Disgorgement and refunds are remedies available to the Federal Trade Commission, a Florida federal court ruled in a case involving a purported time-share scam.

The FTC filed suit against Pro Timeshare Resales of Flagler Beach and its owners, accusing the defendants of violating both Section 13(b) of the FTC Act and Section 6(b) of the Telemarketing and Consumer Fraud and Abuse Prevention Act by tricking consumers into paying for assistance in selling or renting their time-shares and then failing to provide the promised services.

The complaint requested equitable relief, including disgorgement of profits, rescission or reformation of consumers’ contracts, issuance of refunds, and restitution.

In response, the defendants filed a motion for summary judgment, arguing that the equitable relief sought by the FTC was unavailable pursuant to the statutes pled in the complaint. Neither of the provisions explicitly provides for such relief, the defendants told the court.

But U.S. District Judge Gregory A. Presnell was not persuaded, finding “no shortage” of case law recognizing the availability of the equitable relief sought by the FTC under Section 13(b).

“[T]he Court needs no express grant of authority to grant equitable relief under Section 13(b),” the court wrote. “District courts possess inherent power to grant equitable relief ‘unless otherwise provided by statute.’ Accordingly, Section 13(b), which contains no language restricting the Court’s authority to grant equitable relief, ‘provides “an unqualified grant of statutory authority” to issue “the full range of equitable remedies.”’”

In support of their position, the defendants pointed to a recent Supreme Court case that they argued raised “questions as to the viability” of precedent permitting the equitable remedies sought by the FTC.

Not only did Kokesh v. SEC deal with federal securities law, but Judge Presnell refused to “disregard decades of precedent” simply for a footnote in the opinion that specifically declined to address whether courts possess the authority to order disgorgement in Securities Exchange Commission enforcement proceedings and could, at best, be described as reflecting “an expression of doubt” as to whether courts had such authority in SEC proceedings.

The court denied the defendants’ motion for summary judgment.

To read the order in Federal Trade Commission v. J. William Enterprises, LLC, click here.

Why it matters: The court wasted little ink on the argument that the FTC could not seek equitable remedies because Section 13(b) of the FTC Act does not explicitly provide for them. Relying on prior case law, the court explained that because the statute does not restrict the remedies available to the FTC, the inherent power of district courts to grant equitable relief more than suffices to let the FTC request disgorgement and refunds, among other equitable remedies.