Walmart’s Challenge of FTC’s Litigation Powers a Delay Tactic, Says Agency

Walmart’s April 12 motion seeking 7th Circuit interlocutory review to challenge the constitutional validity of the FTC’s litigation powers (see 2304130002) is an “unwarranted” delay tactic, said the FTC’s opposition brief Monday (docket 1:22-cv-03372) in U.S. District Court for Northern Illinois in Chicago.

The case involves telemarketers who conned consumers into sending money using Walmart’s services. The FTC alleges Walmart knew it was processing fraudulent money transfers and failed to do enough to protect consumers. The court’s March 27 order denying Walmart’s motion to dismiss “raises fundamental questions about the FTC’s legal authority and the proper interpretation of key provisions of the FTC Act,” said Walmart’s motion for the 7th Circuit challenge.

Walmart argues interlocutory appellate review “will clarify the law and promote the efficient resolution of this case.” But the FTC disagrees, saying an interlocutory appeal now wouldn’t “materially advance the litigation, but would significantly delay -- rather than expedite -- the ultimate termination of the case,” said its opposition.

The FTC worries a delay would expose consumers to even more harm, “unnecessarily interrupting the district court proceedings,” said the opposition. Since Walmart can’t meet its “considerable burden” of showing exceptional circumstances that would justify immediate certification of the March 27 order for 7th Circuit interlocutory review, the retailer’s motion should be denied, it said.

The court’s March 27 order “correctly decided” each of the issues Walmart has raised in its motion for interlocutory review, said the FTC’s opposition. None of those issues creates “exceptional circumstances” warranting immediate appellate review, it said. Applying U.S. Supreme Court precedent that’s “equally binding” on the 7th Circuit, the court “properly held” that the FTC “has the authority to bring this suit,” it said.

The court’s conclusion the agency’s allegations “support a plausible claim” under Section 5 of the FTC Act “was supported by an extensive analysis of the applicable legal authority and a thorough review of the complaint,” said the opposition. Walmart hasn’t demonstrated a likelihood that the order will be reversed, it said. Even if the 7th Circuit were to resolve any of the “proffered questions” in Walmart’s favor, that “would neither dispose of nor meaningfully narrow the scope of the case,” it said. An immediate appeal of these questions “would only unduly protract this litigation,” it said.

The court’s ruling the FTC’s civil enforcement authority is constitutional doesn’t warrant certification for immediate appeal, said the commission’s opposition. “Walmart’s far-fetched constitutional challenge is at odds with longstanding Supreme Court precedent,” it said. “Allowing interlocutory review of clearly foreclosed arguments would upend the final judgment rule and disrupt the course of the litigation.”

Walmart hasn’t demonstrated the court’s ruling the FTC’s enforcement authority is constitutional is “contestable,” said the opposition. Applying controlling Supreme Court precedent, the court correctly ruled the FTC “has authority to bring this suit,” and Walmart hasn’t met its high burden of demonstrating “this is a contestable issue,” it said. The “prevailing standard” for contestability is rigid and can be satisfied only in rare circumstances, such as when there’s a substantial likelihood that the district court’s order would be reversed on appeal, said the commission.

The court’s March 27 order properly applied the “controlling” June 2021 Supreme Court decision in Collins v. Yellen (docket 19-422) to conclude that the FTC has authority to bring this suit, said the agency’s opposition. That was regardless of any “potential incompatibility” between the commissioners’ removal protections and the agency’s enforcement authority, because the commissioners were constitutionally appointed, it said: “Courts across the country have applied Collins to reject identical challenges to FTC enforcement actions.”

Just as the court’s March 27 order “was bound to follow Collins,” the 7th Circuit “would be similarly bound in any interlocutory appeal,” said the FTC’s opposition. “Tellingly, Walmart completely ignores Collins in its motion,” it said. Walmart can’t establish a contestable issue “that purportedly is appropriate for immediate review by simply ignoring the binding Supreme Court decision that is directly on point,” it said.