United States of America v. Adteractive, Inc., No. 3:2007cv05940 - Document 4 (N.D. Cal. 2007)
Court Description: ORDER: Final Judgment for Civil Penalties and Permanent Injunctive Relief. Signed by Judge Illston on 11/27/07. (Attachments: # 1 # 2)(ts, COURT STAFF) (Filed on 11/27/2007)
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United States of America v. Adteractive, Inc. Case 3:07-cv-05940-SI Doc. 4 Document 3 4 Filed 11/27/2007 Page 1 of 16 1 PETER D. KEISLER Assistant Attorney General 2 EUGENE M. THIROLF 3 Director, KENNETH L. JOST 4 Deputy Director, Office of Consumer Litigation 5 JOHN W. BURKE (VA BAR NO. 72780) 6 Trial Attorney, Office of Consumer Litigation Civil Division 7 United States Department of Justice P.O. Box 386 8 Washington, D.C. 20044 Telephone: (202) 353-2001 9 Facsimile: (202) 514-8742 Email: josh.burke@usdoj.gov 10 Attorneys for Plaintiff United States of America 11 12 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA 13 14 15 16 17 18 19 UNITED STATES OF AMERICA, Case No. CV-07-5940 SI Plaintiff, v. ADTERACTIVE, INC., doing business as FreeGiftWorld.com and SamplePromotionsGroup.com, STIPULATED FINAL JUDGMENT FOR CIVIL PENALTIES AND PERMANENT INJUNCTIVE RELIEF Defendant. 20 21 Plaintiff, the United States of America, acting upon 22 notification and authorization to the Attorney General by the 23 Federal Trade Commission (“FTC” or the “Commission”), pursuant to 24 Section 16(a)(1) of the Federal Trade Commission Act (“FTC Act”), 25 15 U.S.C. § 56(a)(1), has filed a complaint pursuant to Sections 26 5(a)(1), 5(m)(1)(A), 13(b), 16(a), and 19 of the FTC Act, 27 15 U.S.C. §§ 45(a)(1), 45(m)(1)(A), 53(b), 56(a), and 57b and 28 Stip. Final Judgment CV-07-5940 Page 1 of 16 Dockets.Justia.com Case 3:07-cv-05940-SI Document 3 4 Filed 11/27/2007 Page 2 of 16 1 under Section 7(a) of the Controlling the Assault of Non2 Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM” or 3 the “CAN-SPAM Act”), 15 U.S.C. § 7706(a), to secure civil 4 penalties, a permanent injunction, and other equitable relief for 5 Defendant’s violations of Section 5(a) of the FTC Act, 15 U.S.C. 6 § 45(a), and Section 5(a) of CAN-SPAM, 15 U.S.C. § 7704(a). 7 Defendant has waived service of the Summons and Complaint; 8 the parties have been represented by the attorneys whose names 9 appear hereafter; and the parties have agreed to settlement of 10 this action upon the following terms and conditions, without 11 adjudication of any issue of fact or law and without Defendant 12 admitting liability for any of the matters alleged in the 13 Complaint. 14 THEREFORE, on the joint motion of the parties, it is hereby 15 ORDERED, ADJUDGED AND DECREED as follows: 16 FINDINGS 17 1. This Court has jurisdiction over the subject matter of this 18 action pursuant to 15 U.S.C. §§ 45(m)(1)(A), 53(b), 56(a), 57b, 19 and 7706(a), and 28 U.S.C. §§ 1331, 1337(a), 1345, and 1355. 20 2. Plaintiff and Defendant consent to jurisdiction and venue in 21 this District. 22 3. The activities of Defendant are in or affecting commerce, as 23 defined in Section 4 of the FTC Act, 15 U.S.C. § 44. 24 4. The Complaint states a claim upon which relief may be 25 granted against Defendant under Section 5(a) of the CAN-SPAM Act, 26 15 U.S.C. § 7704(a), and Sections 5(a), 5(m)(1)(A), 13(b) and 19 27 of the FTC Act, 15 U.S.C. §§ 45(a), 45(m)(1)(A), 53(b), and 57b. 28 Stip. Final Judgment CV-07-5940 Page 2 of 16 Case 3:07-cv-05940-SI 1 5. Document 3 4 Filed 11/27/2007 Page 3 of 16 Defendant has entered into this Stipulated Final Judgment 2 For Civil Penalties And Permanent Injunctive Relief (“Order”) 3 freely and without coercion. 4 6. Defendant hereby waives all rights to appeal or otherwise 5 challenge or contest the validity of this Order. 