. Pet. 20-22. Each enforcement pathway is tailored to

provide appropriate judicial guardrails on the Commission’s authority to determine that particular conduct is

illegal. Ibid.

Where the Act gives the Commission greater authority

to determine that particular conduct is illegal (through

rulemaking or an administrative enforcement proceeding

and cease-and-desist order), it checks that power by

providing procedural safeguards to judicial enforcement of

the Commission’s decrees, such as the statute of limitations

on Section 19 actions. See 15 U.S.C. 57b(d). Similarly, Section 5(l) of the Act supports the Commission’s administrative enforcement authority by providing limited judicial

remedies against those who violate a cease-and-desist

order, but only after the order has become final through

judicial review (or the expiration of the time to seek judicial

review). 15 U.S.C. 45(l); 15 U.S.C. 45(g).

10

Unlike the administrative enforcement and rulemaking

paths, Section 13(b) only allows the Commission to allege

that particular conduct is illegal. To obtain a permanent

injunction (and the return of consumers’ funds), the Commission must prove its case to the satisfaction of a federal

district court.

Although respondents recognize that Congress provided the Commission with multiple enforcement tools useful

in different situations, they nevertheless contend that

provisions designed to support separate tools must be

worded the same. Br. in Opp. 3, 11-12.

Thus, they argue that the authority to enter a permanent injunction under Section 13(b) cannot encompass the

return of consumer losses because Section 19 contains

“language authorizing a monetary award” whereas Section

13(b) does not. Id. at 11-12. But Congress anticipated that

question and incorporated into Section 19 (enacted after

Section 13(b) became law) a savings clause stating: “Nothing in this section shall be construed to affect any authority

of the Commission under any other provision of law.” 15

U.S.C. 57b(e). Respondents’ claim also ignores Mitchell’s

holding that Congress need not say more to authorize the

return of funds when it has already authorized an injunction. 361 U.S. at 291.

Respondents next argue that the word “injunction” in

Section 13(b) cannot encompass the return of consumer

losses because Section 5(l) provides, in a civil-penalties

action to enforce a final cease-and-desist order, the authority to obtain a “mandatory injunction” and also “other and

further equitable relief.” 15 U.S.C. 45(l). Again, that argument is contrary to Mitchell, which held that no additional

language is required. 361 U.S. at 291. The argument also

compares statutory apples and oranges: the word “injunc-

11

tion” in Section 5(l) is not used in the same way as in Section 13(b). An action under Section 5(l) primarily involves

the payment of civil penalties for violation of a final ceaseand-desist order. 15 U.S.C. 45(l). It also allows for a “mandatory injunction”; that is, an order that requires a positive

act, or other relief the district court finds appropriate to

enforce a Commission order. That language is not comparable to Section 13(b), where a “permanent injunction” is

the primary authorized relief.

Respondents next complain that the Commission’s

reading of Section 13(b) allows an order requiring the

return of consumer losses without providing notice that

particular conduct is illegal through a Commission rulemaking or cease-and-desist order. Br. in Opp. 12-13. But

Congress balanced the Commission’s authority to declare

conduct illegal with the courts’ authority to craft remedies.

In a Commission rulemaking or administrative enforcement action, the Commission itself declares conduct illegal.

Under Section 13(b), by contrast, the Commission must

convince a court with “proper proof ” that the defendant’s

conduct is unlawful. 15 U.S.C. 53(b). Defendants are free to

argue (and often do) that the conduct alleged does not fit

within an established prohibition or that the established

restrictions provide constitutionally inadequate notice.

Lastly, respondents claim that Porter and Mitchell cannot be used “to categorically recognize all ancillary forms

of equitable relief without a close analysis of statutory text

and structure.” Br. in Opp. 13-14 (quoting Pet. App. 33a).

But it is the court of appeals’ analysis that ignores the

traditional understanding of the term “injunction,” nullifies

Section 19’s savings clause, and upsets the balance of decisionmaking authority inherent in the structure of the FTC

Act. There is no reason why Congress would have wanted

12

those who violate the FTC Act to the detriment of consumers to profit from their misconduct.

CONCLUSION

The petition should be granted.

Respectfully submitted.

ALDEN F. ABBOTT

General Counsel

JOEL MARCUS

Deputy General Counsel

for Litigation

MICHAEL BERGMAN

THEODORE (JACK) METZLER

MATTHEW M. HOFFMAN

Attorneys

FEDERAL TRADE COMMISSION

APRIL 2020