COLLEEN KOLLAR-KOTELLY, District Judge.
Plaintiff, the Federal Trade Commission (the "FTC") brings this civil action against Defendant Christopher Mallett ("Mallett"), alleging that Mallett has engaged in deceptive practices in the course of marketing debt-, tax-, and mortgage-relief services to consumers through a series of websites. Currently before the Court is the FTC's [2] Motion for a Preliminary Injunction and Other Equitable Relief ("Motion for a Preliminary Injunction"), which Mallett has failed to oppose. Upon consideration of the FTC's uncontested submissions, the relevant authorities, and the record as a whole, the Court shall GRANT the FTC's [2] Motion for a Preliminary Injunction.
The FTC is an independent agency of the United States created by the Federal Trade Commission Act (the "FTC Act"), 15 U.S.C. §§ 41-58. Among other responsibilities, the FTC enforces Section 5(a) of the FTC Act, which prohibits "unfair or deceptive acts or practices in or affecting commerce." Id. § 45(a)(1). Mallett is an individual residing in San Antonio, Texas, though he has recently used addresses in both Texas and Tennessee. Decl. of Erin Feehan-Nelson ("FTC Decl."), ECF No. [2-1], ¶ 15 & Attach. H at 144, 448.
Earlier this year, the FTC commenced an investigation into certain websites operated by Mallett and others. Id. ¶ 2. During its investigation, the FTC learned that Mallett has registered a number of websites over the past two years that he has used to advertise purported debt-, tax-, and mortgage-relief services to consumers that are ultimately provided by third parties, a practice commonly referred to as "lead generation." Id. ¶¶ 15-17 & Attachs. H-J. The websites are accessible by residents of the District of Columbia and do not state that the advertised services are unavailable to District of Columbia residents. Id. ¶¶ 3-12 & Attachs. A-F. Indeed, an FTC investigator successfully accessed the websites from within the District of Columbia and used them to communicate with a third-party service provider. Id. ¶¶ 1-12.
Mallett's websites comprise a loosely organized network. The websites often refer to one another and Mallett has adopted a practice of cycling through websites, shutting down some while opening others. See, e.g., id. Attach. D at 80-81, Attach. H. at 145, 203-04, & Attach. E at 92-93. Many of the websites registered by Mallett are now inactive, including "govusdebtreform.net," "usdebtcare.net," "worldlawdebt.org," "fha-homeloan.info," "usstopforeclosurenow.com," "usstopforeclosuretoday.com," "usstopforeclosure.com," "usbankloanmodification-gov.info," "mortgagehelp-gov.us," "loanmods-gov.info," "loanmods-gov.us," "mortgagehelp-gov.info," "debtconsolidation-gov.info," "debtrelief-gov.info," "creditcard-assistance-gov.info," and "mycredithelp-gov.info." Id. Attach. H. at 145, 203-04.
One example of Mallett's websites is "gov-usdebtreform.net," which displayed a main page entitled "Welcome to the Department of Consumer Services Protection Commission" and included various links to putative services such as "Student Loan Relief," "Debt Relief Services," and "Tax Services." Id. Attach. B at 48. Clicking on the displayed links opened new pages advertising financial-related services, which would in turn direct visitors to advertised businesses provided by third parties. Id. ¶ 3 & Attach. B at 50-78. When
During its investigation, the FTC collected evidence showing that Mallett is personally involved in the maintenance and operation of the network of websites. Payment for registration was frequently made by using Mallett's credit card and Mallett would periodically call his internet service providers to address matters concerning the maintenance of the websites. Id. Attach. H at 162, 304, 406-43. One of Mallett's websites included an online "Debt Assistance Request Form" that, when used, directed visitors to a "thank you" page displaying "cmallett" as part of the website address. Id. ¶ 19 & Attach. K at 459. In addition, an FTC investigator using an alias placed four telephone calls to a toll free phone number listed on two of Mallett's websites—specifically, "USDebt-Care.net" and "WorldLawDebt.org"—and on each occasion the investigator was directed to a voicemail account with the following outgoing message: "You have reached the voicemail of Christopher Mallett [], senior financial consultant for World Law Debt, Legal Advocate Financial Assistance branch." Id. ¶¶ 21-22 & Attach. L at 463-64.
