2010-04 Homeassureii 11cir Ftcbrief
2010-04 Homeassureii 11cir Ftcbrief
09-16466-GG
v.
WILLARD K. TOM
General Counsel
JOHN F. DALY
Deputy General Counsel for Litigation
OF COUNSEL:
ANN F. WEINTRAUB LESLIE RICE MELMAN
DAVID W. DULABON Assistant General Counsel for Litigation
DARREN H. LUBETZKY Federal Trade Commission
Attorneys 600 Pennsylvania Ave., N.W.
Federal Trade Commission Washington, DC 20580
Northeast Region (202) 326-2478
New York, New York 10004
CERTIFICATE OF INTERESTED PERSONS
No. 09-16466-GG
Pursuant to Circuit Rules 26.1-1 and 27-1(9), this is to certify that the
following is a complete list of all attorneys, persons, and entities known to have an
HomerBonner, PA
C-1 of 2
McCoun III, Thomas B., United States Magistrate Judge
Shonka, David C., Principal Deputy General Counsel, Federal Trade Commission
C-2 of 2
STATEMENT OF ORAL ARGUMENT
The Federal Trade Commission does not believe that oral argument will
PAGE
ARGUMENT ......................................................................................................... 19
i
B. The District Court Was Divested of Jurisdiction by
the Pending Appeal ................................................................. 20
CONCLUSION ...................................................................................................... 28
CERTIFICATE OF COMPLIANCE
CERTIFICATE OF SERVICE
ii
TABLE OF AUTHORITIES
CASES PAGE
In re Hodes,
308 B.R. 61 (10th Cir. 2004) ....................................................................... 27
FEDERAL STATUTES
15 U.S.C. § 45 ........................................................................................... 2, 3
iv
MISCELLANEOUS
v
STATEMENT OF JURISDICTION
brought an action in the United States District Court for the Middle District of
Florida, pursuant to Sections 5 and 13(b) of the Federal Trade Commission Act, 15
deceptive sale of foreclosure rescue services and equitable monetary relief for
their assets, they filed before the district court a “Renewed Motion for a ‘Nexus’
Hearing and to Modify and/or Dissolve the Asset Freeze” (“Renewed Motion”).
Doc. 133. On October 27, 2009, the district court entered an order denying
defendants’ motion, holding that, in view of the pending appeal of the interim
freeze, it lacked authority to grant the requested relief under Fed. R. Civ. P. 62(c).
Doc. 136, RE Tab 136. On December 23, 2009, appellants filed a notice of appeal
of the district court’s ruling denying their “Renewed Motion.” Doc. 145. This
Court has jurisdiction over the instant appeal pursuant to 28 U.S.C. § 1292(a)(1).
2
STATEMENT OF THE ISSUE PRESENTED
Whether the district court properly held that it lacked jurisdiction to entertain
preliminary injunction, where the injunction they sought to modify was already the
subject of an interlocutory appeal to this Court, and the relief requested could not
injunction.
This is the second interlocutory appeal arising from an action by the Federal
13(b)(2)3 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 45 and
1
Page references in documents in the district court record conform to the
pagination in the headers in the Official Court Electronic Filing System. However,
citations to pages in documents that are not available electronically on PACER, or
that are cited in appellants’ brief, are to the document’s internal pagination. Also,
to avoid confusion, exhibits are cited as “Exh. __,” while documents appended to
exhibits are cited as “Att. __.”
2
Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits “unfair or
deceptive acts or practices.”
3
The second proviso of Section 13(b)(2) of the FTC Act, 15 U.S.C.
§ 53(b)(2), vests the district courts with authority to grant a permanent injunction
and other equitable relief with respect to violations of any provision of law
enforced by the FTC.
3
53(b)(2), seeking a permanent injunction against appellants’ deceptive practices in
the sale of mortgage foreclosure rescue services. The Commission also seeks
monetary equitable relief for consumers who, despite the defendants’ touted money
back and service guarantees, in many or most cases paid for services they never
received.
liability company, and its principals, appellants Michael Trimarco and Nicolas
Molina. Starting in August 2007, Home Assure marketed and sold mortgage
facing foreclosure, searched the Internet for help and advice.4 At its website,
call for a “free consultation,” or to complete and submit an online form with
4
Doc. 5, Exh. 1 at 2, 4-5, 7, 12 & Atts. A.1, A.9, D, Q, T; Doc. 61-9 at 2.
