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U.S. v. TELEMARKETING

United States District Court, N.D. California


April 1, 2004.

UNITED STATES OF AMERICA, Plaintiff,
v.
TELEMARKETING, INC., a Utah corporation, also d/b/a Univoxx; APEX INVESTMENTS, LLC, a Utah corporation, also d/b/a Operator Directory Service and Northwestern Atlantic; UNIVERSAL INNOVATIONS, LLC, a Utah corporation; THOMAS GREGORY PARRISH, individually and as an officer of Telemarketing, Inc.; SEAN K. ANGELETTI, individually, and as an officer of Telemarketing, Inc.; and JOHN P. STARRS, individually, Defendants

The opinion of the court was delivered by: CHARLES BREYER, District Judge

STIPULATED FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF
WHEREAS plaintiff, the United States of America, has commenced this action by filing the Complaint herein; Defendants have waived service of the Summons and Complaint; the Page 2 parties have been represented by the attorneys whose names appear hereafter; and the parties have agreed to settlement of this action upon the following terms and conditions, without adjudication of any issue of fact or law, and without admitting liability for any of the matters alleged in the Complaint;

  THEREFORE, upon stipulation of Plaintiff and Defendants, it is hereby ORDERED, ADJUDGED, AND DECREED as follows:

  1. This Court has jurisdiction of the subject matter and of the parties.

  2. The Complaint states a claim upon which relief may be granted against the Defendants under Sections 5(a)(1), 5(m)(1)(A), 13(b), and 16(a) of the Federal Trade Commission Act, 15 U.S.C. § 45(a)(1), 45(m)(1)(A), 53(b), and 56(a).

  DEFINITIONS

  3. "American Idol Show" means the television program titled "American Idol: The Search for a Superstar," produced and co-owned by FremantleMedia North America, Inc., and 19 TV Limited, or their successors or assigns.

  4. "Clearly and prominently," unless otherwise specifically defined in this Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief "Order"), means:

  (a) In an advertisement communicated through an electronic medium (such as television, video, radio, and interactive media such as the telephone, Internet, and online services), the message shall be presented simultaneously in both the audio and video portion of he advertisement. The audio message shall be delivered in a volume and cadence sufficient for in ordinary consumer to hear and comprehend it. The video message shall be of a size and shade, and shall appear on the screen for a duration, sufficient for an ordinary consumer to read and comprehend it. In addition to the foregoing, in interactive media the message shall also be unavoidable and shall be presented prior to the consumer incurring any financial obligation, Provided that, in any advertisement presented solely through video or audio means, the message Page 3 nay be conveyed through the same means in which the ad is presented

  (b) In a print advertisement, the message shall be in a type size, location, and in print hat contrasts with the background against which it appears, sufficient for an ordinary consumer o notice, read, and comprehend it. In a multi-page document, the message shall appear on the first page.

  (c) Nothing contrary to, inconsistent with, or in mitigation of the disclosure shall be used in any advertisement.

  5. "Commerce" shall mean as defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. § 44.

  6. The "Commission" or "FTC" means the Federal Trade Commission.

  7. "Complementary Number Program" means a marketing technique whereby a seller employs telephone numbers, Internet addresses, or other communication addresses similar o current or previous telephone numbers, Internet addresses, or other communication addresses of other organizations or persons ("Intended Contacts") that consumers frequently contact, in an effort to market goods, services, or investments to persons who mistakenly contact the seller rather than the Intended Contact.

  8. "Complementary Number or Address" means any telephone number, Internet address, or other communication address actually leased or utilized by persons conducting a Complementary Number Program.

  9. A "corresponding provision" of the Pay-Per-Call Rule, 16 CF.R. Part 308, refers o any duly enacted regulation that amends, augments or replaces the provision to which `corresponding provision" refers.

  10. "Defendants" means Thomas Gregory Parrish, Scan K. Angeletti, John P. Stairs, Telemarketing, Inc., Apex Investments, LLC, and Universal Innovations, LLC, each of them individually or in combination, and any entity through which any of them does business.

