Case 8:08-cv-02062-JDW-AEP Document 111 Filed 05/04/10 Page 1 of 6 PageID 1259
UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
____________________________________
)
FEDERAL TRADE COMMISSION )
)
Plaintiff, ) Case No. 8:08-cv-2062-T-27AEP
)
v. )
)
RCA CREDIT SERVICES, LLC )
a Florida Corporation; and )
)
RICK LEE CROSBY, JR., individually, )
and as an officer or manager of )
Defendant; and )
)
BRADY WELLINGTON, individually, )
and as an officer or manager of )
Defendant; )
)
Defendants. )
____________________________________)
PLAINTIFF’S REPLY TO DEFENDANT’S AFFIDAVIT IN OPPOSITION
TO PLAINTIFF’S DISPOSITIVE MOTION FOR SUMMARY JUDGMENT
I. INTRODUCTION
Plaintiff Federal Trade Commission (“FTC”) hereby submits its Reply to Defendant
Rick Lee Crosby, Jr.’s (“Crosby”) response to the FTC’s Motion for Summary Judgment
(“Mot. Summ. J.”), styled “Defendant’s Affidavit in Opposition to Plaintiff’s Dispositive
Motion for Summary Judgment” (“Opp.”). On the merits of the case, Crosby has not raised
any genuine issue of material fact and the FTC is entitled to judgment as a matter of law on
all counts. Accordingly, the Reply is limited to certain aspects of the FTC’s requested relief.
1
Case 8:08-cv-02062-JDW-AEP Document 111 Filed 05/04/10 Page 2 of 6 PageID 1260
In his Opposition, Crosby argues that FTC’s proposed ban on the sale of credit repair
products and services “would be a violation of my First Amendment Right to freedom of
speech.” Opp. p. 6. Although the proposed ban is sufficiently tailored to directly advance a
substantial government interest in preventing Defendant from deceiving consumers, and thus
Constitutionally valid, the FTC proposes a modification to the [Proposed] Final Judgment
and Order (“Proposed Order”) that is more narrowly tailored to prevent the type of deceptive
conduct in which Crosby has been engaging. A revised Proposed Order is attached to this
motion as Exhibit 1.
II. ARGUMENT
It is axiomatic that “commercial speech does not receive the same degree of
constitutional protection as other forms of constitutionally guaranteed expression, and the
former may be forbidden and regulated in situations where the latter may not be.” Supersign
of Boca Raton, Inc. v. City of Fort Lauderdale, 776 F.2d 1528, 1530 (11th Cir. 1985). The
Supreme Court has set forth a four-part analysis when the government seeks to restrict
commercial speech. First, the speech “must concern lawful activity and not be misleading.”
Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of New York, 447 U.S. 557, 566
(1980) (emphasis added). Second, the court must ascertain if the asserted government
interest is substantial. See id. If the first two conditions are met, the court then determines
“if the regulation directly advances the governmental interest asserted[.]” Id. Lastly, the
court determines if the restriction is “not more extensive than is necessary to serve that
2
Case 8:08-cv-02062-JDW-AEP Document 111 Filed 05/04/10 Page 3 of 6 PageID 1261
interest.” Id.1
The FTC’s proposed ban on advertising or selling credit repair products and services
is valid because of the government’s substantial interest in preventing deceptive advertising.
See United States v. Readers Digest Ass’n, 464 F. Supp. 1037, 1051 (D. Del. 1978) (“The
Government’s interest in preventing the use of deceptive advertising is a legitimate and
important one.”). The proposed ban directly advances this interest and is sufficiently tailored
in light of Defendant’s pervasive misrepresentations and continued involvement in the sale
of deceptive credit repair services. As noted in the FTC’s Summary Judgment brief, during
the over 3 years Crosby ran his credit repair business, he continuously made deceptive
representations in telephone conversations, websites and emails. See Mot. Summ. J. at 5-8.
Moreover, even after the Court entered a Preliminary Injunction prohibiting Crosby from
making misrepresentations about credit repair goods and services, Crosby associated himself
with a new credit repair business making similar claims. See id at 18-19. Accordingly, the
FTC’s proposed ban is valid. See FTC v. Gill, 265 F.3d 944, 957 (9th Cir. 2001) (affirming
district court’s permanent prohibition on defendant’s engaging in credit repair business
where defendant, inter alia, made systematic misrepresentations and continued to operate
credit repair business in violation of a preliminary injunction).
