Trudeau v. Federal Trade Com'n.

• Decision Date: 28 July 2006
• Docket Number: No. 05-5363.,05-5363.
• Citation: 456 F.3d 178
• Parties: Kevin TRUDEAU, Appellant v. FEDERAL TRADE COMMISSION, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

456 F.3d 178

Kevin TRUDEAU, Appellant v. FEDERAL TRADE COMMISSION, Appellee.

No. 05-5363.

United States Court of Appeals, District of Columbia Circuit.

Argued March 10, 2006.

Decided July 28, 2006.

Appeal from the United States District Court for the District of Columbia (No. 05cv00400).

David J. Bradford argued the cause for appellant. With him on the briefs were Daniel J. Hurtado and Daniel Mach.

Lewis Yelin, Attorney, U.S. Department of Justice, argued the cause for appellee. With him on the brief were Peter D. Keisler, Assistant Attorney General, Kenneth L. Wainstein, U.S. Attorney, and Douglas N. Letter, Litigation Counsel.

Before: HENDERSON and GARLAND, Circuit Judges, and EDWARDS, Senior Circuit Judge.

Opinion for the court filed by Circuit Judge GARLAND.

GARLAND, Circuit Judge.

Plaintiff Kevin Trudeau challenges a Federal Trade Commission (FTC) press release that reported the settlement of a case the agency brought against him for false and misleading advertising. Trudeau alleges that the press release is itself false and misleading, and that, in issuing it, the FTC exceeded its statutory authority and violated his First Amendment rights. The district court held that it lacked jurisdiction to review Trudeau's claims and, in the alternative, that Trudeau failed to state a claim upon which relief can be granted.

This case raises a host of complicated questions regarding the jurisdiction and authority of federal courts. In the end, however, it comes down to whether Trudeau has the right to take a red pencil to the language of the FTC's press release. He does not. Consequently, although we disagree with the district court's jurisdictional holding, we affirm its dismissal for failure to state a claim.

I

Plaintiff Trudeau is a best-selling author and producer of radio and television information-commercials ("infomercials"). He has used his books and infomercials to promote a wide variety of products as cures for medical conditions ranging from cancer and multiple sclerosis to hair loss and obesity. He has also been an outspoken critic of the FTC.

In 2001 and 2002, Trudeau began marketing two new products in nationally-televised infomercials. He billed the first, a calcium supplement called "Coral Calcium Supreme," as an effective treatment for cancer, multiple sclerosis, lupus, heart disease, and high blood pressure. He marketed the second, a product called "Biotape" that consists of adhesive strips resembling electrical tape, as a "space age mylar" that "connects the broken circuits" in the body. Trudeau v. FTC, 384 F.Supp.2d 281, 284 (D.D.C.2005) (internal quotation marks omitted). Trudeau claimed that Biotape could provide permanent relief from debilitating back pain, as well as pain due to arthritis, sciatica, and migraine headaches.

In June 2003, the FTC filed a complaint against Trudeau in the United States District Court for the Northern District of Illinois, alleging that Trudeau's marketing of Coral Calcium Supreme and Biotape was false and misleading, in violation of the Federal Trade Commission Act, 15 U.S.C. § 41 et seq. The Commission also filed a motion for an order to show cause why Trudeau should not be held in contempt for violating a 1998 court order that, among other things, prohibited him from making unsubstantiated claims about consumer products. On July 1, 2003, the parties agreed to, and the court entered, a stipulated preliminary injunction barring Trudeau from making the challenged representations about Coral Calcium Supreme and Biotape. Eleven months later, after Trudeau had once again started advertising Coral Calcium Supreme, the FTC asked the court to hold Trudeau in contempt for violating the preliminary injunction. On June 29, 2004, the court granted the Commission's motion, held Trudeau in contempt, and ordered him to halt all advertising of Coral Calcium Supreme. See Trudeau, 384 F.Supp.2d at 284.

