Federal Trade Commission v. Emerica Media Corporation et al

Filing 289

ORDER as to Corporate Defendants. Signed by Judge Dana L. Christensen on 6/28/2017. (ASG)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
MISSOULA DIVISION

FEDERAL TRADE COMMISSION,

CV 13-03-M-DLC

Plaintiff,
ORDER

vs.
AMERICAN EVOICE, LTD., EMERICA
MEDIA CORPORATION, FONERIGHT,
INC., GLOBAL VOICE MAIL, LTD.,
HEARYOU2, INC., NETWORK
ASSURANCE, INC., SECURATDAT,
INC., TECHMAX SOLUTIONS, INC.,
VOICE MAIL PROFESSIONALS, INC.,
STEVE V. SANN, TERRY D. LANE,
a/k/a TERRY D. SANN, NATHAN M.
SANN, ROBERT M. BRAACH,
Defendants.
and
BIBLIOLOGIC, LTD.,
Relief Defendant.

WHEREAS on January 8, 2013, Plaintiff Federal Trade Commission
("FTC" or "Commission") filed its Complaint (Doc. 1) for a permanent injunction
and other equitable relief in this matter pursuant to Section 13(b) of the Federal
Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), against Defendants
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American eVoice, Ltd.; Emerica Media Corp.; FoneRight, Inc.; Global Voice
Mail, Ltd.; HearYou2, Inc.; Network Assurance, Inc.; SecuratDat, Inc.; Techmax
Solutions, Inc.; Voice Mail Professionals, Inc.; Steven V. Sann; Terry D. Sann
(a/k/a Terry D. Sann); Nathan M. Sann; and Robert M. Braach ("Defendants");
and Relief Defendant Bibliologic, Ltd; and
WHEREAS Plaintiff FTC alleges in its Complaint that the Defendants
engaged in deceptive and unfair acts or practices in violation of Section 5 of the
FTC Act, 15 U.S.C. § 45, by placing over $70 million in unauthorized charges on
consumers' telephone bills; and
WHEREAS Plaintiff FTC, in its Complaint, requests that Court award
Plaintiff, among other things, equitable monetary relief such as restitution, the
refund of monies paid, and the disgorgement of ill-gotten assets; and
WHEREAS Plaintiff FTC and Defendants American eVoice, Ltd.; Emerica
Media Corp.; FoneRight, Inc.; Global Voice Mail, Ltd.; HearYou2, Inc.; Network
Assurance, Inc.; SecuratDat, Inc.; Techmax Solutions, Inc.; and Voice Mail
Professionals, Inc., ("Corporate Defendants") stipulate to the entry of this Order to
resolve all matters in dispute in this action between them;
THEREFORE, IT IS ORDERED as follows:

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FINDINGS

1.

This Court has jurisdiction over this matter.

2.

The FTC's Complaint charges that Defendants engaged in deceptive
and unfair acts or practices in violation of Section 5 of the FTC Act,
15 U.S.C. § 45, by placing unauthorized charges on consumers'
telephone bills ("cramming").

3.

The Corporate Defendants, as defined below, neither admit nor deny
any of the allegations in the Complaint, except as specifically stated
in this Order. Only for purposes of this action, the Corporate
Defendants admits the facts necessary to establish jurisdiction.

4.

The Corporate Defendants waive any claim that they may have under
the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the
prosecution of this action through the date of this Order, and agree to
bear their own costs and attorney fees.

5.

The Corporate Defendants waive all rights to appeal or otherwise
challenge or contest the validity of this Order.
DEFINITIONS

For purposes of this Order, the following definitions shall apply:
1.

"Clearly and Conspicuously" means that a required disclosure is
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difficult to miss (i.e., easily noticeable) and easily understandable by
ordinary consumers, including in all of the following ways:
a.

In any communication that is solely visual or solely audible, the
disclosure must be made through the same means through
which the communication is presented. In any communication
made through both visual and audible means, such as a
television advertisement, the disclosure must be presented
simultaneously in both the visual and audible portions of the
communication even if the representation requiring the
disclosure is made in only one means.

b.

A visual disclosure, by its size, contrast, location, the length of
time it appears, and other characteristics, must stand out from
any accompanying text or other visual elements so that it is
easily noticed, read, and understood.

c.

An audible disclosure, including by telephone or streaming
video, must be delivered in a volume, speed, and cadence
sufficient for ordinary consumers to easily hear and understand
it.

d.

In any communication using an interactive electronic medium,

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such as the Internet or software, the disclosure must be
unavoidable.
e.

The disclosure must use diction and syntax understandable to
ordinary consumers and must appear in each language in which
the representation that requires the disclosure appears.

f.

