Unreported / Non-Citable
Background
The United States sued NetLatitude, Inc. and other defendants, including Ace Business Solutions, LLC and Sandra Barnes (the Ace Defendants), under the Telemarketing Sales Rule. Count 6 alleges that the Ace Defendants requested or received fees tied to the Provident Solutions Program, which the court describes as exclusively sending debt validation letters, in violation of the rule's advance-fee ban, 16 C.F.R. § 310.4(a)(5)(i). That provision bars sellers and telemarketers from collecting fees for a debt relief service until the debt has been renegotiated or altered and the consumer has made at least one payment under the new terms.
Both sides moved for summary judgment on Count 6. In its earlier order (ECF No. 281), the court found triable issues on whether the Ace Defendants engaged in telemarketing, and so on whether they were sellers or telemarketers, and reasoned that it did not need to reach whether they offered debt relief services. The Ace Defendants asked the court to reconsider that approach. They also argued that the government's responses to Requests for Admission 11 and 12 admitted that they did not induce consumers to buy the program, which would defeat the telemarketing element. The government did not oppose reconsideration of the debt relief issue.
The Court’s Holding
The court denied the motion in full. Reconsideration is warranted only by newly discovered evidence, clear error or manifest injustice, or an intervening change in controlling law, and it is not a vehicle to relitigate settled arguments. On the debt relief question, the court found the government had adduced sufficient evidence that the Ace Defendants received fees for a debt relief service. It pointed to the parties' joint statement that at least two program customers made multiple payments to the Ace Defendants before any debt validation letters were sent, with payments placed in an Ace bank account. It also noted that it had already ruled the program a debt relief service because it is represented, directly or by implication, to renegotiate, settle, or alter the terms of the debt, citing United States v. Stratics Networks Inc.
Because seller or telemarketer status remains triable, the court concluded it did not err in leaving all of Count 6 for trial. It treated the Ace Defendants' contention that they merely validated debt as a jury question. It cited its earlier findings that quality-control call scripts and agents' accounts showed the Ace Defendants' agents reiterating that customers' accounts would be paid in full and offering reduced payments to customers who called to cancel. What the Ace Defendants knew about the program was likewise left to the trier of fact.
On the requests for admission, the court gave three reasons. The Ace Defendants did not raise the issue in the pre-filing conference that the court's Standing Order for Civil Cases § 4(A) requires, which alone sufficed to deny the motion. The responses were not newly discovered evidence. And even if reached, there was no clear error: the government objected that the phrase 'induced the purchase' was vague and ambiguous and answered subject to those objections, so the responses are not conclusive admissions under Federal Rule of Civil Procedure 36(a)(4).
Key Takeaways
- A reconsideration motion may be denied outright when it raises an argument that was not discussed in the pre-filing conference the judge's standing order requires.
- Evidence that could have been found earlier with reasonable diligence is not newly discovered evidence for reconsideration purposes.
- Discovery responses that object to a key term as vague and answer subject to that objection are not treated as conclusive admissions.
- Denying reconsideration here leaves Count 6 for trial; it does not establish liability against the Ace Defendants.
Why It Matters
The order is a ruling on reconsideration in a pending case, not a final judgment, and it decides no one's liability. Its practical effect is that Count 6 proceeds against the Ace Defendants, with the court finding enough evidence, for present purposes, that the program was a debt relief service. Whether the Ace Defendants were sellers or telemarketers, whether they induced consumers, what they knew, and whether any fees violated the advance-fee conditions remain for the factfinder.
For litigants, the decision shows strict enforcement of a judge's meet-and-confer requirement, a narrow view of reconsideration, and how objection-qualified admission responses may be read. As a district court order, it does not bind other courts.