# FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 1 of 89 * -PUBLIC > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Aftc%3A27c9ed5a79863cb4 ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 1 of 89 * -PUBLIC PUBLIC UNITED STATES OF AMERICA BEFORE THE FEDERAL TRADE COMMISSION COMMISSIONERS: Lina M. Khan, Chair Rebecca Kelly Slaughter Alvaro M. Bedoya In the Matter of FLEETCOR TECHNOLOGIES, INC., a corporation, and Docket No. D-9403 RONALD CLARKE, individually and as an officer of FLEETCOR TECHNOLOGIES, INC. COMPLAINT COUNSEL’S MOTION TO PARTIALLY LIFT STAY OF ADMINISTRATIVE PROCEEDINGS TO PERMIT DISPOSITIVE MOTIONS Pursuant to the Federal Trade Commission’s Rule of Practice 3.22, Complaint Counsel respectfully request that the Commission partially lift the stay of this administrative action, which has been in place for more than twenty-one months, for the sole purpose of permitting the parties to file dispositive motions. As explained below, the FTC’s action on identical claims before the U.S. District Court for the Northern District of Georgia has now been litigated to conclusion and has determined that Respondents FleetCor Technologies, Inc., (“FleetCor”) and Ronald Clarke are liable on all five counts alleged. FTC v. Fleetcor Techs., Inc., 620 F. Supp. 3d 1268 (N.D. Ga. 2022).1 As such, the goal of the stay as stated by the Commission—to avoid the need for the parties to spend resources litigating the same case in two forums—can and should 1 In June 2023, having granted summary judgment to the FTC, the district court entered a permanent injunction against both Respondents and closed the case. 1 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 2 of 89 * -PUBLIC PUBLIC now be accomplished by permitting this action to be resolved through immediate dispositive motion practice. Complaint Counsel seek to promptly file a motion for summary decision based on the determinations made in the district court action, thereby bringing the small business customers victimized by Respondents’ unfair and deceptive practices a critical step closer to the hundreds of millions of dollars of monetary relief that have been withheld from them during the threeyear-plus pendency of the federal court and administrative proceedings.2 Any proceedings and deadlines in this action other than those directly related to dispositive motion filings should, however, remain stayed: because all issues necessary to resolve this administrative proceeding have been fully litigated in the district court, discovery and evidentiary hearing proceedings would serve no purpose other than to inflict on the parties the burden and expense of duplicative litigation that the stay was initiated to prevent. I. Background In December 2019, the Commission authorized FTC staff to file in the Northern District of Georgia a complaint against Respondents under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), seeking both a permanent injunction and equitable monetary relief. The complaint alleged that Respondents, who market and sell “fuel cards” that can be used to make purchases at gas stations and similar fueling locations, had violated the FTC Act in two principal ways: (1) by charging their customers, who overwhelmingly are small businesses, hundreds of millions of dollars of fees without their consent; and (2) by misleadingly marketing their products, such as by misrepresenting the discounts available to cardholders. 2 The proposed order sought through the instant motion to partially lift the stay would afford Respondents an equal opportunity to file any dispositive motion. 2 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 3 of 89 * -PUBLIC PUBLIC The parties had conducted full discovery on all claims and defenses in the district court action and were midway through summary judgment briefing when the Supreme Court issued its April 2021 decision in AMG Capital Management v. FTC, which held that the Commission cannot obtain monetary relief through Section 13(b). 141 S. Ct. 1341 (2021). In order to preserve the opportunity for monetary relief for the small business consumers harmed by Respondents’ years of unfair and deceptive practices, FTC staff sought and filed the administrative complaint in this action, which is identical in substance to the Section 13(b) complaint. In August 2021, within days of filing the administrative complaint, FTC staff filed two motions:  a motion before the district court to stay or voluntarily dismiss without prejudice the Section 13(b) action in order that this administrative action—a predicate to monetary relief under Section 19(a)(2), 15 U.S.C. § 57b(a)(2)—proceed without delay; and  a motion before the Commission seeking to stay this administrative proceeding pending the district court’s resolution of the motion to stay or voluntarily dismiss. The Commission promptly granted the motion to stay the administrative proceeding, which was unopposed. Order Staying Administrative Proceeding, Doc. 603387 (Aug. 25, 2021). In so doing, the Commission found that the interest in avoiding unnecessary burden and expense from duplicative actions provided good cause to stay this proceeding while the district court resolved the motion to stay or dismiss the Section 13(b) action. Id. After full briefing and a hearing on the motion to stay or dismiss the Section 13(b) action, ayliwhich Respondents “staunchly” opposed, the district court denied the FTC’s motion, instead deciding to itself adjudicate the merits, after which the FTC—if successful—could obtain a cease-and-desist order and then return to the district court for monetary relief pursuant to 3 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 4 of 89 * -PUBLIC PUBLIC Section 19(a)(2). Order at 21, Fleetcor Techs., No. 19-5727 (N.D. Ga. Feb. 7, 2022). In successfully arguing that the district court should itself determine liability, Respondents expressly—and correctly—represented that there are no different or additional issues that require discovery or adjudication in this administrative action, and that Respondents will be conclusively bound in this action by the district court’s liability determinations. See infra Section II.A. In August 2022, the district court granted summary judgment in favor of the FTC on all claims. Fleetcor Techs., 620 F. Supp. 3d 1268. In a comprehensive, 32,000-word opinion, the Court held that (1) the challenged marketing representations were materially misleading; (2) FleetCor never procured customers’ consent for the seven challenged fees it imposed on consumers; and (3) FleetCor systematically charged late fees for on-time payments and in circumstances where it had blocked consumers from making timely payment. Id. at 1289–1339. The Court also held that FleetCor’s CEO, Ronald Clarke, was liable for the company’s conduct. Id. at 1339–43. In addition, the Court held that permanent injunctive relief was “imperative to protect the public interest” given (1) the “mountain of evidence” that Defendants’ violations “were farreaching” and “ingrained in the fabric of the company for years”; (2) “unrefuted evidence . . . that the conduct was intentional”; (3) Defendants’ refusal to acknowledge the wrongfulness of their conduct; (4) evidence of ongoing violations of the FTC Act; and (5) the serious harm to consumers that would result should Defendants’ violations continue. Id. at 1343–46. To determine the contours of a permanent injunction, the district court solicited multiple rounds of briefing and held a hearing. In June 2023, approximately ten months after the grant of summary judgment, the district court entered an Order for Permanent Injunction and Other Relief against 4 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 5 of 89 * -PUBLIC PUBLIC both Respondents and closed the case. See Order for Permanent Injunction and Other Relief, Fleetcor Techs., No. 19-5727 (N.D. Ga. June 8, 2023). II. This Action Should Proceed Immediately to Dispositive Motion Practice The Commission is committed to resolving Part 3 proceedings expeditiously; delay is the exception and permitted only upon a showing of good cause.3 Now that the district court has determined Respondents’ liability on all counts, this action should be resolved through dispositive motion practice because all necessary issues have been conclusively determined in the district court and these determinations are ripe for preclusive use. Moreover, failing to proceed immediately to dispositive motion practice would unjustly impose additional delay before Respondents’ long-suffering customers can receive the monetary relief to which they are entitled. A. All Necessary Issues Have Been Conclusively Determined in the District Court and These Determinations Are Ripe for Preclusive Use It is entirely appropriate for this matter to move directly to dispositive motion practice without discovery or other pretrial proceedings because, as Respondents acknowledged in successfully persuading the district court to deny the FTC’s motion to stay the Section 13(b) action, there are no different or additional issues for adjudication in this action beyond those addressed by the district court, and Respondents are bound here by the district court’s liability determinations. Among other statements, Respondents represented to the district court that, with 3 See 16 C.F.R. § 3.1 (“[T]he Commission’s policy is to conduct [Part 3] proceedings expeditiously.”); id. § 3.41(b) (“Hearings shall proceed with all reasonable expedition . . . .”); id. § 3.41(f) (“The pendency of a collateral federal court action that relates to the administrative adjudication shall not stay the proceeding” unless “the Commission for good cause, so directs”). 5 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 6 of 89 * -PUBLIC PUBLIC what Respondents viewed as one possible exception,4 there is “no daylight between what Your Honor would decide in the court and what [the FTC] would need to prove there [in the administrative action].” Att. A, Transcript of Oral Argument (“Transcript”) at 41–42, Fleetcor Techs., Inc., No. 19-5727 (N.D. Ga. Jan. 7, 2022). Respondents further represented to the district court that, for “things that are litigated in front of Your Honor we would have issue preclusion. So anything that Your Honor decides against us, that would bind us.” Id. at 41. Respondents’ representations to the district court were a correct statement of law. Under the doctrine of issue preclusion, “once a court has decided an issue of fact or law necessary to its judgment, that decision is conclusive in a subsequent suit” involving a party to the prior litigation. United States v. Mendoza, 464 U.S. 154, 158 (1984). Preclusion is appropriate if (1) the issues at stake are “identical” to those in the prior litigation; (2) the issue was “actually litigated” in the prior action; (3) the issue was a “critical and necessary part” of the prior judgment; and (4) the parties are the same or in privity with each other. See, e.g., Terrell v. DeConna, 877 F.2d 1267, 1270 (5th Cir. 1989); Baloco v. Drummond Co., 767 F.3d 1229, 1251 (11th Cir. 2014). Because there is “no daylight” between the determinations in the district court and those necessary for a cease-and-desist order—i.e., the same issues were actually and 4 As the sole potential difference between the federal court and administrative actions, Respondents claimed, incorrectly, that in this proceeding Complaint Counsel would need to overcome a “scienter defense.” Att. A, Transcript at 41–42. There is, however, no scienter defense or requirement in determining a violation of Section 5. E.g., Orkin Exterminating Co. v. FTC, 849 F.2d 1354, 1368 (11th Cir. 1988). Respondents’ confused statements about a “scienter defense” appear to be references to the “dishonest or fraudulent” standard of Section 19(a)(2). See Att. A, Transcript at 41–42, 65. The text of the provision, however, commits to the district court in which a Section 19(a)(2) action is pending, rather than to an administrative adjudication, the determination whether a reasonable person would have known the acts or practices at issue were dishonest or fraudulent. 15 U.S.C. § 57b(a)(2). As such, the “dishonest or fraudulent” standard of Section 19(a)(2) does not represent an additional issue for this proceeding or the Commission. 6 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 7 of 89 * -PUBLIC PUBLIC necessarily litigated between the same parties—Respondents will indeed be bound here by the district court’s determinations. Respondents further assured the district court—again, accurately—that if the court determined liability, this “would then make the cease and desist proceedings very efficient because . . . anything that needs to be decided that you already decided, that would be done. You resolved it conclusively.” Att. A, Transcript at 41–42; see also Att. B, Respondents’ Letter to Hon. Amy Totenberg at 2 (Jan. 12, 2022) (“If the FTC prevails here, it would streamline (if not entirely resolve) the administrative proceeding, because any issues decided by this Court would be conclusive.”). Accordingly, any proceedings and deadlines in this action other than those directly related to dispositive motion filings should remain stayed: discovery and evidentiary proceedings would serve no purpose other than to inflict on the parties the burden and expense of duplicative litigation that the stay was initiated to prevent. See Att. A, Transcript at 38 (Respondents’ representations that there are no “meaningful differences between the [federal court] injunction standard and the cease and desist order standard” and that “we see no daylight” on the “type of evidence that would be presented and the decision of the Court or the FTC”).5 In addition, the determinations of the district court are ripe for preclusive use. Although Respondents are likely to appeal the district court’s entry of judgment against them, it is well- 5 Complaint Counsel agreed with Respondents that the district court and the Commission would apply identical legal standards to determine liability. Att. A, Transcript at 44 (“In terms of liability, the same standard, correct.”). Complaint Counsel noted that there may be “a little bit of daylight” between the factors that the district court and the Commission would respectively consider in determining the scope of injunctive relief, id. at 29–32, 44–45, while, as noted in the accompanying text, Respondents saw “no daylight.” In any event, Complaint Counsel agreed that the same factual determinations would be sufficient to decide injunctive relief in either venue. Id. at 30–31, 47 (noting that the summary judgment papers filed by the parties in the district court could be re-used in the cease-and-desist proceeding). 