A District Court judge in Nevada has blocked the Federal Trade Commission’s attempt to use the Fair Debt Collection Practices Act to collect on a judgment against a defendant in an enforcement action, who was found liable by a judge back in 2013 for $1.5 million.
The Background: Back in 2011, the FTC accused a number of defendants of violating the Federal Trade Commission Act by engaging in unfair or deceptive acts or practices. The FTC alleged that the defendant in this case benefitted directly from the proceeds earned from those deceptive acts or practices.
- In 2013, a court found the defendant liable for $1,529,292.52. She failed to satisfy the judgment.
- The defendant filed a motion in 2023, seeking relief from enforcement of the judgment, arguing that the 10 year statute of limitations in Nevada had passed and that the judgment was no longer enforceable.
- The FTC argued that the FDCPA does not place a time limit on enforcing judgments, among other arguments.
The Ruling: Judge James C. Mahan of the District Court for the District of Nevada was unpersuaded by the government’s arguments.
- The FTC cited a case in which it was ruled that the FDCPA preempts state law, but that case was from the Fifth Circuit and Judge Mahan decided it was not binding in Nevada, which sits in the Ninth Circuit.
- The FTC also cited a Ninth Circuit case which held that the FDCPA holds no time limit for collecting debts via writs of execution, but that was a criminal case, not a civil one like this, Judge Mahan noted. The Ninth Circuit ruled that “the scope of the FDCPA is limited to collection of debts owed to the federal government.” In this case, the money that is collected by the FTC will be used to reimburse individuals, and will not go to the government.
