Court Opinion

ID: 9366595
Source: CourtListenerOpinion
Date Created: 2023-01-27 15:00:24.31057+00
Date Added: 2024-06-11T17:15:53.842135
License: Public Domain

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                                                                [PUBLISH]
                                      In the
                 United States Court of Appeals
                          For the Eleventh Circuit

                            ____________________

                                   No. 21-13116
                            ____________________

        FEDERAL TRADE COMMISSION,
                                                         Plaintiff-Appellee,
        versus
        SIMPLE HEALTH PLANS LLC,
        a Florida Limited Liability Company, et al.,

                                                               Defendants,

        STEVEN J. DORFMAN,
        individually and as an officer, member or manager of Simple
        Health Plans LLC, Health Benefits One LLC, Health Center
        Management LLC, Innovative Customer Care LLC, Simple
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        2                     Opinion of the Court                21-13116

        Insurance Leads LLC, and Senior Benefits One LLC,

                                                     Defendant-Appellant.

                            ____________________

                  Appeal from the United States District Court
                      for the Southern District of Florida
                     D.C. Docket No. 0:18-cv-62593-DPG
                           ____________________

        Before WILLIAM PRYOR, Chief Judge, JILL PRYOR, and GRANT,
        Circuit Judges.
        GRANT, Circuit Judge:
               The Federal Trade Commission alleges that Steven J.
        Dorfman and his six companies engaged in unfair or deceptive
        business practices in violation of § 5(a) of the Federal Trade
        Commission Act and the Telemarketing Sales Rule. 15 U.S.C.
        § 45(a); 16 C.F.R. Part 310. Relying on its authority under § 13(b)
        of the FTC Act, the Commission obtained a preliminary injunction
        that included an asset freeze and the imposition of a receiver.
        Dorfman now argues that the preliminary injunction must be
        dissolved because a recent Supreme Court decision undermines
        the Commission’s § 13(b) authority. See AMG Cap. Mgmt., LLC
        v. FTC, 141 S. Ct. 1341, 1344 (2021).
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        21-13116                    Opinion of the Court                                 3

               He is right that the decision limits the Commission’s § 13(b)
        authority, but wrong about what that means here. The
        Commission’s updated complaint also invokes § 19 against
        Dorfman, and that provision authorizes the asset freeze and
        receivership. We therefore affirm the order denying Dorfman’s
        emergency motion to dissolve the preliminary injunction.
                                                I.
                                                A.
                For over four years—starting in 2013 and continuing until
        the Commission began this action in October 2018—Dorfman and
        the companies under his control engaged in a “bait and switch”
        scheme to sell underinclusive health insurance plans to unwitting
        consumers. 1 The technical term for these plans is “limited
        indemnity plans and medical discount memberships.” But as the
        district court put it, they are more like grocery store savers cards
        than health insurance. They allow consumers to purchase medical
        services at pre-negotiated discount rates, but the consumer retains
        the risk of catastrophic medical bills. And if that risk becomes a
        reality? The plans are “practically worthless.”

        1 Because Dorfman does not challenge the district court’s findings of      fact, we
        draw our recitation of the facts from the facts as they existed at the preliminary
        injunction stage. The parties have engaged in substantial discovery since the
        preliminary injunction was entered, and at summary judgment specific facts
        may be different. The facts recited here are for the purposes of this appeal
        only.
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        4                     Opinion of the Court                21-13116

