February 02, 2018

MONTH-IN-BRIEF: Business Litigation & Dispute Resolution

Mac R. McCoy, Sara Bussiere

Business Litigation

Business That Ignored Red Flags Held Jointly and Severally Liable for the Unjust Gains of a Telemarketing Scheme

By Tali L. Katz, Greensfelder, Hemker & Gale, P.C.

In Fed. Trade Comm'n v. WV Universal Mgmt., LLC, 877 F.3d 1234 (11th Cir. 2017), the United States Court of Appeals for the Eleventh Circuit affirmed a district court’s decision to hold a credit card payment processing company jointly and severally liable for the total amount of unjust gains to all defendants in a fraudulent credit card scheme. After ruling that the processing company violated the Federal Trade Commission’s (FTC) Telemarketing Sales Rule, 16 C.F.R. § 310.3(b), because it “knew or consciously avoided knowing of the fraudulent activities” and “substantially assisted” a telemarketing company in its scheme to defraud victims, the district court held both defendants jointly and severally liable for the entire amount of unjust gains—despite the respective roles and profits of each party to the scam. In affirming this apportionment of damages, the appellate court reasoned that 15 U.S.C. § 53, which authorizes the FTC to seek injunctions against practices that violate its laws, “carries with it the full range of equitable remedies,” including disgorgement and restitution—which may be joint and several. This opinion demonstrates the extent of the potential consequences of doing business with a company engaged in illegal activity, and cautions lawyers to advise their clients not to ignore “red flags.”

Mac R. McCoy

United States Magistrate Judge, Middle District of Florida

Mac R. McCoy is a United States Magistrate Judge in the Fort Myers Division of the United States District Court for the Middle District of Florida.  Prior to his federal judicial appointment on July 1, 2015, Judge McCoy was a Shareholder in the National Trial and National Class Actions Practice Groups at Carlton Fields, P.A. in Tampa, Florida.

Sara Bussiere

Associate, Bayard

Sara E. Bussiere is an associate in Bayard’s Litigation Department. Sara concentrates her practice on corporate and commercial litigation in the Delaware Court of Chancery, Delaware Superior Court, and the United States District Court for the District of Delaware. Sara counsels clients concerning the General Corporation Law of the State of Delaware and Delaware’s alternative entity statutes. Sara has experience in a broad range of corporate matters, including fiduciary duty claims, corporate and alternative entity control disputes, advancement and indemnification claims, trade secret and noncompetition agreement disputes, and other breach of contract claims. Sara also has experience advising corporate entities in receivership or seeking dissolution.