4
contact and mortgage-related financial information.5 Reiterating bold print
guarantees from the company’s website, sales representatives told consumers that
they would be entitled to a “full refund” of their fees if Home Assure were
Assure did not stop the impending foreclosures or even contact lenders, or they
offered only solutions that were contrary to the promised terms, had been offered
Founder,” and appellant Nicolas Molina was its “CEO and Co-Founder.” Doc. 5,
Exh. 1 at 5 & Att. C; see also Doc. 5, Exh. 1 at 12 & Att. Q at 1. Each played
“[w]ill have full time responsibility for tech-ops and financial management” and
provide “[m]arketing support.”); id. at 2-3 (Molina “[w]ill have full time
responsibility for marketing and lead generation” and have responsibility “for the
5
Doc. 5, Exh. 4 at 1, Exh. 5 at 2, Exh. 6 at 2, Exh. 7 at 1, Exh. 8 at 1, Exh. 9
at 1, Exh. 10 at 1, Exh. 11 at 1-2, Exh. 12 at 1, Exh. 13 at 1, Exh. 14 at 1, Exh. 15
at 1, Exh. 16 at 1.
6
Doc. 5, Exh. 1 at 10-11 & Att. M at 20-21, Exh. 7 at 1, Exh. 9 at 2, Exh. 11
at 2, Exh. 12 at 1, Exh. 14 at 2; Doc. 61-4 at 3.
7
See Doc. 5, Exh. 4 at 2, Exh. 5 at 4-5, Exh. 8 at 3, Exh. 12 at 3, Exh. 15 at
6.
5
overall marketing of Home Assure products and services.”). As of August 2007,
Trimarco and Molina each owned a 40% share of the business. Doc. 61-9 at 2.
process that by the end of November 2008 was largely complete. Doc. 38-3 at 4;
Doc. 38-4 at 9. Home Assure left homeowners in many cases without providing
the promised foreclosure rescue services and without honoring its marketing
pledge of money back guarantees. Doc. 5, Exhs. 4-16; Doc. 30-5 at 1-2; Doc. 30-
10. As appellants note, at the time of its wind down the company’s coffers were
In October 2008, as Home Assure was winding down its business, Brian
hiring several Home Assure employees and taking over registration for the
homeassure.com domain name.9 At least one Home Assure customer, after paying
for services, was told by a Home Assure representative that in the future she
8
Blanchard was not a member of Home Assure after November 2008, and
formally resigned as manager on January 6, 2009. Doc. 38-5 at 3; Doc. 5, Exh. 1
at 4 & Att. A.8.
9
Compare Doc. 5, Exh. 1 at 11 with Exh. 1 at 13-14; compare Doc. 61-12 at
2 with Doc. 61-10 at 2; see Doc. 5, Exh. 1 at 14-15 & Atts. X-Y.
