Federal Trade Commission v. E.M.A. Nationwide, Inc.
767 F.3d 611
6th Cir.2014Background
- FTC filed a complaint against E.M.A., First United, New Life, four Canadian corporations, and individuals alleging violations of the FTC Act, TSR, and MARS Rule.
- District court denied motions to stay and for further discovery; FTC moved for summary judgment supported by over 1,000 pages of exhibits.
- Defendants claimed ongoing criminal investigations and inability to access records; court denied renewed stay and further discovery.
- FTC obtained a preliminary injunction; later granted summary judgment finding a common enterprise and joint and several liability for the corporations and individuals.
- Restitution of $5,706,135.48 ordered and a permanent injunction barring defendants from debt relief and mortgage assistance industries.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court abused its discretion denying 56(d) discovery | FTC prevailed; Defendants failed to show need for discovery to oppose summary judgment. | Defendants could not adequately defend without discovery of records and contracts from Canadian authorities. | No abuse; denial affirmed |
| Whether the district court erred by denying renewed stay pending any potential criminal proceedings | Stays unnecessary; interests of consumers and public outweigh stays. | Stay warranted to protect Fifth Amendment rights and prevent discovery abuses. | No abuse; denial affirmed |
| Whether FTC showed violation of the FTC Act through deceptive practices warranting summary judgment | Defendants’ misrepresentations and omissions were material and deceptive. | Written materials clarified services; net impression not deceptive; factual disputes exist for trial. | FTC summary judgment upheld on FTC Act claim |
| Whether joint and several liability and personal liability against Michaels/Benhaim and common enterprise theory were proper | Common enterprise and personal participation support joint/individual liability; hierarchy shown by records. | Corporate separateness should shield individuals; limited participation. | District court affirmed; common enterprise and individual liability imposed |
Key Cases Cited
- FTC v. World Travel Vacation Brokers, Inc., 861 F.2d 1020 (7th Cir. 1988) (misrepresentations in ads constitute unfair or deceptive acts)
- FTC v. Cyberspace.Com, LLC, 453 F.3d 1196 (9th Cir. 2006) (front-side messaging; fine print insufficient to defeat deception)
- Removatron Int’l Corp. v. FTC, 884 F.2d 1489 (1st Cir. 1989) (each advertisement stands on its own merits; deceptions cannot be cured by later disclosures)
- Carter Prods. v. FTC, 186 F.2d 821 (7th Cir. 1951) (deception at first contact supports violation even if corrected later)
- FTC v. Fin. Freedom Processing, Inc., 538 F. App’x 488 (5th Cir. 2013) (advertising campaign messages evaluated per advertisement)
- Washington Data Res., LLC v. FTC, 856 F. Supp. 2d 1247 (M.D. Fla. 2012) (TSR and FTC Act principles apply similarly)