  11. "Directory Assistance" means a service that, by any means, merely provides to Page 4 an inquiring person telephone numbers, Internet addresses, or other address information of a third party.

  12. "Document" is equal in scope and synonymous in meaning with the usage of the term in Federal Rule of Civil Procedure 34(a), and includes writings, drawings, graphs, charts, photographs, audio and video recordings, computer records, and other data compilations from which information can be obtained and translated, if necessary, into reasonably usable form through detection devices. A draft or non-identical copy is a separate document within the meaning of the term.

  13. "Pay-Per-Call Service" shall have the meaning provided in section 308.2(c) of he Pay-Per-Call Rule, 16 CF.R. 308.2(c).

  14. The "Pay-Per-Call Rule" or "Rule" means the FTC's Trade Regulation Rule Pursuant to the Telephone Disclosure and Dispute Resolution Act of 1992, 16 CF.R. Part 308, as currently promulgated or as it may hereafter be amended.

  15. "Person" means any individual, partnership, corporation, association, government or governmental subdivision or agency, or other entity.

  I. INJUNCTIVE PROVISIONS

  IT IS THEREFORE ORDERED that:

  A. Defendants, their successors, subsidiaries, affiliates and assigns, and their officers, agents, servants, independent contractors, employees, and all persons in active concert Dr participation with any one or more of them who receive actual notice of this Order by personal service or otherwise, are hereby permanently enjoined from

 

(1) Falsely representing in any manner, expressly or by implication, that a caller to any toll-free or pay-per-call line leased or otherwise utilized by Defendants for their own business purposes has reached the American Idol Show or any other entity affiliated with, associated with, or endorsed by the American Idol Show;
  (2) Falsely representing in any manner, expressly or by implication, that a caller to Page 5 any toll-free or pay-per-call line leased or otherwise utilized by Defendants for their own business purposes has reached a particular person or has reached a person associated with, affiliated with, or endorsed by another person;

 

(3) Falsely representing in any manner, expressly or by implication, that a caller to any toll-free number leased or otherwise utilized by Defendants for their own business purposes needs to call a pay-per-call number to successfully vote for any American Idol contestant;
(4) Falsely representing in any manner, expressly or by implication, that a caller to any toll-free number needs to call a pay-per-call number or otherwise incur charges to complete the original call or to complete any other communication or transaction;
(5) In connection with any Complementary Number Program employed in any medium (telephone, Internet, or other media), failing to disclose clearly and prominently to any person who has reached a Complementary Number or Address (a) that such person has failed to reach his or her Intended Contact; (b) the true identity of Defendants' business and affiliation with the Intended Contact (or lack thereof); and (c) a description of the service in sufficient detail to make clear it is not related to the Intended Contact's business.
(6) Providing substantial assistance or support to any person when the Defendants know or consciously avoid knowing that the person is engaged in the practices set forth in Paragraphs I.A.1 — I.A.5 above; and
  (7) Using the trade name "Operator Directory Service" in connection with any telephonic Complementary Number Program that merely offers directory assistance, without clearly and prominently disclosing in all relevant toll-free and pay-per-call messages: (a) all of the information required to be disclosed in Part I.A.5 of this Order; and (b) that the service provided is mere directory assistance Page 6

 and not itself a means to directly complete the original call or intended transaction or communication.

  B. Defendants, their successors, subsidiaries, affiliates and assigns, and their officers, agents, servants, independent contractors, employees, and all persons in active conceit or participation with any one or more of them who receive actual notice of this Order by personal service or otherwise, are hereby permanently enjoined from

  (1) Violating any provision of the Pay-Per-Call Rule, 16 C.F.R. Part 308; and

  (2) Failing, in connection with any Complementary Number Program (including programs charging "nominal costs" that otherwise would be exempted by § 308.5(c) of the Pay-per-Call Rule), to include in a pay-per-call message an introductory disclosure message that clearly, in a slow and deliberate manner and in a reasonably understandable volume, identifies he name of the provider of the pay-per-call service, describes the service being provided, and informs callers that charges for the call begin, and that to avoid charges the call must be terminated, three seconds after a clearly discernible signal or tone indicating the end of the introductory disclosure message.

