Contact: Andrew Gordon, Esq.
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Diluted Preliminary Injunction Order
Repels Aggressive Tactics Used by FTC
Against Online Advertiser

October 24, 2016 - Fort Lauderdale, FL - Corporate Defendants, Inc.,, Inc., Excelsior Enterprises International, Inc., and JPL Enterprises International, Inc. and individual defendants James P. Lamb, and Uliana Bogash (collectively, the "Defendants") announced today that they have stood their ground against Federal Trade Commission ("FTC") allegations of deceptive online advertising by effectively eliminating the most restrictive aspects of a previously-issued ex parte Temporary Restraining Order. After an evidentiary hearing in the case (CIVIL ACTION NUMBER: 0:16-cv-62186-WJZ), the United States District Court for the Southern District of Florida promptly and fully lifted a previously-imposed asset freeze and terminated its previously imposed receivership. The ruling called into question the propriety of the overbroad and aggressive tactics employed by the FTC in this case, which the Court ultimately deemed unwarranted.

Although the litigation is still ongoing, the Court's September 29, 2016 Order is particularly noteworthy due to the reversal of the FTC's requested ex parte remedies, especially given the steep initial advantages normally enjoyed by the FTC in such proceedings and, relatedly, the exceptionally low success rate of similarly situated defendants .

Attorney Andrew Gordon, a member of the defendants' legal defense team, stated:

"Normally, it is our practice to refrain from commenting to the media on matters that are pending before the court. However, the FTC's tactics thus far, which include concealment of their losses in court from the public, call for the record to be set straight. Until we get to trial, we will allow our court filings, such as the answer and recent motion to allocate receivership expenses to the FTC, to speak for us. It is telling that the Court quickly discharged the receivership and asset freeze that the FTC previously misled the Court to enter. It is important in the American system of justice that our clients get a fair trial, and that the press refrain from jumping to conclusions and accepting the FTC's complaint and publications as the whole, true story."

This case arose from the FTC's allegations that the Defendants were engaging in deceptive online advertising practices in violation of Section 5(a), of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. 45(a) and Section 4 of the Restore Online Shoppers' Confidence Act ("ROSCA"), 15 U.S.C. 8403. The Defendants operate several permit renewal businesses that help interstate commercial carriers remain compliant with the slew of complex and rapidly-changing state and Federal regulations. The FTC alleged that the Defendants were engaging in deceptive businesses practices by misleading consumers into believing that Defendants were affiliated with a governmental entity.

On September 15, 2016, the FTC obtained an ex parte TRO, freezing the Defendants' personal and business assets, and imposing a court-appointed receiver to wrest control of the Defendants' businesses during the pendency of the proceedings. Defendants were thus placed in the position of having to defend themselves without access to any funds for legal fees or business records-records and funds that were necessary for the Defendants to support their defense. Unless the FTC's requested relief was immediately overturned, the asset freeze and receivership would remain in place for the pendency of the litigation; a sure death sentence for the Defendants' businesses.

Two weeks later, on September 29, 2016, the federal court took witness testimony and heard arguments from the Defendants' counsel, all of which highlighted the facts that (i) the FTC's ex parte request for an asset freeze and receivership was improvident, (ii) the FTC acted inappropriately by implying that exigent circumstances existed when, in fact, no emergency existed, and (iii) the Defendants' business was both legitimate and extremely helpful to thousands of customers nationwide who relied on the Defendants for their interstate commercial carriers registrations.

Defendants prevailed at the hearing, and the asset freeze and receivership were immediately lifted. A greatly modified preliminary injunction still issued; however, the restrictions of the injunctions were entirely acceptable to the Defendants and, in fact, were offered to the FTC by the Defendants prior to the evidentiary hearing.

To understand the significance of the Court's September 29 ruling, it is necessary to examine two substantial advantages enjoyed by the FTC in litigating matters involving claims of deceptive advertising. When online advertisers face off against the FTC, it is a wildly uneven playing field.