6 7. Defendant agrees that this Order does not entitle Defendant 7 to seek or to obtain attorneys’ fees as a prevailing party under 8 the Equal Access to Justice Act, 28 U.S.C. § 2412, and Defendant 9 further waives any rights to attorneys’ fees that may arise under 10 said provision of law. 11 8. Entry of this Order is in the public interest. 12 DEFINITIONS 13 For the purpose of this Order, the following definitions 14 shall apply: 15 1. “Commercial electronic mail (‘email’) message” means 16 any email message the primary purpose of which is the commercial 17 advertisement or promotion of a commercial product or service 18 (including content on an Internet website operated for a 19 commercial purpose) and that further satisfies the requirements 20 of 16 C.F.R. §§ 316.1 - 316.5, as they exist now and may be 21 amended. 22 2. Unless otherwise specified, “Defendant” means 23 Adteractive, Inc., d/b/a FreeGiftWorld.com and 24 SamplePromotionsGroup.com, and its successors, assigns, 25 affiliates, or subsidiaries. 26 3. “Document” is synonymous in meaning and equal in scope 27 to the usage of the term in Federal Rule of Civil Procedure 28 Stip. Final Judgment CV-07-5940 Page 3 of 16 Case 3:07-cv-05940-SI Document 3 4 Filed 11/27/2007 Page 4 of 16 1 34(a), and includes writings, drawings, graphs, charts, 2 photographs, audio and video recordings, computer records, and 3 other data compilations from which information can be obtained 4 and translated, if necessary, into reasonably usable form through 5 detection devices. A draft or non-identical copy is a separate 6 document within the meaning of the term. 7 4. “Electronic mail (‘email’) address” means a 8 destination, commonly expressed as a string of characters, 9 consisting of a unique user name or mailbox (commonly referred to 10 as the “local part”) and a reference to an Internet domain 11 (commonly referred to as the “domain part”), whether or not 12 displayed, to which an email message can be sent or delivered. 13 5. “Electronic mail (‘email’) message” means a message 14 sent to a unique email address. 15 6. “Initiate,” when used with respect to a commercial 16 email message, means to originate or transmit such message or to 17 procure the origination or transmission of such message, but 18 shall not include actions that constitute routine conveyance of 19 such message. For purposes of this Order, more than one person 20 may be considered to have initiated a message. 21 7. "Landing page" means, in online marketing, a specific 22 web page that a visitor reaches after clicking a link or 23 advertisement in an email or banner ad. This page usually 24 showcases content that is an extension of the link or ad. 25 8. “Person” means a natural person or a corporation, 26 partnership, proprietorship, limited liability company, or other 27 organization or legal entity, including an association, 28 Stip. Final Judgment CV-07-5940 Page 4 of 16 Case 3:07-cv-05940-SI Document 3 4 Filed 11/27/2007 Page 5 of 16 1 cooperative, or agency, or other group or combination acting as 2 an entity. 3 9. “Procure,” when used with respect to the initiation of 4 a commercial email message, means intentionally to pay or provide 5 other consideration to, or induce, another person to initiate 6 such a message on one’s behalf. 7 10. “Recipient,” when used with respect to a commercial 8 email message, means an authorized user of the email address to 9 which the message was sent or delivered. If a recipient of a 10 commercial email message has one or more email addresses in 11 addition to the address to which the message was sent or 12 delivered, the recipient shall be treated as a separate recipient 13 with respect to each such address. If an email address is 14 reassigned to a new user, the new user shall not be treated as a 15 recipient of any commercial email message sent or delivered to 16 that address before it was reassigned. 