F.T.C. v. Trudeau

• Decision Date: 27 August 2009
• Docket Number: No. 08-4249.,08-4249.
• Citation: 579 F.3d 754
• Court: U.S. Court of Appeals — Seventh Circuit
• Parties: FEDERAL TRADE COMMISSION, Plaintiff-Appellee, v. Kevin TRUDEAU, Defendant-Appellant.

579 F.3d 754

FEDERAL TRADE COMMISSION, Plaintiff-Appellee, v. Kevin TRUDEAU, Defendant-Appellant.

No. 08-4249.

United States Court of Appeals, Seventh Circuit.

Argued May 14, 2009.

Decided August 27, 2009.

C. Steven Baker, Attorney, Federal Trade Commission, Chicago, IL, Lawrence Demille-Wagman, Attorney (argued), Federal Trade Commission Office of the General Counsel, Washington, DC, for Plaintiff-Appellee.

Kimball R. Anderson, Attorney (argued), Lisa J. Parker, Winston & Strawn LLP, Chicago, IL, for Defendant-Appellant.

Before RIPPLE, MANION, and TINDER, Circuit Judges.

TINDER, Circuit Judge.

If you have a problem, chances are Kevin Trudeau has an answer. For over a decade, Trudeau has promoted countless "cures" for a host of human woes that he claims the government and corporations have kept hidden from the American public. Cancer, AIDS, severe pain, hair loss, slow reading, poor memory, debt, obesity—you name it, Trudeau has a "cure" for it. To get his messages out, Trudeau has become a marketing machine. And the infomercial is his medium of choice. He has appeared in dozens of them, usually in the form of a staged, scripted interview where Trudeau raves about the astounding benefits of the miracle product he's pitching. But Trudeau's tactics have long drawn the ire of the Federal Trade Commission ("FTC"). By promoting his cures, Trudeau claims he is merely exposing corporate and government conspiracies to keep Americans fat and unhealthy. But the FTC accuses Trudeau of being nothing more than a huckster who preys on unwitting consumers—a 21st-century snake-oil salesman. For years Trudeau has dueled with the FTC in and out of court.

Trudeau's latest run-in concerns his cure for weight loss, which he explains in his book, The Weight Loss Cure "They" Don't Want You to Know About. By the time Trudeau began promoting the book, courts had sharply curbed his marketing activities. A consent decree banned Trudeau from appearing in infomercials for any products, except for books, provided that he did not "misrepresent the content of the book."

That proviso forms the basis for this latest lawsuit. The FTC claimed that Trudeau's Weight Loss Cure infomercial misled consumers by describing a weight loss program that was "easy," "simple," and able to be completed at home, when in fact it was anything but. The program requires a diet of only 500 calories per day, injections of a prescription hormone not approved for weight loss, and dozens of dietary and lifestyle restrictions. The district court sided with the FTC, concluded that Trudeau had misrepresented his book, and held Trudeau in contempt. As sanctions, the court ordered Trudeau to pay $37.6 million and banned Trudeau from appearing in any infomercials, even for books, for the next three years.

Trudeau appeals everything. He argues he should not have been held in contempt because he merely quoted his book and expressed his opinions. And he contends that the court's sanctions were not appropriate for civil (as opposed to criminal) contempt proceedings. We disagree with Trudeau about the contempt finding—he clearly misrepresented the book's content—but we are troubled by the nature of both the $37.6 million fine and the infomercial ban. So we must remand those aspects of the court's judgment.

I. Background

A. Trudeau and the FTC

Trudeau's troubles with the FTC started over a decade ago. In 1998, the FTC sued Trudeau for deceptive practices and false advertising in connection with a variety of products that Trudeau promoted through his infomercials. For example, Trudeau participated in an infomercial for the "Sable Hair Farming System," which was guaranteed to regrow hair and "actually end hair loss in the human race." An infomercial for "Howard Berg's Mega Reading" claimed to significantly increase reading speed, up to as much as ten times, even for individuals with severe brain damage. And promoting his very own "Kevin Trudeau's Mega Memory System," Trudeau claimed that users would achieve a photographic memory.

Trudeau settled that case and paid $500,000 to compensate purchasers of these products. Trudeau also agreed not to make any representations about the benefits or performance of any product without "competent and reliable evidence" of his claims, and he agreed not to misrepresent the existence or contents of any research study. He further agreed to be up front about the fact that his infomercials were advertisements and not actual interviews. Stipulated Order for Permanent Inj. & Final J. Against Kevin Trudeau, FTC v. Trudeau, No. 98-CV-168 (N.D.Ill. Jan. 14, 1998).