7 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 8 of 89 * -PUBLIC PUBLIC established that a possible or pending appeal does not diminish the preclusive effect of a district court’s determinations. See, e.g., Jaffree v. Wallace, 837 F.2d 1461, 1467 (11th Cir. 1988) (“The established rule in the federal courts is that a final judgment retains all of its res judicata consequences pending decision of the appeal.”); Comer v. Murphy Oil USA, Inc., 718 F.3d 460, 467 (5th Cir. 2013) (“[a] case pending appeal is res judicata and entitled to full faith and credit unless and until reversed on appeal”); Ross ex rel. Ross v. Bd. of Educ. of Twp. High Sch. Dist. 211, 486 F.3d 279, 284 (7th Cir. 2007) (“the fact that an appeal was lodged does not defeat the finality of the judgment” for preclusion purposes); Hawkins v. Risley, 984 F.2d 321, 324 (9th Cir. 1993) (“the preclusive effects of a lower court judgment cannot be suspended simply by taking an appeal that remains undecided”); Erebia v. Chrysler Plastic Products Corp., 891 F.2d 1212, 1215 n. 1 (6th Cir. 1989) (“a final judgment retains all of its preclusive effect pending appeal”). B. Failing to Proceed Immediately to Dispositive Motion Practice Would Unjustly Delay Monetary Relief Significantly, any additional delay before proceeding to dispositive motion practice would be manifestly unjust to the consumers injured at Respondents’ hands. The district court’s summary judgment decision reflects substantial and ongoing injury to consumers. Fleetcor Techs., 620 F. Supp. 3d at 1314–15, 1319 (noting FTC estimates of equitable monetary injury to consumers from unlawful charges of more than $530 million as of December 2019); id. at 1345– 46 (unlawful FleetCor practices are ongoing). The affected consumers are not large enterprises that can easily bear an indefinite wait for redress, but overwhelmingly are small, lesssophisticated businesses with limited resources. Id. at 1280, 1334, 1346 (citing FleetCor documents and studies describing Respondents’ customers as “small business owners/coowners” who are “not business people,” are “short on time due to wearing multiple ‘hats,’” and are often “fairly unsophisticated”). There is no good cause to further extend their suffering by 8 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 9 of 89 * -PUBLIC PUBLIC failing to proceed immediately to dispositive motion practice. III. Conclusion For the foregoing reasons, Complaint Counsel respectfully request that the Commission enter the proposed order to partially lift the stay in this Part 3 action. June 23, 2023 Respectfully submitted, /s/ Daniel O. Hanks Daniel O. Hanks James I. Doty Bureau of Consumer Protection 600 Pennsylvania Avenue NW Mailstop CC-10232 Washington, DC 20580 9 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 10 of 89 * -PUBLIC PUBLIC Attachment A Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 1 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 11 of 89 * -PUBLIC PUBLIC The following is the PDF of an official transcript. Official transcripts may only be filed in CM/ECF by the Official Court Reporter and will be restricted in CM/ECF for a period of 90 days. You may cite to a portion of the attached transcript by the docket entry number, referencing page and line number, only after the Court Reporter has filed the official transcript; however, you are prohibited from attaching a full or partial transcript to any document filed with the Court. UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 2 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 12 of 89 * -PUBLIC PUBLIC 1 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION 2 3 FEDERAL TRADE COMMISSION, PLAINTIFF, 4 5 vs. 6 FLEETCOR TECHNOLOGIES, INC., AND RONALD CLARKE, 7 DEFENDANTS. : : : : : : : : : : DOCKET NUMBER 1:19-CV-5727-AT 8 9 10 TRANSCRIPT OF ORAL ARGUMENT VIA ZOOM PROCEEDINGS 11 BEFORE THE HONORABLE AMY TOTENBERG 12 UNITED STATES SENIOR DISTRICT JUDGE 13 JANUARY 7, 2022 14 10:28 A.M. 15 16 17 18 19 20 MECHANICAL STENOGRAPHY OF PROCEEDINGS AND COMPUTER-AIDED 21 TRANSCRIPT PRODUCED BY: 22 OFFICIAL COURT REPORTER: 23 24 SHANNON R. WELCH, RMR, CRR 2394 UNITED STATES COURTHOUSE 75 TED TURNER DRIVE, SOUTHWEST ATLANTA, GEORGIA 30303 (404) 215-1383 25 UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 3 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 13 of 89 * -PUBLIC PUBLIC 1 A P P E A R A N C E S O F C O U N S E L 2 3 FOR THE PLAINTIFF: 4 5 6 7 BRITTANY K. FRASSETTO GREGORY J. MADDEN MICHAEL A. BOUTROS LISA ROTHFARB MICHAEL E. TANKERSLEY FEDERAL TRADE COMMISSION 8 FOR THE DEFENDANT FLEETCOR TECHNOLOGIES, INC.: 9 10 11 BENJAMIN M. MUNDEL DANIEL J. HAY MARK T. HOPSON SIDLEY AUSTIN LLP 12 13 JESSICA A. CALEB CAPLAN COBB 14 15 FOR THE DEFENDANT RONALD CLARKE: 16 17 LEVI M. DOWNING KELLEY DRYE COLLIER SHANNON 18 19 20 21 22 23 24 25 UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT 2 Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 4 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 14 of 89 * -PUBLIC 3 Is everyone connected in? I P R O C E E D I N G S 1 2 PUBLIC (Atlanta, Fulton County, Georgia; January 7, 2022.) 3 THE COURT: All right. 4 see Mr. Madden just connected. 5 MR. MADDEN: Yes, Your Honor. 6 THE COURT: No. No. I apologize. No need to apologize. 7 on time. 8 present that you-all had organized to be here. 9 I hope you-all are well. You are I just was trying to make sure that everyone was We are here to have oral 10 argument and discuss the present pending motion to dismiss from 11 the FTC and the summary judgment motion -- related summary 12 judgment motions and Daubert motion. But my greatest concern obviously is the motion -- 13 14 the motion to dismiss and request that it be done on a 15 voluntary basis and the response of the defendant to this. As I indicated, I allocated a substantial amount of 16 17 time for this. I have some thoughts about how we might 18 proceed. 19 much time you would like to have to make any presentation you 20 so desire, first of all. 21 MS. FRASSETTO: But I would like to hear from you first as to how Yes, Your Honor. Again, thank you 22 for accommodating our request to hold this hearing virtually 23 today. 24 The FTC is prepared to discuss specifically our 25 motion to stay or alternatively dismiss without prejudice. UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT And Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 5 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 15 of 89 * -PUBLIC PUBLIC 1 I would be happy to give some opening remarks on that, if you 2 would like. 4 3 THE COURT: Okay. 4 MR. MUNDEL: Thank you, Your Honor. 5 Mundel on behalf of FleetCor. 6 the motions that Your Honor mentioned today. 7 proceed in any particular order and timing limits, Your Honor. THE COURT: 8 And defense counsel? This is Ben We're prepared to discuss all of All right. We're happy to Well, I think first and 9 foremost I would like to spend time on the motion to dismiss 10 filed by the FTC. 11 motion for summary judgment. 12 helpful to me at this juncture. I would like to spend less time on the I don't know that it will be as But there are issues that -- that might be of some 13 14 import. 15 consider is also what are the -- you know, really looking at 16 the motion to dismiss, as well as the fact that the Government 17 also has a pending motion for an injunction -- I mean, has 18 provided a delineated request for injunctive relief. 19 20 21 22 And one of the things I would like everyone to What is the possibility -- because it is not one that is really fully explored in anyone's position so far that -I'm sorry. for a moment. (There was a brief pause in the proceedings.) 23 24 25 I'm going to have to close the door here THE COURT: the house. I am out of practice with using Zoom from But so many people have become ill or requested UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 6 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 16 of 89 * -PUBLIC PUBLIC 1 modifications in the way of the proceedings that here I am 2 again doing it. 3 All right. 5 In any event, what I'm interested in is 4 partially if the -- also if the FTC -- I ultimately conclude 5 that the proceedings should continue at least as to injunctive 6 relief and in this -- this forum, does that in any way preclude 7 the FTC from basically either continuing with its Section 19 8 claim possibly in the commission proceeding or just simply 9 staying -- my allowing them to stay that -- the complaint -- 10 continue to stay their -- that proceeding pending the 11 conclusion of the injunctive relief claim. 12 And that is a -- and that notion would be essentially 13 not that I would hold open this proceeding and then stay it 14 later -- for later on intervention. 15 could -- that might not be a reasonable way of proceeding. 16 might be that this matter comes to a close. 17 decided at some point it was going to come back into federal 18 court, it could obviously always mark this as a related case. 19 But this case would be closed. 20 I mean, obviously it It And if the FTC I'm just sort of throwing that out so that you-all 21 can think about it. And there are other -- lots of other 22 related issues I have. 23 option that was not discussed in your briefs. But that was one that was just an 24 So -- all right. I've lost -- let me see. 25 Ms. Frassetto, do you want to proceed? UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT It is your Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 7 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 17 of 89 * -PUBLIC PUBLIC 1 6 motion. 2 MS. FRASSETTO: Yes. I will proceed, Your Honor. 3 I would like to briefly summarize the key issues 4 before Your Honor today. First, I would like to discuss the 5 FTC's sole reason for its request for a stay or dismissal 6 without prejudice. 7 giving money back to injured consumers in the wake of the 8 Supreme Court's decision in AMG. And that is to preserve the possibility of 9 Second, I will discuss why all the equities weigh in 10 favor of granting the FTC's request, why there is no prejudice 11 to defendant, and why the FTC's proposed course of action is 12 fully supported by Eleventh Circuit precedence. First, we are here today because the FTC is seeking 13 14 to reserve the possibility of getting money back to injured 15 small business consumers in the middle of the pandemic and post 16 AMG. 17 The extensive evidence presented in this case shows 18 that these consumers lost more than $550 million after 19 defendants lured them in with false advertisements and then 20 charged them hidden fees. 21 overturned nearly 40 years of circuit court precedent, means 22 that the FTC can no longer recover a single penny of that money 23 for consumers in this fashion. But the AMG decision, which 24 The Supreme Court has made clear that the FTC's only 25 viable path to monetary relief for consumers in cases like this UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 8 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 18 of 89 * -PUBLIC PUBLIC 7 1 is to first go through administrative litigation. As a result, 2 the commission authorized the filing of an administrative 3 complaint against defendants in August of last year. 4 FTC is trying to do here is respect the AMG decision and move 5 forward as seamlessly as possible to protect injured consumers. All the 6 Our proposed path would preserve the possibility of 7 getting money back to consumers if defendants are found liable 8 rather than expending this Court's resources deciding liability 9 but then leaving consumers with nothing. 10 Second, the issue before Your Honor today is what to 11 do about this action in a post AMG world where the only path 12 forward for getting money to injured consumers is an 13 administrative proceeding. 14 15 16 We are requesting a stay -(There was a brief pause in the proceedings.) MS. FRASSETTO: So, again, we are seeking a stay or 17 alternatively dismissal without prejudice. 18 proceeding in administrative litigation without simultaneously 19 litigating in federal court. 20 are amply supported by Eleventh Circuit precedent. 21 Each would allow And both the stay and dismissal I will first discuss the stay and then the dismissal 22 without prejudice. So with respect to the stay, our sole 23 driving force here is preserving the possibility of monetary 24 relief for injured consumers. 25 possibility of obtaining a greater amount of relief for those A stay would preserve the UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 9 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 19 of 89 * -PUBLIC PUBLIC 1 consumers. 