The disclosure must comply with these requirements in each
medium through which it is received, including all electronic
devices and face-to-face communications.

g.

The disclosure must not be contradicted or mitigated by, or
inconsistent with, anything else in the communication.

h.

When the representation or sales practice targets a specific
audience, such as children, the elderly, or the terminally ill,
"ordinary consumers" includes reasonable members of that
group.

2.

"Corporate Defendants" means American eVoice, Ltd.; Emerica

Media Corp.; FoneRight, Inc.; Global Voice Mail, Ltd.; HearYou2,
Inc.; Network Assurance, Inc.; SecuratDat, Inc.; Techmax Solutions,
Inc.; Voice Mail Professionals, Inc., as well as any affiliates,
subsidiaries, successors, or assigns, and any fictitious business
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entities or business names created or used by these entities, or any of
them.
3.

"Defendants" means the Individual Defendants and the Corporate
Defendants, individually, collectively, or in any combination.

4.

"Individual Defendants" means Steven V. Sann; Terry D. Lane
(a/k/a Terry D. Sann); Nathan M. Sann; and Robert M. Braach.

5.

"Person" means a natural person, an organization or other legal
entity, including a corporation, partnership, sole proprietorship,
limited liability company, association, cooperative, or any other group
or combination acting as an entity.

ORDER
I. PROHIBITION AGAINST TELEPHONE BILLING
IT IS THEREFORE ORDERED that the Corporate Defendants are
permanently restrained and enjoined from placing charges on any person's
telephone bill, whether directly or through an intermediary, including by providing
any advertising, marketing, financial, or technical assistance to other persons to
place charges on any person's telephone bill.

II. PROHIBITION AGAINST BILLING WITHOUT AUTHORIZATION
IT IS FURTHER ORDERED that the Corporate Defendants and their
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officers, agents, servants, employees, and attorneys, and all other persons in active
concert or participation with any of them, who receive actual notice of this Order,
whether acting directly or indirectly, are permanently restrained and enjoined from
(a) representing or assisting others in representing, expressly or by implication,
that a consumer is obligated to pay any charge for goods or services, or (b) causing
or assisting others in causing any charge to be billed to a consumer's account,
unless:
A.

the consumer provides express verifiable authorization to be charged;
and

B.

all material terms of the offer for which the consumer is billed,
including the number and amount of each charge and the account to
which each charge will be billed, have been clearly and
conspicuously disclosed prior to the authorization of the charge and
in close proximity to any request that the consumer provide his or her
name, address, telephone number, email address, account number, or
any other payment information.

III. PROHIBITION AGAINST USE OF CONSUMER INFORMATION
IT IS FURTHER ORDERED that the Corporate Defendants and their
officers, agents, servants, employees, and attorneys, and all other persons in active
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concert or participation with any of them, who receive actual notice of this Order,
whether acting directly or indirectly, are hereby restrained and enjoined from:
A.

disclosing, using, or benefitting from customer information, including
the name, address, telephone number, email address, social security
number, other identifying information, or any data that enables access
to a customer's account (including a credit card, bank account, or
other financial account), that any Defendant obtained prior to entry of
this Order in connection with the placement of charges on consumers'
telephone bills; and

B.

failing to destroy such customer information in all forms in their
possession, custody, or control within 30 days after receipt of written
direction to do so from a representative of the Commission.

Provided, however, that customer information need not be disposed of, and
may be disclosed, to the extent requested by a government agency or required by
law, regulation, or court order.
IV. MONETARY JUDGMENT AND PARTIAL SUSPENSION
IT IS FURTHER ORDERED that:

A.

Judgment in the amount of forty-one million, nine hundred ten
thousand, four hundred twenty-two dollars ($41,910,422) is hereby
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entered in favor of the Commission against the Corporate Defendants,
jointly and severally, as equitable monetary relief, which shall be
suspended, subject to Sections IV.B through IV.D below.
B.

The Commission's agreement to the suspension of the monetary
judgment is expressly premised upon the truthfulness, accuracy, and
completeness of the Corporate Defendants' sworn financial statement
and related documents (collectively, "financial representations")
submitted to the Commission, namely, the Affidavits of Defendant
Steven Sann executed on March 31, 2017, and May 3, 2017,
including attachments thereto.

C.

The suspension of the judgment will be lifted as to the Corporate
Defendants if, upon motion by the Commission, the Court finds that
Corporate Defendants failed to disclose any material asset, materially
misstated the value of any asset, or made any other material
misstatement or omission in the financial representations identified
above.

D.

