UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

COMMISSIONERS: Lina M. Khan, Chair 

Noah Joshua Phillips 

Rebecca Kelly Slaughter 

Christine S. Wilson 

Alvaro M. Bedoya 

In the Matter of 

HomeAdvisor, Inc., a corporation, 

d/b/a Angi Leads, DOCKET NO. 9407 

d/b/a HomeAdvisor Powered by Angi. 

OPINION FOLLOWING ORDER DENYING SUMMARY DECISION 

By Chair Lina M. Khan, for the Commission: 

On April 7, 2022, Complaint Counsel moved for summary decision on all counts of the 

Complaint in this matter alleging that Respondent engaged in unfair or deceptive acts or 

practices in violation of Section 5(a) of the Federal Trade Commission Act, 5 U.S.C. § 45(a). 

Respondent opposed the motion. On August 2, 2022, the Commission issued an Order denying 

summary decision. Below, we explain our reasoning for that denial and address certain of 

Respondent’s affirmative defenses raised in its opposition brief. 

I. BACKGROUND 

A. HomeAdvisor’s Business 

Respondent HomeAdvisor, Inc., also doing business as Angi Leads and HomeAdvisor 

Powered by Angi, is a Delaware corporation with its principal offices or places of business in 

Colorado. CCSF ¶ 2; RCCSF ¶ 2; Answer ¶ 1.1 It seeks to connect homeowners nationwide 

1 We use the following abbreviations: 

Compl. Complaint 

Answer Answer and Defenses of Respondent HomeAdvisor, Inc. 

1 
user is "the owner or authorized to make ro e1 chanoes." Com 1. 32· Answer 32. 

with local professional service providers across an an ay ofhome service tasks, from handyman 

work and plumbing to landscaping and full-home remodels. See Answer at 2-3; RSF ,i 28. 

Stated briefly, HomeAdvisor collects info1m ation about potential customers for home se1vices 

(i.e., homeowners),2 runs that infonnation through various checks, and then potentially sells the 

info1mation to se1v ice providers in its network in the fonn ofa "lead." Answer ,i 4; RCCSF 

,i,i 11-13. 

Approximately. ofthe leads that HomeAdvisor sells are generated from info1mation 

submitted by visitors to HomeAdvisor's websites. CCSF ,i 4; RCCSF ,i 4; Compl. ,i 10; Answer 

,i 10; PX0028 (Smith Tr. 23:7-18). At the time ofthe Complaint, HomeAdvisor 's website 

homeadvisor.com stated: "Find bu sted local pros for any home project" and prompted visitors to 

enter their contact info1m ation and answer a series of questions about their potential projects. 

Compl. ,i 10; Answer ,i 10. Among the questions that users must typically answer are questions 

about their project status and timeframe. One question asks whether the project status is "Ready 

to Hire" or only "Planning & Budgeting." Compl. ,i 32; Answer ,i 32. Another asks when the 

user would like the project completed ( e.g., "Timing is flexible," "Within 1 week," "1-2 weeks," 

or "More than 2 weeks"). Compl. ,i 32; Answer ,i 32. Yet another question asks whether the 

HomeAdvisor also sells leads that are generated based on info1mation provided by 

homeowners over the phone. Compl. ,i 15; Answer ,i 15; see also RSF ,i 30. HomeAdvisor 's 

telephone-generated leads contain the same types ofinfo1mation as leads from HomeAdvisor's 

website. Compl. ,i 15; Answer ,i 15. A HomeAdvisor corporate witness testified that 

approximately 5-10% ofleads HomeAdvisor sells to se1vice providers are generated from 

info1mation submitted telephonically to a HomeAdvisor representative. PX0028 (Smith Tr. 

26: 14-19); see also CCSF ii 4; RCSF ii 4. 

Mot. 

Opp. 

Reply 

CCSF 

RCCSF 

RSF 

OralArg. 

Memorandum in Support ofComplaint Counsel's Motion for Swumary Decision 

Respondent HomeAdvisor, Inc. 's Memorandum ofLaw in Opposition to Complaint 

Counsel's Motion for Summruy Decision 

Reply Memorandum in Support ofComplaint Counsel's Motion for Summruy Decision 

Complaint Cow1sel's Statement ofMaterial Facts as to Which There Is No Genuine Issue 

for Trial 

Respondent's Responses to Complaint Counsel's Statement ofPurpo1t edly Undisputed 

Facts (Part Two ofRespondent's Statement ofMaterial Facts for Which There Is a 

Genuine Issue for Trial) 

Respondent's Counterstatement ofMaterial Facts for Which There Is a Genuine Issue for 

Trial (Prut One ofRespondent's Statement ofMaterial Facts for Which There Is a 

Genuine Issue for Trial) 

Oral Argument Transcript (July 21, 2022) 

2 For ease ofreference, we refer to these potential customers for home services as "homeowners," although we 

recognize that not all ofthem actually own the home for which they may be seeking services. 

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In addition, HomeAdvisor sells leads that originate from third-party affiliates. Compl. 

¶ 14; Answer ¶ 14; see also RSF ¶ 30. Approximately of the leads transmitted to service 

providers are sourced from affiliates. CCSF ¶ 4; RSF ¶ 150. 

HomeAdvisor sells several types of leads, including Market Match leads, Exact Match 

leads, and Instant Booking leads. RCCSF ¶ 10. As HomeAdvisor explains, a Market Match lead 

is a blind match between the homeowner and service providers.} PX0044-0007. HomeAdvisor 

sells a Market Match lead to service providers in its network who are profiled to 

perform the type of work specified in the service request in the relevant geographic area. See 

CCSF ¶ 11; RCCSF ¶ 11. The service providers then contact the homeowner to try to win the 

homeowner’s business. See PX0044-0005. An Exact Match lead, on the other hand, allows a 

homeowner to view a directory of HomeAdvisor service providers and submit a service request 

lead directly to one or more service providers of the homeowner’s choice. PX0044-0008; see 

also Compl. ¶ 13; Answer ¶ 13; CCSF ¶ 12; RCCSF ¶ 12. For an Instant Booking lead, a visitor 

makes an appointment with a specific service provider via a web-based application. 

to late 2020, approximately 

Compl. 

¶ 13; Answer ¶ 13. As of mid- of the leads HomeAdvisor sold 

to service providers were Market Match leads, were Exact Match leads, and fewer than 5% 

were Instant Booking leads. CCSF ¶ 10; RCCSF ¶ 10. 

HomeAdvisor automatically bills its service providers for each Market Match and Exact 

Match lead that it sends them, regardless of whether such leads convert into jobs for the service 

provider. CCSF ¶ 14; RCCSF ¶ 14. With respect to Instant Booking leads, a service provider is 

obligated to pay at the point the homeowner confirms a booked appointment with the service 

provider based on the service provider’s availability calendar posted on HomeAdvisor’s website. 

RCCSF ¶ 14. 

Market Match lead fees vary depending on the type and geographic location of the 

project, but they generally cost less than Exact Match and Instant Booking leads. Compl. ¶ 19; 

Answer ¶ 19. Between July 2014 and September 2019, the average price of a lead, across lead 

types, tasks, and locations, was approximately . RCCSF ¶ 16; Compl. ¶ 19; Answer ¶ 19. 

