United States District Court, D. Nevada
M. Navarro, Chief Judge United States District Judge.
before the Court is the Motion for Preliminary Injunction,
(ECF No. 9), filed by Plaintiff Federal Trade Commission
(“the FTC”). Defendants OMICS Group Inc.
(“OMICS”), iMedPub LLC (“iMedPub”),
Conference Series LLC (“Conference Series”), and
Srinubabu Gedela (“Gedela”) (collectively
“Defendants”) filed a response, (ECF No. 32), and
the FTC filed a Reply, (ECF No. 34). Also pending before the
Court is Defendants' Motion to Dismiss. (ECF No. 31). The
FTC filed a response, (ECF No. 35), and Defendants filed a
reply, (ECF No. 36). For the reasons discussed herein, the
FTC's Motion for Preliminary Injunction is GRANTED and
Defendants' Motion to Dismiss is DENIED.
brings this action pursuant to Section 5(a) of the FTC Act,
15 U.S.C. § 45(a), alleging that Defendants engaged in
unfair and deceptive practices with respect to the
publication of online academic journals and organization of
scientific conferences. (See Compl., ECF No. 1).
Defendants claim to operate hundreds of online academic
journals on a wide variety of topics, including medicine,
chemistry, nursing, engineering, and genetics. (Mot. for
Prelim. Inj. 2:1-12, ECF No. 9; see also Defs.'
Mot. to Dismiss 4:21-28, ECF No. 31). According to the FTC,
Defendants make numerous misrepresentations regarding the
nature and reputation of their journals in order to attract
consumers. Id. Furthermore, Defendants allegedly
fail to disclose that they charge significant fees in
exchange for their publication service. Id. Finally,
Defendants allegedly make numerous misrepresentations in
connection with the marketing of their scientific
asserts that Defendants OMICS, iMedPub, and Conference Series
(collectively “Corporate Defendants”) have
operated as a common enterprise in violating Section 5(a) and
therefore are jointly and severally liable. (Compl. ¶
10). The FTC further asserts that Gedela has
“formulated, directed, controlled, had the authority to
control, or participated in the acts and practices of the
Corporate Defendants that constitute the common
enterprise.” (Id.). Based on these
allegations, the FTC initiated the instant action and filed
the Motion for Preliminary Injunction. (ECF Nos. 1, 9).
Specifically, the FTC seeks a preliminary injunction that:
(1) restrains Defendants from engaging in deceptive practices
with respect to the marketing and sale of academic journal
publishing services and scientific conference services; (2)
requires Defendants to identify assets and make an accounting
of their present financial condition and certain business
information; and (3) requires Defendants to preserve records.
(Mot. for Prelim. Inj. 2:14-21).
Section 13(b) of the Federal Trade Commission Act (“FTC
Act”), the Court may grant the FTC a preliminary
injunction “[u]pon a proper showing that, weighing the
equities and considering the Commission's likelihood of
ultimate success, such action would be in the public
interest.” 15 U.S.C. § 53(b). Section 13(b) of the
FTC Act, therefore, “places a lighter burden on the
Commission than that imposed on private litigants by the
traditional equity standard.” F.T.C. v. Warner
Commc'n, Inc., 742 F.2d 1156, 1159 (9th Cir. 1984).
Under this more lenient standard, the FTC need not show
irreparable harm; instead, it must only demonstrate (1) that
it is likely to succeed on the merits and (2) that the
equities weigh in favor of an injunction. Id. at
1160; see also F.T.C. v. World Wide Factors, 882
F.2d 344, 346 (9th Cir. 1989).
court's authority to grant injunctive relief under
Section 13(b) includes “all the inherent equitable
powers . . . for the proper and complete exercise” of
the court's equity jurisdiction. F.T.C. v. H.N.
