T hi s di s pos i t i on i s notappr opr i a t e f orpubl i c a t i on a nd i s notpr e c e de nt * e xc e pta s pr ovi de d by9th C i r . R . 36- 3. NOT F OR P UB L I CAT I ON UN I TE D STATE S C OU RT OF APPE ALS FOR T HE NI NTH CI RC UI T F E DE R AL T R AD E C OMMI S S I ON , P l ai nt i ff

- A pp el l ee , v. TH O M A S W ELLS, D e f

e n d a n t - A p p e lla n t, v. I N T E R B I L L , L T D ., D efen d an t -th i rd -p artyp la in tif f - A p p e lla n t, v. WE L L S F AR GO B AN K N AT I ON AL AS S OC I AT I ON , T h ir d - p a rty - d e f e n d a n t. N o. 09- 16179

D . C . N o . 2 : 0 6 - c v - 0 1 6 4 4 - J C MP AL ME MOR AN DU M *

A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt

f orthe D i s tr i c tof

N e va da J a m e s C . M a ha n, D i s tr i c tJ udge , P r e s i di ng 

# FI LED JU N 28 2010 M OLLY C. DW Y ER, CLERK U . S. C O U R T OF APPE ALST he H onor abl e T i m othyM . T y m kovi c h, U ni t e d S t a t e s C i r c ui tJ udge f or ** the T e nth C i r c ui t , s i tt i ng byde s i gna t i on. 2 A r gue d a nd S ubm i tt e d J une 17, 2010 S a n F r a n c is c o , C a lif

o rn ia B e f o r e : H A W K I N S a n d F I S H E R , C ir c u it J u d g e s , a n dT Y M K O V I C H , C ir c u it Judg e. ** T hom a s W e l l s a nd I nt e rbi l l L t d. ( “ A ppe l l a nt s ” ) appe a l f r om j udgm e nt e nt e r e d i n a n a c t i on unde rS e c t i on F i ve of the F e de r a l T r a de C om m i s s i on A c t , 15 U . S . C . § 45. T he di s tr i c tc ourtf ound tha tA ppe l l a nt s ha d e nga ge d i n unf a i rtr a de p r a c tic e s b y“p r o c e s s in g d e b it tr a n s a c tio n s to c o n s u m e r s ’ b a n ka c c o u n ts , w h ile kn ow i ng or consci ou sl y avo i di ng kn ow i ng thattho se debi ttransac t i on s w er e un autho ri ze d b y c on sum er s” and o rder ed $1 , 77 9, 70 0 i n res t i tut i on and b road i n j u n c t i v e r e l i e f

. W e a f f i rm. T he di stri ctcourtdi d n oterr by i m po si ng l i abi l i ty bas ed on a f i nd i ng that A ppe l l a nt s kne w orc ons c i ous l ya voi de d know i ng tha tthe yw e r e f a c i l i t a t i ng unauthor i z e d tr a ns a c t i ons . A n unf a i rpr a c t i c e doe s notr e qui r e know l e dge of consum erharm and m aym er el y “ fa ci l i t at e, or contri bu t e t o, i l l i nt ent i on ed sc hem es i f the i nj ury w as a pre di ct abl e c on se qu ence of tho se ac t i on s. ” F TCv. N eovi, Inc. , N o . 0 9 - 5 5 0 9 3 , 2 0 1 0 W L 2 3 6 5 9 5 6 , a t * 5 ( 9 th C ir . J u n e 1 5 , 2 0 1 0 ) . O ve rw he l m i ng a nd undi s put e d e vi de nc e s how s tha tA ppe l l a nt s ’ r ol e i n f a c i l i t a t i ng3

the P harm ac yC ar ds prog ram re sul t ed i n u nautho ri ze d transac t i on s. W el l s r ec ei ved i m m edi at e r eport s of f

raud and n ot i ce of char ge-backs at10 t o 2 0 t i m es the ra t es g e n e r a llyp e rm itte d f

o rc r e d it c a r da n dd ir e c t d e p o s it tr a n s a c tio n s . H e a ls o f a ile d to c onduc tr e a s onabl e due di l i ge nc e a nd di d notr e a c tt o r e c e i ptof f ul f i l l m e nt m a t e r i a l s tha tdi d notm a t c h the pr ogr a m he be l i e ve d he w a s s e rvi c i ng. C a rry i ng o u t u n au th o r iz e d tr a n s a c tio n s w a s a n u n f a irp r a c tic e . See 1 5 U .S .C . § 4 5 ( n ) ; N eovi , 2 0 1 0 W L 2 3 6 5 9 5 6 , a t * 6 - * 7 . T he di s tr i c tc ourtdi d notabus e i t s di s c r e t i on byor de r i ng r e s t i tut i on f orthe f u ll a m o u n t o f

c o n s u m e rlo s s jo in tlya n ds e v e r a llya g a in s t I n te r B ill a n dW e lls . T ot al consum erl oss i s an app ropri at e m ea sure of re st i tut i on un der the F T C A ct, s e e F TCv . G ill , 265 F . 3d 944, 958 ( 9th C i r . 2001) , a nd adi s tr i c tc ourtne e d not e x c lu d e c o s ts in c u rr e d in c a rry in g o u t u n f a irp r a c tic e s f

r o m th e r e s titu tio n o r d e r . See N eovi , 2010 W L 1930229, a t*7- *8. T he F T C m a ys e e k f ul l r e s t i tut i on f

r om a n yin d iv id u a l w h o c au s e d c o n s u m e rh a rm th r o u g h u n f a irp r a c tic e s . See F TCv. P antr on I

C or p. , 33 F . 3d 10 88 , 11 01 -04 (9th C i r. 19 94 ). F i nal l y, the di stri ctcourtdi d n otabuse i t s di sc re t i on by ent er i ng a broad pr ohi bi t oryi nj unc t i on a ga i ns tA ppe l l a nt s . T he F T C A c tauthor i z e s i m pos i t i on of c o m p r e h e n s iv e p r o p h y la c tic in ju n c tiv e r e lie f

a f te rap r o p e rf

in d in g th a t d e f

e n d a n ts h a v e e n g a g e d in u n f

a irp r a c tic e s a n dh a rm e dc o n s u m e r s . Se e, e . g. , F TCv.4

R ube r oi d C o. , 3 4 3 U .S . 4 7 0 , 4 7 3 ( 1 9 5 2 ) ; Tr a n s W o r ld Ac c o u n t s , I n c . v . FTC , 594 F .2 d 2 1 2 , 2 1 5 ( 9 th C ir . 1 9 7 9 ) . A FFI R M ED .