FILED
NOT FOR PUBLICATION
JUN 11 2021
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
FEDERAL TRADE COMMISSION, No. 19-35668
Plaintiff-Appellee, D.C. No. 1:16-cv-00720-CL
v.
MEMORANDUM*
HOYAL & ASSOCIATES, INC., an
Oregon corporation; et al.,
Defendants-Appellants.
FEDERAL TRADE COMMISSION, No. 19-35669
Plaintiff-Appellee, D.C. No. 1:16-cv-00720-CL
v.
HOYAL & ASSOCIATES, INC., an
Oregon corporation; JEFFREY HOYAL,
individually and as an officer of Hoyal &
Associates, Inc.,
Defendants-cross-
defendants-Appellees,
v.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
DAVID P. LENNON; LENNON &
KLEIN, P.C., a foreign business
corporation,
Third-party-defendants-
Appellees,
REALITY KATS, LLC, an Oregon limited
liability company; DENNIS SIMPSON,
Defendants-third-party-
plaintiffs-cross-claimants-
Appellants.
Appeal from the United States District Court
for the District of Oregon
Mark D. Clarke, Magistrate Judge, Presiding
Submitted June 9, 2021**
Portland, Oregon
Before: GRABER and IKUTA, Circuit Judges, and BENITEZ,*** District Judge.
Dennis Simpson, Jeffery Hoyal, Lori Hoyal, and corporate defendants,
Reality Kats, LLC, and Hoyal & Associates, Inc. (H&A), appeal from the district
court’s judgment holding that they are subject to a permanent injunction and
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Roger T. Benitez, United States District Judge for the
Southern District of California, sitting by designation.
2
monetary judgment. We have jurisdiction under 28 U.S.C. §§ 636(c)(3) and 1291.
We affirm in part and vacate in part.
Section 5 of the Federal Trade Commission Act (FTCA) makes it unlawful
for any person or entity to engage in “unfair or deceptive acts or practices in or
affecting commerce.” 15 U.S.C. § 45(a). When a corporate entity violates this
section by making a deceptive representation, an individual may be found
personally liable for such a corporate violation if he or she “participated directly”
in the unlawful acts or practices, or “had the authority to control” the unlawful acts
or practices at issue, and “had actual knowledge of the misrepresentations
involved, was recklessly indifferent to the truth or falsity of the misrepresentations,
or was aware of a high probability of fraud and intentionally avoided learning the
truth.” FTC v. Com. Planet, Inc., 815 F.3d 593, 600 (9th Cir. 2016), overruled on
other grounds by AMG Cap. Mgmt., LLC v. FTC, 141 S. Ct. 1341 (2021). Under
§ 13(b) of the FTCA, 15 U.S.C. § 53(b), the Federal Trade Commission (FTC),“in
proper cases,” may seek a permanent injunction to remedy a violation of § 45.
This statutory authorization does not, however, allow the FTC to seek, and the
court to award, equitable monetary relief. AMG Cap. Mgmt., LLC, 141 S. Ct. at
1344.
3
In light of AMG Capital Management, we vacate the district court’s
monetary judgment. See id. Therefore, we need not consider the parties’
arguments relating to the monetary judgment, including Simpson and Reality Kats’
laches and estoppel theories.
The district court did not err in holding Simpson, Jeffrey Hoyal, and Lori
Hoyal personally liable for the corporate defendants’ violations of § 45.1
First, the district court did not err in concluding that the corporate
defendants, including Reality Kats and H&A, operated as a common enterprise and
were therefore liable for each other’s unlawful acts.
Second, the district court did not err in holding that the mailers sent by the
common enterprise were deceptive as a matter of law because the representations
in the mailers created a “net impression” that was likely to mislead consumers
acting reasonably. FTC v. Gill, 265 F.3d 944, 950, 956 (9th Cir. 2001). The
appellants do not dispute the district court’s finding that the mailers created the
“net impression” that any current subscription would be renewed automatically and
1
Dennis Simpson failed to challenge personal jurisdiction before the district
court, so he cannot raise such a challenge here. Am. Ass’n of Naturopathic
Physicians v. Hayhurst, 227 F.3d 1104, 1106 (9th Cir. 2000), as amended on
denial of reh’g (Nov. 1, 2000) (holding that personal jurisdiction challenges “must
be raised at the first available opportunity or, if they are not, they are forever
waived”).
4
that the consumer was being offered the lowest price. FTC v. Stefanchik, 559 F.3d
924, 928 (9th Cir. 2009). Nor do they dispute on appeal that these representations
were material. Contrary to the appellants’ argument, the mailers’ misleading “net
impression” was not cured by the disclaimer on the reverse side of the mailers. See
id. Further, the 2004 settlement agreement between some of the appellants and the
state of Oregon does not undermine the district court’s determination that the
representations on the mailers are deceptive under federal law. U.S. Const. art. VI.