First, the FTC typically imposes a drastically accelerated litigation timeline, forcing defendants to scurry and draft complex responsive pleadings in very short order. In the case at hand, for instance, Defendants were given only a handful of days to prepare for the preliminary injunction hearing and to draft a lengthy memorandum in opposition to the FTC's motion for a preliminary injunction.

Second, the FTC is held to a different standard of law, making it easier for the Commission to obtain preliminary injunctions. Unlike private litigants, the FTC does not need to prove irreparable injury when seeking a TRO --such injury is presumed in a statutory enforcement action. Because irreparable injury is presumed, the FTC's burden of establishing success on the merits is decreased, and a district court "'need only to find some chance of probable success on the merits'" in order to award preliminary relief.

The two aforementioned factors create a markedly uphill battle for defendants accused of violating the FTC Act and those that wish to oppose the entry of a preliminary injunction against them. The resounding defeat of the FTC in this phase of the case underscores the importance of the Defendants' attorneys' accomplishment in the face of the overwhelmingly odds that were stacked in favor of the FTC. President James Lamb denies any wrongdoing in the matter and questions what might be motivating the FTC to suddenly attack his fifteen (15) year old business, which offers a valuable service to the trucking industry. Lamb echoed his attorney this morning:

"For over a decade, we have worked diligently to serve and educate the industry and stand up for the rights of the smaller players in this industry. Now the FTC is calling our reputable service a "scam" when, in reality, we have always provided a valuable service to carriers and owner operators that helps keep them in compliance and out of trouble. Anyone who visits our website can see that we perform valuable registration services for the transportation industry and hold ourselves out as an independent third party. Our resolve and faith in the justice system has not been shaken by FTC's false claims, strong arm tactics, and attempts to demonize us in the press before trial."

Having suffered a resounding defeat in the early stages of the case, the FTC has undertaken efforts to bolster its flailing case by publishing false and defamatory statements about the Defendants in press releases and FTC-sponsored blog posts. These activities, which are all too familiar to counsel who handle FTC matters, demonstrate the FTC's unabashed policy of posting self-serving and defamatory half-truths about ongoing cases in which it is involved, under the guise of "legitimate reporting." An example of the FTC's improvident behavior can be seen in its October 17, 2016 press release, in which the FTC summarily stated that the Defendants were "government imposters," despite the fact that the Defendants' websites were (and remain) replete with disclaimers identifying them as independent consulting firms. This illustrates the ongoing and vexing obstacle that any defendant facing a FTC-related case must hurdle, namely, that the FTC tries its cases in the press before stepping foot into court.

Challenges in the case still remain, however, the Defendants have effectively halted the FTC's momentum and highlighted the improvident and improper actions of the FTC. The record now reflects the overly aggressive nature of the FTC's conduct by formally acknowledging the impropriety of the asset freeze and court-appointed receiver. With hope, the ruling will help to make it harder for the FTC to employ similarly aggressive and improvident tactics against other online advertisers in the future.

1. See e.g., FTC v. A TO Z Marketing, Inc., No. 14-56582 (9th Cir.); No. 8:13-cv-00919 (C.D. Cal.) (granting preliminary injunction in response to FTC allegations of deceptive online marketing in violation of Section 5(a) of the FTC Act); FTC v. Sale Slash, LLC, et. al., No. 2:15-cv-03107-PA-AJW (granting preliminary injunction against Defendants Apex Customer Care LLC, Penway LLC, Renvee LLC, Optim Products LLC, and Edgar Babayan in response to FTC allegations of deceptive online marketing in violation of Section 5(a) of the FTC Act); and FTC v. American Yellow Browser, Inc., No. 1:15-cv-02047 (N.D. Ill.) (granting preliminary injunction to halt allegations of deceptive online marketing in violation of Section 5(a) of the FTC Act).
2. FTC v. IAB Mktg. Assoc., LP, 746 F.3d 1228, 1232 (11th Cir. 2014) (citing FTC v. Univ. Health, Inc., 938 F.2d 1206, 1218 (11th Cir. 1991)).
3. FTC v. World Wide Factors, Ltd., 882 F.2d 344, 347.
4. Id. (quoting United States v. Odessa Union Warehouse Co-op, 833 F.2d 172, 176 (9th Cir. 1987)).