6
2. Proceedings Below
On March 24, 2009, the Commission, having “reason to believe” that the
defendants had engaged, or were engaging in, violations of Section 5(a) of the
FTC Act, 15 U.S.C. § 45(a), filed a complaint in the United States District Court
for the Middle District of Florida pursuant to the permanent injunction proviso of
Section 13(b) of the Act, 15 U.S.C. § 53(b). The complaint alleged that the
virtually all instances; and (2) failing in most cases to honor their refund policy
when foreclosure was not stopped. Doc. 1 at 9-10, RE Tab 1 at 9-10. The
contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten
monies * * *.” Doc. 1 at 11, RE Tab 1 at 11. Contemporaneously with the filing
of its complaint, the Commission asked the district court to enter an ex parte
temporary restraining order (“TRO”) and asset freeze and an order appointing a
On March 26, 2009, the district court (per Hon. Steven Merryday) entered a
7
TRO, finding that the FTC had demonstrated a likelihood of success on the merits
and good cause to believe that immediate and irreparable injury to the court’s
ability to grant final monetary relief would occur in the absence of an asset freeze
court appointed a temporary receiver for the corporate defendants and froze the
defendants’ assets. Doc. 13 at 7-9, 18, RE Tab 13 at 7-9, 18. The district court,
inter alia, also directed the defendants to complete financial reports (Doc. 13 at
16, RE Tab 13 at 16), and to appear and show cause why a preliminary injunction
should not issue (1) enjoining the defendants from any further violations and (2)
continuing the interim freeze pending a decision on the ultimate merits of the
On March 31, 2009, having been served with the TRO, appellants filed a
“Motion for a Nexus Hearing and to Modify or Dissolve the Asset Freeze.” In
support of their motion, appellants asserted that (1) the FTC must demonstrate a
specific “nexus” between the frozen assets and the alleged claim for relief; (2)
with the possible exception of appellants’ purportedly modest salary, such a nexus
did not exist; and (3) consequently, that the freeze was tantamount to an
8
unauthorized prejudgment attachment and must be dissolved or modified.10 Doc.
23. The district court did not reach the merits of that motion, but on April 3,
and recommendation. Doc. 40. After considering the record and hearing oral
had made material misrepresentations to consumers that Home Assure would stop
foreclosure of consumers’ homes and that, in the event that foreclosure could not
be stopped, Home Assure would return their service fees. Doc. 54 at 10, RE Tab
54 at 10.
Magistrate Judge McCoun found that “their involvement in the formation and
10
The district court subsequently denied the motion as moot because the
TRO expired by its terms on April 8, 2009.
9
initial development of the company, including its financing, IT structure, business,
and marketing strategies,” and “[their] authority within the corporate structure”
enforcement actions in which two states had alleged their practices violated state
for finding individuals liable for violations of the FTC Act, the Magistrate Judge
success on this element of the FTC’s proof as against these individuals.” Id.
Magistrate Judge McCoun concluded that it was a “close issue” whether the
conduct. Id. He noted that Home Assure had wound down its business and that
the FTC had not shown that the business history of the individual defendants was
11-12.11 Based on these findings, Magistrate Judge McCoun found there was “no
clear showing that [the defendants] intend to re-enter this type business” and,
balancing of the equities “[did] not favor the FTC * * *.” Doc. 54 at 12, 13, RE
11
Also, he noted, the individual defendants “appear[ed] to be sophisticated
businessmen” who, in opposing the FTC’s motion, attempted to establish they had
suffered “a sizable loss on their investment.” Doc. 54 at 12, RE Tab 54 at 12.
10
Tab 54 at 12, 13. He reasoned that “a preliminary injunction [against conduct]
can not properly issue [when] the FTC is unable to demonstrate that [the
defendants] are currently violating, or are apt to violate, any provision of law
enforced by the FTC.” Doc. 54 at 13, RE Tab 54 at 13. Based on this analysis,
Magistrate Judge McCoun recommended to the district court that it deny the
of success on the merits of its allegations of deceptive acts and practices, he also
recommended that the court grant the requested interim freeze, pursuant to its
to Expert Foreclosure and Home Assure, who had not appeared or opposed the
Commission’s motion. Doc. 61 at 4-9. The Commission also objected that, given
the individual defendants’ refusal to comply with the disclosure provisions of the
TRO,12 the pervasive nature of their deceptive practices, and the ease of their re-
entry into the mortgage modification business, a preliminary injunction against the
12
Appellants complied with these requirements after the district court issued
a preliminary injunction.
