IN THE UNITED STATES COURT OF APPEALS
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No. 23-4009
IN THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
–––––––––––––––––––––––––––––––––––––––––––––
FEDERAL TRADE COMMISSION,
Plaintiff-Appellee,
v.
ELITE IT PARTNERS, INC.,
and
JAMES MICHAEL MARTINOS,
Defendants-Appellants.
–––––––––––––––––––––––––––––––––––––––––––––
On Appeal from the United States District Court
for the District of Utah
No. 2:19-cv-0125
(Hon. Robert J. Shelby)
–––––––––––––––––––––––––––––––––––––––––––––
ANSWERING BRIEF OF APPELLEE
THE FEDERAL TRADE COMMISSION
–––––––––––––––––––––––––––––––––––––––––––––
ANISHA S. DASGUPTA
General Counsel
MARIEL GOETZ
Acting Director of Litigation
MICHAEL BERGMAN
Attorney
FEDERAL TRADE COMMISSION
600 Pennsylvania Avenue, N.W.
Washington, DC 20580
(202) 326-3184
mbergman@ftc.gov
ORAL ARGUMENT NOT REQUESTED
TABLE OF CONTENTS
TABLE OF AUTHORITIES ...................................................................iii
INTRODUCTION ..................................................................................... 1
STATEMENT OF JURISDICTION ....................................................... 3
STATEMENT OF THE ISSUE PRESENTED ..................................... 3
STATEMENT OF THE CASE ................................................................ 4
A. The FTC’s Complaint.................................................................... 4
B. The TRO and Stipulated Preliminary Injunction ....................... 7
C. The Stipulated Order.................................................................... 9
D. The FTC’s Consumer Redress .................................................... 12
E. Defendants’ Motion and the Decision on Review ...................... 12
STANDARD OF REVIEW ..................................................................... 17
ARGUMENT............................................................................................ 18
The District Court Correctly Denied Rule 60(b)(6) Relief ...................... 18
I.
Defendants Waived Their Right To “Otherwise
Challenge or Contest the Validity” Of The Judgment,
Including Through Rule 60(b)(6). ...................................................... 20
II. Rule 60(b)(6) Relief Is Unwarranted Because The
Judgment Resulted From Defendants’ Deliberate
Decision To Settle............................................................................... 23
III. AMG Does Not Constitute An Extraordinary
Circumstance Under Rule 60(b)(6).................................................... 27
A. Supreme Court Rulings Have No Retroactive Effect
on Closed Cases .......................................................................... 28
i
B. The District Court Properly Held That AMG Does
Not Justify Relief From the Judgment Under Rule
60(b)(6) ........................................................................................ 29
1.
2.
3.
AMG was not a “related case” under this Court’s
interpretation of Rule 60(b)(6) ............................................ 29
The Court need not consider additional factors ................. 32
Even if considered, other factors only confirm
relief is not appropriate ....................................................... 36
STATEMENT REGARDING ORAL ARGUMENT............................ 40
CERTIFICATE OF COMPLIANCE .................................................... 41
ii
TABLE OF AUTHORITIES
CASES
Adams v. Merrill Lynch, Pierce, Fenner & Smith,
888 F.2d 696 (10th Cir. 1989) ............................................................... 33
Agostini v. Felton,
521 U.S. 203 (1997) ............................................................................... 29
AMG Capital Management, LLC v. FTC,
141 S. Ct. 1341 (2021) ..................................................... 2, 12, 16, 26, 27
Petition for Writ of Certiorari,
No 19-508 (Sup. Ct. filed Oct. 18, 2019) ............................................... 25
Blue Diamond Coal Co. v. Trustees of UMWA Combined Ben. Fund,
249 F.3d 519 (6th Cir. 2001) ................................................................. 33
Bousley v. United States,
523 U.S. 614 (1998) ............................................................................... 34
Buck v. Davis,
580 U.S. 100 (2017) ............................................................................... 18
Cashner v. Freedom Stores, Inc.,
98 F.3d 572 (10th Cir. 1996) ......................................... 16, 20, 23, 24, 25
Collins v. Wichita,
254 F.2d 837 (10th Cir. 1958) ............................................................... 35
Colorado Interstate Gas Co. v. Nat. Gas Pipeline Co. of Am.,
962 F.2d 1528 (10th Cir. 1992) ............................................................. 36
Coltec Indus. v. Hobgood,
280 F.3d 262 (3rd Cir. 2002) ................................................................. 24
Davis v. United States,
192 F.3d 951 (10th Cir. 1999) ............................................................... 36
FTC v. Ah Media Grp., LLC,
339 F.R.D 612 (N.D. Cal. 2021) .......................................... 20, 21, 22, 24
FTC v. AMG Cap. Mgmt., LLC,
910 F.3d 417 (9th Cir. 2018) ................................................................. 24
FTC v. Apex Cap. Grp., No. 18-cv-9573,
2021 WL 7707269 (C.D. Cal. Sept. 3, 2021) ................................... 20, 25
iii
FTC v. Credit Bureau Center, LLC,
937 F.3d 764 (7th Cir. 2019) ................................................................. 25
No. 18-2847 (7th Cir. Sept. 20, 2019) ................................................... 25
FTC v. EMP Media,
No. 2:18-cv-0035, 2023 WL 3687722 (D. Nev. May 25, 2023) ............. 20
FTC v. Figgie Int’l, Inc.,
994 F.2d 595 (9th Cir. 1993) ................................................................. 37
FTC v. Freecom Commc'ns, Inc.,
401 F.3d 1192 (10th Cir. 2005) ............................................................. 37
FTC v. H.N. Singer, Inc.,
668 F.2d 1107 (9th Cir. 1982) ............................................................... 27
FTC v. Hewitt,
68 F.4th 461 (9th Cir. 2023) ............................................... 19, 36, 37, 38
FTC v. Ivy Cap., Inc.,
340 F.R.D. 602 (D. Nev. 2022) .............................................................. 20
FTC v. Nat’l Urological Grp., Inc., No. 1:04-cv-3294,
2021 U.S. Dist. LEXIS 235970 (N.D. Ga. Sept. 30, 2021) ................... 20
FTC v. Ross, No. 08-cv-3233,
2022 U.S. Dist. LEXIS 166360 (D. Md. Sept. 14, 2022) ...................... 20
FTC v. Simple Health Plans LLC,
58 F.4th 1322 (11th Cir. 2023) ............................................................. 26
FTC v. Southwest Sunsites, Inc.,
665 F.2d 711 (5th Cir. 1982) ................................................................. 27
FTC v. USA Fin. LLC,
No. 8:08-0899, 2023 WL 2196641 (M.D. Fla. Feb. 24, 2023)............... 20
Gonzalez v. Crosby,
545 U.S. 524 (2005) ....................................................... 15, 19, 34, 35, 37
Harper v. Va. Dep’t of Tax’n,
509 U.S. 86 (1993) ................................................................................. 28
In re Gledhill,
76 F.3d 1070 (10th Cir. 1996) ............................................................... 34
James B. Beam Distilling Co. v. Georgia.,
501 U.S. 529 (1991) ......................................................................... 19, 28
iv
Johnson v. Spencer,
950 F.3d 680 (10th Cir. 2020) ................................................... 18, 24, 35
Johnston v. Cigna Corp.,
14 F.3d 486 (10th Cir. 1993) ................................................................. 30
Kemp v. United States,
142 S. Ct. 1856 (2022) ........................................................................... 18
Kile v. United States,
915 F.3d 682 (10th Cir. 2019) ......................................................... 17, 24
Liljeberg v. Health Servs. Acquisition Corp.,
486 U.S. 847 (1988) ............................................................. 18, 23, 32, 38
Lincoln v. BNSF Ry. Co.,
900 F.3d 1166 (10th Cir. 2018) ............................................................. 23
Moses v. Joyner,
