Legal Docket - Challenging federal overreach

MARY REICHARD, HOST: It’s Monday morning and time to get back to work on The World and Everything in It. Today is February 8, 2021. Good morning to you!  I’m Mary Reichard.

NICK EICHER, HOST: And I’m Nick Eicher.  

The justices of the U.S. Supreme Court handed down two opinions last week. 

First, a surprise loss for Jewish families who’d fought for compensation from the German government. Specifically, a group of heirs of Jewish art dealers had sued Germany in American courts to try to recover medieval art relics. 

The heirs say the Nazis forced sale of the artwork for far less than its true value. 

This property is known as the Guelph Treasure.

REICHARD: They did lose. But the case isn’t over. The unanimous decision returns the case to lower court to consider whether a different argument might permit the case to go forward. 

The heirs sued under a law that does not generally permit lawsuits against foreign nations in American courts. But a pretty clear exception allows for that, if it involves property taken in violation of international law. 

Germany argued it took property from its own citizens, making this is a domestic matter. So the exception doesn’t apply. 

But the heirs say their relatives were not German citizens; therefore, it’s not a domestic matter.

The lower court will now have to sort all that out.

EICHER: Second, a 6 to 3 ruling in favor of a retired railroad worker. 

The federal Railroad Retirement Board had refused to reconsider a decision that declined disability benefits. The Supreme Court ruling gives that worker the right to have the courts review that decision.

REICHARD: Now, on to the one oral argument for today.

ROBERTS: We will hear argument this morning in case 19-508 AMG Capital Management versus the Federal Trade Commission.

EICHER: The founder of AMG Capital Management is a man by the name of Scott Tucker. He’s also an amateur race car driver. 

And a federal inmate.

Tucker’s currently serving a 16 year prison sentence for making illegal payday loans. His company made internet loans at interest rates that were unlawfully high and automatically renewed them. 

With the profits, Tucker funded his race-car ambitions, and he’s something of a known entity. Apparently Justice Amy Coney Barrett had heard about him. 

Listen to this comment to the attorney for Tucker:

BARRETT: I don’t understand you to be arguing he has clean hands.  I mean, he’s been convicted. He has the dubious distinction of being the subject of an episode of “Dirty Money” on Netflix.

REICHARD: Nobody disputes his conviction. What Tucker does dispute is how the Federal Trade Commission went after his money.

The FTC used a part of the Federal Trade Commission Act to do that. Tucker’s lawyer Michael Pattillo argues the agency used a portion of the law that permits an injunction. Meaning, a court order for someone to stop a behavior. 

But it doesn’t permit the agency to go after money. The FTC isn’t playing by its own rules, says Pattillo, again, for Tucker. Note I’ve edited for flow.

PATTILLO: I heard the Commission say that sometimes one pathway might be more attractive. Well, of course it’s going to be more attractive for the Commission to proceed …where it doesn’t have to comply with for example the heightened proof requirement.  Here, the Commission first investigated this conduct, it first asked Mr. Tucker about his disclosures, in 2002. Yet, subject to no limitations period, it sat on its hands for a decade.

Sitting on its hands, wasting time, letting memories fade. That makes mounting a defense harder as time goes on. Time limits on when an agency can go after a person is one protection for the accused.

Other protections against government overreach is due process. The accused receiving a hearing, for example. 

Or making sure the government itself follows the law, before going after citizens.

Each side of this dispute draws support from different sections of the FTC Act.

The agency wants to use the section that gives it the power to seek an injunction against a business “that is violating or is about to violate” the law.

That language is forward-looking. Nothing about past money damages mentioned in that.

And yet, the courts have let this slide for decades. Here’s how lawyer for the FTC, Joel Marcus, put it. When he says “petitioners,” you should know he means Tucker.

MARCUS: The Petitioners are asking you to rule that when Congress allowed the Commission to enforce the FTC Act in federal court, it intended that the Court would merely stop the violations while letting the violator keep his stolen money.

Not so fast, Tucker’s lawyer argues. Another section is what should apply to his client, one passed a little later than the section the FTC relies upon. It allows the agency to win monetary relief, but only after it jumps through some hoops. 

First, an administrative hearing to see whether a cease and desist order was sent out, and two, only for behavior that a reasonable person would have known is “dishonest or fraudulent.” 

Neither one nor two happened and Tucker’s lawyer argues that means the FTC exceeds its authority to go after the money.

Chief Justice John Roberts made note of how things have changed since the FTC Act passed a half century ago. He sets it all up in a question to Tucker’s lawyer, Pattillo.

ROBERTS: …and in the intervening years, there’s been a significant change in how this Court interprets statutes. Back when this one was passed, we had a pretty free-wheeling approach. You know, we weren’t as confined to the specific language. You sort of look at what Congress had in mind and — and figured out the meaning in light of that. And, of course, today, we have a more disciplined approach, you know, I think more suited to our role under the Constitution. But shouldn’t we construe this statute in the environment in which Congress passed it in light of the, as I said, more free-wheeling approach?…So why would we adopt a view that is current today but wasn’t current back then?

Well, here’s why, Patillo answered: Just look at the text itself. The right answer is right there. Never mind past practices.

But Marcus for the FTC argued of course past practice matters. That’s where the analysis should lie.

Justice Stephen Breyer wondered about that history. He mentions Marbury v Madison. That’s the decision from 1803 that gave American courts the power to strike down laws, statutes, and government actions they find violates the Constitution.

BREYER: Law isn’t perfect. Courts make mistakes. We make mistakes too. And this, if it is a mistake, has been around for 50 years and there’s a pretty uniform interpretation before the Seventh Circuit. And if we never say “let bygones be bygones,” I mean, we’re going to be here to Marbury versus Madison and beyond. So too much time has passed, water under the bridge, good-bye.

Justice Breyer asking what’s the principle for correcting mistakes? Maybe better to accept them for the sake of judicial sanity?

Justice Brett Kavanaugh offered some insight, given his resume:

KAVANAUGH: I worked in the Executive Branch for many years, so I understand how this happens. When you’re in the Executive Branch or an independent agency, you want to do good things and prevent or punish bad things, and sometimes your statutory authority is borderline…could be war policy or immigration or environmental or what have you, but with good intentions, the agency pushes the envelope and stretches the statutory language to do the good or prevent the bad. The problem is it results in a transfer of power from Congress to the Executive Branch to decide whether to exercise this new authority. That’s a particular concern, at least for me, with independent agencies.

The concern is separation of powers. That protects the rights of citizens from the concentrated power of government. 

Marcus countered that the legislature spelled out the authority for the executive agency to go to court, and it’s right there in the text. If Congress intended to let agencies go to court and ask for all sorts of remedies, then there is no separation of powers problem to worry about.

The main problem seems to be undefined terms. The law gives the FTC power to prevent, prohibit, or punish “unfair or deceptive” business practices. But as The Wall Street Journal pointed out, and Justice Kavanaugh alluded to, the FTC tends to see whatever it’s investigating as an unfair or deceptive practice. To a hammer, every problem is a nail.

So even though Tucker the unscrupulous payday lender has unclean hands, the Constitution still protects him from a government arrogating power unto itself. 

Judging from the way the questioning went, I think the FTC is going to be nipped of some power this time around. 

And that’s this week’s Legal Docket.

(AP Photo/J. Scott Applewhite, File) In this Friday, Nov. 6, 2020 file photo, The Supreme Court is seen at sundown in Washington. 

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