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03/9/2018

Appellate Court Unfreezes Small Business Owner’s Assets After Being Wrongly Targeted by FTC

Washington, D.C. – The 11th Circuit Court of Appeals has ruled to unfreeze in part the assets of our client, Robert Cupo, who owns a small family-run tech support company, Vylah Tec, LLC (“V-Tec”), after the Federal Trade Commission (“FTC”) used misleading evidence to convince the lower court to grant a damaging injunctive order against his company. The ruling rejects the government’s clear overreach in not only freezing assets of the company, but also the joint marital assets of Mr. Cupo and his wife, and the assets of his brother who had no business connection to V-Tec.  Cause of Action Institute (“CoA Institute”) filed an appeal of the district court’s order in September 2017.

CoA Institute Senior Counsel Cynthia Crawford: “The Government attempted to bulldoze Mr. Cupo and his family with punitive financial penalties before they had an opportunity to defend themselves. The preliminary injunction was granted based on faulty and mischaracterized evidence. That’s not due process, and it certainly is not justice. After nine long months of financial hardship, a large portion of the burden has finally been lifted, allowing our client to continue to fight to clear his name.”

The 11th Circuit found that the district court “did not make sufficient factual findings to support freezing these assets.”

Case Background:

V-Tec provides tech support to customers and also sells third-party antivirus and other data security software. In May 2017, the company’s headquarters was raided by FTC regulators, in conjunction with the Florida Attorney General’s office, on suspicion of “deceptive” sales practices.

To obtain the injunctive order that froze the Cupos’ assets, the FTC in court cited two examples of recorded calls that were both mischaracterized. The Government conceded that it submitted false evidence. Nonetheless, a Florida district court judge granted the injunctive order turning V-Tec’s operation over to a third-party receiver and freezing the assets of Mr. Cupo and several of his family members.

The 11th Circuit ruling vacates the asset freeze imposed against the assets held jointly by Mr. Cupo and his wife, as well as the asset held by his brother.

The full opinion can be found here.

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org.

 

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10/17/2017

CoA Institute to Appeal Ruling that Children’s Clothing Consignment Volunteers Must be Considered Employees

Washington, DC – Cause of Action Institute (“CoA Institute”) today announced it will appeal a ruling by the district court that wrongly found that volunteers at Rhea Lana’s children’s clothing consignment events must be considered employees under the Fair Labor Standards Act.

Cause of Action Institute Vice President Julie Smith: “The district court reached the wrong conclusion in taking an outdated view of a decades-old law intended to protect vulnerable individuals and groups from exploitation. The court freely conceded that Rhea Lana’s labor practices are not designed to exploit anybody. We continue to believe that the Department of Labor has overstepped its authority. The federal government should not attack a business model that provides hardworking families with affordable children’s clothing.”

Rhea Lana Riner: “Individuals should be free to volunteer their time for their own benefit. The Labor Department’s crusade to classify volunteers as employees has put my business and livelihood in jeopardy. If everyone is satisfied, why would the federal government need to intervene?”

Case background:
Rhea Lana founded her clothing consignment business in her living room more than a decade ago. Since the company’s humble beginnings, Rhea Lana, Inc. has expanded as a franchise with 80 locations across 24 states.

In 2013, the U.S. Department of Labor conducted an audit, and sent Rhea Lana a letter claiming that her company was in violation of the Fair Labor Standards Act regarding minimum wages and overtime pay.  The government claimed that volunteers who help at the consignment events must be classified as “employees.”

Rhea Lana’s complaint was initially dismissed in 2014 for lack of a reviewable agency action.  On appeal, however, the Court of Appeals held that the government’s letter to Rhea Lana was subject to judicial review.  Last month, the district court ruled in favor of the government. CoA Institute will represent Rhea Lana in her appeal of the district court’s decision.

Rhea Lana Inc., et al. v. Department of Labor, No, 14-0017, U.S. District Court for the District of Columbia

Watch a short video about Rhea Lana’s story here

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org

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