Established with an eponymous act in 1914, the Federal Trade Commission (FTC) oversees civil antitrust enforcement and consumer protection. They enforce consumer protection through three avenues. First, they bring cases before administrative law judges; second, they bring cases before the district courts, usually seeking injunctions to stop ongoing alleged violations of the FTC act; and third, the Biden administration has issued an executive order aiming to reinvigorate the FTC’s rulemaking authority, similar to that of the National Labor Relations Board. These analyses examine the cases the FTC has been involved in since 2019.
Overall, the FTC spends approximately 52% of its cases in District court, 27% in front of administrative law judges, 17% before the Circuit Judiciary, 2% in bankruptcy proceedings, and 2% before the Supreme Court.
The vast plurality of cases held the Nature of Suit Code 890 for other statutory actions, followed by administrative cases, and antitrust cases. When looking at the specific statutes cited in the complaints, the FTC usually cites the key enforcement clauses of the Federal Trade Commission Act.
Different Administrations, Different Approaches?
On average, the Trump administration was involved in more cases per month than the Biden administration. Cases peaked in January 2020, and then fell to a low in February 2021. However, controlling for filings and start date, the Biden administration is taking on longer-running cases. This could suggest that Biden’s FTC is taking on more challenging cases instead of simply going after the lowest hanging fruit. However, controlling for case length and start date, the administrations’ cases do not differ in how many documents are filed.
Looking specifically at cases brought before an administrative law judge, the Biden and Trump administrations did not differ in cases brought per month. This suggests that while the Biden administration is involved in fewer cases, a greater proportion of them are heard before administrative law judges.
Challenges to FTC Power
Since 2019, the FTC has faced numerous challenges to its regulatory authority. Most notable among these cases is AMG Capital Management, LLC, et al., Petitioners v. Federal Trade Commission. In this case, the Supreme Court ruled 9–0 that the FTC could not use section 13(b) of the FTC Act to levy fines. This section, passed in 1973, allows the agency to seek courts for an injunction to prevent ongoing and future unfair business practices. However, as the decision explains, in the prevailing decades, the FTC has used this authority to seek fines and asset freezes to redress consumers for the alleged unfair business practices. This Supreme Court ruling, then, ruled that if the FTC wants to freeze a defendant’s assets or seek disgorgement of resources, they must use their authority under Sections 5 and 19 of the FTC Act, which provide for longer proceedings in either the district courts or before an administrative law judge. Proceedings before an administrative law judge in a different agency, the Securities and Exchange Commission, are currently under fire in Securities and Exchange Commission v. Jarkesy, which was argued before the Supreme Court of the United States last month.
Since AMG, seven cases have been brought before the Circuit Courts in which defendants sought to overturn the disgorgement the FTC had previously achieved under section 13(b). In all of these instances, the disgorgement, and in one case the asset freeze, was overturned.
Beyond AMG, the FTC has faced extensive litigation over Congress’ creation of the Horseracing Integrity and Safety Authority (HISA) in 2020. While multiple suits were filed, they were consolidated into State of LA v. Horseracing Integrity, in which the Fifth Circuit ruled in 2022 the body was unconstitutional, on the grounds that Congress had created a non-governmental body to regulate in place of the government. However, that same year, Congress amended the law to give the FTC the final say on any action taken by HISA. The Sixth Circuit ruled in 2023 that this amendment satisfied the nondelegation doctrine. And in support of this ruling, the FTC overturned a HISA ruling on whether a jockey improperly used his crop.
The third challenge to the FTC’s power came in a lawsuit over a hospital merger in New Orleans. The FTC sued to block this merger, arguing the hospitals failed to file the requisite Hart–Scott–Rodino Act premerger notification paperwork. Louisiana Children’s Hospital and HCA Healthcare Inc, the defendants, argued that Louisiana’s Certificate of Public Advantage (COPA) allowing the merger preempts federal regulation. The Eastern District of Louisiana sided with the defendants, ruling that COPAs do preempt federal antitrust regulation. The FTC argues that COPAs do not sufficiently regulate hospital monopolies.
Since 2019, the FTC has filed amicus briefs in 20 cases, 75% of which were filed during the Biden administration. The majority of these cases deal with antitrust issues. Of those, 9 are still in progress, and of the remaining 11, in 7, the judge agreed with the FTC; in 2, the judge disagreed with the FTC, the other two were resolved out of court and transferred to another district. Most of these cases were heard before Circuit courts.
In an update to a case previously covered on Law Street, the FTC filed a brief in favor of two McDonald’s workers suing the franchise arguing their anti-poaching policy violates the Sherman Act. The Northern District of Illinois dismissed the suits, but the Seventh Circuit vacated the ruling, stating that McDonald’s banning franchisees from luring employees from their competitors with higher wages is a per se violation of the Sherman Act. McDonald’s has appealed this decision to the Supreme Court.
In only one case has the FTC filed an amicus brief in favor of the defendant. In Jazz Pharmaceuticals, Inc. v. Avadel CNS Pharmaceuticals, LLC, the defendant filed a motion to delist the plaintiff’s patent from the Food and Drug Association’s Orange Book. The FTC argued that Jazz Pharmaceuticals’ patent did not qualify for Orange Book protection as it concerns drug distribution, not of a drug itself or drug use.