On July 26, the U.S. District Court for the District of Nevada ruled that the Federal Trade Commission (FTC) could not collect $1,529,292.52 from a relief-defendant in an enforcement action. This origin of this case was a 2011 FTC enforcement action against multiple defendants that the FTC alleged had engaged in unfair or deceptive acts affecting commerce. The relief-defendant was not directly accused of wrongdoing, but was alleged to have received funds from unlawful acts, leading to a 2013 judgment that the relief-defendant never satisfied. Arguing that more than ten years had passed since the court’s entry of judgment, the relief-defendant claimed the FTC’s enforcement attempts were “inequitable.” The District Court agreed, finding that the FTC’s efforts violated Nevada’s statute of limitations and that the Fair Debt Collection Practices Act (FDCPA) did not apply.

With respect to the statute of limitations argument, Nevada has a six-year limitation period for enforcing judgments, but the FTC did not seek garnishment of the relief-defendant’s bank accounts until June 2023, well beyond the limitations period. The judge rejected the FTC’s argument that the FDCPA applied and would preempt the state law limitations period. While the FTC had cited a Fifth Circuit case in support of this position, the district court determined that this out-of-circuit precedent was not binding. Furthermore, the court concluded that the FDCPA’s scope was limited to the collection of debts owed to the federal government, whereas this case involved refunding ill-gotten gains to consumers.

The District Court granted the relief-defendant’s motion for judgment modification to preclude enforcement. This decision underscores the importance of timely enforcing judgments within state limitations periods, even in cases involving federal agencies like the FTC.