Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-00390/USCOURTS-azd-2_11-cv-00390-6/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:0045 Federal Trade Commission Act

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

United States of America, 

Plaintiff, 

vs.

Business Recovery Services, LLC; Brian

Hessler, 

Defendants. 

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No. CV 11-0390-PHX-JAT

ORDER

Pending before the Court is Plaintiff’s Motion for Entry of Judgment (Doc. 160). The

Court now rules on this motion.

I. Background

Defendant Business Recovery Services (“BRS”) is an Arizona limited liability

company with its principal place of business in Maricopa County. Defendant Brian Scott

Hessler is the owner of BRS (collectively referred to herein as “Defendants”).

Defendants sell goods and services, including “recovery kits,” that they state allow

customers to recover funds that consumers have lost in previous transactions. Some of the

customers who purchase Defendants’ recovery kits lost money or other items of value in

previous telemarketing transactions.

Plaintiff filed a Motion for a Preliminary Injunction (Doc. 5) to enjoin Defendants

from violating the Telemarketing Sales Rule. After holding a hearing on April 5, 2011,

Case 2:11-cv-00390-JAT Document 183 Filed 07/26/12 Page 1 of 4
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the Court granted the Plaintiff’s Motion. The Court enjoined Defendants from: 

requesting or receiving payment of any fee or consideration from a person

for goods or services represented to recover or otherwise assist in the return

of money or any other item of value paid by that person in a previous

telemarketing transaction, until seven (7) business days after such money or

other item is delivered to that person.

(Doc. 34 at 8.)

On May 24, 2011, Plaintiff moved for an order to show cause why Defendants

should not be held in contempt for violating the preliminary injunction, and on October

17, 2011, after a hearing and a full briefing on the issue, the Court held Defendants in

civil contempt. (Doc. 117). As part of that holding, the Court granted Plaintiff its

attorneys’ fees associated with the contempt proceedings as a sanction against

Defendants. 

On November 5, 2011, Defendants filed a notice of appeal in which they appealed

the Court’s contempt ruling as well as the Court’s rejection of a request to modify or

dismiss the preliminary injunction. (Doc. 128). On June 20, 2012, the Court of Appeals

for the Ninth Circuit affirmed the denial of the motion to modify or dissolve the

preliminary injunction. United States v. Bus. Recovery Servs., LLC, No. 11-17677, at *3

(9th Cir. June 15, 2012). In that opinion, the Circuit Court also ruled that they did “not . . .

have jurisdiction over the contempt order.” Id. Plaintiff now moves the Court to enter

judgment pursuant to Rule 58 of the Federal Rules of Civil Procedure (Rule 58) on the

attorneys’ fees order.

II. Analysis

Plaintiff asserts that Rule 58 of the Federal Rules of Civil Procedure should apply

in this case. Part (d) of that Rule reads: “[a] party may request that judgment be set out in

a separate document as required by Rule 58(a).” Fed. R. Civ. P. 58(d). Section (a) of Rule

58 indicates “[e]very judgment and amended judgment must be set out in a separate

document, but a separate document is not required for an order disposing of a motion . . .

(3) for attorney’s fees under Rule 54.” Fed. R. Civ. P. 58(a)(3). Plaintiff cites to a split of

authority regarding whether or not the exception listed in Rule 58(a)(3) applies to an

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award of attorneys’ fees ordered as a sanction. (Doc. 160 at 2-3). Plaintiff first cites to a

Seventh Circuit opinion indicating that awards of attorneys’ fees, whether explicitly

arising under Rule 54 or not, do not require a separate judgment pursuant to the Rule

58(a)(3) exception. Feldman v. Olin Corp., 673 F.3d 515, 517 (7th Cir. 2012) (“Rule 58

should not be read to mean that some motions for awards of attorneys' fees are ‘under’

Rule 54 and others are ‘under’ something else and therefore require a separate judgment

document”). That court held that Rule 54 does not create a right to claim attorneys’ fees,

but instead outlines the appropriate procedure for enforcing such a right to attorneys’ fees.

Id. The court found that a sanction in the form of attorneys’ fees was indeed “under Rule

54” if it followed Rule 54 procedures. Id. 

Plaintiff next cites to a New York District Court opinion that held that a court

should enter a judgment on an order for attorneys’ fees awarded as a sanction. Burgie v.

Euro Brokers, Inc., 2008 WL 4185701 at *8 (E.D.N.Y. Sept. 8, 2008)(“[c]ourts routinely

enter judgment in the amount of sanctions when an attorney fails to satisfy the amount of

the sanction award, even when the overarching litigation is not yet terminated”). The

court in Burgie appears to have read Rule 58(a)(3) to be inapplicable to attorneys’ fees

awarded as sanctions. Id. at 7 (See “Rule 58(a), in turn, provides that ‘[e]very judgment

and amended judgment must be set out in a separate document,’ with exceptions not

relevant herein.”) (emphasis added). The Court finds this non-binding District Court

opinion unpersuasive.

The Court, in the absence of Ninth Circuit law, agrees with the reasoning of the

Seventh Circuit. The Court ordered Plaintiff to comply with Local Rule of Civil

Procedure 54.2 when filing its motion for attorneys’ fees associated with the contempt

proceedings. (Doc. 117). Rule 54.2 was designed to be consistent with Rule 54. Fed. R.

Civ. P. 83(a)(1). Because Plaintiff’s motion for fees was made in a manner consistent

with the procedures listed in Rule 54, the exception contained in Rule 58(a)(3) should

apply. The Court does not need to enter a separate judgment on the attorneys’ fees order

and therefore will not do so.

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The Court’s conclusion here does not free Defendants from their obligation to pay

Plaintiff its attorneys’ fees of $33,064.87 pursuant to the Court’s Order of March 8, 2012

(Doc. 155). Plaintiff does not need a separate judgment to collect on its award of fees.

Defendants are required to pay pursuant to the Court’s earlier award of attorneys’ fees.

(Doc. 155).

III. Conclusion

Based on the foregoing,

IT IS ORDERED denying Plaintiff’s Motion for Entry of Judgment (Doc. 160) as

unnecessary.

DATED this 26th day of July, 2012.

Case 2:11-cv-00390-JAT Document 183 Filed 07/26/12 Page 4 of 4