Opposition Brief — Universal Processing Services of Wisconsin, LLC, Petitioner v. Federal Trade Commission

Supreme Court briefMay 16, 2018

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No. 17-1309

In the Supreme Court of the United States

UNIVERSAL PROCESSING SERVICES OF WISCONSIN, LLC,

PETITIONER

FEDERAL TRADE COMMISSION

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

ALDEN F. ABBOTT

Acting General Counsel

JOEL MARCUS

Deputy General Counsel

For Litigation

THEODORE (JACK) METZLER

Attorney

Federal Trade Commission

Washington, D.C. 20580

NOEL J. FRANCISCO

Solicitor General

Counsel of Record

Department of Justice

Washington, D.C. 20530-0001

SupremeCtBriefs@usdoj.gov

(202) 514-2217

QUESTIONS PRESENTED

The Federal Trade Commission’s Telemarketing

Sales Rule prohibits deceptive telemarketing acts or

practices, 16 C.F.R. Pt. 310, and violations of the Rule

are treated as violations of the statutory prohibition on

“unfair or deceptive acts or practices,” 15 U.S.C.

6102(c)(1). A person violates the Rule by “provid[ing]

substantial assistance or support” to a telemarketer

who violates the Rule if the person providing assistance

“knows or consciously avoids knowing” of the telemarketer’s illegal conduct. 16 C.F.R. 310.3(b). The questions presented are as follows:

1. Whether a company that, with the requisite scienter, provides substantial assistance to a fraudulent telemarketing scheme may be held jointly and severally

liable for the amount of money taken from consumers.

2. Whether petitioner lacked constitutionally adequate notice that it could be held jointly and severally

liable for its violation of the Rule.

(I)

TABLE OF CONTENTS

Page

Opinions below .............................................................................. 1

Jurisdiction .................................................................................... 1

Statement ...................................................................................... 1

Argument....................................................................................... 9

Conclusion ................................................................................... 16

TABLE OF AUTHORITIES

Cases:

Bell v. Wolfish, 441 U.S. 520 (1979) ..................................... 15

Delaware Watch Co. v. FTC, 332 F.2d 745

(2d Cir. 1964) ....................................................................... 14

FTC v. Bay Area Bus. Council, Inc., 423 F.3d 627

(7th Cir. 2005) ...................................................................... 14

FTC v. E.M.A. Nationwide, Inc., 767 F.3d 611

(6th Cir. 2014) ...................................................................... 14

Honeycutt v. United States, 137 S. Ct. 1626 (2017) ........... 11

Jackson v. Smith, 254 U.S. 586 (1921)................................. 11

Louisville & Nashville R.R. v. Sloss-Sheffield Steel

& Iron Co., 269 U.S. 217 (1925) ................................... 10, 11

Muhammad v. Close, 540 U.S. 749 (2004) .................... 14, 15

State Farm Mut. Auto Ins. Co. v. Campbell,

538 U.S. 408 (2003).............................................................. 15

United Parcel Serv., Inc. v. Mitchell, 451 U.S. 56

(1981) .................................................................................... 15

Constitution, statutes, and regulations:

U.S. Const. Amend. V (Due Process Clause) ..................... 15

Federal Trade Commission Act, 5 U.S.C. 41 et seq. ............ 1

15 U.S.C. 45(a)(1)......................................................... 2, 10

15 U.S.C. 53 ........................................................................ 2

(III)

Statutes and regulations—Continued:

Page

15 U.S.C. 53(b) ................................................................. 10

15 U.S.C. 57a(1)(B) ...................................................... 9, 10

Telemarketing and Consumer Fraud and Abuse

Prevention Act, 15 U.S.C 6101 et seq. ................................. 2

15 U.S.C. 6101(5) ............................................................... 2

15 U.S.C. 6102(a)(1) ................................................. 2, 9, 10

15 U.S.C. 6102(a)(2) ..................................................... 2, 10

15 U.S.C. 6102(c)(1) ........................................................... 9

15 U.S.C. 6105(b) ........................................................... 8, 9

16 C.F.R.:

Pt. 310 ..................................................................... 2, 10

