Motion to Dismiss for lack of personal jurisdiction is denied.

Bay Vacations also seeks to dismiss Plaintiff's Amended Complaint for failure to state a
claim upon which relief can be granted. A defendant prevails on a motion to dismiss for failure to
state a claim upon which relief can be granted only if the plaintiff could show no set of facts that
would entitle it to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The FTC alleges one count
of deceptive acts or practices in violation of section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and three
counts of violations of the FTC’s Telemarketing Sales Rule, 16 CER. §§ 310.3(a)(1)G),
310.3(a)(2)(iii), 310.3(a)(4). Clearly, facts Could be proven to demonstrate each of these, and each
would be a violation of federal law.

Bay Vacations argues that the FTC nonetheless fails to state a claim because, in a separate
Motion to Add Defendants to Receivership Entities, the FTC acknowledged that Bay Vacations has
only been in existence since July 2002 and, therefore, implicitly conceded that Bay Vacations could
not possibly have been involved in activities alleged in the complaint that occurred prior to that time.
The Motion to Add Defendants to Receivership Entities alleges that Bay Vacations was “set up in
July 2002 to drain assets from Bay Area Business Council, Inc. and American Leisure Card Corp.
and to bill consumers for the same product sold by those companies.” Bay Vacations’ arguments
pointing to this other Motion fails. The Motion to Add Defendants to Receivership Entities only
provides Bay Vacations with more specific information about the facts being alleged against it; the
Motion to Add Defendants to Receivership Entities does not contradict Plaintiffs Amended
Complaint.

Therefore, Bay Vacations’ Motion to.Dismiss for failure to state a claim upon which relief

can be granted is denied.


information. Defendants then routinely debit the bank accounts of the consumer but do not provide
them with the promised unsecured MasterCard credit card. Instead, in many instances, Defendants
provide consumers with a “temporary card” bearing the MasterCard logo and the name “Bay Area
Business Council,” with a telephone number to call to “activate” the card. When the consumer calls
to activate the card, they are told that they must send an additional amount plus a “security deposit”
to receive an actual credit card and that the card can only be used if the consumer deposits sufficient
sums of money to pay for purchases made with the card. Additionally, Defendants continue to
withdraw a “fee” of $10 per month from the consumer’s bank accounts without authorization to do
so. Defendants also tell the consumer that as an additional benefit to their credit card, Defendants
will provide consumers with such things as a “free” vacation package, free internet telephone long
distance service, a household protection plan, and gasoline discount coupons. In many instances, the
consumer is then billed $50 to $100 monthly for these “free” benefits by companies that sell such
products.

Defendant Bay Vacations, Inc. (“Bay Vacations”), asserts that because it has not transacted
any business in this forum, this Court lacks personal jurisdiction over it. The FTC Act provides for
service of process “on any person, partnership, or corporation, wherever it may be found.” 15 U.S.C.
§ 53(b). When a federal statute provides for nationwide service of process, as the FTC Act does,
personal jurisdiction may be obtained over any defendant having minimum contacts with the United
States as a whole. United Rope Distribs. v. Seatriumph Marine Corp., 930 F.2d 532, 534 (7th Cir.
1991). Bay Vacations states in its own Motion to Dismiss that it is “‘a Florida corporation with its
principal place of business in Florida.” Thus, Bay Vacations has minimum contacts with the United

States and is subject to personal jurisdictionin this Court. Accordingly, Bay Vacations, Inc.’s



For the reasons stated above, Bay Vacations’ Motion to Dismiss and alternative Motion for

Summary Judgment are denied.

Dated: Geared. [3 2.00% [ Ver rtA.
JOHN\W. DARRAH
United States District Judge



Minut-,Qrder Form (06/97)

