Federal Trade Commission v. ELH Consulting LLC, et al

Filing 55

ORDER granting 44 Motion to Strike Defendants' jury demand 43 . (See document for further details). Signed by Judge Frederick J Martone on 2/6/13. (LAD)

1

WO

2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE DISTRICT OF ARIZONA

8
9

Federal Trade Commission,
Plaintiff,

10
11

vs.

12
ELH Consulting, LLC, et al.,
13
Defendants.
14

)
)
)
)
)
)
)
)
)
)
)
)

No. CV 12-02246-PHX-FJM
ORDER

15
16
We have before us defendants' request for jury trial (doc. 43), plaintiff's motion to
17
strike defendants' jury demand (doc. 44), plaintiff's memorandum in support of the motion
18
to strike (doc. 45), defendants' response (doc. 47), and plaintiff's reply (doc. 48).
19
On October 22, 2012, the Federal Trade Commission ("FTC") filed a complaint
20
seeking equitable preliminary and permanent injunctive relief, rescission of contracts,
21
restitution, disgorgement, and other equitable relief under sections 13(b) and 19 of the
22
Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b) and 57(b), and the
23
Telemarketing and Consumer Fraud and Abuse Prevention Act ("Telemarketing Act"). We
24
granted the FTC's request for a temporary restraining order. Defendants now request a jury
25
trial pursuant to Fed. R. Civ. P. 38. The FTC argues that defendants' demand for jury trial
26
should be stricken because the FTC seeks only equitable relief, and there is no right to a jury
27
in an equitable action.
28

1

Pursuant to Fed. R. Civ. P. 38, a party has “[t]he right of trial by jury as declared by

2

the Seventh Amendment to the Constitution—or as provided by federal statute[.]" Here,

3

neither the FTC Act nor the Telemarketing Act provides for a jury trial. The Seventh

4

Amendment "preserves the right to trial by jury of all legal claims," but "'no right to a jury

5

exists' for equitable claims." Danjaq LLC v. Sony Corp., 263 F.3d 942, 962 (9th Cir. 2001)

6

(citations omitted). Defendants concede that they are not entitled to a jury trial on the FTC's

7

equitable claims. Defendants' Response at 3.

8

Defendants argue, however, that they are entitled to a jury trial because the FTC seeks

9

a legal remedy. Defendants rely on Great-West Life & Annuity Ins. Co. v. Knudson, 534

10

U.S. 204, 122 S. Ct. 708 (2002) to argue that the FTC's claims are for legal restitution

11

because they seek to recover funds that have been commingled with defendants' general

12

assets. In Great-West, the Court held that plaintiffs sought legal relief where they imposed

13

personal liability on defendants for a contractual obligation to pay money. Id. at 221, 122

14

S. Ct. at 719. In contrast, the Court found that restitution lies in equity where plaintiff seeks

15

to "restore to the plaintiff particular funds or property in the defendant's possession." Id. at

16

214, 122 S. Ct. at 715. Here, the FTC does not seek to impose personal liability for a

17

contractual obligation. Instead, the FTC seeks relief based on the court's equitable powers

18

to "redress injury to consumers resulting from Defendants' violations of the FTC Act and the

19

[Telemarketing Act]." Therefore, the FTC's claims lie in equitable, not legal, restitution.

20

Defendants next contend that the FTC's request for "refund of monies paid" is a form

21

of legal restitution. However, "[t]he award of monetary relief is not necessarily always

22

legal." Smith v. Barton, 914 F.2d 1330, 1337 (9th Cir. 1990) (citations omitted). For

23

example, damages are equitable where, as here, they are in "action[s] for disgorgement of

24

improper profits." Id. (quotation omitted). Accordingly, the FTC seeks equitable relief, and

25

thus defendants are not entitled to a jury trial. This is not an action for damages.

26
27

Moreover, weighing carefully the interests of justice and the interests of judicial
economy, we decline to impanel an advisory jury under Rule 39(c), Fed. R. Civ. P., to hear

28
-2-

1

any claims in this action. An advisory jury would add needless complexity with no attendant

2

benefit.

3
4
5

IT IS ORDERED GRANTING plaintiff's motion to strike defendants' jury
demand (doc. 44).
DATED this 6th day of February, 2013.

6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-3-