Fed. Trade Comm'n v. Traffic Jam Events, LLC

FEDERAL TRADE COMMISSION v. TRAFFIC JAM EVENTS, LLC, ET AL.

CIVIL ACTION NO. 20-1740-WBV-DMD SECTION: D (3)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA

June 26, 2020

ORDER AND REASONS

Before the Court is the Federal Trade Commission's Motion for A Temporary Restraining Order, and Other Equitable Relief, and Order to Show Cause Why a Preliminary Injunction Should Not Issue against defendants, David J. Jeansonne, II (hereinafter, "Mr. Jeansonne"), individually and as an officer of Traffic Jam Events, LLC, and Traffic Jam Events, LLC (collectively, "Defendants").¹ Defendants oppose the Motion.²

The Court held an initial hearing on June 23,2020, to determine whether the Federal Trade Commission (hereinafter, "FTC" or "the Commission") is entitled to a temporary restraining order. At the request of counsel, that initial hearing was converted to a status conference with the Court. A follow-up hearing was held on June 25, 2020. After careful consideration of the Motion, the testimony and arguments presented during the hearing, the record and the applicable law, the Motion is DENIED.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. The Complaint

On June 16, 2020, the FTC, an independent agency of the United States government, filed suit under Section 13(b) of the Federal Trade Commission Act (the "FTC Act"), 15 U.S.C. § 53(b), against Defendants.³ In the Complaint, the FTC alleges that Traffic Jam Events, LLC "offers direct mail marketing services and staffed tent sales events to automotive dealerships."⁴ The FTC further alleges that David Jeansonne, II is the owner, managing member, and president of Traffic Jam Events, LLC⁵ and that, "Since at least March 2020, Defendants have mailed or caused to be mailed deceptive advertisements purporting to provide COVID-19 stimulus relief to consumers."⁶ The FTC asserts that Traffic Jam Events, LLC used the deceptive ads to "lure individuals and families to auto sales events under the guise that valuable stimulus relief was available at designated locations for a short period of time."⁷

The FTC claims that the mailing included statements such as, "URGENT:COVID-19 ECONOMIC AUTOMOTIVE STIMULUS PROGRAM RELIEF FUNDS AVAILABLE • ALL PAYMENTS DEFERRED FOR 120 DAYS,"⁸ and repeatedly described the location as, "your designated temporary 10-day site," "designated local headquarters," and "relief headquarters."⁹ The FTC further alleges that the mailing represented that consumers "must claim these stimulus incentives at your designated temporary 10-daysite: 5925 SW 20^th Street, Bushnell, FL 33513."¹⁰ A check allegedly issued by the "Stimulus Relief Program" was included in the mailing.¹¹ The Complaint further alleges that, "The Florida Attorney General also sued Defendants on April 23, 2020 over the Florida mailers, yet Defendants continue to provide advertising and marketing services to the automotive industry nationwide."¹² The FTC points out that Defendants have been the subject of prior law enforcement actions allegedly based on misleading advertising, two from Kansas (2010 and 2012) and one from Indiana (2018).¹³

Based on the foregoing facts, the FTC alleges that Defendants are violating or are about to violate laws enforced by the Commission, including unfair or deceptive acts or practices in or affecting commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).¹⁴ Pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), the FTC seeks the following relief:

• preliminary injunctive and ancillary relief, including a temporary and preliminary injunction, to prevent consumer injury during the pendency of this action;

• a permanent injunction to prevent future violations of the FTC Act;

• such relief that the Court finds necessary to redress injury to consumers, including rescission or reformation of contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten monies; and

• litigation costs incurred by the FTC in bringing the action.¹⁵

B. The Motion for Temporary Restraining Order

On the same day it filed the Complaint, June 16, 2020, the FTC filed the instant Motion for a Temporary Restraining Order, and Other Equitable Relief, and Order to Show Cause by a Preliminary Injunction Should Not Issue (the "Motion").¹⁶ The FTC asserts that, "through its advertising in direct-mail marketing, Defendants have been misrepresenting that (i) their mailers concern official COVID-19 stimulus information, (ii) consumers will receive stimulus relief, including checks, by visiting a designated site, and (iii) the mailers involve a stimulus program associated with, or approved by, the government."¹⁷ The FTC asserts that Defendants are not providing official COVID-19 stimulus information or relief and are not affiliated, or approved by, the United States government or any government agency.¹⁸ The FTC argues that Defendants' acts and practices violate Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).¹⁹

