FTC v. Consumer Defense, LLC
926 F.3d 1208
9th Cir.2019Background
- The FTC sued Consumer Defense Global and related entities alleging deceptive MARS practices: false promises of loan modifications, charging unlawful advance fees, misrepresenting government affiliation, and advising consumers to stop mortgage payments.
- FTC alleged the defendants operated as a common enterprise, harmed consumers nationwide, and sometimes never contacted lenders, causing fees, penalties, and foreclosures.
- FTC brought claims under the FTC Act and the MARS Rule and sought injunctive relief under Section 13(b) of the FTC Act; it obtained an ex parte TRO freezing assets and appointing a receiver.
- At the preliminary-injunction stage the FTC argued irreparable harm is presumed in statutory-enforcement actions authorizing injunctions, and also cited asset dissipation and further consumer harm as practical irreparable injury.
- Consumer Defense Global conceded some MARS violations but argued most customers obtained modifications and contended the FTC failed to show irreparable harm or likelihood of success; they appealed the district court’s preliminary injunction and asset freeze.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FTC must show irreparable harm to obtain a preliminary injunction under §13(b) when it pursues statutory enforcement | FTC: In statutory-enforcement suits where the statute authorizes injunctive relief, irreparable harm is presumed; court need only weigh equities and likelihood of success | Consumer Defense Global: Winter requires a plaintiff show likelihood of irreparable harm for preliminary injunctions | The Ninth Circuit affirmed that for statutory-enforcement actions where the statute authorizes injunctive relief, the traditional irreparable-harm showing is not required; precedent presuming harm remains valid and is reconcilable with Winter |
Key Cases Cited
- Winter v. Natural Res. Def. Council, 555 U.S. 7 (2008) (established traditional preliminary-injunction test including requirement of likely irreparable harm)
- F.T.C. v. World Wide Factors, Ltd., 882 F.2d 344 (9th Cir. 1989) (in §13(b) actions, harm to the public interest is presumed; lighter burden for FTC)
- United States v. Odessa Union Warehouse Co-op, 833 F.2d 172 (9th Cir. 1987) (agency need not show irreparable injury when statute authorizes injunction)
- F.T.C. v. Weyerhaeuser Co., 665 F.2d 1072 (D.C. Cir. 1981) (congressional intent to lighten agency burden; presumption of irreparable injury where statute authorizes injunction)
- Amoco Prod. Co. v. Village of Gambell, 480 U.S. 531 (1987) (discusses irreparable injury as a basis for injunctive relief)
- Miller v. Gammie, 335 F.3d 889 (9th Cir. en banc 2003) (framework for determining whether intervening higher authority has invalidated prior circuit precedent)
- F.T.C. v. H. N. Singer, Inc., 668 F.2d 1107 (9th Cir. 1982) (district court may grant preliminary relief justified by usual equitable standards when permanent injunction is authorized)