17 11. “Sender,” when used with respect to a commercial email 18 message, means a person who initiates such a message and whose 19 product, service, or Internet website is advertised or promoted 20 by the message. 21 ORDER 22 I. PROHIBITION AGAINST FAILING TO DISCLOSE MATERIAL INFORMATION 23 IT IS THEREFORE ORDERED that Defendant, its successors, 24 assigns, officers, agents, servants, and employees, and those 25 persons in active concert or participation with it who receive 26 actual notice of this Order by personal service or otherwise are 27 hereby permanently restrained and enjoined from: 28 Stip. Final Judgment CV-07-5940 Page 5 of 16 Case 3:07-cv-05940-SI 1 A. Document 3 4 Filed 11/27/2007 Page 6 of 16 In any email and online advertisement, and on any 2 landing page associated with such email or online advertisement, 3 that contains any direct or implied representation made by 4 Defendant, or made by any authorized agent on behalf of 5 Defendant, that a gift or award is free, failing to disclose, in 6 the same color, font, and size, and within close proximity to 7 such representation that a purchase is required, or that 8 purchases are required, to obtain such gift or award, when such 9 is the case; 10 B. On any landing page associated with any direct or 11 implied representation made by Defendant, or made by any 12 authorized agent on behalf of Defendant, that a gift or award is 13 free, failing to disclose, in a clear and conspicuous manner: 14 1. A list of the monetary obligations a consumer is 15 likely to incur to obtain the advertised gift or 16 award; 17 2. A list of any non-monetary obligations a consumer 18 is likely to incur to obtain the advertised gift 19 or award, such as having to apply and qualify for 20 credit cards or an automobile loan. 21 22 II. PROHIBITION AGAINST VIOLATING THE CAN-SPAM ACT IT IS FURTHER ORDERED that Defendant, its successors, 23 assigns, officers, agents, servants, and employees, and those 24 persons in active concert or participation with it who receive 25 actual notice of this Order by personal service or otherwise are 26 hereby permanently restrained and enjoined from violating the 27 CAN-SPAM Act, 15 U.S.C. §§ 7701 et seq., attached hereto as 28 Stip. Final Judgment CV-07-5940 Page 6 of 16 Case 3:07-cv-05940-SI Document 3 4 Filed 11/27/2007 Page 7 of 16 1 Attachment A, and as it may be amended, by, including, but not 2 limited to, initiating the transmission of a commercial email 3 message that misrepresents the content or subject matter of the 4 message. 5 6 III. CIVIL PENALTIES IT IS FURTHER ORDERED that Defendant shall pay to Plaintiff 7 a civil penalty, pursuant to Section 5(m)(1)(A) of the Federal 8 Trade Commission Act, 15 U.S.C. § 45(m)(1)(A), in the amount of 9 $650,000 as follows: 10 A. Defendant shall make the payment required by this Part 11 within ten (10) business days of the date of entry of this Order 12 by electronic fund transfer or certified or cashier’s check in 13 accordance with the instructions provided by the Office of 14 Consumer Litigation, Civil Division, U.S. Department of Justice, 15 Washington, D.C. 20530, for appropriate disposition; and 16 B. In the event of any default in payment, which default 17 continues for ten (10) business days beyond the due date of 18 payment, the entire unpaid penalty, together with interest, as 19 computed pursuant to 28 U.S.C. § 1961, from the date of default 20 to the date of payment, shall immediately become due and payable. 