UNITED
STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF IOWA
DAVENPORT DIVISION
FEDERAL TRADE COMMISSION,
6th and Pennsylvania
Avenue, N.W.
Washington, DC 20580, and
STATE OF WISCONSIN,
123 West Washington
Avenue
Madison, Wisconsin 53702,
Plaintiffs,
v.
DANIEL B. LUBELL,
individually, and as the
manager of the
limited liability company named below, and d/b/a
MERCANTILE MESSAGING and
D B & L, Inc.,
2943 Oxford Drive
Bettendorf, Iowa 52722; and
MERCANTILE MESSAGING, L.L.C.,
an Illinois limited
liability company,
1800 3rd Avenue, Suite 418
Rock Island, Illinois 61201,
Defendants.
Civil Action No.
EX PARTE
TEMPORARY RESTRAINING ORDER AND
ORDER FOR EXPEDITED DISCOVERY
AND
ORDER TO SHOW CAUSE WHY A PRELIMINARY INJUNCTION
SHOULD NOT ISSUE
Plaintiffs, the Federal Trade Commission
("FTC" or "the Commission") and the
State of Wisconsin, having filed their complaint for a
permanent injunction and other relief in this matter,
pursuant to Sections 13(b) and 19 of the Federal Trade
Commission Act ("FTC Act"), 15 U.S.C. 53(b) and
57b, and under the Telemarketing and Consumer Fraud and
Abuse Prevention Act ("Telemarketing Act"), 15
U.S.C. 6101, et seq., and having moved ex
parte for a Temporary Restraining Order pursuant
to Rule 65 of the Federal Rules of Civil Procedure, Fed.
R. Civ. P. 65, and the Court having considered the
complaint, declarations, exhibits, and memorandum of law
filed in support thereof, and now being advised in the
premises finds, that:
1. This Court has jurisdiction of the
subject matter of this case and there is good cause to
believe it will have jurisdiction of all parties hereto.
2. There is good cause to believe that
the Commission will ultimately succeed in establishing
that defendants Daniel B. Lubell, individually and as the
manager of Mercantile Messaging, L.L.C., doing business
as Mercantile Messaging and D B & L, Inc., and
Mercantile Messaging, L.L.C., have engaged in and are
likely to engage in practices that violate Section 5(a)
of the FTC Act, 15 U.S.C. 45(a), and the Telemarketing
Sales Rule, 16 C.F.R. Part 310.
3. There is good cause to believe that
immediate and irreparable harm will result from
defendants' ongoing violations of Section 5(a) of the FTC
Act and the Telemarketing Sales Rule, and that immediate
and irreparable damage to the Court's ability to grant
effective final relief for consumers in the form of
monetary redress will occur from the sale, transfer,
assignment, or other disposition or concealment by
defendants of their assets or records unless defendants
are immediately restrained and enjoined by Order of this
Court. There is thus good cause for issuing this Order
without prior notice to the defendants of the
Commission's application, pursuant to Federal Rule of
Civil Procedure 65(b).
4. Weighing the equities and considering
the Commission's likelihood of success in its causes of
action, this Temporary Restraining Order is in the public
interest.
5. No security is required of any agency
of the United States for the issuance of a restraining
order. Fed. R. Civ. P. 65(c).
ORDER
Definitions
For purposes of this temporary
restraining order, the following definitions shall apply:
"Assets" means any
legal or equitable interest in, right to, or
claim to, any real and personal property,
including but not limited to chattel, goods,
instruments, equipment, fixtures, general
intangibles, effects, leaseholds, mail or other
deliveries, inventory, checks, notes, accounts,
credits, receivables, and all cash, wherever
located.
"Defendants" means
Daniel B. Lubell, individually and as the manager
of Mercantile Messaging, L.L.C., doing business
as Mercantile Messaging and D B & L Inc., and
Mercantile Messaging, L.L.C., and each of them
and their successors, assigns, officers, agents,
servants, employees, and those persons in active
concert or participation with them who receive
actual notice of this Order by personal service
or otherwise, whether acting through any
corporation, subsidiary, division, or other
device.
"Document" is
synonymous in meaning and equal in scope to the
usage of the term in Federal Rule of Civil
Procedure 34(a), and includes writings, drawings,
graphs, charts, photographs, audio and video
recordings, computer records, and other data
compilations from which information can be
obtained and translated, if necessary, through
detection devices into reasonably usable form. A
draft or non-identical copy is a separate
document within the meaning of the term.
"Financial institution"
means any bank, savings and loan institution,
credit union, or any financial depository of any
kind, including but not limited to any brokerage
house, trustee, broker-dealer, escrow agent,
title company, commodity trading company, or
precious metal dealer.
