Opposition Brief — Hi-Tech Pharmaceuticals, Inc., et al., Petitioners v. Federal Trade Commission, et al.
Supreme Court briefSep 4, 2020
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No. 19-1445
In the Supreme Court of the United States
HI-TECH PHARMACEUTICALS, INC., ET AL., PETITIONERS
v.
FEDERAL TRADE COMMISSION, ET AL.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
BRIEF FOR THE FEDERAL RESPONDENT
IN OPPOSITION
ALDEN F. ABBOTT
General Counsel
JOEL MARCUS
Deputy General Counsel
MARIEL GOETZ
Attorney
Federal Trade Commission
Washington, D.C. 20580
JEFFREY B. WALL
Acting Solicitor General
Counsel of Record
Department of Justice
Washington, D.C. 20530-0001
SupremeCtBriefs@usdoj.gov
(202) 514-2217
QUESTIONS PRESENTED
After the Federal Trade Commission charged petitioners with falsely advertising dietary supplements,
the district court permanently enjoined petitioners
from, inter alia, making representations about the
weight-loss potential of covered products unless they
had “competent and reliable scientific evidence” to support those representations. When petitioners thereafter engaged in a similar marketing campaign, the district court found them in civil contempt and imposed
monetary sanctions. The questions presented are as
follows:
1. Whether the court of appeals correctly held that
petitioners had waived their argument that the injunction was ambiguous.
2. Whether the injunction gave petitioners clear notice that they were prohibited from making weight-loss
claims about their products unless those claims were
substantiated by randomized clinical trials on the products themselves.
3. Whether the court of appeals correctly held that
the district court had not abused its discretion in imposing the contempt order.
(I)
TABLE OF CONTENTS
Page
Opinions below .............................................................................. 1
Jurisdiction .................................................................................... 1
Statement ...................................................................................... 2
Argument..................................................................................... 10
Conclusion ................................................................................... 23
TABLE OF AUTHORITIES
Cases:
Abbott v. Perez, 138 S. Ct. 2305 (2018) ................................ 17
Auto Driveaway Franchise Sys., LLC v. Auto Driveaway Richmond, LLC, 928 F.3d 670 (7th Cir. 2019) ...... 18
Blackmon-Malloy v. United States Capitol Police
Bd., 575 F.3d 699 (D.C. Cir. 2009) ..................................... 15
Boyce Motor Lines, Inc. v. United States,
342 U.S. 337 (1952).............................................................. 20
Bristol-Myers Co. v. FTC, 738 F.2d 554
(2d Cir. 1984), cert. denied, 469 U.S. 1989 (1985) .......... 2, 3
FTC v. Colgate-Palmolive Co., 380 U.S. 374
(1965) .............................................................................. 19, 20
FTC v. Direct Mktg. Concepts, Inc., 624 F.3d 1 (1st
Cir. 2010)................................................................................ 2
FTC v. Pantron I Corp., 33 F.3d 1088
(9th Cir. 1994), cert. denied, 514 U.S. 1085 (1995)............. 2
Farmer v. Banco Popular of N. Am., 557 Fed. Appx.
762 (10th Cir. 2014) ............................................................. 18
Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Truck Drivers, 415 U.S. 423 (1974) ............ 11
H. K. Porter Co. v. National Friction Prods. Corp.,
568 F.2d 24 (7th Cir. 1978) ................................................. 13
(III)
IV
Cases—Continued:
Page
Hi-Tech Pharms., Inc. v. HBS Int’l Corp.,
910 F.3d 1186 (11th Cir. 2018) ........................................... 16
International Longshoremen’s Ass’n v. Philadelphia
Marine Trade Ass’n, 389 U.S. 64 (1967) .......................... 11
Joseph v. United States, 574 U.S. 1038 (2014) .................... 16
Liu v. SEC, 140 S. Ct. 1936 (2020) ....................................... 22
Max’s Seafood Cafe ex rel. Lou-Ann, Inc. v.
