FTC versus Innovative Marketing et al – developments
So sayeth the Court....
“This Court conducted a hearing yesterday on almost all outstanding motions in this case and rendered the following rulings for the reasons stated on the record:
- Sam Jain's Motion to Stay (Paper No. 45) is DENIED;
- Kristy Ross's Motion to Temporary Stay (Paper No. 48) is DENIED;
- FTC's Motion for Order Holding Sam Jain and Kristy Ross in Contempt of Court and Requiring the Repatriation of their Assets (Paper No. 49) is DENIED;
- Kristy Ross's Motion to Strike or in the Alternative Motion for an Extension of Time (Paper No. 51) is MOOT;
- Sam Jain's Motion to Strike or in the Alternative Motion for an Extension of Time (Paper No. 52) is MOOT;
- Sam Jain's Motion to Modify Preliminary Injunction (Paper No. 58) is DENIED IN PART, with the Court withholding a ruling on the requested modification of the asset freeze;
- Sam Jain's Motion to Dismiss under Rule 12(b)(7) and 19 (Paper No. 60) is DENIED;
- Kristy Ross's Motion to Dismiss under Rule 12(b)(7) and 19 (Paper No. 61) is DENIED;
- Marc D'Souza's Motion to Dismiss under Rule 12(b)(7) and 19 (Paper No. 70) is DENIED; and
- Marc D'Souza's Motion for Temporary Stay and Modification of Preliminary Injunction (Paper No. 71) is DENIED IN PART, with the Court withholding a ruling on the requested modification of the asset freeze.
Sam Jain's Motion to Modify Preliminary Injunction (Paper No. 58), Marc D'Souza's Motion for Temporary Stay and Modification of Preliminary Injunction (Paper No. 71) and Kristy Ross's oral motion to modify the preliminary injunction all require further briefing and argument on the issue of whether the asset freeze in Section IV of the Preliminary Injunction should be modified. Moreover, this Court withheld ruling on Maurice D'Souza's Motion to Dismiss for Lack of Jurisdiction under Rule 12(b)(2) (Paper No. 90) so that limited jurisdictional discovery can occur and further briefing and argument.
On these outstanding issues, a hearing will be held on Wednesday, July 8, 2009 at 10:00 a.m. Counsel for Sam Jain, Marc D'Souza, Kristy Ross and the FTC will each be permitted to smit an additional brief on whether the asset freeze should be modified by Tuesday, June 23, 2009. Counsel for Maurice D'Souza and the FTC will also each be permitted to submit an additional brief on whether this Court has personal jurisdiction over Maurice D'Souza by the same date. The briefs should be limited to ten (10) pages, excluding attachments and exhibits.”
The Court will issue a scheduling order at the hearing on July 8, 2009.
As a brief recap, the arguments put forward by Sam Jain, Kristy Ross and Marc D’Souza in their Motions to Dismiss the FTC complaint under Rule 12(b)(7) and 19 (which were dismissed) were:
- that the FTC had failed to join Innovative Marketing, a "necessary and indispensible party", claiming that the FTC had never served IMI (the FTC served IMI *twice*).
- that Jack Palladino did not represent IMI and was not authorised to accept service, claiming that Palladino had not made the statements attributed to him
- that the service of IMI in Belize was invalid under the local laws.
Previous relevant commentary:
I didn't blog about the defendants’ claim that the service on IMI in Belize was invalid. The gist of the argument was that the defendants were claiming IMI had not been properly served by the FTC when the FTC personally served IMI's registered agent in that country because the defendants had found a single State Department web page that advised that "Belize and the United States are parties to an agreement that requires all service of process in Belize to be sent exclusively to Belize's central authority". Unfortunately for the defendants, it turned out that the web page on which the defendants were relying was "defunct". A link to the cited web page on the United States Department of State's Bureau of Consular Affairs' main judicial assistance portal had been deactivated some years earlier due to inaccuracies that had developed over time, although some links to the web page remained on the CA web which were accessible to the public. The cited web page itself was disabled on March 6, 2009 after it was discovered that it was still being linked to. The FTC pointed out in its response to the defendants’ claim that if the defendants had checked with the State Department they would have been told that the information was wrong.
Sam Jain’s Motion to Stay (Paper No. 45) (which was denied) was his request that the FTC proceedings be stayed “until the ongoing parallel federal criminal case against him is resolved” because “to defend both cases simultaneously will effectively prevent him from defending either adequately and will force him to choose between sacrificing his Fifth Amendment privilege against self incrimination or his right to defend the civil claims”. Kristy Ross’s Motion to Temporary Stay (Paper No. 48) basically made the same arguments.
James Reno and Bytehosting Internet Services
Back on 18 March 2009 I reported that the FTC, James Reno and Bytehosting Internet Services had requested the Court stay further proceedings as to James Reno and Bytehosting for a period of 90 days.
The stay was requested so that the Commission's attorneys could seek approval of a "Stipulated Final Order for Permanent Injunction and Monetary Judgment As To Defendants James M. Reno and Bytehosting Internet Services, LLC". Reno and Bytehosting executed a proposed stipulated final order on 11 March 2009, but this proposed stipulated final order must firstly be approved by the Director of the Bureau of Consumer Protection and then considered, voted on and approved by the full Commission; a procedure that can take up to 90 days.
The stay was granted on 18 March 2009, therefore I expect that the proposed stipulated final order will be lodged with the court any day now (assuming it is approved by the Director of the Bureau of Consumer Protection and then the full Commission).