The FTC commenced this action on September 14, 2011, asserting seven causes of action and claiming that Mallett has engaged in deceptive practices in the course of marketing debt-, tax-, and mortgage-relief services to consumers through his websites. See Compl. for Permanent Inj. & Other Equitable Relief ("Compl."), ECF No. [1]. On September 19, 2011, the FTC filed the pending Motion for a Preliminary Injunction. See Pl.'s Mem. in Supp. of its Mot. for Issuance of a Prelim. Inj., ECF No. [2].
On September 30, 2011, three days after Mallett's time to respond to the FTC's Motion for a Preliminary Injunction had expired, the FTC filed its reply. See Pl.'s Reply in Supp. of its Mot. for a Prelim. Inj. & Other Equitable Relief, ECF No. [5]. That same day, noting Mallett's failure to file an opposition, the Court ordered the FTC to show cause why "expedition" on its
Even though Mallett executed a form confirming that he received a copy of the Court's Order, see Acceptance of Service, ECF No. [7-1], he still did not file an opposition to the FTC's Motion for a Preliminary Injunction or seek leave to file an opposition out-of-time. Indeed, even though a total of 23 days have elapsed since the FTC first served a copy of its motion on Mallett, the public docket reflects that Mallett still has not filed an opposition or otherwise appeared in this action. Therefore, the Court considers the FTC's Motion for a Preliminary Injunction without the benefit of an opposition.
The FTC grounds its Motion for a Preliminary Injunction in Section 13(b) of the FTC Act, the final proviso of which provides "[t]hat in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction." 15 U.S.C. § 53(b). Courts are in agreement that the authority to grant permanent injunctive relief under this proviso includes the authority to grant preliminary injunctive relief. See, e.g., FTC v. World Travel Vacation Brokers, Inc., 861 F.2d 1020, 1026 (7th Cir.1988); FTC v. U.S. Oil & Gas Corp., 748 F.2d 1431, 1434 (11th Cir.1984) (per curiam); FTC v. H.N. Singer, Inc., 668 F.2d 1107, 1113 (9th Cir.1982).
When presented with a motion for a preliminary injunction, courts in this Circuit ordinarily apply a four-prong test, requiring the moving party to show (1) a substantial likelihood of success on the merits, (2) that it would suffer irreparable injury if the injunctive relief were not granted, (3) that an injunction would not substantially injure other interested parties, and (4) that the public interest would be furthered by the injunction. Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290, 297 (D.C.Cir.2006). However, when the FTC seeks to enforce a matter entrusted to it by Congress, it operates not as an "ordinary litigant," but as a "statutory guardian" charged with safeguarding the public interest in enforcing federal law. SEC v. Mgmt. Dynamics, Inc., 515 F.2d 801, 808 (2d Cir.1975). In recognition of this special statutory role, the FTC generally is not held to the same "high thresholds" that apply to private parties seeking preliminary relief. FTC v. Weyerhaeuser Co., 665 F.2d 1072, 1082 (D.C.Cir.1981); cf. FTC v. Whole Foods Mkt., Inc., 548 F.3d 1028, 1034 (D.C.Cir.2008) ("Congress recognized the traditional four-part equity standard for obtaining an injunction was not appropriate for the implementation of a Federal statute by an independent regulatory agency.") (internal quotation marks and citation omitted). Instead, when seeking a preliminary injunction under the final proviso of Section 13(b), the FTC bears the lesser burden of satisfying a "public interest" standard, requiring only a showing of (1) a likelihood of success on the merits and (2) a balance of the equities at stake. World Travel Vacation Brokers, 861 F.2d at 1029; accord FTC v. World Wide Factors, Ltd., 882 F.2d 344, 346 (9th Cir.1989); FTC v. Ameridebt, Inc., 373 F.Supp.2d 558, 563 (D.Md.2005). In determining whether a preliminary injunction is appropriate, the district court must "exercise independent judgment." Weyerhaeuser, 665 F.2d at 1082.