The FTC asserts that this Court has jurisdiction to enjoin violations of the FTC Act and to provide appropriate equitable relief, including restitution and disgorgement, according to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b) (hereafter, "Section 13(b)").²⁰ The grounds asserted by the FTC in its Motion track the language of its Complaint, namely that Defendants "since at least March 2020 . . . have mailed or caused to be mailed deceptive advertisements purporting to provide COVID-19 stimulus relief to consumers."²¹ The description of the mailer is identical to thedescription provided in the Complaint, including that the mailer contained statements indicating that it contained "Important COVID-19 economic stimulus documents," with the notice stating, "URGENT: COVID-19 ECONOMIC AUTOMOTIVE STIMULUS PROGRAM RELIEF FUNDS AVAILABLE."²² The mailers also included a mock check issued by the "Stimulus Relief Program."²³

The FTC asserts that none of the information provided in the mailer is supported or authorized by the United States government or any governmental agency. Quoting the Fifth Circuit in EEOC v. Cosmair, Inc., the FTC argues that, "[w]hen an injunction is expressly authorized by statute and the statutory conditions are satisfied, the movant need not establish specific irreparable injury to obtain a preliminary injunction."²⁴ The FTC then provides a detailed analysis of why it believes it is likely to succeed on the merits of its underlying claim that Defendants' actions violate Section 5(a) of the FTC Act, asserting that this Court need only find "some chance of probable success on the merits" to grant an injunction.²⁵ The FTC also argues that Mr. Jeansonne is individually liable because the FTC has proven "he either participated in the unlawful activities or had some control over those activities."²⁶ In support of this argument, the FTC alleges that Mr. Jeansonne possesses the authority to control Traffic Jam Event, LLC's operations and organizes Traffic Jam Events, LLC as its owner, president and manager.²⁷ The FTC alsomentions that Traffic Jam Events, LLC has been subject to at least three prior enforcement actions in Indiana and Kansas dating back to 2010, for using deceptive advertising campaigns promising incentives and prizes to lure consumers to auto sales events.²⁸ The FTC argues that it would likely succeed on the merits because Mr. Jeansonne signed three prior consent judgments on behalf of Traffic Jam Events, LLC, as a result of those prior proceedings.²⁹ The FTC then balances the equities between the public and private interests in granting the requested injunctive relief, and argues that the public interest in halting Defendants' unlawful conduct outweighs any interest Defendants may have in continuing their unlawful marketing services.³⁰

The following day, June 17, 2020, the Court set a telephone status conference for June 19, 2020, to discuss the Motion.³¹ On June 18, 2020, Defendants filed into the record Defendants' Memorandum Submitted in Advance of June 19, 2020 Status Conference, seeking to "address gross misrepresentations and omissions of fact and law" contained in the FTC's Complaint and Motion.³² During the June 19^th telephone status conference, the Court discussed with counsel the status of the case and the pending Motion, and set the matter for a hearing on June 23, 2020.³³

Thereafter, on June 22, 2020, Plaintiffs filed a Motion For Leave to File Supplemental Authority and Amended Proposed Temporary Restraining Order,³⁴ which the Court granted.³⁵

That same day, June 22, 2020, Defendants filed an Opposition to the FTC's Motion for Temporary Restraining Order, asserting that the relief sought by the FTC is "extreme, unnecessary, and not justified by the law or the facts."³⁶ Attached to the Opposition brief is a Declaration from Mr. Jeansonne, which Defendants assert "is submitted in lieu of live testimony upon agreement of the parties and the Court during the June 19, 2020 Status Conference."³⁷ Defendants assert that Mr. Jeansonne's Declaration "makes clear that the Mailer at issue was past conduct that has not been repeated and will not be repeated in the future, and importantly, is the subject of a pending action in Florida state court."³⁸ Defendants further assert that, since this involves "past conduct that has not been repeated and will not be repeated in the future" this case does not satisfy the express statutory requirement of Section 13(b) of the FTC Act that the Commission has reason to believe that an entity is violating or is about to violate any provision of the law.³⁹ Defendants point out that the purpose of Section 13(b) was to address the need to quickly enjoin ongoing or imminent illegal conduct.⁴⁰

Defendants also assert that the issuance of a temporary restraining order will not serve the public interest, as required by Section 13(b), because there is no continuing orfuture harm.⁴¹ Relying on Mr. Jeansonne's Declaration, Defendants assert that the mailer was part of a single mailing event distributed in two...