FTC v. Consumer Defense, LLC ( 2019 )

FILED
NOT FOR PUBLICATION
JUN 17 2019
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
FEDERAL TRADE COMMISSION, No. 18-15462
Plaintiff-Appellee, D.C. No.
2:18-cv-00030-JCM-PAL
v.
CONSUMER DEFENSE, LLC, Nevada MEMORANDUM*
limited liabilty company; CONSUMER
LINK, INC., Nevada corporation;
BENJAMIN R. HORTON, in his
individual and corporate capacity,
Defendants,
and
PREFERED LAW, PLLC, Utah
professional limited liability company;
AMERICAN HOME LOAN
COUNSELORS, Utah limited liability
company; CONSUMER DEFENSE
GROUP, LLC, FKA Modification Review
Board, LLC, Utah limited liability
company; CONSUMER DEFENSE, LLC,
Utah limited liability company; BROWN
LEGAL, INC., Utah corporaton; AM
PROPERTY MANAGEMENT, LLC,
Utah limited liability company; FMG
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
PARTNERS, LLC, Utah limited liability
company; ZINLY, LLC, Utah limited
liability company; JONATHAN P.
HANLEY, in his individual and corporate
capacity; SANDRA X. HANLEY, in her
individual and corporate capacity;
AMERICAN HOME LOANS, LLC, Utah
limited liability company,
Defendants-Appellants,
______________________________
THOMAS W. MCNAMARA,
Receiver-Appellee.
Appeal from the United States District Court
for the District of Nevada
James C. Mahan, District Judge, Presiding
Argued and Submitted September 14, 2018
San Francisco, California
Before: RAWLINSON, WATFORD, and FRIEDLAND, Circuit Judges.
Defendants-Appellants Consumer Defense, LLC, a Utah limited liability
company, Preferred Law, PLLC, a Utah professional limited liability company,
American Home Loan Counselors, a Utah corporation, Consumer Defense Group,
LLC, a Utah limited liability company, Brown Legal, Inc., a Utah corporation,
AM Property Management, LLC, a Utah limited liability company, FMG Partners,
LLC, a Utah limited liability company, Zinly, LLC, a Utah limited liability
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company, Jonathan P. Hanley, Sandra X. Hanley, and American Home Loans,
LLC, a Utah limited liability company (collectively, the Consumer Defense
Defendants) appeal the district court’s order entering a preliminary injunction
freezing all the Consumer Defense Defendants’ assets and enjoining the Consumer
Defense Defendants from engaging in various practices taken in violation of the
Federal Trade Commission Act, 15 U.S.C. § 45, and Regulation O, 12 C.F.R. Part
1015 - Mortgage Assistance Relief Services (the MARS Rule). We have
jurisdiction under 28 U.S.C. § 1292(a)(1), and we affirm.
The Consumer Defense Defendants first contend that the district court
procedurally erred by entering the preliminary injunction without making a
determination that personal jurisdiction existed. However, “[t]o rule on the
preliminary injunction is necessarily to make a judgment as to the question of
jurisdiction.” al-Kidd v. Ashcroft, 580 F.3d 949, 979 (9th Cir. 2009), rev’d on
other grounds, 563 U.S. 731, 744 (2011); see also Hendricks v. Bank of Am., N.A.,
408 F.3d 1127, 1134 (9th Cir. 2005), as amended (The issue of personal
jurisdiction implicates “the district court’s authority to rule on a party’s motion for
a preliminary injunction”) (citation and internal quotation marks omitted)
(emphasis in the original). In any event, we review whether the district court had
personal jurisdiction over the defendants de novo. See Axiom Foods, Inc. v.
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Acerchem Int’l, Inc., 874 F.3d 1064, 1067 (9th Cir. 2017). We conclude that the
district court properly exercised personal jurisdiction pursuant to the nationwide
service of process provision in the FTC Act. See 15 U.S.C. § 53(b); see also
Action Embroidery Corp. v. Atl. Embroidery, Inc., 368 F.3d 1174, 1180 (9th Cir.
2004) (explaining that “when a statute authorizes nationwide service of process,
national contacts analysis is appropriate”) (citation and alteration omitted).
“In such cases, due process demands a showing of minimum contacts with
the United States,” meaning that “the defendant has acted within any district of the
United States or sufficiently caused foreseeable consequences in this country.”
Id. (citations, alteration, and internal quotation marks omitted). The Consumer
Defense Defendants do not dispute that they conducted a loan modification
business in Utah. This activity was sufficient “national contact” to establish
personal jurisdiction over the Consumer Defense Defendants. See id. (concluding
that “a Virginia professional corporation operating in the United States” had
minimum national contacts).
Contrary to the Consumer Defendants’ second argument, the scope of the
asset freeze did not constitute an abuse of discretion. See Boardman v. Pac.
Seafood Grp., 822 F.3d 1011, 1024 (9th Cir. 2016) (“An overbroad injunction is an
abuse of discretion.”) (citation omitted). “A court has the power to issue a
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preliminary injunction to prevent a defendant from dissipating assets in order to
preserve the possibility of equitable remedies.” Republic of the Philippines v.
Marcos, 862 F.2d 1355, 1364 (9th Cir. 1988) (citation omitted). The district court
had a thorough understanding of the case and was cognizant of the value of the
assets available for possible disposition. By entering an asset freeze, the court
“preserve[d] the status quo in order to protect the possibility of [an] equitable
remedy.” F.T.C. v. H. N. Singer, Inc., 668 F.2d 1107, 1112 (9th Cir. 1982). Nor
did the court abuse its discretion by freezing assets outside the forum state. An
asset freeze is not an attachment, and its issuance is not subject to the requirements
of Rule 64 of the Federal Rules of Civil Procedure. See id. Therefore, state law
territorial limits of attachment were inapplicable. See id.AFFIRMED.1
1
We address the interplay between the irreparable harm standard articulated
in Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008) and the theory of
implied irreparable harm in an opinion filed contemporaneously with this
disposition.
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