The Court's discussion here proceeds in four parts. First, the Court shall address
Because Mallett has failed to respond to the FTC's Motion for a Preliminary Injunction, the Court begins by explaining why it is satisfied that it has jurisdiction to decide the motion. Subject matter jurisdiction is a simple matter; the Court plainly has subject matter jurisdiction under, inter alia, 28 U.S.C. §§ 1331, 1337(a), and 1345. As for personal jurisdiction, the FTC has met its relatively light burden at this stage of the proceedings by establishing a prima facie case of personal jurisdiction. Mwani v. bin Laden, 417 F.3d 1, 7 (D.C.Cir.2005); accord FTC v. Cleverlink Trading Ltd., 2006 WL 1735276, at *3 (N.D.Ill. June 19, 2006). Where, as here, "the court exercises personal jurisdiction by virtue of a federal statute authorizing nationwide service of process,"
In Count I of the Complaint, the FTC alleges that Mallett has violated Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), by representing that "the websites or organizations he has operated are agencies of the United States government, or affiliated or otherwise associated with, or
Section 5(a) of the FTC Act prohibits "unfair or deceptive acts or practices in or affecting commerce." 15 U.S.C. § 45(a)(1). "To prove a deceptive act or practice in violation of Section 5(a) . . ., the FTC must show: (1) a representation, omission, or practice that (2) is likely to mislead consumers acting reasonably under the circumstances, and that (3) the representation, omission, or practice is material." FTC v. Cantkier, 767 F.Supp.2d 147, 151 (D.D.C.2011) (citations omitted); accord FTC v. Verity Int'l, Ltd., 443 F.3d 48, 63 (2d Cir.2006), cert. denied, 549 U.S. 1278, 127 S.Ct. 1868, 167 L.Ed.2d 317 (2007). "The deception need not be made with intent to deceive; it is enough that the representations or practices were likely to mislead consumers acting reasonably." Verity Int'l, 443 F.3d at 63 (citing World Travel Vacation Brokers, 861 F.2d at 1029). "A representation is material if it `involves information that is important to consumers and, hence, likely to affect their choice of, or conduct regarding, a product.'" Cantkier, 767 F.Supp.2d at 152 (quoting FTC v. Cyberspace.Com LLC, 453 F.3d 1196, 1201 (9th Cir.2006)).
In this case, the FTC has made an uncontested showing that Mallett's websites falsely represent that the websites, and the organizations advertised on those websites, are associated with the federal government. Some of the websites have displayed official government insignia and other iconic images or language. A few examples will suffice. First, when an FTC investigator first visited Mallett's website located at "gov-usdebtreform.net," the body of the main page displayed an image of the FTC's official seal. FTC Decl. ¶¶ 2-3 & Attach. A at 9. Although the main page was subsequently changed to omit the seal from the body, the FTC's official seal still appeared as the website's "shortcut" or website icon located in the browser bar next to the website address. Id. ¶¶ 4-5 & Attach. C at 79. Mallett's website located at "usdebtcare.net" similarly displayed the official FTC seal on its main page until the website was rendered inactive. Id. ¶ 7 & Attach. D at 81. Second, the website located at "govusdebtreform.net" touted an organization identified as the "Department of Consumer Services Protection Commission," described as a "National consumer protection agency." Id. Attach. B at 48. It has also included language taken almost verbatim from the FTC's Bureau of Consumer Protection website describing some of the FTC's responsibilities in protecting consumers. Compare id. Attach. B at 48, with id. Attach. M at 466. Finally, at least 34 of the websites operated by Mallett convey an affiliation with the federal government through the use of "gov," "us," or shorthands for federal agencies in the website address, such as "gov-usdebtreform.net,"