In order to receive leads from HomeAdvisor, service providers must join HomeAdvisor’s 

network by purchasing a membership, and they must pass a background check. CCSF ¶¶ 17-18; 

RCCSF ¶¶ 17-18. HomeAdvisor offers several different types of memberships. RCCSF ¶ 17. 

One such membership, offered until January 2020, cost $347.98 annually and included a onemonth subscription to mHelpDesk, a software that assists service providers with tasks such as 

scheduling appointments and processing payments. CCSF ¶¶ 20, 22; RCCSF ¶¶ 20, 22; Answer 

¶¶ 7, 58. After the first month, those service providers were billed $59.99 monthly for 

mHelpDesk unless they cancelled their subscription to mHelpDesk. CCSF ¶ 21; RCCSF ¶ 21; 

Compl. ¶ 18, Answer ¶ 18. HomeAdvisor also offered a stand-alone annual membership for 

$287.99 if a service provider did not want a one-month subscription to mHelpDesk. CCSF ¶ 23; 

RCCSF ¶ 23; RCCSF ¶ 20; see also Compl. ¶ 58; Answer ¶ 58. In or about January 2020, 

HomeAdvisor ceased offering mHelpDesk to prospective service providers. RCCSF ¶ 22; 

Answer ¶ 54. 

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The majority ofse1vice providers in HomeAdvisor's network are small businesses and 

local proprietorships. Answer ,r 5. Cf RCCSF ,r 36. A se1vice provider can only join 

HomeAdvisor's network by speaking to a HomeAdvisor sales agent over th e phone. Compl. 

,r 23; Answer ,r 23. HomeAdvisor explains that, during the em ollment call, se1vice providers 

create personalized HomeAdvisor online profile pages in which they select the specific tasks and 

geographic areas they wish to se1vice. RSF ,r 14. The online profile pages remain accessible to 

and under the control ofthe se1vice providers and can be changed at any time. RSF ,r 15. 

HomeAdvisor maintains a credit policy pursuant to which it may give service providers 

credits for "illegitimate leads." RSF ,r,r 71-72. According to HomeAdvisor, the credit policy is 

memorialized in its publicly-available Lead Credit Guidelines, which specify various situations 

that may be eligible or ineligible for a lead credit. RSF ,r 72; RX0l 13; RX0 l 14. If 

HomeAdvisor grants a se1vice provider's credit request, HomeAdvisor then applies the credit 

against the cost offuture leads. Compl. ,r 21; Answer ,r 21. 

HomeAdvisor advertises its products on its websites, including homeadvisor.com an d 

pro.homeadvisor.com, and via other media, including email marketing, direct marketing, radio 

spots, and social media. CCSF ,r 24; RCCSF ,r 24. HomeAdvisor also employs sales agents 

whose responsibilities have included conducting telephone sales outreach to service providers. 

CCSF ,r 27; RCCSF ,r 27; PX0105-0007. Per HomeAdvisor's corporate witness, as of 

November 2020, HomeAdvisor had about- sales reps. RCCSF ,r 27; PX0030 (Schott Tr. 

126:2-7). HomeAdvisor provides its sales representatives with training materials, including 

materials Complaint Counsel refer to as "scri ts." See Mot. at 7-8 16-17· RCCSF 30. The 

aiiies a ree however that HomeAdvisor's 

B. The Allegations 

On Mai·ch 11 , 2022, the Commission filed a Complaint alleging that HomeAdvisor 

engaged in unfair or deceptive acts or practices in violation of Section 5(a) ofthe Federal Trade 

Commission Act, 5 U.S.C. § 45(a), in connection with its marketing and sale ofits products to 

se1vice providers. The Complaint contains three counts. 

Count I alleges that HomeAdvisor misrepresented the quality, characteristics, and source 

ofits leads. In paiiiculai·, the Complaint asse1is that HomeAdvisor made false or misleading 

representations that the leads the se1vice providers would receive concern (a) individuals who 

intend to hire a se1vice provider soon, (b) projects that match th e types ofse1vices that se1vice 

providers have expressed they perf01m, (c) projects that match the geographic ai·eas the se1vice 

providers se1ve, or ( d) individuals who knowingly sought HomeAdvisor for assistance in 

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much higher. Id. ¶¶ 48-53. 

selecting a service provider. Compl. ¶¶ 61-63. With respect to the first claim, the Complaint 

asserts that many of the leads sold by HomeAdvisor concerned people who did not intend to hire 

a service provider soon, contrary to HomeAdvisor’s representations. Id. ¶ 31. The Complaint 

alleges that some of HomeAdvisor’s leads listed non-existent addresses or disconnected phone 

numbers, or were for people who were only interested in obtaining prices, wanted instructions on 

how to do the project themselves, or only answered the questions to become eligible to win a gift 

offered through a promotion. Id. The Complaint also states that many of the leads 

HomeAdvisor sold concerned people who actually indicated on their questionnaire that their 

project status was only “Planning & Budgeting,” that they had an indefinite timeframe for 

project completion, or that they were not authorized to make property changes. Id. ¶ 32. With 

respect to representations that HomeAdvisor would match the types of services the provider 

offered in their geographic areas, the Complaint asserts that many service providers in fact 

received leads that concerned services they did not perform or were outside the providers’ 

geographic preferences. Id. ¶ 39. Further, the Complaint asserts that contrary to HomeAdvisor’s 

representations that its leads concerned people who knowingly sought its assistance in selecting a 

service provider, many of the leads that HomeAdvisor sold were purchased from affiliates and 

concerned individuals who did not knowingly seek HomeAdvisor’s assistance. Id. ¶¶ 42, 45. 

Count II asserts that HomeAdvisor made false, misleading, or unsubstantiated 

representations to service providers that its leads convert into jobs at or above certain rates. Id. 

¶ 64. Specifically, the Complaint asserts that, although HomeAdvisor’s own calculations 

showed that the rate at which leads purchased by service providers turned into jobs ranged from 

, HomeAdvisor’s sales agents frequently represented that those rates were 

Finally, Count III alleges that HomeAdvisor made false or misleading representations 

that the first month of mHelpDesk was free. Id. ¶¶ 66-68. In particular, the Complaint states 

that HomeAdvisor’s sales agents represented to service providers that the cost of an annual 

membership was $347.98, including a free one-month subscription to mHelpDesk. Id. ¶ 54. In 

fact, however, the cost of the annual membership was $287.99, and the $347.98 price 

represented the cost of an annual membership plus one month of mHelpDesk, which was 

optional and cost an extra $59.99 per month. Id. ¶ 58. If a service provider did not want a onemonth subscription to mHelpDesk, the provider could have purchased the annual membership 

for the lower price. Id. 

HomeAdvisor denies any wrongdoing and asserts that the Complaint reflects a 

fundamental misunderstanding of HomeAdvisor’s business, its provider and homeowner 

network, and the lead-generation industry generally. Answer at 1; Opp. at 2. Complaint Counsel 

have moved for summary decision on the Complaint, and Respondent has opposed. For the 

reasons discussed below, the Commission has denied the motion. 

