Case 2:14-cv-00088-DB Document 211 Filed 04/09/15 Page 1of4

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH

Federal Trade Commission, Case No. 2:14-cv-00088 (DB)
Plaintiff ORDER GRANTING PLAINTIFF
: FEDERAL TRADE COMMISSION’S
1S: MOTION TO DISMISS THE
SONNENBERG COMPANIES’
Apply Knowledge, LLC, et al., COUNTERCLAIM
Defendants.

This matter comes before the Court on the Federal Trade Commission’s Motion to
Dismiss the Counterclaim of defendants Apply Knowledge, LLC, eVertex Solutions, LLC,
Supplier Source, LLC, Kenneth Sonnenberg, and Babata Sonnenberg (collectively the
“Sonnenberg Companies’) under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6)
(“Motion”). [DE 146]. In their Counterclaim, the Sonnenberg Companies seek money damages
from the FTC, alleging claims for wrongful injunction and intentional interference with
contractual or business relations. On July 11, 2014, the Sonnenberg Companies voluntarily
dismissed their claim for intentional interference with contractual or business relations. [DE 178
atiin.1]. The parties fully briefed the Motion, and on January 30, 2015, the Court heard oral
argument on the Sonnenberg Companies’ remaining claim for wrongful injunction.

The FTC asserts that the Sonnenberg Companies’ claim for wrongful injunction alleges
an intentional tort over which this Court lacks jurisdiction based on sovereign immunity. The
United States and its agencies may not be sued without congressional consent. Although the

United States has waived its sovereign immunity for certain types of tort claims under the

Case 4:14-cv-00815-BCW Document 291-1 Filed 04/13/15 Page 1 of 4

Case 2:14-cv-00088-DB Document 211 Filed 04/09/15 Page 2 of 4

Federal Tort Claims Act (“FTCA”), it has not done so for intentional torts, except in limited
circumstances not applicable to this matter. 28 U.S.C. §§ 1346(b)(1) and 2680(h).

The Sonnenberg Companies assert that sovereign immunity does not bar their wrongful
injunction claim because Congress waived the United States’ sovereign immunity for such
claims through the Equal Access to Justice Act (“EAJA”), 28 U.S.C. 8§ 2412(b) and (d)(1)(A),
and Rule 65(c) of the Federal Rules of Civil Procedure and because their wrongful injunction
claim sounds in contract rather than in tort.

Based on the legal arguments that the parties have presented to the Court in their
respective memoranda of law and during oral argument, the Court, being fully advised, hereby
finds as follows:

1. The FTC is an agency of the United States;

2 Sovereign immunity prohibits the assessment of damages, fees, or costs against
the United States or its agencies without congressional consent;

“3 If a claim is barred by sovereign immunity, the Court lacks jurisdiction over it;

4, Congress alone has the power to waive sovereign immunity and such waivers
must be unequivocally expressed and strictly construed in favor of the United States;

a: The Sonnenberg Companies’ wrongful injunction claim against the FTC does not
sound in contract; it sounds in tort, resembling a claim for malicious prosecution or wrongful use
of civil proceedings;

6. “The FTCA provides the exclusive avenue to bring a tort claim against the United
States, notwithstanding other statutes that permit the government to be sued... .” In re: Franklin

Sav. Corp., 385 F.3d 1279, 1287 (10th Cir. 2004);

2

Case 4:14-cv-00815-BCW Document 291-1 Filed 04/13/15 Page 2 of 4

Case 2:14-cv-00088-DB Document 211 Filed 04/09/15 Page 3 of 4

7. Through the FTCA, Congress has waived the United States’ sovereign immunity
from claims “for money damages . . . for injury or loss of property, or personal injury or death
caused by the negligent or wrongful act or omission of any employee of the Government while
acting within the scope of his office or employment. .. .” 28 U.S.C. § 1346(b)(1);

8. Congress has not waived through the FTCA the United States’ sovereign
immunity from claims for money damages based on allegations of malicious prosecution or
wrongful use of civil proceedings, regardless of whether such claims are labeled wrongful
injunction claims or otherwise. 28 U.S.C. § 2680(h);

2 The EAJA and Rule 65(c), whether read separately or in combination, are not
express and unequivocal congressional waivers of the United States’ sovereign immunity from
claims for money damages based on allegations of malicious prosecution or wrongful use of civil
proceedings. 28 U.S.C. § 2412 (b) and (d)(1)(A) and Fed. R. Civ. P. 65;

10. Accordingly, based on the United States’ sovereign immunity, this Court has no
jurisdiction over the Sonnenberg Companies’ counterclaim for wrongful injunction; and

11. Nothing in this ruling, however, prevents the Sonnenberg Companies from
bringing a claim against the FTC in the Court of Federal Claims under the Tucker Act. The
Court expresses no opinion on the viability of any such claim.

It is therefore ORDERED that:

3

Case 4:14-cv-00815-BCW Document 291-1 Filed 04/13/15 Page 3 of 4

Case 2:14-cv-00088-DB Document 211 Filed 04/09/15 Page 4 of 4

12. Pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6), the FTC’s Motion is
GRANTED and the Sonnenberg Companies’ wrongful injunction claim is DISMISSED without

prejudice.
Dated this 9th day of April 2015.

BY THE COURT:

Dee Benson
United States District Judge

4

Case 4:14-cv-00815-BCW Document 291-1 Filed 04/13/15 Page 4 of 4