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

Filing 181

ORDER granting in part and denying in part 144 Motion for summary judgment. It is hereby ORDERED that the FTC's Motion for Summary Judgment (Doc. 144) is DENIED as to Counts I and II, and GRANTED as to Counts III and IV. At the conclusion of the case, judgment in favor of the FTC will be entered as to Counts III and IV. Signed by Judge Gregory A. Presnell on 11/7/2017. (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 Plaintiff’s Motion for Summary Judgment
(Doc. 144), the Defendants’ Responses in Opposition (Docs. 160, 165-1), and the Plaintiff’s
Replies (Docs. 172, 174).
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 5(a) of the FTC Act, 15 U.S.C. § 45(a),
and the Telemarketing Sales Rule (“TSR”), 16 C.F.R. 310 et seq. On August 2, 2017, the FTC
filed a Motion for Summary Judgment. Doc. 144.
The FTC seeks summary judgment on Counts I, II, III, and IV. Count I alleges that the
Defendants made misrepresentations in violation of 15 U.S.C. § 45(a). Count II alleges that the
Defendants made misrepresentations to induce customers to pay for goods or services in violation
of the TSR. Counts III and IV allege that the Defendants made calls to telephone numbers on the

National Do Not Call Registry in violation of the TSR and that the Defendants failed to pay
required National No Call Registry fees in violation of the TSR.
The undisputed facts are as follows. Defendant Jess Kinmont (“Kinmont”) is the owner of
J. William Enterprises, LLC (“JWE”), which he organized in 2009. JWE obtained the fictitious
name of “Pro Timeshare Resales” in October of 2011. In 2012, JWE began selling advertising
services under the name of Pro Timeshare Resales (“PTR”). Kinmont Dep. 1, Doc. 144-4, at 43:812. Defendant John Wenz (“Wenz”) formed Pro Timeshare Resales of Flagler Beach, LLC
(“PTRFB”) “with the purpose of selling the advertising services of JWE.” Wenz. Dep. 1, Doc.
144-13, at 23:10-24. JWE became affiliated with PTRFB in March of 2012. Kinmont Dep. 1, Doc.
144-4, at 43:9-44:13. Under the agreement between JWE and PTRFB, JWE would pay PTRFB an
agreed-upon percentage of successful sales, minus cancellations, charge-backs, and expenses.
Both JWE and PTRFB operated under one Florida telemarketing license.
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). A party is
entitled to summary judgment when the party can show that there is no genuine issue as to any
material fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56.
Which facts are material depends on the substantive law applicable to the case. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party bears the burden of showing that
no genuine issue of material fact exists. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.
1991). A court “must draw all reasonable inferences in favor of the non-moving party, and it may
not make credibility determinations or weigh the evidence.” Hinson v. Clinch County, Ga. Bd. Of

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Educ., 231 F.3d 821, 826-27 (11th Cir. 2000) (quoting Reeves v. Sanderson Plumbing Prods., Inc.,
530 U.S. 133, 150-51 (2000)).
When a party moving for summary judgment points out an absence of evidence on a
dispositive issue for which the nonmoving party bears the burden of proof at trial, the nonmoving
party must “go beyond the pleadings and by [his] own affidavits, or by the depositions, answers to
interrogatories, and admissions on file, designate specific facts showing that there is a genuine
issue for trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 324-25 (1986) (internal quotations and
citation omitted). Thereafter, summary judgment is mandated against the nonmoving party who
fails to make a showing sufficient to establish a genuine issue of fact for trial. Id. at 322, 324-25.
The party opposing a motion for summary judgment must rely on more than conclusory
statements or allegations unsupported by facts. Evers v. Gen. Motors Corp., 770 F.2d 984, 986
(11th Cir. 1985) (“conclusory allegations without specific supporting facts have no probative
value”).
III.