II. STANDARD FOR SUMMARY DECISION 

Rule 3.24 of our Rules of Practice provides standards analogous to those that apply to a 

Rule 56 motion for summary judgment under Federal Rule of Civil Procedure 56. See In re 

McWane, Inc., Ltd., No. 9351, 2012 WL 4101793, at *5 (F.T.C. Sept. 14, 2012); In re Polygram 

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Holding, Inc., No. 9298, 2002 WL 31433923, at *1 (F.T.C. Feb. 26, 2002). A party moving for 

summary decision must show that “there is no genuine issue as to any material fact” and that it is 

“entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); 16 C.F.R. § 3.24(a)(2). 

As with a summary judgment motion, the party seeking summary decision “bears the 

initial responsibility of . . . identifying those portions of [the record] which it believes 

demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 

317, 323 (1986) (internal quotations omitted). Provided the movant meets this burden, the “party 

opposing the motion may not rest upon the mere allegations or denials of his or her pleading” but 

must instead “set forth specific facts showing that there is a genuine issue of material fact for 

trial.” 16 C.F.R. §3.24(a)(3); Celotex, 477 U.S. at 323. In evaluating the existence of a dispute 

for trial, we are required to resolve all factual ambiguities and draw all justifiable inferences in 

the light most favorable to the party opposing the motion. Anderson v. Liberty Lobby, Inc., 477 

U.S. 242, 255 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 

(1986); McWane, Inc., 2012 WL 4101793, at *5. 

III. ASSESSING THE ALLEGED VIOLATIONS UNDER SUMMARY DECISION 

STANDARDS 

A. Jurisdiction 

Under the FTC Act, the Commission has jurisdiction over persons, partnerships, and 

corporations using unfair or deceptive acts or practices “in or affecting commerce.” 15 U.S.C. 

§ 45(a) (enumerating certain exceptions, not relevant here, to the persons, partnerships, and 

corporations covered). Respondent is a Delaware corporation that has its principal offices or 

places of business in Colorado. Answer ¶ 1. Since at least July 2014, Respondent has sold 

memberships and leads to service providers throughout the United States. See CCSF ¶ 35; 

RCCSF ¶ 35; RSF ¶ 114. Accordingly, the Commission has jurisdiction over Respondent with 

respect to its alleged deceptive acts and practices. 

B. Legal Standard for Deception 

“An advertisement is deceptive if it contains a representation or omission of fact that is 

likely to mislead a consumer acting reasonably under the circumstances, and that representation 

or omission is material to a consumer’s purchasing decision.” In re POM Wonderful, LLC, No. 

9344, 2013 WL 268926, at *18 (F.T.C. Jan. 16, 2013), aff’d sub nom. POM Wonderful, LLC v. 

FTC, 777 F.3d 478 (D.C. Cir. 2015); see also In re California Naturel, Inc., No. 9370, 2016 WL 

7228668, at *5 (F.T.C. Dec. 5, 2016); FTC Policy Statement on Deception, 103 F.T.C. 174, 175 

(1984), appended to Cliffdale Assocs., Inc.,103 F.T.C. 110 (1984) (“Deception 

Statement”). Thus, in determining whether an advertisement is deceptive, the Commission 

considers (1) what claims are conveyed in the ad; (2) whether those claims are false or 

misleading; and (3) whether the claims are material. In re Health Rsch. Labs., LLC, No. 9397, 

2021 WL 5711355, at *5 (F.T.C. Nov. 19, 2021); In re Traffic Jam Events, No. 9395, 2021 WL 

5124183, at *12 (F.T.C. Oct. 25, 2021), pet. for review filed, No. 21-60947 (5th Cir. Dec. 21, 

2021); California Naturel, 2016 WL 7228668, at *5. 

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Claims may be express or implied: express claims are those that directly state the 

representation at issue, while implied claims are any that are not express. Kraft, Inc., 114 F.T.C. 

40, 120 (1991), aff’d sub nom. Kraft, Inc. v. FTC, 970 F.2d 311 (7th Cir. 1992). Absent an 

explicit representation, the Commission may determine whether the advertisement in question 

makes a representation by considering whether, from the point of view of a reasonable 

consumer-viewer, the “net impression” of the advertisement is to make such a representation. 

Traffic Jam Events, 2021 WL 5124183, at *12; Jerk LLC, 159 F.T.C. 885, 891 (2015); FTC v. 

Direct Mktg. Concepts, Inc., 569 F. Supp. 2d 285, 298 (D. Mass. 2008); Removatron Int’l Corp. 

v. FTC, 884 F.2d 1489, 1497 (1st Cir. 1989) (looking to “common-sense net impression” of an 

advertisement). Extrinsic evidence is unnecessary if the claim is reasonably clear from the face 

of the advertisement. POM Wonderful, 2013 WL 268926, at *21. Both express and implied 

claims may be deceptive. Fedders Corp. v. FTC, 529 F.2d 1398, 1402-03 (2d Cir. 1976). 

“Deception may be accomplished by innuendo rather than by outright false statements.” FTC v. 

Wilcox, 926 F. Supp. 1091, 1098 (S.D. Fla. 1995) (quoting Regina Corp. v. FTC, 322 F.2d 765, 

768 (3d Cir. 1963)); FTC v. Cap. Choice Consumer Credit, Inc., No. 02-21050 CIV., 2003 WL 

25429612, at *4 (S.D. Fla. Jun. 2, 2003) (same). 

Turning to the second element, the determination of whether a representation or omission 

is deceptive turns on whether it is likely to mislead, not whether it has caused actual deception. 

Deception Statement at 176; Thompson Med. Co. v. FTC, 791 F.2d 189, 197 (D.C. Cir. 1986); 

Trans World Accts., Inc. v. FTC, 594 F.2d 212, 214 (9th Cir. 1979) (“[p]roof of actual deception 

is unnecessary to establish a violation of Section 5”). The question is whether the claim is likely 

to mislead a consumer acting reasonably under the circumstances. Southwest Sunsites, Inc. v. 

FTC, 785 F.2d 1431, 1436 (9th Cir. 1986); FTC v. Wilcox, 926 F. Supp. at 1098. 

The third element is materiality. A representation is considered “material” if it “involves 

information that is important to consumers and, hence, likely to affect their choice of, or conduct 

regarding, a product.” FTC v. Cyberspace.com, LLC, 453 F.3d 1196, 1201 (9th Cir. 2006) 

(quotation omitted); see also Kraft, 970 F.2d at 322; Jerk, 159 F.T.C. at 891. Express claims are 

presumed material, see FTC v. Pantron I Corp., 33 F.3d 1088, 1095-96 (9th Cir. 1994), and 

consumer action based on express statements is presumptively reasonable. See FTC v. Five-Star 

Auto Club, Inc., 97 F. Supp.2d 502, 528 (S.D.N.Y. 2000) (citations omitted). Where evidence 

exists that a seller intended to make an implied claim, the Commission will infer materiality. 

Deception Statement at 182. The Commission also presumes materiality where claims relate to 

central characteristics of the product or service such as its purpose, safety, efficacy, or cost. Id.; 

Thompson Med. Co., 104 F.T.C. 648, 816-17 (1984). 

