The 5th Circuit said the FTC’s deceptive advertising claims are “traditional actions at law and equity and thus involve private rights that demand adjudication in an Article III court.” The court rejected the FTC’s argument that the claims involve public rights that may be adjudicated by administrative agencies.
“In sum, there is overwhelming evidence that Section 5 of the FTC Act did not create a new duty for merchants to refrain from deceptive advertising,” the 5th Circuit said. “That duty long predated the FTC Act and could be enforced by private parties in actions at common law or equity for fraud, deceit, or unfair competition.”
FCC power to issue fines also at risk
In Jarkesy, the Supreme Court said that “matters concerning private rights may not be removed from Article III courts. If a suit is in the nature of an action at common law, then the matter presumptively concerns private rights, and adjudication by an Article III court is mandatory.”
By contrast, matters involving public rights may be handled exclusively by the executive and legislative branches without a court’s involvement. Categories that fall within public rights include: “collection of revenue; aspects of customs law; immigration law; relations with Indian tribes; the administration of public lands; and the granting of public benefits,” the Jarkesy ruling said.
The Jarkesy precedent that helped Intuit beat the FTC is also at the center of a case in which AT&T, Verizon, and T-Mobile are challenging the Federal Communications Commission’s authority to issue fines for selling customer location data without their users’ consent. The mobile carriers’ fight against FCC punishment is set to be decided by the Supreme Court.
Although current FCC Chairman Brendan Carr voted against the mobile-carrier penalties during the previous administration, the Carr FCC is urging the Supreme Court to uphold his agency’s ability to issue fines. The FCC argues that companies it fines can decline to pay and eventually receive a jury trial when the government sues to obtain the fine.
“Forfeitures are among the FCC’s most important enforcement tools,” the FCC told the Supreme Court on Friday. “Eliminating them could mean that many vital rules—such as those protecting privacy, combating robocalls, and regulating broadcasting—go effectively unenforced.”