Cantwell, Wicker Staffs Talking on FTC 13(b)
Senate Commerce Committee Chair Maria Cantwell, D-Wash., and ranking member Roger Wicker, R-Miss., are having staff-level discussions about a legislative response to the Supreme Court striking down FTC Act Section 13(b) authority (see 2104260065), they told us. Cantwell previously said she wants to move quickly on legislation to bolster the agency’s authority. The committee has bill language, but “I don’t know when we’re rolling it out,” Cantwell told us. Wicker confirmed the staff discussions.
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The House Commerce Committee advanced its own 13(b) legislation earlier this month with a 30-22 party-line vote (see 2106150068). The Consumer Protection and Recovery Act (HR-2668), from Rep. Tony Cardenas, D-Calif., would provide a 10-year statute of limitations. House Republicans are seeking a five-year window, House Commerce Committee ranking member Cathy McMorris Rodgers, R-Wash., and House Consumer Protection Subcommittee ranking member Gus Bilirakis, R-Fla., told us.
Democrats have been working with the minority and stakeholders “to find the right answer here,” Cardenas said in a statement. “A 5-year limit would have left some consumers out in the cold if it had been applied to the DeVry or Volkswagen frauds, among others. We have an offer to the Republicans and hope to find a reasonable compromise. But the one thing we can’t do is take too long -- consumers will lose billions of dollars from fraud if we don’t act quickly.”
Republicans want five years but are willing to work on a middle ground, said Bilirakis: “I think it can be worked out because we all have the same goal.” Most states have implemented two-year, four-year, five-year or six-year statutes of limitation for fraud, he said: “We should look at the whole picture and be very practical about it. I’m open to discussion.”
It’s “disappointing” the bill moved through committee with a party-line vote, said Rodgers: “We’re hoping to continue to work with the majority, and we pretty much laid out what we believe needs to happen. We recognize the bill needs to move.” Five years is “consistent with other statutes of limitation,” she said. Offices for House Commerce Committee Chairman Frank Pallone, D-N.J., and Consumer Protection Subcommittee Chair Jan Schakowsky, D-Ill., didn’t comment Monday, nor did the FTC.
Ten years is a “very lengthy” statute of limitations, said Kelley Drye’s John Villafranco, noting he has heard there’s room for compromise. Members of Congress discussed restoring the agency’s authority, but SCOTUS said Congress never gave the agency this authority, he said. He noted there’s “no disagreement that scammers shouldn’t profit.” Cardenas' bill would apply retroactively to cases the agency filed previously, which raises constitutional issues, he said: There will be challenges to the idea a party “could be liable for violating a law that didn’t exist” when a lawsuit was brought.
The high court decision's long-term effect is that it will significantly lengthen the time frame for the FTC when seeking restitution or disgorgement, and state attorneys general might need to fill the gap, said National Consumer Law Center Litigation Director Stuart Rossman. Nothing in the ruling prevents Congress from authorizing disgorgement or restitution authority, he added: “It’s a correctable issue, and that’s why remedial legislation is possible.”
The FTC “created its own power,” which is what prompted the court decision, said New Civil Liberties Alliance Senior Litigation Counsel John Vecchione. The FTC was supposed to hold regulatory hearings concerning any behavior in question and concurrently seek an injunction in court to prevent any bad action, Vecchione said: That morphed into the FTC holding ex parte proceedings without representation for defendants. There’s no chance for a defendant to get a lawyer when assets are frozen, he said: “This process upended pretty much all of American law.”