"Telemarketing" means a
plan, program or campaign which is conducted to
induce the purchase of goods or services by use
of one or more telephones and which involves more
than one interstate telephone call. The term does
not include the solicitation of sales through the
mailing of a catalog which: Contains a written
description or illustration of the goods or
services offered for sale; includes the business
address of the seller; includes multiple pages of
written material or illustrations; and has been
issued not less frequently than once a year, when
the person making the solicitation does not
solicit customers by telephone but only receives
calls initiated by customers in response to the
catalog and during those calls takes orders only
without further solicitation. For purposes of the
previous sentence, the term "further
solicitation" does not include providing the
customer with information about, or attempting to
sell, any other item included in the same catalog
which prompted the customer's call or in a
substantially similar catalog.
I. Prohibited Business
Activities
IT IS THEREFORE ORDERED
that, in connection with telemarketing or in connection
with advertising, offering for sale, or selling
information, defendants are hereby temporarily restrained
and enjoined from:
Misrepresenting, either directly
or by implication, that by placing a call to a
specified telephone number, a consumer may enter
a sweepstakes or other prize promotion.
Representing, either directly or
by implication, that by placing a call to a
specified telephone number, a consumer may enter
a sweepstakes or other prize promotion, unless:
Defendants provide a
mechanism whereby callers may enter the
purported sweepstakes or prize promotion
by placing the telephone call to the
specified number, without having to enter
by mail or to use any other means of
entry; and
Defendants clearly and
conspicuously disclose, before the
consumer places a call to the specified
telephone number, that the consumer need
not call the number to enter the
sweepstakes.
Representing, directly or by
implication, that by calling a specified
telephone number, a consumer will receive
information about how to fly at no expense on
commercial airlines unless defendants also
clearly and conspicuously disclose any costs that
the consumers will incur in order to take
advantage of the information offered by
defendants.
Misrepresenting, directly or by
implication, that defendants do not charge or do
not otherwise receive consideration for the
information provided over the specified telephone
numbers.
II. Prohibited
Telemarketing Activities
IT IS FURTHER ORDERED
that, in the course of telemarketing, defendants are
hereby temporarily restrained and enjoined from violating
the Telemarketing Sales Rule, 16 C.F.R. Part 310, PROVIDED,
that for purposes of this Order, the customer shall be
deemed to have paid for goods or services under Section
310.3 of the Rule when the customer places a call to a
telephone number for which there is a per-minute or
per-call toll or other charge.
III. Asset Freeze
IT IS FURTHER ORDERED that
defendants are hereby temporarily restrained and enjoined
from:
Directly or indirectly
transferring, selling, liquidating, encumbering,
pledging, loaning, assigning, concealing,
dissipating, converting, withdrawing, or
otherwise disposing of all assets that are: (1)
owned or controlled, directly or indirectly, by
any defendant, in whole or in part; (2) in the
actual or constructive possession of any
defendant; or (3) owned, controlled by, or in the
actual or constructive possession of any
corporation, partnership, or other entity
directly or indirectly owned, managed, or
controlled by, or under common control with any
defendant, including but not limited to, any
assets held by, for, or under the name of any
defendant at any financial institution.
Opening or causing to be opened
any safe deposit boxes titled in the name of any
defendant, or subject to access by any defendant;
and
Incurring charges or cash
advances on any credit card issued in the name,
singly or jointly, of any defendant.
IV. Banks and Financial
Institutions: Asset Freeze
IT IS FURTHER ORDERED
that any bank, financial institution, or any other entity
or person having custody or control of any records,
accounts or other assets, owned directly or indirectly,
of record or beneficially, by defendants, is hereby
temporarily restrained and enjoined from:
Selling, transferring, pledging,
assigning, liquidating, encumbering, delivering,
loaning, or otherwise disposing of the contents
of such account or asset, whether by payments or
withdrawals from such account, except as allowed
by further Order of this Court;
Allowing access to defendants to
any safe deposit box that is:
Titled in the name of any
defendant, either individually or
jointly; or is
Otherwise subject to
access by any defendant.
