Jones v. Mississippi, AMG Capital Mgmt v. FTC, Carr v. Saul

Greetings, Court fans!

Last Thursday, the court rendered three decisions in debated cases. In Jones v. Mississippi (n ° 18-1259), a sharply divided court reduced its earlier ruling to Miller vs. Alabama (2012), holding that a court could sentence a minor to life imprisonment without the possibility of parole, even without expressly concluding that the accused was “definitely incorrigible”. In AMG Capital Management LLC v FTC (# 19-508), a unanimous court ruled that the FTC’s power to obtain “permanent injunctions” did not allow it to seek fair pecuniary relief, such as restitution or restitution. And in Carr v. Saul (n ° 19-1442), the Court unanimously held that applicants for disability benefits could challenge the question whether the administrative judges who had ruled on their claims against them were validly appointed, whether or not they raised this argument at the time. of their initial hearings before the ALJ. We will come back later this week with a more complete description of Jones, but for now we have summaries of AMG and Carr.

Section 13 (b) of the Federal Trade Commission Act authorizes the FTC to obtain a “permanent injunction” in federal court against a person or entity that it believes is currently breaking or is about to violate any law that the FTC is in law. impose. In AMG Capital Management LLC v FTC (# 19-508), the Supreme Court considered whether this power to seek an injunction also authorized the FTC to obtain fair pecuniary relief such as restitution or restitution. Breyer J., speaking for a unanimous Court, concluded that it did not.

Scott Tucker was a payday loan mogul. His online businesses used a ploy to mislead customers by stating that customers could pay off a loan by making a single payment including interest, but then burying it in the fine print that the loan would automatically renew unless the customer does not disengage in the affirmative. As a result, a client who borrowed $ 300 might think they could make a single payment of $ 390 to pay off the loan, but if they didn’t opt ​​out in the affirmative, they would be forced to get another loan. of $ 300 (and another, and so on. to).

Between 2008 and 2012, Tucker’s companies made more than $ 1.3 billion in deceptive charges. In 2012, the FTC sought to ban deceptive lending practices in federal court under Section 13 (b). Above all, the FTC also sought financial redress, including restitution and restitution. The district court issued summary judgment in favor of the FTC, issued the injunction and ordered payment of $ 1.27 billion. The Ninth Circuit asserted that Section 13 (b) empowers federal courts to grant “any collateral remedy necessary to achieve full justice, including restitution.”

The Supreme Court unanimously overturned it. Judge Breyer’s opinion began by setting out the statutory structure enabling the FTC, including the administrative remedies available. He then outlined the history of Article 13 (b). This provision was part of a larger congressional plan to strengthen the FTC in the 1970s, including the addition of other provisions that empower courts to impose monetary fines and fair monetary relief if someone violates an FTC final order. In the 1990s, the FTC began seeking monetary relief under Section 13 (b), but cut back in 2003, issuing a policy statement that it would only seek such relief in “exceptional cases.” involving a “manifest violation”. Then, in 2012, the FTC revoked that policy statement. The end result was that, until this ruling, the FTC used “Section 13 (b) to obtain fair monetary relief directly in court with great frequency” at the rate of “dozens of cases each year. , Employing this enforcement route much more frequently than other administrative remedies available to it under the FTC Act.

After setting out this history, Justice Breyer then turned to the relatively straightforward question of statutory interpretation: Does the phrase “permanent injunction” authorize the FTC to seek court-ordered monetary relief? The court’s response was a simple ‘no’. On the one hand, an injunction is not the same as a fair pecuniary remedy: the former generally offers prospective redress for future damage, while the latter generally offers retrospective redress for damage already suffered. The structure of the FTC Act only confirms this: the language of the permanent injunction appears in a long provision that focuses entirely on a prospective remedy. The aim is to put an end to “apparently unfair practices while the [FTC] determines their legality. In addition, since the FTC Is explicitly provide for monetary relief in other sections where an FTC order has been violated, the absence of such language in section 13 (b) suggests that Congress did not consider such remedies in this section. Finally, Justice Breyer noted that Congress is unlikely to surreptitiously undermine administrative enforcement mechanisms elsewhere in the FTC by providing for the much more powerful monetary redress remedy in federal court without specifically stating so.