  II. CIVIL PENALTIES

  IT IS FURTHER ORDERED that:

  A. Defendants Thomas Gregory Parrish, Sean K. Angeletti, John P. Stairs, Telemarketing, Inc., Apex Investments, LLC, and Universal Innovations, LLC and their successors and assigns, shall pay to Plaintiff a civil penalty, pursuant to Section 5(m)(1)(A) of he Federal Trade Commission Act, 15 U.S.C. § 45(m)(1)(A), in the amount of Forty Thousand Dollars ($40,000). Defendants are jointly and severally responsible for paying this penalty.

  B. Defendants shall, within five (5) days of the date of entry of this Order, pay the foregoing sum of $40,000 in civil penalties by certified or cashier's check made payable to the Treasurer of the United States and delivered to the Office of Consumer Litigation, Civil Division, U.S. Department of Justice, Washington, D.C 20530, for appropriate disposition. Page 7 Alternatively, Defendants by that date shall pay such sum by electronic transfer in accordance with the instructions provided by the Office of Consumer Litigation, Civil Division, U.S. Department of Justice, Washington, D.C 20530.

  C. In the event of any default on any obligation to make payment under this Part, interest, computed pursuant to 28 U.S.C. § 1961 (a), shall accrue from the date of default to the date of payment.

  D. Within five (5) days of the date of entry of this Order, Defendants are hereby required, in accordance with 31 U.S.C. § 7701, to furnish to Plaintiff their taxpayer identifying lumbers (social security number or employer identification number), which shall be used for purposes of collecting and reporting on any delinquent amount arising out of such persons' relationship with the government

  III. COMPLIANCE MONITORING

  IT IS FURTHER ORDERED that, for the purpose of monitoring and investigating compliance with any provision of this Order,

  (A) Within ten (10) days of receipt of written notice from a representative of the Commission, Defendants Thomas Gregory Parrish, Sean K. Angeletti, John P. Stairs, Telemarketing, Inc., Apex Investments, LLC, and Universal Innovations, LLC shall submit additional written reports, sworn to under penalty of perjury; produce documents for inspection and copying; appear for deposition; and/or provide entry during normal business hours to any business location in Defendants' possession or direct or indirect control to inspect the business operation;

  (B) The Commission is authorized to monitor compliance with this Order by all other lawful means, including but not limited to the following:

(1) obtaining discovery from any person, without further leave of court, using the procedures prescribed by Fed.R.Civ.P. 30, 31, 33, 34, 36, and 45; and
  (2) using representatives posing as consumers to Thomas Gregory Parrish, Sean K. Page 8 Angeletti, John P. Stairs, Telemarketing, Inc., Apex Investments, LLC, and Universal Innovations, LLC, to their employees, or to any other entity managed or controlled in whole or in part by the foregoing persons or companies, without the necessity of identification or prior notice;

 Provided that nothing in this Order shall limit the Commission's lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. § 49, 57b-1, to obtain any documentary material, tangible things, testimony, or information relevant to unfair or deceptive acts or practices in or affecting commerce (within the meaning of 15 U.S.C. § 45(a)(1)).

  (C) Thomas Gregory Parrish, Sean K. Angeletti, John P. Starrs, Telemarketing, Inc., Apex Investments, LLC, and Universal Innovations, LLC shall permit representatives of the Commission to interview any employer, consultant, independent contractor, representative, agent, or employee who has agreed to such an interview, relating in any way to any conduct subject to this Order. The person interviewed may have counsel present.

