Fed. Trade Comm'n v. AMG Servs., Inc.
| Decision Date | 28 August 2012 |
| Docket Number | 2:12-cv-00536-GMN -VCF |
| Parties | FEDERAL TRADE COMMISSION, Plaintiff, v. AMG SERVICES, INC, et al., Defendant. |
| Court | U.S. District Court — District of Nevada |
(Motion For Protective Order #134, Joinder
#136, and Motions To Quash Subpoenas #138, #139, and #142)
Before the court are AMG Services, Inc., Red Cedar Services, Inc., SFS, Inc., and Tribal Financial Services' (hereinafter "Tribal-Chartered Defendants1 ") Motion To Quash Plaintiff's Subpoena to Produce Documents, Information, or Objects or Permit Inspection of Premisses to DataX, Ltd (hereinafter "DataX")(#138) and Motion To Quash Plaintiff's Subpoena to Produce Documents, Information, or Objects or Permit Inspection of Premisses to Partner Weekly, LLC (hereinafter "Partner Weekly") (#139). The Tribal-Chartered Defendants filed an Unopposed Motion to Amend Defendants' Motion To Quash Subpoena to Produce Documents, Information, or Objects or Permit Inspection of Premisses to Partner Weekly, LLC (#139) to include the subpoena issued to Selling Source, LLC (hereinafter "Selling Source") (#142). The Federal Trade Commission (hereinafter "FTC") filed an Opposition to the Motions To Quash (#143), and the Tribal-Chartered Defendants filed a Reply To Plaintiff's Opposition to Defendants' Motions to Quash Subpoenas To DataX, Partner Weekly, and Selling Source. (#148).
Also before the court is defendants Joint Motion For A Protective Order Regarding All Discovery Currently Pending, Including Written Discovery Requests and Subpoenas Duces Tecum.(#134). The Law Firm Defendants filed a Joinder to Defendants' Joint Motion For A Protective Order Regarding All Discovery Currently Pending, Including Written Discovery Requests and Subpoenas Duces Tecum. (#136). The FTC filed an Opposition (#141) addressing both the motion for a protective order (#134) and the joinder thereto (#136). Defendants filed a Joint Reply To Plaintiff's Opposition (#149), and the Law Firm Defendants filed a Reply In Support of their Joinder (#150).
Plaintiff FTC filed its complaint on April 2, 2012, asserting (1) violations of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a) in counts one and two, (2) violations of the Truth In Lending Act (hereinafter "TILA") and Regulation Z in count three, and (3) violations of the Electronic Funds Transfer Act (hereinafter "EFTA") and Regulation E in counts four and count five (count five is asserted against relief defendants Park 269 LLC and Kim Tucker only). (#1). FTC also filed a motion for preliminary injunction on the same day, seeking to enjoin the defendants from violating the FTC Act, TILA, and EFTA. (#4).
On May 25, 2012, the Tribal-Chartered Defendants filed a motion to dismiss (#100), defendant Don E. Brady filed a motion to dismiss (#103), the Law Firm Defendants filed a motion to dismiss (#104), defendant Robert D. Campbell filed a motion to dismiss (#105), AMG Capital Management, LLC, Black Creek Capital Corporation, Broadmoor Capital Partners, LLC, LeadFlash Consulting, LLC, Level 5 Motorsports, LLC, Blaine A. Tucker, Scott A. Tucker filed a motion to dismiss (#107), defendants Park 269, LLC and Kim C. Tucker filed a joinder thereto (#108), and defendant Troy L LittleAxe filed a motion to dismiss (#109). On August 1, 2012, the FTC filed a stipulated discovery plan and scheduling order, wherein plaintiff stated its position that discovery should commence immediately and defendants stated their position that "discovery should not commence until the [c]ourt has ruled on the pending dispositive motions." (#133). On the same day, defendants filed the instant motion for protective order, seeking to stay discovery in this action. (#134). The Law Firm Defendants filed a joinder on August 2, 2012. (#136). On August 3, 2012, the court entered an order schedulinga hearing for August 23, 2012, and temporarily staying discovery in this matter until further order from the court. (#137).
The Tribal-Chartered Defendants filed their motions to quash on August 9, 2012. (#138 and #139). The court entered a minute order on the same day scheduling oral argument on the motions to quash for August 23, 2012. (#140). The court held a hearing on August 23, 2012, at 10:00 a.m., and addressed the defendants' request to stay discovery and the pending motions to quash2 . (#152). At the conclusion of the hearing, the court stated that the temporary stay remained in effect.
