[00:00:00] Speaker 02: Thank you, Your Honor. [00:00:05] Speaker 03: All right. [00:00:05] Speaker 03: The next case for argument this morning is the Federal Trade Commission versus Hoskins, and that is case number 24-5747. [00:00:56] Speaker 04: Okay, there's three, there's one go up. [00:01:03] Speaker 04: No, that's going the wrong way. [00:01:08] Speaker 04: That'll have to do. [00:01:10] Speaker 03: Can you raise it up just a little bit more? [00:01:11] Speaker 03: You're pretty tall and it's, is that as high as it's going to go? [00:01:15] Speaker 04: Okay. [00:01:16] Speaker 04: Yeah. [00:01:18] Speaker 03: Did you break it? [00:01:22] Speaker 04: Um, but, um, you know, I could try on my knees, but that would be a little hard, I think. [00:01:27] Speaker 04: Um, but, um, hopefully, um, you can see and hear me. [00:01:32] Speaker 04: Um, may it please the court, uh, Matthew Hoffman for the FTC. [00:01:35] Speaker 04: I'd like to reserve three minutes for a bottle. [00:01:37] Speaker 04: Um, the district court here relied on Nevada law, uh, to prevent the FTC from enforcing, um, a judgment against Ms. [00:01:47] Speaker 04: Rogers, a monetary judgment. [00:01:48] Speaker 04: Those rulings are contrary to the plain language of the Federal Debt Collection Procedure Act and clear precedent from this court. [00:01:58] Speaker 04: The Act provides a uniform set of procedures for the collection of debts owed to the United States government, and the whole purpose of the Act is so that federal agencies don't have to deal with a patchwork of state laws, and it expressly preempts state law. [00:02:11] Speaker 03: Okay, so I'm with you, but to get there, we would have to agree that the writ here fell within the statutory language, particularly section 3002, subsection 3, defining debt. [00:02:28] Speaker 04: Correct. [00:02:28] Speaker 03: So we'd have to conclude that the order for disgorgement [00:02:34] Speaker 03: is a debt to the United States, right? [00:02:37] Speaker 04: And I think that as the Fifth Circuit held in national business consultants, the statutory language is very clear. [00:02:43] Speaker 04: It includes anything that is owing to the United States on account of any indebtedness to the United States. [00:02:48] Speaker 04: There's a whole list of things and there's catch-all. [00:02:51] Speaker 03: So the Fifth Circuit decided that recently, but they also have a conflicting decision from earlier where they said that that is not the case. [00:02:58] Speaker 03: It's a 1993 decision [00:03:02] Speaker 03: I could find the site for you, but it seems that their case law is inconsistent. [00:03:06] Speaker 03: So that was SEC versus Huffman from 1993. [00:03:11] Speaker 03: And then you're referencing the National Business Consultants case from 2004. [00:03:16] Speaker 04: So I'm not familiar with the Huffman case. [00:03:19] Speaker 04: I don't think that's something that anyone has cited. [00:03:22] Speaker 04: But I think the Fifth Circuit law is very clear in the FTC context, based on National Business Consultants. [00:03:29] Speaker 04: And the court reaffirmed that. [00:03:31] Speaker 04: in the Sobrana's case some years later, which dealt with a different exception. [00:03:36] Speaker 04: And it explained how National Business Consultants was different. [00:03:40] Speaker 03: And National Business Consultants... But then you have other circuit case laws as well. [00:03:45] Speaker 03: So you have Bongiorno from the First Circuit and Betty from the Second Circuit. [00:03:51] Speaker 00: Yeah, so... Those cases involved, as I recall, [00:03:56] Speaker 00: individual judgments that the government was assisting an individual to collect and were not judgments entered in favor directly of the United States. [00:04:07] Speaker 00: Is there any case that you're aware of in which the judgment like this one is entered in favor directly of the government but has been held not to be a debt within the meaning of the statute? [00:04:22] Speaker 04: No, there isn't. [00:04:24] Speaker 04: I'm not aware of no such case. [00:04:25] Speaker 04: And you're exactly correct. [00:04:27] Speaker 04: In Buongiorno and in Betty, you had orders that said pay an individual. [00:04:32] Speaker 04: And Betty is very clear on this language. [00:04:34] Speaker 04: If you look at this, the court says, well, the judgment says pay Inver's daughter. [00:04:42] Speaker 04: It doesn't say pay the United States. [00:04:44] Speaker 04: Well, here, and in National Business Consultants, we have an order that says pay the United States. [00:04:49] Speaker 04: And it doesn't say anything else. [00:04:50] Speaker 04: Now, the United States, the government [00:04:52] Speaker 04: intends to use that money, to the extent possible, to compensate the victims of the scam. [00:04:59] Speaker 00: And if there's any leftover, does it go to the United States Treasury? [00:05:03] Speaker 04: So that's a complicated question, which I think should not be addressed at this point. [00:05:10] Speaker 04: Certainly, prior to AMG, when courts awarded money under Section 13B, the typical practice was that if there was money left over, it would be payable to the Treasury. [00:05:21] Speaker 04: Under post AMG, and this is a prior pre AMG judgment, and this court held in the Hewitt case, which Judge Beatty, I believe you were on the panel for that one, that pre AMG judgments remain valid. [00:05:38] Speaker 04: The judgment itself doesn't say, it says, disgorgement for ill-gotten gains, which seems to imply that the money would go to the government, but it doesn't expressly say that. [00:05:50] Speaker 04: So I think it's a little unclear in this case whether in the event that we recover money and are unable to pay it out, whether a go to the Treasury or not, that's really an issue for another