815 F.3d. 163 (4th Cir. 2016) ................................................................ 32
Nixon v. City & Cty. of Denver,
784 F.3d 1364 (10th Cir. 2015) ............................................................. 14
Pierce v. Cook & Co.,
518 F.2d 720 (10th Cir. 1975) ............................................................... 30
Reynoldsville Casket Co. v. Hyde,
514 U.S. 749 (1995) ............................................................................... 28
Ross v. Bush,
704 F. App’x 771 (10th Cir. 2017)......................................................... 31
Saggiani v. Strong,
718 F. App’x 706 (10th Cir. 2018)......................................................... 25
Sproull v. Union Texas Products Corp., No. 90-6286,
944 F.2d 911, 1991 WL 184098 (10th Cir. Sept. 18, 1991).................. 29
Teague v. Lane,
489 U.S. 288 (1989) ............................................................................... 29
United States v. Cockerham,
237 F.3d 1179 (10th Cir. 2001) ............................................................. 22
United States v. Manzanares,
956 F.3d 1220 (10th Cir. 2020) ............................................................. 33
v
United States v. Sandoval,
29 F.3d 537 (10th Cir. 1994) ................................................................. 20
Wilson v. Al McCord Inc.,
858 F.2d 1469 (10th Cir. 1988) ............................................................. 33
Zurich N. Am. v. Matrix Serv., Inc.,
426 F.3d 1281 (10th Cir. 2005) ............................................................. 18
STATUTES
15 U.S.C. § 45(a) ..................................................................................... 3, 6
15 U.S.C. § 53(b) ..................................................................................... 3, 6
15 U.S.C. § 57b............................................................................ 3, 6, 26, 39
15 U.S.C. § 6102(c)...................................................................................... 3
15 U.S.C. § 6105(b) ..................................................................................... 3
15 U.S.C. § 8403.......................................................................................... 6
15 U.S.C. § 8404(a) ..................................................................................... 3
16 C.F.R. pt. 310 ......................................................................................... 6
28 U.S.C. § 1291.......................................................................................... 3
28 U.S.C. § 1331.......................................................................................... 3
28 U.S.C. § 1337(a) ..................................................................................... 3
28 U.S.C. § 1345.......................................................................................... 3
OTHER AUTHORITIES
Fed. Trade Comm’n, Elite IT Refunds: FTC sends
checks to people who lost money to a tech
support scheme (January 2023) ............................................................ 12
RULES
Fed. R. Civ. P. 60(b) ............................................................................ 12, 13
vi
STATEMENT OF RELATED CASES
Pursuant to 10th Cir. R. 28.2(C)(3), appellee states that there are
no prior or related appeals.
vii
INTRODUCTION
Appellants James Martinos and his company, Elite IT Partners
(collectively, “defendants”), operated a deceptive technical support scam
that took more than $13 million from consumers. Preying mostly on
elderly customers looking to recover their email passwords, the
defendants ran bogus “diagnostic” tests that convinced customers that
their computers were infected with viruses in order to trick them into
paying for costly and unnecessary repair services. Seeking to shut down
the operation and return money to injured consumers, the Federal
Trade Commission (“FTC”) sued Martinos and the company for
violating federal consumer protection laws.
Rather than challenge the FTC’s case in court, the defendants
elected to settle. In December 2019, by stipulation of the parties, the
district court entered a final order imposing a monetary judgment equal
to the amount of consumer loss—$13.5 million. But the order only
required the defendants to pay what they had in available assets, less
than $400,000; the remainder of the judgment was suspended. The
order also enjoined defendants from certain deceptive sales tactics.
Defendants expressly waived their right to appeal from or otherwise
1
challenge the order. Following the judgment, the FTC collected all
available assets and distributed refunds to consumers.
In April 2021, the Supreme Court held that Section 13(b) of the
FTC Act does not authorize monetary relief. AMG Capital Management,
LLC v. FTC, 141 S. Ct. 1341, 1352 (2021). Nearly a year later, and more
than two years after they settled, defendants asked the district court to
vacate the 2019 judgment, invoking Federal Rule of Civil Procedure
60(b). Defendants claimed it was no longer equitable to apply the
judgment prospectively, arguing for relief under Rule 60(b)(5), and
asserted that the AMG decision was an extraordinary circumstance
justifying relief under Rule 60(b)(6). The district court rejected both
arguments. On appeal, defendants abandon their Rule 60(b)(5)
argument. Thus, the only issue before this Court is whether the district
court abused its discretion in denying relief under Rule 60(b)(6).
The Court should affirm. It is a settled principle that new law
created by the Supreme Court does not apply to closed cases, and
AMG—the sole basis for defendants’ request—does not justify relief
under Rule 60(b)(6). There was no abuse of discretion in the district
court’s finding that AMG did not amount to an extraordinary
2
circumstance that would warrant reopening a judgment that was
consistent with the prevailing law at the time. That is especially so
given that the judgment resulted from the defendants’ own considered,
deliberate decision to forego litigating the case and instead settle. Rule
60(b)(6) cannot be used to relieve defendants from a strategic decision
they later regret.
STATEMENT OF JURISDICTION
The district court had jurisdiction pursuant to 28 U.S.C. §§ 1331,
1337(a), and 1345, and 15 U.S.C. §§ 45(a), 53(b), 57b, 6102(c), 6105(b),
and 8404(a).
The district court entered a Stipulated Order for Permanent
Injunction and Monetary Judgment on December 9, 2019. Defendants
moved to vacate that stipulated judgment order on March 17, 2022, and
the district court denied their motion on January 23, 2023. Defendants
timely appealed the district court’s denial of their motion.
This Court has jurisdiction pursuant to 28 U.S.C. § 1291.
STATEMENT OF THE ISSUE PRESENTED
The district court denied the defendants’ motion to vacate an
earlier judgment, which had been entered by stipulation of the parties
following alleged violations of the FTC Act. Did the district court abuse
3
its discretion when it found that a new Supreme Court decision was not
an extraordinary circumstance that justified relief under Rule 60(b)(6)
from the final judgment memorializing the parties’ settlement?
STATEMENT OF THE CASE
A.
The FTC’s Complaint
In February 2019, the FTC sued Elite IT Partners, Inc. (“Elite” or
“the company”) and its founder and CEO, James Martinos, for operating
a widespread, deceptive technical support scheme that violated federal
consumer protection laws. App. 21-45. 1 The FTC sought to enjoin
defendants from further unlawful conduct and to obtain monetary relief
for harmed consumers. App. 21-22, 44-45.
1. The FTC alleged that defendants, using online ads, targeted
elderly consumers who needed computer assistance with issues like
forgotten email passwords. Defendants claimed they would provide
“free, No Obligation” computer assistance including password recovery.
App. 24-27 ¶¶11-12, 14-17. Once on the phone, and after gaining remote
1 “App.” refers to pages in defendants’ Appendix; “SUPPAPP” refers to
the FTC’s Supplemental Appendix; “ECF_” refers to district court
docket entries; page cites (other than to defendants’ Opening Brief) are
to ECF-generated page numbers; and “Br.” refers to defendants’
Opening Brief.