Section 310.3(a) ...................................................... 3

Section 310.3(b) ................................................ 3, 11

Section 310.4 ........................................................... 3

Miscellaneous:

60 Fed. Reg. 43,842 (Aug. 23, 1995) ....................... 2, 8, 12, 13

S. Rep. No. 80, 103d Cong., 1st Sess. (1993) ......................... 2

Restatement (Second) of Torts (1979) ................. 8, 11, 12, 13

In the Supreme Court of the United States

No. 17-1309

UNIVERSAL PROCESSING SERVICES OF WISCONSIN,

LLC, PETITIONER

FEDERAL TRADE COMMISSION

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1-19)

is reported at 877 F.3d 1234. The opinion of the district

court (Pet. App. 20-46) is not published in the Federal

Supplement but is available at 2015 WL 916349. A prior

opinion of the court of appeals is not published in the

Federal Reporter but is reprinted at 652 Fed. Appx.

837.

JURISDICTION

The judgment of the court of appeals was entered on

December 13, 2017. The petition for a writ of certiorari

was filed on March 13, 2018. The jurisdiction of this

Court is invoked under 28 U.S.C. 1254(1).

STATEMENT

1. The Federal Trade Commission Act, 15 U.S.C. 41

et seq., outlaws “unfair or deceptive acts or practices in

(1)

or affecting commerce,” 15 U.S.C. 45(a)(1), and it authorizes the Federal Trade Commission (FTC or Commission) to seek judicial relief in response to violations

of consumer-protection statutes within its jurisdiction,

15 U.S.C. 53. One such statute is the Telemarketing and

Consumer Fraud and Abuse Prevention Act (Telemarketing Act), 15 U.S.C. 6101 et seq., which Congress enacted to “offer consumers necessary protection from

telemarketing deception and abuse.” 15 U.S.C. 6101(5).

The Telemarketing Act directs the Commission to “prescribe rules prohibiting deceptive telemarketing acts or

practices and other abusive telemarketing acts or practices.” 15 U.S.C. 6102(a)(1). The Telemarketing Act

further specifies that the FTC’s rules should encompass

“entities or individuals that assist or facilitate deceptive

telemarketing.” 15 U.S.C. 6102(a)(2).

Congress understood that fraudulent telemarketers

often “mak[e] themselves appear legitimate” by “tell[ing] their victims that they can pay using a credit

card.” S. Rep. No. 80, 103d Cong., 1st Sess. 10 (1993).

Access to the credit card system can thus help fraudulent telemarketing businesses target consumers more

effectively, and Congress recognized that such practices had been “widely” adopted by fraudulent telemarketers. Ibid. Congress accordingly enacted the prohibition in Section 6102(a)(2) in order to limit access to the

credit card system to legitimate businesses by forbidding companies that control access to the system from

knowingly assisting and facilitating telemarketing

fraud. See 60 Fed. Reg. 43,842, 43,853 (Aug. 23, 1995).

To carry out the Telemarketing Act, the Commission

has promulgated a Telemarketing Sales Rule. 16 C.F.R.

Pt. 310. The Rule requires telemarketers to make cer-

tain disclosures and to refrain from specified false, misleading, and abusive practices. See, e.g., 16 C.F.R.

310.3(a), 310.4. The Rule also declares it a “deceptive

telemarketing act or practice and a violation of th[e]

Rule for a person to provide substantial assistance or

support to any seller or telemarketer when that person

knows or consciously avoids knowing that the seller or

telemarketer is engaged in any act or practice that violates” the Rule. 16 C.F.R. 310.3(b).

2. a. Treasure Your Success (TYS) was a telemarketing scheme designed “to extract payments from consumers in exchange for fraudulent credit card interest

reduction services.” Pet. App. 2-3. Under the scheme,

robocalls informed consumers “that they could lower

their credit card interest rates by dialing the number

one.” Id. at 3. Upon doing so, a consumer would be

transferred to a sales representative who “ ‘promise[d]

the world,’ albeit in an intentionally confusing manner,

in order to persuade the consumer to divulge his or her

credit card number.” Ibid. (bracket and ellipsis omitted). Consumers were falsely told that, “by authorizing

TYS to charge between $600 and $1000 to the consumer’s credit card, the consumer would be entitled to

receive $2500 or more in credit card interest rate reductions.” Ibid. By making such promises to consumers,

TYS “fraudulently amass[ed] more than $2.5 million.”