day. [00:06:01] Speaker 03: The question here, I mean, I think that the rule that we're advocating for... I think the difficulty is that the statute defines [00:06:13] Speaker 03: debts to the United States and it seems that those all inured to the benefit of the government and here that is not the case. [00:06:21] Speaker 03: This disgorgement of these ill-gotten gains is to make the victims whole. [00:06:28] Speaker 03: I mean it wasn't a fine, it wasn't restitution ordered in a criminal case, it wasn't a contract with the government, it wasn't any of these things that the government had an entitlement to this money. [00:06:41] Speaker 04: Sure. [00:06:41] Speaker 04: But there's nothing in the statute that expressly says the government has to have a pecuniary interest in the case and in the money. [00:06:48] Speaker 04: The statute says source of indebtedness to the United States. [00:06:52] Speaker 04: And in this case, we have a judgment that says it's payable to the United States. [00:06:56] Speaker 04: It would be. [00:06:56] Speaker 04: If we had a situation where money that's payable to the United States and not enforceable by anyone else, no one else has a specific right to this money. [00:07:08] Speaker 04: I think that would create a great deal of administrative difficulty, not just for the FTC, but for other agencies as well. [00:07:18] Speaker 04: But leaving aside the administrative difficulty, I come back to I think the language is pretty clear. [00:07:23] Speaker 04: It says, and this is exactly what the Fifth Circuit said in the National Business Insultants, we look at the text of the statute. [00:07:31] Speaker 04: The relevant text is clear and ambiguous. [00:07:33] Speaker 04: The terms of the judgment render appellants jointly and separately liable to the FTC, not to private individuals for the entire amount of the judgment. [00:07:40] Speaker 04: Therefore, the United States, not an individual of individuals, is the formal owner of the judgment. [00:07:46] Speaker 04: None of those other cases that you mentioned, Betty and Bongiorno, involve the situation where the United States is the formal owner of the judgment. [00:07:53] Speaker 04: And that's related to the, in our view, that should be the dispositive question here. [00:08:01] Speaker 04: And again, as I pointed out, as a response to Judge Graper's question, no court has ever suggested, or at least we're not aware of any case that a judgment payable to the United States is not a get within the meaning of this statute and therefore, so for that reason we would ask that the [00:08:24] Speaker 04: with the court whole agree with the Fifth Circuit and National Business Council and hold that this is a debt. [00:08:29] Speaker 04: Are there more questions on this topic? [00:08:30] Speaker 04: Or should I move on to the motion to quash? [00:08:37] Speaker 03: Go ahead. [00:08:38] Speaker 04: OK. [00:08:39] Speaker 04: So I mean, the first issue that we've been talking about goes to the question of whether the FDCPA applies. [00:08:44] Speaker 04: And if it does apply, I think it's very clear the statute of limitations is preempted under this court's decision in Giannelli. [00:08:54] Speaker 04: The second part of the order deals with quashing the writ of execution. [00:09:01] Speaker 04: And the court there, I think, erred for essentially the same reasons. [00:09:07] Speaker 04: It applied state law rather than the federal statute. [00:09:12] Speaker 04: And I think it also misapplied the state law. [00:09:14] Speaker 04: The statute provides a writ of, provides for a levy by writ of execution on all property in which the judgment debtor has a substantial non-exempt interest [00:09:23] Speaker 04: and that includes property held in trust. [00:09:28] Speaker 04: State law has a role to play here, but it's a very narrow one. [00:09:31] Speaker 04: State law defines the nature of the debtor's interest in a particular piece of property, and then the federal statute we look at to determine is that property. [00:09:42] Speaker 04: We never look at state procedures. [00:09:45] Speaker 04: So, for example, in the Harris case, the criminal restitution case, the court [00:09:52] Speaker 04: The court did exactly that. [00:09:53] Speaker 04: It looked at the nature of the trust interest under state law and said, okay, that qualifies as property for purpose of the federal statute. [00:10:03] Speaker 04: I think there's really no dispute here that Ms. [00:10:06] Speaker 04: Rogers and Mr. Hoskins have a interest under state law in the Corona Vista property. [00:10:15] Speaker 04: They are beneficiaries of the trust, which owns it through a series of shell entities. [00:10:18] Speaker 04: They live in the house, it was purchased with [00:10:20] Speaker 04: money from the sale of their prior property. [00:10:24] Speaker 04: So I think what the district court went wrong here was partly some confusion about what a trust is, confusion about Nevada law, and the provisions that talk about co-owned properties. [00:10:40] Speaker 01: Can you address that, that section 3010A, can you address that, that refers to [00:10:44] Speaker 01: If it's co-owned by someone else, then you look at the state law. [00:10:47] Speaker 04: Yeah. [00:10:47] Speaker 04: So I mean, what that essentially is a way of protecting, you know, innocent co-owners who are not liable on the debt. [00:10:55] Speaker 04: And so to the extent those people would be subject to, would not be subject to execution under state law, the FDCPA is not going to make them. [00:11:03] Speaker 04: So as we point out in our reply brief, for example, under Nevada law, if you have community property, a spouse that share a community property is not liable for debts incurred [00:11:13] Speaker 04: prior to the marriage so that would certainly apply here and if we had a