Federal Trade Commission v. Western Union Co. , 579 F. App'x 55 ( 2014 )

13-3100, 13-3272
FTC v. Western Union
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals
2 for the Second Circuit, held at the Thurgood Marshall United
3 States Courthouse, 40 Foley Square, in the City of New York,
4 on the 7th day of October, two thousand fourteen.
5
6 PRESENT: DENNIS JACOBS,
7 CHRISTOPHER F. DRONEY,
8 Circuit Judges,
9 LEWIS A. KAPLAN,
10 District Judge.*
11
12 - - - - - - - - - - - - - - - - - - - -X
13 FEDERAL TRADE COMMISSION,
14 Appellant and Cross-
15 Appellee,
16
17 -v.- 13-3100, 13-3272
18
19 THE WESTERN UNION COMPANY,
20 Appellee and Cross-
21 Appellant.
22 - - - - - - - - - - - - - - - - - - - -X
23
24
*
Judge Lewis A. Kaplan, of the United States District
Court for the Southern District of New York, sitting by
designation.
1
1 FOR APPELLANT FEDERAL
2 TRADE COMMISSION: BURKE W. KAPPLER (with Jonathan
3 E. Nuechterlein, David C.
4 Shonka, John Daly, Leslie Rice
5 Melman, Josephine Liu, Office of
6 the General Counsel, Federal
7 Trade Commission, and C. Steven
8 Baker, Todd M. Kossow, Karen D.
9 Dodge, Midwest Region, and Hugh
10 Stevenson, Stacy Feuer, Laureen
11 Kapin, Office of International
12 Affairs, on the brief), Office
13 of the General Counsel, Federal
14 Trade Commission, Washington,
15 D.C.
16
17 FOR APPELLEE WESTERN
18 UNION: CHARLES G. COLE (with Edward B.
19 Schwartz, Kate M. Riggs, Steptoe
20 & Johnson LLP, and David Fallek,
21 Engelwood, Colorado, on the
22 brief), Steptoe & Johnson LLP,
23 Washington, D.C.
24
25 Appeal from a judgment of the United States District
26 Court for the Southern District of New York (Hellerstein,
27 J.).
28
29 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
30 AND DECREED that the judgment of the district court be
31 REVERSED in part and VACATED and REMANDED in part.
32
33 The Federal Trade Commission (“FTC”) appeals, and
34 Western Union cross-appeals, from the judgment of the United
35 States District Court for the Southern District of New York
36 (Hellerstein, J.), granting, in part, and denying, in part,
37 enforcement of a Civil Investigatory Demand (“CID”) issued
38 by the FTC to Western Union. We assume the parties’
39 familiarity with the underlying facts, the procedural
40 history, and the issues presented for review.
41
42 The FTC is authorized by Congress to regulate “unfair
43 or deceptive acts or practices in or affecting commerce.”
44 15 U.S.C. § 45(a)(1). Its mission is protecting and
2
1 assisting U.S. consumers. In carrying out its mission, the
2 FTC has authority to regulate “acts or practices involving
3 foreign commerce that – (i) cause or are likely to cause
4 conduct reasonably foreseeable injury within the United
5 States; or (ii) involve material conduct occurring within
6 the United States.” 15 U.S.C. § 45(a)(4)(A).
7
8 The FTC has authority to issue a CID in connection with
9 “any inquiry conducted by a Commission investigator for the
10 purpose of ascertaining whether any person has been engaged
11 in any unfair or deceptive acts or practices in or affecting
12 commerce.” Id. § 57b-1(a)(1)-(2). If the subject of a CID
13 does not voluntarily turn over the requested material, the
14 FTC may file a petition for enforcement with a district
15 court. Id. § 57b-1(e).
16
17 In compliance with the FTC’s investigation into fraud-
18 induced money transfers, Western Union has produced to the
19 agency more than two dozen categories of documents. Western
20 Union objected, however, to the production of two document
21 categories, which became the subject of the CID and this
22 appeal and cross-appeal: complaints of consumer fraud made
23 outside the U.S.; and documents related to the work of a
24 monitor appointed in connection with a settlement of an
25 Arizona state investigation of cross-border third-party
26 money laundering. Specifically, the CID called for:
27 (1) “all documents referring or relating to complaints by
28 consumers worldwide relating to fraud-induced money
29 transfers” and (2) “all documents referring or relating to
30 communications with the Monitor, including, but not limited
31 to, all information Western Union provided to the Monitor
32 and, any reports, reviews or other documents prepared by the
33 Monitor.”
34
35 The FTC sought enforcement of the CID in the district
36 court, which denied enforcement as to the foreign documents
37 and granted enforcement as to the Monitor-related documents.
