989 F. Supp. 2d 799
D.S.D.2013Background
- FTC filed suit under FTCA and related statutes alleging deceptive and unfair practices across ten defendants in a common enterprise led by Webb.
- FTC asserted seven counts: five under §5 FTCA, and two under Credit Practices Rule and EFTA/ Regulation E; defendants dispute common enterprise and liability.
- Court granted partial summary judgment on Counts I (some wage-garnishment communications) and V (EFTA/ Regulation E) and denied others for lack of record credibility.
- Defendants produced multiple loan agreements and financial material; issues included common enterprise, EFT clauses, and wage assignment/garnishment practices.
- Court found genuine disputes on whether certain entities constitute a common enterprise and on tribal court jurisdiction, directing trial on those matters.
- Disgorgement of $417,740 and potential civil penalties were addressed, with final injunctive relief to be set in later proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether there is a common enterprise as a matter of law | FTC argues a common enterprise exists among many defendants due to control and intertwined finances. | Webb-controlled entities may not all be part of a single common enterprise; distinctions exist. | There is a genuine issue of material fact; not all defendants are conclusively part of a single common enterprise. |
| Whether EFT/ Regulation E violations are established | FTC contends EFT clauses conditioned credit on preauthorized EFTs violated Regulation E § 205.10(e)(1). | Defendants claim clauses were for consumer convenience and revocable; no conditioning in practice. | Summary judgment in FTC's favor on Count V; EFT clauses violated Regulation E. |
| Whether wage assignments violated the Credit Practices Rule | FTC alleges unlawful wage assignment clauses in loan agreements breached § 444.2(a)(3). | Defendants argue revocation provisions and post-2010 changes complied with exceptions. | Summary judgment for wage-assignments violations granted only for October 2009–June 7, 2010; other periods unresolved. |
| Whether FTC can obtain monetary relief under § 13(b) | FTC seeks disgorgement of ill-gotten gains from garnishment and civil penalties. | Defendants contend monetary relief is incidental to injunctive relief and subject to trial evaluation. | Disgorgement of $417,740 awarded to PayDay Financial LLC and Financial Solutions LLC; civil penalty left for trial. |
| Whether the FTC is entitled to summary judgment on tribal court jurisdiction/resolution | FTC argues misuse of tribal court and misleading tribal jurisdiction provisions violated FTCA §5. | Defendants contest tribal jurisdiction and the meaning of arbitration/jurisdiction terms. | Summary judgment on Counts involving tribal court jurisdiction denied; issues reserved for trial. |
Key Cases Cited
- FTC v. Nat'l Urological Grp., Inc., 645 F. Supp. 2d 1167 (N.D. Ga. 2008) (factors for common enterprise; corporate structures may be linked)
- FTC v. Think Achievement Corp., 144 F. Supp. 2d 993 (N.D. Ind. 2000) (common enterprise through interrelated companies)
- FTC v. J.K Publ’ns, Inc., 99 F. Supp. 2d 1176 (C.D. Cal. 2000) (agency liability when controlling individuals or entities)
- Pantron I Corp., 33 F.3d 1088 (9th Cir. 1994) (materiality and deception in FTC Act analysis)
- FTC v. Verity Int'l Ltd., 443 F.3d 48 (2d Cir. 2006) (disgorgement framework and unjust enrichment)