F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

F E D E R A L T R A D E C O MM I S S I ON , Plaintiff-Appellee
,

v.

C ON S UM E R D E F E

N S E , L L C, a Nevada limited liability

company ; C ON S UM E R L I

N K , I N C ., a Nevada corporation; B E

N J A M I N R. H O R

T ON , in his individual and corporate capacity ; Defendants
,

and

P R E F E R R E D L AW , PL L C, a Utah professional limited liability company ; A M E R

I C A N H O M E L O A

N C O U N S E L O R S , a Utah limited liability company ; C ON S UM E R D E F E N S E G R O UP , L L C, F KA Modification Review B oard, L L C, a Utah limited liability company ; C ON S UM E R D E F E N S E , L L C, a Utah limited liability company ; B R

O W N L E G A L , I N C ., a Utah corporation; AM P R O P E R T Y M A N A G E M E N T , L L C, a Utah limited liability

company ; F MG P A

R TN E R S , L L C, a Utah No. 18-15462

D.C. No. 2:18-cv-00030- J CM-PAL

OPI NI ONF T C V

. P R E F E R R E D L A W 2

limited liability

company ; Z I

N L Y , L L C, a Utah limited liability company ; J ON

A T H A N P. H A N L E Y , in his individual and corporate capacity ; S A

N D R A X. H A NLE Y , in her individual and corporate capacity ; A M E R I C A N H O M E L O A

N S , L L C, a Utah limited liability

company , Defendants-Appellants
,

_____________________________
T H O M A S W

. M C

N A M A R A , Receiver-Appellee

.

Appeal from the United States District Court for the District of Nevada J ames C. Mahan, District J udg e, Presiding

Argu ed and Submitted September 14, 2018 San F rancisco, California

F iled J une 17, 2019

B efore: J ohnnie B . Rawlinson, Paul J . W atford, and Michelle T. F riedland, Circuit J udg es.
Opinion by

J udg e RawlinsonF T C V

. P R E F E R R E D L A W 3

SUMMARY *

F ederal Trade Com m ission

The p an e l a f

f irmed the district court’s order entering a preliminary injunction f

r e ez ing all of the defendants’ a ssets in connection with C o n sumer Defense Global’s loan modification business operations in a n action initiated by the F ederal Trade Commission (F TC) allegi n g violations of the F TC Act and Reg ulation O, 12 C.F .R. Part 1 0 15 – Mortg ag e Assistance Relief Services.

The parties ag reed t h at the F TC broug ht the action pursuant to the second proviso of Section 13(b) o f the F TC A c t , w hich allows the F TC to seek injunctive relief withou t initiating administrative action, but d isputed whether the F TC

was required to demonstrate a likelihood of irreparable harm to obtain relief.

The panel held that althou gh i n t he ordinary case a showing of irreparable harm w as required to obtain injunctive relief, n o such showing was required w h e n i njunctive relief

was soug ht in conjunction w i th a statutory enforcement action where the applicable statute authoriz e d injunctive relief. The panel further held that circuit p recedent to that effect did not prese n t an irreconcilable conflict with the holding in W inter

v

. N a tural Resource Defense Council, Inc. , 555 U.S. 7, 2 0 (2008), a nd remained valid. The panel concluded that t he district court committed no error in g ranting the motion f or a

* T h is su m m ary co n stitu

tes n o p art o f th e o pin io n o f th e co urt. It h as b eenp rep ared b y

co urt staf

f f o r th e co n v en i en ce o f

th e read er.F T C V

. P R E F E R R E D L A W 4
preliminary injunction w ithout requiring the F TC to make the traditional showing of irreparable injury

.
The panel addressed c h a lleng es to the district cou r t ’s jurisdiction and the scope o f the injunction in a concurrently filed memorandum disposition.

COUNSEL

Karra J

. Porter (arg

ued) and Sarah E. Spencer, Christensen & J ensen, P.C., Salt L ake City
, Utah, for D efendantsAppellants.

