Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—E.D.N.Y.: Affirmative defenses stricken in FTC suit against seller of medical-alert devices, (Feb 12, 2014)

By Jeffrey May, J.D.

In an FTC action challenging the telemarketing practices of a company that sells medical-alert devices and services, the federal district court in Brooklyn, New York, has granted the agency’s motion to strike two affirmative defenses raised by the company’s creator who also was a defendant (FTC v. Instant Response Systems, LLC, February 11, 2014, Glasser, I.).

In February 2013, the FTC filed a complaint, seeking injunctive and other equitable relief, against Instant Response Systems, LLC and its creator for allegedly employing deception, threats, and intimidation to coerce elderly consumers into paying for medical alert systems. The agency alleged that telemarketers working for Instant Response cold-called elderly consumers, some of whom are on the National Do Not Call Registry, in order to sell medical-alert devices. Although some consumers declined to buy a device, Instant Response billed them for the device anyway and then threatened the consumers with civil and criminal legal action if they did not pay, according to the FTC.

The company’s creator, acting pro se, filed an Answer, asserting affirmative defenses based on the statute of limitations and laches. Although the FTC did not file its motion to strike until almost two months after the Answer was received by the pro se office, the district court considered the motion. While Federal Rule of Civil Procedure 12 requires that a motion to strike be filed within 21 days of the service of the Answer, a court may entertain an untimely motion to strike an insufficient defense on its own initiative at any time.

The laches defense was not applicable. The court explained that laches is not available against the federal government when it undertakes to enforce a public right or protect the public interest. Here, the FTC was seeking to enforce laws that protect the public.

Statute of limitations. The FTC also established that the defendant’s statute of limitations defense was not viable with respect to Counts I and V of the complaint, alleging violations of the FTC Act and Unordered Merchandise Statute. None of the provisions upon which Counts I and V were based have limitations periods, the court noted. Further, courts have universally rejected arguments that statutes of limitations from other provisions of the FTC Act apply to the Act’s provision authorizing the FTC’s suit on these counts. The statute of limitations defense remained in play for Counts II through IV, regarding the Telemarketing Sales Rule violations, which the FTC did not move to strike, the court noted.

The case is 13 Civ. 00976 (ILG) (VMS)

Attorneys: Arturo A. DeCastro for the FTC.

Companies: Instant Response Systems, LLC

Cases: ConsumerProtection FederalTradeCommissionNews NewYorkNews