FTC files against witness in TrueCar ‘boycott’ case

Last week, the Federal Trade Commission filed an action in Nevada against a witness who allegedly refused to produce documents or give oral testimony in response to two CIDs (Civil Investigative Demands).  The FTC is investigating a suspected refusal to deal (boycott) of TrueCar, Inc. by auto dealers who disapproved of a “reverse auction” feature on TrueCar’s website.

The FTC suspects that, through comments on websites and other communications, auto dealers conspired to stop working with TrueCar due to the reverse auctions.  It issued a CID to Ralph Paglia, a media consultant blogger in Las Vegas, on whose sites some of the comments appeared.  The CID demanded that Mr. Paglia produce a large number of documents with a lot of technologically complicated requirements, giving him 14 days to comply.  It later issued another CID ordering him to be questioned under oath.  (Both CIDs are included in the exhibit link below.)

The gist of the FTC’s new action is as follows:

Respondent Ralph Paglia is a consultant who provides business advice and training to auto dealers regarding online marketing, lead generation, and related matters. He is President of Automotive Media Partners LLC, which has its principal place of business at 2701 N. Rainbow Blvd., Suite 2202, Las Vegas, Nevada 89108.

Mr. Paglia writes frequently about online marketing and other topics of interest to auto dealers, and disseminates his writing through blog postings, comments on online social media networks, and publications on other online forums and websites.  He also operates, manages, or moderates several such blogs, websites, and online social networks , including www.dealerelite.net, ralphpaglia.blogspot.com, www.automotivedigitalmarketing.com, www.automotivedigitaltraining.com, and automotivesocialcrm.com.  Many of the comments criticizing TrueCar’s business model and urging auto dealers not to participate in the TrueCar reverse-auction program appeared on websites and blogs that Mr. Paglia operates or administers. Moreover, materials on Mr. Paglia’s websites and blogs indicate that some industry consultants, dealer groups, and other businesses may have communicated with one another outside of the websites about matters relevant to this investigation.

Accordingly, the FTC staff believes that the investigation would be furthered by obtaining information that Mr. Paglia may have in his possession relating to the online communications, direct communications, and other activities at issue in the investigation. The FTC staff made a number of attempts to secure such information from Mr. Paglia on a voluntary basis, but Mr. Paglia declined to provide any information in response to the FTC staff’s inquiries.

 

Looking at the CIDs themselves, Mr. Paglia would appear to have several legitimate objections to resisting them.  For now, the court filing provides useful examples of CIDs and the FTC’s methods of enforcing them.  Here are the FTC’s petition to enforce the CIDs and the exhibits, which include the actual CIDs and an affidavit from the FTC.