FTC V. GARY HEWITT, ET AL, No. 21-56037 (9th Cir. 2023)
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Defendant spearheaded a get-rich-quick scam—which promised to make consumers rich but ultimately defrauded them of hundreds of millions of dollars. In response, the Federal Trade Commission (“FTC”) brought suit against Defendant and other scam participants under Sections 13(b) and 19 of the Federal Trade Commission Act (“FTCA”) and under the Telemarketing and Consumer Fraud and Abuse Prevention Act, alleging that the scam violated Section 5 of the FTCA and the FTC’s Telemarketing Sales Rule. In 2012, the district court granted summary judgment to the FTC, holding that Defendant’s scam indeed violated Section 5 of the FTCA and the Telemarketing Sales Rule. To remedy the established violations, the district court granted both injunctive and monetary relief. Defendant never challenged the statutory validity of the equitable monetary relief, nor appealed from the 2012 judgment—which has remained on the books all this time.
The Ninth Circuit affirmed the district court’s denial of Defendant’s Fed. R. Civ. P. 60(b) motion for relief from an equitable money judgment. The panel held that Defendant failed to establish a certain type of jurisdictional error. Defendant failed to show that the equitable monetary judgment here—which was consistent with then-prevailing precedent—rested on a total want of jurisdiction or lacked even a colorable basis. Second, Defendant argued that the district court abused its discretion in concluding that the equitable monetary portion of the judgment lacked prospective application under Rule 60(b)(5). The panel held that the first relevant set of considerations—the nature and relationship of the intervening change in the law—did not establish that the district court abused its discretion in denying relief.
Court Description: Fed. R. Civ. P. 60(b). The panel affirmed the district court’s denial of Gary Hewitt’s Fed. R. Civ. P. 60(b) motion for relief from an equitable money judgment, in a case in which the district court in 2012 granted summary judgment to the Federal Trade Commission, holding that a scam by Hewitt violated Section 5 of the Federal Trade Commission Act (“FTCA”) and the Telemarketing Sales Rule.
To remedy the violations, the district court in 2012 issued a permanent injunction that, inter alia, prohibited Hewitt from engaging in the unlawful practices; and entered a judgment in favor of the Federal Trade Commission for equitable monetary relief. Hewitt never appealed the judgment. In 2021, the Supreme Court issued AMG Capital Management, LLC v. Federal Trade Commission, 141 Sup.
Ct. 1341 (2021), which held that Section 13(b) of the FTCA did not authorize such equitable monetary relief. Hewitt filed his Rule 60(b) motion to vacate the equitable monetary judgment awarded against him—relying on the decision in AMG.
First, the panel addressed Hewitt’s argument that the district court erred in holding that the equitable monetary portion of the original judgment was not “void” under Rule 60(b)(4). Under the first category for Rule 60(b)(4) relief outlined in United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 271 (2010), the panel held that Hewitt failed to establish a certain type of jurisdictional error. Hewitt failed to show that the equitable monetary judgment here—which was consistent with then-prevailing precedent—rested on a total want of jurisdiction, or lacked even a colorable basis. Turning to the second Espinosa category, the panel held that Hewitt also failed to establish that a “violation of due process deprive[d] [him] of notice or opportunity to be heard” before the original judgment was imposed. Espinosa, 559 U.S. at 271. Hewitt did not meaningfully press any material contentions that he was deprived of notice or an opportunity to be heard during the proceedings culminating in the underlying judgment.
Second, Hewitt argued that the district court abused its discretion in concluding that the equitable monetary portion of the judgment lacked prospective application under Rule 60(b)(5). The standard used in determining whether a judgment has prospective application is whether it is executory, or involves the supervision of changing conduct or conditions. The panel held that the equitable monetary judgment—which required nothing from Hewitt other than paying the money awarded—was not executory because it did not compel Hewitt to perform or restrain him performing a future act within the meaning of Rule 60(b)(5). The panel held further that the equitable monetary judgment—which involved no court supervision of Hewitt other than ordering him to pay the money awarded—did not involve supervision of changing conduct or conditions within the meaning of Rule 60(b)(5).
Third, Hewitt argued that the district court abused its discretion in denying his request for relief under the catch- all provision of Rule 60(b)(6). Relief under Rule 60(b)(6) is available only in extraordinary circumstances. The panel held that the first relevant set of considerations—the nature and relationship of the intervening change in the law—did not establish that the district court abused its discretion in denying relief. It was not extraordinary that the Supreme Court arrived at a different interpretation from then- prevailing precedent in this Circuit. The panel held also that the second relevant consideration—the diligence of the party in seeking relief from the original judgment—did not establish that the district court abused its discretion in denying relief. Hewitt was not diligent in challenging the original judgment a decade ago, and he fell decisively short of the diligence standard in Gonzalez v. Crosby, 545 U.S.
524 (2005). The panel held that the third set of considerations--which included “additional considerations” relevant to balancing the competing policies of the finality of judgments and the command that justice be done—did not establish that the district court abused its discretion in denying relief. The panel concluded that given the “additional considerations” on both sides, it was difficult to conclude that the district court abused its discretion in declining to relieve Hewitt from a decade-old judgment requiring him to provide restitution or disgorgement for its ill-gotten gains. The panel declined to disturb the district court’s exercise of its wide discretion in concluding that no extraordinary circumstances warranted relief under Rule 60(b)(6).
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