2 be limited to three years from the date the administrative 3 action was filed in August 2021, instead of three years from 4 the date this action was filed in December 2019. 6 Without a stay, consumers' relief would potentially THE COURT: 5 Let me ask you -- let me interrupt you there. So have you assessed what the scope of the impact 7 8 will be? 9 right? I mean, you're talking about a two-year difference; 10 MS. FRASSETTO: 11 numbers, if that would be useful. Yes, Your Honor. 12 THE COURT: 13 much it truncates the remedy. 14 Yes. MS. FRASSETTO: Sure. So if it was three years from August of 2021, it would be less than half. 16 best about 250 million. 17 THE COURT: 18 MS. FRASSETTO: I can provide rough I mean, I would like to know how 15 It would be at Okay. And I would note that the three years 19 from December 2019 would still be about 425 million. 20 is still less than we were seeking because of this three-year 21 statute of limitations. 22 So that As we noted in the brief, we would potentially argue 23 for equitable tolling. 24 premature here. 25 8 We think all of that is somewhat But just so you have the numbers. THE COURT: Okay. Go ahead. UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 10 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 20 of 89 * -PUBLIC PUBLIC 1 MS. FRASSETTO: Okay. 9 So practically speaking, the 2 stay would work as follows. If defendants are held liable in 3 the administrative proceedings, we would then return to court 4 on a narrower issue, the amount of money that should go back to 5 victims injured by defendants' practices. 6 All of the traditional stay factors, the interest of 7 the plaintiff, defendants, courts, nonparties, and the public, 8 weigh in favor of a stay. 9 notably injured consumers would benefit by having the case 10 proceed in a forum that potentially allows recovery of more 11 than $550 in relief. 12 businesses injured by defendants' conduct at a time when small 13 businesses are facing pandemic hardships as well. 14 The FTC, the public, and most These funds would primarily go to small Administrative litigation would also free up Your 15 Honor's docket for the time being. As for any follow-on 16 action, the issues would be narrowed for this Court. 17 Honor would not need to decide liability, only monetary relief. 18 And defendants have made no credible argument that a stay would 19 harm their interest. Your 20 Further, the proposed stay is moderate and analogous 21 to the Tomco Equipment case cited in our opening brief also out 22 of this district. 23 patent reexamination, a process that could take over a year. 24 The Court felt that the reexamination would simplify and narrow 25 the issues before it. There, the Court granted a stay pending a UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 11 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 21 of 89 * -PUBLIC PUBLIC 10 1 Here, the administrative proceeding can conclude in 2 less than a year and would resolve Section 5 liability and 3 injunctive relief. 4 left for this Court to decide. 5 would only have to decide issues related to monetary relief. 6 In turning now to dismissal without prejudice, as I If the FTC lost, there would be nothing If the FTC won, Your Honor 7 noted before, while the stay would potentially preserve a 8 larger amount of what was lost for struggling small businesses, 9 the FTC is moving in the alternative for dismissal without 10 prejudice. 11 McCants v. Ford Motor Co. set forth the Eleventh Circuit 12 standard very clearly. 13 And there Potenberg v. Boston Scientific and In Potenberg, the court held -- and I quote -- in 14 most cases, a voluntary dismissal should be granted unless the 15 court will suffer clear legal prejudice other than the mere 16 prospect of a subsequent lawsuit as a result. 17 And in McCants, the court granted voluntary dismissal 18 without prejudice. 19 likely time-barred where the plaintiff had originally filed and 20 sought dismissal and not time-barred where the plaintiffs 21 intended to refile. 22 And notably in that case, the suit was McCants is particularly instructive in refuting 23 defendants' claim here that losing a defense to monetary relief 24 is clear legal prejudice. 25 defense is not clear legal prejudice, surely losing only one If losing its statute of limitations UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 12 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 22 of 89 * -PUBLIC PUBLIC 11 1 defense also is not. And tellingly defendants did not cite a 2 single in-circuit decision to support their claim that losing 3 such a defense was a clear legal prejudice. Likewise, it is not clear legal prejudice to move to 4 5 administrative proceedings. Any argument that such proceedings 6 violate due process is without legal support and was 7 specifically rejected by the Supreme Court in FTC v. Cement 8 Institute and Withrow v. Larkin, in which the court 9 specifically said -- and I quote -- the combination of 10 investigative and adjudicative functions does not without more 11 constitute a due process violation. Further, none of the parties' efforts to date will be 12 13 wasted. 14 arguments in its motion to the commission. 15 not seek additional discovery assuming defendants do the same. 16 The FTC will be making the same summary judgment And the FTC will The facts here are analogous to those in Daglis v. 17 Coca-Cola where Your Honor granted dismissal without prejudice 18 after 21 months of discovery and after defendants filed a 19 summary judgment motion. 20 parties could reuse discovery from that action in any future 21 proceeding. Your Honor further noted that the 22 Finally, I want to close by addressing defendants' 23 bad faith allegations, which personally upset me because the 24 FTC has been civil and professional throughout these 25 proceedings under unprecedented legal change and challenges UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 13 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 23 of 89 * -PUBLIC PUBLIC 12 1 during the pandemic, which we are still obviously facing today. The FTC has acted in good faith throughout these 2 3 proceedings, including in the wake of the Supreme Court's AMG 4 decision. 5 hour gotcha game to us. 6 We are here for consumers. 7 possibility of getting money back to small business consumers 8 who faced dire circumstances during the pandemic. Proceeding administratively is not some eleventh We are not doing this for ourselves. We're doing this to preserve the 9 We have been clearly transparent with the Court and 10 defendants that obtaining monetary relief for these consumers 11 is the sole driving factor in our decision. 12 And I want to thank Your Honor again for your time 13 today, and I look forward to answering any questions you may 14 have. 15 Thank you. 16 THE COURT: I have a number of questions. But I 17 think it would be more useful to hear from defense counsel and 18 then proceed to ask the questions. 19 MS. FRASSETTO: 20 MR. MUNDEL: 21 Mundel on behalf of FleetCor. Yes, Your Honor. Thank you, Your Honor. This is Ben I want to start by answering the question that you 22 23 have. You asked whether the FTC can litigate liability and the 24 injunction in federal court and then go back to an admin 25 proceeding in Section 19 to get the monetary relief if it UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 14 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 24 of 89 * -PUBLIC PUBLIC 13 1 prevails. 2 could not do that. 3 can see at this time why the FTC, if it prevails in front of 4 Your Honor, could not do that. 5 And Ms. Frassetto never told the Court that the FTC And, in fact, there is no reason that we So that is why it is clear to us from what the FTC is 6 doing is they are trying avoid this Court from determining 7 liability. 8 that they filed in front of Your Honor, instead of having an 9 independent Article III court decide them. 10 the only reason for this motion is because the five 11 commissioners at the FTC want to decide the very motions that 12 they have filed in this Court. 13 independent neutral judge to decide it, they want to decide 14 their own motion. 15 They are trying to take the summary judgment motion The only reason -- Instead of allowing an And there are three things beyond that that I would 16 like the Court to keep in mind up front. 17 this is a dispositive motion. 18 Court permits the commissioners to decide their own summary 19 judgment motion it would be dispositive. 20 The first is that It is dispositive because if the Since 1995, the FTC has prevailed in all of the cases 21 they filed directly in its own forum. But this is not just any 22 ordinary case. 23 for the first time here, the FTC has actually already filed 24 summary judgment motions in front of the Court. 25 motions, it has said it should prevail as a matter of law. Because unlike every single one of those cases, UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT And in those Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 15 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 25 of 89 * -PUBLIC PUBLIC 14 And Ms. Frassetto confirmed that today that they 1 2 still believe they should prevail as a matter of law. And in 3 their motion to dismiss and stay, they told the Court that they 4 demonstrated in its summary judgment papers that FleetCor 5 violated the law. 6 commissioners want to decide their very own summary judgment 7 motion where they have already prejudged that FleetCor violated 8 the law. So it is dispositive because the FTC The second thing we want the Court to keep in mind is 9 10 that this is completely unprecedented. The FTC cannot cite any 11 precedence for the proposition that it may take a case that it 12 filed in federal court, litigate it all the way from summary 13 judgment, and then dismiss it in favor of its own 14 administrative forum. 15 have never done that before. 16 done it before either. In the 108-year history of the FTC, they And no federal agency has ever And certainly AMG was an intervening Supreme Court 17 18 case. 19 appeals cases have decided issues on antitrust and consumer 20 protection and issues that other agencies dealt with during the 21 pendency of the litigation and never before has any federal 22 agency tried to do what the FTC is doing here. 23 But this is not new. Supreme court cases and court of The third thing we would ask the Court to keep in 24 mind is that the burden of proof remains with the FTC. 25 is, Rule 41 prohibits the Federal Trade Commission or any UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT That Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 16 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 26 of 89 * -PUBLIC PUBLIC 15 1 plaintiff from voluntarily dismissing a suit at this late stage 2 without an order of the court. 3 an order from the court is to protect the interests of 4 defendants and protect the interests of defendants just like 5 FleetCor here today. And the reason Rule 41 requires When it comes to the legal standard, the parties 6 7 largely agree that the motion to dismiss should be denied if it 8 will cause a legal prejudice or it was done in bad faith. 9 agree on the legal standard, but the burden of proof is on them 10 to disprove that there was any legal prejudice or any bad 11 faith. We And they haven't done that here, Your Honor. THE COURT: 12 I don't know that it is their burden to 13 show there is no bad faith. I think that is always your 14 burden -- the opposing party's burden to show bad faith and 15 which is a very high standard when you are dealing with an 16 agency in terms of its decision-making as properly argued by 17 the FTC. 18 these contexts where it is -- is meaningful argument. And I don't know that sort of mere supposition in 19 MR. MUNDEL: Certainly, Your Honor. To be clear, bad 20 faith is not required. 21 on the basis of legal prejudice standing alone. 22 identified bad faith beyond just supposition. 23 favorable example of that, Your Honor, is the case law from the 24 Eleventh Circuit -- and the FTC admits this on Page 9 of their 25 brief -- is that filing a motion to dismiss to avoid an adverse We believe the motion should be denied UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT But we have And the most Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 17 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 27 of 89 * -PUBLIC PUBLIC 16 1 summary judgment motion is bad faith. 2 case from the Eleventh Circuit. 3 confirmed that. 4 is doing here. 5 They agree. That is in the McBride And Page 9 of their briefing Yet that is exactly what the FTC We filed on behalf of FleetCor and Mr. Clarke a 6 motion for summary judgment on restitution. 7 get restitution in this court based upon the plain text of the 8 statute and the Supreme Court's decision in AMG. 9 further concedes that we must prevail on that motion based on 10 the Supreme Court's finding decision in AMG. 11 precisely -- avoiding that adverse decision is precisely -- 12 precisely what the FTC is doing. 13 And the FTC cannot The FTC Yet that is In fact, what Ms. Frassetto said was the sole reason 14 that the FTC filed this motion. So their own concessions 15 confirmed under Eleventh Circuit precedent that they are trying 16 to avoid an adverse summary judgment ruling. 17 constitutes bad faith for the purpose of Rule 41. And that 18 But there are other reasons for bad faith as well. 19 But before I get to those, I wanted to talk briefly if I may 20 about the legal prejudice because I think that is really the 21 core of why this motion should be denied. 22 And the principal legal prejudice that FleetCor and 23 Mr. Clarke will face if this motion is granted is that it would 24 deprive them of a complete and total defense to damages. 