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Federal Trade Commission v. J. William Enterprises, LLC

United States District Court, M.D. Florida

November 7, 2017

FEDERAL TRADE COMMISSION, Plaintiff,
v.
J. WILLIAM ENTERPRISES, LLC, JESS KINMONT, JOHN P. WENZ, JR. and PRO TIMESHARE RESALES OF FLAGLER BEACH LLC, Defendants.

          ORDER

          GREGORY A. PRESNELL UNITED STATES DISTRICT JUDGE.

         This Matter comes before the Court on the Plaintiff's Motion for Summary Judgment (Doc. 144), the Defendants' Responses in Opposition (Docs. 160, 165-1), and the Plaintiff's Replies (Docs. 172, 174).

         I. Background

         The Federal Trade Commission (“FTC”) filed a Complaint on December 12, 2016. Doc. 2. In the Complaint, the FTC alleged violations of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the Telemarketing Sales Rule (“TSR”), 16 C.F.R. 310 et seq. On August 2, 2017, the FTC filed a Motion for Summary Judgment. Doc. 144.

         The FTC seeks summary judgment on Counts I, II, III, and IV. Count I alleges that the Defendants made misrepresentations in violation of 15 U.S.C. § 45(a). Count II alleges that the Defendants made misrepresentations to induce customers to pay for goods or services in violation of the TSR. Counts III and IV allege that the Defendants made calls to telephone numbers on the National Do Not Call Registry in violation of the TSR and that the Defendants failed to pay required National No Call Registry fees in violation of the TSR.

         The undisputed facts are as follows. Defendant Jess Kinmont (“Kinmont”) is the owner of J. William Enterprises, LLC (“JWE”), which he organized in 2009. JWE obtained the fictitious name of “Pro Timeshare Resales” in October of 2011. In 2012, JWE began selling advertising services under the name of Pro Timeshare Resales (“PTR”). Kinmont Dep. 1, Doc. 144-4, at 43:8-12. Defendant John Wenz (“Wenz”) formed Pro Timeshare Resales of Flagler Beach, LLC (“PTRFB”) “with the purpose of selling the advertising services of JWE.” Wenz. Dep. 1, Doc. 144-13, at 23:10-24. JWE became affiliated with PTRFB in March of 2012. Kinmont Dep. 1, Doc. 144-4, at 43:9-44:13. Under the agreement between JWE and PTRFB, JWE would pay PTRFB an agreed-upon percentage of successful sales, minus cancellations, charge-backs, and expenses. Both JWE and PTRFB operated under one Florida telemarketing license.

         II. Legal Standards

         Courts may grant summary judgment “[w]hen the only question a court must decide is a question of law.” Saregama India Ltd. v. Mosley, 635 F.3d 1284, 1290 (11th Cir. 2011). A party is entitled to summary judgment when the party can show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. Which facts are material depends on the substantive law applicable to the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party bears the burden of showing that no genuine issue of material fact exists. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). A court “must draw all reasonable inferences in favor of the non-moving party, and it may not make credibility determinations or weigh the evidence.” Hinson v. Clinch County, Ga. Bd. Of Educ., 231 F.3d 821, 826-27 (11th Cir. 2000) (quoting Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150-51 (2000)).

         When a party moving for summary judgment points out an absence of evidence on a dispositive issue for which the nonmoving party bears the burden of proof at trial, the nonmoving party must “go beyond the pleadings and by [his] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 324-25 (1986) (internal quotations and citation omitted). Thereafter, summary judgment is mandated against the nonmoving party who fails to make a showing sufficient to establish a genuine issue of fact for trial. Id. at 322, 324-25. The party opposing a motion for summary judgment must rely on more than conclusory statements or allegations unsupported by facts. Evers v. Gen. Motors Corp., 770 F.2d 984, 986 (11th Cir. 1985) (“conclusory allegations without specific supporting facts have no probative value”).

         III. Analysis

         a. Counts I and II

         In order to show that the Defendants violated Section 5(a), the FTC must show “‘(1) there was a representation; (2) the representation was likely to mislead customers acting reasonably under the circumstances, and (3) the representation was material.'” Fed. Trade Comm'n v. Lanier Law, LLC, 194 F.Supp.3d 1238, 1273 (M.D. Fla. 2016) (quoting F.T.C. v. Tashman, 318 F.3d 1273, 1277 (11th Cir. 2003)). If a representation would likely be “relied upon by a reasonable prospective purchaser, ” it is material. Id. at 1274. (quoting F.T.C. v. Washington Data Res., 856 F.Supp.2d 1247, 1272 (M.D. Fla. 2012), aff'd sub nom. F.T.C. v. Washington Data Res., Inc., 704 F.3d 1323 (11th Cir. 2013)). The Court presumes that express claims made in order to induce the purchase of a service are material. Id. Like Section 5 of the FTC Act, the TSR prohibits sellers and telemarketers from “[m]aking a false or misleading statement to induce any person to pay for goods or services.” 16 C.F.R. § 310.3(a)(4). “Identical principles of deception from Section 5 of the FTC Act apply to the TSR, and a violation of the TSR amounts to both a deceptive act or practice and a violation of the FTC Act.” Washington Data Res., 856 F.Supp.2d at 1273. In order to hold individuals liable for such violations, the FTC must demonstrate that the individual defendants directly participated in, or had authority to control, the practices. Lanier Law, LLC, 194 F.Supp.3d at 1285 (citing Wash. Data Res., 856 F.Supp.2d at 1276).

         The FTC argues that the Defendants made misrepresentations to consumers, and it has produced voluminous evidence that supports this contention. Citing language used on the Defendants' website and in brochures and other documents, in addition to statements from numerous consumer declarations, the FTC claims that the Defendants misrepresented that they would sell or rent customers' timeshares, rather than merely advertise the availability of the timeshares for purchase or rental. However, the FTC's evidence does not stand unrebutted. PTRFB and Wenz produced evidence indicating that Wenz forbade employee telemarketers from stating that they would “buy or sell or rent timeshares on behalf of any customers.” E.g., Simmons Aff., Doc. 160-1, at 2; Mabrey Aff., Doc. 160-2, at 3. JWE and Kinmont point to similar evidence providing that Kinmont prohibited employees from leading prospective clients to believe that JWE could guarantee a sale or rental of property within any time frame or that JWE had a buyer or renter for the prospective client's property. E.g., Jones Decl., Doc. 15, at 3; Holmes Decl., Doc. 17, at 3-4. Viewing the evidence in the light most favorable to the non-movant, as the Court must, there remain material disputes of fact as to whether the Defendants are liable for misleading material representations in violation of the FTC Act and the TSR.

         b. ...


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