Third, the factual findings by the district court, which are not clearly
erroneous, support the conclusion that Simpson, Jeffrey Hoyal, and Lori Hoyal are
personally liable for the corporate defendants’ violations of § 45. The district court
did not clearly err in finding that Simpson participated directly in the deceptive
mailing operation because, through Reality Kats, he “managed subscription
product marketing, modeling, database management, [and] analysis for the
deceptive mailing operation.” The district court did not clearly err in concluding
that Simpson had actual knowledge of or was recklessly indifferent to the
deceptive practices, Com. Planet, Inc., 815 F.3d at 600, as he signed the 2015
settlement, received some of the cease-and-desist letters, and was aware that the
operation received complaints or inquiries from state attorneys general. Nor did
the district court clearly err in finding that Lori Hoyal participated in the deceptive
5
mailing operation, or had the authority to control it, given that she was a 50%
owner of H&A, held H&A’s corporate officer roles, and managed consumer
money from the deceptive mailing operation through H&A. The 2004 settlement
agreement with Oregon expressly prohibited the Hoyals from relying on the
agreement as evidence of approval of their deceptive operations, and therefore does
not negate the district court’s finding that the Hoyals had actual knowledge of or
were recklessly indifferent to the deceptive practices. Id.
Further, the district court did not err in holding that there was a reasonable
likelihood of recurrence of the operation’s deceptive practices even though some of
the corporate entities in the operation had ceased to exist before this lawsuit.2
Simpson’s reliance on an out-of-circuit case, FTC v. Shire ViroPharma, Inc., 917
F.3d 147 (3d Cir. 2019), is misplaced because the defendant in that case had
stopped its challenged practice five years previously, and there was no evidence
that it would carry out similar unfair practices in the future, id. at 160. Here, by
contrast, given the defendants’ record showing a “willingness to flout the law” in a
2
The 2015 settlement by some defendants with Oregon did not extinguish
the mailing operation. After the 2015 settlement, the assets of the operation were
transferred to the Hoyals’ nephew “to effectively run and maintain a subscription
agency business.” And since 2015, Simpson continued to be involved in mailers,
providing one of his former business partners with the same kind of services as he
did for the deceptive mailing operation.
6
substantially similar manner over a decade, the district court did not err in
concluding that Lori Hoyal, Jeffrey Hoyal, Simpson, and the corporate defendants,
including Reality Kats, would likely commit future violations involving deceptive
mailer operations.3 Sears, Roebuck & Co. v. FTC, 676 F.2d 385, 392 (9th Cir.
1982). Therefore, the district court did not err in ordering the injunction against
appellants. Evans Prods., 775 F.2d at 1086.4
For the same reasons, the district court did not err in concluding that this is a
“proper case” for the issuance of a permanent injunction under 15 U.S.C. § 53(b).
Evans Prods., 775 F.2d at 1086; FTC. v. H. N. Singer, Inc., 668 F.2d 1107, 1110
(9th Cir. 1982), overruled on other grounds by AMG Cap. Mgmt., LLC, 141 S. Ct.
at 1341. We have long held that the FTC can obtain injunctive relief without
initiating administrative proceedings. H.N. Singer, 668 F.2d at 1110. As indicated
3
For this reason, Simpson’s and Reality Kats’ argument that the case was
brought under the impermissible theory that the defendants “could” violate the law,
rather than the “likely to recur” theory fails. FTC v. Evans Prods. Co., 775 F.2d
1084, 1087 (9th Cir. 1985). So does their challenge that they were not allowed “an
opportunity to explore discovery on this [theory].”
4
Reality Kats and Dennis Simpson also raise issues regarding, among other
things, the order dismissing their third-party complaint and their cross-claim, and
the district court’s evidentiary rulings, but fail to support them with arguments.
Those issues “are deemed abandoned.” See Aguilar-Ramos v. Holder, 594 F.3d
701, 703 n.1 (9th Cir. 2010).
7
above, there is ample evidence supporting the district court’s conclusion that
violations are “likely to recur.” Evans Prods., 775 F.2d at 1087, 1089.
Finally, the injunction is neither impermissibly vague nor overbroad. The
scope of the injunction is not confusing, and it bears a reasonable relation to the
FTC’s goal of preventing similar future violations. FTC v. Colgate-Palmolive Co.,
380 U.S. 374, 394–95 (1965); Portland Feminist Women’s Health Ctr. v. Advocs.
for Life, Inc., 859 F.2d 681, 684–85 (9th Cir. 1988).
AFFIRMED IN PART and VACATED IN PART.5
5
The parties will bear their own costs on appeal.
8