11
individuals’ alleged practices was warranted. Doc. 61 at 10-18. Appellants, for
their part, reiterated that there must be a demonstrable nexus between the frozen
assets and the FTC’s alleged claim for relief, and that, in the absence of such a
On April 16, 2009, the district court overruled the parties’ objections, and
issued an order granting in part and denying in part the FTC’s motion for
preliminary relief. Doc. 65, RE Tab 65. Specifically, the district court denied the
against the deceptive acts and practices alleged in the complaint. Doc. 65 at 10,
RE Tab 65 at 10. However, the court granted the Commission’s motion for an
interim freeze of appellants’ assets, holding, inter alia, that the evidence amassed
by the Commission demonstrated that it was likely to prevail on the merits of its
allegations of deceptive practices, and that immediate and irreparable injury to the
court’s ability to grant effective final monetary relief for consumers would likely
The district court specifically rejected appellants’ notion that its authority to
recurrence of the alleged unlawful conduct. Rather, the court agreed with
12
Magistrate Judge McCoun that, under Section 13(b), the district courts are
As for the scope of the freeze, the court agreed with the Magistrate Judge
that it “depends on the equitable relief ultimately available if the FTC prevails on
court then rejected appellants’ contention that, at most, final relief must be limited
5, RE Tab 65 at 4-5. The court also rejected appellants’ contention that such a
Management Corp., 531 F.3d 1339, 1345 (11th Cir. 2008). The district court
distinguished Section 13(b) of the FTC Act, noting that, in an action under Section
13(b) of the FTC Act, “‘the amount that [the defendants] wrongfully gained’ may
(emphasis added). Thus, by contrast to Wilshire, the court concluded that final
relief “may include a refund to the consumer of the full amount paid by the
As for appellants’ notion that monetary equitable relief must take into
account defendants’ expenditures for marketing and labor, the district court
13
concluded that such offsets would undermine the deterrent purpose of Section
13(b). Doc. 65 at 7-8, RE Tab 65 at 7-8. Finally, the court rejected appellants’
argument that the Supreme Court’s decision in Great-West Life & Annuity Ins. Co.
v. Knudson, 534 U.S. 204, 122 S. Ct. 708 (2002) – a private action involving a
that the FTC trace the individuals’ assets directly back to the alleged violations
before it may obtain an interim asset freeze. Doc. 65 at 8-9, RE Tab 65 at 8-9.
The district court explained that it should not be assumed that Great-West
Warner Holding Co., 328 U.S. 395, 66 S. Ct. 1086 (1946). Id. Furthermore, the
liability for corporate violations of the FTC Act * * *.” Doc. 65 at 8, RE Tab 65
at 8.
freezing appellants’ assets to the extent of $3.7 million each13 – an amount the
13
If the court finds that the individuals participated in, or, alternatively, both
controlled and had knowledge of Home Assure’s alleged practices, they are jointly
and severally liable under governing law. See, e.g., FTC v. Gem Merchandising
Corp., 87 F.3d 466, 470 (11th Cir. 1996); FTC v. Amy Travel Service, Inc., 875
14
court determined was a “reasonable approximation” of Home Assure’s gross sales
appellants with several avenues of relief from the freeze order. First, noting that
appellants’ failure to make financial disclosures earlier (as required by the TRO)
had prevented the FTC from determining whether appellants owned “exempt
the court granted them leave to “move to exclude or exempt additional assets”
after complying with the disclosure provisions of the asset freeze order. Id.
Second, the court provided that appellants could seek immediate relief from
Id. Third, the court held, appellants could move to substitute a surety bond for the
F.2d 564, 573-74 (7th Cir. 1989). Hence, to ensure that consumers would be fully
protected during the pendency of the proceedings, it was necessary to freeze each
appellant’s assets for the full amount that was estimated would fully recompense
consumers for Home Assure’s unlawful practices.
14
As explained in the FTC’s opposition to the Renewed Motion, Home
Assure’s own records were not sufficient to show how many consumers actually
received a viable workout plan. It therefore was necessary for the FTC to expend
substantial efforts in discovery to make this determination. Specifically, the FTC
retained a Columbia University marketing professor to conduct a customer survey
and assigned an FTC economist to audit records the Commission had subpoenaed
from lenders. See Doc. 134 at 3 n.1. Both experts prepared reports in which they
concluded that approximately 80% did not receive the promised services. Id. The
Commission produced the expert reports to appellants in September 2009.
15
Appellants did not pursue any of these avenues of relief. Nor did
appellants seek reconsideration of the freeze order.15 See Fed. R. Civ. P. 59(e).