C. Count I: Misrepresentations About the Intent to Hire, Type and Geographic 

Location of Projects, and Source of Leads 

The first count in the Complaint alleges that Respondent falsely represented that its leads 

concern (1) individuals who intend to hire a service provider soon, (2) projects that match the 

types of services that the service providers have expressed they perform in the geographic areas 

that they have expressed they serve, and (3) individuals who knowingly sought HomeAdvisor for 

assistance in selecting a service provider. Although styled as a single count, the allegations 

7 
involve separate representations and are effectively separate sub-counts, so we discuss them 

separately. 

1. Intent to Hire 

Complaint Counsel allege that Respondent made false or misleading, express and 

implied, representations that its leads concern homeowners who are ready to hire a se1vice 

provider soon. Mot. at 12-13; Compl. ,i 6. According to Complaint Counsel, express 

representations include statements indicating that the homeowners are "ready to hire" and "not 

just window shopping." Mot. at 13-14. Implied representations include assertions that the 

homeowners are "serious" or "project-ready" or other te1ms that strongly imply the same 

meaning. Id. 

To supp01t the claim that Respondent made the alleged representations about intent to 

hire, Complaint Counsel point to statements on HomeAdvisor's website and in its advertising, 

transcripts from a sample ofrecorded sales calls, as well as declarations from se1vice providers 

and former HomeAdvisor employees. See CCSF ,i,i 62, 65. These materials provide examples 

of HomeAdvisor or its sales reps describing its leads as concerning homeowners who are "ready 

to hire," "ready to buy," "project-ready," "serious," "actively seeking the se1vices ou rovide" 

or other similar hrases. Id. 62 65. Com laint Counsel also cite to 

I, . ,i 63; RCCSF ,i 63; PX0050-0003. Responclent contests 

much ofthis evidence, arguing that the cited de onents are not credible dis utin the 

significance and characterization of the , and 

asse1ting that the recorded sales calls have not een s own to e representative o t e hundreds 

of thousands ofsales calls that took place over the relevant period. Opp. at 7-12; RCCSF ,i,i 63, 

65. Respondent also asse1ts that Complaint Counsel have failed to establish what "net 

impression" would have come across the multitude of conversations between sales reps and 

se1vice providers. Opp. at 12. And, Respondent asserts that it is not clear how te1ms such as 

"serious" or "project-ready" would have been understood by se1vice providers, who it claims are 

sophisticated and understand the lead-generation indust1y and the product they are purchasing. 

Id. at 13, 17. 

leads with obviously fake info1111ation, or leads for homeowners who insisted they were not 

looking for a se1vice provider. Id. at 14-15. As to this latter argument, Respondent claims that 

no filtering process is foolproof and that it is widely understood that some number ofillegitimate 

se1vice requests are likely to reach se1vice providers in any lead-generation company. Opp. at 

With respect to falsi · · 1rst is that 

ondent sold leads 

T e secon argument 1s at many o e ea s conceme 

individuals who were not interested in the se1vice at all, such as leads coming from children, 

3 Complaint Cotmsel also state that HorneAdvi.sor 

8 
20. Respondent also points to its credit policy, which it claims allows service providers to obtain

credits for illegitimate leads not caught by the filtering system. Id.

With respect to the materiality of the claims concerning readiness to hire, Complaint

Counsel apply the presumptions for express representations and for representations that concern 

the central characteristics, purpose, and efficacy of the product. Mot. at 16. Complaint Counsel 

also point to, among other things, a shareholder letter from HomeAdvisor's parent company 

stating that, from the service provider's perspective, a more valuable customer "may be a 

customer contemplating a bigger job, but more often it's just a customer closer to doing a job, 

period." Mot. at 12 (quoting PX0084-0002). Respondent admits that lead quality is impo1iant to 

service providers. RCCSF ,i 61. Respondent asse1is, however, that whether a service request is 

in the "Planning & Budgeting" stage or in the "Ready to Hire" stage does not detennine whether 

a lead will be conve1ied to a job. RCCSF ,i 7 (citing service provider declarations indicating that 

planning and budgeting leads are valuable and often conve1i into jobs). 

We fnd that Respondent has raised genuine disputes of fact with respect to the implied 

representations, including whether and how the alleged sophistication of service providers would 

have affected their understanding of phrases like "serious" and "project-ready," as well as

whether HomeAdvisor's homeowners could accurately be described by those tenns. Our 

detennination regarding these issues would benefit from fuller development of the facts at trial. 

Complaint Counsel's claims regarding HomeAdvisor's express statements are stronger. 

Respondent's website describes its homeowners as "ready to hire" and not ''just window 

shop[ping]." See PX0018-0073 ("HomeAdvisor com1ects contractors with homeowners who are 

ready to hire pros for their home projects[.]"); PX0019-0049 (same); PX0018-0025 ("You won't 

have to waste your time with customers who just window-shop. HomeAdvisor allows you to 

spend time with the ri ht 'read -to-bu ' customers." · PX0019-0012 similar . But Res ondent 

has admitted that 

people who were only plamiing and budgeting, just looking for a quote, or merely browsing with 

no intention to have work perfonned soon. RX0066, 68-71. 

Respondent argues that Complaint Counsel must, but have failed to, show that the alleged 

misrepresentations were made "systemically or as a general or widespread pattern or practice." 

Opp. at 7. But the cases Respondent cites do not stand for such a broad proposition. In those 

cases, the Commission simply found that there was not substantial evidence of a deceptive 

statement having been made because the evidence consisted of only a few isolated instances of 

individual salespersons making the misrepresentation. See Benjamin L. Hill, 51 F.T.C. 48, 50 

9 
(1954); Nat'! Exec. Search, Inc. , 76 F.T.C. 962, 998 (1969). 4 That al'gument has no bearing on 

claims based on statements on HomeAdvisor's website; such statements are HomeAdvisor's own 

representations put fo1ward for public viewing. To be sure, it is conect that, in a case where 

representations are made only orally on a one-on-one basis in an unscripted environment, a 

handful ofisolated statements by a few individual sales representatives may not in and ofitself 

constitute substantial evidence ofmisrepresentation by the company. However, there is no 

general requirement that Complaint Counsel prove a pattern or practice of misrepresentation in 

order to show a violation ofSection 5 of the FTC Act. A single statement on a web page can 

suffice. See Fox Film C01p. v. FTC, 296 F. 353, 356 (2d Cir. 1924) ("One act that constitutes an 

unfair practice may of itselfbe offensive to the act."). 

Respondent does, however, make some factual contentions with respect to the express 

readiness-to-hire claim. Notably, Respondent argues that homeowners who indicated that they 

were only in the planning and budgeting phase could still accurately be described as "ready to 

hire" as that te1m would have been understood by sophisticated service providers. Oral Arg. at 

56:19-57: 1, 73:7-74:15; see also Opp. at 13-18 (discussing se1vice provider sophistication and 

understanding of the lead-generation industiy). Because at sllillffiaiy decision the Commission is 

bound to draw all justifiable inferences in favor of the non-moving paity, we have denied 

summa1y decision on the intent-to-hire sub-count; the question of whether the express ready-tohire claim is likely to mislead consun1ers could benefit from fuller development under the 

evidentiaiy standards applicable at tl'ial. 

