Federal Trade Commission v. Peterson

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
JAN 22 2001
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
FEDERAL TRADE COMMISSION,
Plaintiff-Counter-
Defendant - Appellee,
v. Nos. 99-4190, 00-4050
(D.C. No. 93-CV-444-B)
JAY H. PETERSON, individually (D. Utah)
and as an officer of Ads Across
America, Inc.,
Defendant - Appellant,
U.S. HOTLINE, INC., doing business
as U.S. Car Buyers Alliance, doing
business as U.S. Publishers
Advocates, doing business as U.S.
Job Finders; ADS ACROSS
AMERICA, INC.; KALEIDOSCOPE
HOLDING CORPORATION,
Defendants-Counter-
Claimant-Third-Party-
Plaintiffs-Appellees,
_______________________________
BRUCE R. DIXON; MICHAEL
MARTIN, doing business as Martin
Print Services; EAST BAY
GRAPHICS,
Claimants,
and
UNITED STATES OF AMERICA;
UTAH COUNTY; INTERNAL
REVENUE SERVICE,
Claimants - Appellees,
HERSCHEL J. SAPERSTEIN,
Trustee - Appellee.
ORDER AND JUDGMENT *
Before BALDOCK , KELLY , and HENRY , Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
Background
These two appeals arise from a district court action brought by the FTC
against Jay Peterson and several of his corporations, alleging deceptive practices
in violation of the Federal Trade Commission Act. A temporary restraining order
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
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was initially issued to freeze the corporations’ assets and then, a month later, the
parties stipulated to a preliminary injunction and the appointment of an equity
receiver. Shortly thereafter, Mr. Peterson filed for bankruptcy. 1
In August 1995,
the parties agreed to a settlement that encompassed not only the FTC’s claims, but
also those of the Internal Revenue Service, the Utah State Tax Commission, and
several classes of present and future commercial claimants (the agreement set out
notice and refund procedures for defendants’ customers). The receiver remained
in place to administer the agreement, which was formally approved by the district
court handling these FTC actions and the bankruptcy court handling the Peterson
bankruptcy.
The receiver’s administration of the agreement, overseen by a magistrate
judge, continued for several years. In late 1998, a dispute arose over payment of
certain claims against the receivership estate. The magistrate judge ordered the
receiver to pay most of the claims. Mr. Peterson, who retains an interest in
receivership assets, if any, left over when administration is complete, filed an
objection, along with a motion to wind up the receivership. On July 12, 1999, the
district court affirmed in part and reversed in part the magistrate judge’s decision
1
The corporations also filed bankruptcy proceedings, but since the property
and claims therein would have been the same as those already subject to the
receivership estate, those proceedings were abated from the outset by the district
court. Mr. Peterson’s personal bankruptcy, however, was allowed to proceed.
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regarding payment of the claims. The court denied the motion to wind up the
receivership as superfluous: “The receivership appears to be near completion,
and the wind-up appears to be proceeding according to schedule. Therefore,
rather than order such a wind-up, the Court will allow the wind-up to proceed
under the direction of the Magistrate Judge as scheduled.” R. doc. 730 at 3.
Mr. Peterson appealed (No. 99-4190) from that order on September 7, 1999.
Thereafter, other disputes arose concerning tax withholdings from
receivership estate distributions as well as approval of various professional fees
to be paid by the estate. In conjunction with objections regarding these issues,
Mr. Peterson re-urged his motion to wind up the receivership. He filed a second
appeal (No. 00-4050) from the district court’s adverse rulings on these matters.
For reasons explained below, we conclude that we lack jurisdiction to review any
of the rulings challenged herein by Mr. Peterson. We therefore dismiss these
appeals.
Jurisdictional Analysis
A final judgment has not been entered in the receivership action. Thus, if
we have jurisdiction over either of Mr. Peterson’s appeals, it must be by virtue of
28 U.S.C. § 1292(a)(2), which permits appellate review of “[i]nterlocutory orders
appointing receivers, or refusing orders to wind up receiverships or to take steps
to accomplish the purposes thereof, such as directing sales or other disposals of
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property.” For purposes of § 1292(a)(2), these two appeals are functionally the
same, as Mr. Peterson acknowledges. Both involve various objections to the
conduct of the receivership, coupled with an unsuccessful request to wind up the
receivership. The receiver contends we lack jurisdiction over either aspect of the
appeals. The language of the statute, pertinent case law, and common sense
support his contention.
