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Financial Services Law Insights and Observations

9th Circuit: FTC does not need to show irreparable harm to get injunctive relief

Courts Appellate FTC FTC Act Preliminary Injunction Ninth Circuit

Courts

On June 17, the U.S. Court of Appeals for the 9th Circuit held that no showing of irreparable harm is required for the FTC to obtain injunctive relief when the relief is sought in conjunction with a statutory enforcement action where the applicable statute authorizes such relief. According to the opinion, the FTC brought an action against an entity and related individuals (collectively, “defendants”) operating a mortgage loan modification scheme for allegedly violating the FTC Act and Regulation O by making false promises to consumers for services designed to prevent foreclosures or reduce interest rates or monthly mortgage payments. (Previously covered by InfoBytes here.) The FTC brought the action under the second proviso of Section 13(b) of the FTC Act, which allows the agency to pursue injunctive relief without initiating administrative action. The district court granted the motion for preliminary injunction without requiring the FTC to make a showing of irreparable harm.

On appeal, the 9th Circuit rejected the defendants’ argument that the FTC was still required to demonstrate the likelihood of irreparable harm in a Section 13(b) action. The appellate court noted that the FTC’s position is supported by the court’s precedent, quoting “‘[w]here an injunction is authorized by statute, and the statutory conditions are satisfied . . ., the agency to whom the enforcement of the right has been entrusted is not required to show irreparable injury.’” The appellate court concluded that its precedent is not irreconcilable with the 2008 Supreme Court decision in Winter v. Natural Resource Defense Council, Inc, noting that Winter did not address injunctive relief in the context of statutory enforcement. Therefore, the appellate court concluded that although irreparable harm is required to obtain injunctive relief in an ordinary case, the district court did not error in granting injunctive relief, without the showing of irreparable harm, in conjunction with a statutory enforcement action.  

 

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