38
39 As to the foreign documents, a request for “documents
40 referring or relating to complaints by consumers worldwide
41 relating to fraud-induced money transfers” falls within the
42 FTC’s statutory authority because foreign complaints of
43 fraud-induced money transfers are subject to Western Union’s
44 anti-fraud program, which is administered in the United
3
1 States.1 15 U.S.C. § 45(a)(4)(A)(ii). And, if Western
2 Union fails to respond to foreign complaints of fraud-
3 induced transfers, it is “reasonably foreseeable” that
4 unaddressed fraud will harm U.S. consumers. Id.
5 § 45(a)(4)(A)(i).2
6
7 As to the Monitor-related documents, the district court
8 acknowledged that fraud and money laundering “may be
9 different.” In particular, the transferor and the
10 transferee in a money-laundering transaction are willing and
11 informed. The district court stated that the Monitor-
1
This Court is not deciding whether the FTC has
jurisdiction to commence an enforcement proceeding
concerning wholly foreign transactions. At the subpoena
stage courts need not decide questions of the agency’s
jurisdiction; “rather the coverage determination should wait
until an enforcement action is brought against the
subpoenaed party.” United States v. Constr. Prods.
Research, Inc., 73 F.3d 464, 470 (2d Cir. 1996). Currently,
the FTC is acting pursuant to its investigative power, and
we look only to determine whether the FTC has statutory
authority for its investigation.
2
Since the FTC relies on these provisions of the SAFE
WEB Act as authority for the issuance of the CIDs, the Court
does not address the question of whether the Commission has
authority to issue the CIDs under other provisions of the
FTC Act. See, e.g., 15 U.S.C. § 57b-1(c)(1) (authorizing
the issuance of CIDs “[w]henever the Commission has reason
to believe that any person may be in possession, custody, or
control of any documentary material or tangible things, or
may have any information, relevant to unfair or deceptive
acts or practices in or affecting commerce . . . or to
antitrust violations); id. § 46(a) (granting the FTC the
power to “gather and compile information concerning, and to
investigate from time to time the organization, business,
conduct, practices, and management of any person,
partnership, or corporation engaged in or whose business
affects commerce”); id. § 44 (defining “commerce” to mean
“commerce among the several States or with foreign
nations . . . or between any such Territory and any State or
foreign nation, or between the District of Columbia and any
State or Territory or foreign nation.”).
4
1 related documents were relevant to the FTC’s investigation
2 nevertheless because both fraud and money laundering “have
3 to do with money transferred from one place to another place
4 due to the agency of a company like Western Union.”
5
6 The district court’s explanation of its decision with
7 respect to the Monitor-related documents is “too spare to
8 serve as a basis for our review.” Beckford v. Portuondo,
9 234 F.3d 128, 130 (2d Cir. 2000). “[I]t is normally useful
10 to have [the district court’s] conclusions articulated”
11 because “if the District Court does not enter an opinion
12 analyzing the relevant precedents in light of the record, or
13 merely enters skeletal conclusions of law, the reviewing
14 court is deprived of . . . helpful guidance.” Miranda v.
15 Bennett, 322 F.3d 171, 175 (2d Cir. 2003) (internal
16 quotation marks and alterations omitted). Accordingly, we
17 remand “for further consideration and a complete and
18 comprehensive decision.” Beckford, 234 F.3d at 130.
19
20 On remand, the district court should make findings
21 regarding how documents generated in connection with a
22 monitorship imposed in settlement of a cross-border money-
23 laundering investigation relates to Congress’ grant of
24 regulatory powers to the FTC.3 Separate findings are needed
25 as to what justifies the production of (i) the Monitor’s
26 reports, (ii) Western Union’s exchanges with the Monitor,
27 and (iii) Western Union’s internal documents that “refer or
28 relate” to the Monitor.
29
30 We remand in accordance with the procedures set forth
31 in United States v. Jacobson, 15 F.3d 19, 22 (2d Cir. 1994).
32 Either party may notify the Clerk of Court of a renewed
33 appeal within fourteen days of the district court’s decision
34 and this panel will retain jurisdiction over any subsequent
35 appeal.
36
3
The district court should also determine whether
Western Union’s anti-money laundering initiatives have
sufficient bearing upon consumer fraud detection to justify
the burden of compliance.
5
1 For the foregoing reasons, we hereby REVERSE the
2 judgment of the district court as to the foreign documents,
3 and VACATE and REMAND as to the Monitor-related documents.
4
5 FOR THE COURT:
6 CATHERINE O’HAGAN WOLFE, CLERK
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