4
control of the consumer’s computer, defendants used a deceptive
diagnostic tool to claim that the consumer’s password had been
compromised by malware. Defendants then claimed that the consumer
needed Elite’s urgent help to protect important personal data and
finances. App. 24-33 ¶¶11-12, 14-17, 20-25, 27-31.
In fact, the “threats” supposedly detected by defendants’ testing
were merely computer “cookies”—small text files placed on a user’s
computer or web browser when visiting certain websites—that were
benign and did not pose the serious threats claimed by the salespeople.
App. 29-30 ¶22. Other supposed signs of viruses and malware likewise
did not indicate the presence of a virus or any malfunction. App. 31-32
¶¶26, 28, 29. But defendants would dupe consumers into paying $100 or
more for a one-time “cleaning” of (non-existent) computer threats and
ongoing technical support services costing $20-$40 per month. App. 24,
33 ¶¶12, 33-34.
The FTC also alleged that the defendants failed to adequately
disclose material terms, such as that consumers who agreed to the
monthly service were automatically signed up for a yearly term that
renewed if the consumer failed to timely cancel; that those cancellations
5
had to be in writing a month before the yearly term ended; and that
cancellations within the first year would be subject to a $150 fee. App.
24-25, 34-36 ¶¶13, 35-40. The FTC alleged that Martinos, as the
founder and CEO of the company, directed, controlled, and participated
in these deceptive practices. App. 23, 36-37 ¶¶9, 43.
2. The FTC alleged that defendants’ scheme violated Section 5(a)
of the FTC Act, 15 U.S.C. § 45(a), which prohibits deceptive acts and
practices; the FTC’s Telemarketing Sales Rule (TSR), 16 C.F.R. pt. 310,
which bars misleading telemarketing; and Section 4 of the Restore
Online Shoppers’ Confidence Act (ROSCA), which prohibits deceptive
automatic renewal practices online. 15 U.S.C. § 8403. App. 21-22, 37-44
¶¶1, 44-70.
For relief, the FTC sought a permanent injunction under Section
13(b) of the FTC Act, 15 U.S.C. § 53(b), as well as money to distribute to
defrauded consumers as redress, pursuant to Sections 13(b) and 19 of
the FTC Act, 15 U.S.C. §§ 53(b), 57b, among other laws. App. 21-22, 4445.
6
B.
The TRO and Stipulated Preliminary Injunction
At the outset of the case, evidence showed that defendants were
dissipating assets by paying significant legal fees to pursue meritless
suits against third parties (including former customers), and also were
avoiding their bank’s compliance procedures. SUPPAPP-1-29–32.
Fearing further hiding or dissipating of assets, or destruction of
documents relevant to the litigation, the FTC moved for an ex parte
temporary restraining order (TRO) when it filed its complaint. App. 4878; SUPPAPP-1-25–36, ECF 9-18 at XX (PX 28 ¶¶ 10-45). The FTC also
asked the court to appoint a receiver and freeze defendants’ assets to
preserve the possibility of meaningful relief for defrauded consumers.
App. 48, 55-56, 62-70. Defendants were notified of the TRO shortly
afterwards. See ECF_17.
The FTC supported its motion with declarations from over two
dozen injured consumers; former Elite employees describing the
company’s deceptive practices (including their purported affiliation with
Microsoft and Yahoo; undercover FTC investigators who recorded their
interactions with Elite salespeople; an FTC forensic accountant who
analyzed Elite’s bank records and calculated consumer harm, and a
7
computer and data security expert who analyzed Elite’s services,
including the representations of its telemarketers, and concluded that
they were a sham. See generally App. 196-198, 278-279 (and record cites
therein).
In opposing the TRO, the defendants provided no evidence
refuting their employees’ carefully scripted misrepresentations to
consumers. ECF_81 at 7. Nor did Martinos rebut the FTC’s showing
that he knew of those misleading statements. Id. The district court
found “good cause to believe” that both Martinos and his company had
violated the FTC Act, the TSR, and ROSCA, and determined that the
FTC was “likely to prevail on the merits.” App. 49. The court thus
issued the TRO, froze defendants’ assets, and appointed a receiver for
Elite’s operations. App. 50.
The FTC also sought a preliminary injunction, providing
additional evidence corroborating defendants’ misrepresentations to
consumers, including in sales scripts, training notes, customer call
recordings, transcripts of deceptive sales calls, and additional former
employee declarations. SUPPAPP-1-142–43, 130. Some of these items
were discovered in Martinos’s desk, confirming Martinos’s knowledge of
8
his employees’ deceptive sales tactics. SUPPAPP-2-9–10, 17 ¶¶61-62.
Evidence also showed Martinos’s active participation in his company’s
practices. He also secretly removed and modified hard drives with
damaging information against him in blatant violation of the TRO.
SUPPAPP-1-114–17, 121–22; SUPPAPP-2-6 ¶¶ 11, 12; 17.
Given the opportunity to defend themselves at a court hearing,
Martinos and his company instead chose to stipulate to a preliminary
injunction, which was entered in May 2019. SUPPAPP-2-19 –121.
Under the preliminary injunction, Martinos was allowed to continue
Elite’s business-to-business operations (which were not part of the
deceptive scheme alleged in the FTC’s complaint), but the TRO’s
receivership and asset freeze remained in place. SUPPAPP-2-25–27,
33–41. The preliminary injunction also barred the defendants from
making the misrepresentations alleged in the complaint, and required
defendants to provide financial statements to the FTC and to preserve
their business records. SUPPAPP-2-23–25, 29–32.
C.
The Stipulated Order
Following the preliminary injunction, the parties engaged in
extensive settlement negotiations. Both defendants were represented by
9
experienced counsel throughout the proceedings. Ultimately, Martinos
and his company agreed to a final Stipulated Order for Permanent
Injunction and Monetary Judgment (“Stipulated Order”), which the
district court entered on December 9, 2019. App. 119-165.
Under the Stipulated Order, the defendants were permanently
banned from selling to consumers any technical support product or
service, or any good or service with a negative option feature;
mispresenting the detection of viruses on computers that affect the
computers’ security; telemarketing by misleading consumers or failing
to disclose material information; and mispresenting material terms in
their refund or cancellation policies. App. 121-123. The order did not
apply to defendants’ business-to-business operations.
The Stipulated Order imposed a monetary judgment against both
defendants in the amount of $13,537,288.75, which represented the
FTC’s calculation of consumer losses from their scam. App. 124, 126.
But the order limited defendants’ payment obligations to their attested
available assets, which constituted a mere fraction of the $13 million –
approximately $355,000. See App. 124-125, 202-203; SUPPAPP-2-122–
10
24. 2 The remainder of the judgment was suspended based on Martinos’s
sworn representations about his and his company’s assets and their
ability to pay. App. 124-125. The Stipulated Order provided that if the
court later found that defendants had misrepresented their financial
status, defendants would be held liable for the full $13 million
judgment. 3 App. 125-126.
The Stipulated Order also contained a broad waiver provision,
under which defendants agreed to “waive all rights to appeal or
otherwise challenge or contest the validity of this Order.” App. 120.
Defendants further agreed to “relinquish dominion and all legal and
equitable right, title, and interest in all assets transferred pursuant to
[the Stipulated] Order” and agreed “not [to] seek the return of any
assets.” App. 126.
