The opinion of the court was delivered by: Platt, District Judge
Before the Court is a motion by Plaintiff, Federal Trade Commission ("Plaintiff" or "FTC"), for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure against all Defendants*fn1 for all claims asserted in the complaint (the "Complaint"). Plaintiff's Complaint seeks injunctive and equitable relief against Essex Marketing Group, Inc. ("Essex"), Westbrook Marketing Group, Inc. ("WMG"), Westbrook Marketing Associates, LLC ("WMA"), Manhattan Vending, LLC ("MV"), Richard J. Guadagno ("Guadagno"), Jack G. Schwartz ("Schwartz"), and Henry Sanchez ("Sanchez"), (collectively, "Defendants").*fn2 Sanchez is the only defendant who has filed papers in opposition to the motion for summary judgment. For the following reasons, Plaintiff's motion is DENIED as to Defendant Sanchez and GRANTED as to the Defendants who have failed to file any opposition.
The FTC, an independent agency of the United States Government, alleges in the Complaint that Defendants engaged in acts that violated: (1) Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which "prohibits unfair or deceptive acts or practices in or affecting commerce," (Cmplt. at 2); and (2) the FTC's Trade Regulation Rule entitled "Disclosure requirements and prohibitions concerning franchising and business opportunity ventures" ("Franchise Rule"), 16 C.F.R.§ 436, which requires franchisors to provide prospective franchisees with a "complete and accurate basic disclosure document" containing information including the history of franchise and its principles, information about litigation and bankruptcy and the terms and conditions under which the franchise operates. (Cmplt. at 8). These charges allegedly stem from Defendants' deceptive conduct in offering for sale vending machine business opportunities by misrepresenting the income purchasers would receive and misrepresenting details regarding the delivery of purchased vending machines. (Cmplt. at 8).
The FTC alleges that beginning in January 2000, Defendants were engaged in "a series of schemes, to promote, offer to sell, and sell vending machine business opportunities." (Pl.'s Mem. Sum. J. at 5). Essex, WMA, WMG and MV ("Defendant Corporations") all used the same promotional materials and methods to promote their business scheme. (Pl.'s 56.1 Statement ¶ I.13). Defendant Corporations advertised their vending machine scheme in the classified sections of newspapers all over the nation, generally stating that they had vending machine routes for sale with significant opportunities for money potential. (Pl.'s 56.1 ¶¶ II.7-8, III.10). Employees of Defendant Corporations used sales scripts that stated profit projections and/or earnings claims that were made without any reasonable basis when speaking to potential purchasers of vending machines over the phone and in follow up promotional materials that were mailed to these individuals. (Pl.'s 56.1 ¶¶ I.21, II.9, 15, 21, 22-23, III.13-14, 16-18).
Upon purchasing vending machines, Defendant Corporations proceeded to provide purchasers with locating companies who would find locations for the vending machines (Pl.'s 56.1 ¶ I.46, II.18). Defendant Corporations also told purchasers that they could cancel their purchase if the machines were not delivered within a specified period, usually 30 days; however, some purchasers were not able to cancel their purchase when the machines were delivered late or never delivered at all. (Pl.'s 56.1 ¶¶ I.37, 39, 40, II.25-27, 31, III.20-21). As a result of the delay, many purchasers incurred significant expenses. (Pl.'s 56.1 ¶¶ I.42, II.33).
After vending machines were delivered, numerous purchasers did not receive a Franchise Disclosure Statement, required by the Franchise Rule, nor did they receive an Earnings Claim Disclosure Document in connection with the profit projections/earning claims that were made to them by Defendant Corporations. (Pl.'s 56.1 ¶¶ I.47, 50, II.39-40, III.25-26). Numerous purchasers of Defendant Corporations' vending machines earned little or no return on their investment, even though they were promised income and profits by Defendants. (Pl.'s 56.1 ¶¶ I.36, II.38, III.19).
Defendant Guadagno was the owner of Essex, WMA, MV, and WMG, an officer of Essex, the president of WMA and WMG, and the managing member of WMA. (Pl.'s 56.1 ¶¶ II.43-47; III.4-5). In these capacities, he signed purchaser contracts, signed letters, made sales calls to prospective purchasers, was responsible for and controlled the marketing and sales of the vending machines, wrote and reviewed the sales scripts, wrote the classified ads, and ran the day-to-day business offices. (Pl.'s 56.1 ¶¶ II.48-50, 53-58, III.6, 8-12).
Defendant Guadagno initially began selling vending machine business opportunities through Essex to purchasers from approximately March 2000 to July 2000, (Pl.'s 56.1 ¶ III.7), and began selling vending machines through WMA and WMG from approximately the end of 2000 through 2001. (Pl.'s 56.1 ¶ II.3). In addition to the vending machine scheme discussed above, the FTC alleges that upon receiving calls from the purchasers who did not receive their machines within the specified contractual period, WMA and WMG would provide fake tracking numbers or tell purchasers that the vending machines were about to be delivered, when in fact they knew that to be untrue. (Pl.'s 56.1 ¶¶ II.29-30, 34). The FTC also states WMA and WMG used Proctor & Gamble's Pringles trademark in connection with the sale of vending machines without permission. (Pl.'s 56.1 ¶¶ II.16, 19).
In October 2001, MV was established as a New York limited liability company, and in early 2002, Defendant Guadagno began selling vending machine business opportunities through MV, in addition to WMG and WMA. (Pl.'s 56.1 ¶ I.10). Defendant Sanchez was an officer of Defendant MV.
Defendants Guadagno, Essex, WMA and WMG did not respond to the FTC's motion for summary judgment, thus all statements of material facts with respect to these parties are deemed admitted. The FTC and Sanchez dispute many of the material facts relevant ...