United States District Court, S.D. New York
OPINION & ORDER
A. CROTTY United States District Judge
the Federal Trade Commission (the "FTC" or
"Commission"), seeks an order holding Defendant
Joseph K. Rensin ("Rensin" or
"Defendant") in contempt for failure to comply with
a final judgment (ECF 138, April 19, 2016) imposing
compensatory contempt sanctions in the amount of $13, 400,
627.60; and an order determining that coercive incarceration
is the appropriate sanction, but that order is to be stayed
pending resolution of Rensin's bankruptcy
proceedings. ECF 146; ECF 165; ECF 170.
Court held an evidentiary hearing on the issues on January 4,
2017 and set a schedule for post-hearing briefing. ECF 154 at
187. Two days before his post-hearing briefing was due on
February 17, 2017, Rensin filed a Chapter 7 Bankruptcy
petition in the U.S. Bankruptcy Court, Southern District of
Florida. See ECF 159. Rensin immediately filed a
suggestion of bankruptcy in this Court and claimed that these
proceedings were automatically stayed pursuant to §
362(a) of the Bankruptcy Code. Id. The FTC opposed.
March 6, 2017, this Court denied Rensin's motion to hold
the post-hearing briefing schedule in abeyance, ECF 161. The
Court determined that the automatic bankruptcy stay was
inapplicable pursuant to the governmental unit regulatory
power exception of 11 U.S.C. § 362(b)(4). ECF 166.
Rensin has filed a Notice of Interlocutory Appeal.
See ECF 167.
Court now proceeds to determine the merits of the instant
holding the January 4, 2017 hearing and reviewing the
parties' submissions, the Court makes the following
findings of fact:
This Court Found Defendant in Contempt of the Consent
Order and Ordered Him to Pay $13,
400, 627.60 as a Compensatory Sanction 1. The
Court has jurisdiction over the subject matter of this case
and each of the parties. Venue is appropriate.
February 22, 2008, the FTC brought this action against
BlueHippo Funding, LLC and BlueHippo Capital, LLC
(collectively, "BlueHippo") pursuant to Section 13
of the FTC Act, 15 U.S.C. § 53(b), for alleged
violations of federal statutes and regulations. ECF 1.
April 9, 2008, the parties consented to the entry of a
Stipulated Final Judgment and Order of Permanent Injunction
(the "Consent Order"). ECF 2.
July 27, 2010, this Court found "BlueHippo in civil
contempt for violating the Consent Order by failing to
disclose material terms relating to its Store Credit
Policy" (the "July 2010 Contempt Order"). ECF
76 at 9. The Court held Rensin, BlueHippo's CEO, liable
for BlueHippo's contempt; and held Rensin and BlueHippo
jointly and severally liable for $609, 856.38 in consumer
harm caused by the violations. Id. at 11-12.
appeal, the Second Circuit upheld the contempt finding, but
determined that this Court had incorrectly calculated the
damages. ECF 86-1 at 12-13; F.T.C. v. BlueHippo Funding,
LLC, 762 F.3d 238, 246 (2d Cir. 2014).
Second Circuit held that once the FTC makes the proper
showing, it is entitled to a presumption of consumer reliance
in compensatory contempt proceedings. ECF 86-1 at 9-10;
BlueHippo, 762 F.3d at 244-45. The Second Circuit
vacated the damages award and remanded for determination of
whether the presumption applied. ECF 86-1 at 13;
BlueHippo, 762 F.3d at 246. Upon a finding that the
FTC had made a sufficient showing, the Second Circuit
instructed the District Court to "use the
defendants' gross receipts as a baseline for calculating
the actual loss to consumers caused by defendants'
conduct" and "give the defendants the opportunity
to rebut the determined baseline loss calculation." ECF
86-1 at 13; BlueHippo, 762 F.3d at 246.
November 6, 2015, after briefing and oral argument, the Court
held that the presumption of consumer reliance applied, and
that BlueHippo's gross revenue of $14, 062, 627.51 was
the appropriate compensatory baseline. ECF 103 at 7-8.
Rensin proffered rebuttal evidence to offset the baseline,
ECF 107, certain categories of which the FTC moved in
limine to exclude. ECF 120.
Court held a telephonic hearing after the parties fully
briefed the issue on April 6, 2016. ECF 131. During the
hearing, the Court made several minor adjustments and found
that Rensin was liable for $13, 400, 627.60 in compensatory
Court directed the FTC to submit a proposed order
memorializing its oral rulings, which the FTC did on April
13, 2016. ECF 131 at 12; ECF 138 at 1.
Rensin objected to the form of the FTC's proposed order,
including to the language affirmatively ordering Rensin to
pay, and attached a proposed judgment that did not contain
any affirmative obligation to pay. ECF 136; ECF 136-2.
April 19, 2016, the Court issued a Final Judgment Imposing
Compensatory Contempt Sanctions in the amount of $13, 400,
627.60 (the "April 19, 2016 Order"). ECF 139.
an accompanying opinion, the Court "adopt[ed] the
[FTC's] Proposed Final Judgment (with a few typographical
corrections), since it is an accurate recitation of the
procedural history and the Court's oral order of April 6,
2016, which resolved all open disputes." ECF 138 at 1.
The Court also held that "Rensin's objections are
denied as meritless." Id.
May 18, 2016, Rensin filed a Notice of Appeal. ECF 140. He
raised two issues, both pertaining to the Court's refusal
to permit discovery regarding certain offsets. F.T.C. v.
BlueHippo Funding, LLC, No. 16-1599 (2d Cir. Aug. 29,
2016), ECF 30 at 1-2. The appeal is pending.
The April 19, 2016 Final Judgment Imposing Compensatory
Contempt Sanctions Was Clear and Unambiguous
Section I.B.I obligated Rensin to pay $8, 000, 000 to the
FTC, to be deposited into the Redress Fund, within seven days
of entry of the Final Judgment. ECF 139 at 6.
Section I.B.2 required Rensin to secure the remaining balance
of $5, 400, 627.60 within thirty days, to be subsequently
turned over to the FTC for deposit into the Redress Fund
"[u]pon motion of the FTC and upon proof that the
Initial Redress Sum will be exhausted." Id. at
Section I.C specified that should Rensin fail to satisfy
either condition, "he [was] ordered to immediately pay
the full amount of the judgment ($13, 400, 627.60) to the
Commission to ...