2 The assets (which include Elite’s assets recovered by the receiver)
consisted of defendants’ funds in bank or brokerage accounts that had
been frozen at three financial institutions, and $173,500 drawn on
Martinos’s home equity line of credit. Id.
3 The order also included recordkeeping and reporting requirements to
ensure compliance, App. 130-133, and continued the receivership, but
directed that the receivership begin to wind down and terminate after
approval of the receiver’s final report. App. 128.
11
D. The FTC’s Consumer Redress
The FTC has distributed nearly all the $355,138.80 collected from
Elite and Martinos to defendants’ scam victims as redress, with a small
amount covering the cost of administering redress. See SUPPAPP-2122–25; Fed. Trade Comm’n, Elite IT Refunds (January 2023),
https://www.ftc.gov/enforcement/refunds/elite-it-refunds. Because
defendants had squandered most of the funds they filched from
consumers by the time assets were frozen, funds available for redress
comprise only 2.6% of total consumer losses captured by the full $13
million judgment.
E. Defendants’ Motion and the Decision on Review
In March 2022—two and a half years after agreeing to the
Stipulated Order—the defendants moved to vacate the judgment under
Federal Rule of Civil Procedure 60(b). App. 166-187. Defendants also
sought the return of funds they paid the Commission. App. 171, 186.
Their arguments for post-judgment relief were based on the Supreme
Court’s decision a year earlier in AMG Cap. Mgmt., LLC v. FTC, 141 S.
Ct. 1341 (2021). App. 171-172. In AMG, the Supreme Court held that
Section 13(b) of the FTC Act does not authorize equitable monetary
relief. 141 S. Ct. at 1344, 1352.
12
In their motion to vacate, defendants claimed that they “would not
have agreed to the same settlement terms” had they not believed that
the FTC could obtain money damages through Section 13(b). App. 171172, 182-183. Defendants contended that AMG thus justified relief from
the judgment under two provisions of Rule 60: (b)(5), which permits
relief when applying the judgment “prospectively is no longer
equitable,” and (b)(6), which allows relief “for any other reason.” See
App. 174-175.
The district court denied the motion. App. 284, 290. Noting “the
high bar required to qualify for relief under Rule 60,” the court
concluded that relief was not warranted under either provision
defendants invoked. App. 284. The court first held that to qualify for
relief under Rule 60(b)(5), “a judgment must not only be inequitable but
also ‘prospective,’ and Elite’s judgment does not qualify as prospective.”
Id. Rather, the monetary judgment “provides redress for past harms,”
making Rule 60(b)(6) relief unavailable.” App. 287-288.
Next, the district court rejected defendants’ argument that the
AMG decision amounted to “extraordinary circumstances” justifying
relief under Rule 60(b)(6). App. 288-290. Under Tenth Circuit
13
precedent, the court explained, a change in the law generally does not
constitute an extraordinary circumstance justifying relief under this
provision. App. 288-289. While this Court has recognized an exception
when the change in law occurs in a factually related case, here, AMG
was “a completely unrelated case” to the one against the defendants.
App. 290. The decision thus did not constitute an extraordinary
circumstance. Id. Finding no other “legal or factual basis” to vacate the
judgment, the district court denied relief. Id.
This appeal followed. On appeal, defendants abandoned their Rule
60(b)(5) argument; the only issue before this Court is whether the
district court abused its discretion in denying relief under Rule
60(b)(6). 4
SUMMARY OF ARGUMENT
New Supreme Court decisions do not retroactively apply to closed
cases. In 2019, Martinos and Elite chose to settle charges that they ran
a wide-scale deceptive tech support scheme, and to forego any legal
4 Defendants abandoned their challenge under Rule 60(b)(5) by
“fail[ing] . . . to explain what was wrong with the reasoning that the
district court relied on” in rejecting their request for relief under that
provision. See Nixon v. City & Cty. of Denver, 784 F.3d 1364, 1366,
1368-70 (10th Cir. 2015).
14
challenge to the agreed upon monetary relief. The resulting judgment
became final, and the case was closed. The district court acted well
within its discretion when it denied defendants’ request, filed more than
two years after defendants settled, to set aside that final judgment
based on a new Supreme Court decision.
The catch-all provision of Rule 60(b)(6) permits a district court to
reopen a final judgment for “any other reason justifying relief” from the
judgment. Relief under this provision is available only in “extraordinary
circumstances,” which do not include a district court’s correct
application of the law as it stood when the judgment was entered—even
if the Supreme Court later reaches a different decision. Gonzales v.
Crosby, 545 U.S. 524, 536 (2005). The district court properly denied
relief under Rule 60(b)(6), and this Court should affirm.
1. Martinos and Elite waived the right to seek the requested relief
when they expressly agreed to waive “all rights to appeal or otherwise
challenge or contest the validity” of the judgment. This provision was an
important part of the bargain defendants struck with the FTC to settle
the case. Asking the court to vacate the judgment in these
15
circumstances constitutes a “challenge” that the waiver provision bars,
and the Court can affirm on this basis alone.
2. That the final judgment resulted from defendants’ deliberate
decision to settle likewise forecloses relief here. Circuit precedent holds
that Rule 60(b)(6) should not be used to relieve defendants from a
strategic decision they later regret. Cashner v. Freedom Stores, Inc., 98
F.3d 572, 580 (10th Cir. 1996). Here, at the time defendants settled,
they should have been aware that the law might change: a petition for
certiorari squarely presenting the issue was already pending at the
Supreme Court, and a Circuit split had been created by a prominent
Seventh Circuit decision. The Supreme Court’s later decision in AMG
Cap. Mgmt., LLC v. FTC, 141 S. Ct. 1341 (2021), thus shows no
“unanticipated intervening change of circumstances” that could justify
Rule 60(b)(6) relief. Cashner, 98 F.3d at 580.
3. In any event, the district court properly exercised its discretion
to deny relief under Rule 60(b)(6) because this case presents no
extraordinary circumstances. Defendants’ motion hinged on AMG, but it
is “hardly extraordinary” for the Supreme Court to disagree with a
lower court’s interpretation of federal law. If every change in decisional
16
law justified reopening a final judgment at any time, all cases would be
perpetually susceptible to challenges and no case would truly be final.
New Supreme Court decisions thus apply only to cases open on direct
review. For similar reasons, every other court to consider Rule 60(b)
motions on AMG grounds has denied relief. And in this case, alternative
provisions—alleged in the FTC’s complaint—independently justify a
sizeable consumer redress award, making relief even less warranted.
Defendants complain that the district court adopted an unduly
rigid “categorical rule” and should have considered other factors. But
governing law does not require courts to consider any particular factor
in a Rule 60(b)(6) analysis. The district court properly applied Tenth
Circuit precedent holding that a change in decisional law arising in a
factually unrelated case does not justify Rule 60(b)(6) relief. AMG
plainly was not related to this case under that standard. And
defendants fail to show that any other factor would justify relief. The
Court should affirm.
STANDARD OF REVIEW
This Court reviews the denial of Rule 60(b)(6) relief for abuse of
discretion. Kile v. United States, 915 F.3d 682, 688 (10th Cir. 2019).