2. Type and Geographic Location of Projects 

Complaint Counsel asse1i that HomeAdvisor has represented that se1vice providers will 

receive only those leads that match the type ofwork that they perfonn and the geographic areas 

where they want to work. Mot. at 16-17. Complaint Counsel contend, however, that 

HomeAdvisor's leads regularly have concerned tasks or geographic areas that do not match the 

se1vices or geographic areas ofthe se1vice providers. Id. at 18. With respect to project type, 

Complaint Counsel argue that HomeAdvisor's platform is "stiucturally incapable ofdelivering 

the unqualified precision it advertises," because the platfo1m "only allows se1vice providers to 

select job type preferences within a finite list ofpreset categories, without allowing those 

providers to further nanow the categories to match more unique specializations or scale 

preferences." Id. Complaint Counsel also assert that HomeAdvisor's leads are often not in the 

se1vice provider's selected location or for the selected task because "HomeAdvisor assumes the 

homeowners accurately and completely describe their potential projects in their answers to 

multiple-choice questions that HomeAdvisor uses to generate leads." Id. 5 

4 The federal case cited by Respondent, FTC v. Lucas/aw Ctr. "Jnco,porated", 2010 WL 11523900 (C.D. Cal. June 

21, 2010), is no different. That case, too, concemed the lack of evidence regarding individual statements made by 

call operators. Id. at *2. 

5 Com laint Counsel also assert, in a footnote. that 

r to address it. 
Respondent raises a number of arguments in defense, focusing in large part on disputing 

the alleged falsity ofHomeAdvisor 's representations that its leads match se1vice providers' 

desired task types and geographic locations. First, Respondent notes that, during the enrollment 

process, se1vice providers themselves select their task and geographic preferences, which are 

then available on their profiles and can be changed at any time. Opp. at 21-22; RSF ,i,i 14-15, 

140. With respect to the allegation that HomeAdvisor's platfo1m is strncturally incapable of 

precise task matching, Respondent points out that HomeAdvisor has maintained over. 

unique Task IDs that se1vice providers can add to their profile to capture extremely granular 

aspects ofvarious fields. Opp. at 22-23; RSF ,i 136. Respondent fmiher argues that claims 

about granularity are claims about competitive quality, not deception. Opp. at 23. As for 

mismatches that occur because ofhomeowner inaccuracy, Respondent asserts that homeowners 

are sometimes mistaken about the details oftheir projects (for example, whether a leaky roof 

needs to be replaced or merely repaired) or may make typographical eITors when entering 

location info1mation, but these are one-off events and do not amount to deception on the paii of 

HomeAdvisor. Opp. at 22-23. 6 Respondent notes that "only approximately - ofleads 

resulted in a credit request based on task or location. Id. at 24-25. Respondent fmiher states that 

it is HomeAdvisor's policy to grant credits to se1vice providers if they receive a lead for a task or 

geographic area for which they are not profiled. Id. at 23; RSF ,i 141. In light ofthese vai·ious 

contentions, many of which go to the central question ofwhether HomeAdvisor's representations 

were false, we find that a decision on this sub-count should await the factual development of an 

evidentiaiy hearing. 

3. Source of Leads 

The last sub-count ofCount I alleges that HomeAdvisor falsely represented to 

prospective customers that its leads concern homeowners who have intentionally sought the 

company's help. Mot. at 19. To suppo1i the claim that HomeAdvisor made this representation, 

Complaint Counsel cite fo1mer employee and se1vice provider declai·ations as well as vai·ious 

statements from HomeAdvisor's sales training scripts, transcripts from recorded sales calls, and 

HomeAdvisor's website. See CCSF ,i,i 83-84, 86; PX0014-0001 (fo1mer employee declaration: 

"We told prospects that if they joined HomeAdvisor, they would receive high quality leads from 

homeowners who visited the HomeAdvisor website lookin for a contractor ..." · PX0051-0001 

o consumers use 

t e HomeA visor site? . . . In or er to qmc y find the best local se1vice professionals, customers 

submit a briefdescription oftheir se1vices using the HomeAdvisor interview on the Web site."); 

PX0018-0092 (website: "Consun1ers come to HomeAdvisor.com and give us detailed info about 

their projects. We match that info with your work and ai·ea preferences, and connect you with 

homeowners that match your needs."). 

6 Respondent also argues that, to the extent that service providers are affected by leads that include inaccurate 

info1mation from the homeowners, HomeAdvisor is immune from liability under the Communications Decency Act. 

That argument is discussed in Section IV.B. 

11 
Complaint Counsel argue that these representations are false because HomeAdvisor sold 

millions of leads based on info1mation obtained from third-party affiliates; according to 

Complaint Counsel, these leads did not concern individuals who knowingly sought out 

HomeAdvisor's assistance in selecting a service provider. Mot. at 20. Complaint Counsel claim 

that the alleged misrepresentations are material because leads sourced from affiliates are of lower 

quality. Id. at 21. Complaint Counsel explain that, because affiliate websites made little, if any, 

mention ofHomeAdvisor, homeowners were frequently surprised they were called by a service 

provider claiming to have gotten their info from HomeAdvisor. Id. at 20-21 ; PX0008-0002 

(service provider declaration: "[I]t was basically like making a cold call; these leads certainly 

didn't have the same value as a lead who knew they had entered their info1mation into the 

HomeAdvisor site and ex ected a call." . Com laint Counsel cite to 

Respondent makes a variety offactual contentions with respect to all three elements of 

deception - the representation made, falsity, and materiality. First, Respondent disputes that it 

represented that all leads provided to service providers come from homeowners who submitted 

service requests on HomeAdvisor's online platfo1m or over the phone to a HomeAdvisor 

representative. RCCSF ,r,r 84, 86. Respondent asserts that declarants relied upon by Complaint 

Counsel are not credible and contends that the selected recorded sales calls were taken from an 

unrepresentative and unreliable sample. RCCSF ,r 86. Respondent objects to reliance on 

"scripts" because it asse1ts that sales agents do not use scripts or read them verbatim during sales 

calls with service providers. RCCSF ,i 84. Respondent also raises the question of whether one 

of the quoted webpages actually would have been accessible to service providers from its 

website. See Respondent HomeAdvisor, Inc. 's Demonstratives for the Commission's July 21, 

2022 Hearing at 36. Moreover, Respondent claims that HomeAdvisor's website publicly 

discloses the use of affiliates to generate leads. Opp. at 25; RSF ,i 148. 

Further, Respondent contends that the statements quoted by Complaint Counsel are trne. 

Respondent argues that those statements do not suggest that all leads would be from homeowners 

who submitted service requests to HomeAdvisor directly and that in fact overllll of the leads 

sold to service providers are from homeowners who came directly to HomeA~·. See Opp. at 

25; RCCSF ,r,r 83-84. Moreover, Respondent argues that affiliate websites identify their 

association with HomeAdvisor and therefore affiliate leads are actually from homeowners who 

have "intentionally sought HomeAdvisor's help." Opp. at 26. 

Res ondent additionally disputes t · · · . . . . 

ctual 

12 
and other controls ensure quality from all leads from affiliates. Opp. at 25-26; RCCSF ,i 89. 

Respondent also challenges Complaint Counsel's asse1iion that homeowners who submit their 

info1mation through affiliate websites would be surprised to hear from HomeAdvisor service 

providers, because affiliates are contractually required to disclose to homeowners that their 

requests will be submitted to HomeAdvisor. Opp. at 26. Moreover, Respondent argues that, 

when em olling, service providers often do not consider whether HomeAdvisor sources some of 

its leads from third pa1iies. Id.; RSF ,i 151 (citing service provider testimony). 

