Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—3rdCir: Disappointed Consumer’s Claims Against FTC, New Jersey Attorney General Fail, (May 3, 2013)

By Tobias J. Gillett, J.D., LL.M.

An allegedly defrauded consumer who did not receive personal restitution when the New Jersey Attorney General and the FTC pursued enforcement actions against a credit repair company could not proceed with a variety of claims against the FTC, the New Jersey Attorney General, and related individuals due to sovereign immunity and a lack of personal and subject matter jurisdiction, the U.S. Court of Appeals in Philadelphia has ruled (Gary v. FTC, May 2, 2013, Per Curiam).

In November 2007, Robert L. Gary filed a complaint with the New Jersey Attorney General regarding the failure of United Credit Adjusters, Inc. to perform credit repair services in exchange for his $1,049 payment. Subsequently, the New Jersey Attorney General filed suit against United Credit for violating the New Jersey Consumer Fraud Act, and the New Jersey Superior Court entered a consent judgment requiring United Credit to pay restitution to a small group of injured consumers, not including Gary.

Gary then contacted the FTC, which later filed a complaint against United Credit. However, since United Credit allegedly defrauded at least 12,000 consumers, but the FTC only anticipated a recovery of $25,000, it determined that providing restitution was impractical.

Gary filed suit in the federal district court in Philadelphia against the New Jersey Division of Consumer Affairs (NJDCA), the former New Jersey Attorney General, the former NJDCA Director, and a NJDCA investigator. He later amended his complaint to add claims against the FTC and its employees, the former U.S. Attorney for the District of New Jersey, and an Assistant U.S. Attorney.

Gary asserted claims for violations of the First, Fifth, Seventh, Thirteenth, and Fourteenth Amendments, as well as 42 U.S.C. §§ 1981, 1982, 1983, 1985, 1986, and 2000d, and under the Federal Tort Claims Act (FTCA). He alleged that the defendants failed to provide him with personal restitution and sought $100 million in damages. The district court granted the defendants’ motions to dismiss, and Gary appealed.

The court of appeals first affirmed the dismissal with respect to the FTC, the former U.S. Attorney, and the Assistant U.S. Attorney on the ground of sovereign immunity, noting that United States had not consented to suit under those circumstances. Moreover, Gary’s FTCA claims failed for lack of subject matter jurisdiction because he had not exhausted his administrative remedies, and 42 U.S.C. §2000d did not apply to federal agencies.

Furthermore, the court found it lacked personal jurisdiction over the former U.S. Attorney, the Assistant U.S. Attorney, the NJDCA, the former New Jersey Attorney General, and the former NJDCA Director because Gary had failed to demonstrate that any of them had minimum contacts with the Commonwealth of Pennsylvania. Finally, the NJDCA investigator’s "handful of communications" between Hines in New Jersey and Gary in Pennsylvania were insufficient to establish specific jurisdiction over him. Therefore, the court summarily affirmed the district court’s dismissal of Gary’s claims.

The case is No. 12-3732.

Attorneys: Robert L. Gary, pro se. Thomas F. Johnson, Office of the United States Attorney, for Federal Trade Commission. Salvatore A. Clemente (Wilson, Elser, Moskowitz, Edelman & Dicker, LLP) for Anne Milgram.

Cases: ConsumerProtection StateUnfairTradePractices FederalTradeCommissionNews DelawareNews NewJerseyNews PennsylvaniaNews