  IV. COMPLIANCE REPORTING BY DEFENDANTS

  IT IS FURTHER ORDERED that, in order that compliance with the provisions of this Order may be monitored:

(A) For a period of three (3) years from the date of entry of this Order,
(1) Thomas Gregory Parrish, Sean K. Angeletti, John P. Starrs, Telemarketing, Inc., Apex Investments, LLC, and Universal Innovations, LLC shall notify the Commission of the following:
  (a) Within ten (10) days of the date of such change, any changes in the residence, mailing addresses, telephone numbers, and employment status (including self-employment) of Defendants Thomas Gregory Parrish, Sean K. Angeletti, and John P. Starrs. Notice of change of employment status shall include the name and address of each business that each Defendant is affiliated with, employed by, or performs services for; a statement of the nature of the Page 9 business; and a statement of Defendant's duties and responsibilities in connection with the business;

 

(b) Any changes in any Defendant's name or use of any aliases or fictitious names; and
(2) Thomas Gregory Parrish, Sean K. Angeletti, John P. Starrs, Telemarketing, Inc., Apex Investments, LLC, and Universal Innovations, LLC each shall notify the Commission of any changes in corporate structure that may affect compliance obligations arising under this Order, including but not limited to a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor corporation; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; the filing of a bankruptcy petition; or a change in the corporate name or address, at least thirty (30) days prior to such change, provided that, with respect to any proposed change in the corporation about which the Defendant learns less than thirty (30) days prior to the date such action is to take place, Defendant shall notify the Commission as soon as is practicable after obtaining such knowledge.
  (B) One hundred eighty (180) days after the date of entry of this Order, Defendants each shall provide a written report to the FTC, sworn to under penalty of perjury, setting forth in detail the manner and form in which they have complied and are complying with this Order. This report shall include, but not be limited to:

 

(1) Any changes required to be reported pursuant to subparagraph (A) above;
(2) A copy of each acknowledgment of receipt of this Order obtained by Defendants pursuant to Paragraph VI of this Order; and
(3) A statement describing the manner in which each Defendant has complied and is complying with the injunctive provisions of this Order.
  (C) For the purposes of this Order, Defendants shall, unless otherwise directed by the Page 10 Commission's authorized representatives, mail all written notifications to the Commission to:

 

Regional Director for the Western Region Federal Trade Commission 901 Market Street Suite 570 San Francisco, California 94103 Re: United States v. Telemarketing, Inc. et al., Civil Action No. ____.
  (D) For purposes of the compliance reporting required by this Paragraph, the Commission is authorized to communicate directly with Defendants Thomas Gregory Parrish, Sean K. Angeletti, John P. Starrs, Telemarketing, Inc., Apex Investments, LLC, and Universal Innovations, LLC.

  V. RECORD KEEPING PROVISIONS

  IT IS FURTHER ORDERED that, for a period of eight (8) years from the date of entry of this Order, each Defendant and his agents, employees, officers, and servants, corporations, successors, and assigns, and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, in connection with any business where (1) that Defendant is at least 50% owner of the business or directly or indirectly manages or controls the business, and where (2) the business is engaged in any Pay-Per-Call Service or Complementary Number Program, is hereby restrained and enjoined from failing to create and retain the following records:

(A) Accounting records that reflect the cost of goods or services sold, revenues generated, and the disbursement of such revenues;
(B) Personnel records accurately reflecting: the name, address, and telephone number of each person employed in any capacity by such business, including as an independent contractor; that person's job title or position; the date upon which the person commenced work; and the date and reason for the person's termination, if applicable;
  (C) Customer files containing the names, addresses, phone numbers, dollar amounts paid, quantity of items or services purchased, and description of items or services Page 11 purchased, to the extent such information is obtained in the ordinary course of business;

 

(D) Complaints and refund requests (whether received directly, indirectly or through any third party) and any responses to those complaints or requests;
(E) Copies of all sales, entertainment, information, operator, recorded message, and customer service scripts, training materials, advertisements, or other marketing materials; and
(F) Lists of all Complementary Numbers, toll-free numbers, and Pay-Per-Call Numbers used, and scripts used in conjunction with such Complementary Numbers, toll-free numbers or Pay-Per-Call Numbers.
VI. DISTRIBUTION OF ORDER BY DEFENDANTS
  IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order,