17
“The denial of a 60(b)(6) motion will be reversed only if we find a
complete absence of a reasonable basis and are certain that the decision
is wrong.” Johnson v. Spencer, 950 F.3d 680, 701 (10th Cir. 2020). “The
district court's ruling is only reviewed to determine if a definite, clear or
unmistakable error occurred below.” Zurich N. Am. v. Matrix Serv., Inc.,
426 F.3d 1281, 1289 (10th Cir. 2005).
ARGUMENT
THE DISTRICT COURT CORRECTLY
DENIED RULE 60(b)(6) RELIEF
Defendants argue that the district court should have vacated the
Stipulated Order under Rule 60(b)(6), a catchall provision that permits
a court to reopen a judgment when none of the other Rule 60(b) grounds
apply and when the movant demonstrates “extraordinary
circumstances.” Buck v. Davis, 580 U.S. 100, 121-124 (2017); Kemp v.
United States, 142 S. Ct. 1856, 1861 (2022). Relief under this provision
will only be granted where necessary “to accomplish justice.” Liljeberg v.
Health Servs. Acquisition Corp., 486 U.S. 847, 863–64 (1988). Put
another way, relief under Rule 60(b)(6) “is extraordinary and reserved
for exceptional circumstances.” Johnson v. Spencer, 950 F.3d 680, 70001 (10th Cir. 2020).
18
The high bar for relief under Rule 60(b)(6) reflects the importance
to the legal system of maintaining the finality of judgments. “Public
policy dictates that there be an end of litigation[.]” James B. Beam
Distilling Co. v. Georgia., 501 U.S. 529, 541 (1991) (“Beam Distilling”)
(cleaned up). When a decision is rendered correctly under the “thenprevailing interpretation” of a federal statute and the case then
becomes final, a new Supreme Court decision generally does not
“provide[] cause for reopening” the closed case. Gonzalez v. Crosby, 545
U.S. 524, 536-37 (2005). “It is hardly extraordinary” for the Supreme
Court to disagree with a lower court’s interpretation of federal law. Id.
at 536.
The district court thus did not abuse its discretion in denying Rule
60(b)(6) relief on this basis. Indeed, no court has reopened a final
judgment in an FTC case on AMG grounds. And the Ninth Circuit
recently rejected the same argument defendants make here, affirming
the denial of Rule 60(b)(6) relief in the wake of AMG. FTC v. Hewitt, 68
F.4th 461, 467-470 (9th Cir. 2023). 5
5 In addition to Hewitt and the decision below, every court that has
addressed the issue has refused to grant relief. See FTC v. EMP Media,
19
The requested relief is even less warranted in this case because
the judgment resulted from defendants’ own calculated decision to
settle. As this Court has explained, Rule 60(b)(6) should not be used to
set aside a “a free, counseled, deliberate choice whose consequences in
hindsight” may seem “unfortunate.” Cashner v. Freedom Stores, Inc., 98
F.3d 572, 580 (10th Cir. 1996).
I.
DEFENDANTS WAIVED THEIR RIGHT TO “OTHERWISE
CHALLENGE OR CONTEST THE VALIDITY” OF THE JUDGMENT,
INCLUDING THROUGH RULE 60(b)(6).
As a threshold matter, while the district court did not reach the
issue, waiver provides an independent basis on which to affirm the
decision below. See United States v. Sandoval, 29 F.3d 537, 542 n.6
(10th Cir. 1994) (appellate court may “affirm a district court decision on
any grounds” found in the record “even grounds not relied upon by the
district court”).
No. 2:18-cv-0035, 2023 WL 3687722, at *3–4 (D. Nev. May 25, 2023);
FTC v. USA Fin. LLC, No. 8:08-0899, 2023 WL 2196641 (M.D. Fla. Feb.
24, 2023); FTC v. Ross, No. 08-cv-3233, 2022 U.S. Dist. LEXIS 166360
(D. Md. Sept. 14, 2022); FTC v. Ivy Cap., Inc., 340 F.R.D. 602 (D. Nev.
2022); FTC v. Nat’l Urological Grp., Inc., No. 1:04-cv-3294. 2021 U.S.
Dist. LEXIS 235970 (N.D. Ga. Sept. 30, 2021); FTC v. Apex Cap. Grp.,
No. 18-cv-9573, 2021 WL 7707269, at *4 (C.D. Cal. Sept. 3, 2021); FTC
v. Ah Media Grp., LLC, 339 F.R.D 612 (N.D. Cal. 2021).
20
Martinos and Elite waived the right to seek their requested relief
when they voluntarily and knowingly agreed to waive “all rights to
appeal or otherwise challenge or contest the validity of [the Stipulated]
Order.” App. 120. The relief defendants seek through Rule 60(b)(6)
amounts to a “challenge” to the Stipulated Order within the meaning of
this waiver provision. See App. 205. And asking for the return of funds
violates the separate provision in which defendants agreed “not [to]
seek the return of any assets.” App. 126.
In response to the FTC’s waiver arguments below, defendants
argued, without further explanation, that the waiver provision of the
Stipulated Order does not foreclose review because “Rule 60(b) exists to
reopen this . . . type of agreement.” App. 247. But defendants identified
no cases in which courts granted Rule 60(b)(6) relief despite a clear
waiver provision like this one; nor is the FTC aware of any such cases. 6
In the habeas context, this Court has repeatedly held that “a
defendant’s waiver of the statutory right to direct appeal contained in a
6 One district court stopped short of finding that similar waiver
provisions “conclusively barr[ed]” the defendants’ Rule 60(b)(6) motion,
but still denied relief, concluding that “the fact of their voluntary
waivers is another factor that cuts against granting them relief.” FTC v.
Ah Media Grp., LLC, 339 F.R.D. 612, 620 (N.D. Cal. 2021).
21
plea agreement is enforceable if the defendant has agreed to its terms
knowingly and voluntarily.” United States v. Cockerham, 237 F.3d 1179,
1181-82 (10th Cir. 2001) (cleaned up). Similarly, the Court treats a
criminal defendant’s “waiver of collateral attack rights” as “generally
enforceable where the waiver is expressly stated in the plea agreement
and where both the plea and the waiver were knowingly and voluntarily
made.” Id. at 1183. These principles apply even though a defendant’s
physical liberty is at stake.
The same basic analysis applies here, although the underlying
issue is not physical liberty but defendants’ efforts to avoid providing
redress to the consumers they indisputably defrauded. Elite and
Martinos cannot dispute that they agreed to the terms of the Stipulated
Order “knowingly and voluntarily,” having engaged in lengthy
settlement discussions with the FTC while represented by competent
counsel.
At the very least, defendants’ agreement to waive challenges to
the Stipulated Order shows that this case does not implicate any
exceptional circumstances that would justify vacating the judgment. See
Ah Media, 339 F.R.D. at 620 (finding waiver “cuts against” relief);
22
Liljeberg, 486 U.S. at 863–64 (relief under Rule 60(b)(6) warranted only
where such relief would “accomplish justice”).
II.
RULE 60(b)(6) RELIEF IS UNWARRANTED BECAUSE THE
JUDGMENT RESULTED FROM DEFENDANTS’ DELIBERATE
DECISION TO SETTLE.
That the challenged judgment resulted from defendants’ own
decision to settle this case provides a further basis to deny discretionary
Rule 60(b) relief. 7 This Court has recognized that Rule 60(b)(6) should
not be used to set aside “a free, counseled, deliberate choice whose
consequences in hindsight are unfortunate.” Cashner, 98 F.3d at 580.
