FTC V. Commerce Planet, Inc.

The FTC filed suit against Commerce Planet in order to enjoin it's deceptive marketing of a product called “OnlineSupplier.” The FTC alleged that Commerce Planet violated section 5(a) of the Federal Trade Commission Act, 15 U.S.C. 45(a). Commerce Planet and two individual defendants settled. The remaining defendant, Charles Gugliuzza, was enjoined from engaging in similar misconduct and ordered to pay $18.2 million in restitution. In this opinion, the court addressed Gugliuzza's arguments contesting the validity of the restitution award. The court concluded that the district court had the authority to award restitution under section 13(b) of the FTC Act; the court saw no basis for holding that courts are categorically precluded from imposing joint and several liability in actions brought under section 13(b); because joint and several liability is permissible, restitution awards need not be limited to the funds each defendant personally received from the wrongful conduct; and, in this case, the judgment entered against Gugliuzza does not actually hold him jointly and severally liable for Commerce Planet’s restitution obligations. Therefore, the court vacated the judgment. If on remand the district court decides, in the exercise of its discretion, to hold Gugliuzza jointly and severally liable with Commerce Planet, it may reinstate the $18.2 million restitution award. Otherwise, the award must be limited to the unjust gains Gugliuzza himself received. Finally, the court concluded that the district court properly followed the two-step burden-shifting framework for calculating restitution awards under section 13(b) and the district court did not abuse its discretion in calculating the amount of the award in this case. Accordingly, the court affirmed in part, reversed in part, and remanded. View "FTC V. Commerce Planet, Inc." on Justia Law