Instead, on June 15, 2009, they filed an interlocutory appeal.16 Doc. 103 (Home
Assure I). That appeal – which is fully briefed and calendared for oral argument –
squarely presents the question whether, in seeking an interim freeze, the FTC must
bear the burden of demonstrating a “nexus” between the claims for relief and the
15
Given appellants’ failure to seek reconsideration of the asset freeze, they
have no reasonable basis for complaining about the need to await this Court’s
disposition of the issues they raised in the pending interlocutory appeal.
16
After the Clerk docketed their appeal, appellants filed a Civil Appeal
Statement in which they proposed raising the following three issues, each of which
they briefed in the pending appeal in Home Assure I.
III. Whether the FTC can obtain an asset freeze over Defendants’ future
assets/earnings.
16
(b) Continued efforts to obtain a “nexus” hearing
2009 – nearly four months after taking an appeal from the asset freeze order –
appellants filed a “Renewed Motion for a ‘Nexus’ Hearing and to Modify and/or
Dissolve the Asset Freeze” before the district court. Doc. 133. Appellants’
motion was premised on the same proposition that the district court had
considered and rejected earlier – namely, that a district court is not authorized to
finding a demonstrable “nexus” between the Commission’s claims and the frozen
The district court denied the “Renewed Motion” on October 27, 2009,
concluding that, in light of the pending appeal from the asset freeze, it lacked
jurisdiction to entertain the motion. Doc. 136, RE Tab 136. Given that the
Renewed Motion raised the same issues that appellants have raised in their appeal
in Home Assure I, the district court concluded that “an adjudication of each issue
presented in the defendants’ renewed motion would moot the defendants’ appeal
and divest the appellate court of jurisdiction.” Doc. 136 at 2-3, RE Tab 136 at 2-
3.
17
The court specifically noted that Fed. R. Civ. P. 62(c) allows modification
modification is allowed only to the extent that the requested modification does not
modify the status quo. Doc. 136 at 2; RE Tab 136 at 2. Because, the court
reasoned, it was apparent that “an adjudication of each issue presented in the
defendants’ renewed motion would moot [appellants’] appeal and divest the
Having failed in their efforts to persuade the district court to entertain their
Renewed Motion, appellants asked this Court to remand the “nexus” issue. After
this Court denied that motion, appellants filed a second interlocutory appeal. The
sole issue before the Court in the current appeal (“Home Assure II) is whether the
district court erred in concluding that, in view of the pending appeal in Home
145.
18
SUMMARY OF ARGUMENT
fronts the issues they have raised about the district court’s authority to freeze their
assets. The district court, in its order of October 27, 2009, squarely rejected their
notion that the FTC, in applying for preliminary injunctive relief in a public
enforcement action, must bear the burden of tracing frozen assets to the alleged
practices before the court may impose an interim freeze. Appellants decided to
“nexus issue,” in an effort to repackage their arguments before the district court.
It is axiomatic that litigants are not entitled to challenge the same order in
two courts at the same time. Having decided to forego reconsideration in favor of
an appeal of the interim freeze order, appellants must await a resolution of the
issues they have raised by this Court. Although a district court may modify an
injunction that is pending appeal, the district court may not disturb the status quo
as the case sits before the Court of Appeals. In the present case, that is precisely
the kind of relief that appellants seek in their “Renewed Motion for a ‘Nexus’
Hearing and to Modify and/or Dissolve the Asset Freeze.” The district court
19
ARGUMENT
A. Standard of Review
de novo. See, e.g., United States v. McPhee, 336 F.3d 1269, 1271 (11th Cir. 2003)
(“[W]e review de novo the district court’s interpretation and application of the
Sierra Club, Lone Star Chapter v. Cedar Point Oil Co., 73 F.3d 546, 577 (5th Cir.
1996) (same).
