Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: U.S. Supreme Court denies telemarketing company’s petition over FTC Act damages, (Jun 9, 2014)

By Greg Hammond, J.D.

The U.S. Supreme Court will not review a decision by the U.S. Court of Appeals in San Francisco that made legal damages mandatory as an appropriate remedy under Section 13(b) of the FTC Act. Today, the Court denied the magazine subscription telemarketing business’ petition for certiorari. The petition was filed on February 27, 2014 (Publishers Business Services, Inc. v FTC, Dkt. 13-1045).

According to the FTC’s complaint, Publishers Business Services, Inc., Ed Dantuma Enterprises, Inc., and six corporate officers and managers allegedly engaged in deceptive and abusive telemarketing practices with regard to the sale of magazine subscriptions. The district court granted the FTC’s motion for summary judgment, issued a permanent injunction, and awarded the FTC over $190,000 in equitable damages.

The appellate court found that the district court abused its discretion in determining the damages award. Instead, the appellate court found that the award in the instant case was authorized by Section 13(b) of the FTC Act, which allows awards that are greater than a defendant’s unjust enrichment. Consequently, the appellate court vacated the damages award and remanded it to the district court, noting that although it was not required to accept the FTC’s $34.4 million calculation for damages, it “should base its calculation on the injury to consumers, not on the net revenues received by the defendants.”

The telemarketing business contended that the Ninth Circuit placed itself in conflict with the approaches of other circuits on the availability of monetary damages under Section 13(b), a statute which prescribes the sole remedy of a preliminary or permanent injunction. The petitioner also contended that the Ninth Circuit endorsed the FTC’s ability to get money damages, measured by customer losses based on a district court’s supposed implied authority under Section 13(b) to issue ancillary relief.

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