Federal Trade Commission v. Neovi Inc et al

Filing 279

ORDER granting 275 Ex Parte Motion to Continue Hearing and Modify Briefing Schedule; and denying 276 Ex Parte Motion For Hearing to Demonstrate Compliance With Final Order. The motion hearing currently set for September 20, 2012 is HEREBY CONTINU ED to September 27, 2012. Further, the time for Defendants to file an opposition to Plaintiffs motion shall be extended to August 28, 2012, and Plaintiff shall have until September 4, 2012 to file a reply. Defendants SHALL FILE a Notice of Compliance by August 10, 2012 at 5:00 p.m. The FTC MAY JOIN in Defendants Notice of Compliance, or alternatively MAY FILE a response to the Notice by August 24, 2012 at 5:00 p.m. Signed by Judge Janis L. Sammartino on 8/2/2012. (mtb)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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FEDERAL TRADE COMMISSION,

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CASE NO. 06-CV-1952 JLS (JMA)

Plaintiff,

ORDER: (1) GRANTING EX
PARTE MOTION TO CONTINUE
HEARING AND MODIFY
BRIEFING SCHEDULE; AND (2)
DENYING EX PARTE MOTION
FOR HEARING TO
DEMONSTRATE COMPLIANCE
WITH FINAL ORDER

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vs.

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(ECF Nos. 275, 276)
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NEOVI, INC., et al.,
Defendants.

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Presently before the Court are two ex parte motions filed by Defendants in this matter.

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First, Defendants request a continuance of the hearing and modification of the briefing schedule on

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Plaintiff’s Motion to Modify the Final Order. (Mot. to Modify, ECF No. 275.) Plaintiff has not

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opposed the motion, and Defendants indicate Plaintiff is amenable to the relevant dates being

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moved as requested. (Id. at 1.) Accordingly, Defendants’ request to modify the hearing and

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briefing schedule dates is GRANTED. The motion hearing currently set for September 20, 2012
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is HEREBY CONTINUED to September 27, 2012. Further, the time for Defendants to file an

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opposition to Plaintiff’s motion shall be extended to August 28, 2012, and Plaintiff shall have until

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September 4, 2012 to file a reply.

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Second, Defendants request a hearing be set on August 3, 2012 to demonstrate compliance

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with the Court’s Final Order. (Mot. for Hearing, ECF No. 276.) This request stems from the

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Court’s July 11, 2012 ruling in which Contempt Defendants (“Defendants”) were held in contempt

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of the Final Order, and given 30 days to demonstrate compliance before a per diem fine would be

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exacted. (See Contempt Order, ECF No. 272.) Defendants complain that the “Contempt Order

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does not specify how such demonstration is to be made,” and ask for a hearing on August 3, 2012

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to apparently make such demonstration “[t]hrough the use of testimony and screen shots in a

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PowerPoint format.” (Mot. for Hearing 1.) Defendants’ motion lists the efforts they have

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undertaken, but argues that “[d]emonstration of these matters is not easily achieved and heavily

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relies on circumstances and the cooperation of the parties outside Defendants’ control.” (Id. at 1-

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2.) Thus, a “hearing on the date requested will allow Defendants to obtain the Court’s input and

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still allow them an opportunity, before the 30-day compliance period expires, to address any

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shortcomings the Court might identify.” (Id. at 3.)

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The FTC opposes the motion, arguing that Defendants’ request in effect seeks “an

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evidentiary hearing by ambush.” (Opp’n to Mot. for Hearing 2, ECF No. 278.) Defendants

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apparently did not inform the FTC of their intent to file this motion for hearing, did not seek the

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FTC’s consent to conduct an evidentiary hearing, and have not discussed the efforts they have

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already undertaken to comply nor sought to collaborate with the FTC prior to the expiration of the

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time for compliance. (Id.) According to the FTC, Defendants “have failed to engage the FTC in

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meaningful discussions concerning how they might comply.” (Id.)

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The Court agrees with the FTC that holding a compliance hearing before Defendants have

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presented their compliance efforts to the FTC and given the FTC an opportunity to respond “is

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premature and likely to waste judicial resources.” (Id.) The FTC has expressed a willingness to

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evaluate Defendants’ effort to comply, but must be given an opportunity to do so, and should not

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be made to do so on the fly. Nor will the Court undertake to perform an on-the-spot evaluation of
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Defendants’ evidence of compliance or respond to Defendants’ unknown queries regarding the

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sufficiency of this evidence in a question-and-answer format punctuated by the FTC’s unprepared

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remarks.

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However, the Court commends Defendants for the efforts they appear to have taken to

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comply, as briefly listed in their motion for hearing. (See Mot. for Hearing 1-2.) The Court

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further wishes to encourage Defendants’ swift and full compliance—indeed, this is the entire

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purpose of civil sanctions. The determination of compliance, like all decisions relating to

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contempt, is at the discretion of the Court. See Peppers v. Barry, 873 F.2d 967, 968 (6th Cir.

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1989). In exercising that discretion, the Court is guided by the coercive purpose of contempt.

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McComb v. Jacksonville Paper Co., 336 U.S. 187, 193 (1949) (discussing “the power of the

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District Court . . . to grant the relief that is necessary to effect compliance with its decree. The

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measure of the court’s power in civil contempt proceedings is determined by the requirements of

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full relief.”); see also Shuffler v. Heritage Bank, 720 F.2d 1141, 1146-47 (9th Cir. 1983).

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Accordingly, the Court HEREBY ORDERS the following:

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1. Defendant’s motion for hearing (ECF No. 276) is DENIED.

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2. Defendants SHALL FILE a Notice of Compliance by August 10, 2012 at 5:00 p.m., if

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they wish to avoid the accrual of the per diem fines set forth in the Contempt Order. Defendants

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should present evidence as necessary to demonstrate to the Court that they have purged their

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failure to comply with the Final Order. Defendants are encouraged to meet and confer with the

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FTC prior to that date to facilitate a robust and complete showing of compliance, and the FTC is

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encouraged to cooperate fully with Defendants’ efforts.

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3. The FTC MAY JOIN in Defendants’ Notice of Compliance, or alternatively MAY

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FILE a response to the Notice by August 24, 2012 at 5:00 p.m., indicating any ways in which the

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FTC believes Defendants’ showing of compliance to be inadequate.

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4. If, in the Court’s discretion, it decides that a hearing regarding Defendants’ compliance
would be beneficial or productive, the Court will set a date for hearing.
5. In the event the Court deems Defendants’ showing insufficient to purge their contempt,
the Court reserves the right to forgive any fines which accrue between August 10, 2012 and such
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determination of noncompliance, provided the Court finds that Defendants’ showing was in good

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faith.

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IT IS SO ORDERED.

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DATED: August 2, 2012
Honorable Janis L. Sammartino
United States District Judge

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