FTC v. Success by Health trial likely to be delayed
The FTC v. Success by Health trial is likely to be delayed. Jay Noland and his fellow defendants are not ready for trial.
At time of publication the Success by Health defendants have not filed a notice indicating their readiness for a Final Pretrial Conference.
On November 30th one of the Success by Health defendant’s attorneys filed a request for an extension to file motion, revealing the lead attorney had knee replacement surgery in early November.
They are still recovering as of time of filing, and are expected to return to work in full capacity on or around December 20th.
As per their own November 30th readiness filing, the FTC states it is “ready for scheduling a Final Pretrial Conference”.
That said, the FTC has requested the conference be delayed anyway, until
(1) the Court has ruled on the FTC’s Motion for Contempt Sanctions; and
(2) the parties or the Court have resolved the issue of the Corporate Defendants’ representation and/or the question whether the Court’s liability ruling against the Individual Defendants applies to the Corporate Defendants.
The Motion for Contempt Sanctions clarification, pertains to holding Noland liable for violating the previously granted NetForce injunction.
On June 23, 2021, the FTC filed its motion seeking a finding that the Contempt Defendants violated the 2002 Noland Permanent Injunction and a judgment of approximately $7 million in civil compensatory contempt sanctions.
A decision on that motion remains pending. The FTC argues that
if the Court grants the Contempt Motion, it would almost certainly obviate the need for a trial in this matter.
If the court denies the motion, the FTC states the violation would eventually lead to a consolidated trial (resolution of both the Success by Health and NetForce matters would be resolved through a single trial).
The Corporate Defendant liability issue pertains to avoiding holding two trials; one for the individual Success by Health defendants, and one for the corporate defendants.
The FTC proposes avoiding these inefficient outcomes by allowing the parties and Receiver further time to meet and confer with Individual Defendants’ new counsel regarding the status of the case as to the Corporate Defendants.
If the parties cannot agree, the FTC will file a motion requesting appropriate relief on or before December 23, 2021.
There’s also an interesting “scope of trial” issue brought up by the FTC.
The FTC puts forth that in granting liability summary judgment,
the Court nevertheless found a “triable issue of material fact” regarding whether SBH was a pyramid scheme and whether Defendants had misled consumers regarding their potential earnings in SBH.
In an Order issued the next day, the Court denied the FTC’s motion to exclude the Individual Defendants’ expert testimony, explaining that because the FTC had proven the Individual Defendants’ liability on all counts (as to VOZ Travel), “there will not be a trial on whether SBH also operated as an illegal pyramid scheme.”
The FTC sought clarification of the Order, explaining that a trial regarding SBH might be necessary to determine the appropriate injunctive relief to enter against the Individual Defendants.
The Court granted that FTC’s clarification motion, but did not indicate whether a trial regarding SBH would be necessary.
Basically what the FTC seeks clarification on is whether there’s any need to further prove Success by Health was a pyramid scheme at trial.
The court has accepted Success by Health was a pyramid scheme, but the FTC wants to ram the point home at trial to establish the depth of judicial penalties awarded.
The court has yet to rule on either Success by Health’s request for an extension to file motion, or the FTC’s Readiness for Final Pretrial Conference notice.
I’ll continue to monitor the case docket for updates.
Update 10th December 2021 – The court has granted Success by Health a reply extension till December 20th.
The FTC has then been given till January 4th to file a response.
Update 25th February 2022 – We don’t have a trial date yet but the FTC’s motion regarding the Corporate Defendants has been denied.