United States District Court, Northern District of Iinois

Name of Assigned Judge John W. Darrah Sitting Judge if Other
or Magistrate Judge . than Assigned Judge
CASE NUMBER 02 C 5762 DATE 3/13/2003
CASE FEDERAL TRADE COMMISSION vs. BAY AREA BUSINESS COUNCIL, INC.
TITLE
[In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.)
DOCKET ENTRY:
(1) o Filed motion of [ use listing in “Motion” box above.]
(2) a Brief in support of motion due
(3) oO Answer brief to motion due. . Reply to answer brief due
(4) QO Ruling/Hearing on set for at
(5) Oo Status hearing[held/continued to] [set for/re-set for] on set for at
(6) a Pretrial conference(held/continued to] {set for/re-set for] on set for at :
(©) a Trial{set for/re-set for] on at
(8) oO [Bench/Jury trial] [Hearing] held/continued to, at
(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) O Local Rule 41.1. C)FRCP41(a\(1) OFRCP41(a)(2).
(10) Ml [Other docketentry] Status hearing held._Enter Memorandum Opinion And Order. Bay Vacations’
motion to dismiss and alternative motion for summary judgment are denied.
(1) ff [For further detail see order attached to the original minute order.]
No notices required, advised in open court,
No notices required. number of notices
Notices mailed by judge's staff,
Notified counsel by telephone. Mi AR
vu | Docketing to mail notices.
Mail AO 450 form. Luned Taiyisia sq r
Copy to judge/magistrate judge. MYS13
courtroom €S:S kd El Wwe
LG deputy's
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central Clerk’s Office mailing deputy initials



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

FEDERAL TRADE COMMISSION,

Plaintiff,
No. 02 C 5762
ve
Judge John W. Darrah
BAY AREA BUSINESS COUNCIL, INC.;

BAY AREA BUSINESS COUNCIL CUSTOMER
SERVICE CORP.;

AMERICAN LEISURE CARD CORP.;

BAY MEMBERSHIPS, INC.; BAY kL Dp.
VACATIONS, INC.; SR. MARKETING “Ip iy
CONSULTANTS, INC.; SPECIAL “7, “Dp
TECHNOLOGIES, INC.; ,

PETER J. PORCELLI, I;
CHRISTOPHER TOMASULO; and
BONNIE A. HARRIS,

eS SSS SS HS SH HS SH SSS SS SY

Defendants.

MEMORANDUM OPINION AND ORDER
Plaintiff, Federal Trade Commission (“FTC”), brought suit against Defendants, Bay Area
Business Council, Inc.; Bay Area Business Council Customer Service Corp.; American Leisure Card
Corp.; Bay Memberships, Inc.; Bay Vacations, Inc.; Sr. Marketing Consultants, Inc.; Special
Technologies, Inc.; Peter J. Porcelli, JI; Christopher Tomasulo; and Bonnie A. Harris (collectively
“Defendants”), alleging violations of Section 5(a) of the Federal Trade Commission Act (“FTC
Act”), 15 U.S.C. § 45(a), and violations of the FTC’s Telemarketing Sales Rule, 16 C.F.R. §

310.3(a). Presently before the Court is Bay Vacations, Inc.’s Motion to Dismiss or alternatively,


Motion for Summary Judgment! based on lack of personal jurisdiction and failure to state a claim
upon which relief can be granted.

In reviewing a motion to dismiss for lack of personal jurisdiction under F ederal Rule of Civil
Procedure 12(b)(2), the allegations in the complaint are to be taken as true, unless controverted by
the defendants in affidavits or other materials submitted by the parties. Turnock v. Cope, 816 F.2d
332, 333 (7th Cir. 1987); O'Hare Int’l Bank y. Hampton, 437 F.2d 1173, 1176 (7th Cir. 1971). In
reviewing a motion to dismiss for failure to state a claim upon which relief can be granted, the court
reviews all facts alleged in the light most favorable to the plaintiff. Marshall-Mosby v. Corporate
Receivables, Inc., 205 F.3d 323, 326 (7th Cir..2000).

For the purposes of this Motion to Dismiss, the following allegations are taken as true.

Since at least June 2000, Defendants, acting directly or through their employees and agents,
have solicited consumers by telephone throughout the United States and Canada, promising to
provide credit cards to consumers in exchange for an advance fee, typically ranging from $169.95
to $499.00. During most of these telephone calls, Defendants offer to provide consumers with an
unsecured MasterCard, with no security deposit, regardless of the consumer’s credit history. The
Defendants tell the consumer that he or she is pre-approved for the credit card and assure the
consumer that, if he or she pays the required fee, the consumer will receive the credit card. In the
phone calls, Defendants persuade the consumer to divulge their checking account information,

including their name as it appears on the account, the account number, and the bank routing

‘Bay Vacation invites the Court to treat.the Motion to Dismiss as a Motion for Summary
Judgment if the Court determines that such conversion is required. However, converting the
Motion to Disrniss to a Motion for Summary Judgment is not required under the facts of this case
and at this stage of litigation.