For example, “even if the settlement upon which the parties agreed
constituted a bad deal in hindsight, there is nothing sufficiently
‘unusual or compelling’ about making a bad bargain to warrant relief
7 The district court did not address this argument. See App. 288 n.69.
Nevertheless, this Court may affirm on that ground since it is
supported by the record and because defendants “had a fair opportunity
to address” that argument below. Lincoln v. BNSF Ry. Co., 900 F.3d
1166, 1180 (10th Cir. 2018) (cleaned up). Defendants addressed the
effect of settlement in their motion to vacate, App. 183-184, and in their
reply. App. 248, 251-252, 254-255.
23
under Rule 60(b)(6).” Kile, 915 F.3d at 688 (citing Cashner, 98 F.3d at
580); Johnson, 950 F.3d at 703 (same). 8
Defendants claim that they would not have settled but for the
injunction and asset freeze, and that the FTC should not have obtained
that relief in 2019 because the law changed in 2021. Br. 9, 12. 39. But
at the time defendants decided to settle, they should have been aware of
the possibility that judicial interpretation of Section 13(b) might
change. A full year before the judgment was entered, the Ninth Circuit
had questioned the FTC’s authority to obtain monetary relief under
Section 13(b). FTC v. AMG Cap. Mgmt., LLC, 910 F.3d 417, 429-437
(9th Cir. 2018) (O’Scannlain, J., specially concurring). And three
months before defendants settled, the Seventh Circuit created a circuit
split regarding the FTC’s authority under Section 13(b) when it
overturned decades of circuit precedent to hold that Section 13(b) does
not authorize monetary relief. See FTC v. Credit Bureau Center, LLC,
See also Coltec Indus. v. Hobgood, 280 F.3d 262, 274 (3rd Cir. 2002)
(denying Rule 60(b)(6) relief because regret about a settlement, after a
new Supreme Court decision, does not permit parties “to escape the
consequences of their own counseled and knowledgeable decisions”); Ah
Media Grp. 339 F.R.D. at 619 (denying Rule 60(b)(6) relief where
defendants chose to settle but regretted it after AMG).
8
24
937 F.3d 764, 767 (7th Cir. 2019). Indeed, when the parties settled in
December 2019, a petition for a writ of certiorari in AMG was pending
before the Supreme Court. 9 See Petition for Writ of Certiorari, AMG
Cap. Mgmt., LLC v. FTC, No 19-508 (Sup. Ct. filed Oct. 18, 2019).
Defendants chose the certainty of a settlement over the risk of
litigation, at a time when they reasonably could have anticipated the
possibility of a change in the law. The Supreme Court’s later decision in
AMG shows no “unanticipated intervening change of circumstances”
warranting overturning the Stipulated Order under Rule 60(b)(6). See
Cashner, 98 F.3d at 579-580. 10 At the very least, defendants assumed
the risk of subsequent favorable changes in the law when they agreed to
settle the case.
9 And in Credit Bureau Center, by then the Seventh Circuit had stayed
its mandate until Supreme Court proceedings in that case were over.
See FTC v. Credit Bureau Center, LLC, No. 18-2847 (7th Cir. Sept. 20,
2019).
10 See also, e.g., Saggiani v. Strong, 718 F. App’x 706, 711 (10th Cir.
2018) (denying 60(b)(6) relief because all relevant facts were available
to movant when he elected not to investigate or object to the
settlement); FTC v. Apex Cap. Grp., No. 18-cv-9573, 2021 WL 7707269,
at *4 (C.D. Cal. Sept. 3, 2021) (denying 60(b)(6) relief where defendants
chose to settle despite being “fully aware of the challenges to the FTC’s
authority to recover equitable monetary relief pursuant to Section
13(b)”).
25
Furthermore, defendants are mistaken that AMG barred the
FTC’s ability to obtain an injunction, asset freeze, and appointment of a
receiver – conditions defendants claim spurred them to settle. Br. 9, 12,
39. The FTC’s complaint here sought consumer redress under both
Section 13(b) and Section 19 of the FTC Act for the defendants’ TSR and
ROSCA violations. App. 21-22, 44-45. AMG held that Section 13(b) did
not authorize equitable monetary relief, 141 S. Ct. at 1344, 1352, but
did not restrict the FTC’s ability to obtain monetary relief for
consumers under Section 19 (or other FTC Act provisions providing
such relief). 11 See id. at 1346, 1348-49, 1352. Section 19 itself permits
“such relief as the court finds necessary to redress injury to consumers .
. . resulting from the rule violation,” and likewise authorizes
“preliminary measures like an asset freeze or a receivership [that] are
necessary to preserve funds for a future monetary judgment” under that
provision. 15 U.S.C. § 57b(b); FTC v. Simple Health Plans LLC, 58
F.4th 1322, 1330 (11th Cir. 2023); accord FTC v. H.N. Singer, Inc., 668
11 Section 19(a)(1) of the FTC Act, 15 U.S.C. § 57b(a)(1), authorizes
courts to issue monetary relief under Section 19(b), id. § 57b(b), for rule
violations and violations of statutes, such as ROSCA, which provide
that a statutory violation is deemed a violation of an FTC Act rule.
26
F.2d 1107, 1109-1110, 1112 (9th Cir. 1982). AMG also did not prohibit
the FTC from using Section 13(b) to obtain injunctive relief. 141 S. Ct.
at 1346-47, 1349. Courts have long recognized that the permanent
injunction authorized by Section 13(b) includes preliminary relief
necessary to ensure effective final relief. See Singer, 668 F.2d at 1113;
FTC v. Southwest Sunsites, Inc., 665 F.2d 711, 717-18 (5th Cir. 1982)
(Section 13(b) injunction authority permits preliminary relief for
Section 19 remedies). Thus, even after AMG, a court may issue
preliminary relief—including an asset freeze and a receiver—to ensure
effective final relief as consumer redress under Section 19.
*
*
*
Here, defendants had a full and fair opportunity to litigate their
case, but they chose to settle instead. The judgment resulted from
defendants’ own decision to relinquish their potential arguments
against the relief the FTC sought. AMG does not provide a basis for
relieving defendants from the consequences of that considered decision.
III. AMG DOES NOT CONSTITUTE AN EXTRAORDINARY
CIRCUMSTANCE UNDER RULE 60(b)(6)
In addition to these waiver and settlement considerations, relief is
not warranted under the plain terms of Rule 60(b)(6). In line with every
27
other court to address Rule 60(b) arguments based on AMG, the district
court properly held that AMG did not constitute an extraordinary
circumstance sufficient to justify relief from the final judgment.
A.
Supreme Court Rulings Have No Retroactive
Effect on Closed Cases
The Supreme Court has drawn a sharp line between open cases
and closed cases for purposes of deciding whether a new decision can be
applied retroactively. New decisions are given retroactive effect in “all
cases still open on direct review.” Harper v. Va. Dep’t of Tax’n, 509 U.S.
86, 97 (1993). But new decisions “do not apply to cases already closed.”
Reynoldsville Casket Co. v. Hyde, 514 U.S. 749, 758 (1995). That is
because “retroactivity in civil cases must be limited by the need for
finality.” Beam Distilling, 501 U.S. at 541.
If every change in decisional law justified reopening a judgment,
then the careful distinction that Harper draws between cases “open on
direct review” and closed cases would be eviscerated, and any judgment,
however old, would be subject to challenge at any time. Indeed, such a
rule would eliminate the concept of finality in litigation and make every
28
lawsuit victor susceptible to additional litigation if the law is changed. 12
But “it has long been established that a final civil judgment entered
under a given rule of law may withstand subsequent judicial change in
that rule.” Teague v. Lane, 489 U.S. 288, 308 (1989) (plurality opinion)
(overruled on other grounds).
