Federal Trade Commission v. Lending Club Corporation
- Jacquelyn Corley
- 3:18-cv-02454
- U.S. District Court · Northern District of California
- 7
Federal Trade Commission v. Lending Club, Judge Corley, stayed proceedings pending Supreme Court decisions on FTC monetary relief under Section 13(b).
The Federal Trade Commission and Lending Club Corporation were affected because all proceedings in the case were stayed until the Supreme Court issued its decisions in the referenced cases.
What happened
In Federal Trade Commission v. Lending Club Corporation, Lending Club asked the court to pause the case until the Supreme Court decided two cases about whether the Federal Trade Commission could seek money under Section 13(b) of the FTC Act.
The FTC opposed the pause, arguing that witnesses might forget facts and relevant employees might become unavailable. Lending Club argued that continuing toward trial could waste resources because the Supreme Court’s decisions might eliminate the monetary remedy at issue. The opinion states that discovery had closed and that Lending Club had stopped virtually all of the conduct involved.
Judge Jacqueline Scott Corley granted Lending Club’s motion to stay all proceedings until the Supreme Court issued its decisions in the two referenced cases. The court found that the stay would avoid possible hardship, conserve resources, and promote an orderly resolution.
The detailed version
- Federal Trade Commission v. Lending Club Corporation · No. 3:18-cv-02454
- Jacquelyn Corley
- Aug. 20, 2020
Background
The Federal Trade Commission brought the action under Section 13(b) of the Federal Trade Commission Act. The case involved the FTC’s request for relief, including restitution. Lending Club Corporation moved to stay, or pause, all proceedings while the Supreme Court considered F.T.C. v. Credit Bureau Ctr. and AMG Capital Mgmt., LLC v. F.T.C. Those cases concerned whether Section 13(b) authorizes the FTC to seek monetary relief.
The opinion explains that Ninth Circuit precedent had treated Section 13(b) as allowing courts to award equitable monetary relief, including restitution. It also notes that the Seventh Circuit had held that Section 13(b)’s permanent-injunction provision does not authorize monetary relief, and that a Ninth Circuit panel had said the argument against non-injunctive relief had force while following earlier circuit precedent.
Legal standard
The court applied the standard from Landis, under which a court may stay proceedings to control its docket and conserve time and effort. The court considered three factors: possible harm to the party opposing the stay; hardship or unfairness to the party seeking the stay; and whether a stay would simplify or complicate the issues, evidence, or legal questions. Lending Club, as the party seeking the stay, had the burden of showing that the discretionary stay was justified.
Court’s analysis
The FTC argued that a stay could create evidentiary problems because witnesses might not remember specific facts and Lending Club might lose or terminate relevant employees. The court found that this did not establish a sufficient possibility of harm, particularly because discovery had closed and deposition transcripts could help address witness unavailability or faded memories. The court also found that the Supreme Court decisions were not speculative because the Court had already agreed to hear the cases.
The court further noted that Lending Club had ceased virtually all of the conduct at issue and that the remaining issue was the FTC’s recovery of restitution. It concluded that monetary recovery could not serve as the basis for denying the stay.
The court found that Lending Club had shown hardship and unfairness if the case continued. Proceeding to trial could require Lending Club to mount a defense even though the Supreme Court might eliminate the FTC’s ability to obtain monetary relief under Section 13(b). The court also found that the Supreme Court cases were directly relevant and that a decision could substantially simplify the case. The COVID-19 pandemic provided an additional reason to avoid deciding whether and how to conduct an October trial remotely.
Ruling
Judge Jacqueline Scott Corley held that all three stay factors supported pausing the case. The court GRANTED Lending Club’s motion to stay all proceedings until the Supreme Court issued its decisions in AMG Capital and Credit Bureau. The order stated that this disposed of Docket No. 311.
Read the full 7-page opinion on CourtListener, the free public archive maintained by the Free Law Project.