Given the numerous disputes ofmaterial fact raised by Respondent, which we must view 

in the light most favorable to Respondent, we find that summaiy decision is not appropriate for 

this sub-count.7 

D. Count II: Misrepresentation About Rates at Which Leads Convert to Jobs 

For the second count, Complaint Counsel asse1i that HomeAdvisor sales agents have 

repeatedly told prospective customers that HomeAdvisor's leads conve1ied to jobs at specific 

rates ("win rates"), but those rates were inflated and unsubstantiated. See Com 1. 51 · Mot. at 

21. Com laint Counsel cite in lar e aii to HomeAdvisor's 

to support its asse1iion 

percent or greater W ill rate or its Instant Booking leads and a 

arket Match leads or across all leads. See, e . . PX0042-

lacked adequate data to substantiate any Will rate clarms, and w 

the claims it made. Mot. at 21-22, 24. Complaint Counsel note that 

at data 1t d1 ave contradicted 

7 To the extent Respondent argues that any alleged misrepresentation is mitigated or cured by disclosures on the 

HomeAdvisor website, we note that the Commission has previously held that disclaimers are ineffective when they 

are not in close proximity to the triggering representation. See California Nature/, 2016 WL 7228668, at *6 

("Adding a disclaimer to the bottom ofthe webpage that is well removed from proximity to the 'all natural' claims -

and, in fact, not visible at all without scrolling down - does not change the net impression conveyed to constuners 

that the product is 'all natural."'); see also FTC v. Washington Data Res., 856 F. Supp. 2d 1247, 1274 (M.D. Fla. 

2012), affd sub nom. FTC v. Washington Data Res., Inc., 704 F.3d 1323 (11 th Cir. 2013) (rejecting defendants' 

argument that a disclaimer in the retainer agreement sufficiently dispelled a misrepresentation about whether a home 

loan was guaranteed); FTC v. Cyberspace.com LLC, 453 F.3d 1196, 1200 (9th Cir. 2006) (rejecting defendant's 

argtunent that tmthful fine print notices on reverse side of checks, invoices, and marketing inserts cured deception 

that check/invoice was a refund rather than offer for se1vices); Cap. Choice Consumer Credit, 2003 WL 25429612, 

at *5 (finding that "fine print on reverse side" of ad was inadequate to modify net impression), aff'd, 157 F. App'x 

248 (11th Cir. 2005); FTC v. Gill, 71 F. Supp. 2d 1030, 1044 (C.D. Cal. 1999), affd, 265 F.3d 944 (9th Cir. 2001) 

(granting FTC's motion for smmmuy judgment and holding that a disclaimer in a contract consumers eventually 

signed was inadequate to overcome deceptive representations in defendants' adve1tisements); Resort Car Rental 

Sys., Inc. v. FTC, 518 F.2d 962, 964 (9th Cir. 1975) ("The Federal Trade Act is violated if [the seller] induces the 

first contact through deception, even ifthe buyer later becomes fully info1med before entering the contract."). 

13 
Respondent disputes these claims. First, it disputes that these representations about win 

rate were widely made, asse1ii11g that they were neither common nor approved. Opp. at 28. 

Respondent dismisses the sales call transcripts as a "handful of recorded sales calls" with respect 

to which Complaint Connsel have "failed to follow even basic statistical procedures to detennine 

the re resentativeness." Id. at 27. As for the Res ondent asserts that 

Respondent also takes issue with Complaint Connsel's assertions that the alleged 

statements are false and nnsubstantiated. With res ect to Instant Bookino rates Res ondent 

claims that 

Through these asse1iions, Respondent has disputed material facts nnderlying Complaint 

Connsel's claims. An evidentiaiy hearing will allow the Administrative Law Judge to make 

initial rulings on the merits ofthese disputes. We have therefore denied summa1y decision on 

the second connt. 

14 
E. Count III: Misrepresentations Regarding mHelpDesk 

With respect to the final count, Complaint Counsel allege that, until it ceased offering 

mHelpDesk in 2020, HomeAdvisor often misled se1vice providers to think the first month ofits 

optional mHelpDesk software would be free with an annual membership, when in tiuth that first 

month cost $59.99, the same as eve1y other month. Compl. ,n[ 7, 18, 54, 58; Mot. at 25-26; see 

also Answer ,r 7. HomeAdvisor simply tacked on that extra charge to its existing $287.99 

membership fee, selling the two as a bundled package for a combined price of $347.98. Mot. at 

26; Compl. ,r 58; see also Answer ,r 58. 

Complaint Counsel cite to, among other things, sales call transcripts, in which sales reps 

indicated that the first month ofmHelpDesk would be free, Better Business Bureau complaints, 

in which customers expressed their belief that the first month was free, a f01m email to se1vice 

providers confuming their purchase of an annual membership, which stated that $347 .98 was the 

cost ofthe annual membership and a "free" month ofmHelpDesk, as well as an internal 

HomeAdvisor email recognizing that se1vice providers are aware that they would be receiving a 

"free ti·ial" ofmHelpDesk. Com 1. 55 57· Mot. at 25-26· CCSF 115 117. In addition 

Com laint Counsel cite to 

. . . aint 

f mHelpDesk had they 

known it was not actually free but cost an additional $59.99. See id. 

Respondent disputes Complaint Counsel's allegations. It claims that the cited statements 

about the first month ofmHelpDesk being "free" were not encoura ed or condoned b 

HomeAdvisor mana ement. To the conti·a 

ent 

el 

Opp. at 30; RSF ,r 173. 

With respect to the membership purchase confnmation email refening to a "free" month of 

mHelpDesk, Respondent claims that this phrase was later changed and that Complaint Counsel 

offer no evidence it was used after Februa1y 2016. RCCSF ,r 114. Moreover, Respondent 

appears to deny that se1vice providers were not told that they could purchase a stand-alone 

membership for $287 .99, noting that fewer than- of all sales for memberships were for 

the option that included the first month ofmHelpDesk. Opp. at 30; see also RCCSF ,r,r 21, 112. 

Drawing all inferences and resolving all factual ambiguities in a light most favorable to 

Respondent, as we must, we find that this count too would benefit from the fuller factual 

development of an evidentiaiy heai·ing. 

15 
 

 

 

 

 

 

 

 

 

 

 

 

Accordingly, we have denied summary decision on all counts of the Complaint in order 

to allow the parties’ respective factual contentions to be further developed and tested at trial. 

IV. AFFIRMATIVE DEFENSES 

Respondent has asserted several affirmative defenses that the parties have now briefed. 

We provide guidance below for the proceeding on remand. 

A. Proximate Cause 

In its Answer, Respondent asserts that “[t]he FTC’s claims are barred, in whole or in part, 

because the losses or injuries allegedly suffered were not proximately caused by any act or 

omission of HomeAdvisor.” Answer, Def. 7. Respondent explains that success with leads 

depends largely on the service provider’s own efforts to contact and nurture the leads it receives. 