Ibid.

b. Petitioner is a “payment[ ] processor”—one of the

gatekeepers to the credit card payment system. Pet.

App. 28. For a fee, petitioner connects merchants that

want to accept payment via credit card with banks that

issue credit cards. Ibid. In that capacity, petitioner

controls access to the credit card system by granting or

denying applications to open “merchant account[s].” Id.

at 4. Businesses that wish to accept credit cards must

apply for a merchant account and undergo a rigorous

underwriting process that is intended to weed out fraud

and to ensure that the applicant is a legitimate and creditworthy business. See 1 C.A. R.E. 119-120. Payment

processors thus carefully scrutinize merchant account

applications, and they usually deny applications from

businesses that present a high risk of fraud or that engage in suspect activities, such as lotteries, psychics,

and credit repair services. Id. at 132.

Petitioner twice approved TYS’s applications for

merchant accounts, both times through procedures that

deviated from its normal underwriting process. 1 C.A.

R.E. 120. TYS’s initial application contained “several

glaring red flags indicating TYS might be a fraud risk.”

Pet. App. 4. Inter alia, the application showed that both

of TYS’s principals had no meaningful income, unusually low credit scores, and serious delinquencies on past

debts, and their credit reports contained “high risk

fraud alert[s].” Id. at 30; see 5 C.A. R.E. 813, 815. The

TYS merchant application also claimed suspiciously

high anticipated sales from outbound telemarketing solicitations, which are often implicated in fraud and

which are considered an “Unacceptable Business Type”

under petitioner’s own underwriting standards. 1 C.A.

R.E. 132; see 4 C.A. R.E. 686.

Notwithstanding these red flags, TYS’s application

was personally reviewed and approved by petitioner’s

president, Derek DePuydt. Pet. App. 4. For years,

DePuydt bypassed petitioner’s normal underwriting

process and personally approved applications promoted

by sales agent Hal Smith, who had previously referred

a number of “profitable” but risky ventures to peti-

tioner. Ibid.; see 1 C.A. R.E. 147. Members of petitioner’s underwriting department repeatedly rejected

Smith’s applications, calling them “garbage,” but were

repeatedly overruled by DePuydt. 1 C.A. R.E. 147. The

accounts referred by Smith were profitable because petitioner retained a fee of 15% for each transaction—

several times the industry average—and withheld an

additional 15% in reserve for the “chargeback” refunds

petitioner anticipated it would have to pay to consumers

who challenged the charges. 5 C.A. R.E. 773, 777.

Almost as soon as petitioner started processing

charges for TYS, consumers started disputing them.

See 4 C.A. R.E. 697. The typical legitimate internetbased business has a chargeback rate of about two out

of each thousand credit card charges (0.2%). Id. at 695.

From the start, TYS “experience[d] an unusually high

number of chargebacks,” Pet. App. 4, and the chargeback rate increased every subsequent month, with more

than 30% of TYS’s customers ultimately asking for refunds, see 4 C.A. R.E. 698-699. Instead of terminating

the TYS account, however, DePuydt personally approved a second merchant account for the operation.

Pet. App. 4.

3. In October 2012, the Commission initiated suit

against TYS, its principals, and its related businesses,

charging them with violations of the Federal Trade

Commission Act, the Telemarketing Act, and the Telemarketing Sales Rule. Pet. App. 4. The Commission

later amended its complaint to name as defendants

Smith (and his alter-ego company), DePuydt, and petitioner. Id. at 4-5. Petitioner was charged with providing substantial assistance to TYS while knowing, or consciously avoiding the knowledge, that TYS was violating

the Telemarketing Sales Rule. Id. at 5. All defendants

except petitioner, Smith, and Smith’s personal corporation settled. Ibid.

a. The district court granted summary judgment to

the Commission, concluding that petitioner had violated

the Telemarketing Sales Rule. Pet. App. 5. The court

found that petitioner “knew or consciously avoided

knowing of the fraudulent activities TYS conducted, and

that [petitioner] substantially assisted TYS in perpetuating the scheme by providing the merchant accounts.”