But five years later, Trudeau was at it again. The FTC went after him for marketing two products: "Coral Calcium Supreme," as a cure for cancer, heart disease, multiple sclerosis, lupus, and many other serious ailments; and "Biotape," as a cure for severe pain. Trudeau even claimed that his cancer cure had been proven by an article in the Journal of the American Medical Association. The FTC again alleged deception and false advertising, and it sought to hold Trudeau in contempt for violating the 1998 injunction. In response, Trudeau stipulated to a preliminary injunction to cease marketing these products without first submitting the infomercials to the FTC. Stipulated Prelim. Inj. Order, FTC v. Trudeau, No. 03-CV-3904 (N.D.Ill. July 1, 2003) (R. 26.)

But that didn't stop him—he kept marketing Coral Calcium as a cure for cancer. So in June 2004, the court held Trudeau in contempt for violating the preliminary injunction and ordered him to cease marketing that product altogether. Contempt Order, FTC v. Trudeau, No. 03-CV-3904 (N.D. Ill. June 29, 2004) (R. 55.)

But Trudeau still wanted to promote his "cures." This time, though, instead of marketing the curative substances themselves, he sought to advertise his book, Natural Cures "They" Don't Want You To Know About, which reveals "natural cures" for everything from herpes and AIDS to MS and cancer. So Trudeau began negotiating with the FTC about a new stipulated agreement that would govern Trudeau's future marketing activities.

In September 2004, the court entered a Consent Order, which ordered Trudeau to pay $2 million for consumer redress and prohibited Trudeau from advertising any products in infomercials. But the Order contained an exception: Trudeau could participate in infomercials for publications, including his own publications, as long as the publication did not refer to any other product Trudeau was marketing. In addition, and of particular importance to this case, the Order specifically provided that "the infomercial for any such book ... must not misrepresent the content of the book." Stipulated Final Order for Permanent Inj. & Settlement, FTC v. Trudeau, No. 03-CV-3904 (N.D.Ill. Sept. 2, 2004) (R. 56.)

In connection with the 2004 Consent Order, Trudeau submitted to the FTC an infomercial for his Natural Cures book. Trudeau claims that this infomercial merely quoted and paraphrased his book and gave his personal opinion about topics in the book. The FTC viewed the infomercial and didn't object to it being put on the air. Over the next two years, Trudeau aired that and a number of other infomercials promoting several of his books.

In mid-2006, Trudeau's company, Trucom, LLC, sold all of its assets to ITV Global, Inc., an entity allegedly not-at-all affiliated with Trudeau. ITV agreed to pay Trucom $121 million. In exchange, Trudeau agreed that ITV may market his books and publications via infomercials and that Trudeau would appear in those infomercials for the purpose of promoting those books. Trudeau attests he would not receive any additional compensation for those appearances beyond the $121 million. But Trudeau claims that Trucom has received only $2 million of that $121 million from ITV.

B. The Weight Loss Cure Infomercial

Trudeau was on good terms with the FTC until 2007, when he appeared in infomercials promoting his Weight Loss Cure book. The Weight Loss Cure book touts a four-phase program to permanently shed pounds:¹

• Phase One lasts 30 days and consists of a list of 60 dos and don'ts, dozens of which the book claims dieters "MUST" follow.² Among other things, dieters are advised to eat an all-organic diet of six meals per day; eat 100 grams of organic meat just before bed; not eat any food cooked in a microwave; receive 15 "colonics" (a procedure like an enema with water performed only by specialists); walk an hour a day; take infrared saunas; and avoid all skin creams, lotions, and prescription and over-the-counter medications. Instead of medications, Trudeau advocates using the "all-natural non-drug alternatives" explained in his Natural Cures book.

• Phase Two, which requires physician supervision, involves a restricted, all-organic diet of only 500 calories per day, along with daily injections of Human Chorionic Gonadotropin (hCG) hormone.³ In addition, dieters must drink at least one-half to one gallon of water per day, along with at least four cups of various teas. And it's strongly suggested that dieters do yoga, walk an hour per day, and do resistance training. Dieters must also avoid all skin creams and lotions, MSG, artificial sweeteners, and any prescription or over-the-counter medications.⁴ Phase Two lasts between 21 and 45 days.

• Phase Three, which lasts 21 days, involves many of the dietary and lifestyle restrictions contained in the earlier phases. Among other things, dieters must drink at least one-half to one gallon of water per day, drink four cups of tea per day, eat six times per day, eat only 100% organic food, walk an hour a day, and get colonics as recommended by a colon therapist. Dieters must refrain from eating sugars, starches, food cooked in a microwave, and food prepared by fast-food or national chain restaurants. No prescription or over-the-counter drugs either. Dieters are strongly encouraged to avoid exposure to air conditioning and fluorescent lights, and told, ...