The opinion of the court was delivered by: AMY J. ST. EVE, District Judge
MEMORANDUM OPINION AND ORDER
The United States Federal Trade Commission ("FTC") filed a six count
complaint against World Media Brokers, Inc. ("WMB") and other
corporations*fn1 (collectively, the "Corporate Defendants"), and George
Yemec and Anita Rapp (collectively, the "Individual Defendants"),
alleging violations of Section 5(a) of the FTC Act,
15 U.S.C. § 45(a), and the FTC's Telemarketing Sales Rule, 16 C.F.R. Part 310.
Specifically, the FTC alleges that Defendants illegally sold Canadian
lottery tickets to consumers throughout the United States and
misrepresented to those consumers that such sales were legal.
In Count I, the FTC alleges that Defendants' representations that the
consumer is likely to win a large prize in the Canadian lottery
constitute a deceptive practice, in violation of Section 5
of the FTC Act. In Count II, the FTC alleges that Defendants'
failure to disclose to United States' consumers that selling and
trafficking in foreign lottery tickets is a violation of federal criminal
law constitutes a deceptive practice, in violation of Section 5 of the
FTC Act. In Count III, the FTC alleges that Defendants' representations
to United States' consumers that Defendants can legally sell foreign
lottery tickets to United States' consumers and that the United States'
consumers can legally purchase such tickets constitute deceptive acts or
practices, in violation of Section 5 of the FTC Act. In Count IV, the FTC
alleges that Defendants' representations that the consumer would receive
a substantial monetary award or other prize in the Canadian lottery
constitute a deceptive practice, in violation of Section 5 of the FTC
Act. In Count V, the FTC alleges that Defendants' failure to disclose
that the sale and trafficking of foreign lottery tickets is a crime in
the United States constitutes a violation of Section 310.3(a)(1)(ii) of
the Telemarketing Sales Rule. In Count VI, the FTC alleges that
Defendants made certain false and misleading statements to induce United
States' consumers to purchase foreign lottery tickets or interests, in
violation of Section 310.3(a)(4) of the Telemarketing Sales Rule.
The FTC moved for partial summary judgment on Counts II, III, V, and
VI. For the reasons stated herein, the FTC's motion for summary judgment
is granted as to those counts.
summary judgment is proper when "the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law."
Fed.R.Civ.P. 56(c). A genuine issue of triable fact exists only if "the
is such that a reasonable jury could return a verdict for the
nonmoving party." Pugh v. City of Attica, 259 F.3d 619, 625 (7th
Cir. 2001) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248, 106 S.Ct. 2505, 2510 (1986)). "Only disputes over facts that
might affect the outcome of the suit under the governing law will
properly preclude the entry of summary judgment." Anderson, 477
U.S. at 248, 106 S.Ct. at 2510. The party seeking summary judgment has
the burden of establishing the lack of any genuine issue of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106
S.Ct. 2548, 2552 (1986). A party will successfully oppose summary judgment
only if it presents "definite, competent evidence to rebut the motion,"
Equal Employment Opportunity Comm'n v. Roebuck & Co.,
233 F.3d 432, 437 (7th Cir. 2000). The Court "considers the evidentiary
record in the light most favorable to the nonmoving party, and draws all
reasonable inferences in his favor." Lesch v. Crown Cork & Seal
Co., 282 F.3d 467, 471 (7th Cir. 2002).
The Court first addresses Defendants' failure to comply with the
requirements of Local Rule 56.1, which governs summary judgment briefing
in the Northern District of Illinois. L.R. 56.1. Local Rule 56.1(a)(3)
requires the moving party to provide a "statement of material facts as to
which the moving party contends there is no genuine issue and that
entitle the moving party to a judgment as a matter of law." L.R.
56.1(a)(3). The opposing party must then file "a concise response to the
movant's statement," in which the nonmoving party must "admit or deny
each factual statement proffered by the defendant . . ., and
designate with specificity and particularity those material facts
believed to establish a genuine dispute for trial." Greer v. Board of
Educ, of the City of Chicago, 267 F.3d 723, 727 (7th Cir. 2001);
L.R. 56.1(b)(3)(A). The nonmoving party
may also file a statement of additional facts that require the
denial of summary judgment. L.R. 56.1(b)(3)(B). The moving party must
submit a reply addressing each additional fact. "All material facts set
forth in the statement filed pursuant to section (b)(3)(B) will be deemed
admitted unless controverted by the [reply] statement of the moving
party." Dimmitt & Owens Fin., Inc. v. Superior Sports Prods.,
Inc., 196 F. Supp.2d 731, 737 (N.D. Ill. 2002).