Singer, Inc., 668 F.2d 1107, 1112 (9th Cir. 1982)
(citations omitted). One such power is the authority to
freeze a defendant's assets. Id. at 1113;
F.T.C. v. Evans Prods. Co., 775 F.2d 1084, 1088-89
(9th Cir. 1985). As the Ninth Circuit emphasized in H.N.
Singer, an order freezing assets is a form of
“ancillary relief” rather than a primary remedy.
See 668 F.2d at 1112-13. “Courts have inherent
equitable powers to grant ancillary relief, other than a
preliminary injunction restraining future violations of the
law, when there is no likelihood of recurrence.”
Evans Prods., 775 F.2d at 1088. “A party
seeking an asset freeze must show a likelihood of dissipation
of the claimed assets, or other inability to recover monetary
damages, if relief is not granted.” Johnson v.
Couturier, 572 F.3d 1067, 1085 (9th Cir. 2009).
Likelihood of Success on the Merits
5 of the FTC Act prohibits “unfair or deceptive
practices in or affecting commerce.” 15 U.S.C. §
45. An act or practice is deceptive under Section 5 if it
involves a material misrepresentation or omission that is
likely to mislead consumers acting reasonably under the
circumstances. FTC v. Stefanchik, 559 F.3d 924, 928
(9th Cir. 2009). A misrepresentation is material if it
involves facts that a reasonable person would consider
important in choosing a course of action. See FTC v.
Cyberspace.com LLC, 453 F.3d 1196, 1201 (9th Cir. 2006).
Express claims are presumed material, so consumers are not
required to question their veracity to be deemed reasonable.
See Pantron I, 33 F.3d 1088, 1095-96 (9th Cir.
1994). Furthermore, the FTC need not prove reliance by each
consumer misled by Defendants. See FTC v. SlimAmerica,
Inc., 77 F.Supp.2d 1263, 1275 (S.D. Fla. 1999); FTC
v. Figgie Int'l, Inc., 994 F.2d 595, 605 (9th Cir.
considering whether a claim is deceptive, the Court must
consider the “net impression” created by the
representation, even when the solicitation contains some
truthful disclosures. See Cyberspace, 453 F.3d at
1200. The FTC need not prove that Defendants'
misrepresentations were made with an intent to defraud or
deceive or in bad faith. See, e.g., Removatron Int'l
Corp. v. FTC, 884 F.2d 1489, 1495 (1st Cir. 1989);
FTC v. World Travel Vacation Brokers, 861 F.2d 1020,
1029 (7th Cir. 1988). A representation is also deceptive if
the maker of the representation lacks a reasonable basis for
the claim. See FTC v. Direct Mktg. Concepts, Inc.,
624 F.3d 1, 8 (1st Cir. 2010). Where the maker lacks adequate
substantiation evidence, they necessarily lack any reasonable
basis for the claims. Id. Furthermore, any
disclaimers must be prominent and unambiguous to change the
apparent meaning and leave an accurate impression. See
Kraft, Inc. v. FTC, 970 F.2d 311 (7th Cir. 1992). The
FTC Act is violated if a seller “induces the first
contact through deception, even if the buyer later becomes
fully informed before entering the contract.”
Resort Car Rental Sys., Inc. v. FTC, 518 F.2d 962,
964 (9th Cir. 1975).
burdens at the preliminary injunction stage track the burdens
at trial.” Gonzales v. O Centro Espirita
Beneficente Uniao do Vegetal, 546 U.S. 418, 429 (2006).
Thus, the burden is on the FTC to demonstrate that it is
likely to prevail on its claims that Defendants engaged in:
(1) misrepresentations regarding journal publishing; (2) a
deceptive failure to disclose publishing fees; and (3)
misrepresentations regarding conferences. “Because
irreparable injury must be presumed in a statutory
enforcement action, the district court need only . . . find
some chance of probable success on the merits.”
World Wide Factors, 882 F.2d at 347 (internal
quotation marks omitted).
Court finds that the FTC has satisfied its burden of
demonstrating a likelihood of success on the merits of its
claims, and considers each claim in turn.