If the suspension of the judgment is lifted as to the Corporate

Defendants, the judgment becomes immediately due as to them in the
amount specified in Section IV.A above (which the parties stipulate,
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only for purposes of this Section, represents the consumer injury
alleged in the Complaint), less any payments previously made
pursuant to this Section, plus interest computed from the date of entry
of this Order.
V. ADDITIONAL MONETARY PROVISIONS
IT IS FURTHER ORDERED that:
A.

The facts alleged in the Complaint will be taken as true, without
further proof, in any subsequent civil litigation by or on behalf of the
Commission, including in a proceeding to enforce its rights to any
payment or monetary judgment pursuant to this Order

B.

The facts alleged in the Complaint establish all elements necessary to
sustain an action by the Commission pursuant to Section 523(a)(2)(A)
of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and this Order
will have collateral estoppel effect for such purposes.

C.

The Corporate Defendants acknowledges that their Taxpayer
Identification Numbers (Social Security Numbers or Employer
Identification Numbers), which they previously submitted to the
Commission, may be used for collecting and reporting on any
delinquent amount arising out of this Order, in accordance with 31
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u.s.c. § 7701.
D.

All money paid to the Commission pursuant to this Order may be
deposited into a fund administered by the Commission or its designee
to be used for equitable relief, including consumer redress and any
attendant expenses for the administration of any redress fund. If a
representative of the Commission decides that direct redress to
consumers is wholly or partially impracticable or if money remains
after redress is completed, the Commission may apply any remaining
money for such other equitable relief (including consumer
information remedies) as it determines to be reasonably related to
Defendants' practices alleged in the Complaint. Any money not used
for such equitable relief is to be deposited into the U.S. Treasury as
disgorgement. The Corporate Defendants have no right to challenge
any actions the Commission or its representatives may take pursuant
to this Section V.C.
VI. MODIFICATION OF ASSET FREEZE

IT IS FURTHER ORDERED that the freeze imposed on the Corporate

Defendants assets pursuant to the Stipulated Preliminary Injunction entered on
May 8, 2013 (Doc. 55) is dissolved.
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VII. ORDER ACKNOWLEDGMENTS
IT IS FURTHER ORDERED that the Corporate Defendants obtain

acknowledgments of receipt of this Order.
A.

The Corporate Defendants, within 7 days of entry of this Order, must
submit to the Commission an acknowledgment of receipt of this
Order sworn under penalty of perjury.

B.

For 5 years after entry of this Order, the Corporate Defendants, for
any business that they, individually or collectively with any other
Defendants, is the majority owner or controls directly or indirectly,
must deliver a copy of this Order to: (1) all principals, officers,
directors, and LLC managers and members; (2) all employees, agents,
and representatives who participate in activity relating to the
placement of charges on consumers' telephone bills; and (3) any
business entity resulting from any change in structure as set forth in
Section VIII below. Delivery must occur within 7 days of entry of
this Order for current personnel. For all others, delivery must occur
before they assume their responsibilities.

C.

From each individual or entity to which a Defendant delivered a copy
of this Order, that Defendant must obtain, within 30 days, a signed
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and dated acknowledgment of receipt of this Order.
VIII. COMPLIANCE REPORTING
IT IS FURTHER ORDERED that the Corporate Defendants make timely

submissions to the Commission.
A.

One year after entry of this Order, each Corporate Defendant must
submit a compliance report, sworn under penalty of perjury.
1.

Each Corporate Defendant must: (a) identify the primary
physical, postal, and email address and telephone number, as
designated points of contact, which representatives of the
Commission may use to communicate with the Corporate
Defendant; (b) identify all of that Corporate Defendant's
businesses by all of their names, telephone numbers, and
physical, postal, email, and Internet addresses; (c) describe the
activities of each business, including the goods and services
offered, the means of advertising, marketing, and sales, and the
involvement of any other Defendant; (d) describe in detail
whether and how that Corporate Defendant is in compliance
with each Section of this Order; and (e) provide a copy of each
Order Acknowledgment obtained pursuant to this Order,
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unless previously submitted to the Commission.
B.

For 15 years after entry of this Order, each Corporate Defendant must
submit a compliance notice, sworn under penalty of perjury, within
14 days of any change in the following:
1.

Any designated point of contact; or

2.

The structure of any Corporate Defendant or any entity in
which a Corporate Defendant has any ownership interest or
controls directly or indirectly that may affect compliance
obligations arising under this Order, including: creation,
merger, sale, or dissolution of the entity or any subsidiary,
parent, or affiliate that engages in any acts or practices subject
to this Order.

C.

Each Corporate Defendant must submit to the Commission notice of
the filing of any bankruptcy petition, insolvency proceeding, or
similar proceeding by or against it within 14 days of its filing.

