Partner William Buhay and Associate Christopher Garten secure Defense Judgment in U.S. District Court for the Northern District of Georgia in FTC action alleging violations of the FTC Act, ROSCA, and the Telemarketing Act

FTC Act, ROSCA, Telemarketing Act

Defense Judgment

On August 15, 2017, the Federal Trade Commission (the “FTC”) filed suit against more than a dozen separate entities and individuals alleging, among other things, that the Defendants, alone or in concert, engaged in conduct in the operation of an online coupon program that violated Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce.  The FTC further contended that the Defendants’ conduct violated ROSCA, 15 U.S.C. §§ 8401-05, which, among other things, bans the use of negative option features in transactions effected on the internet that do not meet certain conditions for disclosure, consent, and cancellation, and that the Defendants violated the Telemarketing Act, 15 U.S.C. §§ 6101-08, by engaging in deceptive and abusive telemarketing acts or practices in violation of 16 C.F.R. Part 310, which was promulgated pursuant to the Telemarketing Act.

Our client, James McCarter (“Jim”), was a minority investor who was not involved in the day-to-day management of any of the corporate Defendants. In fact, for the majority of his ownership interest in the business, Jim had a separate, full-time job, and he relied heavily on the officers and employees of the corporate Defendants to operate the business. Despite his limited involvement in the business, Jim was forced to litigate this case for nearly seven years and faced claims by the FTC that he owed in excess of $9 million in damages.

Jim was represented by another firm for the first two and a half years of litigation but was forced to go pro se because the expense of the case was more than he could bear. Following the close of discovery and the filing by the FTC of a motion for summary judgment, Jim retained Weinberg Wheeler Hudgins Gunn & Dial, first to successfully argue his response to the FTC’s motion for summary judgment, and then to defend him at trial. Given Jim’s financial circumstances, it was critically important to try this case in a lean and efficient manner.

With Partner William (“Bill”) Buhay as lead counsel, first-year Associate Christopher (“Chris”) Garten as second chair, and third-year Emory law student Adam Shepherd providing valuable support, the team engaged in a four-week trial in January of 2024. On March 21, 2024, the Court issued its Order concluding that the FTC’s claims failed because Jim did not actively participate in the alleged misconduct nor did he have the authority to control any of the entities involved. The Court’s Order was reduced to a final Judgment in Jim’s favor on March 22, 2024