B.
The District Court Properly Held That AMG Does
Not Justify Relief From the Judgment Under
Rule 60(b)(6)
These principles underscore why “[i]ntervening developments in
the law by themselves rarely constitute the extraordinary
circumstances required for relief under Rule 60(b)(6).” Agostini v.
Felton, 521 U.S. 203, 239 (1997). As discussed, relief under this
provision is reserved for exceptional situations, and is addressed to the
sound discretion of the district court.
1.
AMG was not a “related case” under this
Court’s interpretation of Rule 60(b)(6)
Consistent with Supreme Court precedent, Tenth Circuit cases
hold that a change in decisional law arising in an unrelated case does
not justify post-judgment relief under Rule 60(b)(6). See, e.g., Johnston
12 See Sproull v. Union Texas Products Corp., No. 90-6286, 944 F.2d
911, 1991 WL 184098, at *2 (10th Cir. Sept. 18, 1991) (unpublished).
29
v. Cigna Corp., 14 F.3d 486, 497 (10th Cir. 1993) (explaining circuit
law). The district court properly rejected defendants’ attempt to
dramatically expand the narrow “related case” exception to this general
rule, outlined in Pierce v. Cook & Co., 518 F.2d 720 (10th Cir. 1975) (en
banc). App. 288-290.
In Pierce, this Court granted Rule 60(b)(6) relief based on a postjudgment change in law “arising out of the same accident.” 518 F.2d at
723. Absent relief, plaintiffs harmed in the same accident would have
received “substantially different [legal] treatment” depending on the
court adjudicating their claims, a situation the court considered
“extraordinary.” Id. Pierce thus recognized that Rule 60(b)(6) relief may
be appropriate when a post-judgment change in law arises in a
factually-related case.
Here, there was no such factual nexus between the case below and
AMG. Defendants contend that the Court should adopt an expansive
“relatedness” standard of their own invention: whether this case “shares
common attributes—legal or factual—with the case that changed the
law.” Br. 34. In defendants’ view, because “AMG decided the exact
30
issue” as this case regarding the scope of relief under Section 13(b), the
two cases are related for purposes of Rule 60(b)(6). Br. 36.
Accepting defendants’ argument would lead to reopening any case
which relied upon then-prevailing precedent that is later overturned—
gutting the principles of finality articulated by the Supreme Court.
Stated another way, if defendants’ case is “related” to AMG in the Rule
60(b)(6) sense, then every case to which a new decisional rule might
apply is related, and every final judgment subject to modification or
vacatur. That cannot be the law. 13 As the district court held here,
defendants’ situation is not remotely similar to Pierce or any other
scenario that could justify extraordinary relief under Rule 60(b)(6).
The district court’s ruling fell well within the court’s broad
discretion and was consistent with Supreme Court cases, principles of
finality, and common sense.
13 Indeed, this Court has affirmed the denial of a request to vacate
based on a subsequent change of law where the legal basis of the claims
was the same, but the claims arose in factually unrelated cases. See
Ross v. Bush, 704 F. App’x 771, 773–74 (10th Cir. 2017).
31
2.
The Court need not consider additional
factors
Defendants complain that the district court adopted “a categorical
rule” that only considered “relatedness” while ignoring other factors. Br.
6, 14, 17, 22-23, 32-33. But the district court recognized that defendants
had shown no other “legal or factual basis” to vacate the judgment. App.
290. In any event, neither the Supreme Court nor the Tenth Circuit
require consideration of any particular factor as part of the Rule
60(b)(6) analysis. To the contrary, the Supreme Court has recognized
that the “Rule does not particularize the factors that justify relief.” See
Liljeberg, 486 U.S. at 863-64. 14 Indeed, some circuits hold that a change
in decisional law after a final judgment provides no basis for relief
under Rule 60(b)(6) period, without other considerations. See Moses v.
Joyner, 815 F.3d. 163, 168-169 (4th Cir. 2016).
Boiled down, defendants’ contention is that the Court should
ignore its own precedent, and apply a multifactor test that it has never
14 Elite argues (Br. 21-22) that courts should consider the factors listed
in Liljeberg as “equitable circumstances” when assessing relief under
Rule 60(b)(6). But those factors appear limited to motions to vacate
based on violations of 28 U.S.C. § 455(a), which is inapposite here. See
Liljeberg, 486 U.S. at 864.
32
adopted. But of course, this Court is bound by its own precedent. See
United States v. Manzanares, 956 F.3d 1220, 1225 (10th Cir. 2020). In
any case, as discussed above, this Court’s rule—that a mere change in
decisional law arising in an unrelated case does not justify relief under
Rule 60(b)(6)—is plainly correct and makes good sense.
Defendants claim that this Court’s decisions in Adams v. Merrill
Lynch, Pierce, Fenner & Smith, 888 F.2d 696 (10th Cir. 1989) and
Wilson v. Al McCord Inc., 858 F.2d 1469 (10th Cir. 1988) show that a
change in decisional law alone can support Rule 60(b)(6) relief. Br. 2427. But neither case involved a post-judgment change in law because
the cases were still open when the law changed. In Wilson, the Court
granted relief based on a change in state law during the pendency of the
appeal. 858 F.2d at 1478. And in Adams, the change in law was issued,
and defendant’s motion filed, while plaintiff’s federal claims were being
litigated. 888 F.2d at 697-98. So as the district court correctly
recognized, in Adams and Wilson “the law changed during the pendency
of the litigation.” App. 289; see also Blue Diamond Coal Co. v. Trustees
of UMWA Combined Ben. Fund, 249 F.3d 519, 528 (6th Cir. 2001)
(recognizing Adams involved a change of law while the case was open).
33
Further, modifying a final judgment in a closed case based only on a
change in decisional law cannot be squared with Gonzalez, Agostini,
Reynoldsville Casket, and the vast weight of authority. 15
Misconstruing a footnote in Gonzalez (Br. 23, 28), defendants
contend that AMG represents a “change in the interpretation of a
substantive statute,” and suggest that this strengthens their case for
relief. Br. 36. The Gonzalez footnote actually states that “[a] change in
the substantive statute may have consequences for cases that have
already reached final judgment, particularly in the criminal context.”
545 U.S. at 536 n.9 (citing Bousley v. United States, 523 U.S. 614, 61921 (1998)). In that context, “substantive statute” means a statute
defining what conduct is unlawful. See Bousley, 523 U.S. at 619-21
(addressing when new decisions can be applied retroactively in criminal
cases). Here, the change in law related to (civil) remedies and did not
proscribe any conduct.
Defendants also misplace reliance on Johnson, supra. Br. 23, 3032. In Johnson, this Court reversed a district court order that denied
15 In re Gledhill, 76 F.3d 1070, 1082 (10th Cir. 1996), Br. 29, likewise is
inapposite as it did not involve a change in decisional law.
34
Rule 60(b) relief on the mistaken ground that such relief applies only to
equitable (and not legal) claims. 950 F.3d at 701-702. That case
involved legal error in applying existing circuit law regarding Rule
60(b) relief, not an attempt to reopen an underlying judgment that was
based on indisputably correct law as it stood at the time. 16
Defendants further claim that Supreme Court and more recent
Tenth Circuit authority have displaced this Court’s earlier holding in
Collins v. Wichita, 254 F.2d 837, 839 (10th Cir. 1958), that “[a] change
in the law . . . is not such an extraordinary circumstance which justifies
[Rule 60(b)(6)] relief.” Br. 25-26. Not so. Collins is consistent with the
Supreme Court’s ruling that a new statutory reinterpretation by the
Supreme Court is “hardly extraordinary.” Gonzalez, 545 U.S. at 536.