situation where we had an innocent co-owner of the property that might come into play here we have a situation where both both judgment debtors are both liable on the same judgment for amounts in excess of the property value so that doesn't prevent that doesn't prevent the [00:11:41] Speaker 04: the uh... rivets iraq based on the record do we know who all all the co-owners are is is it clear from the record based on the record we don't know if there are other beneficiaries other than uh... miss rogers and mister hoskins uh... i that's not information they provided uh... they haven't suggested that to do suggest in the reply group at the meeting other trustees but there's no record evidence of that the only [00:12:07] Speaker 04: references to them and trustees for them, the two of them as trustees. [00:12:11] Speaker 04: So those are issues that could be dealt with on remand. [00:12:13] Speaker 04: If there's any question about that, I don't believe there is, but certainly if there are other parties that have an interest in the property, you know, that's something that we could certainly deal with on remand and make sure that everyone's rights are protected. [00:12:27] Speaker 04: Again, our goal here is to do this by the book in make sure that everyone's rights are [00:12:34] Speaker 04: protected, but at the same time safeguarding our interest in recovery of this judgment to protect consumers and the extent that there is. [00:12:43] Speaker 04: The United States has an interest in the judgment, which it may well. [00:12:47] Speaker 04: Again, we want to make sure that we protect that. [00:12:51] Speaker 03: I'm sorry to throw you off order of your argument here, but I'd like to circle back to AMG. [00:13:00] Speaker 03: argument that AMG doesn't apply is because the judgment was entered before AMG was decided. [00:13:07] Speaker 03: Is that what I understood you to say? [00:13:09] Speaker 04: That is correct. [00:13:12] Speaker 04: In this case, Ms. [00:13:14] Speaker 04: Rogers filed a motion under Rule 60B6 to set aside the judgment based on AMG. [00:13:20] Speaker 04: That was denied, and she didn't appeal that. [00:13:24] Speaker 03: So there's no attack on the judgment, right? [00:13:28] Speaker 03: She didn't appeal. [00:13:28] Speaker 04: Correct. [00:13:29] Speaker 04: The judgment is settled. [00:13:30] Speaker 03: So right now the question is the procedures that are available to collect on the judgment, right? [00:13:40] Speaker 04: Correct. [00:13:41] Speaker 03: So why would AMG not apply? [00:13:43] Speaker 03: The judgment stands. [00:13:45] Speaker 03: It's not being attacked, and no one's suggesting AMG is being used to undercut the judgment at this point. [00:13:51] Speaker 03: It's a collection issue. [00:13:53] Speaker 04: I mean, I don't think AMG is relevant to this case. [00:13:57] Speaker 04: AMG was about whether we can collect money under Section 13B. [00:14:02] Speaker 04: The Supreme Court said that we can't. [00:14:05] Speaker 03: Right. [00:14:06] Speaker 03: This court has said that. [00:14:06] Speaker 03: So, I mean, that takes us back to what is the commission doing when they're getting a judgment to disgorge money. [00:14:13] Speaker 03: So, I mean, if it's not for the benefit of the victims, I mean, [00:14:20] Speaker 03: I think what AMG is saying is the commission can't just get a judgment and then take the $130 million or whatever it is to the government. [00:14:28] Speaker 03: The commission can recover money for victims. [00:14:32] Speaker 04: I don't think that's what AMG said. [00:14:34] Speaker 04: AMG said that under 13B, we can't get money at all. [00:14:39] Speaker 04: So it wasn't dealing with whether the money goes to consumers or to the government. [00:14:43] Speaker 03: So you have to have Section 19 rather than Section 13. [00:14:45] Speaker 03: We do have Section 19. [00:14:46] Speaker 04: I know there's a Section 19 claim in this as well. [00:14:49] Speaker 04: I mean, typically, [00:14:50] Speaker 04: Prior to AMG, many judgments would say that the money should be used for consumers. [00:14:57] Speaker 04: Anything left over can be deposited to the Treasury. [00:15:01] Speaker 04: Those judgments are still valid. [00:15:05] Speaker 03: Okay. [00:15:05] Speaker 03: So if you turn to Section 19, if that's your available vehicle here, it's an award for such relief as the court finds necessary to address injury to consumers or other persons. [00:15:17] Speaker 03: partnerships, corporations resulting from the rule violation or unfair or deceptive practice or act, as the case may be, including the refund of money or return of property. [00:15:26] Speaker 03: So that seems to be authorizing the government to get a judgment to obtain these funds for the benefit of the victims, not for the public fisc and to put it in the treasury. [00:15:37] Speaker 04: That is correct. [00:15:38] Speaker 04: My point is simply that to the extent that this judgment pre-AMG allowed for disgorgement to the government, [00:15:46] Speaker 04: that judgment has been affirmed, it's settled law, and it's not subject to challenge now. [00:15:51] Speaker 04: So it's a little unclear, as I've said, and I think that's an issue that would need to be decided, but it's not at all clear that this judgment doesn't require disgorgement in the event that we're unable to distribute the money. [00:16:02] Speaker 03: So would the logical extension of your argument be that because this judgment was entered pre-AMG that the government could bring an action against these defendants [00:16:15] Speaker 03: recover a judgment and then just put all the money in the Treasury. [00:16:20] Speaker 03: It doesn't have to be for the benefit of the victims. [00:16:23] Speaker 04: I think as we said in the in the in our reply brief, I mean personally wouldn't bring