Quinteros, 176 F.3d 669 (3d Cir. 1999) ............................. 19
McComb v. Jacksonville Paper Co.,
336 U.S. 187 (1949).................................................. 10, 19, 22
Moriarty v. Svec, 164 F.3d 323 (7th Cir. 1998) ................... 15
NLRB v. Bell Aerospace Co., 416 U.S. 267 (1974) .............. 21
Negrón-Almeda v. Santiago, 528 F.3d 15
(1st Cir. 2008) ................................................................ 15, 16
Orr v. Orr, 440 U.S. 268 (1979) ............................................. 14
PFS Distribution Co. v. Raduechel, 574 F.3d 580
(8th Cir. 2009) ...................................................................... 15
Removatron Int’l Corp. v. FTC, 884 F.2d 1489
(1st Cir. 1989) ........................................................................ 2
Russell C. House Transfer & Storage Co. v. United
States, 189 F.2d 349 (5th Cir. 1951) .................................. 13
SEC v. Chenery Corp., 332 U.S. 194 (1947)......................... 21
Schad v. Arizona, 501 U.S. 624 (1991)................................. 14
Schmidt v. Lessard, 414 U.S. 473 (1974) ....................... 11, 17
Thompson Med. Co. v. FTC, 791 F.2d 189
(D.C. Cir. 1986), cert. denied, 479 U.S. 1086 (1987) .......... 2
Tivo Inc. v. Echostar Corp., 646 F.3d 869
(Fed. Cir. 2011) ............................................................. 11, 19
United States v. Clariot, 655 F.3d 550
(6th Cir. 2011) ...................................................................... 15
United States v. Hernandez-Rodriguez,
352 F.3d 1325 (10th Cir. 2003) ........................................... 15
V
Cases—Continued:
Page
Washington v. Confederated Bands & Tribes of the
Yakima Indian Nation, 439 U.S. 463 (1979) ................... 14
Williams v. United States, 402 F.2d 47
(10th Cir. 1967) .................................................................... 13
Wisniewski v. United States, 353 U.S. 901 (1957) ............. 16
Statutes and rules:
Federal Trade Commission Act:
15 U.S.C. 45 (§ 5) ............................................................... 2
15 U.S.C. 52(a) (§ 12(a)) .................................................... 2
15 U.S.C. 52(b) (§12(b))..................................................... 2
15 U.S.C. 78u(d)(5) .......................................................... 22
Fed. R. Civ. P.:
Rule 65(d) ......................................................................... 17
Rule 65(d)(1)(B) ............................................................... 17
Rule 65(d)(1)(C) ............................................................... 17
Miscellaneous:
Federal Trade Commission:
Policy Statement on Deception, 103 F.T.C. 174
(1984) ............................................................................. 2
Policy Statement Regarding Advertising
Substantiation, 104 F.T.C. 839 (1984)........................ 2
In the Supreme Court of the United States
No. 19-1445
HI-TECH PHARMACEUTICALS, INC., ET AL.,
PETITIONERS
v.
FEDERAL TRADE COMMISSION, ET AL.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
BRIEF FOR THE FEDERAL RESPONDENT
IN OPPOSITION
OPINIONS BELOW
The opinion of the court of appeals (Pet. App. 1-26)
is not published in the Federal Reporter but is reprinted at 786 Fed. Appx. 947. The order of the district
court (Pet. App. 48-164) is not published in the Federal
Supplement but is available at 2017 WL 6759868.
JURISDICTION
The judgment of the court of appeals was entered on
September 18, 2019. A petition for rehearing was denied on January 29, 2020 (Pet. App. 46-47). On March
19, 2020, this Court extended the time within which to
file a petition for a writ of certiorari to 150 days from
the denial of a timely rehearing petition. The petition
for a writ of certiorari was filed on June 26, 2020. The
jurisdiction of this Court is invoked under 28 U.S.C.
1254(1).
(1)
2
STATEMENT
1. Section 5 of the Federal Trade Commission Act
(FTC Act) prohibits “deceptive acts or practices in or
affecting commerce” and directs the Federal Trade
Commission (FTC or Commission) to prevent such
practices. 15 U.S.C. 45. Under Section 12 of the FTC
Act, prohibited deceptive acts include “any false advertisement” relating to “food” or “drugs.” 15 U.S.C. 52(a)
and (b). An advertisement violates Sections 5 and 12 of
the FTC Act when it contains a representation that is
likely to mislead consumers acting reasonably under
the circumstances and is material to a consumer’s decision to purchase the product. FTC v. Pantron I Corp.,
33 F.3d 1088, 1095 (9th Cir. 1994), cert. denied, 514 U.S.
1085 (1995); see FTC, Policy Statement on Deception,
103 F.T.C. 174, 178 (1984).
When an advertiser makes objective claims about a
product’s performance, it represents “explicitly or by
implication that the advertiser has a reasonable basis
supporting these claims.” FTC, Policy Statement Regarding Advertising Substantiation, 104 F.T.C. 839,
839 (1984). An advertisement thus “is considered deceptive if the advertiser lacks a ‘reasonable basis’ to
support the claims made in it.” Thompson Med. Co. v.