21 22 IV. COMPLIANCE MONITORING IT IS FURTHER ORDERED that, for the purpose of monitoring 23 and investigating compliance with any provision of this Order, 24 A. Within ten (10) days of receipt of written notice from 25 a representative of the Commission, Defendant shall submit 26 additional written reports, sworn to under penalty of perjury; 27 produce documents for inspection and copying; appear for 28 Stip. Final Judgment CV-07-5940 Page 7 of 16 Case 3:07-cv-05940-SI Document 3 4 Filed 11/27/2007 Page 8 of 16 1 deposition; and/or provide entry during normal business hours to 2 any business location in such Defendant’s possession or direct or 3 indirect control to inspect the business operation; 4 B. In addition, the Commission is authorized to monitor 5 compliance with this Order by all other lawful means, including 6 but not limited to the following: 7 1. Obtaining discovery from any person, without 8 further leave of court, using the procedures 9 prescribed by Fed. R. Civ. P. 30, 31, 33, 34, 36, 10 and 45; 11 2. Posing as consumers and suppliers to Defendant’s 12 employees, or any other entity managed or 13 controlled in whole or in part by Defendant, 14 without the necessity of identification or prior 15 notice; and 16 C. Within ten (10) days of receipt of written notice from 17 a representative of the Commission, Defendant shall permit 18 representatives of the Commission to interview any employer, 19 consultant, independent contractor, representative, agent, or 20 employee who has agreed to such an interview, relating in any way 21 to any conduct subject to this Order. The person interviewed may 22 have counsel present. 23 Provided, however, that nothing in this Order shall limit 24 the Commission’s lawful use of compulsory process, pursuant to 25 Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1, to 26 obtain any documentary material, tangible things, testimony, or 27 information relevant to unfair or deceptive acts or practices in 28 Stip. Final Judgment CV-07-5940 Page 8 of 16 Case 3:07-cv-05940-SI Document 3 4 Filed 11/27/2007 Page 9 of 16 1 or affecting commerce (within the meaning of 15 U.S.C. 2 § 45(a)(1)). 3 V. 4 COMPLIANCE REPORTING BY DEFENDANT IT IS FURTHER ORDERED that, in order that compliance with 5 the provisions of this Order may be monitored: 6 A. For a period of five (5) years from the date of entry 7 of this Order, Defendant shall notify the Commission of any 8 changes in corporate structure that may affect compliance 9 obligations arising under this Order, including but not limited 10 to a dissolution, assignment, sale, merger, or other action that 11 would result in the emergence of a successor entity; the creation 12 or dissolution of a subsidiary, parent, or affiliate that engages 13 in any acts or practices subject to this Order; the filing of a 14 bankruptcy petition; or a change in the corporate name or 15 address, at least thirty (30) days prior to such change, provided 16 that, with respect to any proposed change in the corporation 17 about which Defendant learns less than thirty (30) days prior to 18 the date such action is to take place, Defendant shall notify the 19 Commission as soon as is practicable after obtaining such 20 knowledge; 21 B. One hundred eighty (180) days after the date of entry 22 of this Order, Defendant shall provide a written report to the 23 FTC, sworn to under penalty of perjury, setting forth in detail 24 the manner and form in which it has complied and is complying 25 with this Order. This report shall include, but not be limited 26 to: 27 28 Stip. Final Judgment CV-07-5940 Page 9 of 16 Case 3:07-cv-05940-SI 1 1. Document 3 4 Filed 11/27/2007 Page 10 of 16 A copy of each acknowledgment of receipt of this 2 Order, obtained pursuant to Part VII.B of this 3 Order; and 4 2. 