FTC v. Consumer Defense, LLC, No. 18-15462 (9th Cir. 2019)
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The Ninth Circuit affirmed the district court's order entering a preliminary injunction freezing all of defendants' assets in connection with Consumer Defense Global's loan modification business operations. The Commission filed suit alleging that defendants violated the Federal Trade Commission Act and Regulation O, 12 C.F.R. Part 1015 – Mortgage Assistance Relief Services. In this case, the parties agree that the FTC brought the instant action pursuant to the second proviso of Section 13(b) of the FTC Act, but dispute whether the FTC was required to demonstrate a likelihood of irreparable harm to obtain relief.
The panel held that, although in the ordinary case a showing of irreparable harm is required to obtain injunctive relief, no such showing is required when injunctive relief is sought in conjunction with a statutory enforcement action where the applicable statute authorizes injunctive relief. Therefore, the panel held that the district court did not err by granting the motion for preliminary injunction without requiring the FTC to make the traditional showing of irreparable injury.
Court Description: Federal Trade Commission. The panel affirmed the district court’s order entering a preliminary injunction freezing all of the defendants’ assets in connection with Consumer Defense Global’s loan modification business operations in an action initiated by the Federal Trade Commission (FTC) alleging violations of the FTC Act and Regulation O, 12 C.F.R. Part 1015 – Mortgage Assistance Relief Services. The parties agreed that the FTC brought the action pursuant to the second proviso of Section 13(b) of the FTC Act, which allows the FTC to seek injunctive relief without initiating administrative action, but disputed whether the FTC was required to demonstrate a likelihood of irreparable harm to obtain relief. The panel held that although in the ordinary case a showing of irreparable harm was required to obtain injunctive relief, no such showing was required when injunctive relief was sought in conjunction with a statutory enforcement action where the applicable statute authorized injunctive relief. The panel further held that circuit precedent to that effect did not present an irreconcilable conflict with the holding in Winter v. Natural Resource Defense Council, Inc., 555 U.S. 7, 20 (2008), and remained valid. The panel concluded that the district court committed no error in granting the motion for a 4 FTC V. PREFERRED LAW preliminary injunction without requiring the FTC to make the traditional showing of irreparable injury. The panel addressed challenges to the district court’s jurisdiction and the scope of the injunction in a concurrently filed memorandum disposition.
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