Analysis

a. Counts I and II
In order to show that the Defendants violated Section 5(a), the FTC must show “‘(1) there
was a representation; (2) the representation was likely to mislead customers acting reasonably
under the circumstances, and (3) the representation was material.’” Fed. Trade Comm'n v. Lanier
Law, LLC, 194 F. Supp. 3d 1238, 1273 (M.D. Fla. 2016) (quoting F.T.C. v. Tashman, 318 F.3d
1273, 1277 (11th Cir. 2003)). If a representation would likely be “relied upon by a reasonable
prospective purchaser,” it is material. Id. at 1274. (quoting F.T.C. v. Washington Data Res., 856 F.
Supp. 2d 1247, 1272 (M.D. Fla. 2012), aff'd sub nom. F.T.C. v. Washington Data Res., Inc., 704
F.3d 1323 (11th Cir. 2013)). The Court presumes that express claims made in order to induce the

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purchase of a service are material. Id. Like Section 5 of the FTC Act, the TSR prohibits sellers and
telemarketers from “[m]aking a false or misleading statement to induce any person to pay for
goods or services.” 16 C.F.R. § 310.3(a)(4). “Identical principles of deception from Section 5 of
the FTC Act apply to the TSR, and a violation of the TSR amounts to both a deceptive act or
practice and a violation of the FTC Act.” Washington Data Res., 856 F. Supp. 2d at 1273. In order
to hold individuals liable for such violations, the FTC must demonstrate that the individual
defendants directly participated in, or had authority to control, the practices. Lanier Law, LLC,
194 F. Supp. 3d at 1285 (citing Wash. Data Res., 856 F. Supp. 2d at 1276).
The FTC argues that the Defendants made misrepresentations to consumers, and it has
produced voluminous evidence that supports this contention. Citing language used on the
Defendants’ website and in brochures and other documents, in addition to statements from
numerous consumer declarations, the FTC claims that the Defendants misrepresented that they
would sell or rent customers’ timeshares, rather than merely advertise the availability of the
timeshares for purchase or rental. However, the FTC’s evidence does not stand unrebutted.
PTRFB and Wenz produced evidence indicating that Wenz forbade employee telemarketers from
stating that they would “buy or sell or rent timeshares on behalf of any customers.” E.g., Simmons
Aff., Doc. 160-1, at 2; Mabrey Aff., Doc. 160-2, at 3. JWE and Kinmont point to similar evidence
providing that Kinmont prohibited employees from leading prospective clients to believe that JWE
could guarantee a sale or rental of property within any time frame or that JWE had a buyer or
renter for the prospective client’s property. E.g., Jones Decl., Doc. 15, at 3; Holmes Decl., Doc.
17, at 3-4. Viewing the evidence in the light most favorable to the non-movant, as the Court must,
there remain material disputes of fact as to whether the Defendants are liable for misleading
material representations in violation of the FTC Act and the TSR.

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b. Count III
The TSR prohibits telemarketers from engaging in, or sellers from causing telemarketers to
engage in, conduct that is abusive. 16 C.F.R. § 310.4(b). Abusive conduct includes “[i]nitiating
any outbound telephone call to a person when . . . [t]hat person’s telephone number is on the “donot-call registry.” § 310.4(b)(1)(iii). However, initiating such telephone calls is not considered
abusive conduct for purposes of the TSR if the seller or marketer can show that either (1) the seller
has obtained express written agreement permitting such calls or (2) the seller has an established
business relationship with the person to whom that number belongs and the person has not stated
that she does not wish to receive such calls. Id. Additionally, a seller can avoid liability for
violating § 310.4(b)(1)(iii)
. . . if it can demonstrate that, as part of the seller's or telemarketer's routine
business practice:
(i) It has established and implemented written procedures to comply with
§ 310.4(b)(1)(ii) and (iii);
(ii) It has trained its personnel, and any entity assisting in its compliance, in the
procedures established pursuant to § 310.4(b)(3)(i);
(iii) The seller, or a telemarketer or another person acting on behalf of the seller or
charitable organization, has maintained and recorded a list of telephone numbers
the seller or charitable organization may not contact, in compliance with
§ 310.4(b)(1)(iii)(A);
(iv) The seller or a telemarketer uses a process to prevent telemarketing to any
telephone number on any list established pursuant to § 310.4(b)(3)(iii) or
310.4(b)(1)(iii)(B), employing a version of the “do-not-call” registry obtained from
the Commission no more than thirty-one (31) days prior to the date any call is
made, and maintains records documenting this process;
(v) The seller or a telemarketer or another person acting on behalf of the seller or
charitable organization, monitors and enforces compliance with the procedures
established pursuant to § 310.4(b)(3)(i); and
(vi) Any subsequent call otherwise violating paragraph (b)(1)(ii) or (iii) of this
section is the result of error and not of failure to obtain any information necessary

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to comply with a request pursuant to paragraph (b)(1)(iii)(A) of this section not to
receive further calls by or on behalf of a seller or charitable organization.