an action. [00:16:29] Speaker 04: We're simply trying to enforce an existing judgment and whether that money could go to the Treasury. [00:16:37] Speaker 04: I think that's unclear. [00:16:39] Speaker 04: It's not the issue we've addressed. [00:16:41] Speaker 04: Should we recover any money and be unable to distribute it? [00:16:44] Speaker 04: Then that's an issue that we would need to address. [00:16:48] Speaker 04: And we might need to seek guidance from the district court in that question. [00:16:50] Speaker 04: But I don't think it's clear here at all. [00:16:53] Speaker 04: I don't think it matters, because at the end of the day, the money is payable to the United States. [00:16:57] Speaker 04: And as I've said, this is one of the benefits of it. [00:17:01] Speaker 03: I mean, I guess it does matter if there is a requirement that it inure to the benefit of the United States for it to be a debt. [00:17:08] Speaker 03: if that is a requirement. [00:17:09] Speaker 03: I understand you're suggesting it's not. [00:17:12] Speaker 04: Right. [00:17:13] Speaker 04: I mean, my reaction is, if that were a requirement, Congress would have said that that was a requirement. [00:17:18] Speaker 04: It didn't. [00:17:19] Speaker 04: As the Fifth Circuit said, there's nothing in the statute that requires the government be the exclusive beneficiary of the... And suppose I'm right, maybe I'm not, but suppose there is a 1993 case in which the Fifth Circuit said the opposite. [00:17:34] Speaker 03: So they have conflicting case law within their circuit line, which is not binding on us in any event. [00:17:40] Speaker 03: What would we do with that? [00:17:40] Speaker 04: I would need to look at that case, and I'm happy to do that and submit a letter regarding that case. [00:17:47] Speaker 04: It's SEC versus Huffman, you said? [00:17:50] Speaker 03: It's Huffman. [00:17:52] Speaker 03: I can give you the site, but that's OK. [00:17:54] Speaker 04: I'm sure I can find it, and I'm happy to address it in a follow-up letter, but I can't address it now because I'm not familiar with it. [00:18:01] Speaker 04: I think, as I said, that the [00:18:04] Speaker 04: You know, the place that's clearly on point is National Business Consultants. [00:18:09] Speaker 04: That's dealing with the FTC. [00:18:11] Speaker 04: It's dealing with, and it finds the language of the statute to be clear and unambiguous. [00:18:15] Speaker 04: I think that reasoning is correct, and I think this court should follow it. [00:18:20] Speaker 04: I'll reserve, well, I think I've gone over my time, so I hope you'll give me some more time. [00:18:25] Speaker 03: Yes, I'll give you a couple of minutes. [00:18:26] Speaker 03: I took you over. [00:18:34] Speaker 02: Good morning and may it please the court. [00:18:37] Speaker 02: Caleb Kruckenberg on behalf of Leanne Rogers, the relief defendant in this case. [00:18:44] Speaker 02: This case is really about one question and whether the FTC as an agency must follow state rules or the same rules for collecting judgment that has been obtained on behalf of another person as any other litigant. [00:19:00] Speaker 02: And the answer in the Federal Debt Collection Procedures Act is very clear. [00:19:07] Speaker 02: It's that the FTC for judgments that are not owing to the government must follow state procedures. [00:19:15] Speaker 00: And taking a step back just to settle this factual scenario, this is a very simple- The judgment name is only the FTC, not individuals, the underlying judgment. [00:19:31] Speaker 00: So why isn't sort of at the beginning and the end a judgment of 1.5 million plus change is entered in favor of the Federal Trade Commission and against Lee Ann Hoskins? [00:19:50] Speaker 00: The only entity to whom this debt is owed, the only entity that can enforce this, is the FTC. [00:19:59] Speaker 00: So why does it [00:20:01] Speaker 00: matter to go beyond that and say, oh, well, it'll be used for purpose X or purpose Y or purpose C once it gets into the hands of the United States. [00:20:13] Speaker 02: Your Honor, the reason that we have a process that's different when it inures to the benefit of another, and that's what these other cases are talking about, like the NLRB case, the Beatty case, et cetera. [00:20:24] Speaker 00: Yes, but the two that involve this statute, Beatty was [00:20:31] Speaker 00: back pay to one individual. [00:20:33] Speaker 00: Buongiorno was child support owed to one individual, and the government was kind of helping out. [00:20:40] Speaker 00: But the judgments in those cases were not solely judgments, as I understand it at least, in favor of the United States without any other person or entity named. [00:20:55] Speaker 02: Your honor, it is correct that those original judgments named those other entities payable to the government and in that case, they were back pay awards. [00:21:05] Speaker 02: My point is even going back in time, even going back pre AMG in a world where [00:21:11] Speaker 02: the precedent allowed discouragement orders payable to the commission, which is what this original order says. [00:21:18] Speaker 02: The problem is, if we're relying on section 19, which is what the FTC is claiming they're doing now, they're saying we invoke section 19 in the original judgment, we intend, I believe that was page 19 in their brief, [00:21:33] Speaker 02: They intend to use this only for restitution. [00:21:35] Speaker 02: The problem there is that under this court's case in 1993, FTC versus FIGI International, Section 19 does not allow, quote, indirect redress, payable to the commission. [00:21:50] Speaker 02: And I think this was a distinction that this court made a long time ago, is that when you're trying to get [00:21:57] Speaker 02: consumer injury awards, you have to follow normal process. [00:22:01] Speaker 