 

(A) Telemarketing, Inc., Apex Investments, LLC, and Universal Innovations, LLC, and their successors and assigns shall deliver a copy of this Order to all principals, officers, directors, managers, employees, agents, and representatives having responsibilities with respect to the subject matter of this Order, and shall secure from each such person a signed and dated statement acknowledging receipt of the Order. Telemarketing, Inc., Apex Investments, LLC, and Universal Innovations, LLC shall deliver this Order to current personnel within thirty (30) days after the date of service of this Order, and to new personnel within thirty (30) days after the person assumes such position or responsibilities.
  (B) Thomas Gregory Parrish, Sean K. Angeletti, and John P. Stairs shall deliver a copy of this Order to the principals, officers, directors, managers and employees under their control for any business that (a) employs or contracts for personal services from him, and (b) has responsibilities with respect to the subject matter Page 12 of this Order. Thomas Gregory Parrish, Sean K. Angeletti, and John P. Stairs shall secure from each such person a signed and dated statement acknowledging receipt of the Order within thirty (30) days after the date of service of the Order or the commencement of the employment relationship.

 

VII. ACKNOWLEDGMENT OF RECEIPT OF ORDER BY DEFENDANTS
  IT IS FURTHER ORDERED that each Defendant, within five (5) business days of receipt of this Order as entered by the Court, must submit to the Commission a truthful sworn statement acknowledging receipt of this Order.

  VIII. RETENTION OF JURISDICTION

  IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for purposes of enabling any of the parties to this Order to apply to the Court at any time for such further orders or directives as may be necessary or appropriate for the interpretation or modification of this Order, for the enforcement of compliance therewith, or for the punishment of violations thereof.

  JUDGMENT IS THEREFORE ENTERED in favor of Plaintiff and against Defendants, pursuant to all the terms and conditions recited above. Page 13

  The parties, by their respective counsel, hereby consent to the terms and conditions of the Order as set forth above and consent to the entry thereof Defendants waive any rights that may arise under the Equal Access to Justice Act, 28 U.S.C § 2412, concerning the investigation and prosecution of this action. Page 14

  [EDITORS' NOTE: THIS PAGE CONTAINED ATTORNEYS' SIGNATURE] Page 15

  [EDITORS' NOTE: THIS PAGE CONTAINED ATTORNEYS' SIGNATURE]

  REASONS FOR SETTLEMENT

  This statement accompanies the Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief ("Order") executed by defendants Telemarketing, Inc., Apex Investments, LLC, Universal Innovations, LLC, Thomas Gregory Parrish, Scan Angeletti, and John P. Starrs, in settlement of an action brought to recover penalties and other equitable relief from the defendants for engaging in acts or practices in violation of the Commission's Trade Regulation Rule Pursuant to the Telephone Disclosure and Dispute Resolution Act of 1992, 16 C.F. R. Part 308 (the "Rule").

  Pursuant to Section 5(m)(3) of the Federal Trade Commission Act, as amended (15 U.S.C. § 45(m)(3)), the Commission hereby sets forth its reasons for settlement by entry of an Order:

On the basis of the allegations contained in the attached Complaint, the Commission believes that the payment of $40,000 in civil penalties by the defendants constitutes an appropriate amount upon which to base a settlement. The amount should assure compliance with the law by defendants and by others who engage in practices covered by the Rule. Further, defendants are permanently enjoined from engaging in acts or practices that are prohibited by the Rule. With the entry of such Order the time and expense of litigation will be avoided.
  For the foregoing reasons, the Commission believes that the settlement by entry of the attached Order with Telemarketing, Inc., Apex Investments, LLC, Universal Innovations, LLC, Thomas Gregory Parrish, Scan Angeletti, and John P. Starrs is justified and well within the public interest Page 1

20040401

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