I mad D. Aby ad (arg

ued), A t t o rney ; J oel Marcus, Deputy General Counsel; Alden F

. Abbott, General Counsel ; Greg ory A

. A she and Adam M. W esolowski, Attorney s; J

. Re i l l y Dolan, Acting Director; B ureau of Consumer Prot e c t ion; F ederal Trade Commission, Washing ton D.C.; f o r P l aintiffAppellee.
No appearance for Receiver-Appellee.F T C V

. P R E F E R R E D L A W 5

OP INION

RAW L I NSON, Circuit J udg e:

This appeal stems from a

n action initiated by the F ederal Trade Commission (F TC) al l e gi ng v iolations o f the F ederal Trade Commission Act, 15 U.S.C. § 45, a n d R eg ulation O
, 12 C.F .R. Part 1015 - Mortga g e A s sistance Relief Services (the MARS Rule). De f

e n d ants-Appellants Preferred L aw, PL L C; American Home L oan C o u n s e l o r s ; C o n sumer Defense Group, L L C; Consumer Defense, L L C; Br own L eg a l, I nc.; AM Property Manag ement, L L C; F MG Partners, L L C; Z inly
, L L C; J onatha n P

. Hanley ; Sandra X. Hanley ; and American Home L o ans, L L C (collectively
, Consumer Defense Global) appeal the district court’s order entering an injunction freez ing a ll of the d efendants’ ass ets in connection with Consumer D efense Global’s loan modificati o n business operations. 1

Consumer Defense Global c o ntends that the district court

e r r e d as a matter of law because the court presum e d irreparable harm, r ather than requiring that t h e F TC demonstrate a likelihood of irreparab l e h a rm. W e have jurisdiction p u r s u ant to 28 U .S.C. § 1292(a)(1), a nd we affirm. 2

1 Co n su m er Def en se- Nev ad a, Co n su

m er L in k

- Nev ad a, an d Ben j am in Ho rto n d o n o t j o in

th e in s tan t

ap p eal.

2 Co n su m er Def en se Glo b al also ch allen g es th e d istrict c o u r t ’s j urisd ictio n an d th e sco p e o f th e in j u n ctio n

. W e ad d ress th ese claim s i n a
co n curren t ly

f iledm em o ran dum

d isp o s itio n

.F T C V

. P R E F E R R E D L A W 6

I. BACK G R OUND

I n J anuary of 2018, the F TC broug ht an a ction in federal district c ourt in the D istrict o f Nevada ag ainst Consumer Def e nse, L L C ( Consumer Defense-Nevada); Consumer L ink, I nc. (Consumer L ink-Nevada); B enjamin Horton, an attorney employ e d by Consumer D efense Global; and Cons u mer Defense Global. The F TC alleg ed that Consumer D efenseNevada, Consumer L ink-Nevada, B enjami n Horton, a nd Consumer D efense Global, directed and controlled b y J onathan H anley
, Sandra Han ley
, and B enjamin H orton,

“ o p e rated as a common e nterprise while eng ag ing in t h e deceptive acts and practices” of “lur ing [ financially distressed homeowners] into sig ning contracts for MARS services with promises that they [ would] receive ex pert leg al assistance

. . . that [ would] stop them fro m go ing into foreclosure a nd modify their mortg ag e loans to m a k e their pay ments more affordable.”

The F TC asserted that, “throug h an interrelated n e t work of companies” w ith common ownership, manag ement, phy sical locations, comming led funds, and marketing materials, the defendants d eceived consume r s b y regularly

m isrepresenting the likelihood of obtaining a successf u l modification, improperly c h a r g ing advance f ees for modi f i c ation services, sug g esting an affiliation w ith o r endorsement by g overnment p rog rams, and instructing customers to cease making their mortg ag e pay ments. As part of this common enterprise, the F TC al l e ged, each of the defendants had transacted business in the District of Nevada,

as well as throug h o u t t h e United States. The F TC f urther alleg ed that, in numerous instances, the defendants f ailed to obtain relief for their customers, sometimes never contacting the lender s at all. As a result of these practices, consumersF T C V

. P R E F E R R E D L A W 7

incurred substantial f

ees and penalti e s , with some entering foreclosure and losing

their homes.

I n connection with these activities, the F TC charge d t he def e n d a n t s w ith two v iolations of the F TC Act: making “deceptive representations reg ar d ing substantially more affordable loan p a y

ments, substantially lower interest rates,

or foreclosure avoidance” (Count I ), and making “d e c eptive representations reg arding loan modification services” (Count I I ). The F TC charg ed the d efendants w ith four violations o f the MARS Rule: requesting “advance pay ments for mortg ag e assistance relief services” (Count I I I ); makin g p rohibited representations that consumers s e e king loan modifications “cannot or should not contact or communicate with his or her lender” (Count I V) and material misrepresentations reg arding the likelihood of obtaining a modification, the defendants’ affiliation with g overnmental ag encies, a nd the consumer’s oblig ation to make pay

ments on the current loan (Count V); and failing t o clearly and prominently make r equired disclosures (Count VI ). The F TC soug ht an i n j u nction a

nd other equitable relief p ursuant to S e ct i on 13(b) of the F TC Act, 15 U.S.C. § 53(b).

On the same da y , the F TC filed an emerg ency ex parte motion for a temporary restraining order (TRO), for a n asset freez e, for appointment of a rec e iver, and for an order to show cause ( OSC) as to why a preliminary injunction should not issue. The district court g r anted the motion.

I n support of its request for a preliminary injunction, the F TC asserted that it was likely to succeed on the merits, and that the b a l a n c e of equities tipped in the public’s favor. The F TC maintained that i r re p a rable harm was presumed for purposes o f a statutory

enforcement action, but in a footnoteF T C V

. P R E F E R R E D L A W 8

argued that it could nevertheless d emonstrate irreparable harm: without r elief

, t h e FTC a sserted, there would be a “likely destruction of evidence and dissipation of assets,” a nd

more consumers were likely to suffer financial harm from the defendants’ activities.

T h e d efendants f

iled a n opposition to the preliminary injunction request. Consumer Defense Global conceded that “they failed to make MARS-worded disclosures to some consumers,” and “in a number o f i n stances, they collected fees for services before the ex ecution of a written ag reement between the consumer and his or h er loan holder or servicer,

w hich is a violation of the MARS Rule.” Nevertheless, Consumer Defense Global contended that a preliminary injunction was unwarranted b e c a u se they had secured loan modifications for the majority o f their customers, a nd with only a f ew e x ceptions, the F TC faile d t o d emonstrate that Consumer Defense Globa l n eg lected to provide MARSrequired disclosures, or that consumers w e re harmed b y the absence of required d isclosures. Consumer Defense Global contended that the F TC did not demonstrate irreparable harm or a likelihood of success on the merits.

Fo l l o w ing a hearing
, the district court entered an ord e r preliminarily enjoining C onsumer Defense Global from eng ag ing in v ar ious business practices that the court determined to be in violation of the F T C Act and the MARS Rule, as well as freez ing all o f C o nsumer Defense Global’s assets.

Consumer Defense G lobal a ppealed the district court’s order, c o n t e n d ing that the district c o urt erred by g ranting an i n junction without requiring the F TC to demonstrate irreparable harm.F T C V

. P R E F E R R E D L A W 9

II. LEG AL STANDARDS

“A p reliminary injunction should only be set aside if the district court abused its discretion o r based its d ecision on an
e r r oneous leg al standard or on clearly e rroneous finding s o f fact.

. . .” Puente Arizona v. A rpaio , 821 F .3d 1098
, 1103 (9th Cir. 2 016) ( citation and internal quotation marks omitted). “W e re v iew the district c ourt’s leg al conclusions de novo , the factual finding s underlying its decision for clear
error, and the injunction’s scope for abuse of discretion.” K.W . ex rel. D.W

. v

. Armstrong
, 789 F .3d 962, 969 (9th Cir. 2015) (citation omitted).

III. DISCUSSION

Section 13(b) of the F TC Act contains two p rovisos under which the F TC may bring an actio n to enjoin activity in violation of the Act. The first proviso applies when the F TC intends to initiate administrative act i on and provides in pertinent part:

Upon a proper showing that, weig hing the equities and considering the C o mmission’s likelihood of ultimate success, su c h action would be in the public interest, an d a fter

n otice to the defendant, a temporary restrai n i ng order or a preliminary injunction may be g ranted . . .

15 U.S.C. § 5 3 ( b). This proviso “places a lig hter burden on the Commission than that imposed on private litig ants by the traditional e quity standard; the Commission need n o t show irreparable harm to obtain a prelimin a r y i njunction.” F.T.C.F T C V

. P R E F E R R E D L A W 10

v. W a rner Commc’ns Inc. , 742 F. 2 d 1156, 1159 (9th Cir. 1984) (citations omitted).

Th e second proviso allows the F TC to seek injunctive relief without initiating a dministrative action and states:

“Provided

further
, That in p roper cases the Commission may seek, and after proper proof, the c ourt may issue, a p ermanent injunction.” 15 U .S.C. § 5 3(b) (emphasis in the or i gi nal). I nterpretingthe second proviso, we have held that:

[ B ] ecause the district court has the power to issue a permanent injunction to enjoin acts

or practices that v i o l ate the law enforced b y the Commission, it also has authority to g rant whatever preliminary injunctions are justified by the usual equitable standards and a re soug h t in acc o r dance with [ F e deral] Rule [ o f Civil Procedure] 65(a).

F.T.C. v. H. N. Singer, Inc. , 668 F

. 2d 1 1 0 7 , 1 1 1 1 ( 9 th Cir. 1982); see also F ed. R. Civ. P. 65.

The parties agree that the F TC broug ht the instant action pursuant to the second proviso, but dispute whether the F TC

was required to demonstrate a likelihood of irreparable harm to obtain relief. Consumer Defense Global contends that the F TC was required to demonstrate a likelihood of irreparable harm, a s e stablished in W inter v

. N a tural Resource Defense Council, Inc

. , 555 U.S. 7 , 2 0 (2008). T h e F TC counters that in a case inv o l v ing statutory enforcement where the g overn i n g statute authoriz es injunctive relief, irreparable harm is presumed, and a co u r t need o n ly weig h the equities and consider the likelihood of success on the merits

. S eeF T C V

. P R E F E R R E D L A W 11

F.T.C. v

. W

orld W ide Factors, Ltd.
, 882 F. 2 d 3 4 4
, 346–47 (9th Cir. 1989), as a mended ; see also United States v. O dessa Union W arehouse C o

- o

p , 833 F

. 2d 172, 175–76 (9th Cir. 1987).

The F TC’s position is supported by our prec e d e nt. See W orld W ide F actors , 882 F .2d at 346 (“Pursuant to 15 U .S.C. § 53(b), the d istrict court is required ( i) to weig h equities; a nd (ii) to c onsider the F TC’s l ikelihood of ultimate success before entering a preliminary injunction. Harm to the public interest is presumed

. ”) (ci t a t i on omitted) (emphasis added);

see also Odessa
, 8 33 F .2d at 17 5 ( “W here an injunction is authoriz ed b y statute, and the statutory conditions a re satisfied

. . ., the ag ency to whom the enforcement of the rig ht has been e ntrusted is not required to show irreparable injury . . . .” (citations and footnote reference omitted). 3

Consumer Defense Global relies o n the well-established injunction standard most recently articulated by the Supreme Court in W

inter , 555 U.S. at 20:

A p laintiff seeking a preliminary i n j unction must establish that he is likely t o succeed on the merits, that h e is likely to suffer irrepa r able harm in the absence o f preliminary relief, that the b alance of equities t i ps in his favor, and that an injunction i s i n the public interest. (Emphasis added).

3 It i s un d i s p u ted th at t h e FT C o th erw ise satisf ied th e statuto ry
co n d itio n s f

o r im p o sitio n o f anin j un ctio n

.F T C V

. P R E F E R R E D L A W 12

Our precedent eliminating the requirement of a showing of irreparable harm in c a ses of statutory enforcement, where

an injunction is authoriz ed by the applicable statute, pre-dates the Supreme Court’s W inter decision. Consequently
, the question arises whether o ur cases e liminating the irreparable harm showing for actions involving statutory enforcement, where an injunction is authoriz ed by the applic a b l e statute, remain g ood law. W e a ddressed h ow to approach this kind o f question in Miller v. Gammie
, 335 F .3d 889, 899 (9th Cir. 2003) (en banc). I n Miller
, we h el d that if a “court o f last resort [ has] undercut the t h e o ry or reasoning underly ing the prior circuit precedent in such a way that the cases are clearly irreconcilable,” the prior circuit precedent cannot stand. Id

. at 900. I f the cases are “clearly irr e c o n c ilable,” the prior irreconcilable case f

rom the lower court is “effectively overruled.” I

d

.

I n a pply ing the holding of Miller
, we have em p h a s i z ed that the “clearly irreconcilable” requi r e m ent “ is a hig h standard.” Rodriguez v. AT & T Mobility Servs. L L C
, 7 2 8 F .3d 975, 979 (9th Cir. 2 013). We e x plained that if w e can apply our precedent consistently with that of th e h i gh er authority
, we must do so. See id

. at 979–80. W e clarified that “[ i] t is not enoug h fo r t h ere to be some tension between the intervening hig her authority and prior circuit precedent.” Id

. (quoting Lair v. Bullo c k
, 6 9 7 F .3d 1200, 1207 (9th Cir. 2012)).
Admittedly
, there is some tension betw een the Supreme Court’s holding in W

inter and our h olding s in W orld W ide Factors and Odessa

. W

i nter includes the requirement of a
s howing o f irreparable h arm, a n d W orld W ide Factors a n d Odessa eliminate that r equirement for c ases involvingF T C V

. P R E F E R R E D L A W 13

statutory enforcement where the applicable statute a uthoriz e s injunctive relief. See W

inter , 555 U.S. at 20; cf

. W orld W ide Factors , 882 F .2d at 346; Odessa
, 833 F .2d at 175. However,

as discussed, mere tension between the cases does not meet t he hig h standard o f irreconcilable conflict. See Roberts o n , 875 F .3d at 1291. Rather, we must determine if the c ases can be applied consistently

. See id

.
W e conclude that the cases can be applied consi s t ently

. Notably
, the i r r eparable h arm r equirement articulated in W inter is also present in earlier S upreme Court cases referenced in W

inter

. See e.g., Amoco Prod. Co. v. Village of Gambell
, 480 U.S. 5 31, 542 (1987) (“[ T] he bases for injunctive relief are irreparable injury and inadequacy of leg al remedies

. . . .”). Therefo r e , W inter did not purport to introduce the irreparable h arm requirement as a new component of the preliminary injunction rubric, but c larified application of the well-established e q uitable test for a preliminary

injunction. I ndeed, in Odessa we acknowledg ed pre- W inter that “[ t] o obtain a prelimi n a r y injunction, the movant must ordinarily show that the r e e x ists a sig nificant threat of irreparable injury .” 833 F

. 2d at 175 ( e m p h asis added). W e then proceeded to descri b e the ex ception to the ordinary circumstance: when the i n junction is soug ht as a corollary to statutory enforcement, and the applicable statute authoriz es injunctive relief. S ee id

.
The D.C. Circuit discussed this distinction at some leng th in F.T.C. v. W

e yerhaeuser Co
., 665 F .2d 1072, 1081 (D.C. Cir. 1981). Addressing 15 U. S

. C

. § 5 3(b), the D.C. Circuit noted that the Conference Report ex plaining “the derivation and purpose” of § 5 3(b) confirmed Cong ressional intent “ not t o impose the traditional

. . . standard of irreparable damageF T C V

. P R E F E R R E D L A W 14

. . .” (quoting H.R. Rep. No. 93-624 at 1 8
, (1973), as reprinted in 1973 U. S

. C

. C. A. N. 2523, 2533). The D.C. Circuit emphasiz ed that Cong ress “intended to c o dify the decisional law” that “lig htened the ag ency ’s b urde n b y eliminating the need to show irreparable harm.” Id

. at 10 8 2. I n such cases, where the statute specifically authoriz es injunctive relief, “irreparable injury should be presumed from the v ery fact that the statute has been violated.” United States

v. Hayes Int’l Corp
., 415 F .2d 1038, 1045 (5th Cir. 1969). B y specifically authoriz ing injunctive relief upon a showing that the statute was violated, Cong r ess essentially incorporated a presumption of irrepar able injury into § 13(b). See id .; see also W eyerhaeuser , 665 F .2d at 1082.

These c ases demonstrate how W inter , W orld W ide Fa c tors , and Odessa can co-ex ist. I n the ordinary case, i.e

. one not involving statutory enforcement, the traditional irreparable injury

showing is required. On the other hand, in

a case involving statutory enforcement, where the applicable statute authoriz es injunctive relief, the traditional irreparable injury showing is not r equired. B ecause W inter d id not address injunctive relief in t h e c o ntex t of statutory enforcement and because the ca ses can be easily reconciled, the hig h standard desc r ibed in M iller for invalidating prior

c a s e s d ue to intervening a u thority has not been met. See Robertson
, 875 F .3d at 1291. Thus, our precedent eliminating the traditional showing of i r r e p a r able harm in cases o f statutory enforcement, where the applicable s t a t ut e a uthoriz e s injunctive relief, remains intact. T he district court committed

no error in presuming the ex istence of irreparable i n j u r y in accordance with our precedent.F T C V

. P R E F E R R E D L A W 15

IV. Conclusion
Althoug h in the o rdinary c ase a showing of i r r e p a rable harm is r equired to obtain injunctive relief, no such showing is required when injuncti v e relief is soug ht in conjunction

w i t h a statutory enforcement action where the a pplicable statute authoriz es injunctive relief. Our p recedent to that effect does n ot present an irreconcilable conflict with W inter and remains v a l i d

. T he district c ourt committed no error in g ranting the motion for preliminary injunction without requiring the F TC to make t h e traditional showing o f irreparable injury

.
AF F IRMED

.