02: And here, that's just the six-year statute of limitations for collection. [00:22:06] Speaker 02: And I think the problem here is, if we take the FTC's position, just because it was originally payable to the government only. [00:22:13] Speaker 00: And solely payable to the government. [00:22:15] Speaker 02: Solely. [00:22:15] Speaker 02: Which we now know is unlawful. [00:22:17] Speaker 02: That was never authorized under Section 13. [00:22:19] Speaker 00: The judgment itself is not before us. [00:22:22] Speaker 00: Correct, John. [00:22:23] Speaker 00: We assume, for purposes of this case, that the judgment is valid in its current form. [00:22:29] Speaker 00: There's nothing in the judgment that requires that that money be paid to anyone else. [00:22:34] Speaker 02: Well, and that's the problem, Your Honor. [00:22:37] Speaker 00: Well, that's the problem, but that's what makes it a debt to the United States. [00:22:41] Speaker 02: Well, Your Honor, we disagree. [00:22:42] Speaker 02: And the reason we disagree is the only lawful collection action the FTC can take today [00:22:50] Speaker 02: I know the FTC doesn't want to answer these questions, but they can't keep the money. [00:22:54] Speaker 02: That's what this court said in Figge. [00:22:56] Speaker 02: That's what AMG reaffirmed under Section 13. [00:22:59] Speaker 02: Awards payable to the Commission as [00:23:04] Speaker 02: punitive awards and not, those are not lawfully authorized. [00:23:08] Speaker 02: And I believe AMG said the commission may not seek and a court may not award. [00:23:15] Speaker 00: Okay, if as you conceded a moment ago, the judgment must be deemed to be valid for our purposes, then it must be available to execute as any other judgment would be that looks like this judgment. [00:23:34] Speaker 00: And this judgment is in favor of the United States, so the United States can execute on it because it's a valid judgment. [00:23:42] Speaker 00: I don't understand why that doesn't follow. [00:23:44] Speaker 02: Let me clarify slightly what actually is at issue in this appeal. [00:23:48] Speaker 02: And it is the district court's July 2024 order at page six of the record, precluding further enforcement against relief defendant Leanne Rogers. [00:24:01] Speaker 02: And the property we're talking about is a home that is owned by multiple beneficiaries of a trust. [00:24:09] Speaker 02: Ms. [00:24:09] Speaker 02: Rogers is identified as one of multiple beneficiaries. [00:24:12] Speaker 02: And we've never had a record about who are the additional beneficiaries. [00:24:17] Speaker 02: And what happened was the FTC attempted to seize this physical, this property and sell it immediately at auction. [00:24:25] Speaker 02: That was the request in the writ of execution. [00:24:28] Speaker 02: and then divvy up the proceeds among the beneficiaries who'd never been identified. [00:24:33] Speaker 02: So that is the process that the FTC attempted to use here to take this home pursuant to this judgment. [00:24:40] Speaker 00: So why wouldn't the answer be exactly as the FTC's counsel described it, which is to ask the district court to figure out if there are innocent co-owners or co-whatever so that only the portion dealing [00:24:58] Speaker 00: that your client owns. [00:25:02] Speaker 00: would be subject to execution rather than none at all. [00:25:05] Speaker 02: And that's assuming the exception applies and trying to find out whether it does or not. [00:25:10] Speaker 02: And the federal rules of civil procedure have always recognized that in debt collection action, we follow the rule of the state in which the court is located. [00:25:22] Speaker 02: In this case, that's Nevada. [00:25:23] Speaker 02: And that's federal rule 59. [00:25:24] Speaker 00: We have a case saying that the statute of limitations doesn't apply, correct? [00:25:29] Speaker 02: The Giannelli case was a limited exception from Rule 69's presumption for all litigants for certain debts owing to the government. [00:25:39] Speaker 02: That is the statutory frame. [00:25:41] Speaker 02: Now we've argued there are two reasons that the FDCPA, the Federal Debt Collection Act, this isn't a way out in this case. [00:25:49] Speaker 02: One is because it's not owing to the government. [00:25:52] Speaker 02: And that's the argument we've been discussing extensively. [00:25:55] Speaker 02: The other is another part of the FDCPA talks about co-owned property, just like this, which is co-owned residential property. [00:26:05] Speaker 02: That's 3010A. [00:26:08] Speaker 02: And it says that this will not, we will follow the state procedures for co-owned property, even under the FDCPA. [00:26:15] Speaker 00: I don't think the government is disagreeing with you if I understood their argument. [00:26:21] Speaker 00: I may not have understood it, but I understood them to say, sure, there's factual development to be had before the district court, but that doesn't mean the whole thing is no good. [00:26:31] Speaker 02: Well, and as the district court said, the statute of limitations facially bars it. [00:26:35] Speaker 00: So we're back to that. [00:26:37] Speaker 00: But if the statute of limitations doesn't apply, I don't think they're disagreeing with you that there may be some [00:26:45] Speaker 00: further fact-finding require. [00:26:47] Speaker 02: Well, Your Honor, the government, the FTC in this case has to justify or they have to show that the district court erred in relying on Nevada state law. [00:26:58] Speaker 02: And in this case, there were two independent reasons. [00:27:01] Speaker 02: The district court said this violated, this attempted collection violated Nevada state law. [00:27:06] Speaker 02: One was the substantive statute of limitations. [00:27:09] Speaker 02: Nevada has a specific six year limitations period for