On September 2, 2004, the parties agreed to, and the court entered, a Stipulated Final Order for Permanent Injunction and Final Judgment ("2004 Final Order") that resolved all pending FTC complaints against Trudeau. The 2004 Final Order "permanently enjoin[s] and restrain[s]" Trudeau from "producing, disseminating, [or] making ... any representation in an infomercial aired or played on any television or radio media." 2004 Final Order at 8. The order contains an exception permitting Trudeau to make representations in "the television or radio media" in connection with "any book, newsletter or other informational publication," provided that the publication does not refer to a product or service that Trudeau is promoting, is not an advertisement for any product or service, and is not sold, promoted, or marketed in conjunction with any product or service that is related to the content of the publication. Id. at 9. This exception is limited to infomercials that do not "misrepresent the content of the book, newsletter or informational publication." Id. The order further bars Trudeau from marketing "any product containing coral calcium" and from making representations regarding the benefits of any product unless the representations are true and not misleading. Id. at 9-11.

The 2004 Final Order also enters "[j]udgment" against Trudeau for "equitable monetary relief in the amount of two million dollars," id. at 16, but states that "[n]o portion of any payments under the judgment herein shall be deemed a payment of any fine, penalty or punitive assessment," id. at 17-18. In addition, the order states that Trudeau "expressly den[ies] any wrongdoing or liability for any . . . matters," and that "[t]here have been no findings or admissions of wrongdoing or liability . . . other than the finding against Kevin Trudeau for contempt" for violating the July 2003 stipulated preliminary injunction. Id. ¶ 8.

On September 7, 2004, five days after entry of the 2004 Final Order, the FTC posted on its website a press release entitled "Kevin Trudeau Banned from Infomercials," and subtitled "Trudeau Settles Claims in Connection with Coral Calcium Supreme and Biotape." App. 51. The press release is the central focus of Trudeau's suit against the Commission.

The first two paragraphs of the release describe the general contours of the settlement incorporated in the 2004 Final Order. The first sentence states:

A Federal Trade Commission settlement with Kevin Trudeau—a prolific marketer who has either appeared in or produced hundreds of infomercials—broadly bans him from appearing in, producing, or disseminating future infomercials that advertise any type of product, service, or program to the public, except for truthful infomercials for informational publications.

Id. After further describing the terms of the settlement, the first paragraph ends with this statement: "Trudeau agreed to these prohibitions and to pay the FTC $2 million to settle charges that he falsely claimed that a coral calcium product can cure cancer and other serious diseases and that a purported analgesic called Biotape can permanently cure or relieve severe pain." Id.

The second paragraph details the settlement's financial terms. It states that "Trudeau is paying $500,000 in cash and transferring residential property located in Ojai, California, and a luxury vehicle to the Commission to satisfy the $2 million monetary judgment against him." Id.

The pertinent remaining portions of the press release are the third and sixth paragraphs, and a disclaimer at the end of the text. The third paragraph contains a quotation from Lydia Parnes, Acting Director of the FTC's Bureau of Consumer Protection, which states:

"This ban is meant to shut down an infomercial empire that has misled American consumers for years. . . . Other habitual false advertisers should take a lesson; mend your ways or face serious consequences."

Id. The sixth paragraph contains additional details about the terms of the 2004 Final Order. It states that the

settlement announced today permanently bans Trudeau ... from appearing in, producing, or disseminating infomercials that advertise any product, service, or program and, regardless of the advertising medium used to make the claim, from making representations that any product, program, or service can cure, treat, or prevent any disease or provide health benefits.

Id. The paragraph also explains that "[t]he order's ban on future infomercials exempts infomercials for books, newsletters, and other informational publications." Id. Finally, the release concludes with the following disclaimer:

Note: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. A stipulated final order has the force of law when signed by the judge.

Id. at 52 (bolded in original).

The press release remains on the FTC's website to this day.¹ At the top-right corner, it prominently features a link to "Related Documents," one of which is a copy of the 2004 Final Order. Five months after the press release was posted, Trudeau asked the FTC to edit and/or remove the webpage. The FTC refused, and this suit followed.

On February 28, 2005, Trudeau filed a complaint against the FTC in the United States District Court for the District of Columbia, seeking only declaratory and injunctive relief. The complaint charged that the FTC had "retaliat[ed] against Trudeau" for his criticism of the agency by "issuing a press release that falsely characterize[d]," Compl. ¶ 48, and "intentionally and deliberately misrepresented," id. ¶ 49, the 2004 Final Order. That conduct, Trudeau asserted, "exceeded the FTC's authority under 15 U.S.C. § 46(f) [and] violated the First Amendment." Compl. ¶ 50. The FTC responded with a motion to dismiss the complaint for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), and for failure to state a claim for which relief can be granted under Rule 12(b)(6).

The district court granted the FTC's motion to...