D.

Any submission to the Commission required by this Order to be
sworn under penalty of perjury must be true and accurate and comply
with 28 U.S.C. § 1746, such as by concluding: "I declare under
penalty of perjury under the laws of the United States of America that
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the foregoing is true and correct. Executed on [date] at [location]."
and supplying the date, location, signatory's full name, title (if
applicable), and signature.
E.

Unless otherwise directed by a Commission representative in writing,
all submissions to the Commission pursuant to this Order must be
emailed to [e-mail] (with "FTC v. American eVoice,
X130020" in the subject line) or sent by overnight courier (not the
U.S. Postal Service) to:
Associate Director for Enforcement
Bureau of Consumer Protection
Federal Trade Commission
600 Pennsylvania Avenue NW
Washington, DC 20580
RE: FTC v. American eVoice, X130020

IX. RECORDKEEPING
IT IS FURTHER ORDERED that the Corporate Defendants must create
certain records for 15 years after entry of this Order, and retain each such record
for 5 years. Specifically, each Corporate Defendant, for any business that it,
individually or collectively with any other Defendants, is a majority owner or
controls directly or indirectly, must create and retain the following records:
A.

accounting records showing the revenues from all goods or services
sold or billed;
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B.

personnel records showing, for each person providing services,
whether as an employee or otherwise, that person's: name; addresses;
telephone numbers; job title or position; dates of service; and (if
applicable) the reason for termination;

C.

records of all consumer complaints and refund requests, whether
received directly or indirectly, such as through a third party, and any
response;

D.

all records necessary to demonstrate full compliance with each
provision of this Order, including all submissions to the Commission;
and

E.

a copy of each unique advertisement or other marketing material.
X. COMPLIANCE MONITORING

IT IS FURTHER ORDERED that, for purposes of monitoring the
Corporate Defendants' compliance with this Order, including the financial
representations identified in Section IV.B of this Order:
A.

Within 14 days of receipt of a written request from a representative of
the Commission, each Corporate Defendant must: submit additional
compliance reports or other requested information, which must be
sworn under penalty of perjury; appear for depositions; and produce
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documents for inspection and copying. The Commission is also
authorized to obtain discovery, without further leave of court, using
any of the procedures prescribed by Federal Rules of Civil Procedure
29, 30 (including telephonic depositions), 31, 33, 34, 36, 45, and 69.
B.

For matters concerning this Order, the Commission is authorized to
communicate directly with each Corporate Defendant. The Corporate
Defendants must permit representatives of the Commission to
interview any employee or other person affiliated with any Defendant
who has agreed to such an interview. The person interviewed may
have counsel present.

C.

The Commission may use all other lawful means, including posing,
through its representatives as consumers, suppliers, or other
individuals or entities, to the Corporate Defendants or any individual
or entity affiliated with them, without the necessity of identification
or prior notice. Nothing in this Order limits the Commission's lawful
use of compulsory process, pursuant to Sections 9 and 20 of the FTC
Act, 15 U.S.C. §§ 49, 57b-l.

XI. RETENTION OF JURISDICTION
IT IS FURTHER ORDERED that this Court retains jurisdiction of this
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matter for purposes of construction, modification, and enforcement of this Order.
DATED this 28th day of June, 2017.

Dana L. Christensen, Chief istrict Judge
United States District Court

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SO STIPULATED AND AGREED:

FOR PLAINTIFF FEDERAL TRADE COMMISSION:
Date:- - - - - - -

RICHARD McKEWEN, WSBA #45041
Federal Trade Commission I Northwest Regional Office
915 Second Ave., Suite 2896
Seattle, WA 98174
Phone: [phone] I Fax: [phone]
E-mail: [e-mail]
Counsel for Plaintiff Federal Trade Commission

FOR THE CORPORATE DEFENDANTS:

Date:- - - - - - -

STEVEN V. SANN,
as an officer or authorized representative of Defendants American eVoice, Ltd.;
Emerica Media Corp.; FoneRight, Inc.; Global Voice Mail, Ltd.; HearYou2, Inc.;
Network Assurance, Inc.; SecuratDat, Inc.; Techmax Solutions, Inc.; and Voice
. Mail Professionals, Inc.

Date:- - - - - - -

COUNSEL
Address
City, State ZIP

Counsel for Defendants American eVoice, Ltd.; Emerica Media Corp.; FoneRight,
Inc.; Global Voice Mail, Ltd.; HearYou2, Inc.; Network Assurance, Inc.;
SecuratDat, Inc.; Techmax Solutions, Inc.; and Voice Mail Professionals, Inc.

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