## Facts

- Hopkins Dodge, Inc. and other automobile dealers (the dealers) violated the Truth in Lending Act (TILA) and Regulation Z through credit advertising and related practices.
- The Federal Trade Commission (FTC), acting through the United States, sued the dealers to stop the violations and to obtain monetary relief.
- The dealers admitted repeated TILA/Regulation Z violations.
- The district court entered a permanent injunction (June 15, 1987) barring future TILA and Regulation Z violations by the dealers.
- The FTC also sought a civil penalty for the admitted violations, relying on enforcement provisions that incorporate procedures from the Federal Trade Commission Act.
- To support civil penalties, the FTC served the dealers with four prior FTC decisions (and synopses), arguing those decisions gave the dealers notice that the challenged conduct was unlawful.
- Only one of the four decisions involved an “unfair or deceptive act or practice,” and that decision concerned a “bait and switch” scheme in the meat industry rather than automobile credit advertising.
- The district court denied the FTC’s request for civil penalties and granted summary judgment to the dealers on that claim, concluding the FTC had not met the statutory prerequisites for imposing penalties.
- The FTC appealed.

## Issues

1. Whether the FTC could obtain civil penalties under 15 U.S.C. § 45(m)(1)(B) for the dealers’ admitted TILA/Regulation Z violations based solely on four prior FTC decisions, without a prior § 45(b) determination and final cease-and-desist order addressing the same act or practice.

## Decision

- The Eighth Circuit affirmed the district court’s summary judgment in favor of the dealers on the civil-penalties claim.
- The court held the FTC did not satisfy the statutory conditions for civil penalties under 15 U.S.C. § 45(m)(1)(B).
- The four prior FTC decisions did not supply the required predicate: a Commission determination in a § 45(b) proceeding that the relevant act or practice is an unfair or deceptive act or practice, together with a final cease-and-desist order tied to that determination.
- Because the FTC could not show the required predicate determination and order, the served decisions did not establish the dealers’ “actual knowledge” in the manner required by § 45(m)(1)(B).
- The permanent injunction against future violations remained in place, but civil penalties were unavailable on the record presented.

## Legal Principles

- Civil penalties under 15 U.S.C. § 45(m)(1)(B) require, as a prerequisite, a prior FTC determination in a § 45(b) proceeding that the act or practice is unfair or deceptive, plus a final cease-and-desist order addressing that act or practice.
- Providing regulated parties with copies or summaries of prior FTC decisions does not satisfy § 45(m)(1)(B) when those decisions do not contain the required unfairness/deception determination and final order directed to the same practice.
- Prior FTC matters from unrelated industries (such as a “bait and switch” case in the meat industry) do not establish the predicate or notice needed to impose civil penalties for automobile credit-advertising violations.
- Injunctive relief to stop future TILA/Regulation Z violations does not substitute for the specific § 45(m)(1)(B) predicate required to impose monetary penalties.

## Conclusion

The Eighth Circuit held that the FTC could not obtain civil penalties against automobile dealers for admitted TILA and Regulation Z advertising violations where the Commission relied on four prior FTC decisions that did not include a qualifying § 45(b) unfair-or-deceptive determination and final cease-and-desist order addressing the same act or practice, and therefore did not meet § 45(m)(1)(B)’s requirements for penalties.


United States v. Hopkins Dodge, Inc., 849 F.2d 311 (1988)