executing on a judgment of the United States. [00:27:17] Speaker 03: Does that apply to the United States as a sovereign? [00:27:20] Speaker 03: Have they waived their sovereign immunity for that statute of limitations? [00:27:24] Speaker 02: Only with respect to the Federal Debt Collection Practices Act, which itself is very ambiguous about, excuse me, not even practices. [00:27:36] Speaker 02: It is the Procedures Act. [00:27:38] Speaker 02: And the statute we're talking about, the exception. [00:27:41] Speaker 03: So wait, where, can you point out where in the [00:27:46] Speaker 03: the statute, the government waives its sovereign immunity over a state statute of limitations. [00:27:50] Speaker 03: Is that in 3010? [00:27:51] Speaker 03: Is that what you're suggesting? [00:27:53] Speaker 03: No, what we're saying is that the FDCPA is a limited exception to Rule 69's presumption, long-standing historical presumption that federal courts... Right, but even if you're applying state law under Rule 69, you still have the issue of dealing with the sovereign and their immunity, unless they've waived it for that statute of limitations. [00:28:15] Speaker 02: correct your honor and then we have additional issues about eerie choices and the substantive law to apply in the federal court what is truly procedural what is substantive. [00:28:27] Speaker 02: These are all questions that come up regularly with the debt collection practices when we're dealing with different states because there's no question that a statute of limitations barring an action under a normal eerie analysis if a federal [00:28:44] Speaker 02: If a federal court is applying a substantive statute of limitations or not, when they are asked to follow state law, that is a problem. [00:28:54] Speaker 02: That is potentially unconstitutional. [00:28:57] Speaker 01: If we can go back to the co-owner provision, section 3010, do you agree with FTC's counsel that it only applies to innocent co-owners, that is, if the other co-owner is a judgment debtor, that it wouldn't apply? [00:29:11] Speaker 02: Not at all, Your Honor. [00:29:12] Speaker 02: And that provision says, if we look at the provision, it says that for property that is co-owned, we follow the law of the state. [00:29:22] Speaker 02: at issue. [00:29:24] Speaker 02: We know this property is co-owned. [00:29:26] Speaker 02: The FTC alleged that there were two beneficiaries of the Hamm Bill Trust. [00:29:30] Speaker 02: The Hamm Bill Trust is what owns the property. [00:29:34] Speaker 02: They alleged that there are two 25% or greater beneficiaries, Ms. [00:29:39] Speaker 02: Rogers, Mr. Hoskins, and there may be additionals. [00:29:43] Speaker 00: As a matter of fact, there are. [00:29:45] Speaker 00: It appears to me, at least from what I understand so far, that [00:29:51] Speaker 00: Mr. Hoskins is not an innocent party. [00:29:53] Speaker 00: The corporate entity of which your client is an alter ego is not an innocent party. [00:30:01] Speaker 00: And the trust containing their property because they are not innocent is also not an innocent party. [00:30:09] Speaker 00: Is there anyone else? [00:30:11] Speaker 02: Your Honor, the district court explicitly found those factual allegations were all untrue. [00:30:19] Speaker 02: And if I can just go back, the district court classified Ms. [00:30:22] Speaker 02: Rogers, my client, as a second-order relief defendant who had not been alleged to have done anything other than receive the benefit. [00:30:30] Speaker 00: Can I go back to my question? [00:30:31] Speaker 00: I know you don't concede that they are non-innocent parties, but I'd like you to assume that for answering my question. [00:30:39] Speaker 00: Are there other parties besides the husband, the corporate entity of which your client is alleged to be the alter ego and the trust containing [00:30:48] Speaker 00: their property. [00:30:48] Speaker 00: Are there other entities or individuals who have a property interest? [00:30:54] Speaker 02: Yes, and the FTC acknowledged that. [00:30:58] Speaker 02: There has not been a record made of that because that was the FTC's allegation. [00:31:02] Speaker 00: You never got there because the district court said this was not a debt owed to the United States. [00:31:07] Speaker 02: And after motion practice and after adopting the Magistrate Court's report, the court issued its July order, precluding further enforcement only against Ms. [00:31:17] Speaker 02: Rogers, not against Mr. Hoskins or the other beneficiaries of this estate. [00:31:22] Speaker 00: So those can be executed upon? [00:31:25] Speaker 02: If there is a valid judgment. [00:31:27] Speaker 02: And so there would be a very different question. [00:31:30] Speaker 00: I thought there was no challenge to the judgment. [00:31:33] Speaker 00: I'm losing track here. [00:31:35] Speaker 02: And my point, Your Honor, is that that is a different issue for Mr. Haskins or any of the other defendants. [00:31:41] Speaker 02: There are numerous defendants in this case. [00:31:43] Speaker 02: What we're dealing with is Ms. [00:31:45] Speaker 02: Rogers, who was the beneficiary of lawful income that she has been ordered to disgorge. [00:31:53] Speaker 02: in its effort to collect this 10 years after the fact the FTC has violated the rules for how they have to go about trying to seize co-owned property. [00:32:05] Speaker 02: They have alleged in their application to the magistrate judge this property was co-owned. [00:32:12] Speaker 02: They said there are two, there is at least two 25% [00:32:16] Speaker 02: beneficiaries. [00:32:17] Speaker 02: That's at page 70 of the record. [00:32:19] Speaker 02: So what we have is we have a facial request from the FTC that violates the language of the statute or that the provision in the 3010 that talks about quote