FTC, 791 F.2d 189, 193 (D.C. Cir. 1986) (citation omitted), cert. denied, 479 U.S. 1086 (1987). For safety- and
health-related claims, a “reasonable basis” means “competent and reliable scientific evidence.” See, e.g., Removatron Int’l Corp. v. FTC, 884 F.2d 1489, 1498-1499
(1st Cir. 1989); Bristol-Myers Co. v. FTC, 738 F.2d 554,
560 (2d Cir. 1984), cert. denied, 469 U.S. 1189 (1985).
Whether an advertiser has satisfied that standard in a
particular case is a question of fact. See, e.g., FTC v.
3
Direct Mktg. Concepts, Inc., 624 F.3d 1, 8 (1st Cir.
2010); Bristol-Myers, 738 F.2d at 558-560.
2. a. Petitioners sell dietary supplements, which
they advertise as causing weight loss and other health
effects. Pet. App. 3. As relevant here, petitioners told
consumers that one product (Thermalean) “causes
rapid and substantial weight-loss, including as much as
30 pounds in two months,” and that another (Lipodrene)
was “clinically proven to enable users to lose up to 42%
of total body fat.” Id. at 291, 306 (citations omitted).
The advertisements included numerous other claims of
significant weight and fat loss, among other purported
benefits. Id. at 289-320. In 2004, the Commission sued
petitioners, alleging that they had made those health
claims without adequate supporting evidence. Id. at 3.
The district court determined that petitioners lacked
substantiation for their representations and granted
summary judgment to the Commission. Pet. App. 257346. The court explained that health-benefit claims
must be substantiated by “competent and reliable scientific evidence,” a flexible standard that requires evidence that “pertinent professionals would require for
the particular claim made.” Id. at 278-279. It then
found that uncontroverted expert testimony showed
that, “to substantiate weight loss claims for any product, including a dietary supplement,” an advertiser
must have well-designed, randomized, double-blind and
placebo-controlled clinical trials (RCTs) “on the product itself.” Id. at 316. The court further found that petitioners had no such evidence and that studies examining only the ingredients in the advertised products, or
similar products using different formulations, were not
adequate to support petitioners’ weight-loss claims. Id.
at 316-317.
4
The district court permanently enjoined petitioners
from making unsubstantiated claims with respect to any
weight-loss product. Pet. App. 231-256. Section II of
the injunction barred petitioners from making representations that their products cause a rapid or substantial loss of weight or fat, or that they affect human metabolism, appetite, or body fat, “unless, at the time the
representation is made, [petitioners] possess and rely
upon competent and reliable scientific evidence that
substantiates the representation.” Id. at 244. The injunction thus incorporated the “competent and reliable
scientific evidence” standard that the court had just
held required RCTs for weight-loss claims. The court’s
order defined “ ‘[c]ompetent and reliable scientific evidence’ ” as “tests, analyses, research, studies, or other
evidence based on the expertise of professionals in the
relevant area, that has been conducted and evaluated in
an objective manner by persons qualified to do so, using
procedures generally accepted in the profession to yield
accurate and reliable results.” Id. at 234.
The district court gave petitioners an opportunity to
object to the scope of the injunction and the definitions
used therein. Pet. App. 85. Although petitioners challenged some terms and definitions, they did not object
to the “competent and reliable scientific evidence”
standard or its definition, as it applied to their weightloss products. Ibid.; see id. at 4-5.
The court of appeals affirmed the district court’s
judgment, 356 Fed. Appx. 358, and this Court denied
review, 562 U.S. 1003. At no time in the appellate proceedings did petitioners challenge the provisions in the
injunction requiring competent and reliable scientific
evidence for weight-loss claims. Pet. App. 5, 86.
5
b. Despite the district court’s injunction, petitioners
continued to promote their dietary supplements using
the same types of unsubstantiated claims about weight
loss. Pet. App. 5-6. Beginning in 2009, petitioners
launched a new marketing campaign for four products—
Fastin, Stimerex-ES, Benzedrine, and a reformulated
version of Lipodrene. Id. at 5-6, 51-52.
