In November, the Success by Health defendants filed an appeal with the Ninth Circuit. They wanted the preliminary injunction to be thrown out.
The Ninth Circuit’s decision came out on July 26. It upheld the District Court’s decision to deny the motion to end the preliminary injunction.
On September 22, the Ninth Circuit’s decision in the case FTC v. Success by Health was put in the case file.
The Ninth Circuit wrote the following to back up the decision to deny the Success by Health defendants permission to end the preliminary injunction:
Even though the Supreme Court hadn’t made a decision when this appeal was filed, the Defendants-Appellants say that the Court’s decision to grant the petition for writ of certiorari in AMG Capital Management, LLC v. FTC changed the law in a big way.
The district court was right to come to the opposite conclusion, so we agree with its decision not to dissolve or change the preliminary injunction.
When the AMG decision came out earlier this year, many companies that were in court with the FTC were happy about it.
But people were wrong to think that the AMG decision would cause FTC cases to fall apart.
Even though financial penalties have been limited, the FTC is still seeing the cases through to the end.
After the Ninth Circuit Court upheld the preliminary injunction, it sent the case back to the District Court, writing;
We give the district court the first chance to decide if and how the AMG Capital Management, LLC v. FTC decision affects the preliminary injunction.
Before, the District Court was worried about its own power without a decision from the Ninth Circuit. However, on September 23, a new order gave the preliminary injunction and asset freeze.
It has been decided:
(1) The FTC’s request for a preliminary injunction, asset freeze, and receivership is granted.
(2) The Individual Defendants’ request to end the preliminary injunction and stop or end the proceedings under Section 13(b) is denied.
The AMG decision is sidestepped by the new preliminary injunction and asset freeze.
The main goal of (the FTC’s) motion is to keep the preliminary injunction that was issued in February 2020. It does this by pointing out other reasons for relief that do not involve AMG Capital.
In the summary judgment order, the Court has already found that the Individual Defendants broke 19 and are responsible for any financial damage caused by those violations.
Summary judgment has already shown that the 19 claims against the individual defendants are true.
In the end, the FTC has given a good reason why a big damage award may be coming soon.
The Individual Defendants’ arguments for dissolving the case and having it thrown out are based on a false premise.
Also, the now-proven violations of 19 make the asset freeze fair.
When the SBH defendants tried to end the Receivership, they couldn’t because they couldn’t get money from Section 13(b), the court wrote:
The Court agrees with the FTC that AMG Capital doesn’t hurt the part of the original order that said a preliminary injunction should be given to a receiver.
The purpose of the receivership wasn’t just to keep the assets safe in case the FTC’s 13(b) claims led to a future award of monetary remedies. On the contrary, one of the main reasons the Court ordered the receivership was to keep harm from happening now and in the future by removing the Individual Defendants from their management positions in entities that were likely running pyramid schemes and making false income claims.
In other news, the legal team for Success by Health is falling apart.
One of the lawyers for the Success by Health defendants asked to leave the case last month.
The reason given is that the law firm that represented the defendants broke up into two smaller firms.
On September 22, the motion to pull out was approved. This meant that the people being sued by Success by Health only had two lawyers.
On its own, this wasn’t news. But on October 1, one of the lawyers who was still there filed a motion to quit.
The reason given for the request to pull out was
how much money it will cost each defendant to pay for a lawyer because of this court’s orders.
Both the FTC and the former receiver, who was also a lawyer for the corporate defendants, have fought hard against letting the individual defendants use their assets for living expenses or legal costs.
Unfortunately, this means that if the law firm keeps working without getting paid the many hundreds of thousands of dollars it is owed, it will have to stop representing the individual defendants because it will be too much of a financial burden.
It looks like the law firm was counting on the courts to rule in their favor.
We already knew from court documents that Jay Noland (on the right) had raised just under $600,000 from SBH affiliates to pay for his legal fees.
It’s not clear if that money has run out or if it was spent on something else.
Based on the motion to withdraw;
Each of the defendants has hired a new lawyer to help them with this case.
Since the motion was only made yesterday, it hasn’t been approved yet.
The new lawyers for Success by Health have not yet filed an appearance.
On September 23, the Success by Health defendants also asked for the summary judgment order to be looked at again.
This month, a decision is likely to be made on that motion.
Change on October 24, 2021 – On October 19, the judge agreed to the attorney’s request to quit.
Update: On October 30, 2021, the request to look over the summary judgment order again was turned down.