In re Sanctuary Belize Litigation
Filing
573
MEMORANDUM OPINION. Signed by Judge Peter J. Messitte on 9/5/2019. (heps, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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IN re SANCTUARY BELIZE
LITIGATION
Civil No. PJM 18-3309
MEMORANDUM OPINION
Defendant Luke Chadwick has moved to dismiss the Federal Trade Commission’s (“FTC”)
Amended Complaint (ECF No. 114) for lack of personal jurisdiction and lack of subject matter
jurisdiction, and alternatively, for failure to state a claim. ECF No. 475. The FTC opposes the
motion. ECF No. 490. The Court denied Chadwick’s Motion to Dismiss for Lack of Personal
Jurisdiction in an earlier opinion.
ECF No. 539.
However, the Court deferred ruling on
Chadwick’s Motion to Dismiss for Lack of Subject Matter Jurisdiction and alternatively, for
Failure to State a Claim, until now. For the following reasons, the Court will DENY Chadwick’s
Motion to Dismiss for Lack of Subject Matter Jurisdiction and his alternate Motion to Dismiss for
Failure to State a Claim.
The FTC alleges Chadwick is or has been the public face of the Sanctuary Belize Enterprise
(“SBE”) in many marketing materials and a self-proclaimed “principal” of Sanctuary Belize.
Amended Complaint at ¶ 20, ECF No. 114. As such, Chadwick has allegedly interacted with
consumers on SBE’s behalf, including participating in sales tours of Sanctuary Belize and
conducting webinars. Id. Among other allegations, the FTC alleges that Chadwick owns Exotic
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Investor, LLC (“Exotic”), a limited liability company organized under the laws of St. Kitts and
Nevis which has allegedly advertised, marketed, distributed, or sold SBE’s real estate investments
and related services. Id. at ¶ 31.
In seeking to dismiss the suit as to him on subject matter jurisdiction grounds, Chadwick
cites Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b), which
“only authorizes the FTC to bring a suit for injunctive relief in federal court when the defendant
‘is violating, or is about to violate the law.’” ECF No. 475 (citing 15 U.S.C. § 53(b)). Chadwick
argues that because his alleged conduct at issue occurred solely in the past, the Court lacks subject
matter jurisdiction to hear any claim against him at this time. The Court disagrees.
The FTC has brought claims against Chadwick pursuant to the FTC Act, which is a federal
statute. Thus, the Court has jurisdiction because “district courts shall have original jurisdiction of
all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C.
§ 1331.
Chadwick’s case authority does not convince otherwise.
He cites FTC v. Shire
ViroPharma, Inc., but Shire states that “[w]hether a person is violating, or is about to violate the
law relates to the merits of a Section 13(b) claim, and does not indicate that Congress intended to
strip district courts of their authority to resolve the FTC's claim.” 917 F.3d 147, 154 (3d Cir. 2019).
Alternatively, Chadwick seeks to dismiss for failure to state a claim. He argues that the
FTC has insufficiently pled present or future conduct that would allow the Court to draw the
reasonable inference that Chadwick is violating or about to violate the FTC Act.
The Court does not need to decide whether the FTC Act extends to past conduct, since it
finds that the FTC has sufficiently pled present or future conduct. To survive a motion to dismiss
under Federal Rule of Civil Procedure 12(b)(6), the FTC need only “state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 554, 570 (2007). The plausibility
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standard requires that the plaintiff plead facts sufficient to show by “more than a sheer possibility
that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). It is true that,
whereas for purposes of judging a motion to dismiss, a court will accept the plaintiff’s factual
allegations as true, “[t]hreadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Id.
But Court has already set out the standard for liability under the FTC Act in its Opinion
denying Defendant Michael Santos’s Motion to Dismiss.1 ECF No. 434. In addition to the
allegations described above, the FTC submits that Chadwick currently “has formulated, directed,
controlled, had the authority control, or participated in the acts and practices set forth in this
Complaint. Amended Complaint. at ¶ 20. This sufficiently pleads present or future conduct.
Moreover, Chadwick may be liable for restitution, refund, disgorgement or other forms of
redress to consumers. The FTC has alleged that his violations of the FTC Act have led to current
consumer harm and unjust enrichment. Amended Complaint. at ¶ 134. If proven, the Court would
be authorized to order redress under the FTC Act. See FTC. v. Ross, 743 F.3d 886, 890 (4th Cir.
2014) (holding “the Supreme Court has long held that Congress' invocation of the federal district
court's equitable jurisdiction brings with it the full ‘power to decide all relevant matters in dispute
and to award complete relief even though the decree includes that which might be conferred by a
court of law’” (quoting Porter v. Warner Holding Co., 328 U.S. 395, 399 (1946))).
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As discussed in its Opinion denying Santos’s Motion to Dismiss, ECF No. 434, an individual may be found
liable under the FTC Act if he “(1) participated directly in the deceptive practices or had authority to control those
practices, and (2) had or should have had knowledge of the deceptive practices. The second prong of the analysis
may be established by showing that the individual had actual knowledge of the deceptive conduct, was recklessly
indifferent to its deceptiveness, or had an awareness of a high probability of deceptiveness and intentionally avoided
learning the truth.” FTC v. Ross, 743 F.3d 886, 892 (4th Cir. 2014).
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For the foregoing reasons, the Court DENIES Chadwick’s Motion to Dismiss for Lack of
Subject Matter Jurisdiction, ECF No. 475, and his alternate Motion to Dismiss for Failure to State
a Claim, ECF No. 475.
A separate Order will ISSUE.
September 5, 2019
/s/
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PETER J. MESSITTE
UNITED STATES DISTRICT JUDGE
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