The FTC has been denied NetForce contempt sanctions towards Jay Noland.
The request for sanctions stems from Noland allegedly violating his NetForce injunction judgment.
Again in mid 2020 the FTC was denied contempt sanctions, pending decision of the FTC’s Success by Well being pyramid scheme case.
The FTC renewed its movement for contempt sanctions in June 2021.
Defendant James D. Noland, Jr., together with co-contemnors Scott Harris, Thomas Sacca, Success By Media LLC, and Success By Media Holdings Inc. violated a number of phrases of this Court docket’s 2002 Stipulated Last Judgment and Everlasting Injunction.
Till the Court docket imposed preliminary reduction in January 2020, they ran two pyramid schemes—Success By Well being (“SBH”) and VOZ Journey—utilizing false earnings claims to bilk 1000’s of shoppers out of $7 million.
The FTC, subsequently, requests the Court docket discover them in contempt and award civil compensatory sanctions.
Regardless of acknowledging “the FTC has established that the Contempt Defendants violated some provisions of the (NetForce) everlasting injunction”, on March twenty second the FTC’s renewed sanction movement was denied.
The Court docket concludes that the FTC has not clearly and convincingly established, at this stage of the proceedings, that the Contempt Defendants violated Sections I, II, and III of the everlasting injunction via their operation of SBH.
The FTC might want to search to ascertain these violations at an evidentiary listening to.
As a result of the FTC has not established the entire violations alleged in its movement, it follows that the FTC has not established an entitlement to the $7,012,913.25 compensatory contempt award sought in its movement.
Following the March twenty second denial, the FTC filed a movement for consideration on March twenty fourth.
In its reconsideration movement, the FTC argues that the Court docket ought to have deemed its proof ample to ascertain the SBH-related violations of Part I of the everlasting injunction as a result of, no matter whether or not SBH qualifies as a “pyramid scheme” beneath Ninth Circuit regulation (which was the difficulty addressed within the abstract judgment order within the Second Motion), SBH essentially qualifies as a “prohibited advertising and marketing scheme” as that time period is outlined by the everlasting injunction.”
The courtroom conceded the FTC’s level however in a March thirtieth order denying the movement, wrote;
The Court docket will not be persuaded that the most effective and most effective answer is to revisit the difficulty now through one other written order issued prematurely of an evidentiary listening to.
This case has been pending for over two years, discovery is closed, and a consolidated evidentiary listening to within the First and Second Actions might want to happen no matter how the reconsideration movement is resolved.
I final checked the Success by Well being case docket on March twenty third. As of but we don’t have any future courtroom dates.
One different fascinating tidbit from the unique denial movement was the courtroom noting it would regulate the FTC’s requested $7 million determine.
If NetForce contempt sanctions are finally granted, the courtroom has signalled it should consider product distributed to associates as a part of the Success by Well being pyramid scheme.
The FTC acknowledges that its calculations don’t account for the inherent worth of the merchandise that customers really acquired and consumed.
Factoring within the worth of merchandise distributed as a part of the Success by Well being pyramid scheme, would successfully scale back the requested $7 million award.
The Supreme Court docket’s AMG resolution doubtlessly impacting enforcement of the NetForce injunction additionally comes up.
Listed below are unresolved questions in regards to the FTC’s authority to pursue a compensatory civil sanction primarily based on new § 13(b) violations that additionally violate an injunction issued in a earlier § 13(b) enforcement motion (such because the everlasting (NetForce) injunction issued within the First Motion).
I’ll proceed to observe the NetForce case docket. I’m not anticipating any important filings although pending decision of the Success by Well being case.
Replace twenty ninth Could 2022 – The FTC’s contempt claims have survived a Movement to Dismiss, filed by Noland and his co-defendants again in March.
As per the Could 18th order;
There’s a disconnect between the substantive argument raised within the Contempt Defendants’ movement (i.e., the FTC’s request for financial contempt sanctions within the First Motion is barred by AMG Capital) and the reduction they search (i.e., a dismissal primarily based on the absence of subject-matter jurisdiction).
The Court docket unquestionably has subject-matter jurisdiction to entertain a declare for civil contempt sanctions primarily based on the violation of a everlasting injunction it beforehand issued.
With respect to the AMG resolution, which the dismiss movement was primarily based round, the order states;
The Court docket acknowledges that, sooner or later within the close to future, it could be essential to resolve whether or not the FTC’s request for financial sanctions within the First Motion is foreclosed by AMG Capital.
However the one request now correctly earlier than the Court docket is the Contempt Defendants’ request for dismissal for lack of subject-matter jurisdiction.
As defined above, that request lacks benefit.
Noland and co. additionally tried to peg an “unclean palms” protection on the FTC, which the courtroom described as “procedurally complicated”.
The courtroom went on to disclaim Noland and co.’s Movement to Dismiss.
Wanting ahead;
The following step might be to carry an evidentiary listening to to resolve the FTC’s contempt allegations within the First Motion (in addition to its claims within the Second Motion) on the deserves.
I’ll proceed to observe the case docket for updates.
Replace fifteenth July 2022 – FTC v. SBH edges nearer to trial. On July sixth the courtroom ordered the events to file a Joint Discover with proposed trial dates.
Specified ranges within the order are September/October 2022 and January/February 2023.
At time of submitting the ordered Joint Discover hasn’t been filed but.