Defendants' Rule 56.1 response is inadequate. Many statements in
Defendants' response include impermissible argument, conclusory
statements, and duplicative responses to separate paragraphs. Instead of
simply admitting or denying the FTC's asserted facts, Defendants
improperly assert legal arguments regarding whether the FTC should have
relied on George Yemec's affidavit and whether certain alleged activity
was in fact legal. Moreover, Defendants repeatedly limit their responses
to the Individual Defendants without referring to the Corporate
Defendants, thereby implicitly admitting that the Corporate Defendants
engaged in the alleged activity. Local Rule 56.1 statements that are full
of argument, evasion, and improper denials defeat the point of Local
Rule 56.1, which is to identify precisely which facts are actually in dispute.
Bordelon v. Chicago Sch. Reform Bd. of Trs., 233 F.3d 524, 528
(7th Cir. 2000). Defendants' failure to adequately dispute the FTC's
material facts, however, does not result in an automatic grant of summary
judgment in the FTC's favor. The Court still must evaluate all facts in
the light most favorable to Defendants, the nonmoving party.
O'Donnell v. City of Chicago, No. 02 C 1847, 2003 WL 22339285,
at *1 (N.D. Ill. Oct. 14, 2003).*fn2
I. Defendants' Attack On The FTC's Evidence
Defendants, in their responses to the FTC's statement of material
facts, assert numerous legal arguments attacking the authenticity and
admissibility of the evidence on which the FTC bases its statement of
material facts. The Court will address those arguments-none of which have
merit-before reciting the undisputed facts.
First, Defendants argue that the FTC improperly obtained the sworn
affidavit of Individual Defendant George Yemec and that the Court,
therefore, should not consider Yemec's affidavit. Yemec submitted his
sworn affidavit in a Canadian proceeding wherein the FTC obtained an
injunction against Defendants that was later dissolved by the Ontario
Superior Court of Justice. Defendants do not argue that the Yemec
affidavit is irrelevant or untrustworthy. Instead, Defendants argue that
they never consented to the FTC's use of the affidavit in this
proceeding, and that Justice Gans of the Ontario Superior Court
"essentially" required the FTC "to return all documents and equipment
immediately and to release Defendants' assets." (R. 43-1, Def.s.' Mot.
to Strike Pl.'s Exs. at 2.) These arguments are misguided because
Defendants' consent is not necessary,*fn3 and because Defendants
mischaracterize Justice Gans's ruling. Justice
Gans never prohibited the FTC from using the documents from the
Canadian proceeding in this proceeding. In fact, Justice Gans
specifically contemplated a ruling from this Court that Defendants cannot
restrict the FTC's use of Defendants' documents from the Canadian
proceeding. (R. 39-1, FTC's Reply Mem. for Partial Summ. J. ("FTC's Reply
Mem.") at 8) ("This Court orders that all the properties, assets,
evidence, and documents of the Defendants . . . shall be returned to
the Defendants forthwith and any copies . . . shall be returned
subject to any order of the United States District Court, Northern
District of Illinois or this Honourable Court." FTC v. Yemec, et
al., Docket No. 02-CV-237070CM3, at 3 (Ontario Sup.Ct. of Justice
Oct. 21, 2003).) The FTC properly relied upon Yemec's sworn affidavit.
Second, Defendants attack the reliability and authenticity of the FTC's
evidence contained in the declaration of the FTC's investigator, Alan
Krause. (R. 38-1, Def.s.' Mem. in Opp. to the FTC's Mot. for Partial
Summ. J. ("Def.s.' Opp. Mem.") at 10.) This attack has no merit.
Defendants filed a motion pursuant to Federal Rule of Civil Procedure
56(f) for an extension of time to allow for needed discovery concerning
the quality and authenticity of the FTC's investigation, which was
conducted by Mr. Krause. (R. 33-1, Def.s.' Rule 56(f) Mot. for Extension
of Time.) The Court granted the motion and gave Defendants an additional
three weeks to file their response brief, expressly to allow them to
depose Mr. Krause. (See Minute Order, Sept, 17, 2003.)
Defendants, however, made no attempt to schedule Mr. Krause's deposition.
(See R. 39-1, FTC's Reply Mem. at 8.) Mr. Krause swore to the
truth of his declaration and the authenticity ...