Federal Trade Commission v. Ross
897 F. Supp. 2d 369
D. Maryland2012Background
- FTC sued IMI, ByteHosting, Jain, Sundín, D’Souza, Ross, Reno, and Maurice D’Souza under FTC Act §§ 5(a), 53(b) for deceptive scareware marketing; four settled, three defaulted, Ross the remaining defendant.
- Court conducted two-day bench trial Sept. 11–12, 2012, after prior summary-judgment proceedings and a preliminary injunction.
- Court held IMI’s deceptive marketing violated Section 5; Ross held individually liable; injunctive relief and monetary redress were ordered.
- Ross was an IMI founder with authority over marketing, operations, and finances; evidence showed direct participation and knowledge of deception.
- Judgment entered against Ross jointly and severally for $163,167,539.95 consumer redress; permanent injunction against further deceptive marketing.
- Order closes the case; related Canadian litigation and other actions noted but not controlling for this judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to control or participate | Ross had control over IMI deception | Ross lacked control or knowledge | Ross possessed both control and participation |
| Knowledge of deception | Ross knew or was recklessly indifferent | No knowledge shown | Ross had actual knowledge or reckless indifference |
| Relief available | FTC may seek injunctive, redress, and disgorgement | Relief limits unclear | Permanent injunction and monetary redress authorized |
| Liability scope | Ross liable jointly and severally with IMI | Liability should be limited to personal acts | Ross jointly and severally liable for consumer redress |
| Evidence sufficiency | Extensive ad scripts, logs, and payments show scheme | Evidence insufficient to prove knowledge | Evidence sufficient to prove liability under Section 5 |
Key Cases Cited
- Amy Travel Service, Inc. v. FTC, 875 F.2d 564 (7th Cir.1989) (knowledge standard for control-person liability)
- Direct Marketing Concepts, Inc. v. FTC, 569 F. Supp. 2d 285 (D. Mass.2008) (knowledge or willful indifference required)
- Publishing Clearing House, Inc. v. FTC, 104 F.3d 1168 (9th Cir.1997) (control and knowledge standards for individual liability)
- Kitco of Nevada, Inc. v. FTC, 612 F. Supp. 1282 (D. Minn.1985) (control and participation sufficient for liability; no intent required)
- J.K. Publications, Inc. v. FTC, 99 F. Supp. 2d 1176 (C.D. Cal.2000) (corporate-officer involvement supports individual liability)
- Direct Marketing Inc. v. FTC, 569 F. Supp. 2d 285 (D. Mass.2008) (reiterates knowledge or willful blindness required)