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Federal Trade Commission v. Paul Navestad Aka Paul Richard Individually and Doing Business As the Cash Grant Institute

March 11, 2011

FEDERAL TRADE COMMISSION, PLAINTIFF,
v.
PAUL NAVESTAD AKA PAUL RICHARD INDIVIDUALLY AND DOING BUSINESS AS THE CASH GRANT INSTITUTE, AND
GLOBAL AD AGENCY, GLOBAL ADVERTISING AGENCY, DOMAIN LEASING COMPANY AND/OR CASH GRANT SEARCH, AND
CHINTANA MASPAKORN AKA CHRISTINA MASPAKORN INDIVIDUALLY AND DOING BUSINESS AS THE CASH GRANT INSTITUTE, GLOBAL AD AGENCY, GLOBAL ADVERTISING AGENCY, DOMAIN LEASING COMPANY AND/OR CASH GRANT SEARCH, DEFENDANTS.



The opinion of the court was delivered by: Michael A. Telesca United States District Judge

DECISION ORDER

INTRODUCTION

Plaintiff Federal Trade Commission ("FTC") brings this action pursuant to the Federal Trade Commission Act ("FTC Act" or the "Act") claiming that the defendants have violated that Act by engaging in unlawful telemarketing and internet-marketing schemes. Specifically, plaintiff claims that the defendants have engaged in unfair and deceptive practices by advertising the availability of private and/or governmental cash grants to individuals for almost any purpose, and then charging fees for information related to the alleged grants. According to the plaintiff, the cash grants are deceptively advertised as being widely available and instantly or quickly available to individuals, when in fact, such grants are not widely available, often require extensive application processes, and take months to receive.

On June 11, 2010, defendant Paul Navestad ("Navestad") filed an answer asserting, inter alia, seven affirmative defenses.

Plaintiff FTC now moves to strike six of the seven affirmative defenses as legally insufficient or irrelevant. For the reasons set forth below, I grant the plaintiff's motion to strike defendant's first, third, fourth, fifth, and sixth affirmative defenses. I deny plaintiff's motion to strike defendant's seventh affirmative defense.

DISCUSSION

Rule 12(f) of the Federal Rules of Civil Procedure provides in relevant part that a court may strike from a pleading "an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter . . . ." Fed. R. Civ. P. 12(f). I apply this standard to the defenses asserted in defendant Navestad's Answer, as explained below.

I. First Affirmative Defense

Navestad's First Affirmative Defense alleges that paragraph 7 of the Complaint should be stricken on grounds that the allegations contained in that paragraph are irrelevant and prejudicial. Paragraph 7 of the Complaint simply alleges that the FTC sued Navestad in 2000, and that this court entered a permanent injunction against Navestad prohibiting him from engaging in the advertising, marketing, promoting, offering for sale, or sale of any credit-related goods or services, or assisting others engaged in same. The allegations contained in paragraph 7 are for purposes of background, and do not allege any facts upon which the instant action is based, nor do they allege a cause of action.

Accordingly, I find no basis for striking paragraph 7 of the Complaint, and find that Defendant's First Affirmative Defense shall be stricken for lack of relevance to the factual allegations underlying the causes of action brought in this action.

II. Defendant's Third Affirmative Defense

Navestad pleads in his Third Affirmative Defense that: "[w]ith regard to prior purported substituted service on defendant, there is neither in personam nor subject matter jurisdiction over defendant." This defense appears to contend that the service of the Complaint on the defendant was insufficient, and therefore this court lacks personal or subject matter jurisdiction over him. Such a claim, however, is without merit. This court previously has found that the substitute service made on Navestad was legally sufficient, and there is no basis for revisiting that determination.

With respect to subject matter jurisdiction, the case is brought under federal law, over which this court unquestionably has jurisdiction. With respect to personal jurisdiction over Navestad, he has minimum contacts with the United States, which is all that is required for personal jurisdiction in this federal-question action brought pursuant to the Federal Trade Commission Act. Therefore, this court has jurisdiction over his person. As a result of having both subject matter ...


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