Lawless Federal Agency Ignores Vital Protections for Defendants

FTC v. Hoskins

Federal law enforcement agencies have uniquely intimidating powers and near-bottomless resources. For good and for bad, they pose life-changing threats to anyone caught in their crosshairs. That’s why it is vitally important to have strong rules to limit the application of law enforcement power and protect Americans from abuse. Regrettably, the Federal Trade Commission (FTC) is looking for loopholes to ignore one of those vital protections for individual rights.

In 2011, Leanne Rodgers was entangled in an FTC investigation concerning others’ wrongdoings. Though Leanne did not violate any federal laws, a federal court determined that she benefited from compensation that her former husband had wrongfully acquired. Accordingly, the court ordered Leanne, and others, to turn over the funds associated with the challenged activity.

Though the court reached its decision in 2013, the FTC delayed collecting what it now says it is owed from Leanne.  Over the next decade, she moved on with her life and started a new career with her own law firm. And eventually, enough time had passed that the Nevada statute of limitations for debt collection expired. That meant, without a federal law explicitly overriding the relevant state statute of limitations, the FTC had no lawful authority to collect funds from her any longer.

But that did not stop them from trying.

FTC Ignores Legal Limits

The FTC finally got around to filing an enforcement action in 2023—ten years after the initial court decision. Even worse, the FTC tried to illegally seize the funds in Leanne’s law firm client trust accounts, which Leanne’s clients paid her as a retainer and which Leanne was ethically required to maintain and use exclusively for the benefit of those clients.

The FTC claimed a special federal authority to ignore statutory limitation periods.  Statutes of limitations are an age-old feature of our system of justice, allowing legitimate claims brought within a reasonable period of time of a claimed injury while setting a fixed endpoint so that people aren’t hounded by stale claims into their old age, and that those claims are not inflicted upon subsequent generations.

Naturally, the FTC lost its case before a federal district judge, who recognized the fundamental injustice of permitting the action after such a lengthy delay, which would have violated the statute of limitations. Now, the agency is pursuing the enforcement action in the U.S. Court of Appeals for the Ninth Circuit. And there is no reason to think it will stop there.

CIR took up Leanne’s defense to strengthen protections against abusive actions from lawless federal agencies.

A Dangerous Precedent

Statutes of limitations are a vital part of our justice system. They ensure that defendants have a fair opportunity to present a case without having to dig through years-old records to try to reconstruct long-forgotten activity. And for anyone like Leanne–-who was dragged into a federal lawsuit without any wrongdoing on her own part–-they ensure a swift and reasonable conclusion to burdensome, costly, and intrusive legal processes without having to live under the constant threat of future action.

If it is not stopped, the FTC’s approach would be devastating. It would mean that the federal government could wait indefinitely to collect on federal debts, requiring Americans to live under the shadow of federal action for decades—and potentially pass on such stale debts to their children as part of their inheritance.

There is also a larger principle at stake. States have long been the first line of defense to protect individual rights. If federal law enforcement agencies can ignore a substantive protection for individuals, without clear authority from Congress, merely by claiming federal supremacy, then any number of legal protections for individual rights will buckle at the first sign of conflict with the feds.