The Federal Trade Commission Thinks Deadlines Don’t Apply to It. They Do.

Michael Brown v. U.S. Federal Trade Commission

A deadline is a deadline—even for the federal government. The U.S. Federal Trade Commission exists to stop unfair business practices and protect consumers. But the agency charged with making others play by the rules has repeatedly refused to follow the most basic rule governing how it can collect on court judgments: When time runs out, it runs out.

Nearly a decade ago, the FTC obtained a monetary judgment in court against Mr. Brown and his business for recurring fees charged to consumers. For three years after the judgment was finalized, the FTC did nothing to collect it. Only after the statute of limitations had expired did the agency finally assert it intended to collect the money. Rather than acknowledging it had missed its window, the FTC tried to exploit a federal debt-collection law that does not apply. But North Carolina state law governs how long any party can wait to collect on a judgment, which prevents debtors and their descendants from being stuck with looming obligations from a distant past.

The FTC is refusing to follow the same rules as everyone else. It now wants to collect on stale awards—no matter how much time has passed. The FTC insists it can ignore any state statute of limitations that gets in its way. But the federal government, particularly the agency tasked with policing fairness in business, has an obligation to follow the rules.

Brown v. FTC asks a simple question: Must the FTC follow the same rules as everyone else when it tries to collect on a court judgment? CIR says yes—and is asking the court to hold the FTC to the deadlines set by applicable law.

Why This Case Matters:

This case is not an isolated mistake. The FTC has repeatedly attempted to collect on stale judgments across the country, invoking federal debt-collection powers it does not possess and ignoring state limitations periods it is obligated to follow. The agency’s theory—that it is exempt from state statutes of limitations whenever it decides to call a judgment a “federal debt”—has no basis in law and no limit in principle. If accepted, it would mean the FTC (and potentially other federal agencies) could pursue individuals indefinitely, long after memories fade, evidence disappears, and people have moved on with their lives.

Under federal rules enacted by Congress, when no federal limitations period governs a collection proceeding, state law fills the gap. North Carolina gives any creditor—including the federal government—three years to act on a judgment. The FTC had that window. It chose not to use it.

The rule of law means nothing if powerful government agencies can simply declare themselves exempt from inconvenient deadlines. This case is about ensuring that the agency entrusted with policing fairness in the marketplace is itself held to a fair and equal standard that Congress has established—no more, and no less.

Background:

Statutes of limitations are among the law’s most fundamental protections. They exist in almost every type of civil and criminal law because justice delayed is justice denied—not just for plaintiffs but for defendants too. These deadlines are established by Congress or a state legislature to prevent people from being dragged into legal proceedings for years or decades after an event, when memories fade, witnesses die, documents have been lost, and the ability to mount a defense has eroded. Legislatures, not individual litigants, decide how long the window should stay open—and their decisions bind everyone, even the government.

Limitations periods for collecting on old judgments serve many of the same interests and relieve debtors from the prospect of having debts collected long after the original dispute has been resolved. For judgments issued in federal court, the parties must follow the law of the state where a federal court is located unless there is a clear federal limitations period that governs the dispute—and there isn’t in this matter. In North Carolina, that means that a party with a federal judgment has three years to collect.

The FTC obtained a final judgment against Mr. Brown in 2021, but waited until 2024 to take any action to collect on it and still has not brought a collection action. Meanwhile, however, the statute of limitations has run out. The FTC asserts that it is immune from state laws that apply to every other litigant, but Congress has said otherwise. Anything else would be an abuse of the power that Congress has granted.