Ibid. The court held petitioner jointly and severally liable, along with Smith, for $1,734,972, “the amount of

the unjust gains that accrued to the TYS scheme less

chargebacks and refunds already remitted.” Ibid.

b. Petitioner appealed, conceding that it had violated the Telemarketing Sales Rule but challenging the

amount of monetary liability imposed by the district

court. Pet. App. 5-6. Petitioner argued that the court

could not properly hold it jointly and severally liable

without a finding that petitioner “had operated together

with the other TYS defendants as a common enterprise

in perpetuating the fraud.” Id. at 6. The court of appeals vacated the monetary relief order, instructing the

district court “to state whether [petitioner] was a part

of the common enterprise or, if not, what other grounds

there were for imposing joint and several liability.”

Ibid.

On remand, the district court again found that petitioner was jointly and severally liable for the amount it

had helped TYS take from consumers. Pet. App. 6. The

court “clarified” that petitioner’s liability was based on

its provision of substantial assistance to the TYS

scheme, “rather than on a common enterprise theory.”

Ibid. The court noted that restitution and disgorgement are sanctions authorized by the Federal Trade

Commission Act, and it drew guidance from tort and securities law, which “suggested that joint and several liability is appropriate where a defendant substantially

assists the primary violator.” Id. at 7.

4. The court of appeals affirmed. Pet. App. 1-19.

The court noted that petitioner had not disputed either

its own liability for violating the Telemarketing Sales

Rule, id. at 2, or any of the facts underlying the district

court’s finding of liability, id. at 3 n.1. See id. at 8 (“It

was undisputed in both this and the prior appeal that

[petitioner] violated [the Telemarketing Sales Rule] by

providing two merchant accounts to TYS despite a slew

of red flags indicating TYS was engaged in a fraudulent

telemarketing scheme.”). The court of appeals explained that “[t]he sole issue before us is whether joint

and several liability was available as a matter of law,

and we hold that it was.” Id. at 2.

The court of appeals first rejected petitioner’s argument that joint and several liability can be imposed under the Federal Trade Commission Act only after proof

that a defendant was “a participant in a common enterprise with the primary violators.” Pet. App. 9. That

contention, the court explained, “mistakes a sufficient

condition for a necessary one. That a common enterprise finding can support joint and several liability does

not mean that such liability cannot attach without one.”

Ibid. The court noted that petitioner had “cite[d] no authority,” and the court had “found none,” supporting the

proposition that a common enterprise is a prerequisite

to such relief. Ibid.

Next, the court of appeals determined that “the text

of the [Telemarketing Sales Rule]” supports the conclusion that petitioner could be held jointly and severally

liable. Pet. App. 10. The court explained that, under

the Rule and the Federal Trade Commission Act, a violation of the Rule is also a violation of Act itself. Ibid.

(citing 15 U.S.C. 6105(b)). Thus, by providing substantial assistance to the TYS scheme in violation of the

Rule, petitioner “violated the FTC Act and is subject to

its penalties,” including “equitable monetary relief of

the kind sought here.” Ibid.

The court of appeals found support for its conclusion

in background tort principles. Under the common law,

for instance, one who gives “substantial assistance” to

another’s tortious conduct, and who “knows that the

other’s conduct constitutes a breach of duty,” may himself be subject to joint and several liability for any resulting harm. Pet. App. 11 (quoting Restatement (Second) of Torts § 876(b) (1979) (Restatement)). The court

further explained that, in this case, “[t]here can be little

mistaking the resemblance” between the substantialassistance provision of the Telemarketing Sales Rule

and the liability rule announced in the Restatement.

Ibid. In that regard, the court observed that, in adopting the Rule, the Commission had relied on § 876(b) of

the Restatement to support liability for substantialassistance violations. Ibid. (citing 60 Fed. Reg. 43,851

n.96). The court further explained that “aiding and

abetting in tort can result in joint and several liability.”

