Federal Trade Commission v. Neora LLC
3:20-cv-01979
| N.D. Tex. | Aug 8, 2022Background
- The FTC sued Neora, LLC (formerly “Nerium”) and founder Jeffrey Olson under Section 13(b) of the FTC Act, alleging the company operated an illegal MLM/pyramid scheme and made unsupported health claims about the ingredient EHT. Signum entities settled early and were dismissed.
- Complaint alleged Brand Partners were rewarded for recruitment (not end‑user sales) and that Defendants and BPs made deceptive health claims and false income claims.
- Defendants’ amended answer asserted three affirmative defenses: monetary relief is unavailable, laches, and failure to exhaust administrative remedies.
- The FTC moved for judgment on the pleadings as to those defenses; the Court reviewed under the Rule 12(c)/12(b)(6) standard.
- The Court (1) recognized its prior ruling that AMG precludes monetary equitable relief under §13(b), (2) held laches is unavailable against the FTC enforcing public rights, and (3) applied law‑of‑the‑case to reject the exhaustion defense; the FTC’s motion was granted and the defenses were rejected/dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Availability of monetary relief | Prior AMG ruling bars monetary equitable relief under §13(b); defense resolved | Defense conceded: prior order disposes of the issue | Resolved against Defendants; monetary‑relief defense dismissed/foreclosed |
| Laches | Laches is not an available defense against the government enforcing public rights; should be rejected | Laches applies because FTC seeks relief benefitting individual consumers (analogy to EEOC exception) | Rejected; laches inapplicable outside narrow EEOC contexts; FTC acts in sovereign capacity seeking injunctive relief |
| Failure to exhaust administrative remedies | FTC may seek a permanent injunction under §13(b) without prior administrative proceedings; prior ruling is law‑of‑the‑case | No controlling Fifth Circuit guidance on what is a "proper case," so exhaustion defense remains | Rejected; Court’s prior ruling (law‑of‑the‑case) forecloses exhaustion defense though defendants may still argue §13(b) is not a “proper case” on other grounds |
Key Cases Cited
- AMG Capital Management, LLC v. Federal Trade Commission, 141 S. Ct. 1341 (2021) (Supreme Court held §13(b) does not authorize equitable monetary relief like restitution or disgorgement)
- Arrow Transportation Co. v. United States, 658 F.2d 392 (5th Cir. 1981) (laches unavailable against the United States enforcing public rights)
- Nabors Drilling U.S.A., Inc. v. NLRB, 323 F.2d 686 (5th Cir. 1963) (government not subject to laches in public‑rights enforcement)
- Medical Center Pharmacy v. Holder, 634 F.3d 830 (5th Cir. 2011) (explaining and applying the law‑of‑the‑case doctrine)
- Hebert Abstract Co. v. Touchstone Properties, Ltd., 914 F.2d 74 (5th Cir. 1990) (standard for judgment on the pleadings under Rule 12(c))
- United States v. Popovich, 820 F.2d 134 (5th Cir. 1987) (recognizing narrow EEOC‑context exception where laches may apply)