co-owned property. [00:32:33] Speaker 02: And I think what the FTC is trying to get out of it is saying, well, maybe that's not the right procedure. [00:32:39] Speaker 02: Maybe there should have been different procedures and essentially quibbling with whether or not [00:32:44] Speaker 00: Well, if there's no time limit, they could presumably file a tidier writ of execution. [00:32:51] Speaker 00: If it is a debt to the United States, and G&L, if I'm pronouncing that right, says there's no statute of limitations problem, all of this can be dealt with. [00:33:06] Speaker 02: Your Honor. [00:33:07] Speaker 02: I don't think that's true because, first of all, and in this case, as we've argued again, the FDCPA must apply for GNLEs holding to a... Right. [00:33:18] Speaker 00: I said, assuming... I know you don't agree with this. [00:33:22] Speaker 00: If this is a debt to the United States that is enforceable under this statute and there is no time limit, [00:33:32] Speaker 00: they could file a different bit of execution tomorrow. [00:33:36] Speaker 02: And then we still have the same problem with they didn't follow the procedures in three thousand and ten. [00:33:40] Speaker 02: And that's why the that that's the alternative hold. [00:33:43] Speaker 02: And the FTC has to get past both of those. [00:33:46] Speaker 02: They have to say the FTCPA does not justify us violating the statute of limitations and it does not justify us disregarding [00:33:55] Speaker 02: the alter ego procedures that are required by due process to notify the other beneficiaries before we seize someone's home and sell it at auction. [00:34:05] Speaker 03: I guess I don't understand why what Judge Graber is suggesting doesn't work in your view. [00:34:11] Speaker 03: There's no statute of limitations and the judgment is not being challenged. [00:34:16] Speaker 03: Could the FTCA just refile? [00:34:19] Speaker 02: Your honor, there is a statute of limitations. [00:34:21] Speaker 03: Well, just assume there's not. [00:34:22] Speaker 03: Just assume there's not. [00:34:23] Speaker 03: That's the question. [00:34:23] Speaker 03: I mean, is this not something that they could either refile or on remand that could amend their pleading and deal with the requirements of Section 3010? [00:34:34] Speaker 02: Well, and that's why we are here, and that's why I wanted to clarify. [00:34:38] Speaker 02: We are here asking this court to affirm the district court's judgment at [00:34:43] Speaker 00: which says it's not a debt to the united states so we're back to that as being basically your argument and if we disagree with that it seems like the rest sort of follows from that no your honor because there's also the twenty eight ten exception those are two independent reasons because we have different provisions requiring [00:35:06] Speaker 02: the state law to be in play. [00:35:08] Speaker 02: And so one argument is this is not a debt owing to the United States. [00:35:12] Speaker 02: Therefore, Giannelli's conclusion about statute of limitations does not apply. [00:35:16] Speaker 02: We've already we also argued there are additional constitutional problems that come up with that kind of [00:35:22] Speaker 02: conclusion if this court goes down that road. [00:35:25] Speaker 02: The other, though, is that even under 3010, even if we assume Janelli applies, the statute of limitations does not bar this action, then we have the second problem about the failure to follow the procedural requirements required for establishing the ownership of the trust. [00:35:42] Speaker 03: And you think that is something that could not be cured on remand or by a subsequent filing? [00:35:47] Speaker 03: Apparently, that's what you think. [00:35:48] Speaker 03: So can you explain why? [00:35:49] Speaker 03: That's, I think, what I was trying to get at before. [00:35:53] Speaker 02: the, those, essentially that ship has sailed. [00:35:57] Speaker 02: And I think the problem, there is a different, there is a different potential argument about if the FTC attempted to attach future property and they prevailed on the statute of limitations argument, there is a potential argument that they could have complied with state procedures under 3010. [00:36:15] Speaker 02: I'm just saying these are independent reasons that this court can affirm the judgment below. [00:36:20] Speaker 02: precluding enforcement against Ms. [00:36:23] Speaker 02: Rodgers. [00:36:26] Speaker 03: We've taken you over time. [00:36:28] Speaker 03: My colleagues have any additional questions? [00:36:32] Speaker 03: Thank you very much. [00:36:33] Speaker 04: Thank you, Your Honor. [00:36:38] Speaker 04: So I'd like to address first the meaning of debt and then the co-owned property issue and hopefully briefly. [00:36:47] Speaker 04: On the question of debt, [00:36:48] Speaker 04: There is nothing in the statute that suggests that a court needs to look at the purposes for which a debt will be used. [00:36:59] Speaker 04: The question is, is the money owing to the United States and is it here? [00:37:03] Speaker 04: I don't think this court should read in a new requirement that Congress didn't prescribe. [00:37:07] Speaker 04: That would also be a very difficult standard to administer. [00:37:12] Speaker 04: For example, in this case, [00:37:13] Speaker 04: you know, although we intend to use the money to pay consumers as to the extent possible, money is also used to administer the refund process. [00:37:21] Speaker 04: It's used to provide notice, things like that. [00:37:23] Speaker 04: That doesn't go to consumers, although arguably, you know, so it's a complicated question. [00:37:29] Speaker 04: It's something that would affect a lot of different agencies that are engaged in law enforcement activities similar to those the FTC does. [00:37:37] Speaker 04: So I