1. Conduct of the Receivership
The statute expressly permits appeal from orders “ refusing . . . to take steps
to accomplish the purposes [of the receivership].” It says nothing about appellate
review with respect to steps actually taken –and, given the enormous potential for
disruptive piecemeal appeals in this context, it seems reasonable for Congress to
have granted a right of immediate review when there has been a complete failure
to act in furtherance of the receivership, but not to have burdened the appellate
courts with ongoing supervision of every action a receiver might be ordered
to take. As the Ninth Circuit has concluded, “the narrow interpretation of the
statute . . . ., restricting it to orders refusing to direct actions, makes good sense.”
SEC v. Am. Principals Holdings, Inc. , 817 F.2d 1349, 1350 (9th Cir. 1987). With
one early and unexplained aberration, the other circuits have also followed this
view. See, e.g. , SEC v. Black , 163 F.3d 188, 195 (3d Cir. 1998); State St. Bank
& Trust Co. v. Brockrim, Inc. , 87 F.3d 1487, 1490-91 (1st Cir. 1996); SEC v.
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Am. Bd. of Trade, Inc. , 829 F.2d 341, 344 (2d Cir. 1987). Contra United States v.
“A” Mfg. Co. , 541 F.2d 504, 505-06 (5th Cir. 1976). We adopt this view as well,
which leaves Mr. Peterson’s wind-up requests as the only matters on which we
could potentially base our jurisdiction.
2. Requests to Wind-up the Receivership
Mr. Peterson is on somewhat firmer jurisdictional ground when it comes to
the denial of his requests for wind-up, but, as the receiver points out, unique
circumstances present here undermine that aspect of the appeals as well. On the
face of it--divorced from the procedural context and the district court’s expressed
rationale--the denial of such requests would certainly appear to implicate the
terms of the statute. However, it is essential to consider the real substance and
effect of the decision over which we are asked to exercise interlocutory review.
Cf., e.g. , Illinois ex rel. Hartigan v. Peters , 861 F.2d 164, 165 (7th Cir. 1988)
(looking to “nature of the order” appealed from in applying § 1292(a)(2)). The
district court did not oppose or forestall the wind-up process; on the contrary, the
court acknowledged that wind-up of the receivership was already in progress
under the magistrate judge’s supervision and indicated it did not wish to interfere.
In essence, then, Mr. Peterson seeks to equate a refusal to interrupt and replace
one ongoing wind-up with another with a refusal to order any wind-up at all. He
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has not cited any authority for that critical point, nor has he referred us to any
case law invoking § 1292(a)(2) to review a comparable ruling. 2
Plainly, Mr. Peterson was not satisfied with the manner in which the
receivership was proceeding during its wind-up under the supervision of the
magistrate judge. However, objections in this regard, challenging the particular
conduct of the receivership, fall on the non-appealable side of the distinction
noted above between taking action with which a party disagrees and failing to
take action at all. We recognize that, at some point, a wind-up unduly protracted
might be the equivalent of a wind-up effectively denied. Cf. United States v.
Sylacauga Props., Inc. , 323 F.2d 487, 489-91 (5th Cir. 1963) (deeming sixth,
indefinite continuance of receivership the equivalent of a refusal to wind-up and
permitting appeal under § 1292(a)(2)). However, we are not faced with anything
like the egregious circumstances cited in favor of the interlocutory appeal in
Sylacauga. Indeed, the receiver here issued his final report, anticipating the
straightforward completion of the last few details of the receivership, before the
second appeal was even taken. Ironically, these appeals and Mr. Peterson’s
2
Further, to the extent Mr. Peterson sought wind-up of the receivership
because “[h]e thinks the receiver should never have been appointed,” his request
constituted, rather, a motion to vacate the receivership, the denial of which is
clearly not within the scope of § 1292(a)(2). Peters , 861 F.2d at 165-66.
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underlying claim disputes are primary obstacles to completion of the wind-up
he seeks.
In sum, we conclude that the district court did not “refus[e] . . . to wind up
[the] receivership” within the meaning of § 1292(a)(2). Accordingly, we lack
jurisdiction over any of the matters for which review is sought.
The appeals are DISMISSED.
Entered for the Court
Bobby R. Baldock
Circuit Judge
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