Unreported / Non-Citable
Background
The United States moved for reconsideration and clarification of the court's order resolving the parties' summary-judgment motions. The earlier order denied the government summary judgment on Count 6, which concerned the Telemarketing Sales Rule's restrictions on requesting or receiving fees for debt relief services before specified performance and consumer payment. The dispute involved Sandra Barnes and Ace Business Solutions, LLC, collectively the Ace Defendants, and their role in the Provident Solutions Program.
The government argued that the court had misread the TSR definitions of "seller" and "telemarketer." It contended that "in connection with" extended those definitions to actors with some relationship to inducement, and that "plan," "program," and "campaign" extended telemarketer liability beyond the person conducting the actual inducement. It also maintained that providing or arranging services did not necessarily require consumer contact, inducement, or telemarketing.
Separately, the government sought clarification of duplicative language in the injunction provisions concerning the Atlas Defendants. The court's earlier conclusion had erroneously duplicated the phrase "Debt Relief Services" across its prohibitions on telemarketing and debt relief services. The government asked the court to confirm that the order awarded two distinct forms of injunctive relief against the Atlas Defendants.
The Court’s Holding
The court denied in part the reconsideration request. It applied the demanding standards for newly discovered evidence, clear error, manifest injustice, or an intervening change in controlling law, emphasizing that reconsideration is not an opportunity to relitigate decided issues. It found no clear error in its earlier conclusion that disputes over whether the Ace Defendants induced enrollment left triable issues about whether they engaged in telemarketing and qualified as sellers or telemarketers under the TSR.
The court also rejected the government's seller argument for two independent reasons. First, the government had not argued at summary judgment that the Ace Defendants arranged for others to provide debt relief services, and the earlier order expressly reserved that issue. Reconsideration could not be used to introduce an argument that reasonably could have been raised earlier. Second, even if a seller need not personally conduct telemarketing or inducement, disputes remained about the Ace Defendants' actual role, including enrollment timing, Quality Control calls, referrals to the Atlas Defendants, and retention calls.
The court granted in part the clarification request. It confirmed that the earlier order awarded injunctive relief against the Atlas Defendants consisting of both a permanent ban on debt relief services and a permanent ban on telemarketing. It restated the two prohibitions separately, correcting the conclusion's erroneous duplication of "Debt Relief Services." The clarification addressed the scope and wording of the awarded relief; it did not grant the requested reconsideration of the summary-judgment rulings.
Key Takeaways
- Reconsideration was denied in part because the government did not establish clear error in the earlier finding of triable issues concerning the Ace Defendants' TSR status.
- The court declined to consider the newly advanced theory that the Ace Defendants were sellers by arranging for others to provide services because that theory had not been presented at summary judgment.
- Even setting aside the procedural forfeiture, factual disputes about enrollment, Quality Control calls, and retention calls prevented the government from showing clear error.
- The court granted in part the clarification request and confirmed that the Atlas Defendants are subject to distinct permanent bans on debt relief services and telemarketing, including specified conduct by them and persons acting in active concert or participation with them.
- The clarification did not disturb the court's denial of summary judgment on Count 6 or its other summary-judgment rulings.
Why It Matters
The order preserves the earlier summary-judgment outcome rather than deciding the Ace Defendants' ultimate liability. Their involvement in the Provident Solutions Program remains factually disputed, including whether their activities amounted to inducement or otherwise satisfied the relevant TSR definitions. The government's broader textual arguments therefore did not eliminate the need to resolve those disputes.
The clarification is also important because injunctions are construed narrowly and cannot prohibit conduct beyond their plain terms. By separating the debt-relief-services ban from the telemarketing ban, the court removed the duplicative wording and expressly confirmed both components of the relief against the Atlas Defendants. The order thus resolves a drafting ambiguity without altering the substantive scope of the earlier summary-judgment decision.