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Court Watch

By Darryl A. Hart and Charles G. Miller
September 28, 2010

Cooperation with Government Might Not Avoid Equitable Relief Payment ' and Attorneys Beware!

Reported cases brought by the Federal Trade Commission under the FTC Franchise Rule are rare, largely because most targets do not have the resources to go to battle with the federal government. In Federal Trade Commission v. Network Services Depot, Inc. 2010 WL 3211724 (9th Cir. Aug. 16, 2010), the FTC filed suit in Nevada against the promoters of an Internet kiosk business opportunity. The case is worthy of attention because of its interesting facts that deal with the quantum of proof necessary to hold individual owners and executives liable for equitable monetary relief. Further, the case is important for the franchise bar because it imposed a constructive trust on legal fees paid to the attorneys representing the defendants.

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