Although not clearly articulated, it appears that Crosby’s concern is that the Proposed
Order’s ban on credit repair products could be read to prohibit him from disseminating
lawful methods of improving an individual’s credit score. As discussed above, the ban as set
1
The prohibition need not be the least restrictive means.
3
Case 8:08-cv-02062-JDW-AEP Document 111 Filed 05/04/10 Page 4 of 6 PageID 1262
forth in the proposed order is narrowly tailored to the circumstances of this case.
Nonetheless, the FTC now proposes modified order language that prohibits false and
misleading representations that are not protected speech. See Miller v. Stuart, 117 F.3d
1376, 1382 (11th Cir. 1997) (noting that “[t]he government may completely ban false and
inherently misleading commercial speech”).
Section I of the FTC’s modified Proposed Order provides for a total ban on
Defendant’s advertising, marketing, promoting or sale of credit repair services. As noted
above, such a ban is valid because of the government’s substantial interest in preventing
deceptive advertising and Crosby’s extensive and continued use of misleading advertising for
credit repair services. See Gill, 265 F.3d at 957.
In Section II, the FTC no longer proposes a total ban on credit repair products, but
instead prohibits certain claims that are false. As explained in the FTC’s Motion for
Summary Judgment, assertions that consumers can improve their credit scores “into the 700s
in as little as 30 days” or “remove any or all negatives” are false and deceptive. See Mot.
Summ. J. at 10-14. Additionally, Crosby has advised individuals to obtain a Taxpayer
Identification Number or Employer Identification Number to use in lieu of that person’s
Social Security Number for the purpose of concealing adverse credit information. For
instance, in an email to Ronald L. Wray, Crosby states that his credit repair program will
provide instructions on how to obtain “a NEW 9-Digit Number that can be used for building
credit with credit cards, bank loans, mortgage loans, auto loans ect. [sic].” Ex. 2. p.2.
Advising an individual to obtain a number to use in lieu of a Social Security number for
4
Case 8:08-cv-02062-JDW-AEP Document 111 Filed 05/04/10 Page 5 of 6 PageID 1263
applications for credit is a common credit repair scam that is specifically prohibited by
Section 404(a)(2) of the Credit Repair Organizations Act, 15 U.S.C. § 1679b. Because all of
these claims are false or concern unlawful activity, they do not enjoy Constitutional
protection. See Central Hudson, 447 U.S. at 563-64 (“The government may ban forms of
communication more likely to deceive the public than inform it, or commercial speech
related to illegal activity.”); FTC v. Stefanchik, 2004 WL 5495267, *2 (W.D. Wash. Nov. 12,
2004) (“The law is well settled that, once speech is deemed to be false, misleading and
commercial, it is not constitutionally protected.”). Accordingly, the Court should prohibit
Defendant from making these claims in any manner.
III. CONCLUSION
WHEREFORE, the Commission respectfully requests that the Court grant its Motion
for Summary Judgment against Defendants RCA Credit Services, LLC and Rick Lee Crosby,
Jr.
Respectfully submitted,
______/s/ James L. Chen____________
Peter Lamberton
K. Michelle Grajales
James L. Chen
Federal Trade Commission
601 N.J. Avenue, NW
Washington, DC 20001
Telephone: (202)326-3274;(202)326-3172;
(202) 326-2659
Facsimile: (202) 326-3768
E-Mail:
[email protected];
[email protected];
[email protected] Attorneys for Plaintiff
Federal Trade Commission
5
Case 8:08-cv-02062-JDW-AEP Document 111 Filed 05/04/10 Page 6 of 6 PageID 1264
CERTIFICATE OF SERVICE
I, James L. Chen, hereby certify that on May 4, 2010, I electronically filed the
foregoing Plaintiff’s Reply to Defendant’s Affidavit in Opposition To Plaintiff’s Dispositive
Motion for Summary Judgment on the Court’s ECF system and served pro se Defendant
Rick Lee Crosby Jr. by Federal Express at 10426 65th Avenue North, Seminole, FL 33772.
___/s/_James L. Chen_______
James L. Chen
Federal Trade Commission
601 New Jersey Avenue, NW
Washington, DC 20001
Tel: (202) 326-2659
Fax: (202) 326-3629
Email: [email protected]
Attorney for Plaintiff
Federal Trade Commission
