Court Opinion

ID: 2740261
Source: CourtListenerOpinion
Date Created: 2014-10-07 15:00:41.798702+00
Date Added: 2024-06-11T10:04:09.409958
License: Public Domain

13-3100, 13-3272
     FTC v. Western Union

                            UNITED STATES COURT OF APPEALS
                                FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER
     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
     ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
     PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
     DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
     ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Thurgood Marshall United
 3       States Courthouse, 40 Foley Square, in the City of New York,
 4       on the 7th day of October, two thousand fourteen.
 5
 6       PRESENT: DENNIS JACOBS,
 7                CHRISTOPHER F. DRONEY,
 8                              Circuit Judges,
 9                LEWIS A. KAPLAN,
10                              District Judge.*
11
12       - - - - - - - - - - - - - - - - - - - -X
13       FEDERAL TRADE COMMISSION,
14                Appellant and Cross-
15                Appellee,
16
17                    -v.-                                        13-3100, 13-3272
18
19       THE WESTERN UNION COMPANY,
20                Appellee and Cross-
21                Appellant.
22       - - - - - - - - - - - - - - - - - - - -X
23
24

                *
               Judge Lewis A. Kaplan, of the United States District
         Court for the Southern District of New York, sitting by
         designation.
                                                  1
 1   FOR APPELLANT FEDERAL
 2   TRADE COMMISSION:          BURKE W. KAPPLER (with Jonathan
 3                              E. Nuechterlein, David C.
 4                              Shonka, John Daly, Leslie Rice
 5                              Melman, Josephine Liu, Office of
 6                              the General Counsel, Federal
 7                              Trade Commission, and C. Steven
 8                              Baker, Todd M. Kossow, Karen D.
 9                              Dodge, Midwest Region, and Hugh
10                              Stevenson, Stacy Feuer, Laureen
11                              Kapin, Office of International
12                              Affairs, on the brief), Office
13                              of the General Counsel, Federal
14                              Trade Commission, Washington,
15                              D.C.
16
17   FOR APPELLEE WESTERN
18   UNION:                     CHARLES G. COLE (with Edward B.
19                              Schwartz, Kate M. Riggs, Steptoe
20                              & Johnson LLP, and David Fallek,
21                              Engelwood, Colorado, on the
22                              brief), Steptoe & Johnson LLP,
23                              Washington, D.C.
24
25        Appeal from a judgment of the United States District
26   Court for the Southern District of New York (Hellerstein,
27   J.).
28
29        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
30   AND DECREED that the judgment of the district court be
31   REVERSED in part and VACATED and REMANDED in part.
32
33        The Federal Trade Commission (“FTC”) appeals, and
34   Western Union cross-appeals, from the judgment of the United
35   States District Court for the Southern District of New York
36   (Hellerstein, J.), granting, in part, and denying, in part,
37   enforcement of a Civil Investigatory Demand (“CID”) issued
38   by the FTC to Western Union. We assume the parties’
39   familiarity with the underlying facts, the procedural
40   history, and the issues presented for review.
41
42        The FTC is authorized by Congress to regulate “unfair
43   or deceptive acts or practices in or affecting commerce.”
44   15 U.S.C. § 45(a)(1). Its mission is protecting and

                                  2
 1   assisting U.S. consumers. In carrying out its mission, the
 2   FTC has authority to regulate “acts or practices involving
 3   foreign commerce that – (i) cause or are likely to cause
 4   conduct reasonably foreseeable injury within the United
 5   States; or (ii) involve material conduct occurring within
 6   the United States.” 15 U.S.C. § 45(a)(4)(A).
 7
 8        The FTC has authority to issue a CID in connection with
 9   “any inquiry conducted by a Commission investigator for the
10   purpose of ascertaining whether any person has been engaged
11   in any unfair or deceptive acts or practices in or affecting
12   commerce.” Id. § 57b-1(a)(1)-(2). If the subject of a CID
13   does not voluntarily turn over the requested material, the
14   FTC may file a petition for enforcement with a district
15   court. Id. § 57b-1(e).
16
17        In compliance with the FTC’s investigation into fraud-
18   induced money transfers, Western Union has produced to the
19   agency more than two dozen categories of documents. Western
20   Union objected, however, to the production of two document
21   categories, which became the subject of the CID and this
22   appeal and cross-appeal: complaints of consumer fraud made
23   outside the U.S.; and documents related to the work of a
24   monitor appointed in connection with a settlement of an
25   Arizona state investigation of cross-border third-party
26   money laundering. Specifically, the CID called for:
27   (1) “all documents referring or relating to complaints by
28   consumers worldwide relating to fraud-induced money
29   transfers” and (2) “all documents referring or relating to
30   communications with the Monitor, including, but not limited
31   to, all information Western Union provided to the Monitor
32   and, any reports, reviews or other documents prepared by the
33   Monitor.”
34
35        The FTC sought enforcement of the CID in the district
36   court, which denied enforcement as to the foreign documents
37   and granted enforcement as to the Monitor-related documents.
38
39        As to the foreign documents, a request for “documents
40   referring or relating to complaints by consumers worldwide
41   relating to fraud-induced money transfers” falls within the
42   FTC’s statutory authority because foreign complaints of
43   fraud-induced money transfers are subject to Western Union’s
44   anti-fraud program, which is administered in the United

