April 2021 was a big month for consumer related cases. This article will provide a brief overview of four recent court decisions throughout the country with the potential to have a big impact on consumers moving forward.
AMG Capital Management, LLC v. Federal Trade Commission
On April 22 the Supreme Court of the United States, in a 9-0 decision, made it much harder for the Federal Trade Commission to timely seek redress for consumers by holding that section 13(b) of the Federal Trade Commission Act, which allows the FTC to seek “a permanent injunction,” concerns only prospective injunctive relief and does not allow the FTC to seek retrospective monetary relief in the form of restitution or disgorgement. The Supreme Court noted that other sections of the Act do allow the FTC to seek such redress, but only after they have adjudicated the claims before an administrative law judge and exhausted any necessary review by the FTC and any appeals.
The FTC had relied on section 13(b) to bring enforcement cases for over four decades and the FTC’s authority to do so had been upheld by several Court of Appeals decisions. In a statement responding to the decision, the FTC argued that the court had “deprived the FTC of the strongest tool [it] had to help consumers most,” noting that Section 13(b) enforcement cases have resulted in “$11.2 billion in refunds to consumers during just the past five years” and urged Congress to act to restore the agency’s powers. https://www.ftc.gov/news-events/press-releases/2021/04/statement-ftc-acting-chairwoman-rebecca-kelly-slaughter-us
The Court’s opinion can be read here: https://www.supremecourt.gov/opinions/20pdf/19-508_l6gn.pdf
Facebook, Inc. v. Duguid
The AMG Capital Management ruling came on the heels of SCOTUS’ April 1 ruling in Facebook, Inc. v. Duguid. In another 9-0 decision, the Supreme Court narrowed the types of devices that qualify as an “automatic telephone dialing system” under the Telephone Consumer Protection Act of 1991 (TCPA).
As defined by the TCPA, an “automatic telephone dialing system” is a piece of equipment with the capacity both “to store or produce telephone numbers to be called, using a random or sequential number generator,” and to dial those numbers. In its decision, SCOTUS determined that the phrase “random or sequential number generator” qualified both “store” and “produce” meaning that a database designed merely to store and call phone numbers inserted into it does not fall under the TCPA.
Given the changes in technology since the TCPA was first enacted and the fact that the majority of companies no longer use equipment that actually randomly generates numbers, some consumer advocates worry the decision will lead to an increase in robocalls, while proponents of the decision note that other provisions of the TCPA – notably those prohibiting prerecorded calls without the consent of the receiver – remain intact and argue that, under a broader interpretation of the statute every smartphone would qualify as an “automatic telephone dialing system.” See, e.g., https://www.nclc.org/media-center/supreme-court-deals-blow-to-protections-against-robocalls-advocates-urge-congress-to-act-to-prevent-a-tsunami-of-unwanted-calls-and-texts-to-cellphones.html and https://news.bloomberglaw.com/us-law-week/facebook-v-duguid-robocall-ruling-its-about-time.
The Court’s opinion can be read here: https://www.supremecourt.gov/opinions/20pdf/19-511_p86b.pdf
Online Merchants Guild v. Cameron
On April 29 the Sixth Circuit overturned a ruling by a judge in the Eastern District of Kentucky which had cited the dormant commerce clause’s extraterritoriality doctrine to severely limit the Kentucky Attorney General’s power to enforce Kentucky’s anti-price gouging laws against online sellers. In March 2020 the Kentucky Attorney General served a subpoena and a civil investigative demand on a Kentucky company because the AG had “reason to believe” the company had engaged, was engaging in, or was about to engage in violations of Kentucky’s anti-price gouging law in regards to sales of hand sanitizer and respirators sold on Amazon. The Online Merchants Guild, of which the target company was a member, initiated a lawsuit seeking to prevent the Kentucky AG from enforcing its anti-price gouging laws against the Guild’s members alleging, in part, that Kentucky’s anti-price gouging laws set an unlawful ceiling for online sales beyond its state lines because Amazon did not allow users to set different prices for different states. After the district court agreed with Online Merchants Guild and issued an injunction, the Kentucky Attorney General appealed, and the Sixth Circuit reversed noting that it was not Kentucky’s law that dictated a price ceiling but Amazon’s structuring of its online marketplace so that there can be only a single national price for goods. As such, Kentucky’s anti-price gouging law did not “by its express terms or by its inevitable effect” control wholly out-of-state commerce and did not violate the dormant commerce clause.
The Court’s opinion can be read here: https://cases.justia.com/federal/appellate-courts/ca6/20-5723/20-5723-2021-04-29.pdf?ts=1619708417
Krakauer v Dish Network, LLC
Also on April 29, the District Court for the Middle District of North Carolina adopted in large part the recommendations of an appointed special master regarding how to distribute cy pres funds stemming from a $61 million dollar judgment awarded to over 18,000 class members that received unlawful telephone solicitations in violation of the Do Not Call Registry. Previously the parties had agreed that over $10 million in judgment funds would not be distributed to class members because they failed to fill out the required claim form and that money was ready to be disbursed. After soliciting applications from organizations that work to address one or more of the objectives of the TCPA, the special master identified 12 organizations they recommended receive cy pres funds. Among other recipients, the district court’s order will provide nearly $3.0 million dollars for the National Legal Aid and Defendant Association, $2 million for state Attorneys General, and over $1.7 million for the National Consumer Law Center, Inc.
The Court’s order can be read here: https://www.anylaw.com/case/krakauer-v-dish-network-l-l-c/m-d-north-carolina/04-29-2021/d_QdKHkBoz_ZJneprDRt