Ibid.; see id. at 11-12 (“In tort, the aider-abettor is liable to the injured party ‘for the entire harm.’ ”) (quoting

Restatement § 875 & cmt. a). The court also found

“perhaps even more striking a resemblance” between

the Telemarketing Sales Rule and aiding-and-abetting

principles in securities law, where one who knowingly

or recklessly provides substantial assistance to a securities violator may face joint and several liability. Id. at

13-14.

Finally, the court of appeals explained that its holding would not work any “injustice in practical application.” Pet. App. 14. Substantial-assistance liability may

be imposed only on a defendant who “knows or consciously avoids knowing that the person to whom the defendant renders such assistance is engaged in telemarketing violations.” Ibid. As a result, joint and several

liability may be imposed only on those with “a culpable

mind,” ensuring that such liability “will not result in collateral damage to innocent third parties.” Ibid.

ARGUMENT

Petitioner contends (Pet. 9-13) that the courts of appeals are divided on the question whether joint and several liability may be imposed on a violator of the Telemarketing Sales Rule without a separate finding that

the defendant was part of a common enterprise that violated the Federal Trade Commission Act. The decision

below is correct and does not conflict with any decision

of this Court or another court of appeals. Petitioner further contends (Pet. 13-14) that the ruling below violated

petitioner’s due process rights. That contention, which

was not pressed or passed upon below, also lacks merit.

Further review is not warranted.

1. a. Congress has directed the FTC to “prescribe

rules prohibiting deceptive telemarketing acts or practices.” 15 U.S.C. 6102(a)(1). “Any person who violates

such rule shall be subject to the penalties * * * provided in the Federal Trade Commission Act.” 15 U.S.C.

6105(b). 1 A violation of an FTC rule promulgated under

Congress has further specified that “[a]ny violation of any rule”

so prescribed “shall be treated as a violation of a rule under section

57a of [Title 15] regarding unfair or deceptive acts or practices.”

15 U.S.C. 6102(c)(1). Section 57a(1)(B) of Title 15 in turn authorizes

the Commission to promulgate “rules which define with specificity

Section 6102(a)(1) thus is treated as a violation of the

Federal Trade Commission Act itself.

Congress has also directed more specifically that the

prohibition on deceptive telemarketing acts should include “entities or individuals that assist or facilitate deceptive telemarketing.” 15 U.S.C. 6102(a)(1) and (2).

The Commission’s Telemarketing Sales Rule, 16 C.F.R.

Pt. 310, was adopted to carry out that statutory mandate. Persons who violate the Rule are subject to “equitable monetary relief ” such as the relief ordered by

the district court here. Pet. App. 10 (citing 15 U.S.C.

53(b)).

Petitioner argues (Pet. 12) that subjecting it to joint

and several liability for violating the Telemarketing

Sales Rule—without a showing that petitioner was engaged in a common enterprise with TYS—would “expand[ ]” liability beyond what traditional principles

would authorize. That is incorrect. In Louisville &

Nashville Railroad Co. v. Sloss-Sheffield Steel & Iron

Co., 269 U.S. 217 (1925), for instance, the Court upheld

the imposition of liability on connecting railroads that

carried freight shipped under end-to-end “through

rates” that exceeded lawful rates. Id. at 231. The railroads argued that they were responsible only for the

part of the overcharge attributable to their segment of

the shipment, rather than jointly and severally liable for

the full amount of the overcharge. Id. at 231-232. The

acts or practices which are unfair or deceptive acts or practices in

or affecting commerce (within the meaning of section 45(a)(1) of [Title 15]).” 15 U.S.C. 57a(1)(B). Section 45(a)(1) states that “[u]nfair

methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful.” 15 U.S.C. 45(a)(1).

Court rejected that contention. It agreed that the connecting railroads were not vicariously liable for one another’s acts, as they would be if they were “partners

* * * engaged in [a] common enterprise.” Id. at 232;

see id. at 233 (“Each connecting carrier is liable only for

its own act.”). Nevertheless, the Court explained, the

harm to shippers resulting from the illegal rates was

caused by “[a] single charge * * * for the transportation from point of origin to point of destination,” and the

railroads had each agreed to that charge. Id. at 233.