25 that is the quintessential forum of legal prejudice. UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT And The FTC Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 18 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 28 of 89 * -PUBLIC PUBLIC 17 1 does not dispute otherwise. Using a defense to a cause of 2 action, using a defense to damages is the core legal prejudice. 3 Yet again that is exactly what this motion does. If this case proceeds in federal court, FleetCor has 4 5 the absolute and complete defense to monetary relief. If they 6 prevail in their motion and are able to litigate in the 7 administrative forum, it is no longer a complete and total 8 defense. 9 And precisely in the Philibert v. Ethicon case where the court 10 found that using just a defense to punitive damages was a loss 11 of a legal right. That is precisely the definition of legal prejudice. THE COURT: I'm sorry. 14 MR. MUNDEL: Yes. 15 The Court in Philibert v. Ethicon determined that the 12 13 I didn't understand your last sentence. I'm sorry, Your Honor. 16 loss of a defense to punitive damages -- punitive damages 17 constituted legal prejudice. 18 case because it is not just the loss of the defense to a 19 particular type of extreme damages, punitive damages. 20 loss of defense to total damages. 21 clear legal prejudice. 22 Here, we have a much stronger It is a So under that case, there is The only argument to the contrary from the FTC is 23 that there are cases that talk about the loss of the statute of 24 limitations, but that is limited to the statute of limitations 25 not being legal prejudice. There is no court that has ever UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 19 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 29 of 89 * -PUBLIC PUBLIC 18 1 said the loss of a defense to damages does not constitute legal 2 prejudice because surely it is in the heartland of what is 3 prejudicial to a defendant. But in addition to the loss of legal defense, the 4 5 defendants would also lose the right to a neutral 6 decision-maker. 7 neutral decision-maker is an essential guarantee of due 8 process. 9 And this is important because the right to a But to be clear, we are not arguing that the FTC 10 administrative structure violates due process. 11 arguing that. 12 should not reach that question here because it is not 13 presented. 14 very specific facts of this case -- of this case where the FTC 15 has made statements prejudging the summary judgment motion. 16 Whether allowing them to take their own motion and decide them 17 is not whether that violates due process, whether it violates 18 Rule 41's prohibition on causing legal prejudice when granting 19 a motion for voluntary dismissal at this late stage. 20 We're not What we are arguing -- and the Court, frankly, The only thing that is presented here is in the The factual scenario is different from what they are 21 asserting from the legal question is very different. 22 the context of this case where the commission has already taken 23 the position that it should prevail as a matter of law and then 24 wants to decide those very same issues that it filed in this 25 case already and are fully briefed and submitted for UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT And in Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 20 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 30 of 89 * -PUBLIC PUBLIC 19 1 decision -- when it has done that already, that shows that 2 FleetCor, Mr. Clarke will not have a neutral decision-maker. 3 And that is legal prejudice that justifies denying the motion. 4 And no court has ever granted a voluntary -- motion 5 for voluntary dismissal when it would move from a neutral 6 decision-maker to one that has prejudged the merits of the 7 case. 8 federal court to another federal court or a federal court to a 9 state court where there are neutral decision-makers and there 10 is not prejudgment. 11 THE COURT: And in every case the FTC cites it is moving from a I don't know why you are saying that I 12 should assume that the -- for instance, the administrative law 13 judge is not going to be neutral. 14 MR. MUNDEL: You absolutely should not and need not 15 assume that, Your Honor. The FTC did not put this in their 16 brief. 17 Commission and what Ms. Frassetto and her colleagues told us, 18 the administrative law judge will not decide the summary 19 judgment papers. 20 The commission has the right to decide those in the first 21 instance. 22 determination on summary judgment. 23 has affirmed in this Court repeatedly that FleetCor has in 24 their view -- and their view is incorrect and not supported by 25 the evidence -- but has violated the law and should lose But under the rules of procedure of the Federal Trade It will be decided by the commission itself. So it is the commission that would be making the It is the commission that UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 21 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 31 of 89 * -PUBLIC PUBLIC 20 1 summary judgment as a matter of law. And they have issued press releases that have said 2 3 that FleetCor has deceived small business customers. So there 4 is no need to make an assumption about the ALJ at all because 5 we're only focused on the commission. 6 commission, we're only asking the Court to not make an 7 assumption into their subjective intent but into the statements 8 that they have made in press releases and repeated filings in 9 this court. And even as to the So that is why it is clear that there is a loss of a 10 11 neutral decision-maker. 12 that is the only legal reason to move this case from federal 13 court to the administrative proceedings because we never heard 14 from the FTC and we still haven't heard any reason why they 15 can't proceed and litigate liability and injunction in this 16 court. 17 proceedings to try to get monetary relief. 18 And, in fact, it appears to us that And if they prevail, we can go to the follow-on THE COURT: Tell me about what that would look like 19 also in terms of the statute of limitations, which was really 20 part of my question earlier. 21 22 23 If they proceed here with their claims for injunctive relief and prevail, you are saying they can then do what? MR. MUNDEL: They would have -- at least have the 24 option -- it appears to me they would have the option if they 25 prevail going to an administrative proceeding with the benefit, UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 22 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 32 of 89 * -PUBLIC PUBLIC 21 1 by the way, Your Honor, of having a judgment from this Court on 2 the issue of liability. They would have the benefit of that. They could go to the administrative proceeding, do 3 4 what needs to be done there, and then if they need to and they 5 are able to proceed with Section 19(b) in federal court and 6 just do exactly as they are doing here except the key 7 difference is they would not be taking the case out of the 8 hands of a federal court judge that has held the case for two 9 years, litigated it all the way through summary judgment, 10 causing extreme burden to the defense. So that is how they would do it. 11 And as far as the 12 statute of limitations in relation to that, I agree with 13 Ms. Frassetto on this. 14 that issue. 15 grants a stay, not only would that be prejudicial, it actually 16 increases the prejudice because it gives them an additional 17 argument to relate that. 18 MS. FRASSETTO: 19 THE COURT: 20 But it is absolutely the case that if the Court Your Honor, if I may respond. I want to make sure that counsel is through, and then you can respond to all of this. MR. MUNDEL: 21 22 I think it is premature to determine Okay? I'll make a few more points, Your Honor. First on the prejudice. The last point of prejudice I would like to hit 23 24 briefly is the cost and expense because this is an important 25 point. Courts have been clear that ordinarily the cost of UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 23 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 33 of 89 * -PUBLIC PUBLIC 22 1 litigation is just practical prejudice. 2 prejudice. It is not legal But when the cost is so great, when the cost is so 3 4 high, when it is so significant, it reaches the point of legal 5 prejudice. 6 Stephens v. Georgia DOT where it affirmed the denial of a 7 motion to dismiss in a case that is either on all fours with 8 this one but it appears that the prejudice to the defendant was 9 less substantial. And that is what the Eleventh Circuit explained in That case had been pending for two years. THE COURT: Tell me the citation to the Stephens 12 MR. MUNDEL: Yes, Your Honor. 13 Eleventh Circuit 2005. 10 11 case. 134 F. App'x. 320, 14 THE COURT: All right. 15 MR. MUNDEL: And that court found a denial of the 16 motion to voluntary dismiss, quote, because during the two-year 17 period since the filing of the complaint, numerous motions had 18 been filed, expensive discovery had been produced, and motions 19 for summary judgment were filed. 20 In our case, two years, there was the voluminous 21 asymmetrical discovery at great expense. 22 Honor to take more depositions than it was allowed. 23 asked Your Honor to have more custodians than normally is 24 permitted. 25 The FTC asked Your The FTC The defendants produced more than a million pages of UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 24 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 34 of 89 * -PUBLIC PUBLIC 23 1 documents, more than 6000 gigabytes of data, all at a cost of 2 more than $10 million. 3 extreme in federal court. 4 that high under Stephens v. Georgia it absolutely reaches the 5 point of legal prejudice. 6 (Zoom interference) case -THE COURT: 7 So this case was litigated to the And when the expense and burden gets And counsel for the FTC cites the Is that case -- it was a private -- an 8 individual proceeding? 9 that right? It was an employment proceeding; isn't 10 MR. MUNDEL: That's correct, Your Honor. 11 THE COURT: And one of the issues here -- yes, there 12 is the money. But there is also a vast public interest that is 13 involved in this case. It is not just your -- not just the 14 defendants' interest. But it is not like the FTC is just 15 proceeding for its own private benefit. 16 MR. MUNDEL: That's absolutely true, Your Honor. 17 I'll say three things. 18 The first is: And That is not a factor under Rule 41. 19 But there is a public interest here. 20 summary judgment briefing, we think it is very clear that the 21 FTC's statement that they are entitled to $500 million is 22 untrue. 23 If the Court reviews the They have no evidentiary basis to support it. We believe that is the reason why they want to leave 24 this court. Because the discovery record in this case shows 25 that the FTC's own expert -- their own expert admitted he did UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 25 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 35 of 89 * -PUBLIC PUBLIC 24 1 not have any evidence that FleetCor customers were deceived. 2 This is a deception case. 3 restitution. 4 Their 30(b)(6) witness said they have no evidence that even 5 ten percent of FleetCor customers saw deceptive advertising. 6 There is no evidence that more than ten percent of FleetCor 7 customers thought those advertisements were material or relied 8 upon them. 9 30(b)(6) witness that any fees were charged by FleetCor without 10 prior notice. 11 They want $500 million in Their expert says no evidence to support it. There is no evidence according to the FTC's own So the evidence in this case shows not only that 12 there is no liability but there is absolutely no basis for the 13 demand for $500 million in restitution. 14 comes from is that the (Zoom interference) at the FTC simply 15 added up the number of fees that FleetCor charged during a 16 particular time period on a particular card program. 17 Where that number It is a number that would not withstand any scrutiny 18 of a neutral decision-maker. So the public interest here is 19 not in reserving the right for the FTC to seek an amount of 20 damages that is not supported by the evidence. 21 interest is in putting a baseless lawsuit behind this company 22 so that its employees and shareholders can move on and create 23 value for their customers so their customers don't have 24 increased cost and less services because of the burden and 25 expense of this litigation. UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT But the public Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 26 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 36 of 89 * -PUBLIC PUBLIC 25 And we believe the evidence strongly supports that. 1 2 But if Your Honor is still concerned about potential relief for 3 customers if they were injured, there are many avenues for 4 relief. 5 private plaintiff class actions. 6 general. 7 other forums. The FTC is not the only avenue for relief. There are There are state attorneys There is the Department of Justice. There are many 8 And the FTC apparently has a way they can get relief 9 through this proceeding if they litigate the case in front of 10 Your Honor to the merits. 11 THE COURT: Going back -- I mean, your argument is, 12 among other things, that they can -- they have their case 13 pending -- their administrative proceeding pending at this 14 point in the commission. 15 of the Section 5 part of the case, they could -- I should stay 16 that -- basically close my case and allow it to be -- then to 17 come back if they have satisfied whatever they need to do under 18 the administrative proceedings? 19 MR. MUNDEL: And if I needed to, at the conclusion You are saying -- just to make sure I 20 understood the question -- litigate in the court first for 21 liability and the injunction? 