«UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MONTANA MISSOULA DIVISION FEDERAL TRADE COMMISSION, Plaintiff, Case No. CV-08-64-M-DWM v. STIPULATED ...»
Case 9:08-cv-00064-DWM Document 91 Filed 10/07/2009 Page 1 of 28
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
FEDERAL TRADE COMMISSION,
Plaintiff, Case No. CV-08-64-M-DWM
v. STIPULATED FINAL JUDGMENT
AND ORDER FOR PERMANENT
YOUR MAGAZINE PROVIDER, INJUNCTIONINC., a corporation, also D.B.A.
PERIODICALS, and U.S. MAGAZINE SERVICES; and JASON W. ELLSWORTH, Defendants.
Plaintiff, the Federal Trade Commission (“Commission” or “FTC”), has filed its Complaint for permanent injunction and other equitable relief pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C.
Page 1 of 28 Case 9:08-cv-00064-DWM Document 91 Filed 10/07/2009 Page 2 of 28 §§ 53(b) and 57b, and the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. §§ 6101 et seq., charging Defendants Your Magazine Provider, Inc., also doing business as Periodicals and as U.S. Magazine Services, and Jason W. Ellsworth with violating Section 5 of the FTC Act, 15 U.S.C. § 45, and the FTC’s Telemarketing Sales Rule (“TSR”), 16 C.F.R. Part 310.
Plaintiff FTC and Defendants Your Magazine Provider, Inc., and Jason W.
Ellsworth have agreed to entry of this Stipulated Final Judgment and Order for Permanent Injunction (“Order”) by this Court to resolve all matters of dispute between them in this action.
NOW, THEREFORE, the Commission and Defendants Your Magazine Provider, Inc., and Jason W. Ellsworth, having requested the Court to enter this
Order, it is ORDERED, ADJUDGED, AND DECREED as follows:
1. This Court has jurisdiction over the subject matter of this case and personal jurisdiction over Defendants.
2. Venue is proper as to all parties in the District of Montana under 15 U.S.C. § 53(b) and 28 U.S.C. §§ 1391(b) and (c).
3. The activities of Defendants are in or affecting commerce, as defined in Page 2 of 28 Case 9:08-cv-00064-DWM Document 91 Filed 10/07/2009 Page 3 of 28 Section 4 of the FTC Act, 15 U.S.C. § 44.
4. The Complaint states a claim upon which relief may be granted against Defendants under Sections 5(a), 13(b), and 19 of the FTC Act, 15 U.S.C. §§ 45(a), 53(b), and 57b; and under the TSR, 16 C.F.R. Part 310.
5. Defendants waive any and all rights that may arise under the Equal Access to Justice Act, 28 U.S.C. § 2412, amended by Pub. L. 104-121, 110 Stat.
847, 863-64 (1996).
criminal remedies that may be provided by law.
7. Defendants waive all rights to seek appellate review or otherwise challenge or contest the validity of this Order. Defendants further waive and release any claim that they may have against the Commission, its employees, agents, and representatives.
8. Defendants enter into this Order freely and acknowledge that they have read and understand the provisions of this Order and agree to abide by them.
9. This Order is for settlement purposes only, and does not constitute and shall not be interpreted to constitute an admission by Defendants or a finding that the law has been violated as alleged in the Complaint, or that the facts alleged in the Complaint, other than the jurisdictional facts, are true.
For the purpose of this Order, the following definitions shall apply:
1. “Assets” means any legal or equitable interest in, right to, or claim to, any real or personal property including, but not limited to, chattel, goods, instruments, equipment, fixtures, general intangibles, effects, leaseholds, mail or other deliveries, inventory, checks, notes, accounts, credits, receivables (as those terms are defined in the Uniform Commercial Code), and all cash, wherever located.
2. “Assisting others” means knowingly providing any of the following
goods or services to another person or entity:
a. performing customer service functions including, but not limited to, receiving or responding to consumer complaints;
location sufficiently noticeable for an ordinary consumer to read and comprehend it, in print that contrasts with the background against which it appears. If the information is contained in a multi-page document, the disclosure shall appear on the first page;
b. in communications disseminated orally, the message shall be delivered in a volume and cadence sufficient for an ordinary consumer to hear and comprehend it;
c. in communications made through an electronic medium (such as television, video, radio, and interactive media such as the Internet, online services, and software), the message shall be presented simultaneously in both the audio, if any, and visual portions of the communication. In any communication presented solely through visual or audio means, the message may be made through the same means in which the communication is presented. In any communication disseminated by means of an interactive
electronic medium such as software, the Internet, or online services, a disclosure must be unavoidable and presented prior to the consumer incurring any financial obligation. Any audio message shall be delivered in a volume and cadence sufficient for an ordinary consumer to hear and comprehend it.
Any visual message shall be of a size and shade, with a degree of contrast to the background against which it appears, and shall appear on the screen for a duration and in a location sufficiently noticeable for an ordinary consumer to
shall be in understandable language and syntax. Nothing contrary to, inconsistent with, or in mitigation of the message shall be used in any
4. “Consumer” means an actual or potential purchaser, customer, licensee, or lessee, regardless of whether that person is a corporation, limited liability corporation, partnership, association, other business or governmental entity, or natural person, and regardless of whether the purchase is made for business purposes or for personal or household purposes.
5. “Corporate Defendant” means Your Magazine Provider, Inc., d.b.a.
