Federal Trade Commission v. Primary Group, Inc.

Case: 16-13532 Date Filed: 09/29/2017 Page: 1 of 8
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-13532
Non-Argument Calendar
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D.C. Docket No. 1:15-cv-01645-MHC
FEDERAL TRADE COMMISSION,
Plaintiff-Counter Defendant-
Appellee,
versus
THE PRIMARY GROUP, INC., etc., et al.,
Defendants,
GAIL DANIELS,
individually and as an officer of
The Primary Group Inc.,
Defendant-Counter Claimant-
Appellant.
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Appeal from the United States District Court
for the Northern District of Georgia
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(September 29, 2017)
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Before ED CARNES, Chief Judge, TJOFLAT, and WILLIAM PRYOR, Circuit
Judges.
PER CURIAM:
The Federal Trade Commission sued Gail Daniels and her company, The
Primary Group, for violating the Federal Trade Commission Act and the Fair Debt
Collections Practices Act (FDCPA). The district court ultimately granted the
FTC’s motion for summary judgment and entered a judgment against Daniels and
Primary Group in the amount of $980,000. Daniels, proceeding pro se here, as she
did in the district court, raises a number of challenges to that judgment and several
orders the district court entered over the course of the litigation.
Daniels contends that the district court erred by: (1) granting summary
judgment when there was a genuine dispute of material fact as to her knowledge of
Primary Group’s illegal debt collection practices, (2) refusing to stay the
proceedings in light of her medical condition, and (3) incorrectly calculating the
amount of equitable relief due the FTC.1
I.
We begin with Daniels’ contention that the district court erred in granting
1
Daniels also contends that the district court erred in issuing a Temporary Restraining
Order (TRO) freezing her assets, that the district court judge assigned to her case should have
recused himself, and that the FTC engaged in misconduct while pursuing its case against her. As
to the TRO, a district court’s decision to grant one is generally not appealable and none of the
exceptions to that rule applies in this case. AT&T Broadband v. Tech Commc’ns, Inc., 381 F.3d
1309, 1314 (11th Cir. 2014). Her contentions that the district court judge abused his discretion
by failing to recuse himself or that the FTC engaged in improper behavior are plainly without
merit and do not require further discussion.
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summary judgment against her on the FTC Act and FDCPA claims. We review de
novo a district court’s decision to grant summary judgment. Dolphin LLC v. WCI
Cmtys., Inc., 715 F.3d 1243, 1247 (11th Cir. 2013). A party is entitled to summary
judgment only if it “shows that there is no genuine dispute as to any material fact
and [it] is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
In order to hold a corporate owner personally liable for her company’s
violations of the FTC Act or FDCPA, the FTC must first show that the corporation
committed violations of those acts for which it is liable. See FTC v. Gem Merch.
Corp., 87 F.3d 466, 470 (11th Cir. 1996).2 In this case, there is no genuine dispute
of material fact as to whether the FTC has satisfied that element. Daniels does
claim that one or more of the most egregious scripts for telephone conversations
with debtors the FTC found at Primary Group’s offices was not created or used by
her company. And she testified at the preliminary injunction hearing, and in later
filings, that she can prove that the FTC’s investigator and a number of the
declarants who submitted complaints to the FTC are lying.
Even assuming both of those things are true, Daniels has not submitted any
2
Although Gem Merchandising and other decisions cited in this opinion concern what
the FTC must show to establish individual liability under the FTC Act, the same standard applies
in FDCPA cases brought by the FTC. It does because, in most cases, “violations of the FDCPA
are deemed to be unfair or deceptive acts or practices under the” FTC Act, which is why the FTC
has the authority to prosecute FDCPA cases. See Jerman v. Carlisle, McNellie, Rini, Kramer &
Urlich LPA, 559 U.S. 573, 577, 130 S. Ct. 1605, 1608 (2010). That is why we have relied on
caselaw and administrative adjudications concerning the FTC Act when interpreting the FDCPA.
Jeter v. Credit Bureau, Inc., 760 F.2d 1168, 1172 (11th Cir. 1985).
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evidence that creates a genuine dispute of material fact as to whether Primary
Group’s debt collectors sent text messages to debtors claiming to be process
servers, in violation of 15 U.S.C. §§ 1692e(3), (5), (13) and § 1692j(a), and failed
to identify themselves as debt collectors, in violation of 15 U.S.C. § 1692e(11).
Plus, several of the scripts that everyone seems to agree were used by her company
at least imply that the debtor being contacted is facing criminal charges. See id. §
1692e(4),(5).
That being said, a corporation’s FDCPA violations alone are not enough for
the owner of that corporation to be held personally liable. The FTC must show
that the individual knew of the deceptive practices and either participated directly
in those practices or had the authority to control them. FTC v. IAM Mktg.
Assocs., 746 F.3d 1228, 1233 (11th Cir. 2014). Daniels does not deny that, as the
owner of Primary Group, she had the authority to control its practices. But she
vigorously denies having any knowledge of its illegal activities.