22 the case for the administrative proceedings to continue? 23 that your question? 24 THE COURT: Yes. 25 MR. MUNDEL: Your Honor, I think that would be one And if the FTC prevails, stay UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Is Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 27 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 37 of 89 * -PUBLIC PUBLIC 26 1 option. The truth is I don't think it is a -- in the event the 2 FTC prevails in front of Your Honor, our preference would be to 3 close the case because a stay is not actually the right vehicle 4 because the FTC never intends to litigate the case they have 5 brought further. 6 complaint, different cause of action, different legal standard, 7 different legal theories, different facts. They would come back and bring a new So I'm not -- so our view is the better course would 8 9 be to close the case; let the FTC go to the administrative 10 proceeding; let them file a new 19(b) action. 11 make the same tolling and equitable arguments they can. 12 just under a new case number. They could still It is I think they can still do that. 13 We would oppose that they could do it. 14 Honor, if your preference is to do that, I think our view is 15 that would be better than the alternative. 16 better than allowing -- dismissing the case now and allowing it 17 to go directly to the administrative proceeding. 18 THE COURT: Thank you. 19 the response of FTC counsel. MS. FRASSETTO: 20 21 discuss. 22 questions. But, Your That would be All right. Let me hear now Sure, Your Honor. There is a lot to But I'll be brief and am happy to answer any 23 You know, again, I just want to start with it really 24 does upset me that the defendants just simply don't believe the 25 reason that we are doing this. You know, there is no evidence UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 28 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 38 of 89 * -PUBLIC PUBLIC 27 1 we have acted in bad faith. 2 commissioners won't come in with an open mind, which is, quite 3 frankly, the standard. 4 more I can say. 5 telling you that is the whole reason that we are here is AMG. 6 And on that point with respect to whether we should 7 just have these proceedings play out, the problem, Your Honor, 8 is that the Supreme Court in AMG said that we need a cease and 9 desist order from the commission before we can pursue the 10 follow-on Section 19 action. 11 There is no evidence the And I just -- I don't know how much I'm here before you, Your Honor. And I am It strikes as duplicative and certainly to my 12 knowledge unprecedented to have a federal judge decide all of 13 the factual issues that the commission would normally view with 14 their expertise in consumer protection law. 15 those findings are go to the commission to potentially rubber 16 stamp though, to be quite honest, I just don't know what that 17 would look like because we still at the end of the day need 18 this cease and desist order from the commission. 19 unclear how that would work. 20 To have whatever So it is So the reason that we are trying to do this now is it 21 is a clean break. It is not looking for a better outcome. It 22 is simply that the commission is the one that needs to issue 23 the cease and desist. 24 because this is what they are there for, to do the factual 25 findings to and from those findings come up with their cease It makes sense for them, particularly UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 29 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 39 of 89 * -PUBLIC PUBLIC 28 1 2 3 and desist order. THE COURT: All right. and remember to go a little slower if you would. 4 MS. FRASSETTO: 5 THE COURT: 6 7 Let me stop you for a second I apologize, Your Honor. It is all right. But you want a good record also in terms of what is being argued. But let me make -- all right. The injunctive relief 8 order that you are requesting is, in fact, a cease -- in effect 9 a cease and desist, among other things, order that you 10 submitted for this Court to enter. 11 the commission wouldn't be in a position to consider my 12 findings and basically do that rapidly. And it doesn't mean that 13 Or am I -- what is in error in that? 14 have been -- it may be sort of somewhat unprecedented. 15 think that the Supreme Court's decision after, as you said, 40 16 years of authority including in this circuit -- the Eleventh 17 Circuit -- you know, it presents some very unique circumstances 18 for those cases that are sort of caught in the headwaters of 19 all of this. 20 I mean, it may But I So, you know -- and there are other cases I know 21 that -- where the commission has decided just to allow the case 22 to proceed in federal court, which apparently are ones where 23 the biggest issue is injunctive relief. 24 they would be in the same pickle that I'm in. 25 But -- so all right. It must be, or else So we have a unique UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 30 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 40 of 89 * -PUBLIC PUBLIC 29 1 circumstance because of the procedural history of this case and 2 the timing of AMG. 3 would present such a challenge for the commission to rule based 4 on whatever finding I might issue. 5 MS. FRASSETTO: And, you know, I don't see though why it So, Your Honor, one issue too that we 6 have flagged in the briefs is that there is a little bit of 7 daylight between the standard for federal injunction and the -THE COURT: 8 9 All right. And I understand that. I understand that. MS. FRASSETTO: 10 And so there could be some issues 11 where there is some, you know, duplicative efforts and some 12 inefficiencies there where the commission can't simply rubber 13 stamp the federal injunction because there is this different 14 standard. 15 So I would just -THE COURT: And I understand that fully. I think it 16 would be helpful for the Court if you would delineate how you 17 think that would play out in this case since you have already 18 gone through the summary judgment record and you are familiar 19 with the record. 20 MS. FRASSETTO: Sure, Your Honor. So, you know, with 21 respect to the defendants' affirmative motion, if we were to 22 play this out and then go back to admin, it strikes me that a 23 lot of the work that Your Honor would be doing there would be 24 not particularly relevant to the admin proceedings. Obviously, 25 we are aware that we cannot get money under 13(b). So any UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 31 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 41 of 89 * -PUBLIC PUBLIC 30 1 decision there would not preclude us from going to 2 administrative proceedings. 3 And then on the injunction, again, many of the 4 defendants' arguments are based on 13(b). 5 say that what they are doing they couldn't reuse because I 6 think it is slightly different for the parties. 7 are essentially arguing what the practices show that they meet 8 this standard. 9 slightly different standard of applying those facts to the law. 10 And so that is where -- 11 And that is not to The parties But, Your Honor, for the commission, there is a THE COURT: I understand that. But I'm asking you to 12 tell me how that plays out, more specifically how you can 13 conceptualize what that different standard would mean in terms 14 of the evidence being presented in front of the Court versus -- 15 I mean, I realize the commission would have to consider that 16 and would have to go to the proceeding to consider that and 17 then present -- and that there is some type of more bad faith 18 like element of that standard. 19 But tell me how that would play out here. I mean, it 20 would be -- it would have to play out whether you proceed 21 obviously now if I let you dismiss or later on. 22 So I'm just trying to understand what it actually in 23 practice you think the shape of the case is, the evidence that 24 would be -- type of evidence that would be presented. 25 MS. FRASSETTO: Yes, Your Honor. I mean, as we UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 32 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 42 of 89 * -PUBLIC PUBLIC 31 1 mentioned, the summary judgment brief and the arguments we have 2 raised would be at least for us the same. 3 reason to think that defendants would present any different 4 evidence, particularly on the injunctive point. And there was no 5 So, again, that is where it would be duplicative 6 because Your Honor would be deciding based on the federal 7 standard and then the commission. You know, here is where I think the issue potentially 8 9 is. So if Your Honor was to grant an injunction, then it 10 strikes me that the FTC or the commission would still have to 11 consider its own standard and spend more time. 12 have two judicial proceedings where that was happening. 13 then I also could -- 14 THE COURT: All right. So you would Stop for a second. And What I'm 15 trying to say -- tell me -- I don't live in the FTC world. 16 sorry. 17 I'm So you have to tell me what does it mean in terms of 18 the difference in the standard that would be applied by the 19 commission for a Section 19 claim. 20 mean, there is a statute of limitations and fine 21 requirements -- some sort of -- and I don't know what that -- 22 surely there are Section 19 cases. 23 I know that there is -- I So could you explain to me what in practice in this 24 case, knowing the nature of the evidence in this case, what 25 would that mean. UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 33 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 43 of 89 * -PUBLIC PUBLIC 32 MS. FRASSETTO: 1 So, Your Honor, if it would be 2 helpful, I can provide you with the high-level considerations 3 of the commission and the cease and desist standard. 4 give you the citations. 5 before. I don't believe we have done them So there is Stouffer Foods Corporation, which is 118 6 7 I can FTC 746, and the pin cite is 811. THE COURT: 8 Okay. And that is from 1994. Let me just say: You can tell me 9 the name of the case, and then you can provide me later the pin 10 citation. All right? 11 MS. FRASSETTO: 12 And POM Wonderful is another one from 2019 -- another 13 Okay. Thank you, Your Honor. FTC proceeding. Essentially, there are three considerations: 14 The 15 seriousness and the deliberateness of the violation; the ease 16 with which the violative claim may be transferred to other 17 products; and whether the respondent has a history of prior 18 violations. And certainly we think that those standards are met 19 20 here as much as we think the standard for federal injunction is 21 met. 22 if this case was transferred to the commission to decide. 23 Certainly I'm sure defendants disagree. THE COURT: But that is for How long do you think it would take if I 24 deny summary judgment -- which, of course, is not what the 25 defendant thinks is appropriate. But if that were to occur on UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 34 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 44 of 89 * -PUBLIC PUBLIC 33 1 the -- on the injunctive relief claim before me, obviously not 2 the Section 13 claim, how long would it take do you think to 3 try the case? 4 MS. FRASSETTO: 5 THE COURT: 6 MS. FRASSETTO: In front of Your Honor? Uh-huh (affirmative). I'm sorry, Your Honor. Would that be 7 in terms of like prepping and doing all the pretrial work as 8 well or just how long do we think -- 9 THE COURT: How long would the trial last? 10 MS. FRASSETTO: You know, sitting here today, I admit 11 I haven't thought about it. 12 counts. 13 we deposed. 14 You know, there are several There are several experts. I don't know. MR. MUNDEL: You know, many witnesses Three to four weeks potentially. Our view is the case would be less than 15 a week overall. 16 of the FTC's in just a few days. 17 a week overall would be more than sufficient. 18 one expert. 19 We could try our case depending upon the scope Two days maybe. So we think The FTC has only That was a rebuttal, I believe. THE COURT: Okay. Well, is there anything else 20 necessary to be done in the case to have a trial on the 21 remaining claims not disposed of by AMG? 22 23 MR. MUNDEL: Your Honor. Not from the defendants' perspective, We're prepared. 24 THE COURT: What about from the FTC's perspective? 25 MS. FRASSETTO: It would depend on Your Honor's UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 35 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 45 of 89 * -PUBLIC PUBLIC 34 1 rulings on summary judgment how much is left and whether any 2 motions in limine would be appropriate at that time. THE COURT: 3 4 Well, you have a motion in limine pending; right? MS. FRASSETTO: 5 Right. I'm sorry. And I would note 6 that that is very specific to defendants' use of Professor 7 Wind's testimony in the summary judgment motion, which is why 8 we think that that would also be useful in a commission 9 proceeding. MR. MUNDEL: Could I respond to a few points, Your 12 THE COURT: Yes. 13 MR. MUNDEL: You already mentioned other cases that 10 11 Honor? 14 the FTC has pending in federal court before or since AMG was 15 decided. 16 implied in none of those cases has the FTC done what they are 17 doing here. 18 the administrative forum. And in none -- Your Honor I think either said or They have not tried to dismiss those in favor of And in those cases, it is not because the injunctive 19 20 relief is their primary form of relief. 21 FTC is seeking restitution or at least was seeking restitution 22 prior to AMG too. 23 annual report that billions of dollars in restitution would be 24 obtained. 