Federal Trade Commission v. Leanspa, LLC
920 F. Supp. 2d 270
D. Conn.2013Background
- FTC and Connecticut sue LeanSpa entities, Mizhen, LeadClick entities, Chiang, and Strano for false advertising and related conduct; court issued ex parte TRO and later a stipulated preliminary injunction in 2011; Amended Complaint adds LeadClick Media and Chiang, and relief defendant Strano; counts include FTC Act and EFTA/Regulation E/CUTPA claims; LeanSpa allegedly used risk-free trials, auto-renewal, and deceptive charge practices; LeadClick allegedly used fake-news sites and affiliate marketers to drive leads; Strano is Mizhen’s spouse and alleged recipient of ill-gotten gains; standard 12(b)(6) framework governs motions to dismiss; court outlines that it accepts the complaint’s allegations as true for purposes of dismissal motion
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| CDA immunity for LeadClick at 12(b)(6) stage | LeadClick may be immune as an interactive service provider | LeadClick qualifies as CDA immunity holder | Not entitled to immunity on face of complaint |
| Chiang's personal liability for counts 4, 13, 14 | Chiang participated in or controlled LeadClick’s deceptive acts and had knowledge or reckless indifference | Insufficient facts to show direct participation/knowledge | Plausible personal liability at pleading stage |
| Monetary relief against Chiang | Equitable relief may include monetary restitution for unjust enrichment | No allegations Chiang personally enriched or received funds | Equitable relief denied; need repleading of unjust enrichment if sought; monetary relief not supported as pled |
| Strano's Velief to Count 17 (relief defendant) | Strano benefited from ill-gotten LeanSpa funds and has no legitimate claim | Pleading details lacking (dates/amounts) | Count 17 survives pleadings; details may be developed later |
Key Cases Cited
- FTC v. Accusearch, 570 F.3d 1187 (10th Cir. 2009) (interactive service provider can be an information content provider for purposes of liability)
- Doctor’s Assocs., Inc. v. QIP Holders, LLC (Doctor’s Associates II), 2010 WL 669870 (D. Conn. 2010) (courts can assess CDA and content-provider roles at pleading stage; not binding as a rule)
- Universal Commc’n Sys., Inc. v. Lycos, Inc., 478 F.3d 413 (1st Cir. 2007) (discusses CDA immunity and when it applies to interactive services)
- Amy Travel Serv., Inc., 875 F.2d 564 (7th Cir. 1989) (participation/control can establish individual liability under FTC Act)
- FTC v. Bronson Partners, LLC, 654 F.3d 359 (2d Cir. 2011) (equitable relief authority under FTC Act includes some monetary relief)