Federal Trade Commission v. J. William Enterprises, LLC et al

Filing 177

ORDER denying 146 Motion for summary judgment. It is hereby ORDERED that the Defendants' Joint Motion for Partial Summary Judgment (Doc. 146) is DENIED.Signed by Judge Gregory A. Presnell on 10/23/2017. (MAF)

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

Case No: 6:16-cv-2123-Orl-31DCI

J. WILLIAM ENTERPRISES, LLC, JESS
KINMONT, JOHN P. WENZ, JR. and
PRO TIMESHARE RESALES OF
FLAGLER BEACH LLC,
Defendants.

ORDER
This Matter comes before the Court on the Defendants’ Joint Motion for Partial Summary
Judgment (Doc. 146), the Plaintiff’s Response in Opposition (Doc. 159), and the Defendants’
Reply (Doc. 168).
I.

Background
The Federal Trade Commission (“FTC”) filed a Complaint on December 12, 2016. Doc. 2.

In the Complaint, the FTC alleged violations of Section 13(b) of the FTC Act, 15 U.S.C. § 53(b),
and Section 6(b) of the Telemarketing and Consumer Fraud and Abuse Prevention Act
(“Telemarketing Act”) , 15 U.S.C. § 6105(b), and sought equitable relief, including disgorgement
of profits, rescission or reformation of consumers’ contracts, refunds, and restitution. Compl.
at 11-12. On August 2, 2017, the Defendants filed a Joint Motion for Partial Summary Judgment.
Doc. 146. The Defendants argue that the equitable relief sought by the FTC is unavailable under
the statutes pled in the Complaint, and that some of the damages sought by the FTC fall outside
the appropriate statute of limitations. Mot. at 1.

II.

Legal Standards
Courts may grant summary judgment “[w]hen the only question a court must decide is a

question of law.” Saregama India Ltd. v. Mosley, 635 F.3d 1284, 1290 (11th Cir. 2011). The
parties agree that there are no issues of fact that would preclude the Court from entering partial
summary judgment here. Accordingly, the sole questions before the Court on this Motion are (1)
whether the equitable relief requested is unavailable under the statutes pled in the Complaint, and
(2) whether the three-year statute of limitations found in section 19(b) of the FTC Act applies to
the claims brought by the FTC.
III.

Analysis
The Defendants argue that the remedies sought by the FTC—disgorgement, restitution,

refunds, and rescission or reformation of contracts—are unavailable for violations of Section 13(b)
of the FTC Act, 15 U.S.C. § 53(b), and Section 6(b) of the Telemarketing Act, 15 U.S.C.
§ 6105(b). As the Defendants point out, Section 13(b), which provides for injunctive relief, does
not mention restitution, rescission, refunds, or disgorgement. However, the Court needs no express
grant of authority to grant equitable relief under section 13(b). District courts possess inherent
power to grant equitable relief “unless otherwise provided by statute.” F.T.C. v. Gem Merch.
Corp., 87 F.3d 466, 469 (11th Cir. 1996) (quoting Porter v. Warner Holding Co., 328 U.S. 395,
398 (1946) (internal quotation marks omitted). Accordingly, section 13(b), which contains no
language restricting the Court’s authority to grant equitable relief, “provides ‘an unqualified grant
of statutory authority’ to issue ‘the full range of equitable remedies.’” F.T.C. v. Washington Data
Res., Inc., 704 F.3d 1323, 1326 (11th Cir. 2013) (quoting Gem Merch. Corp., 87 F.3d at 469); see
also F.T.C. v. Lalonde, 545 F. App'x 825, 841 (11th Cir. 2013); Fed. Trade Comm'n v. Lanier
Law, LLC, 194 F. Supp. 3d 1238, 1287 (M.D. Fla. 2016); F.T.C. v. Worldwide Info Servs., Inc.,