25 In those cases, the And the FTC touts on its website and its So it is clear from the face of those cases that UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 36 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 46 of 89 * -PUBLIC PUBLIC 35 1 restitution was a primary form of relief. 2 believe they could not move those cases to the administrative 3 forum is because they are doing exactly what Your Honor 4 suggested here, which is continue litigation in front of the 5 Court. 6 administrative proceedings to get money. 7 not doing that here is because their case at summary judgment 8 is not substantial. And then when they -- when and if they succeed, do the 9 The second thing -- 10 MS. FRASSETTO: 11 THE COURT: 12 But the reason we The reason they are Your Honor -- All right. So before you go to the second thing, let me let Ms. Frassetto respond to that. 13 MS. FRASSETTO: Yes, Your Honor. Thank you. 14 I just want to point out that, you know, each FTC 15 case that is in litigation has very unique facts and 16 circumstances and there are a variety of -- I'm sorry I'm 17 talking too fast. 18 There are a variety of reasons why we would have made 19 any decision. And I just want to point out that many of those 20 had rule violations that allows the FTC to stay in federal 21 court and obtain monetary relief. 22 Credit Bureau Center, which was -- which is currently in the 23 Northern District of Illinois but went to the Seventh Circuit 24 and was at one point a companion case to AMG in the Supreme 25 Court, there was a rule violation there. So, for example, FTC v. The FTC initially UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 37 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 47 of 89 * -PUBLIC PUBLIC 36 1 only pled monetary relief under Section 13(b); in the wake of 2 AMG sought to then seek relief under Section 19 because of that 3 rule violation. 4 but, you know, had really interesting language when the 5 defendants were attacking the FTC's good faith, as they are 6 doing here. And the Court not only accepted that argument And if it is okay, I would like to read that. And that reads, from the day the complaint was filed 7 8 until the Seventh Circuit decided the appeal in this case, 9 there was controlling circuit precedent permitting the FTC to 10 seek restitution using Section 13(b). 11 Capital, eight circuits permitted the FTC to seek monetary 12 damages under Section 13(b). 13 who proffers arguments based on overwhelming and longstanding 14 precedent has unclean hands once that precedent is overturned 15 after over 30 years. 16 arguing against the prior interpretation of Section 13(b) might 17 be proof that wisdom comes late -- even to courts -- but it is 18 not proof that the FTC is an abusive litigant. In fact, prior to AMG It cannot be true that a party The fact that other parties have been And, Your Honor, I think that is really relevant 19 20 here. 21 judgment ruling. 22 rule violation hook we cannot get money here. 23 get a cease and desist order and judgment from the commission 24 before we can do that. 25 We are not trying to, you know, get out of that summary It is simply that because we don't have the THE COURT: And we need to You have to give me the cite again to UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 38 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 48 of 89 * -PUBLIC PUBLIC 37 1 2 what you were reading from. MS. FRASSETTO: Yes, Your Honor. That was FTC v. 3 Credit Bureau Center. 4 was out of the Northern District of Illinois, and that was 5 issued on September 13 of last year, 2021. 6 MR. MUNDEL: It is 2021 Westlaw 4146884. And that Just to be clear, Your Honor, there are 7 many cases the FTC has in federal court with no rule violations 8 where they were seeking restitution. 9 directly in federal court under Rule 13(b). 10 exactly what Your Honor suggested. 11 then if they win going to the administrative proceeding. 12 They can't seek it now But they are doing Commission the case and And, again, we have never heard anything from the FTC 13 about they cannot do that here. They have never provided any 14 reason where they cannot reserve their right to get full 15 restitution by litigating the case efficiently and particularly 16 in this court and then going to the administrative proceeding. 17 There was one issue raised about the scope of the 18 injunction and whether the injunction standard is similar or 19 different from the FTC proceedings. 20 getting an injunction would be more beneficial it seems to me 21 than a cease and desist order. 22 desist order, an injunction has immediate federal court effect 23 and must be complied with. 24 25 The answer is, first, Because unlike a cease and With a cease and desist order, they have to take another step to enforce it in federal court. So if they wanted UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 39 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 49 of 89 * -PUBLIC PUBLIC 38 1 to stop ongoing conduct, what they would be doing is continuing 2 to seek an injunction here. 3 manner. That would be the efficient The only reason you have heard from the FTC not to 4 5 follow the path Your Honor suggested was because of duplication 6 and inefficiencies. 7 given the duplication and inefficiencies that have already 8 imposed and caused on this court and on the defendant. And, Your Honor, that is not a valid basis It is -- they cannot suggest now I think credibly 9 10 that any meaningful differences between the injunction standard 11 and the cease and desist order standard are so great that it 12 would justify moving to the administrative proceeding. When we look at the two standards, we see no data to 13 14 answer your specific question. And the type of evidence that 15 would be presented and the decision of the Court or the FTC 16 would make we see no daylight. The evidence that we will present is primarily -- on 17 18 the injunction is primarily two-fold. First, that there is no 19 liability at all. 20 cease and desist order, they first need to prove liability and 21 they can't do it. 22 it would resolve the issue. Because in order to get an injunction or a And if the Court reaches that determination, The second type of evidence we would present on the 23 24 injunction would also be presented on the cease and desist 25 order. And that is there is no ongoing conduct that's even UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 40 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 50 of 89 * -PUBLIC PUBLIC 39 1 being challenged by the FTC. The advertisements that they 2 challenge ceased years ago. They were not deceptive. 3 were not unfair. 4 even in circulation today. They were not unlawful. They But they are not 5 All of the things they challenge ceased years ago. 6 And for that reason, they can't get the injunction and they 7 can't get a cease and desist order. So to answer your question directly, the evidence 8 9 that would be presented, the decision we believe is precisely 10 the same when Your Honor rules on it as we think you should 11 that there should be no injunction in this case. MS. FRASSETTO: 12 13 Your Honor, if I can be heard briefly. 14 THE COURT: Go ahead. 15 MS. FRASSETTO: So with respect to whether Your Honor 16 completes the case and it goes back to the commission, quite 17 frankly, it is unprecedented and I understand that because of 18 AMG and that is why we are here. 19 So we are just really concerned that if there is any 20 risk that consumers wouldn't get money by going this route that 21 is unprecedented and hasn't been tested or challenged before 22 that at the end of all of this we would have spent all this 23 time with no money for consumers. 24 25 Whereas, if we move now, we would simply be going under the commission's existing rules to move for summary UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 41 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 51 of 89 * -PUBLIC PUBLIC 40 1 decision, get a cease and desist order, and come back to 2 federal court, which is exactly what was contemplated by the 3 Supreme Court in AMG. 4 here. 5 But that is all we are trying to do MR. MUNDEL: Your Honor, if the FTC was so cautious 6 and concerned about that, then they would have proceeded under 7 19(b) to begin with. 8 Seventh Circuit already held they couldn't get restitution. 9 this did not come as a surprise. Because when they filed their case, the So 10 Additionally, if it was their 100 precent sole focus, 11 they could have done that -- they frankly should have done that 12 from the beginning when they made a strategic choice not to. 13 And it would be legally prejudicial at this stage. 14 all we are required to show. 15 it was an abuse of litigation position. 16 cause legal prejudice. 17 And that is Not that it was bad faith or that But that it would And we have absolutely met that standard here because 18 of the loss of the defense. But in addition, the FTC says they 19 are concerned that they don't know how -- they don't know if it 20 would work. 21 -- you pointed this out -- Your Honor pointed out today, they 22 never identified any way of limiting (Zoom interference) for 23 them to litigate the case fully in front of Your Honor. 24 prepared for trial as soon as Your Honor sets it for trial if 25 our summary judgment motion is denied. They have never identified any reason in our brief UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT We're Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 42 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 52 of 89 * -PUBLIC PUBLIC 41 And they could then proceed expeditiously to the 1 2 administrative proceeding. And they haven't presented a single 3 reason why that wouldn't work. 4 THE COURT: Well, they have argued that it is an 5 enormous addition of -- a piece of additional work. But 6 from -- from your perspective, let's say I rule against your 7 client, which you don't think will happen -- but on the merits 8 in a trial. Are you going to -- if they then proceed on their 9 10 pending petition, what other -- you know, I cannot believe you 11 are not going to be arguing a whole other set of defenses. 12 know -- I understand that there is a different standard of 13 proof as to -- as to 13 and 19. 14 for them. 15 they get back to the commission. 16 MR. MUNDEL: So you are saying it is easy But I'm sure you will not make it easy for them once No, Your Honor, I don't think that is 17 the case. 18 federal court proceeding and the FTC proceeding would be a 19 scienter. 20 I I think the only additional defense between the That is the only defense that would be different. And it would not be additional work to continue this. 21 First, if we prevail, that ends the case. 22 if we don't prevail, things that are litigated in front of Your 23 Honor we would have issue preclusion. 24 Honor decides against us, that would bind us. 25 So that is a very -- So anything that Your So it would then make the cease and desist UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 43 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 53 of 89 * -PUBLIC PUBLIC 42 1 proceedings very efficient because the -- anything that needs 2 to be decided that you already decided, that would be done. 3 You resolved it conclusively. So the scienter defense, that is the only issue that 4 5 we see that would be different in the cease and desist 6 proceeding. MS. FRASSETTO: 7 So, Your Honor, just to that point, 8 there is no scienter defense. I don't quite understand what 9 the defense counsel is speaking of. If he is talking about the reasonable person standard 10 11 in Section 19(a)(2), that would be determined by a federal 12 judge in a follow-on action. 13 admin would be specifically Section 5, precisely what Your 14 Honor is hearing today. MR. MUNDEL: 15 The cease and desist action in Well, if there is no scienter defense, 16 Your Honor, then -- you know, if that is the position of the 17 FTC, we can litigate that legal issue. 18 position, then there is no daylight between what Your Honor 19 would decide in the court and what they would need to prove 20 there. But if that's their And that admission from the FTC is justifying 21 22 precisely why the Court should keep this case, decide summary 23 judgment, and, if necessary, set the case for a trial in short 24 order. 25 THE COURT: I gather you don't though agree that that UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 44 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 54 of 89 * -PUBLIC PUBLIC 43 1 is the case. 2 Would either of you point us to -- Ms. Frassetto, 3 first of all, to any authority as to that that is the case? 4 I mean, I understand that is what I was trying to 5 pursue earlier. What would have -- because you were arguing at 6 some point I thought that there was an additional -- it would 7 require additional work on your part in front of the commission 8 to be presenting it at that point. 9 to get at. That is what I was trying 10 Ms. Frassetto, do you understand what I'm asking you? 11 MS. FRASSETTO: 12 THE COURT: 13 No. I apologize, Your Honor. That's all right. It was a long question. 14 As I understand it, the FTC is required to show that 15 a reasonable man would have known under the circumstances that 16 the conduct at issue was dishonest or fraudulent in order to 17 obtain monetary damages on behalf of consumers. 18 Is that right? 19 MS. FRASSETTO: That's correct. But that would be in 20 a follow-on federal court action after the FTC -- it is after 21 the commission gave us a cease and desist order. 