Opp. at 31. Respondent asserts that discovery is needed to determine whether any given service 

provider’s success or failure with its leads was caused proximately by HomeAdvisor’s actions or 

the service provider’s own acts or omissions. Id. 

Respondent’s asserted defense relates to proximate cause of loss or injury and does not 

apply in a cease and desist proceeding. Complaint Counsel seek an order under Section 5 of the 

Act to halt alleged unfair or deceptive acts or practices by the Respondent. As discussed in 

Section III.B. above, the elements of such a claim are: (1) a representation or omission of fact (2) 

that is likely to mislead a consumer acting reasonably under the circumstances, and (3) that is 

material to a consumer’s purchasing decision. Neither proof of consumer reliance nor consumer 

injury is required to establish a Section 5 violation. FTC v. Freecom Commc’ns., Inc., 401 F.3d 

1192, 1203 (10th Cir. 2005). Proximate cause is therefore not an element of the claim.8 

B. Communications Decency Act 

Respondent asserts that, to the extent that service providers are affected by leads that 

include inaccurate information from the homeowners, as opposed to HomeAdvisor, 

HomeAdvisor is immune from liability under the Communications Decency Act (“CDA”). Opp. 

at 32, (citing 47 U.S.C. § 230(c)(1); FTC v. Match Grp. Inc., No. 3:19-CV-2281-K, 2022 WL 

877107, at *5-10 (N.D. Tex. Mar. 24, 2022)). 

Section 230(c)(1) of the CDA provides that “[n]o provider or user of an interactive 

computer service shall be treated as the publisher or speaker of any information provided by 

another information content provider.” 47 U.S.C. § 230(c)(1). With limited exceptions, the 

CDA confers immunity from federal and state claims for an interactive computer service 

provider’s or user’s “exercise of a publisher's traditional editorial functions—such as deciding 

8 Respondent’s citation to FTC v. Dantuma, 748 F. App’x 735, 738 n.1 (9th Cir. 2018), cert. granted, judgment 

vacated on unrelated grounds in light of AMG, sub nom. Publishers Bus. Servs., Inc. v. FTC, 141 S. Ct. 2589 

(2021), is not to the contrary. That case involved the FTC’s effort to recover equitable monetary relief in court 

under Section 13(b) of the Act, id. at 737, a context that required proof of harm to consumers. Such proof is not 

required here. 

16 
whether to publish, withdraw, postpone or alter content." Zeran v. Am. Online, Inc., 129 F.3d 

327, 330 (4th Cir. 1997). 

Complaint Counsel do not appear to dispute that HomeAdvisor qualifies as an interactive 

computer se1vice provider under the CDA. Mot. at 34; Reply at 22-23. However, Complaint 

Counsel point out that the CDA grants immunity only when a claim seeks to hold an entity 

responsible as the publisher or speaker ofcontent provided by another information content 

provider. Reply at 22; see also, FTC v. LeadClick Med;a, LLC, 838 F.3d 158, 174 (2d Cir. 

2016); FTC v. Accusearch, Inc., 570 F.3d 1187, 11 96 (10th Cir. 2009). Complaint Counsel 

argue that their claims are based on representations that Respondent made to prospective service 

providers on its website and via telephone sales calls. Reply at 22-23 (citing RCCSF ,r,r 24, 27). 

Thus, they argue, CDA immunity does not apply. 

As the proponent of an immunity defense, Respondent bears the burden to demonstrate 

the defense. Elliott v. Donegan, No. 18-CV-5680, 2022 WL 992527, at *2 (E.D.N.Y. Mar. 31 , 

2022) (quoting Gomez v. Toledo, 446 U.S. 635, 640 (1980)). Establishing immunity under the 

CDA is a highly fact-specific exercise. Greater factual development around HomeAdvisor 's 

lead-filtering process, for example, is needed, especially for the leads that involve task type and 

geographic location mismatches, where HomeAdvisor relies upon homeowners to con ectly 

answer multiple-choice questions that help to describe their needs. Mot. at 18. As with, perhaps, 

many such cases, adjudicating CDA protection at this point in the litigation, before substantial 

fact development, would foreclose close scmtiny of the actual nature of the relationship between 

Respondent and the allegedly illegal statements and conduct at issue. 

Of course, the law is clear that HomeAdvisor can be held liable for its own speech. 

Universal Commc'n Sys., Inc. v. Lycos, Inc., 478 F.3d 413, 419-20 (1st Cir. 2007) (citing 

Anthony v. Yahoo!, Inc. , 421 F. Supp. 2d 1257, 1262-63 (N.D. Cal. 2006)).9 The CDA does not 

grant HomeAdvisor a license to misrepresent lead quality and accuracy either in sales calls or on 

its website, nor do we understand Respondent to so argue. Opp. at 32 (limiting asse1i ion of 

immunity to infonnationfrom homeowners); see also Oral Arg. at 45 (Respondent is not 

asse1ting immunity for mHelpDesk claims or other matters that relate solely to Respondent's 

representations). Factual development at trial should help establish the prevalence of 

homeowner enors and misstatements and their relationship to Complaint Counsel's claims. 

C. Affirmative Misconduct 

9 As the Anthony court put it, "the CDA only entitles Yahoo! not to be 'the publisher or speaker' ofthe profiles. It 

does not absolve Yahoo! from liability for any accompanying misrepresentations. Because Anthony posits that 

Yahoo!' s mam1er ofpresenting the profiles - not the underlying profiles themselves - constitute fraud, the CDA 

does not apply." 421 F. Supp. 2d at 1263. 

17 
Oral Arg. at 78-79. Based on these allegations, Respondent 

asse1ts affnmative defenses of affumative misconduct, equitable estoppel, in pari delicto, and 

unclean hands. Answer, Defs. 13-15; Opp. at 32-33. Respondent states that it is pmsuing 

discove1y to dete1mine the full extent ofthe alleged impropriety. Opp. at 33. 

First, we find that Respondent has failed to demonstrate that the defenses of equitable 

estoppel or in pari delicto apply here. The traditional elements of equitable estoppel are: (1) 

false representation; (2) a purpose to invite action by the pa11y to whom the representation was 

made; (3) ignorance ofthe trne facts by that pai1y; and (4) reliance. United States v. Philip 

Morris, Inc., 300 F. Supp. 2d 61, 71 (D.D.C. 2004). Respondent alleges none ofthese elements. 

Fm1her, plaintiffs who are "trnly in pari delicto are those who themselves violated the law in 

cooperation with the defendant." Pinter v. Dahl, 486 U.S. 622, 636 (1988) (quotation omitted). 

Respondent makes no such allegation here. See United States v. Philip Morris, Inc., 300 F. 

Supp. 2d at 66. 

As to defenses of affmnative misconduct and unclean hands, the bar is high. See Masters 

Phann., Inc. v. DEA, 861 F.3d 206, 225 (D.C. Cir. 2017) ("The bar for establishing 'affm native 

misconduct' is high, requiring a showing of 'misrepresentation or concealment, or, at least, 

behav[ior] ... that ... will cause an egregious~y unfair result"' (quoting GAO v. Gen. Acct. Off 

Pers. Appeal Bd., 698 F.2d 516, 526 (D.C. Cir. 1983)) (emphasis added). Some comts have 

found that the affomative defense ofuncleai1 hands does not lie against the government when it 

brings an action in the public interest. See United States v. PhWp Morris, Inc., 300 F. Supp. 2d 

at 7 5 ( unclean hands defense unavailable as a matter oflaw when the government sues in the 

public interest); United States v. Neb. Beef, Ltd., No. 8:15CV370, 2016 WL 6088267, at *4 (D. 

