Notice & Comment

FTC Litigation After Seila Law

Daniel Fisher at Legal Newsline has authored a fascinating story about ongoing litigation between the FTC and Walmart that presents weighty constitutional questions about the FTC’s litigation authority after Seila Law v. CFPB. Here’s how Fisher’s story begins:

Days after the Federal Trade Commission accused Walmart of helping scam artists defraud customers by using its money-transfer service, the retailer fired back with a frontal assault on the agency’s constitutional authority to sue or seek financial penalties.

And here is a link to Walmart’s motion to dismiss, which includes this introductory paragraph:

[T]he FTC lacks constitutionally valid authority to bring this suit. Its Section 5 and [Telemarketing Sales Rule] claims rest on 15 U.S.C. §§ 45(m), 57b, and 53(b), which purport to grant the FTC the authority to file district court actions for monetary and permanent injunctive relief. When Congress enacted those provisions in the 1970s, however, it exceeded the limit on the powers that may be constitutionally vested in the FTC, an independent agency whose Commissioners cannot be removed at will by the President. See 15 U.S.C. § 41; Humphrey’s Executor v. United States, 295 U.S. 602, 625-26 (1935). As the Supreme Court recently emphasized, when Humphrey’s Executor upheld the constitutionality of the FTC’s independence, it reasoned that the FTC as it existed in 1935 did not exercise any executive power. See Seila Law LLC v. CFPB, 140 S. Ct. 2183, 2198-2200 (2020). And the Court also has repeatedly made clear that, by contrast, the power to file federal-court actions on behalf of the United States to enforce federal law through monetary penalties and injunctive relief—as the FTC is doing here—is a “quintessentially executive power.” See, e.g., id. at 2200. Because Congress’s post-Humphrey’s attempts to vest the independent FTC with executive litigation powers were unconstitutional and void, the FTC’s suit must be dismissed.

This litigation is one to watch.*

* If you’re interested in this issue, Fisher’s story quotes from this post of mine from last year about what FTC aggressiveness may mean for the future of agency independence. I also touch on a related issue — FTC rulemaking — in this recent book chapter.

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