                                  3
 1   States.1 15 U.S.C. § 45(a)(4)(A)(ii). And, if Western
 2   Union fails to respond to foreign complaints of fraud-
 3   induced transfers, it is “reasonably foreseeable” that
 4   unaddressed fraud will harm U.S. consumers. Id.
 5   § 45(a)(4)(A)(i).2
 6
 7        As to the Monitor-related documents, the district court
 8   acknowledged that fraud and money laundering “may be
 9   different.” In particular, the transferor and the
10   transferee in a money-laundering transaction are willing and
11   informed. The district court stated that the Monitor-

         1
           This Court is not deciding whether the FTC has
     jurisdiction to commence an enforcement proceeding
     concerning wholly foreign transactions. At the subpoena
     stage courts need not decide questions of the agency’s
     jurisdiction; “rather the coverage determination should wait
     until an enforcement action is brought against the
     subpoenaed party.” United States v. Constr. Prods.
     Research, Inc., 73 F.3d 464, 470 (2d Cir. 1996). Currently,
     the FTC is acting pursuant to its investigative power, and
     we look only to determine whether the FTC has statutory
     authority for its investigation.
         2
           Since the FTC relies on these provisions of the SAFE
     WEB Act as authority for the issuance of the CIDs, the Court
     does not address the question of whether the Commission has
     authority to issue the CIDs under other provisions of the
     FTC Act. See, e.g., 15 U.S.C. § 57b-1(c)(1) (authorizing
     the issuance of CIDs “[w]henever the Commission has reason
     to believe that any person may be in possession, custody, or
     control of any documentary material or tangible things, or
     may have any information, relevant to unfair or deceptive
     acts or practices in or affecting commerce . . . or to
     antitrust violations); id. § 46(a) (granting the FTC the
     power to “gather and compile information concerning, and to
     investigate from time to time the organization, business,
     conduct, practices, and management of any person,
     partnership, or corporation engaged in or whose business
     affects commerce”); id. § 44 (defining “commerce” to mean
     “commerce among the several States or with foreign
     nations . . . or between any such Territory and any State or
     foreign nation, or between the District of Columbia and any
     State or Territory or foreign nation.”).
                                  4
 1   related documents were relevant to the FTC’s investigation
 2   nevertheless because both fraud and money laundering “have
 3   to do with money transferred from one place to another place
 4   due to the agency of a company like Western Union.”
 5
 6        The district court’s explanation of its decision with
 7   respect to the Monitor-related documents is “too spare to
 8   serve as a basis for our review.” Beckford v. Portuondo,
 9   234 F.3d 128, 130 (2d Cir. 2000). “[I]t is normally useful
10   to have [the district court’s] conclusions articulated”
11   because “if the District Court does not enter an opinion
12   analyzing the relevant precedents in light of the record, or
13   merely enters skeletal conclusions of law, the reviewing
14   court is deprived of . . . helpful guidance.” Miranda v.
15   Bennett, 322 F.3d 171, 175 (2d Cir. 2003) (internal
16   quotation marks and alterations omitted). Accordingly, we
17   remand “for further consideration and a complete and
18   comprehensive decision.” Beckford, 234 F.3d at 130.
19
20        On remand, the district court should make findings
21   regarding how documents generated in connection with a
22   monitorship imposed in settlement of a cross-border money-
23   laundering investigation relates to Congress’ grant of
24   regulatory powers to the FTC.3 Separate findings are needed
25   as to what justifies the production of (i) the Monitor’s
26   reports, (ii) Western Union’s exchanges with the Monitor,
27   and (iii) Western Union’s internal documents that “refer or
28   relate” to the Monitor.
29
30        We remand in accordance with the procedures set forth
31   in United States v. Jacobson, 15 F.3d 19, 22 (2d Cir. 1994).
32   Either party may notify the Clerk of Court of a renewed
33   appeal within fourteen days of the district court’s decision
34   and this panel will retain jurisdiction over any subsequent
35   appeal.
36

         3
           The district court should also determine whether
     Western Union’s anti-money laundering initiatives have
     sufficient bearing upon consumer fraud detection to justify
     the burden of compliance.
                                  5
 1        For the foregoing reasons, we hereby REVERSE the
 2   judgment of the district court as to the foreign documents,
 3   and VACATE and REMAND as to the Monitor-related documents.
 4
 5                              FOR THE COURT:
 6                              CATHERINE O’HAGAN WOLFE, CLERK
 7
 8
 9
10

                                  6