Opinion ID: 460128
Heading Depth: 1
Heading Rank: 1

Heading: Preliminary injunctive relief under Sec. 13(b).

Text: 9 The FTC first argues that the district court may grant preliminary relief under section 13(b) of the FTC Act, 15 U.S.C. Sec. 53(b). Although the relevant proviso of Sec. 13(b) explicitly only authorizes permanent relief--in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction, 15 U.S.C. Sec. 53(b) (emphasis added)--we have held that because the district court has the power to issue a permanent injunction to enjoin acts or practices that violate the law enforced by the Commission, it also has authority to grant whatever preliminary injunctions are justified by the usual equitable standards. FTC v. H.N. Singer, Inc., 668 F.2d 1107, 1111 (9th Cir.1982). See also Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 291-92, 80 S.Ct. 332, 334-36, 4 L.Ed.2d 323 (1960); Porter v. Warner Holding Co., 328 U.S. 395, 398, 66 S.Ct. 1086, 1089, 90 L.Ed. 1332 (1946); FTC v. Southwest Sunsites, Inc., 665 F.2d 711, 718-19 (5th Cir.), cert. denied, 456 U.S. 973, 102 S.Ct. 2236, 72 L.Ed. 846 (1982). Therefore, we must determine whether the FTC has brought a proper case that meets the usual equitable standards for preliminary relief. 10 A. The FTC's theory of a proper case: a violation of any law enforced by the FTC. 11 The FTC argues that a proper case for which Sec. 13(b) injunctive relief may be sought includes 1) any case involving a law enforced by the FTC, or 2) any case involving a likelihood that a past violation of a law enforced by the FTC will recur. We accord considerable weight to the meaning given a statute by the agency charged with administering it. See, e.g., Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 2782-83, 81 L.Ed.2d 694 (1984). 12 We accepted the FTC's first assertion in Singer: Congress ... gave the district court authority to grant a permanent injunction against violations of any provisions of law enforced by the Commission.... 668 F.2d at 1113 (emphasis added). See 15 U.S.C. Sec. 53(b)(1) (FTC may seek a temporary restraining order or preliminary injunction whenever it has reason to believe that any person is violating, or is about to violate, any provision of law enforced by the Federal Trade Commission....); S.Rep. No. 151, 93rd Cong., 1st Sess. 30-31 (1973) (quoted in Singer, 668 F.2d at 1110-11); see also FTC v. Simeon Management Corp., 532 F.2d 708, 712 (9th Cir.1976); 119 Cong.Rec. 22979 (July 10, 1973) (Statement of Sen. Jackson). Such a comprehensive reach for Sec. 13(b) has been expressly, see FTC v. Virginia Homes Manufacturing Corp., 509 F.Supp. 51, 54 (D.Md.), aff'd, 661 F.2d 920 (4th Cir.1981); FTC v. H.N. Singer, Inc., 1982-83 Trade Cas. (CCH) p 65,011 at 70,618 (N.D.Cal.1982), and implicitly confirmed, see FTC v. Brown & Williamson Tobacco Corp., 580 F.Supp. 981 (D.D.C.1983); United States v. National Dynamics Corp., 525 F.Supp. 380 (S.D.N.Y.1981), by other courts which have granted permanent injunctions under Sec. 13(b). 13 In attempting to limit Sec. 13(b) to cases involving routine fraud or violations of previously established FTC rules, Evans misreads both the case law, see Singer, 668 F.2d at 1111, and the legislative history. See S.Rep. No. 151, 93rd Cong. 1st Sess. 31 (1973) (Sec. 13(b) authorizes a permanent injunction when a court is reluctant to grant a temporary injunction because it cannot be assured of a [sic] early hearing on the merits, as well as in the routine fraud case) (quoted in Singer, 668 F.2d at 1111). 14 B. Does a proper case include charges of past violations of the FTC Act? 15 Evans' more serious contention is that a Sec. 13(b) proper case does not encompass violations that completely ceased before the FTC brought suit and have not been shown to be likely to recur. 1 16 Evans' view that Sec. 13(b) cannot be used to remedy past violations is supported by the statutory language. The FTC may only seek a temporary restraining order or a preliminary injunction when it believes a person is violating, or is about to violate any law enforced by the FTC; the statute does not mention past violations. 15 U.S.C. Sec. 53(b)(1). The sparse legislative history also indicates that Congress only contemplated ongoing or future violations which required the quick handling that an injunction could provide. See, e.g., S.Rep. No. 151, 93rd Cong., 1st Sess. 30 (1973), quoted in Singer, 668 F.2d at 1111 (Sec. 13(b) would be used to bring an immediate halt to unfair or deceptive acts.... At the present time such practices might continue for several years until agency action is completed.); see also 119 Cong.Rec. 36597 (November 12, 1973) (Statement of Rep. Melcher); 119 Cong.Rec. 36609 (November 12, 1973) (Statement of Rep. Smith). The legislative history is silent about the use of Sec. 13(b) to preserve remedies for a past violation of the law. 17 As a general rule, [p]ast wrongs are not enough for the grant of an injunction; an injunction will issue only if the wrongs are ongoing or likely to recur. See, e.g., Enrico's, Inc. v. Rice, 730 F.2d 1250, 1253 (9th Cir.1984), citing City of Los Angeles v. Lyons, 461 U.S. 95, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983); see also United States v. W.T. Grant Co., 345 U.S. 629, 632-33, 73 S.Ct. 894, 897-98, 97 L.Ed. 1303 (1953); TRW, Inc. v. FTC, 647 F.2d 942, 954 (9th Cir.1981) (FTC must demonstrate cognizable danger of recurrence in order to obtain a cease-and-desist order). We therefore consider whether Evans' alleged violations have completely ceased; if they have, we consider whether they are likely to recur. 18 The gravamen of the FTC's complaint is that Evans engaged in misrepresentations and false advertisements during 1979-1982. The FTC does not contend that these misrepresentations and advertisements are presently occurring. Instead, the FTC characterizes Evans' alleged violation as a continuing refusal to provide promised loans, and analogizes this case to Virginia Homes, 509 F.Supp. 51. 19 Virginia Homes held that a defendant's refusal to advise prior customers that their warranty rights had been recently expanded amounted to an ongoing violation of the Magnuson-Moss Warranty Act, 15 U.S.C. Secs. 2301 et seq. The court did not hold that the incomplete warranty which the customers had originally received constituted a continuing violation. The FTC's argument confuses a violation with the injury flowing from that violation; only the injuries flowing from Evans' alleged misrepresentations are continuing today. The FTC is attempting to obtain injunctive relief for violations which have completely ceased. 20 Even though Evans' alleged violations have completely ceased, we must review whether those violations are likely to recur. See Enrico's, Inc., 730 F.2d at 1253. Evans' alleged misrepresentations ceased in 1982 long before the FTC's complaint was filed on January 11, 1985. Moreover, Evans has filed for bankruptcy. The district court made no finding of likelihood of recurrence. None was requested by the FTC. Our review of the record does not indicate that the district court would do so. Cases that the FTC cites involved violations that, while past, had been found likely to recur. See, e.g., Singer, 668 F.2d at 1113; see also Rubbermaid, Inc. v. FTC, 575 F.2d 1169, 1172-73 (6th Cir.1978) (cease and desist order not involving Sec. 13(b) ). Preliminary injunctive relief under Sec. 13(b) is therefore precluded. 21