5 Any changes required to be reported pursuant to subsection A of this Part; 6 C. For the purposes of this Order, Defendant shall, unless 7 otherwise directed in writing by the Commission’s authorized 8 representatives, mail all written notifications to the Commission 9 to: 10 Associate Director for the Division of Enforcement Federal Trade Commission 601 New Jersey Avenue, N.W. Washington, D.C. 20580 Re: United States v. Adteractive, Inc. Case No. CV-07-5940 (SI); 11 12 13 14 D. For the purposes of this Order, Defendant shall, unless 15 otherwise directed in writing by a representative of Plaintiff, 16 identify all written notifications required to be sent to 17 Plaintiff as in reference to DJ# 102-3433, and mail them to: 18 Director, Office of Consumer Litigation U.S. Department of Justice - Civil Division P.O. Box 386 Washington, D.C. 20044; and 19 20 21 E. For purposes of the compliance reporting and monitoring 22 required by this Order, representatives of Plaintiff and the 23 Commission are authorized to communicate directly with 24 Defendant’s officers. 25 26 VI. RECORD KEEPING PROVISIONS IT IS FURTHER ORDERED that, for a period of eight (8) years 27 from the date of entry of this Order, Defendant is hereby 28 Stip. Final Judgment CV-07-5940 Page 10 of 16 Case 3:07-cv-05940-SI Document 3 4 Filed 11/27/2007 Page 11 of 16 1 restrained and enjoined from failing to create and retain the 2 following records in connection with the marketing, advertising, 3 or promotion of any “free” gift or award from Defendant, and from 4 failing to make such records (or reports concerning such records) 5 available for inspection and copying within ten (10) days of 6 receipt of a written request from a representative of Plaintiff 7 or Commission: 8 A. Standard accounting records generated in the ordinary 9 course of business including, but not limited to, balance sheets, 10 income statements, and annual reports; 11 B. Personnel records accurately reflecting: the name, 12 address, and telephone number of each person employed in any 13 capacity by such business, including as an independent 14 contractor; that person’s job title or position; the date upon 15 which the person commenced work; and the date and reason for the 16 person’s termination, if applicable; 17 C. Customer files containing the names, addresses, phone 18 numbers, dollar amounts paid, quantity of items or services 19 purchased, and description of items or services purchased, to the 20 extent such information is obtained in the ordinary course of 21 business; 22 D. Records that reflect, for every written or oral 23 consumer complaint received by Defendant in the prior three (3) 24 year period relating to the activities of promoting “free” goods 25 and services, whether directly or indirectly or through any third 26 party, (1) the name, address, and telephone number, if provided 27 by the complaining consumer; (2) the written complaint or 28 Stip. Final Judgment CV-07-5940 Page 11 of 16 Case 3:07-cv-05940-SI Document 3 4 Filed 11/27/2007 Page 12 of 16 1 request, if any; (3) the basis of the complaint or request if 2 known; (4) the nature and result of any investigation conducted 3 concerning the complaint or request; (5) each response and the 4 date of such response to the complaint or request; (6) any final 5 resolution of the complaint or request, and the date of such 6 resolution; and (7) in the event of a denial of any resolution, 7 the reason for the denial; 8 E. Copies of all sales scripts, training materials, 9 advertisements, or other marketing materials; 10 F. Records demonstrating reasonable policies and 11 procedures to process and handle customer inquiries and 12 complaints; and 13 G. All records and documents necessary to demonstrate full 14 compliance with each provision of this Order, including but not 15 limited to, copies of acknowledgments of receipt of this Order 16 required by Part VII.B, and all reports submitted to the FTC 17 pursuant to Part V of this Order. 