Misrepresentations Regarding Journal Publishing
evidence produced by the FTC demonstrates that Defendants
engaged in probable misrepresentations regarding journal
publishing. On the OMICS website, for example, OMICS makes
numerous representations indicating that it follows standard
peer-review practices. (See PX12 Att. L at 657, 773,
748, Ex. 12 to Mot. for Prelim Inj., ECF No.
9-12). Under standard industry practice, the peer
review process often takes several weeks or even months and
involves multiple rounds of substantive feedback from experts
in the related field. (See PX13 ¶¶ 9-10).
In contrast, the FTC has provided evidence that
Defendants' peer review practices, in numerous instances,
took a matter of days and contained no comments or
substantive feedback. (See PX04 ¶ 4; PX07
¶ 4; PX06 ¶¶ 5-6; PX09 ¶ 5; PX10 ¶
inadequacy is further demonstrated by statements from
purported “editors, ” which indicate that they
never received manuscripts to review or else even agreed to
be listed as an editor. (See, e.g., PX03
¶¶ 3-4; PX11 ¶ 7). In some instances,
individuals listed as “editors” without
permission requested removal from the website without
success. (See, e.g., PX02 ¶ 4; PX08
¶¶ 4-7; PX06 ¶ 11). In other instances,
Defendants sent out email solicitations on behalf of
academics without their permission. (See PX11 ¶
7). With respect to the journals themselves, Defendants use
names that are nearly identical to other respected journals,
which has led to consumers mistakenly submitting articles to
Defendants' journal. (See PX07 ¶ 3).
has also submitted evidence demonstrating that Defendants
misrepresent the “impact factor” of their
journals (i.e. the number of citations in other reputable
journals). Notably, the term impact factor is understood in
the community to mean the annual calculation released by
Thomson Reuters. (PX13 ¶ 12). Defendants, however, base
their impact factor off of a Google Scholar search.
(See PX12 Att. L at 770). Additionally, the FTC has
submitted evidence that Defendants misleadingly represent
that their publications are indexed in well-known, reputable
indexing services. (See, e.g., PX12 Att. L at 643,
657; PX13 ¶¶ 17-18, 25- 27). In opposition,
Defendants have submitted evidence purporting to demonstrate
the legitimacy of their businesses. However, the FTC has
substantively responded to this evidence and demonstrated the
numerous flaws and inaccuracies in Defendants'
representations. The Court therefore finds that the evidence
in the record is sufficient to support a preliminary
conclusion that Defendants made misrepresentations regarding
their journal publishing.
Deceptive Failure to Disclose Publishing Fees
evidence produced by the FTC indicates that Defendants
deceptively fail to disclose publishing fees. Notably, the
FTC has provided evidence that Defendants send out emails
soliciting the submission of articles to their service but
make no mention of associated fees. (See, e.g., PX04
Att. A at 6, PX09 Att. A at 4; PX10 Att. D at 16).
Furthermore, the fee disclosures that are made on
Defendants' websites are difficult to find. (See
PX12 Att. L at 632). Moreover, as the email solicitations
invite consumers to submit articles directly through email, a
consumer may end up submitting an article without even
viewing the website. (See PX04 Att. A at 6). The FTC
has also submitted evidence indicating that industry practice
when charging publication fees is to clearly disclose the
fees before authors submit their articles. (See PX13
¶¶ 4, 6). A consumer could therefore reasonably and
mistakenly assume that there is no charge for publishing in
Defendants' journals. (See, e.g., PX04 ¶
5). Furthermore, when consumers contest Defendants'
publication fees and ask their articles to be withdrawn,
Defendants have ignored those requests and continued
demanding payment. (See, e.g., PX04 ¶¶
6-8; PX06 ¶¶ 6, 8; PX07 ¶¶ 5, 8). In some
instances, Defendants only removed the articles after the
threat of legal action. (See, e.g., PX07
¶¶ 9-10). The FTC asserts that these practices not
only cause financial harm to consumers, but also prevent
consumers from resubmitting articles to more reputable
journals. (See Mot. for Prelim. Inj. 12:23-27). The
Court therefore finds that the evidence in the record is
sufficient to support a preliminary conclusion that
Defendants deceptively fail to disclose publishing fees.