And even before Gonzalez (but after Pierce, Adams, and Wilson), this
Court reaffirmed that “[t]he Collins holding is still the rule in this
16 Defendants mischaracterizes Johnson as “rejecting imposition of any
‘categorical’ rule in [a Rule] 60(b)(6) motion,” Br. 33. But Johnson did
not say that; rather, the decision referred to certain unexplained
“categorical bars” imposed by other courts. See 950 F.3d at 701, 703.
Defendants also erroneously claim that Johnson sets forth two factors
that courts should consider in assessing whether relief is appropriate
due to a change in law. Br. 30. The purported “relevant factors” (and
cited quotes) appear nowhere in that decision.
35
circuit.” Colorado Interstate Gas Co. v. Nat. Gas Pipeline Co. of Am., 962
F.2d 1528, 1535 (10th Cir. 1992).
3.
Even if considered, other factors only
confirm relief is not appropriate
Even if the Court were to consider other factors as defendants
prefer, Br. 36-44, those factors, too, support denying relief. 17
Defendants’ request to vacate was unquestionably based on AMG, see
App. 171-72; 282; they provided no other reason independent of that
decision to justify vacatur. The district court thus correctly held, as
noted, that defendants had shown no other “legal or factual basis” to
vacate the judgment. App. 290. And the Ninth Circuit, after applying a
multifactor test that considered both relatedness and equitable factors,
rejected the very same argument defendants assert here. See Hewitt, 68
F.4th at 467-70.
The first set of considerations analyzed in Hewitt was “the nature
and relationship of the intervening change in the law.” 68 F.4th at 468.
These considerations weigh even more strongly against granting relief
17 If this Court decides other factors should be considered, it should
remand for the district court to assess those factors in the first instance.
See e.g., Davis v. United States, 192 F.3d 951, 961 (10th Cir. 1999).
36
here. The monetary relief in the Stipulated Order was undoubtedly
correct under prevailing Tenth Circuit law in December 2019 that
Section 13(b) authorizes equitable monetary relief. See FTC v. Freecom
Commc’ns, Inc., 401 F.3d 1192, 1202 n.6 (10th Cir. 2005) (“§13(b)’s
grant of authority to provide injunctive relief carries with it . . . the
power to grant consumer redress.”). And apart from the fact that the
FTC sought monetary relief under Section 13(b) in both AMG and this
case, there is no relationship between AMG and the monetary judgment
here, which was independently supported by Section 19. See FTC v.
Figgie Int’l, Inc., 994 F.2d 595, 606-07 (9th Cir. 1993) (Section 19
remedies include relief to redress consumer injury).
The diligence factor likewise weighs decisively against relief. In
Hewitt, the Ninth Circuit, relying on Gonzalez, recognized that a
“change in the law” is “all the less extraordinary” where the party has
shown little diligence in pursuing its claim for relief. See 68 F.4th at
469 (citing Gonzalez, 545 U.S. at 536-37). Not only did defendants never
challenge the statutory validity of equitable monetary relief under
Section 13(b), but they also ultimately abandoned the litigation
altogether, choosing to settle instead. Cf. Gonzalez, 545 U.S. at 537
37
(emphasizing defendant’s lack of diligence, even though he litigated the
case). Defendants claim they diligently filed a timely motion to vacate.
Br. 42-43. But the motion was filed in March 2022, nearly a year after
AMG. It is not at all clear that a year-long delay shows the requisite
diligence for relief under this rule. See Liljeberg, 486 U.S. at 873-74
(Rehnquist, C.J., dissenting) (suggesting that a movant’s ten month
delay “must weigh heavily” against a Rule 60(b)(6) motion).
Other factors further bolster the case against Rule 60(b)(6) relief.
See Hewitt, 68 F. 4th at 469-70 (citing other “weighty reasons cutting
against relief”). Defendants ran a wide-scale deceptive scheme targeting
vulnerable consumers, in which Martinos played a central role.
Consumers lost over $13 million as a result of defendants’ deception,
and the FTC has already distributed nearly all of the collected funds to
those harmed. The defendants ignore that the monetary judgment
amount was heavily negotiated. A key trade-off in the settlement was
the suspension of most of the monetary judgment, which limited
defendants’ payment obligation to the amount they attested they could
pay. Defendants now seek to negate not only the overall judgment
amount, but the meager amount they agreed to pay— a small fraction
38
of the consumer harm and a condition for suspending the remainder of
the judgment.
Independent grounds for monetary relief also exist here: Section
19 and ROSCA, which were unaffected by AMG and alleged in the
FTC’s complaint. Under those provisions alone, the FTC still would be
entitled to significant monetary relief—approaching that awarded
under Section 13(b) and far exceeding what defendants actually paid on
the judgment. See 15 U.S.C. § 57b(b) (authorizing “such relief as the
court finds necessary to redress injury to consumers” resulting from the
violation). In addition, vacating the judgment would prejudice the FTC;
restarting the litigation against Elite and Martinos over three years
later risks stale evidence and unavailable witnesses, among other
harms.
Martinos argues that it was unfair to “liquidat[e]” the business to
pay the judgment. Br. 39, 41. But business-to-business operations
remain possible under the Stipulated Order. In any event, the
liquidation of assets was part of the bargain defendants struck in
settling the case. And while Martinos contends (Br. 41-42) that it would
be unfair for him to pay the “outstanding balance” of the monetary
39
judgment, he will only have to do that if it is determined that he lied to
the FTC about his assets.
CONCLUSION
For the foregoing reasons, the district court’s decision should be
affirmed.
STATEMENT REGARDING ORAL ARGUMENT
The FTC believes that oral argument would not aid the Court in
resolving the straightforward issues raised in this appeal.
Dated: June 29, 2023
Respectfully submitted,
ANISHA S. DASGUPTA
General Counsel
MARIEL GOETZ
Acting Director of Litigation
/s/ Michael D. Bergman
Michael Bergman
Attorney
Federal Trade Commission
600 Pennsylvania Avenue, N.W.
Washington, D.C. 20580
(202) 326-3184
mbergman@ftc.gov
40
CERTIFICATE OF COMPLIANCE
I certify that the foregoing “Answering Brief for the Federal Trade
Commission” complies with the volume limitations of Fed. R. App. P.
32(a)(7)(B) because it contains 7746 words, excluding the parts of the
brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). I certify further that it
complies with the typeface and type style requirements of Fed. R. App.
P. 32(a)(5)-(6) because it was prepared using Microsoft Word 2010 in 14
point Century Schoolbook.
Dated: June 29, 2023
/s/ Michael D. Bergman
MICHAEL D. BERGMAN
Attorney
FEDERAL TRADE COMMISSION
600 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20580
41
CERTIFICATE OF SERVICE
I hereby certify that on June 29, 2023, I electronically filed the
foregoing Answering Brief with the Clerk of the Court for the United
States Court of Appeals for the Tenth Circuit by using the appellate
CM/ECF system. I certify that all participants in the case are registered
CM/ECF users and that service will be accomplished by the appellate
CM/ECF system.
Dated: June 29, 2023
Respectfully submitted,
/s/ Michael D. Bergman
Michael D. Bergman
Attorney
Federal Trade Commission
42
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.