Thus, each railroad was “liable jointly and severally for

all the damage sustained.” Id. at 232.

The Court’s holding in Louisville & Nashville Railroad was rooted in longstanding principles governing

joint and several liability. Under tort law, for instance,

“[e]ach of two or more persons whose tortious conduct

is a legal cause of a single and indivisible harm to the

injured party is subject to liability to the injured party

for the entire harm.” Restatement § 875; see Honeycutt

v. United States, 137 S. Ct. 1626, 1631 (2017) (“If two or

more defendants jointly cause harm, each defendant is

held liable for the entire amount of the harm.”); Jackson

v. Smith, 254 U.S. 586, 589 (1921) (those who “knowingly join” in unlawful conduct “become jointly and severally liable” for resulting harm). Thus, while the theory of joint and several liability undoubtedly includes

defendants who act as part of a common enterprise, it is

not limited to such defendants.

Those longstanding legal principles apply fully here.

Petitioner has conceded that it violated the Telemarketing Sales Rule by knowingly providing “substantial assistance” to TYS’s prohibited telemarketing practices.

16 C.F.R. 310.3(b). TYS depended for its success on the

merchant accounts that petitioner made available, despite clear indications that TYS was using the accounts

for fraudulent purposes. Thus, as an entity that “kn[ew]

that [TYS’s] conduct [wa]s a breach of duty” and yet

“g[ave] substantial assistance or encouragement” to

those violations, petitioner “is subject to liability” for

“harm resulting to” consumers. Restatement § 876(b).

Indeed, the Commission expressly “invoked” § 876(b) of

the Restatement when it adopted the Rule’s “substantial assistance” provision. Pet. App. 11 (citing 60 Fed.

Reg. at 43,851 n.96).

In resisting that conclusion, petitioner notes that,

under the Restatement, “the simple act of assisting another tortfeasor” may not “automatically make[ ] one liable for the acts of the tortfeasor.” Pet. 13. In particular, “[t]he assistance of or participation by the defendant may be so slight that he is not liable for the act of

the other.” Ibid. (quoting Restatement § 876(b) cmt. d).

That exception cannot help petitioner, however, because the Telemarketing Sales Rule applies by its terms

only to those who provide “substantial assistance or

support” to another’s violation of the Rule. 16 C.F.R.

310.3(b). Petitioner’s concession that it violated the

Rule thus precludes petitioner from invoking the Restatement’s exception for trivial forms of assistance or

participation.

For similar reasons, the decision below will not have

the “deep and far-reaching consequences” predicted by

petitioner (Pet. 4). Persons who do not themselves engage in telemarketing fraud may be held liable under

the Telemarketing Sales Rule only if, like petitioner,

they (a) provide substantial assistance to fraudulent telemarketing and (b) do so while knowing, or consciously

avoiding knowledge, of the fraud. Petitioner is thus incorrect in warning (Pet. 11) that “innocent but solvent

defendants” will be held responsible “for the wrongdoing of others.”

Finally, petitioner is incorrect in arguing (Pet. 12,

14) that the Commission did not intend to impose joint

and several liability on those who commit substantialassistance violations of the Telemarketing Sales Rule.

Petitioner relies for that argument on a single sentence

from the FTC’s commentary on the Rule, in which the

Commission stated that it “decline[d] to read joint and

several liability for sellers and telemarketers into the

Telemarketing Act.” 60 Fed. Reg. at 43,845. That

statement, however, explained only that “sellers” and

“telemarketers” should not automatically be held

jointly responsible “for the actions of the other.” Id. at

43,844. In the sentence following the one on which petitioner relies, the Commission explained that “[t]he assisting and facilitating provisions in § 310.3(b) of the

Rule more appropriately provide a basis” to impose liability against “others involved in the deceptive telemarketing scheme.” Id. at 43,844-43,845. Later in the same

commentary, the FTC explained that “knowledge of, and

substantial assistance to, another’s wrongdoing are a

sufficient basis for liability in tort.” Id. at 43,851 (citing

Restatement § 876). That is the basis on which petitioner was held liable for the harm caused by the TYS

scheme.

b. Petitioner argues (Pet. 9-11) that the decision below conflicts with rulings of other courts of appeals,

which petitioner characterizes as holding that joint and

several liability is appropriate only when a defendant is

part of a common enterprise. Petitioner’s reliance on

those rulings is misplaced.