Misrepresentations Regarding Conferences
evidence produced by the FTC demonstrates that Defendants
engaged in probable misrepresentations regarding their
conferences. Notably, the FTC has provided evidence
indicating that Defendants advertise the attendance and
participation of prominent academics and researchers without
their permission or actual affiliation. (See PX05
¶¶ 3, 5; PX12 Att. U at 1045). In numerous
instances, individuals have requested unsuccessfully to have
their names removed from Defendants' conference
advertising materials. (See, e.g., PX03 ¶¶
6-12). Often, Defendants do not remove an individuals'
name until the threat of legal action. (See, e.g.,
PX05 ¶ 7). Had consumers known of Defendants'
misrepresentations, they may not have agreed to participate
in or be affiliated with Defendants' conferences. The
Court therefore finds that the evidence in the record is
sufficient to support a preliminary conclusion that
Defendants made misrepresentations regarding their
Defendants Engaged in a Common Enterprise
constitute a common enterprise when they exhibit either
vertical or horizontal commonality-qualities that may be
demonstrated by a showing of strongly interdependent economic
interests or the pooling of assets and revenues.”
F.T.C. v. Network Servs. Depot, Inc., 617 F.3d 1127,
1142-43 (9th Cir. 2010). In deciding whether a common
enterprise exists, courts may consider such factors as
whether the companies were under common ownership and
control; whether they pooled resources and staff; whether
they shared phone numbers, employees, and email systems; and
whether they jointly participated in a “common
venture” in which they benefited from a shared business
scheme or referred customers to one another. Id. at
1243. Where the same individuals transact business through a
“maze of interrelated companies, ” the whole
enterprise may be held liable as a joint enterprise. FTC
v. John Beck Amazing Profits, LLC, 865 F.Supp.2d 1052,
1082 (C.D. Cal. 2012).
support of its claim that the Corporate Defendants engaged in
a common enterprise, the FTC points out that “the
various business entities share common ownership and
management and operate from the same principal place of
business in India. (Mot. for Prelim. Inj. 12:4-6).
Furthermore, the FTC provided evidence showing that the
websites belonging to the three corporations use similar
language, often link to one another, and advertise some of
the same journals. (Id. 2:2-3:17). With respect to
common ownership, the FTC has demonstrated that Defendant
Gedela is the authorized signatory on the financial accounts
of the Corporate Defendants, as well as the registrant for
each of their websites. (Id.). The FTC has also
provided evidence that each company is a beneficiary of and
participant in the same shared business scheme.
opposition, Defendants point out perceived gaps in the
FTC's evidence and incorrectly assume that the FTC needs
to demonstrate each one of the above factors to show a common
enterprise. For example, Defendants note that “the FTC
[has not] provided evidence which proves the type of address
the principal place of business is.” (Defs.' Resp
11:11-16, ECF No. 32). Defendants theorize, without citing to
any evidence, that as internet companies “it is highly
likely that the address is simply a common registered agent
similar to those based in the United States where companies
have no actual relationship to each other . . . .”
(Id.). The Court does not find this theoretical
argument sufficient to counter the evidence that Defendants
share a principal place of business and have common
ownership. Based on the record, the Court finds that the FTC
is likely to succeed in proving that the Corporate Defendants
engaged in a common enterprise.
Gedela's Liability for Injunctive and Monetary
liability for violations of the FTC Act fall into two
categories: liability for injunctive relief and liability for
monetary relief. Individuals are liable for injunctive relief
if they directly participate in the deceptive acts or have
the authority to control them. F.T.C. v. Publ'g
Clearing House, Inc., 104 F.3d 1168, 1170 (9th Cir.
