Tuesday, September 05, 2023

AMG Capital didn't change monetary remedies for civil contempt

Federal Trade Commission v. National Urological Group, Inc., 2023 WL 5541756

No. 21-14161, --- F.4th ---- (11th Cir. Aug. 29, 2023)

Nearly 20 years ago, the FTC sued appellants, alleging they had misrepresented their weight-loss products to consumers. The district court granted injunctive relief and ordered them to pay $16 million in equitable monetary relief, which was then available. “Years later, the district court found that they had violated the injunction, held them in civil contempt, and ordered them to pay an additional $40 million in contempt sanctions.” Before that judgment was collected, AMG Capital limited the FTC’s authority to seek equitable monetary remedies directly in district court without first going through an ALJ. The court of appeals affirmed the district court’s holding that AMG had no bearing on a district court’s contempt powers.

In the underlying litigation, the district court permanently enjoined the defendants from making unsubstantiated claims regarding their weight-loss products. After finding they’d violated the injunction, the court held them in contempt. The contempt sanctions were to be deposited with the court and used by the FTC to reimburse consumers. Through garnishment, the FTC has collected about $2.3 million so far.

Defendants argued that the FTC cannot seek equitable monetary remedies via contempt when it cannot do so directly under § 13(b). Not so. These sanctions were imposed for violating the injunction against prospective conduct, and the ability to impose such injunctions was untouched by AMG. “When a district court enters an injunction, whether under § 13(b) or any other authority, it generally retains inherent contempt powers to remedy violations of its own orders.”

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