22 THE COURT: All right. Yes. So that is my -- so it is 23 argued by -- Mr. Mundel, why is that, in fact, not a pretty 24 simple step of going back to the commission to get the cease 25 and desist order that is based on the evidence and rulings of UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 45 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 55 of 89 * -PUBLIC PUBLIC 44 1 the Court and then come back to the Court for the Section 19 2 relief? Because you were saying at some juncture -- and maybe 3 4 I misunderstood -- that it would be more work. I mean, I 5 understand you would be going back and forth. But I'm not sure 6 that it is, in fact, then -- if all of that showing has to be 7 in front of this Court, then it is not really an enormous 8 amount of work in front of the commission to do this in two 9 steps. MS. FRASSETTO: 10 So if I understand Your Honor's 11 question, you are saying why not keep the case here, resolve 12 liability -- let me ask, Your Honor. 13 resolving injunctive relief in federal court as well? THE COURT: 14 Would you also be Well, you've asked for injunctive relief. 15 You have a proposed order that you filed. And I would -- if I 16 am authorized to do so, I would enter that. 17 go back to the commission and get whatever cease and desist 18 order. And then you would And what Mr. Mundel has argued is that this is an 19 20 easy -- there is no daylight between the two. 21 they issue that. 22 relief. 23 All right. Then Then you come back here for the Section 19 MS. FRASSETTO: I understand, Your Honor. Yes. In 24 terms of liability, the same standard, correct. 25 there is a slightly different standard, which is where we think UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT On injunctive, Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 46 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 56 of 89 * -PUBLIC PUBLIC 45 1 2 that there could be issues with judicial inefficiencies. The bigger issue is the uncertainty with this being 3 proper and whether defendants would then challenge that somehow 4 because the federal court decided and then it went to the 5 commission to essentially rubber stamp. 6 because of the difference in the injunctive relief standard 7 whether there is any procedural impropriety there. 8 But, again, who knows So that is our concern is that this just strikes as 9 open to more challenges. 10 relief for consumers, we're at a place where it makes sense to 11 go to the commission and just have them hear everything under 12 the rules that the Supreme Court contemplated in AMG. 13 THE COURT: And when we really just want to get Well, one of my concerns, frankly, is 14 given what I've observed in this case -- and I understand why 15 you think that would be a proper and more immediate win. 16 then, of course, it is also possible that the defendants here 17 may appeal my decision too if I rule in your favor. 18 So if you are concerned about procedural obstacles, 19 it could become worse in a whole other way. 20 lack of interest on their part of litigating the issue. 21 understand your concern. 22 basically holding up all these proceedings. 23 But I don't see any And I But I have a concern that I'll be I mean, I have cases that have been up in the Court 24 of Appeals -- and this is no offense to them because it is just 25 the way things are at this moment -- that have been up there UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 47 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 57 of 89 * -PUBLIC PUBLIC 46 1 for two years. 2 trial at the moment -- a civil case -- because of the fact that 3 there are people who have been sitting in prison for years at 4 this point who haven't been able to get a trial. 5 certainly always because of the Speedy Trial Act have to 6 prioritize that. 7 It is very hard to get, of course, anything to So we That is why I was asking you how long do you think it 8 would take to go to trial. 9 terms of when I could conceptualize trying to expedite this and 10 conduct a trial in the public interest. 11 Because it makes a difference in And you now at least have a petition in front of the 12 the commission that is -- or complaint that at least for 13 purposes of what you have got has a -- I understand a 14 three-year statute of limitations. 15 It may not be the whole pie. But it is at least a 16 portion of the pie, assuming you win. And if, in fact, your 17 evidence is -- construing your evidence and your allegations in 18 the light most favorable to the plaintiff, you are arguing that 19 this is a repeat performer -- a repeat violator. 20 violations would be meaningful. 21 So those We're in a unique and difficult circumstance. And if 22 we were to schedule a trial and I were to deny summary -- 23 basically say that I have to decide based on the evidence, 24 then, you know, you would have enough time to prepare because 25 there is no way I could probably hear this case until fall or UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 48 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 58 of 89 * -PUBLIC PUBLIC 47 1 winter of -- next winter. So that is not really a question. 2 You have sort of 3 held your place, at least. Because alternatively -- let's just 4 look at -- you know, the defendants argue, well, then you need 5 to pay their fees or a portion of their fees. 6 haven't discussed that. And we really 7 And -- but I can't imagine that the commission is 8 very willingly wanting to -- let's say -- I don't know, you 9 know, how this money might be spliced and diced. 10 course, you understand their argument that at least anything 11 that you litigated after the Supreme Court issued its decision 12 in April that the commission should be responsible for in terms 13 of fees because it should have just stopped at that point 14 according to -- what is the argument against that as being a 15 condition for a voluntary dismissal? 16 MS. FRASSETTO: 17 For starters, there just is no prejudice in terms of 18 the work that was done in that time frame precisely because we 19 intend to file substantially identical papers in the admin 20 litigation in summary decision. 21 reused. 22 But, of Sure, Your Honor. So all of that work can be And, second, if it is, you know, balancing the 23 equities and doing justice between the parties, you know, this 24 is -- again, this is taxpayer money. 25 potentially redress on the line. It is consumers' money, UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 49 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 59 of 89 * -PUBLIC PUBLIC 48 1 So we just think that that weighs in favor of no 2 conditions, particularly where there is no prejudice here. 3 So -THE COURT: 4 So, Mr. Mundel, why do you say there is 5 prejudice? 6 this at the FTC, you would -- the same evidence would be 7 necessary. MR. MUNDEL: 8 9 Because if you are going to have to be litigating Yes, Your Honor. If I may just in ten seconds touch on two topics you mentioned earlier. 10 About the appeal, I think you are absolutely right. 11 This is an issue that the defendants take very seriously and 12 would appeal if they were to not prevail on this. 13 would take time. And that 14 As far as the trial goes, because it is a bench 15 trial -- we are certainly well aware of the issues in the 16 federal courts right now for trials. 17 it could be broken apart into pieces, if necessary. 18 be done, you know, a little bit easier than a jury trial, which 19 we know would be the Court (Zoom interference). But with a bench trial, It could 20 So we believe the trial could be done as soon as Your 21 Honor is available and the way that is most efficient for Your 22 Honor. On the question of fees, we prepared a PowerPoint 23 24 presentation that you may have available to you. 25 Page 6. We have a chart of the fees. It is on And I can walk through UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 50 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 60 of 89 * -PUBLIC PUBLIC 49 1 those and explain the prejudice. 2 THE COURT: Okay. 4 MR. MUNDEL: Page 6 of the PowerPoint. 5 If I may start, Your Honor, with the following -- 6 THE COURT: All right. 7 All right. I'm on Page 6. 8 MR. MUNDEL: The FTC's argument here that there is no 3 Let me just pull it up. All right? I'm just pulling it up. 9 prejudice is based upon what Ms. Frassetto said that they would 10 file substantially identical papers to what they filed in 11 federal court -- they would file substantially identical papers 12 with the FTC. 13 That proves the point that we have just been 14 discussing, that there is no daylight between the -- in their 15 view the usual standard in the proceedings in front of this 16 court and in front of the FTC. 17 So in their view, there is absolutely no reason why 18 they shouldn't litigate the case in front of Your Honor, have 19 Your Honor decide the case, and then go to the administrative 20 proceedings. 21 are substantially identical. 22 should get to first. 23 Because they say the standard and the materials So that is, I think, what we If we do reach the issue of fees, the fees here are 24 substantial. The total fees from when the FTC began this 25 litigation are over $17 million. So this is not an ordinary UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 51 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 61 of 89 * -PUBLIC PUBLIC 50 1 case, at least an ordinary case that I'm familiar with. The fees since litigation began are more than $10 2 3 million. 4 saying bring it in federal court. 5 that. 6 case in federal court they knew that the ability to get 7 monetary relief in federal court was in doubt. 8 because the Seventh Circuit held that. 9 commentators and parties and commissioners had been saying it 10 for years. 11 statute (Zoom interference). 12 And at the time the FTC brought this case, we're not We're absolutely not saying But we are saying that when they decided to bring the They knew that They knew it because And they knew it because the same text of the But the FTC made a strategic risk -- it was 13 strategic. 14 in federal court instead of going directly to their 15 administrative proceeding. 16 They determined they would rather assume that risk They should be held to that completely, have this 17 motion denied. 18 that cost and expense that they imposed on the defendants by 19 making that choice. 20 At a minimum, they should bear the burden of So the litigation fees are $10 million. 21 that is the appropriate fee. 22 litigation, Your Honor. 23 started, that would be appropriate. 24 25 We believe The 17 million, that is prior to But the 10 million since litigation If the Court wanted to break it down further, there are other particular categories where the prejudice is even UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 52 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 62 of 89 * -PUBLIC PUBLIC 51 1 more egregious. One example is in the data that was produced for 2 3 damages. After more meet-and-confers on the topic that I have 4 maybe done in total on my career, we discussed data with the 5 FTC. 6 $574,000. 7 for their damages. 8 model, we produced that. 9 be reused because the data that they used in the court 10 proceedings is different from the standard they have to meet 11 not for the cease and desist but for monetary relief under 12 19(b). 13 They have to show a higher standard of reasonable man and 14 fraudulent and knowing deceit. And we produced 6000 gigabytes. It cost more than And the use of that data, according to the FTC, was And in order for them to have a damages That money deduction is not going to Because they can't just show a violation restitution. 15 The second piece of the fee amount that should be 16 shifted is the million dollars in our expert report that has 17 rebutted their damages calculation because that was -- that 18 damages rebuttal was based on the Section 5 in court standing, 19 not based upon the standard in 19(b). 20 It will have to be redone. So it can't be reused. And the third significant category of fees are what 21 22 was incurred since AMG was decided. Because when -- this 23 didn't just come out of the ether. We were all watching it. 24 Right? We discussed it with the 25 FTC counsel repeatedly. We knew that it was coming. And there were dozens and dozens of UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 53 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 63 of 89 * -PUBLIC PUBLIC 52 1 discussions. Some cases with the FTC were stayed early on in the 2 3 litigation pending a decision by the Supreme Court in AMG. 4 FTC did not want to stay this case. 5 were planning what they would do if AMG was decided -- because, 6 you know, of course, they were. So we proceeded. The So they And when AMG came down, instead of at a minimum 7 8 calling us and saying, FleetCor, Mr. Clarke, this is what we 9 may do, this is being considered, why don't we put the 10 litigation on hold so we don't run up the burden and the 11 expense on either the court or the parties, they didn't do 12 that. 13 it cost $686,000 since AMG was filed. They continued to file more briefs, more motions. And And that is to us the most egregious fee shifting, 14 15 that there is no basis for them not to have given advance 16 notice, sought a stay. 17 have us file all these briefs, more than 4000 pages between the 18 parties, that at a minimum, 686,000 of the fee should be 19 shifted. THE COURT: 20 And the decision not to do that, to That is since -- when you say AMG -- 21 $686,000 roughly in fees since the petition was granted or 22 since the Supreme Court decision was issued? MR. MUNDEL: 23 Since the decision was issued, Your 24 Honor. The decision was issued. Again, when the petition was 25 granted in the (Zoom interference) the case, we think they UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 54 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 64 of 89 * -PUBLIC PUBLIC 53 1 should have known that the writing was on the wall and they 2 could have made a different determination. 