1997); F.T.C. v. Stefanchik, 559 F.3d 924, 931 (9th
Cir. 2009). To subject an individual to monetary liability,
the FTC must show that the individual had knowledge of the
misrepresentations, was recklessly indifferent to the truth
or falsity of the misrepresentation, or was aware of a high
probability of fraud and intentionally avoided the truth.
Publ'g Clearing House, 104 F.3d at 1171;
Stefanchik, 559 F.3d at 931. “[T]he extent of
an individual's involvement in a fraudulent scheme alone
is sufficient to establish the requisite knowledge for
personal restitutionary liability.” F.T.C. v.
Affordable Media, 179 F.3d 1228, 1235 (9th Cir. 1999).
evidence produced by the FTC clearly demonstrates that
Gedela's participation and control over the Corporate
Defendants meets the liability standard at this stage. As
detailed above, Gedela is the founder, principal, and owner
of the Corporate Defendants. He has signatory authority over
the corporations' financial accounts and is the billing
contact for Defendants' websites. The OMICS website
itself openly proclaims Gedela as the “CEO and Managing
Director, ” and states that iMedPub LLC and Conference
Series LLC are subsidiaries of OMICS International. (PX12
Att. L at 937; PX22 Att. C at 17). Furthermore, Gedela's
own sworn declaration does not dispute his participation in
the Corporate Defendants' business. (See ECF No.
cite to a number of cases denying individual liability based
on an individual's limited involvement in a company.
(Defs.' Resp 13:24-15:19); see, e.g., FTC v. Swish
Mktg., 2010 WL 653486, at *5 (N.D. Cal. Feb. 22, 2010)
(finding that defendant's “status as CEO, standing
alone” was insufficient to support individual
liability). The Court does not find Defendants' cited
authority persuasive. Notably, these cases involve
individuals with far less involvement than the evidence
provides in this case. Based on the record, the Court finds
the evidence sufficient to support a preliminary conclusion
that Gedela is liable for injunctive and monetary relief.
Balancing of the Public and Private Interests
balancing the equities, public equities receive far greater
weight than private equities. Affordable Media, 179
F.3d at 1236. Public equities include economic benefits and
competitive advantages for consumers, and effective relief
for the FTC. See Warner Commc'n, 742 F.2d at
1165. “[W]hen a district court balances the hardships
of the public interest against a private interest, the public
interest should receive greater weight.” World Wide
Factors, 882 F.2d at 347. If the FTC demonstrates a
likelihood of success on the merits, “a countershowing
of private equities alone does not justify denial of a
preliminary injunction.” Warner Commc'n,
742 F.2d at 1165.
Court finds that the public equities are substantial and
outweigh the private equities in this case. As discussed
above, the FTC has sufficiently demonstrated that Defendants
likely engaged in unlawful and deceptive representations
regarding their publishing, fee scheme, and conferences. As a
result, the evidence clearly demonstrates that the public
equities-protection of consumers from Defendants'
deceptive practices and effective enforcement of the law-
weigh heavily in favor of granting injunctive relief. Absent
such an injunction, the Court finds it likely that Defendants
will continue to engage in deceptive practices.
contrast, the Court does not find the private equities in
this case compelling. As a general rule, compliance with the
law is not an unreasonable burden. See World Wide
Factors, 882 F.2d at 347 (“[T]here is no
oppressive hardship to defendants in requiring them to comply
with the FTC Act [and] refrain from fraudulent
misrepresentation . . . .”). Here, an injunction is
necessary to prevent potential harmful and illegal behavior
and will not prohibitively impact any of Defendants'
legitimate business activities. Defendants argue in their
opposition that “the practical effect of a preliminary
injunction in the eyes of the public would be that Defendants
are guilty of fraud and other wrongful actions” and
therefore an injunction would be “irreparably
devastating” to the Defendants. (Defs.' Resp.
16:13-17). Defendants' assertion is hardly ...