Federal Trade Commission v. WV Universal Management, LLC et al

Filing 308

ORDER adopting 304 REPORT AND RECOMMENDATIONS re 302 MOTION to stay re 297 Judgment filed by Universal Processing Services of Wisconsin, LLC. Defendant Universal Processing Services of Wisconsin, LLC's motion to stay monetary judgment without posting a bond (Doc. 302), filed on January 20, 2017, is DENIED. Signed by Judge Anne C. Conway on 3/24/2017. (JLC)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
FEDERAL TRADE COMMISSION,
Plaintiff,
v.

Case No: 6:12-cv-1618-Orl-22KRS

HES MERCHANT SERVICES
COMPANY, INC., HAL E. SMITH and
UNIVERSAL PROCESSING SERVICES
OF WISCONSIN, LLC,
Defendants.

ORDER
This cause comes before the Court on Defendant Universal Processing Services of
Wisconsin, LLC’s (“UPS”) Objection (Doc. 306) to the Magistrate Judge’s Report and
Recommendation (“R & R”) (Doc. 304). The R & R recommended denial of UPS’s motion to stay
judgment without posting a bond. (Doc. 304 at 6). For the reasons stated herein, the Court will
adopt and confirm the R & R and will deny UPS’s motion.
I.

PROCEDURAL BACKGROUND

The Federal Trade Commission (“FTC”) brought this action against telemarketers and their
credit card payments processor to dismantle a telemarketing boiler room and recover consumer
funds from the various companies and individuals who facilitated the scam. The FTC moved for
summary judgment against UPS, and the Court granted this motion. (Doc. 208). On February 11,
2015, the Court entered Orders granting equitable monetary relief and permanently enjoined
Defendants from certain activities. (Docs. 240, 241, 242, 265 (transcript)). UPS appealed the
Court’s Order. Thereafter, the FTC and UPS filed a joint motion to “stay proceedings to enforce

judgment and ordering deposit of funds.” (Doc. 273). The Court granted the joint motion to stay
execution of judgment and permitted UPS to deposit the amount of judgment in the Court’s
Registry. (Doc. 274).
Thereafter, the Eleventh Circuit affirmed most of the Court’s judgment except for the
Eleventh Circuit remanded the case for findings of fact and conclusions of law with respect to the
issue of whether UPS was jointly and severally liable. (Doc. 283). After the Eleventh Circuit issued
its mandate, UPS filed a motion seeking release of the funds it had deposited into the Court’s
Registry (Doc. 287), which the Court granted. (Docs. 292, 295). The funds were disbursed to UPS.
(Doc. 298). On October 26, 2016, the Court issued findings of fact and conclusions of law again
finding that UPS was jointly and severally liable, and the Court entered judgment to that effect.
(Docs. 296, 297). UPS appealed this judgment, and filed the present motion to stay the monetary
judgment and waive the bond requirement. (Doc. 302).
The Magistrate Judge issued an R & R recommending denial of UPS’s motion and
concluding that UPS failed to show an “extraordinary occasion” warranting waiver of the bond
requirement. To make such a showing, UPS must objectively demonstrate a present financial
ability to “facilely respond to a money judgment and present[] to the court a financially secure
plan for maintaining that same degree of solvency during the period of appeal.” (Doc. 304 at 3, 6)
(citing Poplar Grove Planting & Refining Co., Inc. v. Bache Halsey Stuart, Inc., 600 F.2d 1189,
1190–91 (5th Cir. 1979)). In objecting to the R & R, UPS contends that the Magistrate Judge erred
in recommending denial of UPS’s motion by adding an additional requirement to Rule 62(d) that
UPS prove that it will remain solvent throughout the appeal, and that the Magistrate Judge failed
to account for the collective strength of the financial data that UPS submitted. (Doc. 306 at 1).

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II.

LEGAL STANDARD & DISCUSSION

District courts review de novo any portion of a magistrate judge’s disposition of a
dispositive motion to which a party has properly objected. Fed. R. Civ. P. 72(b)(3); Ekokotu v.
Fed. Express Corp., 408 F. App’x 331, 336 n.3 (11th Cir. 2011) (per curiam).1 The district judge
may reject, modify, or accept in whole or in part the magistrate judge’s recommended disposition,
among other options. Fed. R. Civ. P. 72(b)(3). De novo review of a magistrate judge’s findings of
fact must be “independent and based upon the record before the court.” LoConte v. Dugger, 847
F.2d 745, 750 (11th Cir. 1988). The district court “need only satisfy itself that there is no clear
error on the face of the record” in order to affirm a portion of the Magistrate Judge’s
recommendation to which there is no timely objection. Fed. R. Civ. P. 72 advisory committee’s
note (1983) (citations omitted); see also Gropp v. United Airlines, Inc., 817 F. Supp. 1558, 1562
(M.D. Fla. 1993).
Rule 62(d) of the Federal Rules of Civil Procedure governs the granting of a stay pending
appeal and provides, in relevant part, that “by giving a supersedeas bond” an appellant “may obtain
a stay.” Fed. R. Civ. P. 62(d). In addition, “‘if a judgment debtor objectively demonstrates a present
financial ability to facilely respond to a money judgment and presents to the court a financially
secure plan for maintaining that same degree of solvency during the period of an appeal,’ the
district court, at its discretion, may substitute some form of guaranty of judgment responsibility
for the supersedeas bond.” Advanced Estimating Sys., Inc. v. Riney, 171 F.R.D. 327, 328 (S.D. Fla.
1997). The general rule, however, is that a full security supersedeas bond is required, “and the
courts should only allow lesser bonds on extraordinary occasions.” Id.