3 fees for that. And they should pay 4 But at a minimum -- 5 THE COURT: When was the petition granted? 6 MR. MUNDEL: The petition was granted -- one second, 7 8 9 10 Your Honor. It was granted, I believe, in December of 2019. But let me confirm that. Yes. It was granted a few days before they filed 11 their complaint in December 2019. 12 not only was the petition granted but prior to that they -- 13 normally on behalf of the United States the solicitor general 14 files a petition with the Supreme Court. 15 So they knew at that point We believe it may be the second or third time in 16 history the solicitor general did not file a petition. The FTC 17 filed it on their own litigating authority. 18 not to stay the case but to seek restitution from us, seek 19 discovery about restitution from us. 20 of $10 million because that was the beginning of the 21 litigation. And they continued And that was to the tune 22 But, again, at a minimum, once AMG was decided and 23 the Supreme Court said once and for all that they could not 24 obtain restitution directly in this proceeding, if they were 25 going to do this, at a minimum they should have informed us, UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 55 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 65 of 89 * -PUBLIC PUBLIC 54 1 given us an opportunity for a stay, not filed additional 2 briefing. Say, for example, they filed a motion to exclude an 3 4 expert months after AMG was decided. 5 file that motion (Zoom interference). THE COURT: 6 7 There was no reason to Ms. Frassetto, do you want to respond to that? 8 MS. FRASSETTO: Yes. Thank you, Your Honor. 9 Again, I just want to start with it is incredibly 10 upsetting to me that defense counsel continues to assume that I 11 was saying or doing or the FTC was saying or doing something 12 than what we have told defendants and the Court. 13 simply not true. That is just 14 With respect to defense counsel seeking the 15 10 million, I mean, there is -- there was no way to know that 16 AMG would go that way. 17 the Eleventh Circuit confirmed in the FTC v. Simple Health 18 Plans case that the Eleventh Circuit precedent was that there 19 was monetary relief available under 13(b). In fact, after we filed our complaint, 20 And I already read to Your Honor the language from 21 Credit Bureau Center in the Seventh Circuit, which confirmed 22 that view that there just wasn't a (Zoom interference) with 23 respect -- with any certainty until the decision came out. 24 With respect to the data, it is inaccurate to say 25 that was only for restitution. As I noted in my declaration UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 56 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 66 of 89 * -PUBLIC PUBLIC 55 1 and the supporting documents, the data was 100 percent used to 2 prove, for example, that the savings were not as advertised, 3 that was substantial harm from unfair fees. 4 absolutely would be reused in a Section 19 action. 5 the same underlying conduct. 6 And that It is still With respect to defendants' rebuttal report on 7 damages, again, that went to liability. 8 defendants cited that in support of their opposition to our 9 summary judgment. 10 advertised. 11 payments on time. 12 goes to liability, not restitution. 13 In fact, the She concluded that the savings were as That goes to liability. And that FleetCor posted We disagree with that. But, again, that With respect to the summary judgment briefs, as we 14 have stated many times now, those will be reused. 15 see any prejudice there. 16 reason why that work product will be wasted. 17 So we don't And defendants haven't given any And then, finally, with respect to the Daubert 18 motion, as I also mentioned before, that was, in fact, filed as 19 a motion to exclude the testimony that was proffered in support 20 of the summary judgment motion. 21 defendants would again use Professor Wind in the commission 22 proceedings, we certainly would reuse that work. 23 MR. MUNDEL: 24 correct two things. 25 cert in Credit Bureau. And certainly assuming that I mean, Your Honor, if I may just It was December 2019 when the FTC sought And that was when the Department of UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 57 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 67 of 89 * -PUBLIC PUBLIC 56 1 Justice refused to join. 2 Court granted cert in both Credit Bureau and AMG. 3 THE COURT: It was July 2020 when the Supreme All right. I know the defendant has 4 asked to address the summary judgment briefing. And I'll 5 certainly give you some opportunity to do that. But I don't 6 really basically -- A, I think that the issues raised in the 7 Government's Daubert motion are very substantive ones. 8 sure I would be able to explore all of that in a meaningful 9 fashion today. 10 fly-by-night motion. 11 that they have raised. 12 I'm not But I do think that it is not -- this is not a There are some very significant concerns But as a whole, I'm not sure other than saying that I 13 don't have jurisdiction at this point to consider the -- a 14 monetary claim for relief. 15 seem to me that this would be a very difficult case to grant 16 summary judgment on based on the evidence presented. Though I might later on. It would 17 I mean, there are evidentiary disputes even if -- and 18 you are -- I know that the defendant vigorously argues that the 19 evidence -- that there is not basically sufficient evidence to 20 support the FTC claim. 21 seems to me to jump to that high of a hurdle to make -- given 22 the record here. 23 24 25 But it would be hard for me to -- it And -- but that is what you are arguing, aren't you? This is to Mr. Mundel. MS. FRASSETTO: Your Honor, before we begin on this, UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 58 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 68 of 89 * -PUBLIC PUBLIC 57 1 I just want to note that defendants' request for oral argument 2 was only about the stay and dismissal without prejudice. 3 am not fully prepared to discuss this. 4 THE COURT: 5 MS. FRASSETTO: 6 just wanted to let you know that. THE COURT: 7 So I That's fine. I can answer some questions, but I Well, I'm not going to spend much time on 8 it. But I'm just trying to understand the defendants' position 9 as a whole without going through all of the evidence. MR. MUNDEL: 10 No, Your Honor. I think we are not 11 seeking -- I think the way you described the evidence is 12 exactly right. 13 many facts in dispute. 14 more facts in dispute when it takes 5000-plus pages to go 15 through all the facts. When it comes to liability, there are many, It is hard to imagine a case that has There is a lot of competing expert testimony. 16 There 17 is competing fact testimony. 18 documents. 19 declaration saying one thing and they testified to something 20 else. 21 There is interpretations of There is even some witnesses where they filed a So there's many areas of dispute. And that is why 22 our principal view is summary judgment should be denied on 23 liability and it should proceed to trial under the issues. 24 25 Our motion for summary judgment was really limited in two respects. The first respect was restitution. UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT That we Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 59 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 69 of 89 * -PUBLIC PUBLIC 58 1 don't need to talk about. The second respect when we moved for summary judgment 2 3 was solely on the injunction issue because the FTC has not 4 presented in our view any evidence of ongoing conduct, let 5 alone misconduct. 6 is a much more limited issue in our motion. It stops at a particular point in time. It 7 But generally on liability, we absolutely agree there 8 are more facts in dispute than we can talk about today even if 9 we wanted to. THE COURT: 10 11 Ms. Frassetto, do you want to just respond to that limited question as addressed by Mr. Mundel? 12 MS. FRASSETTO: 13 We disagree that there are facts in dispute. 14 most notably, I would note that the defendants relied very much 15 on Professor Wind. 16 necessary to decide the summary judgment. 17 findings, their defense really falls apart. 18 much to attack on what we have established from the actual 19 record based on the documents and advertisements and our own 20 survey. And And that is, in fact, why that Daubert is THE COURT: 21 Sure, Your Honor. Because without his And there is not So, Mr. Mundel, if I were to grant in 22 whole or in large part the Government's motion as to this 23 expert witness, what do you have? 24 MR. MUNDEL: 25 Honor. That is only one piece of our case, Your Professor Wind did a -- we believe should not be UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 60 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 70 of 89 * -PUBLIC PUBLIC 59 1 excluded. His survey conclusively shows that there is not 2 deception here. But that is only one piece of the case. Our other -- one of our other experts, Professor 3 4 Antoinette Schoar, the professor at MIT, she ran an analysis, 5 as Ms. Frassetto said, on liability and she concluded that 6 there was no deception as to savings claims and the issues. 7 we have expert testimony that certainly creates a dispute of 8 fact. So Second, we have a rebuttal to the FTC's primary 9 10 expert. 11 this is a primary evidence conception. 12 where he asked FleetCor customers years -- sometimes up to 13 eight, nine, or ten years after they signed up do they recall 14 being informed about the fees at the time they signed up. 15 he refused to let them say they don't know. 16 don't know, he didn't record it. 17 They have one expert. And what he did was he did -He did a memory test So that is their primary evidence. And If they said I And we believe it 18 is not -- it is not enough to meet that burden. 19 rebuttal expert who reran this and explains if you look at the 20 data the best way it actually proves FleetCor customers were 21 informed of their fees. 22 And we have a So, again, valid expert is a basis for you to deny 23 summary judgment. In addition, they rely on fact witnesses. 24 They have a fact witness who says FleetCor employees told me X. 25 We don't get what X is. But FleetCor told me X. UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 61 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 71 of 89 * -PUBLIC PUBLIC 60 Our employees testify in their deposition and 1 2 declaration they never said that. That is a classic he said, 3 she said and a basis to deny summary judgment. 4 the FTC relies completely on their own -- their own view of 5 what should be -- how things should be interpreted in a way 6 that is improper for a summary judgment motion. 7 judgment, the Court interprets all inferences against them, not 8 in their favor. In addition, At summary And I will point to Your Honor on Page 4 and 5 of our 9 10 opposition to the Wind Daubert motion we explain all of the 11 disputed facts that exist even if the Court excludes Professor 12 Wind. 13 a number of facts. 14 And we gave that to the Court as a convenience outlining THE COURT: Thank you. I'm going to just go offline 15 for a second so I can talk to my law clerk on this case, 16 Ms. Boring. (A brief break was taken at 11:57 A.M.) 17 18 19 20 So I will be with you shortly. THE COURT: All right. So just a few additional questions. Ms. Frassetto, are there any other comparable cases 21 that you think I should look at that -- involving federal 22 agencies or the commission that haven't been brought to my 23 attention? 24 25 MS. FRASSETTO: Yes, Your Honor. I can give you -- I guess there's two ways to respond to that. UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 62 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 72 of 89 * -PUBLIC PUBLIC 61 One, there are other cases post AMG where the FTC has 1 2 switched strategies. 3 admittedly. 4 So they are still on the hook for monetary relief. 5 to give you those, if you would like. But that is because there is the rule violation. I'm happy Otherwise, the other one I can think of is -- one 6 7 second. 8 wrong document up. Let me pull it up for you. THE COURT: 9 10 None where we have gone to admin I apologize. Well, you can send it to me. I have the You can send it to me. 11 MS. FRASSETTO: 12 THE COURT: 13 MS. FRASSETTO: I found it, Your Honor. All right. So this just has to do again with 14 the, you know, showing of bad faith and presumptions. 15 is Wicker v. Colvin. 16 3072260. 17 District of Florida from May 31st, 2016. And that The case citation is 2016 Westlaw The pin cite is 5. 18 THE COURT: 19 MS. FRASSETTO: And that is out of the Northern I'm sorry. 307 -- -- 2260. And essentially the facts 20 there are that the plaintiff did not overcome the presumption 21 of regularity and good faith in a federal agency when he failed 22 to identify a single agency employee or the date of any alleged 23 conversation that he claims misled him. 24 relevant here, particularly with Mr. Mundel's declaration. 25 THE COURT: And that strikes us as Well, are there any others where a -- you UNITED STATES DISTRICT COURT OFFICIAL CERTIFIED TRANSCRIPT Case 1:19-cv-05727-AT Document 194 Filed 02/18/22 Page 63 of 71 FEDERAL TRADE COMMISSION | OFFICE OF THE SECRETARY | FILED 06/23/2023 OSCAR NO 607985 | PAGE Page 73 of 89 * -PUBLIC PUBLIC 62 1 know, there are certainly lots of other agencies that have had 2 significant adverse rulings against them that sort of probably 3 caused a little bit of havoc in terms of how the cases were to 4 pr [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Aftc%3A27c9ed5a79863cb4. Public record. Not legal advice.