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Trial in FTC v. Success by Health is probably going to be postponed. Neither Jay Noland nor the other defendants are prepared for trial.

The defendants in the Success by Health case have not yet submitted a notification stating that they are prepared for a final pretrial conference as of the time of publishing.

The primary attorney representing the Success by Health defendants underwent knee replacement surgery in early November, according to a request for an extension to file a motion made on November 30 by one of the defendants’ attorneys.

They are still recuperating as of the date of the filing, but it is anticipated that they will be fully recovered by December 20.

According to its own readiness declaration from November 30th, the FTC declares that it is “ready for convening a Final Pretrial Conference.”

Despite this, the FTC has asked that the conference be postponed until

(1) The FTC’s motion for contempt sanctions has been decided by the court; and

(2) The dispute over the Corporate Defendants’ representation and/or whether the Individual Defendants’ liability judgment applies to the Corporate Defendants has been settled by the parties or the court.

The Motion for Clarification of Contempt Sanctions relates to holding Noland accountable for disobeying the earlier-granted NetForce injunction.

The FTC filed their application on June 23, 2021, asking for a determination that the Contempt Defendants had broken the 2002 Noland Permanent Injunction and a judgment of around $7 million in civil compensatory contempt penalty.

The motion is still awaiting a ruling. The FTC contends

There would virtually definitely be no need for a trial in this case if the Court granted the contempt motion.

The FTC asserts that the violation would eventually result in a combined trial if the court rejects the request (resolution of both the Success by Health and NetForce matters would be resolved through a single trial).

The corporate defendant liability problem relates to avoiding conducting two trials—one for the corporate defendants and another for the individual Success by Health defendants.

The FTC suggests delaying these ineffective results to give the parties and Receiver more time to speak with and consult with the new counsel for the Individual Defendants about the case’s situation with relation to the Corporate Defendants.

If the parties are unable to come to an agreement, the FTC will submit a motion on or before December 23, 2021, asking for the necessary remedies.

The FTC also brought up an intriguing “scope of trial” question.

According to the FTC, culpability summary judgment should be granted when

However, the Court concluded that there was a “triable question of substantial fact” as to whether SBH constituted a pyramid scheme and if the Defendants had deceived customers about their prospective earnings in SBH.

The following day, the Court denied the FTC’s request to have the Individual Defendants’ expert testimony excluded. In its order, the Court stated that since the FTC had established the Individual Defendants’ guilt on all counts (as to VOZ Travel), “there will not be a trial on whether SBH also operated as an illegal pyramid scheme.

In order to assess the proper injunctive remedy to issue against the Individual Defendants, the FTC explained that a trial over SBH could be required.

The Court approved the FTC’s request for clarity, but it made no mention of whether a trial in relation to SBH would be required.

In essence, the FTC wants to know if more evidence that Success by Health was a pyramid scheme would be required at trial.

Although the court has acknowledged that Success by Health constituted a pyramid scheme, the FTC seeks to emphasize this issue at trial to determine the severity of the judicial sanctions imposed.

The court has not yet made a decision about the FTC’s notice of readiness for the final pretrial conference or Success by Health’s request for an extension of time to file a motion.

I’ll keep an eye on the court docket for developments.

Update: On December 10, 2021, the court extended Success by Health’s deadline for its reply until December 20.

After that, the FTC has until January 4th to provide a response.

A trial date has not yet been set, however the FTC’s motion involving the corporate defendants has been refused. Update: February 25, 2022.

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