Federal Trade Commission v. John Beck Amazing Profits, LLC
2012 U.S. Dist. LEXIS 122210
C.D. Cal.2012Background
- FTC moved for final relief after winning summary judgment against FP, MOA, Gravink, Hewitt, and related entities for deceptive wealth-creation products.
- Court deferred final judgment to allow supplemental briefing on scope and duration of injunctive relief and amount of monetary relief.
- Court granted a broad perpetual injunction against infomercial production/dissemination and telemarketing by gravin/ Hewitt/ FP/ MOA, with fencing-in provisions.
- Injunctive relief included prohibitions on assisting others in infomercial or telemarketing activities and a 20-year compliance/record-keeping regime.
- Monetary relief calculated as total net revenues from kit, coaching, and continuity sales, totaling $478,919,765, with disgorgement principles discussed.
- Arguments over offsets for consumer benefits were addressed; court rejected consumer-benefit offsets and allowed full disgorgement of gross revenues less refunds/chargebacks.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of permanent injunctive relief | Gravink, Hewitt, FP, MOA merit lifetime ban on infomercials/telemarketing. | Product-specific or shorter bans suffice; lifetime ban is overbroad. | Permanent, broad fencing-in injunction warranted against infomercials/telemarketing. |
| Injunction scope on assisting others | Prohibit assisting others in related unlawful activities to prevent future violations. | Limiting assistance would unduly restrict employment. | Prohibition on assisting others upheld as necessary and properly tailored. |
| Duration of compliance reporting/record-keeping | Twenty-year reporting/record-keeping required. | Five years for Hewitt/Gravink; ten years for gurus. | Twenty years for Gravink/Hewitt; ten years for gurus; duration tailored by history. |
| Destruction of customer records | Destroy pre-judgment customer data to prevent misuse. | Limit destruction to data derived from the disputed infomercials/products. | Destruction of customer records ordered as to all pre-judgment data. |
| Monetary relief and disgorgement | Disgorge entire gross revenues less refunds; no consumer-benefit offsets. | Offset for consumer benefits/actual services rendered should reduce relief. | No offset; disgorgement based on net revenues after refunds/chargebacks; consumer-benefit offsets rejected. |
Key Cases Cited
- Think Achievement Corp. v. City of Evansville, 144 F.Supp.2d 1013 (N.D. Ind. 2000) (fencing-in and breadth of injunctive relief proper to prevent future violations)
- Litton Indus., Inc. v. FTC, 676 F.2d 364 (9th Cir. 1982) (fencing-in provisions must bear reasonable relation to the violation)
- FTC v. Gill, 265 F.3d 944 (9th Cir. 2001) (invasive, long-term bans appropriate for persistent misconduct)
- J.K. Publications, Inc., 99 F.Supp.2d 1176 (C.D. Cal. 2000) (ban on certain business roles can be appropriate; distinguishable from broader employment bans)
- FTC v. Pantron I Corp., 33 F.3d 1088 (9th Cir. 1994) (broad authority to fashion remedies including restitution)
- NLRB v. Express Publ’g Co., 312 U.S. 426 (U.S. 1941) (scope of injunctive relief to prevent future violations)