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New Ninth Circuit FTC Act opinion: FTC v. Neovi, Inc.

By Kimberly A. Kralowec

In Federal Trade Commission v. Neovi, Inc., ___ F.3d ___ (9th Cir. May 14, 2010), the Ninth Circuit construed the Federal Trade Commission Act, 15 U.S.C. § 45(n). 

The opinion is an interesting one, especially to the extent that some Court of Appeal panels may be adopting the FTC Act standard as a third formulation of the UCL's "unfair" prong.  See, e.g., Davis v. Ford Motor Credit Co., 179 Cal.App.4th 581 (2009). But see Overstock.com, Inc. v. Gradient Analytics, Inc., 151 Cal.App.4th 688, 715 (2007) ("the California UCL contains no directive to interpret our consumer protection statute consistently with the FTC Act"). 

Here is a notable passage:

To support its argument that the FTC?s showing of causation was insufficient, Qchex urges us to seek interpretive guidance from several California state cases that were decided under California Business & Professions Code § 17200?the so-called ?Little FTC Act.? We decline the invitation. While it is common practice for states with consumer protection statutes modeled on the FTC Act to rely on federal authority when interpreting those statutes, the reverse is not the case. As the FTC points out, given the abundance of state laws on which such interpretations could be based, this practice would likely result in a sea of inconsistent rulings. See Orkin Exterminating Co., Inc. v. FTC, 849 F.2d 1354, 1363 (11th Cir. 1988) (noting that there is nothing constraining the FTC ?to follow judicial interpretations of state statutes in construing the agency?s section 5 authority?).

Slip op. at 6994.  I have not seen the briefs, so I don't know whether the defendant cited Davis and Camacho, which expressly adopted the FTC Act standard for "unfair" conduct (creating a three-way split in authority), or other UCL cases that did not.

Full post as published by The UCL Practitioner on May 19, 2010 (boomark / email).