               The Commission says that Dorfman led consumers to
        believe they were purchasing comprehensive insurance plans that
        would shift the risk of catastrophic bills to insurers and cover “a
        large portion of the expense for doctor’s visits, emergency room
        visits, hospital stays, laboratory services, and prescription
        medicine.” Dorfman’s companies also wrongly assured consumers
        that the plans they purchased would allow them to avoid the
        Affordable Care Act’s tax penalty for non-compliant plans.
                The alleged misrepresentations did not end there.
        According to the Commission, the companies falsely represented
        that they were experts on, and providers of, government-
        sponsored health insurance policies. On their websites, they
        claimed—again, falsely—that they were affiliated with the AARP
        and the Blue Cross Blue Shield Association. The companies’ lead
        generation tactics were also less than straightforward. For
        example, when consumers searched Google for “Obama Care
        Insurance” the top results included “obamacarequotes.org.” This
        website—which was designed to give the impression that it offered
        comprehensive health insurance—prompted consumers to
        provide their contact information. A salesperson would then
        initiate contact, following a script that Dorfman himself “wrote,
        reviewed, and approved.” Like the websites, these scripts
        contained misrepresentations designed to push consumers into
        Dorfman’s inferior plans.
              Only after payment was collected was it (sometimes)
        revealed to consumers that they had purchased limited benefit
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        21-13116               Opinion of the Court                       5

        plans. At the end of their calls, consumers were transferred to a
        new salesperson to hear a series of densely worded and difficult-to-
        comprehend disclosures. But before this “verification process,”
        consumers were warned not to ask any questions and were told by
        their initial sales representative that only some of the information
        they were about to hear would apply to them—a caveat designed
        to suggest that anything inconsistent with the salesperson’s earlier
        representations did not apply. Verification scripts also varied
        depending on whether the call was being recorded. If it was, the
        sales reps were directed to give honest answers to consumers’
        questions. But if it was not, they were instructed to continue to
        mislead consumers into believing that they had purchased
        comprehensive health insurance.
               The Commission alleges that these sales were as profitable
        as they were dishonest: Dorfman and his companies received over
        $180 million in commissions from the plans. Their customers,
        meanwhile, were stuck with surprise medical bills. In one example
        cited by the district court, a consumer was led to believe that his
        copays would be limited to $50 and his out-of-pocket expenses
        capped at $2,000. But by the time he passed away (about four
        months after purchasing his plan) he had incurred around $300,000
        in uncovered medical bills. This was only one example—extensive
        evidence detailed other injuries Dorfman’s scheme inflicted on
        consumers.
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        6                           Opinion of the Court                        21-13116

                                                B.
               In October 2018, the Commission filed a complaint against
        Dorfman and six companies he owned and controlled.2 The
        complaint alleged violations of § 5(a) of the FTC Act, which
        broadly prohibits “unfair or deceptive acts or practices in or
        affecting commerce.” 15 U.S.C. § 45(a). 3 It also alleged violations
        of the Telemarketing Sales Rule, which prohibits sellers and
        telemarketers from misrepresenting, whether directly or by
        implication, any “material aspect of the performance, efficacy,
        nature, or central characteristics of goods or services that are the
        subject of a sales offer.” 16 C.F.R. § 310.3(a)(2)(iii). In addition, the
        rule bars sellers and telemarketers from misrepresenting, whether
        directly or by implication, a “seller’s or telemarketer’s affiliation
        with, or endorsement or sponsorship by, any person or
        government entity.” Id. § 310.3(a)(2)(vii). And it prohibits sellers
        and telemarketers from making false or misleading statements to
        induce a person to pay for goods or services. Id. § 310.3(a)(4).
               Immediately after suing, the Commission obtained an ex
        parte temporary restraining order. Among other things, the order

        2 Dorfman’s companies are Simple Health Plans LLC, Health Benefits One
        LLC, Health Center Management LLC, Innovative Customer Care LLC,
        Simple Insurance Leads LLC, and Senior Benefits One LLC.
        3 Throughout this opinion, we refer to the provisions of the FTC Act as it was
        enacted. For clarity, we note that § 5(a) of the FTC Act is codified at 15 U.S.C.
        § 45(a); § 13(b) is codified at 15 U.S.C. § 53(b); and § 19 is codified at 15 U.S.C.
        § 57b.
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        21-13116              Opinion of the Court                       7