1

Unpublished Eleventh Circuit cases are persuasive, but not binding.

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As the Magistrate Judge properly noted, there are two limited circumstances that permit a
court to find that the bond requirement may be waived: “(1) where the defendant’s ability to pay
the judgment is ‘so plain that the cost of the bond would be a waste of money’; and (2) where the
bond requirement would put the defendant’s other creditors in undue jeopardy.” (Doc. 304 at 3–4)
(citing Nelson v. Freightliner LLC, No. 5:01-cv-266-Oc-22GRJ, 2004 U.S. Dist. LEXIS 30941, at
*3 (M.D. Fla. June 25, 2004)). The parties do not dispute that the present case involves only the
first instance—whether UPS’s ability to pay the judgment is so plain that the bond is a waste of
money.
The Magistrate Judge found that UPS had failed to establish an extraordinary occasion
warranting waiver of the bond requirement because UPS had not demonstrated that a bond would
be a waste of money. (Doc. 304 at 4). Rather, the Magistrate Judge concluded that the bond is
required to maintain the status quo and protect the FTC’s rights. (Id. at 5). UPS objects to the R &
R for two reasons. First, according to UPS, the Magistrate Judge imposed an additional
requirement that UPS demonstrate that it will remain solvent throughout the appeal. (Doc. 306 at
1). UPS does not cite case law to support its argument. In any event, the Magistrate Judge’s
consideration of this factor was correct because, in order for the Court to exercise its discretion in
waiving the bond, the moving party must demonstrate that it has “a present financial ability” to
satisfy the money judgment, and the moving party is required to present “to the court a financially
secure plan for maintaining that same degree of solvency during the period of an appeal.”
Advanced Estimating Sys., Inc., 171 F.R.D. at 328 (emphasis added).
While UPS has demonstrated that, in the past three years, it may have been capable of
responding to the money judgment against it, it has failed demonstrate that it has a “financially
secure plan” to maintain this ability throughout the appeal. Rather, UPS believes it need not make

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such a showing. This is incorrect. The Magistrate Judge properly considered and weighed whether
UPS has demonstrated that it will remain solvent throughout the appeal. See Poplar Grove
Planting & Refining Co., Inc. v. Bache Halsey Stuart, Inc., 600 F.2d 1189, 1190–91 (5th Cir.
1979) 2 (stating that the judgment debtor must present plan for maintaining “same degree of
solvency during appeal”); see also Slater v. Progress Energy Serv. Co., LLC, No. 8:09-cv-208-T24EAJ, 2010 WL 5209342, at *5 (M.D. Fla. Dec. 16, 2010) (same).
Second, UPS objects to the R & R arguing that the Magistrate Judge did not consider the
“collective strength” of the financial data that UPS submitted. According to UPS, the evidence
demonstrates that “for the past three years and as recently as just over a month ago, [UPS] was
sufficiently solvent such that the cost of a bond would be an unnecessary waste of money.” (Doc.
306 at 4). The Magistrate Judge, citing the undersigned Judge, recognized that limited financial
data such as annual sales figures and operating revenue do not suffice to show that a defendant is
one of the extraordinary parties who should be excused from the bond requirement. Nelson, 2004
U.S. Dist. LEXIS 30941, at *3. These figures establish UPS’s financial history over the past few
years and just before the motion was filed, but do not establish UPS’s ability to pay the judgment
during the appeal. Hamlin v. Charter Twp. of Flint, 181 F.R.D 348, 353 (E.D. Mich. 1998) (stating
that Rule 62(d)’s bond requirement is not a “mere formality that should be waived simply because
the losing party has adequate funds to satisfy the judgment. Ideally, losing parties will always have
sufficient funds to pay the award, but if this fact alone were enough to waive the bond requirement,
the bond requirement would essentially be a nullity.”).

2

In Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1207 (11th Cir. 1981), the Eleventh Circuit held that
the decisions of the Former Fifth Circuit handed down before September 30, 1981 shall be binding as precedent in
the Eleventh Circuit.

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The undersigned Judge agrees with the Magistrate Judge that UPS has not demonstrated
an extraordinary occasion warranting waiver of the bond. Therefore, UPS’s motion to stay the
judgment pending appeal without posting a bond will be denied.
III.

CONCLUSION

Based on the foregoing, it is ordered as follows:
1.

The Defendant Universal Processing Services of Wisconsin, LLC’s Objection

(Doc. 306), filed on February 14, 2017, is OVERRULED.
2.

The Report and Recommendation (Doc. 304), issued January 31, 2017, is

ADOPTED and CONFIRMED and made a part of this Order.
3.

Defendant Universal Processing Services of Wisconsin, LLC’s motion to stay

monetary judgment without posting a bond (Doc. 302), filed on January 20, 2017, is DENIED.
DONE and ORDERED in Chambers, in Orlando, Florida on March 24, 2017.

Copies furnished to:
Counsel of Record
Unrepresented Parties

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