Your Federal Quarterly Tax Payments are due April 15th Get Help Now >>

DEFENDANT JORDAN SEVY'S ANSWER AND AFFIRMATIVE DEFENSES TO AMENDED by ito20106

VIEWS: 89 PAGES: 15

									     Case 5:09-cv-04104-JAR-KGS Document 123                 Filed 12/22/09 Page 1 of 15




                        IN THE UNITED STATES DISTRICT COURT
                             FOR THE DISTRICT OF KANSAS


FEDERAL TRADE COMMISSION, et al,

                              Plaintiffs,
                                                   Case No.: 5:09-CV-04104-JAR-KGS
v.

AFFILIATE STRATEGIES, INC., et al,

                              Defendants.


                    DEFENDANT JORDAN SEVY’S ANSWER AND
                AFFIRMATIVE DEFENSES TO AMENDED COMPLAINT

       Defendant Jordan Sevy (“Sevy”), for his answer to plaintiffs’ Amended Complaint,

denies each and every allegation of plaintiffs’ Amended Complaint not specifically admitted

herein, and further answers as follows:

       1.      Sevy denies the allegations of paragraph 1.

       2.      Sevy denies the allegations of paragraph 2.

       3.      Sevy denies the allegations of paragraph 3.

       4.      Sevy denies the allegations of paragraph 4.

       5.      Sevy denies the allegations of paragraph 5.

                                JURISDICTION AND VENUE

       6.      Sevy admits that the Court has jurisdiction over defendant Sevy with regard to

the federal claims.

       7.      Sevy denies the allegations contained in paragraph 7.

       8.      Sevy admits that venue is appropriate as to this defendant.
     Case 5:09-cv-04104-JAR-KGS Document 123                   Filed 12/22/09 Page 2 of 15




                                          THE PARTIES

       9.       Sevy denies the allegations set forth in paragraph 9 of the Amended Complaint

to the extent that it assumes Sevy violated any of the statutes set forth therein. Sevy admits the

remaining allegations set forth in paragraph 9.

       10.      Sevy denies the allegations set forth in paragraph 10 of the Amended Complaint

to the extent that it assumes Sevy violated any of the statutes set forth therein. Sevy admits the

remaining allegations set forth in paragraph 10.

       11.      Sevy denies that plaintiff State of Kansas is authorized to initiate federal district

court proceedings under 15 U.S.C. § 6103 while the Federal Trade Commission (“FTC”)

litigates identical claims against the same defendants. Sevy admits the remaining allegations set

forth in paragraph 11.

       12.      Sevy denies that plaintiff State of Minnesota is authorized to initiate federal

district court proceedings under 15 U.S.C. § 6103 while the Federal Trade Commission (“FTC”)

litigates identical claims against the same defendants. Sevy admits the remaining allegations set

forth in paragraph 12.

       13.      Sevy denies that plaintiff State of North Carolina is authorized to initiate federal

district court proceedings under 15 U.S.C. § 6103 while the Federal Trade Commission (“FTC”)

litigates identical claims against the same defendants. Sevy admits the remaining allegations set

forth in paragraph 13.

       14.      Sevy denies that plaintiff State of Illinois is authorized to initiate federal district

court proceedings under 15 U.S.C. § 6103 while the Federal Trade Commission (“FTC”)

litigates identical claims against the same defendants. Sevy admits the remaining allegations set

forth in paragraph 14.



                                                   2
     Case 5:09-cv-04104-JAR-KGS Document 123                 Filed 12/22/09 Page 3 of 15




        15.     The allegations in paragraph 15 are not directed at Sevy, therefore Sevy denies the

same.

        16.     The allegations in paragraph 16 are not directed at Sevy, therefore Sevy denies the

same.

        17.     The allegations in paragraph 17 are not directed at Sevy, therefore Sevy denies

the same.

        18.     The allegations in paragraph 18 are not directed at Sevy, therefore Sevy denies the

same.

        19.     The allegations in paragraph 19 are not directed at Sevy, therefore Sevy denies the

same.

        20.     Sevy denies the allegations set forth in paragraph 20 of the Amended Complaint

to the extent that they assume the truth or veracity of any of plaintiffs’ claims or that Sevy

violated any of the statutes set forth therein. Sevy admits the remaining allegations set forth in

paragraph 20.

        21.     The allegations in paragraph 21 are not directed at Sevy, therefore Sevy denies the

same.

        22.     The allegations in paragraph 22 are not directed at Sevy, therefore Sevy denies the

same.

        23.     The allegations in paragraph 23 are not directed at Sevy, therefore Sevy denies the

same.

        24.     The allegations in paragraph 24 are not directed at Sevy, therefore Sevy denies the

same.




                                                 3
    Case 5:09-cv-04104-JAR-KGS Document 123              Filed 12/22/09 Page 4 of 15




       25.   The allegations in paragraph 25 are not directed at Sevy, therefore Sevy denies

the same.

       26.   The allegations in paragraph 26 are not directed at Sevy, therefore Sevy denies

the same.

       27.   The allegations in paragraph 27 are not directed at Sevy, therefore Sevy denies

the same.

       28.   The allegations in paragraph 28 are not directed at Sevy, therefore Sevy denies

the same.

       29.   The allegations in paragraph 29 are not directed at Sevy, therefore Sevy denies

the same.

       30.   The allegations in paragraph 30 are not directed at Sevy, therefore Sevy denies

the same.

                               COMMON ENTERPRISE

       31.   Sevy denies the allegations contained in paragraph 31.

                                      COMMERCE

       32.   Sevy denies the allegations contained in paragraph 32.

                      DEFENDANTS’ BUSINESS PRACTICES

       33.   Sevy denies the allegations contained in paragraph 33.

       34.   Sevy denies the allegations contained in paragraph 34.

                                 THE GRANT GUIDE

       35.   Sevy denies the allegations contained in paragraph 35.

       36.   Sevy denies the allegations contained in paragraph 36.

       37.   Sevy denies the allegations contained in paragraph 37.



                                             4
Case 5:09-cv-04104-JAR-KGS Document 123            Filed 12/22/09 Page 5 of 15




 38.   Sevy denies the allegations contained in paragraph 38.

 39.   Sevy denies the allegations contained in paragraph 39.

                            GRANT RESEARCH

 40.   Sevy denies the allegations contained in paragraph 40.

 41.   Sevy denies the allegations contained in paragraph 41.

 42.   Sevy denies the allegations contained in paragraph 42.

 43.   Sevy denies the allegations contained in paragraph 43.

 44.   Sevy denies the allegations contained in paragraph 44.

 45.   Sevy denies the allegations contained in paragraph 45.

 46.   Sevy denies the allegations contained in paragraph 46.

 47.   Sevy denies the allegations contained in paragraph 47.

 48.   Sevy denies the allegations contained in paragraph 48.

 49.   Sevy denies the allegations contained in paragraph 49.

 50.   Sevy denies the allegations contained in paragraph 50.

                             GRANT WRITING

 51.   Sevy denies the allegations contained in paragraph 51.

 52.   Sevy denies the allegations contained in paragraph 52.

 53.   Sevy denies the allegations contained in paragraph 53.

 54.   Sevy denies the allegations contained in paragraph 54.

 55.   Sevy denies the allegations contained in paragraph 55.

 56.   Sevy denies the allegations contained in paragraph 56.




                                       5
Case 5:09-cv-04104-JAR-KGS Document 123              Filed 12/22/09 Page 6 of 15




            VIOLATIONS OF SECTION 5 OF THE FTC ACT

 57.    Paragraph 57 sets forth a conclusion of law to which no response is required.

 58.    Paragraph 58 sets forth a conclusion of law to which no response is required.

                                    COUNT I

    By Plaintiff Federal Trade Commission against the ASI Defendants and
                    Defendants Blackman, Sevy, and Rulison

 59.    Sevy denies the allegations contained in paragraph 59.

 60.    Sevy denies the allegations contained in paragraph 60.

 61.    Sevy denies the allegations contained in paragraph 61.

                                    COUNT II

   By Plaintiff Federal Trade Commission against the Primary Defendants

 62.    Sevy denies the allegations contained in paragraph 62.

 63.    Sevy denies the allegations contained in paragraph 63.

 64.    Sevy denies the allegations contained in paragraph 64.

                                    COUNT III

   By Plaintiff Federal Trade Commission against the Primary Defendants

 65.    Sevy denies the allegations contained in paragraph 65.

 66.    Sevy denies the allegations contained in paragraph 66.

 67.    Sevy denies the allegations contained in paragraph 67.

        VIOLATIONS OF THE TELEMARKETING SALES RULE

 68.    Paragraph 68 sets forth a conclusion of law to which no response is required.

 69.    Paragraph 69 sets forth a conclusion of law to which no response is required.

 70.    Paragraph 70 sets forth a conclusion of law to which no response is required.




                                        6
    Case 5:09-cv-04104-JAR-KGS Document 123                 Filed 12/22/09 Page 7 of 15




        71.   Paragraph 71 sets forth a conclusion of law to which no response is required.

        72.   Paragraph 72 sets forth a conclusion of law to which no response is required.

                                         COUNT IV

                      By all Plaintiffs against the Primary Defendants

        73.   Sevy denies the allegations contained in paragraph 73.

        74.   Sevy denies the allegations contained in paragraph 74.

                                          COUNT V

                       By All Plaintiffs against Defendant Chapman

        75.   The allegations in paragraph 75 are not directed at Sevy, therefore Sevy denies the

same.

        76.   The allegations in paragraph 76 are not directed at Sevy, therefore Sevy denies the

same.


                             KANSAS STATE LAW CLAIMS

                                         COUNT VI

               By Plaintiff State of Kansas against the ASI Defendants and
                        Defendants Blackman, Sevy, and Rulison

        77.   Sevy denies the allegations contained in paragraph 77.

        78.   Sevy denies the allegations contained in paragraph 78.

        79.   Sevy denies the allegations contained in paragraph 79.

                                         COUNT VII

               By Plaintiff State of Kansas against the Primary Defendants

        80.   Sevy denies the allegations contained in paragraph 80.

        81.   Sevy denies the allegations contained in paragraph 81.



                                               7
Case 5:09-cv-04104-JAR-KGS Document 123             Filed 12/22/09 Page 8 of 15




 82.   Sevy denies the allegations contained in paragraph 82.

                                 COUNT VIII

        By Plaintiff State of Kansas against the Primary Defendants

 83.   Sevy denies the allegations contained in paragraph 83.

 84.   Sevy denies the allegations contained in paragraph 84.

                                  COUNT IX

        By Plaintiff State of Kansas against the Primary Defendants

 85.   Sevy denies the allegations contained in paragraph 85.

 86.   Sevy denies the allegations contained in paragraph 86.

                                   COUNT X

        By Plaintiff State of Kansas against the Primary Defendants

 86.   Sevy denies the allegations contained in paragraph 87.

 87.   Sevy denies the allegations contained in paragraph 88.

 88.   Sevy denies the allegations contained in paragraph 89.

 89.   Sevy denies the allegations contained in paragraph 90.

                   MINNESOTA STATE LAW CLAIMS

                                  COUNT XI

       By Plaintiff State of Minnesota against the Primary Defendants

 90.   Sevy denies the allegations contained in paragraph 91.

 92.   Sevy denies the allegations contained in paragraph 92.

                                  COUNT XII

       By Plaintiff State of Minnesota against the Primary Defendants

 93.   Sevy denies the allegations contained in paragraph 93.



                                        8
Case 5:09-cv-04104-JAR-KGS Document 123             Filed 12/22/09 Page 9 of 15




 94.    Sevy denies the allegations contained in paragraph 94.

                                  COUNT XIII

        By Plaintiff State of Minnesota against the Primary Defendants

 95.    Sevy denies the allegations contained in paragraph 95.

 96.    Sevy denies the allegations contained in paragraph 96.

                                  COUNT XIV

        By Plaintiff State of Minnesota against the Primary Defendants

 97.    Sevy denies the allegations contained in paragraph 97.

 98.    Sevy denies the allegations contained in paragraph 98.

 99.    Sevy denies the allegations contained in paragraph 99.

 100.   Sevy denies the allegations contained in paragraph 100.

 101.   Sevy denies the allegations contained in paragraph 101.

 102.   Sevy denies the allegations contained in paragraph 102.

                NORTH CAROLINA STATE LAW CLAIMS

                                  COUNT XV

          By Plaintiff State of North Carolina against all Defendants

 103.   Sevy denies the allegations contained in paragraph 103.

 104.   Sevy denies the allegations contained in paragraph 104.

                      ILLINOIS STATE LAW CLAIMS

                                  COUNT XVI

          By Plaintiff State of Illinois against the ASI Defendants and
                   Defendants Blackman, Sevy, and Rulison

 105.   Sevy denies the allegations contained in paragraph 105.




                                        9
Case 5:09-cv-04104-JAR-KGS Document 123              Filed 12/22/09 Page 10 of 15




  106.   Sevy denies the allegations contained in paragraph 106.

  107.   Sevy denies the allegations contained in paragraph 107.

                                   COUNT XVII

          By Plaintiff State of Illinois against the Primary Defendants

  108.   Sevy denies the allegations contained in paragraph 108.

  109.   Sevy denies the allegations contained in paragraph 109.

  110.   Sevy denies the allegations contained in paragraph 110.

                                  COUNT XVIII

          By Plaintiff State of Illinois against the Primary Defendants

  111.   Sevy denies the allegations contained in paragraph 111.

  112.   Sevy denies the allegations contained in paragraph 112.

  113.   Sevy denies the allegations contained in paragraph 113.

                              CONSUMER INJURY

  114.   Sevy denies the allegations contained in paragraph 114.

                THIS COURT’S POWER TO GRANT RELIEF

  115.   Paragraph 115 sets forth a conclusion of law to which no response is required.

  116.   Paragraph 116 sets forth a conclusion of law to which no response is required.

  117.   Paragraph 117 sets forth a conclusion of law to which no response is required.

  118.   Paragraph 118 sets forth a conclusion of law to which no response is required.

  119.   Paragraph 119 sets forth a conclusion of law to which no response is required.

  120.   Paragraph 120 sets forth a conclusion of law to which no response is required.

  121.   Paragraph 121 sets forth a conclusion of law to which no response is required.




                                         10
    Case 5:09-cv-04104-JAR-KGS Document 123                    Filed 12/22/09 Page 11 of 15




                                  AFFIRMATIVE DEFENSES

       1.      Plaintiffs have failed to state a claim upon which relief can be granted.

       2.      Plaintiffs’ Amended Complaint should be dismissed due to the fact that one or

more Plaintiffs lack standing to assert the claims stated.

       3.       The proposed equitable remedy is neither appropriate nor justified, as it is

impermissibly punitive in nature and not limited to what is necessary and appropriate to redress

the alleged harm.

       4.      The damages sustained by the consumers, if any, resulted from the acts or

omissions of others and were not proximately caused by defendant.

       5.       Each of plaintiffs’ purported claims are barred in whole or in part because

defendant, in good faith, took reasonable actions to prevent or terminate the occurrence of any

allegedly unfair or deceptive practices.

       6.      Defendant did not participate in the acts, practices or conduct alleged, nor did he

control or have the ability to control the acts, practices, or conduct alleged.

       7.      Plaintiff States lack standing to pursue the claims asserted in the Amended

Complaint.

       8.      The acts or practices complained of did not cause substantial injury to consumers,

and any injuries that did allegedly occur are outweighed by countervailing benefits.

       9.      Consumers could have reasonably avoided the injuries allegedly sustained.

       10.     Defendant did not knowingly provide substantial assistance or support to

telemarketers who allegedly engaged in the unfair or deceptive practices.

       11.     Defendant did not participate in mailings that allegedly contained deceptive

misrepresentations.



                                                  11
    Case 5:09-cv-04104-JAR-KGS Document 123                  Filed 12/22/09 Page 12 of 15




          12.   Defendant has not participated in any activities related to the processing of

payments for the telemarketing or grant services industry.

          13.   To the extent the information contained in Defendants’ marketing materials is

also found in federal government or other non-commercial sources, the FTC cannot prohibit

Defendant from disseminating such information under established commercial speech

jurisprudence of the First Amendment. City of Cincinnati v. Discovery Network, 507 U.S. 410

(1993).

          14.   Plaintiffs have an adequate remedy at law, therefore, injunctive relief would be

inappropriate and is precluded.

          15.   The circumstances surrounding the acts and practices alleged demonstrates that an

injunction against defendant would not be equitable or in the public interest.

          16.   Any demand for monetary sanctions against defendant in excess of monies

actually received by defendant is an excessive and unreasonable penalty.

          17.   Defendant exercised reasonable diligence to uncover allegedly deceptive activities

prior to the filing of this lawsuit.

          18.   Defendant’s attempts to uncover allegedly unfair practices or deceptive activities

were thwarted by others.

          19.   Plaintiffs’ claims are barred in whole or in part by the doctrine of unclean hands,

including but not limited to pre-complaint settlement negotiations that certain state Plaintiffs

conducted in bad faith.

          20.   Defendant never, individually or in concert with others, formulated, directed,

controlled, or participated in the acts alleged.




                                                   12
    Case 5:09-cv-04104-JAR-KGS Document 123                    Filed 12/22/09 Page 13 of 15




       21.     Any monetary relief is subject to offset by the benefits received by consumers,

costs associated with the sale of goods, and/or any refunds paid to consumers. Moreover, any

monetary relief requested that would go to the Government should be reduced by what the

corporate defendants have paid in taxes and in postage to the U.S. Postal Service.

       22.     Defendant denies joint and several liability.

       23.     Defendant’s representations, if any, did not constitute material misrepresentations

in the context of the entire marketing program(s).

       24.     Defendant reasonably relied on the representations of others and did not willfully,

knowingly or intentionally make any material misrepresentations.

       25.     The relief requested by plaintiffs is overbroad and not authorized by the FTC Act

or the other applicable statutes. Further, any alleged violation of the law or injury to consumers

can be resolved with less drastic actions that the injunction proposed by plaintiffs herein. Any

injunctive relief should be the least invasive necessary to correct any alleged violations of law.

       26.     In bringing and pursuing this action, plaintiffs have deprived Defendant of due

process of law to which he is entitled under both the United States Constitution and the

Constitutions of each of the respective plaintiff States.

       27.     Recovery is barred, in whole or in part, by consumers’ failure to mitigate any

damages allegedly sustained.

       28.     Defendant has acted in good faith and in a manner that is reasonable and justified.

       29.     Plaintiffs’ claim for injunctive relief is moot because Defendant is not currently

violating or about to violate any federal or state laws.

       30.     Plaintiffs have not established and cannot establish a likelihood of success on the

merits of their purported claims.



                                                 13
    Case 5:09-cv-04104-JAR-KGS Document 123                 Filed 12/22/09 Page 14 of 15




        31.    Plaintiffs’ requested injunctive relief has and will continue to inflict irreparable

harm.

        32.    The contemplated relief would not be in the public interest.

        33.    The balance of harms does not favor an award of the injunctive relief requested by

plaintiffs.

        34.    Plaintiffs’ claims are barred in whole or in part by releases executed by some

customers.

        35.    To the extent that the FTC seeks an order prohibiting Defendant from

disseminating information which the FTC believes is "unsubstantiated," such request should be

denied because Defendant has a First Amendment right to disseminate such information. Pearson

v. Shalala, 164 F.3d 650 (D.C. Cir. 1999).

        36.    This action is based upon regulatory standards governing the quantity and quality

of substantiation Defendant must possess at the time Defendant makes express and implied

claims in advertisements, if any. The standards fail and have failed to provide reasonable

persons, including Defendant, with fair notice as to whether contemplated claims in

advertisements, including those at issue in this proceeding, are and were permissible and/or

allow and have allowed plaintiffs to enforce the standards pursuant to their personal or subjective

predilections. The regulatory standards are thus unconstitutionally vague on their face and/or as

applied to Defendant's advertising activity, if any, and, therefore, violate Defendant's rights to

due process under the Fifth Amendment to the Constitution of the United States. The Amended

Complaint based upon such standards must therefore be dismissed.

        37.    Defendant had no actual or constructive knowledge of the alleged unlawful

practices, so there is no likelihood of holding Defendant individually liable for monetary relief,



                                                14
    Case 5:09-cv-04104-JAR-KGS Document 123                 Filed 12/22/09 Page 15 of 15




without with there is no basis to freeze Defendant's individual assets. FTC v. Amy Travel Serv.,

875 F.2d 564, 574 (1989), cert. denied 110 S.Ct. 366.

       38.     Defendant reserves the right to assert additional affirmative defenses as facts are

uncovered during further investigation and discovery in this matter.



                                       PRAYER FOR RELIEF

       WHEREFORE, Defendant Jordan Sevy requests that this Court find in favor of

Defendant Sevy and against Plaintiffs, that Plaintiffs’ Amended Complaint be dismissed with

prejudice at Plaintiffs’ cost and expense, and for such other and further relief as this Court

deems just and proper.

                                                    Respectfully submitted,

                                                       /s/ Robin D. Fowler
                                                    Robin D. Fowler              KS #11752
                                                    Bath & Edmonds, P.A.
                                                    7944 Santa Fe Drive
                                                    Overland Park, KS 66204
                                                    Telephone: (913) 652-9800
                                                    Facsimile: (913) 649-8494
                                                    E-mail: robin@bathedmonds.com
                                                    Attorney for Jordan Sevy


                                CERTIFICATE OF SERVICE

        I hereby certify that on this 22nd day of December, 2009, I electronically filed the
foregoing with the Clerk of the Court by using the CM\ECF system which will send a notice of
electronic filing to all parties of record.

                                                      /s/ Robin D. Fowler
                                                    Robin D. Fowler




                                               15

								
To top