would urge this court [00:37:39] Speaker 04: to follow the correct holding of the Fifth Circuit in national business consultants on that question. [00:37:45] Speaker 04: On the question of co-owned property, I think that to the extent there are issues here as to whether there are other people of an interest in this property, that's something that can be issued that can be addressed on remand. [00:38:00] Speaker 04: I think that [00:38:02] Speaker 04: Ms. [00:38:03] Speaker 04: Rogers' counsel has been a little coy about this. [00:38:05] Speaker 04: He says there are other trustees and other beneficiaries. [00:38:08] Speaker 04: To the extent there are other beneficiaries, Ms. [00:38:11] Speaker 04: Rogers and Mr. Hoskins are trustees, so presumably they would have a duty to notify the other beneficiaries and protect their interests. [00:38:18] Speaker 04: That's why we do these things. [00:38:21] Speaker 04: I want to briefly mention just the nature of a trust under Nevada law. [00:38:32] Speaker 04: This is a case that actually, Ms. [00:38:34] Speaker 04: Rogers cites and we didn't, but it's Wishing Grad versus Carrington Mortgage Services, 529 P, 3rd 880. [00:38:39] Speaker 04: And what that case makes clear is that a trust is really a fiduciary relationship between the set law, the trustees and the beneficiaries. [00:38:48] Speaker 04: It's not a distinct legal entity. [00:38:49] Speaker 04: So if we provided notice to the trustees, then that's sufficient. [00:38:52] Speaker 04: But again, to the extent there's any [00:38:54] Speaker 04: If there's any issue like that, it can be addressed on remand. [00:38:58] Speaker 04: And if there's a defect in this route of execution, we can absolutely go and seek another route of execution and correct any such defect. [00:39:05] Speaker 04: The key question here really is, is this a debt such that the statute applies? [00:39:08] Speaker 04: And we believe it is. [00:39:10] Speaker 04: For that reason, we ask that the judgment be reversed. [00:39:14] Speaker 04: Thank you for your time. [00:39:15] Speaker 03: Can I ask you one more question? [00:39:16] Speaker 03: I'm sorry. [00:39:16] Speaker 04: You may. [00:39:18] Speaker 03: Is it the government's position that going forward? [00:39:22] Speaker 03: You argued that this judgment isn't being attacked, so ANG doesn't apply. [00:39:27] Speaker 03: This is something separate, an enforcement action or a collection action. [00:39:32] Speaker 03: So do you think the FTC now could seek this sort of judgment for disgorgement of ill-gotten gains under Section 13B or under Section 19? [00:39:43] Speaker 04: We couldn't seek any monetary relief under Section 13B. [00:39:48] Speaker 04: We could seek monetary relief under Section 19B for [00:39:53] Speaker 04: certain types of violations, including violations of consumer protection regulations. [00:39:58] Speaker 04: Our position is that, you know, that money needs to go to consumers, although we would also be entitled, of course, to assess costs, which was an issue in national business consultants, and so costs would go to the government. [00:40:12] Speaker 03: So how would a judgment in one of those cases work? [00:40:17] Speaker 03: Would it be to the United States, or would it be a judgment to particular individuals under the Section 19? [00:40:23] Speaker 04: The judgment would say, pay to the United States. [00:40:27] Speaker 04: Typically the judgments say, we have a form judgment that courts typically use. [00:40:31] Speaker 04: This was an older case, so I don't know how this judgment came to be written. [00:40:35] Speaker 04: But typically it says, it'll pay this to be used as [00:40:39] Speaker 04: we do we used for ethical monetary relief and as well as for administration of expenses, administration notice, things like that. [00:40:47] Speaker 04: So, um, and then they'll often say if there's money left over, then we come back to the court and figure out what to do with that money. [00:40:54] Speaker 04: It may require returning the money. [00:40:56] Speaker 04: Um, that's how these judgments usually work now, but of course that's in the post AMG world. [00:41:00] Speaker 00: But can I clarify, uh, following on judge baby's question, I take it that the, [00:41:06] Speaker 00: the current form of judgment still is payable to the FTC with some elaboration afterwards, or is it? [00:41:15] Speaker 04: Correct. [00:41:17] Speaker 04: It's payable to the FTC, not to any individual person. [00:41:23] Speaker 04: And indeed, how the money is distributed, the FTC has a great deal of discretion in doing that. [00:41:29] Speaker 04: Sometimes it depends on how much money we get, and sometimes it may be that only people who have lost more than a certain amount [00:41:36] Speaker 04: will get will be able to be to reimburse and we reimbursed as much as we can but you know there's quite a lot of. [00:41:46] Speaker 00: Flexing serve how that works and I was more more trying to figure out the form of the judgment still this the only. [00:41:53] Speaker 00: entity entitled to the payment as the FTC? [00:41:57] Speaker 04: The only entity entitled to the payment is the FTC and no individual person is entitled to enforce the judgment. [00:42:05] Speaker 04: And as we've said, we think that's what matters for purposes of the FDCPA, this FDCPA. [00:42:13] Speaker 04: And that's the rule the court should adopt here. [00:42:17] Speaker 04: Are there further questions? [00:42:20] Speaker 03: No. [00:42:21] Speaker 03: Thank you very much. [00:42:21] Speaker 04: Thank you so much. [00:42:23] Speaker 03: This case is submitted. [00:42:25] Speaker 03: Thank you both for your arguments this morning. [00:42:27] Speaker 03: Mr. Hoffman, thank you for being here during the shutdown. [00:42:36] Speaker 03: We are adjourned until tomorrow morning.