§ 310.4(b)(3). The seller must be able to demonstrate that it did all of these things as part of its
routine business practice in order to avoid liability. Id.
Citing to consumer declarations averring that calls were made to telephone numbers despite
the presence of those numbers on the Do Not Call Registry, the FTC argues that it is entitled to
summary judgment as to Count III. Mot. at 34. The FTC submitted numerous consumer
declarations that indicate both JWE and Flagler employees made calls to telephone numbers that
were registered with the Do Not Call Registry. See, e.g., Deshon Declaration, Doc. 2-5, at 98-100;
Farnham Declaration, Doc. 2-6, at 72-73; Shutler Decl., Doc. 2-8, at 13-14, 17, 22-24, 27-28, 31.
JWE and Kinmont aver that “JWE purchased leads that Defendants reasonably believed were
‘scrubbed’ for compliance with the Do Not Call registry.” Response, Doc. 165-1, at 15. PTRFB
and Wenz claim that “JWE and Kinmont misled Wenz and PTRFB into believing that the lists
were ‘scrubbed’ and therefore compliant.” Response, Doc. 160, at 15. While the Defendants claim
that they believe the lists of phone numbers they were using had been scrubbed, they do not
contest that they or their employees made calls to phone numbers that were listed on the Do Not
Call Registry. Furthermore, the language in the TSR does not limit its application to those who
“believe” that a telephone number they called was listed on the Do Not Call Registry. The FTC
has submitted evidence that the Defendants violated the TSR by making telephone calls to
numbers listed on the Registry, and the Defendants have not offered any rebuttal evidence.
The Defendants have not alleged that they fall within one of the exceptions to the TSR, much
less provided evidence to show that they are not liable. It is clear that the Defendants were the
ones providing the employees with the lists of telephone numbers to call, so there is no question

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that Kinmont and Wenz had the authority to control this practice. JWE and Kinmont argue in their
Response that, under 15 U.S.C. § 45(m), they should not be liable for civil penalties stemming
from violations of which they had no actual or fairly implied knowledge, but § 45(m) is
inapplicable here, because the FTC is not seeking civil penalties. See Reply, Doc. 174, at 7 n.10.
The FTC is entitled to summary judgment as to Count III.
c. Count IV
The FTC argues that it is entitled to judgment as a matter of law on the issue of whether
the Defendants failed to pay the annual fee for the Do Not Call Registry in violation of 16 C.F.R.
§ 310.8. In support of this claim, the FTC cites to two declarations of Michael Liggins, a Senior
Investigator with the FTC. The evidence submitted by the FTC indicates that a search of the Do
Not Call Registry section of Consumer Sentinel, performed on August 26, 2016, “did not reveal
any record of registration for JWE, PTR, PTR of Flagler Beach, Kinmont, or Wenz.” Liggins
Decl., Doc. 2-2, at 6. The FTC also cites to a supplemental declaration that provides that Liggins
searched the Registry on July 28, 2017, and that the search revealed “that JWE, PTR, PTR of
Flagler Beach, Kinmont, and Wenz did not pay the annual fee for access to the telephone numbers
within area codes of the consumers they contacted.” Third Supp. Liggans Decl., Doc. 144-28, at 5.
The Defendants have not produced any evidence that would rebut this; indeed, they have not even
alleged that they paid the Registry fees as required. Accordingly, the FTC is entitled to summary
judgment on Count IV.
IV.

Conclusion
In consideration of the foregoing, it is hereby

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ORDERED that the FTC’s Motion for Summary Judgment (Doc. 144) is DENIED as to
Counts I and II, and GRANTED as to Counts III and IV. At the conclusion of the case, judgment
in favor of the FTC will be entered as to Counts III and IV.
DONE and ORDERED in Chambers, Orlando, Florida on November 7, 2017.

Copies furnished to:
Counsel of Record
Unrepresented Party

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