It feels like only yesterday we were analyzing the Supreme Court’s opinion in Liu v. SEC and its initial impact on FTC cases. As a refresher: Liu held that a disgorgement award may not exceed a firm’s net profits. Subsequent to that, the Court ruled in AMG Capital Management LLC v. FTC that the FTC cannot obtain equitable monetary relief under Section 13(b) of the FTC Act. The House has passed legislation that would “restore” the FTC’s ability to obtain equitable monetary relief, and that bill is now being considered by the Senate. The new bill provides for the FTC to recover both restitution and disgorgement. A decision from the Seventh Circuit, however, found that those remedies are essentially the same thing and that the remedy is properly limited to profits, not revenue.

In CFPB v. Consumer First Legal Group, the district court, pre-Liu, awarded the CFPB $21,709,021 in restitution based on the amount of the defendants’ net revenues. On appeal, the CFPB argued that because Liu addressed only disgorgement, and not restitution, it is inapplicable. The Seventh Circuit disagreed and held that “Liu‘s reasoning is not limited to disgorgement; instead, the opinion purports to set forth a rule applicable to all categories of equitable relief, including restitution.” Central to the Seventh Circuit’s reasoning is the idea that both restitution and disgorgement are forms of equitable monetary relief, and the fact that the district court’s restitution order used disgorgement and restitution interchangeably. Thus, the Seventh Circuit ruled that after Liu an award of equitable monetary relief, whether disgorgement or restitution, is limited to net profits.

It will be worth monitoring how Liu and its progeny apply in the FTC context. Although the Commission lost its authority to obtain equitable monetary relief under Section 13(b), the FTC has been making enhanced used of its authority under Section 19 to recover restitution or redress for certain rule and statutory violations. The FTC has taken the position that this is equitable, not legal, relief, to avoid the right to a jury trial provided by the Seventh Amendment. As noted above, legislation in Congress may “restore” the FTC’s ability to obtain equitable monetary relief under Section 13(b). How the FTC’s use of its Section 19 authority and use of any new Section 13(b) authority intersect with Liu and its progeny is likely to be heavily litigated. Stay tuned.