Judge Deals Blow To FTC Jurisdiction

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Last month, a federal judge in Delaware partially dismissed a lawsuit by the Federal Trade Commission alleging violation of antitrust laws. The dismissal has drawn attention, particularly, due to a ruling that the agency failed to meet a procedural pre-requisite for permanent injunctive relief.

The case is Federal Trade Commission v. Shire ViroPharma Inc., U.S. District Court, District of Delaware. Of factual importance, the FTC alleged that ViroPharma, which Shire acquired in 2014, had repeatedly filed unsupported citizen petitions with the U.S. Food and Drug Administration from 2006 to 2012 to try to block or delay the marketing of generic versions of an antibiotic. The FTC filed a lawsuit in early 2017.

Defendant asserted that because the alleged conduct occurred in the past, the Commission failed to invoke its authority to seek an injunction. The FTC argued, in part, that the appropriate pleading standard should be whether the wrongful conduct was “likely to recur.”

While the court called the argument “novel,” it ultimately agreed that the FTC’s ability to seek a permanent injunction is dependent upon establishing the existence of a reason to believe that a defendant is violating, or is about to violate, a law enforced by the FTC.

Judge Richard G. Andrews stated, “I do not think these allegations, without more, plausibly suggest ViroPharma is ‘about to violate’ any law enforced by the FTC, particularly when the alleged misconduct ceased almost five years before filing of the complaint.”

While defendant’s motion to dismiss was granted pursuant, the FTC has been provided with the opportunity to amend its complaint. The opinion itself appears to suggest ways that the FTC may be able to overcome presently existing pleading hurdles.

Query whether the agency will amend or appeal. It will also be interesting to see how this decision ultimately impacts the FTC’s ability to bring consumer protection cases based upon past violations. However, at least for now, it may be a useful arrow in the quiver of those faced with a regulatory investigation or enforcement action.

Consult with an FTC defense attorney for further information regarding recent FTC investigation and enforcement trends, or if you are the subject of a regulatory action.

Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements.

ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35thFloor, New York, NY 10005 | (212) 756-8777.

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