Petitioner Hi-Tech touted its products’ efficacy in
causing weight loss in full-page advertisements in national publications, on its website, and on its product
packaging and labels. See Pet. App. 62-68 (describing
advertisements in detail). For example, the advertisements told consumers that Fastin is an “EXTREMELY
POTENT DIET AID! DO NOT CONSUME UNLESS
RAPID FAT AND WEIGHT LOSS ARE YOUR DESIRED RESULT.” Id. at 62-63. Advertisements for
Lipodrene similarly stated that “LIPODRENE WILL
CAUSE RAPID FAT AND WEIGHT LOSS WITH
USAGE” and encouraged consumers to “[t]ry Lipodrene® and watch the inches melt away.” Id. at 64-65.
Advertisements for Stimerex-ES likewise claimed that
the product melts away body fat. Id. at 67-68. They also
claimed that Stimerex-ES causes the same weight-loss
and metabolic effects as products containing ephedrine
alkaloids, which had been banned by the FDA, stating
that “The benefits of ephedra are now ‘Back in Black!’ ”
Ibid. Finally, advertisements claimed that Benzedrine
will “ANNIHILATE THE FAT” because of its “Unmatched Anorectic Activity to Manage Caloric Intake.”
Id. at 66. Petitioners did not conduct RCTs on any of
the advertised products. See id. at 6.
Petitioners’ lawyers warned petitioners that their
advertisements would likely violate the district court’s
6
injunction. Pet. App. 6-7, 80-84. They specifically advised petitioner Jared Wheat, the Hi-Tech CEO, that
for weight-loss claims, the injunction required doubleblind, product-specific clinical trials. * Ibid. The lawyers cautioned that “the express language in the FTC
Injunction” required product-specific substantiation,
and not simply evidence that certain ingredients could
have biological effects. Id. at 6-7. They added that the
district court would likely find that the injunction required “double-blind, clinical trials of the products” because that “is the premise upon which the FTC Injunction is based.” Id. at 7. Those warnings were consistent
with Wheat’s own understanding that, if the injunction
survived appeal, “there is nothing we can say without
doing a double-blind placebo study.” Id. at 15.
3. a. In light of petitioners’ latest marketing campaign, the Commission moved the district court for an
order directing petitioners to show cause why they
should not be held in contempt. Pet. App. 6, 51. The
court granted the motion. Id. at 7, 52.
The district court again determined that weight-loss
claims must be supported by well-designed RCTs “on
the product itself ” or its equivalent. Pet. App. 223-225
(citation and emphasis omitted). The court did not allow
petitioners to offer any substantiation evidence other
than RCTs, finding that principles of issue preclusion
applied. Id. at 225.
b. The court of appeals vacated the district court’s
ruling, holding that issue-preclusion principles did not
The FTC acquired Wheat’s communications with his lawyers because they were transmitted using a monitored prison-email system. Pet. App. 6 n.1. The district court ruled that the communications were admissible, and petitioners did not challenge that ruling
on appeal. Ibid.; see id. at 79-80.
*
7
apply because the contempt litigation involved different
weight-loss products and claims. Pet. App. 37-38. The
court of appeals remanded for the district court to
“make findings about whether any evidence of substantiation, if admissible, satisfies the standard of the injunctions for ‘competent and reliable scientific evidence.’ ” Id. at 38.
c. On remand, the district court conducted a bench
trial to determine whether petitioners had “competent
and reliable scientific evidence” to support their advertising claims. Pet. App. 10.
The Commission presented detailed expert testimony on what that standard requires for weight-loss
claims—namely, RCTs on the products themselves.
Pet. App. 124-133. Petitioners, meanwhile, offered various ingredient studies, measuring factors such as metabolism rather than weight or fat loss. See id. at 134.
They also relied on clinical trials of other products with
different formulations and different ingredients from
the products at issue. See id. at 133-136. The Commission’s experts testified that petitioners’ proposed substantiation did not amount to competent and reliable
scientific evidence of the weight- and fat-loss claims for
the particular products at issue. See ibid. The district
court also expressed “concerns regarding the credibility of the defendants’ experts and their ultimate substantiation opinions.” Id. at 136; see id. at 136-147.