Neb. May 6, 2016) (noting that "[c]omts are divided on the issue whether a pai1y may asse1t the 

affinnative defense of unclean hands against the government in an enforcement action pursuant 

to the public interest") (collecting cases). Where comts have pe1mitted equitable defenses to be 

raised against the government in a public interest suit, "they have required that the agency's 

misconduct be egregious and [that] the resulting prejudice to the defendant rise to a 

constitutional level." Bartko v. SEC, 845 F.3d 1217, 1227 (D.C. Cir. 2017), (quoting SEC v. 

Elecs. Warehouse, Inc. , 689 F. Supp. 53, 73 (D. Conn. 1988)); accord, SEC v. Cuban, 798 F. 

Supp. 2d 783, 794 (N.D. Tex. 2011). 

Respondent points to no evidence suggesting that it will be able to demonstrate the 

uired level of re·udice from the alleoed im ro rieties here. Com laint Counsel 

10 See RX0142 at 1 (definition of"Parties"); ,r 14 ("Persons Bonnd by Order"). In the case that Respondent cites for 

the proposition that Complaint Counsel are bonnd, Martindell v. Int'! Tel. & Tel., Co,p. 594 F.2d 291, 296 (2d Cir. 

1979), the Second Circuit emphasized the importance of protective. orders and denied the govemment' s effo1t to 

modify such an order to obtain materials for use in a grand jury investigation. But Martindell did not hold that the 

government was bom1d as a party to the order. 

18 
- so long as any liability in this proceeding rests on detem1inations by the Commission 

~ y supported by facts in the administrative record and applicable law. 

Nevertheless, we have detennined not to deny the affnmative misconduct and unclean 

hands defenses at this time because Respondent has indicated that discove1y regarding the 

allegations is ongoing. Opp. at 33. As to such future discove1y, we note that comts generally 

disfavor the practice of taking depositions ofopposing counsel. Theriot v. Par. ofJefferson, 185 

F.3d 477,491 (5th Cir. 1999); AbiomedInc. v. Maquet Cardiovascular LLC, No. CV 1:16-

10914-FDS, 2017 WL 11625640, at *2 (D. Mass. Oct. 6, 2017) ("Any time a deposition notice 

names an opposing patty's counsel, cunent or fo1mer, as the deponent, red flags go up") (citing 

Bogosian v. Wolooholian Realty C01p., 323 F.3d 55, 66 (1st Cir. 2003). In Shelton v. American 

Motors Corp., 805 F.2d 1323, 1327 (8th Cir. 1986), the comt explained: 

Taking the deposition of opposing counsel not only disrupts the adversarial 

system and lowers the standai·ds ofthe profession, but it also adds to the already 

bmdensome time and costs oflitigation. It is not hard to imagine additional 

pretrial delays to resolve work-product and attorney-client objections, as well as 

delays to resolve collateral issues raised by the attorney's testimony. 

See also W. Peninsular Title Co. v. Palm Beach Cnty., 132 F.R.D. 301, 302 (S.D. Fla. 

1990) ("Federal comts ... have held that depositions of attorneys inherently constitute an 

invitation to harass the attorney and patties, and to disrupt and delay the case."). The 

patty who wishes to depose opposing counsel should beat· the bmden to demonstrate 

good cause for such a deposition, including the exhaustion of alternative discove1y 

mechanisms such as inten ogatories and document requests and the existence ofimpo1tant 

non-privileged info1mation to be discovered. See Shelton, 805 F.2d at 1327 (requiring 

that "no other means exist to obtain the infonnation," that "the info1mation sought is 

relevant and nonprivileged," and that "the info1mation is crucial to the preparation of the 

case"); Nationwide Mut. Ins. Co. v. Home Ins. Co., 278 F.3d 621, 628 (6th Cir. 2002) 

(same); Boughton v. Cotter Co1p., 65 F.3d 823, 830 (10th Cir. 1995) (approving of 

Shelton factors); W. Peninsular Title, 132 F.R.D. at 302 (recommending that written 

intenogatories be employed instead ofdeposing opposing counsel); Kelling v. 

Bridgestone/Firestone, Inc., 153 F.R.D. 170, 171 (D. Kan. 1994) (denying motion to 

compel deposition because "other methods, such as written intenogatories, requests for 

production, or requests for admission, which do not involve the same danoers as an oral 

de osition of o osin counsel should be em lo ed" · Oral Aro. at 80 

. The Commission is not dislnissing the affnmative 

efense m or er to a ow 1scove1y but reminds Respondent that it must meet the high 

standard set fo1th in these cases before being pe1mitted to depose Complaint Counsel. 

Specifically, Respondent must attempt to seek the discovery through other avenues and, 

if it believes it requires depositions of Complaint Counsel, be prepared to demonstrate 

that the testimony is crucial and all other means employed proved insufficient to obtain 

the necessaty info1mation. 

19 
 

 

 

 

 

 

 

 

 

 

 

 

D. Constitutional Defenses 

Respondent asserts several constitutional defenses to this proceeding in its Answer. 

Answer, Defs. 17-18, 20-24. It addresses the following affirmative defenses in its brief: 

1. a claim that the FTC Act, which provides that a Commissioner may be removed only for 

“inefficiency, neglect of duty, or malfeasance in office,” 15 U.S.C. § 41, violates the 

separation of powers and Article II’s Appointments Clause. Answer, Def. 20; Opp. at 33; 

2. a claim that the President’s authority to appoint Commissioners is unconstitutionally 

constrained by the political-party restrictions of 15 U.S.C. § 41, in violation of Article II 

of the Constitution and the First Amendment. Opp. at 33; 

3. a claim that adjudication of this matter by the ALJ and the Commission violates the right 

to due process under the Fifth Amendment, including because these proceedings 

assertedly lack a neutral decisionmaker and lack equal protection. Id.; Answer, Def. 23; 

and 

4. a claim that, to the extent that the findings in this proceeding are used in a potential legal 

action for damages under FTC Act § 19, such administrative fact-finding would violate 

Respondent’s right to have those facts found by a jury in an Article III court. Opp. at 

33.11 

Respondent’s brief requests denial of the motion for summary decision and raises these 

constitutional issues. Opp. at 34. However, at oral argument, Respondent’s counsel stated that 

Respondent presently seeks only denial of Complaint Counsel’s motion for summary decision 

and that such denial is the only issue that the Commission needs to decide now. Oral Arg. at 43-

44. We concur that the constitutional defenses need not be decided at this time. Respondent has 

preserved its constitutional defenses, and we reserve them for a future determination should it 

prove necessary. 

By the Commission. 

April J. Tabor 

Secretary 

SEAL: 

ISSUED: September 9, 2022

11 Respondent also expressly preserves an affirmative defense that having an administrative law judge preside over 

and administer this proceeding violates the separation of powers and Article II’s Appointments Clause. Opp. at 34 

n.144; see Answer, Def. 21. 

20