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No. 6:14cv8, 2015 WL 1020583, at *10 (M.D. Fla. Mar. 6, 2015); F.T.C. v. Direct Benefits Grp.,
LLC, No. 6:11cv1186, 2013 WL 3771322, at *21 (M.D. Fla. July 18, 2013) . There is no shortage
of case law recognizing the availability of the equitable relief sought by the FTC under section
13(b).
Ultimately, the Defendants concede that Eleventh Circuit precedent permits the equitable
remedies sought by the FTC, although the Motion’s discussion of statutory construction
challenges the reasoning underlying those decisions.1 The Defendants cite Owner-Operator Indep.
Drivers Ass'n, Inc. v. Landstar Sys., Inc., 622 F.3d 1307, 1323 (11th Cir. 2010), for the proposition
that, “[e]ven where a statute permits injunctive relief, it does not follow that other forms of
equitable relief, such as restitution or disgorgement, are available.” Mot. at 5. However, Landstar
casts no doubt on the availability of equitable relief under section 13(b). The Eleventh Circuit has
remained firm in its position that the “full range of equitable remedies” are available under section
13(b), even after the Landstar decision. See generally F.T.C. v. Washington Data Res., Inc., 704
F.3d 1323, 1326 (11th Cir. 2013).
The Defendants take the position that a recent Supreme Court case, Kokesh v. S.E.C., 137
S. Ct. 1635 (2017), raises questions as to the viability of that Eleventh Circuit precedent. Kokesh
addressed the narrow question of whether the five-year statute of limitations in 28 U.S.C. § 2462
applied “to claims for disgorgement imposed as a sanction for violating a federal securities law.”
137 S. Ct. at 1639. Nevertheless, the Defendants argue that discussion during oral argument and
what has been called an “ominous footnote” in Kokesh suggest that the Supreme Court had doubts

1

The Reply argues that Washington Data and Gem Merch. Corp. are distinguishable, but
the Motion states that “[t]he Defendants concede that prior precedent from the Eleventh Circuit
and other circuits permits the FTC to seek the equitable remedies such as disgorgement and
restitution as part of its claim for injunctive relief.” Mot. at 7; see Reply at 2.

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about courts’ authority “to order disgorgement in agency enforcement actions where disgorgement
is not a statutorily-conferred remedy.” Mot. at 8-9. Essentially, the Defendants ask the Court to
deviate from Eleventh Circuit precedent and extend the logic of questions and comments made
during oral argument in Kokesh to the facts at hand. As a threshold matter, Kokesh did not involve
section 13(b); it dealt with federal securities law. Even assuming arguendo that a finding as to the
unavailability of equitable remedies for violations of federal securities law would apply to section
13(b) violations, there was no such finding in Kokesh: the Supreme Court specifically declined to
address whether courts possessed authority to order disgorgement in SEC enforcement
proceedings. See Kokesh, 137 S. Ct. at 1642, n.3. The Defendants argue that the footnote in
Kokesh could be read as an expression of doubt as to whether courts had such authority in SEC
proceedings, but the Supreme Court’s deliberate avoidance of this different, if potentially
analogous, issue provides no basis for this Court to disregard decades of precedent. Even if, as the
Defendants argue, the footnote “is not merely a pronouncement of the limitations of the opinion,”
it is far from an extension of the holding in Kokesh.
Additionally, the Defendants contend that, under Kokesh, the sorts of remedies sought by
the FTC should be subject to the three-year statute of limitations in section 19(b) of the FTC Act.
The argument that section 19(b)’s limitation period should apply to FTC requests for
disgorgement is nothing new, and courts have rejected this argument in the past. See, e.g., F.T.C.
v. Sec. Rare Coin & Bullion Corp., 931 F.2d 1312, 1315 (8th Cir. 1991) (rejecting argument that
permitting equitable relief under section 13(b) would improperly allow the FTC to avoid
compliance with section 19(b)’s procedural requirements); United States v. Prochnow, No. 0710273, 2007 WL 3082139, at *5 (11th Cir. Oct. 22, 2007) (citing Security Rare Coin & Bullion
Corp., 931 F.2d at 1314-15) (rejecting disgorgement statute of limitations argument based on

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Security Rare Coin & Bullion Corp.). Additionally, there is nothing in Kokesh that indicates that
the Court should apply section 19(b)’s statute of limitations to the FTC’s claims under section
13(b). Accordingly, the Defendants are not entitled to partial summary judgment on either issue
raised in the Motion.

IV.

Conclusion
In consideration of the foregoing, it is hereby
ORDERED that the Defendants’ Joint Motion for Partial Summary Judgment (Doc. 146)

is DENIED.
DONE and ORDERED in Chambers, Orlando, Florida on October 23, 2017.

Copies furnished to:
Counsel of Record
Unrepresented Party

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