The FTC’s Success By Well being fraud lawsuit has survived a movement to dismiss.
The Success By Well being Plaintiffs (SBH Plaintiffs) filed a movement to dismiss again on July twenty eighth.
Beneath Rule 19(a) of the Arizona Civil Process Guidelines, the SBH Plaintiffs argued its associates ‘should both be joined as events or this motion have to be dismissed.’
This was based mostly on the SBH Plaintiffs’ argument that associates had
two cognizable pursuits on this motion—first, an curiosity in acquiring fee funds for earlier SBH product gross sales, and second, an curiosity in incomes future commissions by promoting SBH merchandise — and since litigating this motion of their absence might, “as a sensible matter,” impair their capacity to guard these pursuits.
In different phrases SBH associates having the ability to earn commissions via SBH entitled them to be acknowledged as a collective get together, failing which the FTC’s lawsuit have to be dismissed.
The courtroom discovered the SBH Plaintiffs’ movement to be incorrectly filed. The SBH Plaintiffs had thus forfeited their proper to file a Rule 19(a) movement to dismiss.
This was one of many responses in opposition the FTC filed. The FTC additionally argued
- Rule 19(a) can’t be used to “power an administrative company to sue a specific get together in an enforcement motion”; and
- there is no such thing as a “proper to take part in a pyramid scheme”.
As a result of the SBH Plaintiff’s movement was discovered to be improperly filed, the courtroom declined to handle the FTC’s second and third responses.
The courtroom concluded that the SBH Plaintiffs ‘seem(ed) to be searching for an unprecedented final result’.
The FTC has cited an unbroken line of instances holding that Rule 19(a) can’t be invoked by a defendant in an enforcement continuing introduced by an administrative company.
The Particular person Defendants, in flip, haven’t pointed to a single resolution ordering such reduction.
In associated information, an ongoing discovery dispute has additionally been resolved within the FTC’s favor.
As per a September seventeenth order, Success By Well being has been given till September thirtieth to supply all “related excellent discovery”.
Wanting ahead, the FTC has filed a response to Success By Well being’s try and dissolve or modify the beforehand granted preliminary injunction.
A call on Success By Well being’s movement stays pending.
The regulator has additionally been granted permission to file a second amended criticism, and has been ordered to take action by September twenty ninth.
I’ve marked our subsequent case docket replace for September thirtieth.