The requests to stay discovery are based on the pending motions to dismiss (#100, #103, #104, #105, #107, #108, and #109). As discussed more fully below, a general stay of discovery is appropriate only if, after the court takes a "preliminary peek" at the motions to dismiss, the court is convinced that relief will be granted as to all claims asserted against all defendants, and that the plaintiff is unable to assert a claim for relief. In granting such a stay, the court must also conclude that discovery is not required before the motions to dismiss can be decided. As a practical manner, usually only motions based on lack of jurisdiction (Federal Rule of Civil Procedure 12(b)(1)), improper venue or immunity are able to meet these stringent requirements.
In support of their request for a discovery stay, the defendants advance the following positions:
1. Native American Tribes are subject to the FTC consumer protection regulations at issue in this case.
2. However, Native American Tribes and Tribal-Chartered Entities, which are arms of Native American Tribes (operating for the benefit of those tribes), are not subject to enforcement actions by the FTC for violation of these consumer protection regulations.
3. As part of its regulation of Native American Tribes, Congress has deprived the FTC ofjurisdiction over any Tribal-Chartered Entity to enforce the provisions of the FTC Act, 15 U.S.C. §45(a).
4. Congress also has deprived the FTC of jurisdiction to bring enforcement actions against Tribal-Chartered Entities asserting violations of TILA, 15 U.S.C. §§ 1601-1666j, and EFTA, 15 U.S.C. §§ 1693-1693r.
5. This lack of jurisdiction extends to any employee or contractor working for or with any Tribal-Chartered Entity.
6. This lack of jurisdiction exists no matter how remote or marginal a benefit is actually conferred upon the Tribe by the Tribal-Chartered Entity, under the terms of its arrangement with the Tribe.
Independent of these arguments, all defendants move for dismissal of the complaint on the grounds that the FTC has not pled its causes of action with the degree of specificity required by Rule 8(a) and 9(b) of the Federal Rules of Civil Procedure against each of them individually. During oral argument, it was established that the pending motions to dismiss are not based on this court's lack of jurisdiction, improper venue or immunity.
The court, in its preliminary evaluation of these issues, does not accept the proposition that any person or entity who points to a business relationship with a Native American tribe to claim the status of a Tribal-Chartered Entity is beyond the enforcement jurisdiction of the FTC. If Congress, as part of its effort to improve the economic conditions of Native American Tribes, deprived the FTC of its generally available power to bring enforcement actions, the burden must rest on the Tribal-Chartered Entity to prove that it is in fact sufficiently an arm of a Native American Tribe to fall outside the enforcement jurisdiction of the FTC. Thus assuming, without deciding, that the Tribal-Chartered Defendants' challenge to the FTC's enforcement jurisdiction is sound legally, before dismissing those defendants on that theory, the court must determine, through motion practice or trial, whether or not the Tribal-Chartered Defendants have met this burden.
In the Law Firm Defendants' joinder (#136), they join in the defendants' request to stay discovery, and also ask this court to quash a subpoena issued to Commerce Bank in Missouri (#136 Exhibit B). As this court does not have jurisdiction to quash a subpoena in another district, the Law Firm Defendants' request to quash is denied.3 Under the court's broad discretionary power to control discovery in actions pending before it, the stay currently in place is partially extended with regard to the production of the bank records sought through the Commerce Bank subpoena. Fed. R. Civ. P. 26(b)(2)(C). Within thirty (30) days from the entry of this order, Commerce Bank must produce bank records for the two bank accounts mentioned by FTC's counsel during the hearing. The applicable time period for such records shall be from seven years prior to the date of entry of this order until the date of full and complete production of the records.
Defendants assert that this court should stay discovery in this action pending the court's ruling on the motions to dismiss (#100, #103, #104, #105, #107, #108, and #109), because the motions to dismiss are jurisdictional and dispositive. (#134). The FTC asserts that this court should not stay discovery pending a ruling on the motions to dismiss, as (1) none of the defendants assert immunity, venue, or jurisdiction as grounds for dismissal in their motions, with the exception of a footnote in one motion which mentions subject matter jurisdiction, (2) the motions to dismiss are not dispositive of all claims, (3) the assertions in the motions to dismiss lack merit, (4) the defenses raised by the motions cannot be proven without further discovery, and (5) if the court granted any of the motions to dismiss under Rules 8(a) or 9(b), it would be with leave to amend. (#141).
"A district court may ... stay discovery when it is convinced that the plaintiff will be unable to state a claim for relief." Wood v. McEwen, 644 F.2d 797, 801 (9th Cir.1981), cert. denied, 455 U.S. 942, 102 S.Ct. 1437, 71 L. Ed.2d 654 (1982)...
To continue reading
Request your trial