We have not yet decided what suffices to show that a corporation’s owners,
officers, or employees had knowledge of its violations of the FTC Act or FDCPA.
But the Fourth and Seventh Circuits have. They have concluded that knowledge
“may be established by showing that the individual had actual knowledge of the
deceptive conduct, was recklessly indifferent to its deceptiveness, or had an
awareness of a high probability of deceptiveness and intentionally avoided learning
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of the truth.” FTC v. Ross, 743 F.3d 886, 892 (4th Cir. 2014); accord FTC v.
World Media Brokers, 415 F.3d 758, 764 (7th Cir. 2005). We believe this
standard correctly describes the breadth of individual liability under the FTC Act
and the FDCPA.
The evidence the FTC pointed to in its motion for summary judgment was
sufficient, in the absence of any response from Daniels, to show that it was entitled
to judgment as a matter of law. Daniels admitted that she kept herself informed of
the day to day operations of Primary Group, that she had the ability to listen to
recordings of phone calls made by Primary Group employees, and that she had
cameras set up to monitor every work station at the corporation’s facilities. She
also acknowledged receiving several Better Business Bureau complaints, which
she did not investigate even though she had been forced to fire significant portions
of her staff in the past due to their unethical behavior. Even in light of Daniels’
protestations that she was not aware of the content of the scripts, the texting, or any
other illegal behavior, the evidence in the record is enough to support a grant of
summary judgment. If Daniels did not know of Primary Group’s deceptive
conduct, it is only because she intentionally avoided discovering it despite
knowing that there was “a high probability” that her corporation was engaging in
unlawful debt collection practices. See Ross, 743 F.3d at 892; World Media
Brokers, 415 F.3d at 764.
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II.
Daniels next contends that the district court should have stayed the
proceedings in this case as a result of her poor health. We review only for an
abuse of discretion the district court’s refusal to stay summary judgment
proceedings in light of Daniels’ medical difficulties. Barfield v. Brierton, 883 F.2d
923, 931 (11th Cir. 1989). “A district court abuses its discretion if it applies an
incorrect legal standard, applies the law in an unreasonable or incorrect manner,
follows improper procedures in making a determination, or makes findings of fact
that are clearly erroneous.” Hartford Cas. Ins. Co. v. Crum & Forster Specialty
Ins. Co., 828 F.3d 1331, 1333 (11th Cir. 2016) (quotation marks omitted).
The district court did none of those things in this case. It gave Daniels
numerous opportunities to present documentation showing that she was physically
unable to participate in the litigation and specifying when she would be able to
participate again. She never did that. Daniels did eventually submit evidence to
the court showing that, among other things, she suffers from Parkinson’s disease
(or something similar to it), has vision problems, and suffers from short-term
memory loss. But none of the materials she submitted described her conditions in
detail or explained when she would again be able to participate in the litigation.
The district court could not, in fairness to the FTC, stay proceedings indefinitely.
Given Daniels’ history of failing to timely comply with the court’s orders, the
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court was not required to stay proceedings and have Daniels certify periodically
that her disabilities continued. 3 Daniels’ numerous filings in this case (including
many that are of substantial length) belie her assertion that she could not, either on
her own or with assistance, be expected to respond to the FTC’s motion for
summary judgment or otherwise participate in the litigation.
III.
Finally, we address Daniels’ contention that the district court improperly
ordered disgorgement in the amount of $980,000. She argues that this was error
because that was the amount of Primary Group’s gross earnings, not the amount it
profited or was unjustly enriched by its FTC Act or FDCPA violations. She also
protests that the FTC did not present evidence showing that any consumers
actually paid Primary Group, despite the fact that the district court requested that
information.
We review only for an abuse of discretion a district court’s grant of equitable
relief, like disgorgement. FTC v. Wash. Data Res., Inc., 740 F.3d 1323, 1325
(11th Cir. 2013). We review only for clear error any factual findings made to
support the grant of equitable relief. Id. at 1326.
Disgorgement is concerned with unjust gain to wrongdoers, and we have
3
Daniels also argues that proceedings should have been stayed while she sought a writ of
mandamus from this Court, but mandamus proceedings do not entitle the party seeking
mandamus to a stay of the district court proceedings. See Fed. R. App. P. 21.
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explained that it is based on net revenue, which is calculated by subtracting any
refunds from a company’s gross receipts. Id. at 1326 –27. The evidence showed
that Primary Group’s gross receipts totaled $980,000. The only evidence in the
record suggesting that Primary Group made any refunds is Daniels’ naked
assertion in her deposition that refunds were made “all the time.” Because Daniels
failed to provide any evidence establishing the amount of the refunds she alleges
were made, the district court did not clearly err in calculating Primary Group’s
unjust gains. It follows that the court did not abuse its discretion by ordering
disgorgement in the amount of $980,000.
IV.
The district court did not err by granting summary judgment to the FTC.
And neither its refusal to stay the proceedings nor its calculation of equitable relief
was an abuse of discretion.
AFFIRMED.
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