This uncontested showing suffices to discharge the FTC's burden to show a likelihood of success on the merits of Count I of the Complaint. The representations appearing on Mallett's websites imbue the advertised services with the aura of legitimacy of the federal government acting in its official capacity. See U.S. Ass'n of Credit Bureaus, Inc. v. FTC, 299 F.2d 220, 222 (7th Cir.1962) ("[P]etitioners' use of the name `United States' in connection with the insignia [mimicking official government insignia], directly or by implication represented that they were, in some manner, connected with or are an agency of the United States Government"); Bennett v. FTC, 200 F.2d 362, 363 (D.C.Cir.1952) ("[P]etitioners' use of the combined words `National', `Service', and `Bureau', with a Washington address, represents that petitioners are connected with the United States government."); In re Fleet, 95 B.R. 319, 335 (Bankr.E.D.Pa.1989) ("Defendants' use of the name, `United States Consumer Council,' together with the American eagle emblem, definitely had the `capacity to mislead' consumers."). Whether or not the advertised debt-, tax-, and mortgage-relief services are "actually affiliated with the federal government is `information that [would be] important to consumers and, hence, likely to affect their choice of, or conduct regarding' that service." Cantkier, F.Supp.2d at 158 (quoting Cyberspace.Com LLC, 453 F.3d at 1201) (notations in original). The FTC has adduced sufficient evidence to support a preliminary finding that representations of this kind would likely mislead consumers acting reasonably under the circumstances. Accordingly, the Court finds that the FTC has demonstrated a sufficient likelihood of success on the merits of Count I of the Complaint to support the issuance of the requested preliminary injunction.
The Court pauses to observe that its finding is merely preliminary; whether or not the representations appearing on Mallett's websites were likely to mislead reasonable consumers is ultimately a factual question that will require further development of the record.
Where, as here, the FTC demonstrates a likelihood of success on the merits, the district court may "presume . . . that the public interest will be served by interim relief." Weyerhaeuser, 665 F.2d at 1082. Nonetheless, the court must "exercise independent judgment" and "take genuine account of `the equities.'" Id. When balancing the equities, "the public interest should receive greater weight," World Wide Factors, 882 F.2d at 347 (citation omitted), and ordinarily "a counter-showing of private equities alone [will] not suffice to justify denial of a preliminary injunction," Weyerhaeuser, 665 F.2d at 1083; accord Whole Foods, 548 F.3d at 1035.
The Court has no trouble concluding that the equities in this case weigh in favor of the issuance of the requested preliminary injunction. The public interest in ensuring the enforcement of federal consumer protection laws is strong, and Mallett's pattern of cycling through websites, shutting down some while opening others, evidences that similar conduct is reasonably likely to recur in the future. See FTC v. Affordable Media, LLC, 179 F.3d 1228, 1237 (9th Cir.1999) ("[I]t is actually well-settled
Distilled to its essence, the preliminary injunction proposed by the FTC would (1) preliminarily restrain Mallett from making materially false or unsubstantiated representations in connection with the marketing of debt-, tax-, and mortgage-relief services to consumers, (2) require the removal of public access to any websites used by Mallett to advertise such services, (3) ensure the preservation of evidence relevant to the prosecution of this action, and (4) direct Mallett to provide an accounting of his present financial condition. Courts in this District routinely find such relief appropriate in similar cases,
However, the Court will depart from the FTC's proposal in two minor respects. First, the FTC has proposed unreasonably tight deadlines for compliance for Mallett and third parties, including internet service providers hosting Mallett's websites. The Court shall issue a preliminary injunction providing Mallett and third parties with a reasonable amount of time to comply with the terms of the injunction. Second, the FTC asks this Court to authorize it to record any oral communications with Mallett or Mallett's employees, agents, or representatives for the purpose of monitoring compliance with the preliminary injunction. The Court shall only authorize the FTC to record oral communications to the extent doing so complies with applicable law. If, for example, the FTC seeks to record a conversation in a jurisdiction that does not permit "single party consent," and if the laws of that jurisdiction are in fact applicable to the FTC and the FTC's conduct, then the Court expects the FTC to comply with any applicable law. With these two minor exceptions, the Court shall GRANT the FTC's [2] Motion for a
For the reasons set forth above, the Court shall GRANT the FTC's [2] Motion for a Preliminary Injunction. An appropriate Order and Preliminary Injunction accompanies this Memorandum Opinion.