Opinion ID: 78043
Heading Depth: 3
Heading Rank: 1

Heading: Whether the district court had authority to order restitution under the CEA

Text: Appellants first argue that the district court erred in awarding restitution because the CEA does not expressly authorize such a remedy. According to Appellants, in an enforcement proceeding brought by the CFTC under 7 U.S.C. § 13a-1, a district court's remedies are limited to injunctions, writs of mandamus or orders affording like relief, and civil penalties. We disagree. Under the CEA, whenever it appears that any registered entity or other person has engaged, is engaging, or is about to engage in a violation of the CEA or CFTC regulations under the CEA, the CFTC may bring an action in district court to enjoin such act or practice, or to enforce compliance with this chapter, or any rule, regulation or order thereunder. 7 U.S.C. § 13a-1(a). Under § 13a-1(b), the court may issue an injunction or restraining order without bond; under § 13a-1(c), entitled Writs or other orders, the court may issue writs of mandamus, or orders affording like relief, ... including the requirement that such person take action as is necessary to remove the danger of violation of the CEA. In Porter v. Warner Holding Co., 328 U.S. 395, 66 S.Ct. 1086, 90 L.Ed. 1332 (1946), the Supreme Court interpreted a similar statute, the Emergency Price Control Act (EPCA). The EPCA allowed the Administrator to ask a court for an order enjoining violations of the EPCA, or for an order enforcing compliance with such provision. Further, upon a showing by the Administrator that [any] person has engaged or is about to engage in violations of the EPCA, a court had the power to grant a permanent or temporary injunction, restraining order, or other order. The Court determined that [s]uch a jurisdiction is an equitable one. Unless otherwise provided by statute, all the inherent equitable powers of the District Court are available for the proper and complete exercise of that jurisdiction. Id. at 398, 66 S.Ct. 1086. Further, when the action involves the public interest, a court's equitable powers assume an even broader and more flexible character. Id. The Court determined that restitution in particular lies within that equitable jurisdiction and is within the recognized power and within the highest tradition of a court of equity. Id. at 403, 66 S.Ct. 1086. The CEA's enforcement provision is nearly identical to the EPCA's enforcement provision. Both provide for an order enforcing compliance and an order enjoining violations. Like the EPCA provision for other orders, the CEA provides for [w]rits or other orders and allows a court to take such action as is necessary to remove the danger of violation of the CEA. The CFTC here invoked the jurisdiction of the District Court to enjoin acts and practices made illegal by the [CEA] and to enforce compliance with the [CEA]. Such a jurisdiction is an equitable one. Id. at 397-98, 66 S.Ct. 1086. We have similarly applied the statutory principles in Porter to the Federal Trade Commission Act. See FTC v. Gem Merch. Corp., 87 F.3d 466 (11th Cir.1996). In Gem Merchandising, we considered language that enabled the FTC, whenever [it] has reason to believe that any person... is violating or is about to violate [the FTCA] to bring suit in district court to enjoin any such act or practice and enabled the district court to grant a preliminary or permanent injunction. Id. at 468, 87 F.3d 466; 15 U.S.C. § 53(b). We concluded that the FTCA's grant of authority to issue an injunction carried the full range of equitable remedies, among which is the power to grant restitution and disgorgement. Id. at 468-69. [1] That a court's jurisdiction under § 13a-1 includes equitable remedies is well established among our sister circuits. See CFTC v. Kimberlynn Creek Ranch, Inc., 276 F.3d 187, 193 (4th Cir.2002) (It is well settled that equitable remedies such as disgorgement are available to remedy violations of the CEA.); CFTC v. Am. Metals Exch. Corp., 991 F.2d 71, 76 (3d Cir. 1993) (finding that a district court had authority to order disgorgement under the CEA); CFTC v. British Am. Commodity Options Corp., 788 F.2d 92, 94 (2d Cir. 1986) (finding that disgorgement is a necessary and appropriate remedy under the CEA and that it effectuates the purpose underlying the [CEA]  protection of the investor); CFTC v. Co Petro Mktg. Group, Inc., 680 F.2d 573, 582-84 (9th Cir.1982) (determining that a court has the power to order disgorgement as ancillary relief under the CEA); CFTC v. Hunt, 591 F.2d 1211, 1223 (7th Cir.1979) (concluding that a district court may compel a violator of [the CEA] to disgorge his illegally obtained profits). We conclude that the unqualified grant of statutory authority to issue an injunction under § 13a-1 carries with it the full range of equitable remedies, among which is the power to grant restitution. Thus, the district court here had authority to order the Appellants to pay restitution. [2]