Periodicals and d.b.a. U.S. Magazine Services, and its successors and assigns.
usage of the term in Federal Rule of Civil Procedure 34(a), and includes writings, drawings, graphs, charts, photographs, audio and video recordings, computer records, and other data compilations from which information can be obtained and translated, if necessary, through detection devices into reasonably usable form. A draft or non-identical copy is a separate document within the meaning of the term.
8. “Individual Defendant” means Jason W. Ellsworth.
9. “Material” means likely to affect a person’s choice of, or conduct regarding, goods or services.
10. “Person” means any individual, group, unincorporated association, limited or general partnership, corporation, or other business or governmental entity.
12. “Telemarketing Sales Rule” or “Rule” or “TSR” means the FTC Rule entitled “Telemarketing Sales Rule,” 16 C.F.R. Part 310, or as it may be hereafter amended.
13. The terms “and” and “or” shall be construed conjunctively or disjunctively as necessary to make the applicable phrase or sentence inclusive rather than exclusive.
IT IS THEREFORE ORDERED that, in connection with the marketing, offering for sale, or sale of any product or service, Defendants and their officers, agents, servants, and employees, and all other persons who are in active concert or participation with any of them who receive actual notice of this Order by personal
service or otherwise, are permanently restrained and enjoined from:
A. Failing to disclose truthfully, in a clear and conspicuous manner, before consumers provide their credit or debit card account numbers or any other billing
B. Misrepresenting, directly or by implication, any fact material to a consumer's decision to purchase such product or service;
C. Charging or debiting, or causing to be charged or debited, a credit card or bank account of any consumer for renewal of a magazine or other subscription without the express informed consent of the consumer; and D. Violating, or assisting others in violating, any provision of the
Telemarketing Sales Rule, 16 C.F.R. Part 310, including, but not limited to:
3. Section 310.3(a)(1)(iv) of the TSR, 16 C.F.R. § 310.3(a)(1)(iv), by failing to disclose truthfully, in a clear and conspicuous
promotion and that any purchase or payment will not increase the consumer’s chances of winning a prize in a prize promotion;
4. Section 310.3(a)(2)(iii), 16 C.F.R. § 310.3(a)(2)(iii), by misrepresenting, directly or by implication, any material aspect of the performance, efficacy, nature, or central characteristics of
5. Section 310.3(a)(2)(v) of the TSR, 16 C.F.R. § 310.3(a)(2)(v), by misrepresenting, directly or by implication, in the sale of goods
A. Judgment in the amount of $600,000 (six hundred thousand dollars) (“Judgment Amount”) is hereby entered against Defendants, jointly and severally, as equitable monetary relief in favor of the Commission;
B. Defendants shall pay the Judgment Amount in three installments. The
first installment of $50,000 (fifty thousand dollars) shall be paid no later than five (5) days after the date of entry of this Order. The second installment of $250,000 (two hundred fifty thousand dollars) shall be paid no later than six (6) months after the date of entry of this Order. The third and final installment of $300,000 (three hundred thousand dollars) shall be paid no later than twelve (12) months after the date of entry of this Order. All payments to the Commission shall be made by certified check or other guaranteed funds payable to and delivered to the Commission, or by wire transfer in accordance with directions provided by the Commission, on or before the due dates given above;
C. To secure the payments required by Subsection II. B of this Order, Defendants hereby grant to the Commission a lien on and security interest in certain real property as described in Attachment A to this Order, together with all dwelling houses, other structures, improvements, appurtenances, hereditaments and other rights appertaining or belonging thereto (collectively referred to as the “Collateral”).
Defendants represent and acknowledge that the Commission is relying on the material representations that one or more of the Defendants are the sole owners in fee simple of the Collateral, that title to the Collateral is marketable, and that the Collateral currently is not encumbered by any other lien, mortgage, deed of trust, assignment, pledge, security interest or other interest except as disclosed to the
Commission in the financial statements dated May 21-24, 2008, and updated asset list sent to FTC counsel via email on July 9, 2009. Defendants represent that none of the encumbrances on the Collateral are in default. Defendants further agree that, as of the date on which they sign this Order, they shall refrain from transferring, converting, encumbering, selling, assigning, or otherwise disposing of the Collateral, except with the express prior written permission of counsel for the Commission. The individual Defendant hereby releases and waives any statutory, common law, or other homestead exemption that may apply to the Collateral and shall not declare and claim any homestead exemption in the Collateral;
D. Defendants shall cooperate fully with the Commission and be responsible for preparing, executing, and recording the necessary documents and doing whatever else the Commission deems necessary or desirable to perfect, evidence, and effectuate its liens and security interests granted herein. No later than five (5) days after the date on which the Commission authorizes staff to sign this Order, Defendants shall prepare, execute and deliver (at their expense) to the Commission mortgages or deeds of trust in form and substance satisfactory to the Commission (the “Security Documents”) and take such other steps as the Commission may require to perfect, evidence, and effectuate its liens, security interests, and assignments and to carry out the purposes of this Order. The
Commission shall refrain from recording the Security Documents until after the Court’s entry of this Order. In the event that the Court does not enter this Order, within five (5) days after receipt of the Court’s denial of this Order the FTC shall return the Security Documents to Defendants. Defendants shall be responsible for paying all costs and fees (including attorneys’ fees and filing fees) required in connection with the liens and security interests granted herein, including all fees and costs related to the preparation, execution, delivery, filing, continuation, and termination of such liens and security interests and to carry out the purposes of this Order;