The FTC has presented several arguments as to why it should be entitled to monetary compensation. Most fall into the “this is how we’ve always done it” and / or “it would lead to unfair policy” categories. He also referred to certain “safeguard clauses” elsewhere in the FTC law. The Court did not find any of this convincing in light of the clear wording of the law. And he went on to note that the FTC can obtain restitution in certain circumstances under other sections of the law, and that he could always “ask Congress to grant him additional remedial power” if he deems it necessary – in fact, the FTC has requested this same authority last year. The ball is now firmly in Congress’ court to decide whether it wants to sharpen the claws of the FTC by further expanding the remedial scope of Section 13 (b).

Our second case for today is Carr v. Saul (n ° 19-1442), a slightly messy but still unanimous opinion that claimants for disability benefits could challenge whether the administrative law judges (“ALJs”) who decided their claims were constitutionally appointed even though they had not raised this argument at the time. of their hearings in front of their ALJs.

Carr and five others had separately applied for disability benefits under the Social Security Act. Their requests were rejected, so they requested an administrative review, obtaining a hearing before different ALJs. When each of them lost, they appealed to the Social Security Administration’s Appeal Board, where they lost again. But then the court decided Lucie vs. SEC (2018), finding that the Securities and Exchange Commission ALJs had been unconstitutionally appointed (i.e., they had not been appointed in the manner required by the appointment clause of the Constitution) . Because the SSA ALJs are very similar to the SEC ALJs (and therefore probably weren’t constitutionally appointed either), the SSA has “rolled over” all of its ALJs to comply with Lucy. He then ruled that the Appeals Board should overturn previous ALJ decisions and provide a new review before a now properly appointed ALJ. But this remedy was only available to applicants who had raised a challenge to the appointment clause during their administrative hearings in the first place. For those who didn’t, SSA gave them no relief.

Each of the petitioners fell into the latter category. At the time of Lucy, they had sued the Federal Court asking the courts to overturn the unfavorable decisions of the SSA. Building on the newly decided Lucy, each claimant then asked their courts to overturn their ALJ’s decisions because the ALJ did not have the power to rule on their claims. But the Eighth and Tenth Circuits (in decisions involving all six petitioners) concluded that they had waived those demands by not raising them at their administrative hearing. The third, fourth and sixth circuits having reached the opposite result, the Court granted cert.

Judge Sotomayor, who wrote for a unanimous court (at least), began with the principles of judicial review of administrative action. As a general rule, before you challenge an administrative body’s actions in court, you should give it an opportunity to resolve the issue through its administrative process. This requirement, known as problem exhaustion, plays out differently depending on the statutes governing each agency. But the statutes of some agencies – the SSA among them – say nothing about the exhaustion of the problems. In this case, the courts decide to require exhaustion by making an analogy with the rule according to which the courts of appeal will generally refuse to consider arguments which had not been raised before in the court of first instance.

With this context set aside, Judge Sotomayor quickly analyzed the SSA’s arguments that the Court should impose a requirement of exhaustion created by justice. In an earlier case, Sims vs. Apfel (2000), the Court found that the rules for exhaustion of questions were not suited to the non-adversarial structure of SSA hearings. Since Social Security claimants do not have the same obligations to develop trouble and prove their case as parties in court, it made little sense to impose trouble exhaustion requirements that punish them when they don’t. True, Sims had dealt with slightly different phases of administrative control (ie, proceedings before the SSA Appeals Board, not before the ALJs). But Judge Sotomayor concluded that trial-level procedures before an ALJ were still mostly non-adversarial, making it unwise to apply a different rule. In addition, the established rules for exhaustion of questions contain exceptions where exhaustion would be futile, and what could be more futile than asking an ALJ to hold their own appointment to be unconstitutional? The Court therefore agreed that the applicants could raise for the first time in federal court their challenges to the appointment clause against the appointment of their ALJs.

Although the result was unanimous, the analysis was not. Justice Thomas, accompanied by Justices Gorsuch and Barrett, concurred with the judgment. And they agreed most in the opinion of the Court. But they considered the court’s discussion of futility to be pointless, arguing that Sims solved the case, so why go any further. Breyer J., on the other hand, was dissenting. Sims, and he still thought he was right about it. But he agreed with the majority that requiring applicants to raise constitutional challenges to an agency’s structure before a JLA would be futile. He therefore agreed with the result and joined the parties of the opinion which the three concurring Conservative judges refused to join.

That’s it for this update. We will come back later this week to talk about it Jones and keep you abreast of other recent events at the Court (including cert grants and possible additional decisions on Thursday).


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About Harold Shirley

Harold Shirley

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