        froze the companies’ assets and imposed a temporary receivership.
        It also prohibited Dorfman and his companies from continuing to
        make material misrepresentations and from disclosing or using
        customer information.
               Dorfman consented multiple times to an extension of the
        order, but he eventually moved to strike it. The district court
        denied his motion, and when he appealed to this Court we
        dismissed for lack of jurisdiction. FTC v. Simple Health Plans,
        LLC, No. 19-10840 (11th Cir. Apr. 16, 2019).
               The district court later granted a preliminary injunction
        continuing the measures imposed by the temporary restraining
        order, including the asset freeze and receivership. The court found
        that the Commission was likely to succeed on the merits of both
        the § 5(a) claim and the Telemarketing Sales Rule claim. The
        authority to issue the injunction was grounded exclusively in
        § 13(b) of the FTC Act—a provision that, at that time, was broadly
        thought to authorize the Commission to seek monetary awards for
        consumer redress whenever it had reason to believe that any law it
        enforced was being violated. See 15 U.S.C. § 53(b).
              Dorfman directly appealed the order granting the
        preliminary injunction on grounds not relevant here. FTC v.
        Simple Health Plans, LLC, 801 F. App’x 685, 687 (11th Cir. 2020)
        (unpublished).     We held that our then-binding precedent
        compelled us to affirm. Id. at 688. With that appeal still pending,
        Dorfman filed his first motion to dissolve the preliminary
        injunction, again on grounds not relevant here. The district court
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        8                       Opinion of the Court                  21-13116

        denied that motion. On appeal, we again held that then-binding
        precedent compelled us to affirm the district court. FTC v. Simple
        Health Plans, LLC, 792 F. App’x 761, 762 (11th Cir. 2020)
        (unpublished).
               The Commission filed its first amended complaint in
        November 2019, a little more than a year after its original filing.
        Besides adding a new defendant, the Commission added one more
        basis for relief—§ 19 of the FTC Act. The district court dismissed
        parts of the amended § 5(a) claim for failure to allege sufficient facts
        detailing the individual involvement of Dorfman and the other
        defendant. Shortly after that dismissal, the Commission remedied
        this deficiency in the now-operative Second Amended Complaint.
              In 2021, three years into this litigation, the Supreme Court
        narrowed the relief available under § 13(b) of the FTC Act—
        monetary awards are no longer an option under that provision.
        AMG Cap. Mgmt., 141 S. Ct. at 1344. Dorfman immediately filed
        an emergency motion to dissolve the preliminary injunction,
        arguing that because § 13(b) could no longer support claims for
        monetary relief, the preliminary injunction freezing his assets and
        imposing a receivership was unlawful.
               The district court denied his motion, but not in reliance on
        § 13(b). It instead grounded its authority to issue the preliminary
        injunction in § 19 of the FTC Act. Dorfman now appeals, and we
        affirm.
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        21-13116               Opinion of the Court                         9

                                         II.
               We review a district court’s denial of a motion to dissolve a
        preliminary injunction for abuse of discretion. Jones v. Governor
        of Florida, 950 F.3d 795, 806 (11th Cir. 2020). Findings of fact are
        reviewed for clear error and questions of law are reviewed de novo.
        Id.
                                         III.
                                         A.
               Section 13(b) of the FTC Act authorizes the district court to
        issue a “permanent injunction.” 15 U.S.C. § 53(b). Many courts,
        including this one, long interpreted that language to invoke the full
        scope of the district courts’ equitable powers. See, e.g., FTC v. U.S.
        Oil & Gas Corp., 748 F.2d 1431, 1432–34 (11th Cir. 1984); AMG
        Cap. Mgmt., 141 S. Ct. at 1346–47. This included the power to
        grant monetary awards such as restitution and disgorgement (or
        so-called “equitable monetary relief”). AMG Cap. Mgmt., 141 S.
        Ct. at 1346–47. Using that authority, the Commission routinely
        obtained monetary awards from defendants who violated various
        consumer protection and antitrust laws. See id. But in AMG
        Capital, the Supreme Court changed that understanding—it held
        that the text and structure of the FTC Act limit the meaning of the
        term “permanent injunction” to forward-looking injunctive relief,
        rather than retrospective monetary measures. Id. at 1347–48.
        Injunctive relief, the Court clarified, “typically offers prospective
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        10                         Opinion of the Court                       21-13116

        relief against ongoing or future harm.” Id. at 1347 (citing United
        States v. Oregon State Med. Soc., 343 U.S. 326, 333 (1952)).
               We agree with Dorfman that after AMG Capital the
        Commission cannot rely solely on § 13(b) to support the
        preliminary injunction here because it includes measures
        preserving assets for monetary relief. Now that “monetary relief is
        no longer available” under § 13(b), “there is no need to preserve
        resources for a future judgment.” FTC v. On Point Cap. Partners
        LLC, 17 F.4th 1066, 1078 (11th Cir. 2021). The “imposition of an
        asset freeze or receivership” is thus inappropriate when premised
        solely on § 13(b). Id.
                But the injunction here is not premised solely on § 13(b); the
        Commission also points to § 19, the FTC Act’s consumer redress
        provision. That provision authorizes the district court to grant
        “such relief as the court finds necessary to redress injury to
        consumers.” 15 U.S.C. § 57b(b). Unlike § 13(b), which applies to
        violations of “any provision of law enforced by the Federal Trade
        Commission,” id. § 53(b), § 19 authorizes the Commission to
        commence a civil action only if the defendant violates a “rule under
        this subchapter respecting unfair or deceptive acts or practices” or
        if the Commission obtains a final cease-and-desist order respecting
        an unfair or deceptive act or practice, id. § 57b(a)(1)–(2). 4

        4 Certain additional limitations apply when the Commission is seeking relief
        after obtaining a final cease and desist order. See 15 U.S.C. § 57b(a)(2). But it
        is undisputed that the Commission has not obtained a cease-and-desist order.
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        21-13116                 Opinion of the Court                          11

                Section 19 thus “comes with certain important limitations
        that are absent in § 13(b).” AMG Cap. Mgmt., 141 S. Ct. at 1349.
        But its potential remedies are broader, or at least different. Section
        13(b), as we have said, allows for prospective injunctive relief. 15
        U.S.C. § 53(b). Section 19, on the other hand, allows for relief
        “necessary to redress injury to consumers.” Id. § 57b(b).
               This case, then, presents two questions. First, does § 19
        apply to the Telemarketing Sales Rule? And second, if so, does it
        authorize the preliminary measures Dorfman challenges?
               On the first question, Dorfman argues that § 19 does not
        cover his alleged violation of the Telemarketing Sales Rule because
        that rule falls within a different subchapter than § 19. And § 19 is
        explicitly limited to the violation of a “rule under this
        subchapter”—that is, subchapter 1 of Title 15, Chapter 2. Id. §
        57b(a)(1). In short, Dorfman says, the Telemarketing Sales Rule
        was promulgated under the Telemarketing Act, which is not found
        in the same subchapter as § 19.
               True enough, but this analysis is incomplete. A more
        thorough review shows that rules prescribed under the
        Telemarketing Act—including the Telemarketing Sales Rule at
        issue here—are enforceable under § 19. See FTC v. Wash. Data
        Res., Inc., 704 F.3d 1323, 1326 (11th Cir. 2013). The Act states that
        a violation of one of its rules “shall be treated as a violation of a rule
        under section 57a of this title regarding unfair or deceptive acts or
        practices.” 15 U.S.C. § 6102(c)(1). And § 57a is in subchapter 1 of
        Title 15, Chapter 2. See id. § 57a.
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        12                        Opinion of the Court                    21-13116

               The statutes at large make the point even more
        straightforward. 5 As enacted by Congress, the Telemarketing Act
        states that “[a]ny violation of any rule” prescribed under the Act
        “shall be treated as a violation of a rule under section 18 of the
        Federal Trade Commission Act (15 U.S.C. 57a) regarding unfair or
        deceptive acts or practices.” Telemarketing and Consumer Fraud
        and Abuse Prevention Act, Pub. L. 103-297, § 3(c), 108 Stat. 1545,
        1546 (1994). So—for purposes of triggering § 19—by expressly
        identifying the FTC Act, Congress has unambiguously
        commanded us to treat the Telemarketing Sales Rule as a rule
        enforceable under § 19.
                Still, the question remains whether § 19 authorizes the
        specific asset freeze and receivership imposed against Dorfman and
        his companies. Section 19(b) provides the district court jurisdiction
        to grant “such relief as the court finds necessary to redress injury
        to consumers,” which “may include, but shall not be limited to,
        rescission or reformation of contracts, the refund of money or
        return of property, the payment of damages, and public
        notification.” 15 U.S.C. § 57b(b). Consistent with the requirement
        that the relief be necessary to redress injury to consumers, the
        district court cannot impose “any exemplary or punitive damages.”
        Id.

        5 Although the U.S. Code is prima facie evidence of the law, the statutes at
        large represent the ultimate authority on what the law is. In re Bayou Shores
        SNF, LLC, 828 F.3d 1297, 1306 n.13 (11th Cir. 2016).
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        21-13116                   Opinion of the Court                               13

               The Commission seeks rescission or reformation of
        contracts and the refund of money—forms of relief expressly
        authorized by § 19(b). 6 Id. And though the statute does not
        explicitly authorize preliminary measures of relief, like the asset
        freeze and receivership sought here, it does give the district courts
        broad authority to grant remedies that are “necessary to redress
        injury to consumers.” Id. It also specifies that relief “shall not be
        limited to” the enumerated measures. Id. That language renders
        the list nonexhaustive “[b]y its own terms,” so the omission of
        preliminary measures does not mean they are not authorized. Talk
        Am., Inc. v. Mich. Bell Tel. Co., 564 U.S. 50, 63 n.5 (2011). Instead,
        the question is whether they are “necessary to redress injury to
        consumers.” 15 U.S.C. § 57b(b).
              Asset freeze and receivership are forms of relief that can be,
        and often are, “necessary to redress injury to consumers.” Id. Our
        law has long recognized the need for the appointment of a receiver
        in appropriate cases to “preserve and protect” property at issue

        6  The Commission’s Second Amended Complaint seeks “rescission or
        reformation of contracts, restitution, the refund of monies paid, and the
        disgorgement of ill-gotten monies.” The Commission clarified in a July 5, 2022
        letter—and again at oral argument—that it will not seek disgorgement to the
        Treasury. So for purposes of this appeal, we accept that any requested relief
        will be used for consumer redress and attendant expenses. Cf. FTC v. Figgie
        Int’l, Inc., 994 F.2d 595, 607 (9th Cir. 1993). We emphasize, however, that the
        exact contours of the relief ultimately granted are not before us in this appeal;
        we look to the final relief sought only to the extent necessary to assess whether
        the asset freeze and receivership are allowed.
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        14                       Opinion of the Court                    21-13116

        pending its final disposition. See, e.g., Gordon v. Washington, 295
        U.S. 30, 37 (1935). And we have considered a “temporary freeze of
        defendant’s assets” to be “reasonably necessary to assure that the
        court’s jurisdiction would not be defeated by the defendant’s
        disposition of assets in the event the court should ultimately order
        disgorgement of the allegedly misappropriated funds.” CFTC v.
        Muller, 570 F.2d 1296, 1301 (5th Cir. 1978). 7 In other words, the
        point is to ensure that if the court awards final monetary relief,
        assets will still be available to redress consumers’ injuries.
        Otherwise, the district court would be unable to provide any
        meaningful relief.
                All that to say, if preliminary measures like an asset freeze or
        a receivership are necessary to preserve funds for a future
        monetary judgment, they are authorized by § 19(b). Here, the
        district court found just that: “a preliminary injunction and asset
        freeze are necessary to protect consumers, protect assets for
        consumer redress, and preserve the status quo.” Dorfman does not
        challenge that conclusion. We therefore affirm the portions of the
        preliminary injunction imposing the asset freeze and receivership.
                                            B.
              Dorfman also seeks to vacate the parts of the injunction
        prohibiting future misrepresentations and the use or disclosure of

        7 This Court adopted as binding precedent all decisions of the former Fifth
        Circuit handed down before October 1, 1981, in Bonner v. City of Prichard,
        661 F.2d 1206, 1207 (11th Cir. 1981) (en banc).
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        21-13116                Opinion of the Court                          15

        customer information. But Dorfman does not make an argument
        that this is compelled by AMG Capital, and that argument would
        misunderstand the extent of AMG Capital’s holding in any event.
        As we have already explained, when the Commission enforces
        § 5(a), “[p]rospective injunctive relief is still allowed” after AMG
        Capital. On Point Cap., 17 F.4th at 1079 (citing AMG Cap. Mgmt.,
        141 S. Ct. at 1347–48). So injunctive relief relating to actions is still
        allowed under § 13(b), while injunctive relief relating to money is
        not. Accordingly, we affirm the district court’s order with respect
        to the portions of the preliminary injunction enjoining future
        misrepresentations and the disclosure or use of customer
        information.
                                          IV.
               Dorfman raises several other issues, but they are either
        outside the scope of this appeal or have been abandoned. Because
        this appeal comes to us on a second successive motion to dissolve
        the preliminary injunction, our review is limited to whether AMG
        Capital requires dissolution or modification of the preliminary
        injunction order. See Birmingham Fire Fighters Ass’n 117 v.
        Jefferson Cnty., 290 F.3d 1250, 1254 (11th Cir. 2002) (an appeal
        “should be permitted only to the extent necessary to consider
        whether the changed circumstances, evidence, or law requires
        modification of the order which is presumed to have been correct
        when issued”). Dorfman’s arguments on due process and the
        likelihood of success on the merits are unrelated to AMG Capital
        and therefore outside the scope of this appeal; he should have
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        16                      Opinion of the Court                 21-13116

        brought them in his initial appeal of the preliminary injunction.
        And his arguments about the final form of relief, including whether
        the Commission will obtain punitive relief, are premature at this
        stage.
                Finally, Dorfman abandoned any argument that the
        Commission was required to renew its motion for a preliminary
        injunction after filing its Second Amended Complaint. Though he
        raises this issue in the introduction of his opening brief, he does not
        otherwise develop the argument in his briefs. “We have long held
        that an appellant abandons a claim when he either makes only
        passing references to it or raises it in a perfunctory manner without
        supporting arguments and authority.” Sapuppo v. Allstate
        Floridian Ins. Co., 739 F.3d 678, 681 (11th Cir. 2014); see also Cote
        v. Philip Morris USA, Inc., 985 F.3d 840, 846 (11th Cir. 2021) (a
        party abandons an issue when it is raised only in the introduction
        of a brief); United States v. Mathis, 767 F.3d 1264, 1275 n.2 (11th
        Cir. 2014) (appellant cannot resurrect an abandoned issue by
        raising it at oral argument).
                                   *      *       *
               Dorfman urges us to read AMG Capital as a signal to
        interpret the FTC Act with a view to “reigning in the FTC’s
        power.” But we take a different lesson. AMG Capital teaches us
        to read the FTC Act to “mean what it says.” 141 S. Ct. at 1349. In
        AMG Capital, that meant limiting § 13(b)’s provision for a
        “permanent injunction” to injunctive relief. Id. Here, that means
        recognizing the broad scope of relief available under § 19. When
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        21-13116             Opinion of the Court                   17

        the Commission enforces a rule, § 19 grants the district court
        jurisdiction to offer relief “necessary to redress injury to
        consumers.” 15 U.S.C. § 57b(a)–(b). To preserve funds for
        consumers, the Commission sought to freeze Dorfman’s assets and
        impose a receivership over his companies. Because § 19 allows
        such relief here, we AFFIRM.