The instant appeal involves a single issue – namely, whether the district
Dissolve the Asset Freeze (“Renewed Motion”) by virtue of the pending appeal
from the freeze order. The district court concluded properly that, as a
20
1. A notice of appeal divests the district court of jurisdiction
to relitigate issues that have been raised on appeal
As this Court has explained, the general rule is “the filing of a timely
and sufficient notice of appeal acts to divest the trial court of jurisdiction over the
matters at issue in the appeal, except to the extent that the trial court must act in
aid of the appeal.” Shewchun v. United States, 797 F.2d 941, 942 (11th Cir. 1986)
(per curiam); accord, Griggs v. Provident Consumer Discount Co., 459 U.S. 56,
58, 103 S. Ct. 400, 402 (1982) (per curiam); Pacific Ins. Co. v. General
Development Corp., 28 F.3d 1093, 1096 n.7 (11th Cir. 1994). The purpose of the
rule is to promote judicial economy and avoid the confusion and inefficiency that
would result from two courts considering the same issues at the same time. See 20
Fed. R. Civ. P. 62(c) codifies this rule. See, e.g., McClatchy Newspapers v.
Central Valley Typographical Union No. 46, 686 F.2d 731, 734 (9th Cir. 1982).
Under Rule 62(c), while an appeal is pending, a district court may in its discretion
terms” as circumstances and justice may require. Rule 62(c), however, is not a
source of authority for a district court to change the status quo before an appellate
21
court has reached a decision.17 See, e.g., Coastal Corp. v. Texas Eastern Corp.,
869 F.2d 817, 820 (5th Cir. 1989); accord, Baum v. Blue Moon Ventures, LLC,
513 F.3d 181, 190 n.2 (5th Cir. 2008); Sierra Club, Lone Star Chapter v. Cedar
Point Oil Co., 73 F.3d 546, 578 (5th Cir. 1996). Appellants’ Renewed Motion
does not satisfy these standards. Rather, it is a thinly veiled attempt to relitigate
issues they presented to the district court repeatedly, and that the district court
injunction.18
Appellants contend, in the alternative, that the “core issue” in the pending
appeal in Home Assure I is whether the asset freeze comported with the
requirements of Fed. R. Civ. P. 65, while the question whether a “nexus” hearing is
17
Rule 62(c) provides in pertinent part as follows:
22
necessary prior to issuance of an asset freeze is a noncore issue that was just another
Assure I is at odds with the attention they devoted to it in their briefs.19 In their
“alternative” to their contentions relating to Rule 65 (see App. Br., Home Assure I,
at 16), and devoted eight full pages of their opening brief – over 50% of their
Argument section – to that issue. See App. Br., Home Assure I, at 22-29.
In any event, their reliance on the dubious distinction between “core” and
“noncore” issues is unavailing. The relevant issue, for purposes of Rule 62(c), is
not whether an issue is “core” or “noncore.” Rather, under governing law, the
freeze – would disturb the status quo. As the district court properly acknowledged
(Doc. 136 at 3, RE Tab 136 at 3), the relief requested by appellants would not only
upset the status quo, it would “moot the defendants’ appeal and divest the appellate
court of jurisdiction.”
19
The specious distinction between “core” and “noncore” issues is also
inconsistent with appellants’ own, varying description of the issues. Indeed, in
their brief in the instant appeal, appellants state that the question whether the
district court erred in issuing the asset freeze without having been presented any
evidence of a ‘nexus’ is a “central question” in Home Assure I.” App. Br. 27.
23
Contrary to appellants’ contention (App. Br. at 25, 27-28), nothing in the
Ninth Circuit’s decision in Natural Res. Def. Council v. Southwest Marine, Inc.,
242 F.3d 1163 (9th Cir. 2001) supports the proposition that the question under Rule
62(c) “boils down to whether the modification ‘materially alters’ the status of the
appeal or leaves ‘unchanged the core questions before the appellate panel.’” App.
Br. at 25. The decision in that case addressed an unusual situation in which the
had required Southwest Marine to conduct water column testing “at the surface” to
measure pollution contribution levels in the San Diego Bay. Id. But because the
phrase ‘at the surface’ was too vague to provide any assurance that testing would
accomplish the intended purpose – i.e., “finding the source of the degraded
condition around the piers” (id.) – the district court modified the injunction by
replacing the term “at the surface” with a more precise term, “surface microlayer.”
Id. Thus, the requested modification merely “effectuated the underlying purposes
of the original requirements.” Id. at 1167; accord, Sierra Club, Lone Star Chapter,
73 F.3d at 579 (“[A] court should only modify an injunction to achieve the original
purposes of the injunction, if those purposes have not been fully achieved.”).