V. Banks and Financial
Institutions: Retention of Records
IT IS FURTHER ORDERED
that any bank, financial institution, or any other entity
or person having custody or control of any records,
accounts or other assets, owned directly or indirectly,
of record or beneficially, by defendants, shall:
Provide counsel for the
Commission, within five (5) business days of
receiving a copy of this Order, a sworn statement
setting forth:
The identification number
of each such account or asset titled in
the name, individually or jointly, of any
of the defendants, or held on behalf of,
or for the benefit of, any of the
defendants;
The balance of each such
account, or a description of the nature
and value of such asset as of the time
this Order is served, and, if the account
or other asset has been closed or
removed, the date closed or removed, the
total funds removed in order to close the
account, and the name of the person or
entity to whom such account or other
asset was remitted; and
The identification of any
safe deposit box that is either titled in
the name, individually or jointly, of any
defendant, or is otherwise subject to
access by any defendant; and
Upon request of the Commission,
promptly provide the Commission with copies of
account applications, account statements,
signature cards, transfers to and from the
accounts which occur after the date of this
order, currency transaction reports, 1099 forms,
and safe deposit logs. Any such financial
institution, account custodian, or other
aforementioned entity may arrange for the
Commission to obtain copies of any such records
which the Commission seeks, provided that such
institution may charge a reasonable fee not to
exceed fifteen cents per page copied.
VI. Recordkeeping
IT IS FURTHER ORDERED
that defendants are hereby temporarily restrained and
enjoined from:
Failing to create and maintain
books, records, and accounts which, in reasonable
detail, accurately, fairly, and completely
reflect the incomes, disbursements, transactions,
and the use of monies by any of the defendants;
and
Destroying, erasing, mutilating,
concealing, altering, transferring, or otherwise
disposing of, in any manner, directly or
indirectly, any contracts, accounting data,
correspondence, advertisements, computer tapes,
discs, or other computerized records, books,
written or printed records, handwritten notes,
telephone logs, telephone scripts, receipt books,
ledgers, personal and business canceled checks
and check registers, bank statements, appointment
books, copies of federal, state, or local
business or personal income or property tax
returns, and any other documents or records of
any kind which relate to the business practices
or business or personal finances of any of the
defendants from January 1, 1996, to the present
time.
VII. Financial Statement
IT IS FURTHER ORDERED
that not less than three (3) days prior to the scheduled
date and time for the hearing on a preliminary injunction
in this matter, but in any event prior to any hearing
regarding modification of the asset freeze provisions of
this Order, each defendant shall provide the Commission
with a completed financial statement, on the forms
attached to this Order, for such defendant individually
and for each defendant corporation, accurate as of the
date of service of this Order upon said defendant.
Service of this statement shall be performed in
accordance with Section XV of this Order.
VIII. Provision of Sworn
Statement
IT IS FURTHER ORDERED
that within three (3) business days of being served with
a copy of this Order, each defendant shall prepare and
deliver to the Commission a sworn statement providing the
following information for the period of time between
January 1, 1996, and the present:
A list of all international,
pay-per-call, or other tolled telephone numbers
advertised or promoted directly or indirectly by
defendants from January 1, 1996, to the present,
and all the revenue generated from such numbers
for defendants. The statement shall also include
any relevant area codes and access codes, and
shall identify the country in which each
telephone number terminates.
The number, frequency, and
average duration of calls to any international,
pay-per-call, or other tolled telephone number
advertised or promoted directly or indirectly by
defendants.
A list of the names, addresses,
and telephone numbers of:
All consumers who have
placed calls to any international,
pay-per-call, or other tolled telephone
number advertised or promoted directly or
indirectly by defendants;
All consumers who have
complained about or asked to be
reimbursed for the cost of calls placed
to any international, pay-per-call, or
other tolled telephone number advertised
or promoted directly or indirectly by
defendants; and
All consumers who have
received refunds from defendants for
calls placed to any international,
pay-per-call, or other tolled telephone
number advertised or promoted directly or
indirectly by defendants, and the amount
of such refunds.
All consumers who have
won anything in any prize promotion
advertised, promoted, or conducted by
defendants.
Service of this statement on the
Commission shall be performed in accordance with Section
XV of this Order.
IX. Provision of Business
Records
IT IS FURTHER ORDERED
that within three (3) business days of receiving a copy
of this Order, each defendant shall deliver to the
Commission the following business records for the period
of time between January 1, 1996, and the present:
All contracts or agreements
between any defendant or business entity named in
the Commission's complaint and any information
service provider, service bureau, or any other
entity providing access to telephone service or
voice storage, including Beylen, in effect at any
time during the relevant period;
All contracts or agreements
between any defendant or business entity and any
international telephone service in effect at any
time during the relevant period;
Examples of each script for
defendants' advertising outbound telemarketing
calls and E-mails used at any time during the
relevant period;
Examples of each script for
defendants' information messages used at any time
during the relevant period;
All contracts or agreements
between any defendant or business entity named in
the complaint and any provider of autodialing
machines or services in effect at any time during
the relevant period;
All documents relating to the
carrying out of any prize promotion or purported
sweepstakes promoted, advertised, or conducted by
defendants; and
All documents maintained in
compliance with Section 310.5 of the
Telemarketing Sales Rule, 16 C.F.R. 310.5.