None of those decisions considered—much less

decided—whether participation in a common enterprise

was necessary to impose joint and several liability. Rather, because each case involved corporate defendants

who operated as a single enterprise, the courts had no

occasion to consider whether joint and several liability

would have been appropriate in other circumstances.

See FTC v. E.M.A. Nationwide, Inc., 767 F.3d 611, 637

(6th Cir. 2014) (considering defendants as a common enterprise where defendants were “interrelated business

entities”); FTC v. Bay Area Bus. Council, Inc., 423 F.3d

627, 635 (7th Cir. 2005) (corporate defendants “d[id] not

dispute the district court’s conclusion that they operated as a ‘common enterprise’ ”); Delaware Watch Co. v.

FTC, 332 F.2d 745, 746 (2d Cir. 1964) (per curiam) (upholding liability for defendants “transacting an integrated business through a maze of interrelated companies”). As the court below aptly explained, petitioner’s

argument thus “mistakes a sufficient condition for a

necessary one.” Pet. App. 9. Petitioner has identified

no decision holding that only common-enterprise defendants may be held jointly and severally liable.

2. Petitioner argues (Pet. 13-14) that constitutional

principles of due process required the Commission to

warn petitioner that it could be held jointly and severally liable for violating the Telemarketing Sales Rule.

Petitioner does not contend that the courts of appeals

are divided on the issue, and petitioner’s argument

lacks merit.

As an initial matter, petitioner forfeited any possible

due process argument by failing to raise it in the court

of appeals. See Muhammad v. Close, 540 U.S. 749, 755

(2004) (per curiam). Petitioner did not argue below that

it was denied due process by the district court’s ruling,

nor did the court of appeals consider or decide that issue. See Pet. App. 2 (“The sole issue before us is

whether joint and several liability was available as a

matter of law.”). “Having failed to raise the claim when

its legal and factual premises could have been litigated,

[petitioner] cannot raise it now.” Muhammad, 540 U.S.

at 755. The Court should decline review on that ground

alone. 2

In any event, petitioner’s argument lacks merit. The

Due Process Clause requires the government to provide

notice of conduct that can result in punishment, including notice regarding the severity of the potential penalty. See State Farm Mut. Auto Ins. Co. v. Campbell,

538 U.S. 408, 417 (2003). But the relief ordered in this

case was not a punitive sanction. The measure of equitable relief ordered here was the net amount that consumers had lost to the TYS scheme as a result of the

statutory violations, including petitioner’s. Pet. App.

41. Relief that is tied to “actual or potential harm suffered” is, by definition, distinct from a “punitive damages award.” State Farm, 538 U.S. at 418.

Petitioner had constitutionally sufficient notice,

moreover, of its exposure to joint and several liability

for violating the Telemarketing Sales Rule. As described above, the district court upheld the imposition

Petitioner’s amicus urges the Court to consider various other issues that were never raised by petitioner, were not considered or

decided by the court of appeals, and are not encompassed by the

question presented in the petition. See Electronic Transactions

Ass’n Amicus Br. 6-18. This Court generally does not entertain such

arguments, see United Parcel Serv., Inc. v. Mitchell, 451 U.S. 56, 60

n.2 (1981) (“declin[ing]” to consider argument raised by amicus

“since it was not raised by either of the parties”); Bell v. Wolfish,

441 U.S. 520, 532 n.13 (1979) (similar), and there is no sound reason

to deviate from that practice here.

of joint and several liability under long-established

principles, including tort principles that the Commission

had invoked when it adopted the Rule. See pp. 10-12,

supra. In addition, the statutory scheme made clear

that petitioner’s violation of the Rule would be treated

as a violation of the Federal Trade Commission Act, see

pp. 9-10 & n.1, supra, and the decisions on which petitioner relies (Pet. 10-11) show that joint and several liability has for decades been imposed for such violations.

Petitioner cannot claim any unfair surprise.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.