18 19 VII. DISTRIBUTION OF ORDER BY DEFENDANT IT IS FURTHER ORDERED that, for a period of five (5) years 20 from the date of entry of this Order, Defendant shall deliver 21 copies of this Order as directed below: 22 A. Defendant must deliver a copy of this Order to all its 23 principals, officers, directors, and managers. Defendant must 24 also deliver copies of this Order, or summaries of this Order, to 25 all its employees, agents, and representatives who engage in 26 conduct related to the subject matter of this Order. For current 27 personnel, delivery shall be within ten (10) days of service of 28 Stip. Final Judgment CV-07-5940 Page 12 of 16 Case 3:07-cv-05940-SI Document 3 4 1 this Order upon Defendant. Filed 11/27/2007 Page 13 of 16 For new personnel, delivery shall 2 occur prior to them assuming their responsibilities; and 3 B. Defendant must secure a signed and dated statement 4 acknowledging receipt of this Order, within thirty (30) days of 5 delivery, from all persons receiving a copy of this Order 6 pursuant to this Part. 7 8 VIII. ACKNOWLEDGMENT OF RECEIPT OF ORDER BY DEFENDANT IT IS FURTHER ORDERED that Defendant, within five (5) 9 business days of receipt of this Order as entered by the Court, 10 must submit to the Commission a truthful sworn statement 11 acknowledging receipt of this Order. 12 13 IX. FEES AND COSTS IT IS FURTHER ORDERED that each party to this Order hereby 14 agrees to bear its own costs and attorneys’ fees incurred in 15 connection with this action. 16 17 X. SEVERABILITY IT IS FURTHER ORDERED that the provisions of this Order are 18 separate and severable from one another. If any provision is 19 stayed or determined to be invalid, the remaining provisions 20 shall remain in full force and effect. 21 22 XI. RETENTION OF JURISDICTION IT IS FURTHER ORDERED that this Court shall retain 23 jurisdiction of this matter for purposes of construction, 24 modification, and enforcement of this Order. 25 26 XII. COMPLETE SETTLEMENT The parties, by their respective counsel, hereby consent to 27 entry of the foregoing Order, which shall constitute a final 28 Stip. Final Judgment CV-07-5940 Page 13 of 16 Case 3:07-cv-05940-SI Document 3 4 1 judgment and order in this matter. Filed 11/27/2007 Page 14 of 16 The parties further stipulate 2 and agree that the entry of the foregoing Order shall constitute 3 full, complete, and final settlement of this action. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Stip. Final Judgment CV-07-5940 Page 14 of 16 Case 3:07-cv-05940-SI Document 3 4 Filed 11/27/2007 1 FOR THE PLAINTIFF: 2 UNITED STATES OF AMERICA: 3 PETER D. KEISLER Assistant Attorney General 4 Civil Division U.S. Department of Justice 5 EUGENE M. THIROLF 6 Director, KENNETH L. JOST 7 Deputy Director, Office of Consumer Litigation 8 /s/ 9 JOHN W. BURKE (VA BAR NO. 72780) Trial Attorney 10 Office of Consumer Litigation U.S. Department of Justice 11 P.O. Box 386 Washington, D.C. 20044 12 PHONE: 202-353-2001 FAX: 202-514-8742 13 EMAIL: Josh.Burke@usdoj.gov 14 FOR THE FEDERAL TRADE COMMISSION 15 /s/ 16 LOIS C. GREISMAN Associate Director for Marketing Practices 17 /s/ 18 STEPHEN L. COHEN Ethan Arenson 19 Attorneys, Federal Trade Commission 600 Pennsylvania Ave., N.W. 20 Washington, D.C. 20580 21 22 23 24 25 26 27 28 Stip. Final Judgment CV-07-5940 Page 15 of 16 Page 15 of 16 Case 3:07-cv-05940-SI Document 3 4 Filed 11/27/2007 Page 16 of 16 1 FOR THE DEFENDANT: 2 /s/ D. Reed Freeman, Jr. 3 Kelley Drye Collier Shannon 3050 K St., NW, Suite 400 4 Washington, D.C. 20007 202-342-8880 5 6 /s/ Adteractive, Inc. 7 BY: Josh Peterson Chairman 8 /s/ 9 Adteractive, Inc. BY: Diego Canoso 10 Vice President _____________________________ 11 303 2nd Street, Suite 375 San Francisco, CA 94107 12 27TH NOVEMBER 13 SO ORDERED this ___________ day of ___________, 2007. 14 ____________________________ United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Stip. Final Judgment CV-07-5940 Page 16 of 16
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