24
By contrast to Southwest Marine, the relief requested by appellants in their
Renewed Motion was not clarifying and did not effectuate the purposes of the
completely the underlying purpose of the freeze – that is, to ensure that appellants’
“availability of individual liability for corporate violations of the FTC Act * * *.”
Doc. 65 at 8, RE Tab 65 at 8.
Appellants also contend that their Renewed Motion presented a “new issue”
for the district court – specifically, “whether the excessive asset freeze should
actuality, appellants’ Renewed Motion did not request relief on the basis of their
decision to complete the financial reports, as required, initially, by the TRO,20 See
Doc. 133. Rather, appellants argued that the asset freeze was tantamount to a
prejudgment attachment; the Commission must show a nexus between its claim for
relief and the frozen assets; and, consequently, that the court must release any assets
20
The TRO (Doc. 13) also contained disclosure requirements, but appellants
did not comply with them.
25
acquired prior to the alleged practices and after the date the asset freeze order was
entered. Id. These are virtually the same arguments that appellants made in
and that were rejected by the district court. Doc. 65 at 8-11, RE Tab 65 at 8-11.
Thus, the distinction that appellants attempt to draw between appellants’ challenge
to the existence of the freeze and its extent is specious. In the end, both turn on the
demonstrate a nexus between the assets and its claim for relief.
In any event, for purposes of Rule 62(c), the overarching issue is not whether
the Renewed Motion presents a new issue, but whether the relief requested
preserves the status quo pending appeal. See, e.g., Coastal Corp., 869 F.2d at 820.
In the present case, the purpose of the freeze was to ensure that sufficient funds
would remain after an adjudication of the merits for a final judgment of monetary
hardship, or to carve out assets that were “exempt” from collection.21 Doc. 65 at 9,
21
Thus, had appellants made such requests, the district court would have
been able to entertain them without exceeding its narrow authority under Rule
62(c).
26
RE Tab 65 at 9 (citing Doc. 61 at 21).22 But the district court plainly did not
contemplate that the asset freeze would remain in place only until the FTC, once it
App. Br. at 27. Indeed, in the same order in which the district court ordered
Tab 65 at 11), the court also held that appellants’ “nexus” argument had “fail[ed] to
requirements” (Southwest Marine, 242 F.3d at 1167), would have the effect of
maintaining the status quo during the pendency of the appeal. Given this
circumstance, the district court was correct in declining to entertain the motion.
22
In granting appellants leave to apply for release of “exempt assets,” the
district court relied on the Commission’s frank acknowledgement that, without
more information from appellants about the nature of their personal assets, it was
possible that the freeze included assets that otherwise would be exempt. See Doc.
61 at 21. For example, some assets are “exempt” from collection – primarily
pursuant to state statutory and constitutional provisions that allow a debtor to keep
property that otherwise would be subject to sale to satisfy his obligations. See,
e.g., In re Hodes, 308 B.R. 61, 65 (10th Cir. 2004).
27
CONCLUSION
For all the foregoing reasons, the order of the district court should be
affirmed.
Respectfully submitted,
WILLARD K. TOM
General Counsel
JOHN F. DALY
Deputy General Counsel for Litigation
OF COUNSEL:
ANN F. WEINTRAUB
DAVID W. DULABON
DARREN H. LUBETZKY /s/ Leslie Rice Melman
Attorneys LESLIE RICE MELMAN
Federal Trade Commission Assistant General Counsel for Litigation
Northeast Region Federal Trade Commission
One Bowling Green 600 Pennsylvania Ave., N.W.
New York, New York 10004 Room 582
Washington, DC 20580
(202) 326-2478
28
CERTIFICATE OF COMPLIANCE
I certify that this brief complies with the type-volume limitation set forth in
I hereby certify that on this 28th day of April, 2010, I electronically filed the
website for the United States Court of Appeals for the Eleventh Circuit. Also on
this day, an original and six paper copies were sent by overnight delivery to the
Court and, using the same manner of service, two paper copies were sent to the
following individuals: