                                                                           FILED
                              NOT FOR PUBLICATION                           DEC 30 2009

                                                                        MOLLY C. DWYER, CLERK
                       UNITED STATES COURT OF APPEALS                    U .S. C O U R T OF APPE ALS




                              FOR THE NINTH CIRCUIT

 FEDERAL TRADE COMMISSION,                           No. 08-55838

             Plaintiff - Appellee,                   D.C. No. CV06-849-GW(OPx)

   v.
                                                     MEMORANDUM *
 BRIAN K. MacGREGOR, et al.,

             Defendants - Appellants.

                      Appeal from the United States District Court
                         for the Central District of California
                       George H. Wu, District Judge, Presiding

                        Argued and Submitted December 9, 2009
                                 Pasadena, California

Before: THOMPSON and SILVERMAN, Circuit Judges, and BOLTON, ** District
Judge.

        Appellants Brian K. MacGregor and Membership Services Direct, Inc.

(“MSD”) appeal the district court’s orders granting summary judgment and

monetary and injunctive relief in favor of the Federal Trade Commission (“FTC”)



        *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
        **
             The Honorable Susan R. Bolton, United States District Judge for the
District of Arizona, sitting by designation.

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on all of its claims under the FTC Act and the Telemarketing Sales Rule (“TSR”).

We review the district court’s grant of summary judgment de novo. Del. Valley

Surgical Supply, Inc. v. Johnson & Johnson, 523 F.3d 1116, 1119 (9th Cir. 2008).

We review the district court’s orders granting equitable relief for an abuse of

discretion. Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1163 (9th

Cir. 2001). We have jurisdiction pursuant to 28 U.S.C. § 1291, and we AFFIRM.

I.    Summary Judgment

      The FTC asserted seven counts against Appellants under the FTC Act and

the TSR. The FTC provided sufficient evidence to show that third party call

centers acting in the names of MSD and other corporate shells in which

MacGregor was involved (“the Companies”) violated the FTC Act and the TSR.

For their part, Appellants did not proffer any survey data or other evidence to

counter the FTC’s evidence. Instead, Appellants provided the affidavits of

MacGregor and Daryl Dupree, the Operations Manager for one of the Companies,

who averred that MacGregor and the Companies did not “knowingly and

intentionally” violate the FTC Act and the TSR. Without any evidentiary support,

both DuPree’s and MacGregor’s statements are conclusory and thus fail to create a

genuine issue of material fact. See FTC v. Publ’g Clearing House, Inc., 104 F.3d

1168, 1171 (9th Cir. 1997).



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      Appellants argue that they wrote procedures and scripts to assure the content

of telemarketing calls, trained and monitored the third party call centers, and

disciplined or terminated callers who did not comply with the procedures and

scripts. However, the evidence Appellants provided in support of this argument

does not demonstrate that the numerous violations of the FTC Act and the TSR did

not occur. Because Appellants provided no affirmative evidence to counter the

FTC’s evidence, it is undisputed that third party call centers acting in the

Companies’ names violated the FTC Act and the TSR. See Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 249-50 (1986); FTC v. Stefanchik, 559 F.3d 924, 929

(9th Cir. 2009).

      Appellants further argue that, even if improper telemarketing calls were

placed by the third party call centers, Appellants have created a genuine dispute as

to whether they are liable for those calls because they never placed or authorized

the calls themselves. The TSR states that “[i]t is a deceptive telemarketing act or

practice and a violation of this Rule for any seller or telemarketer” to engage in

certain abusive conduct. 16 C.F.R. § 310.3(a) (emphasis added). A “seller” is

defined as “any person who, in connection with a telemarketing transaction,

provides, offers to provide, or arranges for others to provide goods or services to

the customer in exchange for consideration.” 16 C.F.R. § 310.2(z) (emphasis



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added).

      The parties do not dispute that MacGregor and the Companies entered into

contracts with third party call centers to place telemarketing calls on behalf of the

Companies. By entering into these contracts and maintaining control over the

product, scripts and quality assurance, Appellants fit the TSR’s description of a

“seller” as one who “arranges for others to provide” a product. See Stefanchik, 559

F.3d at 930. Appellants fail to create a genuine dispute as to whether they are

“sellers” under the TSR, and they are thus subject to its prohibitions. See id.

      In Stefanchik, we stated that, “[u]nder the FTC Act, a principal is liable for

the misrepresentations of his agent acting within the scope of the agent’s actual or

apparent authority.” Id. (citing Southwest Sunsites, Inc. v. FTC, 785 F.2d 1431,

1438 (9th Cir. 1986)). With the contractual authority to sell products in the name

of the Companies following the Companies’ processes and scripts, the third party

call centers had the apparent authority to engage in the acts that were improper

under the FTC Act and the TSR. See id. at 930-31. No genuine issue exists

regarding Appellants’ liability for the acts of the third party call centers.

      Appellants next argue that, even if the FTC’s data are correct regarding

consumer reports of abusive conduct, the data are insufficient to show a “practice”

of engaging in abusive conduct. However, among other data, the FTC provided



                                            4
evidence showing Appellants’ high rates of return, decline, and consumer

complaint, all of which is probative of widespread material misrepresentation and

other abusive conduct. Appellants again failed to produce affirmative evidence to

counter the FTC’s evidence, pointing only to their scripts and written quality

assurance processes. The Court finds that no genuine issue remains regarding the

widespread nature of Appellants’ abusive conduct under the FTC Act and the TSR.

      Finally, Appellants argue that MacGregor should not be liable for monetary

restitution damages as an individual for the acts of the Companies under the FTC

Act. This Court has held that

      [a]n individual is personally liable for a corporation’s [FTC Act]
      violations if he “participated directly in the acts or practices or had
      authority to control them” and “had actual knowledge of material
      misrepresentations, was recklessly indifferent to the truth or falsity of
      a misrepresentation, or had an awareness of a high probability of fraud
      along with an intentional avoidance of the truth.”

FTC v. Cyberspace.com LLC, 453 F.3d 1196, 1202 (9th Cir. 2006) (quoting Publ’g

Clearing House, 104 F.3d at 1170-71); see also FTC v. Amy Travel Serv., Inc., 875

F.2d 564, 573-74 (7th Cir. 1989).

      The FTC provided evidence that MacGregor participated in the operations of

the Companies by writing call center scripts, designing websites, and overseeing

finances, among other things. Appellants did not counter the FTC’s evidence with

anything but conclusory language from MacGregor. The FTC’s evidence that

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MacGregor participated directly in the practices of the Companies is thus

undisputed.

      With regard to MacGregor’s mental state, the FTC provided evidence

showing the high volume of consumer complaints, the high refund and return rates,

and the number of investigations by state Attorneys General and the Better

Business Bureau. The FTC’s evidence is undisputed and sufficient to show that

MacGregor likely knew of material misrepresentations made by the Companies to

consumers, or was at least recklessly indifferent to the truth. See Cyberspace.com,

453 F.3d at 1202; Publ’g Clearing House, 104 F.3d at 1171. No genuine dispute

therefore exists regarding MacGregor’s individual liability for the acts of the

Companies under the FTC Act.

      In sum, the Court concludes that the FTC is entitled to summary judgment

on all of its claims against Appellants MSD and Brian MacGregor as an individual.

II.   Monetary and Injunctive Relief

      Appellants contend that the district court abused its discretion in calculating

the monetary damages because the accounting data used for the calculations were

unreliable and the FTC did not meet its burden to show that the calculations were

reasonable approximations of consumer losses. The Court finds no merit in either

argument. The district court did not abuse its discretion in determining the amount



                                          6
of monetary damages.

      Appellants also assert that the district court abused its discretion by

imposing injunctions that are unconstitutionally overbroad. An injunctive remedy

for a violation of the FTC Act is constitutional if it is “reasonably necessary to the

prevention of future violations and does not impinge upon constitutionally

protected commercial speech.” Litton Indus., Inc. v. FTC, 676 F.2d 364, 373 (9th

Cir. 1982) (quotation omitted). Regulation of commercial speech is permissible “if

the government’s interest in regulation is substantial and if the regulation directly

advances that interest and is not more extensive than necessary.” Id. Because the

injunctions imposed by the district court are reasonably related to Appellants’ past

unlawful conduct, advance the government’s substantial interest in protecting

consumers from fraud, and are not more extensive than necessary, the Court finds

that the district court’s injunctive orders are constitutionally permissible. See FTC

v. Colgate-Palmolive Co., 380 U.S. 374, 394-95 (1965).

      In sum, the Court finds that the district court did not abuse its discretion in

its grant of monetary and injunctive relief against Appellants.

      AFFIRMED.




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