The documents described in this paragraph
may be produced as originals or as legible photocopies
and shall be served upon the Commission in accordance
with Paragraph XV of this Order. If defendants elect to
deliver original documents, Commission staff shall copy
the documents and return them to defendants' business
address in Iowa within four (4) business days from their
receipt.
X. Distribution of Order to
Other Partes
IT IS FURTHER ORDERED
that each defendant shall immediately provide a copy of
this Order to each of its divisions, subsidiaries,
corporations, affiliates, successors, assigns, directors,
managing agents, account representatives, employees,
representatives, or independent contractors, and shall,
within three (3) days from the date of service of this
Order, provide plaintiffs with a sworn statement that
defendants have complied with this provision of the
Order. Service of this statement shall be performed in
accordance with Section XV of this Order.
XI. Expedited Discovery
IT IS FURTHER ORDERED
that in anticipation of the preliminary injunction
hearing in this matter, plaintiffs are granted leave,
pursuant to Rule 30(a) of the Federal Rules of Civil
Procedure, to take the deposition of any person at any
time after the date of this Order, and that two (2) days
notice shall be deemed sufficient for such depositions;
and that pursuant to Rule 36, defendants' response to any
request for admissions served by the plaintiffs shall be
within five (5) days after service of the request.
XII. Witness Testimony
IT IS FURTHER ORDERED that
if any party intends to present the testimony of any
witness at the hearing on a preliminary injunction in
this matter, that party shall, at least one (1) day prior
to the scheduled date and time of the hearing, serve on
counsel for the other party a statement of the name,
address, and telephone number of any such witness, and
either a summary of the witness' expected testimony, or
the witness' affidavit revealing the substance of such
witness' expected testimony. Service on the Commission
shall be performed in accordance with Paragraph XV of
this order.
XIII. Service of Pleadings
IT IS FURTHER ORDERED
that defendants shall serve all memoranda, affidavits,
and other evidence on which they intend to rely at the
preliminary injunction hearing scheduled in this matter
no less than one (1) day prior to the scheduled hearing.
Service on the Commission shall be performed in
accordance with Paragraph XV of this Order.
XIV. Service of Order
IT IS FURTHER ORDERED
that copies of this Order and all other process or
summons in this action may be served by any means,
including facsimile transmission, by employees or agents
of the Commission upon any financial institution or
person that may have possession, custody or control of
any documents or assets of the defendants, or that may be
subject to any provision of this Order. Consistent with
Section 3413(e) of the Right to Financial Privacy Act, 12
U.S.C. 3413(e), a financial institution in receipt of
this Order is not required to notify defendants of such
receipt.
XV. Service on the Commission
IT IS FURTHER ORDERED
that service of documents on the Commission by defendants
shall be by delivery to Patricia S. Howard at the Federal
Trade Commission, Room 238, 6th Street and Pennsylvania
Avenue, N.W., Washington, DC 20580, or by facsimile
transmission to 202-326-3395. Service shall be performed
prior to 4:45 p.m. (Eastern Time) on the date due.
XVI. Credit Reports
IT IS FURTHER ORDERED
that pursuant to Section 604(1) of the Fair Credit
Reporting Act, 15 U.S.C. 1681b(1), any credit reporting
agency may furnish to the Commission a credit report
concerning any defendant.
XVII. Duration of Temporary
Restraining Order
IT IS FURTHER ORDERED
that the Temporary Restraining Order granted herein shall
expire ten (10) days after entry, unless, within such
time, the Order, for good cause shown, is extended for an
additional period not to exceed ten (10) days, or unless
it is extended with consent of the parties.
XVIII. Order to Show Cause Re
Preliminary Injunction
IT IS FURTHER ORDERED,
pursuant to Federal Rule of Civil Procedure 65(b), that
each of the named defendants shall appear before this
Court on the _____ day of _______________, 19_____, at
___________ o'clock ____.m., to show cause, if there is
any, why this court should not enter a preliminary
injunction, pending final ruling on the Complaint against
defendants, enjoining them from further violations of
Section 5(a) of the Federal Trade Commission Act, 15
U.S.C. 45(a), and the Commission's Telemarketing Sales
Rule, 16 C.F.R. Part 310, continuing the freeze of their
assets, and imposing such additional relief as may be
appropriate.
XIV. Retention of Jurisdiction
IT IS FURTHER ORDERED that
this Court shall retain jurisdiction of this matter for
all purposes.
SO ORDERED, this ____
day of _______________, 19___, at _________ o'clock
___.m.
________________________
United States District Judge
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