FTC's Ability to Seek Relief in Federal District Court Based on Past Conduct Is Called Into Question

Section 13(b) of the Federal Trade Commission Act (“Act”), 15 U.S.C. § 53(b), authorizes the Federal Trade Commission (“FTC”) to, among other things, seek injunctive relief (including preliminary and permanent injunctive relief) in federal district court in aid of an administrative proceeding “[w]henever the [FTC] has reason to believe … that any person, partnership, or corporation is violating, or is about to violate, any provision of law enforced by the [FTC] ….” Despite the explicit — and what would appear to be unambiguous — language of this provision, the FTC has taken the position that its authority to seek injunctive relief in federal district court pursuant to section 13(b) of the Act extends to situations where past conduct is “likely to recur” or “there exists some cognizable danger of a recurrent violation.” The FTC’s position is based, in part, on U.S. Supreme Court precedent holding that injunctive relief may be an appropriate remedy in situations where past conduct is likely to recur.

Since 1973, when the Act was amended to authorize the FTC to seek injunctive relief in federal district court, few parties have challenged the FTC’s authority (and the court’s jurisdiction) to seek relief in federal district court based solely on past conduct. That now appears to be changing. Recently, two federal district courts separately held, based on a literal interpretation of section 13(b) of the Act, that pleading factual allegations of an ongoing or imminent violation of the law is a jurisdictional prerequisite for the FTC to seek injunctive relief in federal district court. These courts, in rejecting the FTC’s claim that past conduct could support an action in federal district court even if the action was likely to recur, noted that whether injunctive relief is an appropriate remedy (as held by the Supreme Court) is a distinct issue from the court’s jurisdiction to provide such relief.

For additional information about the issues discussed above, or if you have any other antitrust concerns, please contact the Epstein Becker Green attorney who regularly handles your legal matters, or one of the authors of this Antitrust Byte: