Antitrust Law Daily Wrap Up, ADVERTISING—D. Ariz.: FTC Act claims transferred to Utah court, (Apr 10, 2014)

By Jody Coultas, J.D.

The federal district court in Arizona has transferred an FTC action against supplement manufacturers to the District of Utah based on convenience to the parties (FTC v. Wright, April 8, 2014, Holland, H.).

The FTC alleged that the defendants— Kevin Wright, HCG

Platinum, LLC, and Right Way Nutrition, LLC—violated the FTC Act by making false and unsubstantiated claims about its weight loss supplement HCG Platinum. Also included in the suit were companies and persons that allegedly received funds that were traceable to the funds the manufacturers obtained from their customers. The manufacturers and relief defendants sought to transfer the case to the District of Utah.

A court may transfer a case based on the convenience and fairness to the parties. Courts look at: which state is most familiar with the governing law; the plaintiff’s choice of forum; the convenience of the parties; the convenience of the non-party witnesses; the contacts relating to the plaintiff’s cause of action in the chosen forum; the differences in the costs of litigation in the two forums; the availability of compulsory process to compel attendance of unwilling non-party witnesses; the ease of access to sources of proof; and the relevant public policy of the forum state.

The majority of the transfer factors weighed in favor of transfer, according to the court. Although the FTC chose to bring suit in Arizona, this factor was given minimal weight because the FTC does not “reside” in Arizona and the alleged FTC Act violations did not occur solely in Arizona.

It would be more convenient for the parties if the case was litigated in Utah. All of the corporate defendants had their principle place of business in Utah, all of the non-party witnesses resided in Utah, and the FTC is a federal agency headquartered in Washington D.C. Although the owners of the manufacturers were residents of Arizona, they argued they were domiciled in Utah and provided evidence that they spent a great deal of time there. The FTC presented evidence that the manufacturers’ business activities were not confined to Utah, and that HCG Platinum was sold to customers nationwide. However, this did not prove that the defendants had more substantial contact with Arizona than Utah. It would be less costly to litigate the case in Utah, where most of the parties resided, most of the non-party witnesses would be outside the court’s subpoena power, and all of the relevant electronic and hard-copy business records were located in Utah. Therefore, the defendants’ motion to transfer was granted.

The case is No. 2:13-cv-2215-HRH.

Attorneys: James Anthony Prunty for the FTC. Constance Mike Anagnopoulos (Quintairos Prieto Wood & Boyer PA) for Kevin Wright, HCG Platinum LLC, Right Way Nutrition LLC.

Companies: HCG Platinum LLC, Right Way Nutrition LLC

Cases: Advertising ArizonaNews FederalTradeCommissionNews