IN CASE YOU MISSED IT: Here’s that Big law360 OP ED on Facebook and AMG Capital Management Everyone is Talking About

So I assume you saw this already, but just in case here is that big op-ed I penned on Facebook and AMG Capital that ran in law360 this week. (Re-published with permission.) Just my opinion. Not to be attributed to the firm or anyone else. 

Supreme Court Is Right In Limiting Gov’t Agency Authority

We have finally found something that all nine members of the U.S. Supreme Court agree upon — government agencies are not allowed to unilaterally give themselves more power. And that’s true no matter how high the stakes are.

In two recent decisions, the Supreme Court has ruled unanimously that actions taken by government agencies to protect consumers exceeded congressional authority and were, per se, unlawful.

The practical results of these rulings — we are told — will only aid robocallers and scam artists. Yet this forceful return of agency power to the wellspring of congressional authority was long overdue, and should empower more thoughtful policymaking from Congress in the future, as well as protecting Americans from a far graver, although less apparent, threat.

Let’s start with Facebook Inc. v. Duguid. There, the Supreme Court considered a broad interpretation of the Telephone Consumer Protection Act first advanced by the Federal Communications Commission and later applied by certain courts. The interpretation — which was plainly at odds with the statutory text — expanded the reach of the TCPA to cover all autodialers and not just random or sequential dialers.

This [broad interpretation] was essential, the Federal Communications Commission and courts told us, because the TCPA was the only federal statute designed to prevent robocalls. Reading the TCPA as it was written would deprive Americans of the ability to stop such calls and, the argument goes, open the floodgates to nuisance calls.

Nonetheless, in Facebook the court ruled 9-0 that the expansive read of the TCPA was inconsistent with the statute’s language and original purpose. The TCPA does not apply to all autodialers — just random-fire dialers. And the consequences of that ruling are irrelevant.  If Americans want more protection, they must ask Congress for it. The FCC was not permitted to invent for itself the power to regulate calls — even annoying calls — without congressional approval.

Even more recently, in AMG Capital Management, the Supreme Court took issue with the Federal Trade Commission’s practice of pursuing disgorgement of ill-gotten profits in actions pursuant to FTC Act Section 13.

As written, Section 13 only appeared to grant authority to the FTC to seek injunctive — and not monetary relief. Yet the FTC — and many courts — viewed the incidental power to recover illegal profits as necessary to the purpose of the FTC Act — at least in exceptional cases where wrongdoing was crystal-clear.

The Supreme Court disagreed and in AMG Capital had no problem stripping the FTC of its self-professed powers to obtain monetary relief in preliminary proceedings — a ruling that seemingly only supported scam artists and other clearly wrongful actors.

Yet the Supreme Court’s logic was infallible: The FTC Act did not authorize monetary recovery in Section 13 proceedings. So the FTC would not recover money in Section 13 proceedings.

While many may see these rulings as the Supreme Court missing the forest for the trees, the unanimous nature of the opinions sends a very clear — and critical — message: Statutory authority matters. And there is a second set of offsetting consequences — those of unchecked unilateral agency action — that underscore the value of Supreme Court exalting statutory authority over self-professed agency need.

Consider the case of the TCPA. When it was written, it was a humble statute that, as pertinent, only regulated random-fire dialers. That left ample communication channels open for lawful and legitimate speech.

By 2003, however, the FCC had quietly expanded the TCPA to cover all speech by autodialers to cellphones — a massive unconstitutional expansion of a restriction on speech. Indeed, the TCPA — as interpreted by the FCC — instantly became the single broadest restriction on constitutionally-protected speech in our nation’s history.

And because the expansion took place via the obscure order of a government agency better known for issuing broadband licenses than regulating speech, many Americans were unaware the expansion even occurred until they were trapped in the web of class actions that followed. Permitting an agency to unilaterally regulate American speech is a dangerous practice — and one that the Supreme Court was right to rein in.

The FTC’s actions under Section 13 were perhaps less impactful, but no less dangerous. Agencies exercising quasi-criminal power to sanction or fine individuals or companies ought to act within their defined boundaries and no further.

Once an agency commits to granting itself authority to pursue additional remedies beyond a statute’s narrow grant of authority, the only limit of its power is the limit of its own ambition. But to a hammer everything looks like a nail, and to a good consumer watchdog every case of purported fraud looks like an exceptional case meriting special redress remedies.

It must be noted that these agencies were aided and abetted in their efforts by a judiciary eager to assist. Again and again both the FCC and FTC’s actions — which the Supreme Court has now unanimously agreed were absolutely impermissible — were blessed and adopted by the courts. Call it “common sense” or “judicial activism” if you will, but the courts have demonstrated themselves far too receptive to agencies expansively interpreting their own mandates.

I suspect there will be some unwanted fallout from Facebook and AMG Capital. And I sincerely hope that Americans do not suffer too greatly as a result of these rulings. But at the end of the day the threat of unchecked and unilateral expansion of powers by government agencies is a far greater threat than those posed by petty scam artists and modern-day pickpockets.

Congress can act swiftly to address those ills — but the creeping specter of invented agency authority, limitless in its nature and invisible to all, cannot be accounted for. It haunts us everyone, everywhere and at all times. And I am grateful to the Supreme Court for putting a stop to it.

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