The district court found petitioners in contempt for
violating the injunction and imposed $40 million in sanctions. Pet. App. 7; see id. at 48-164.
The district court rejected petitioners’ argument
that its prior injunction was unclear. The court noted
that petitioners “were given an opportunity to object to
the scope of the injunction[] before [it was] entered, but
8
they did not object to any of the provisions they ostensibly challenge now.” Pet. App. 85. The court observed
that, if petitioners were unsure of what was required by
“ ‘competent and reliable scientific evidence,’ ” “they
could have easily asked, but they did not.” Id. at 84-85.
It also determined that voluminous evidence, including
the advice of their own lawyers, demonstrated that petitioners had understood what the injunction required.
Id. at 74-85. In addition, the court emphasized that the
context in which the injunction was entered made clear
that any weight-loss claims needed to be supported by
RCTs on the products themselves. Id. at 86-87. The
court noted that its summary judgment order, issued
just weeks before the injunction, had held that “ ‘competent and reliable scientific evidence’ ” required RCTs
for weight- and fat-loss claims, and that the injunction
had used that “very same” language. Id. at 87.
The district court next determined that the Commission had shown by clear and convincing evidence that
petitioners had violated the injunction, since no RCTs
had been performed on any of the four products at issue.
Pet. App. 104-151. The court ordered sanctions to compensate consumers for petitioners’ violations, emphasizing petitioners’ “intentional defiance” of the court’s
orders and “the pervasiveness of their contumacious
conduct.” Id. at 159-163.
4. The court of appeals affirmed. Pet. App. 1-26.
The court of appeals first held that petitioners had
waived any objection to the clarity of the injunction.
Pet. App. 12-19. It explained that petitioners were “calculating actors who stayed silent concerning the purported ambiguity about which they now complain” and
then “deliberately engaged in self-serving activities
they knew seriously risked violating the injunction.” Id.
9
at 14-15. The court rejected petitioners’ argument that
they “could not reasonably have been expected to know
in 2008 that the FTC would later seek to hold them in
contempt for failing to substantiate different advertising claims with a product-specific RCTs standard.” Id.
at 18. The court explained that the requirement of a
product-specific RCT for the types of claims at issue
was not an “unexpected interpretation” but had been
well known to petitioners and their lawyers for years.
Ibid.
The court of appeals next held that the district court
had not clearly erred in finding that petitioners’ evidence failed to substantiate their claims. Pet. App.
19-23. The court of appeals emphasized the district
court’s “detailed,” “extensive reasoning,” finding it supported by the evidence. Id. at 20-22. The court of appeals further observed that the district court had found
many of petitioners’ experts to be either unqualified or
not credible. Id. at 21-22.
Finally, the court of appeals rejected petitioners’ argument that the district court had impermissibly
shifted to them the burden of disproving contempt. Pet.
App. 23. The court of appeals determined that the district court had properly placed the burden on the Commission to show, by clear and convincing evidence, that
petitioners had violated the injunction. Ibid. The court
of appeals concluded that the Commission had met that
burden by proving that petitioners “were again making
weight- and fat-loss claims about products without having RCTs on the products themselves, even though the
[district] court had held that only RCTs on the products
themselves could be ‘competent and reliable scientific
evidence’ the last time.” Ibid.
10
ARGUMENT
Petitioners challenge (Pet. 13-36) the court of appeals’ holdings that they had waived their challenge to
the injunction’s clarity and that they had adequate notice of the substantiation standard required to comply
with the injunction. The court of appeals’ unpublished
decision is correct and does not conflict with any decision of this Court or of any other court of appeals. Further review is not warranted.
1. Petitioners contend (Pet. 23-36) that they did not
waive their challenge to the clarity of the injunction’s
requirement of “competent and reliable scientific evidence.” The court of appeals correctly held that petitioners had waived any such challenge. Pet. App. 12-19.
a. Courts sometimes may be required to issue injunctions of a “generality * * * necessary to prevent
further violations where a proclivity for unlawful conduct has been shown.” McComb v. Jacksonville Paper
Co., 336 U.S. 187, 192 (1949). When that occurs, defendants cannot avoid civil contempt by “undert[aking] to
make their own determination of what the decree
meant”—knowing that “they acted at their peril”—and
contending that “the plan or scheme which they adopted
was not specifically enjoined.” Ibid. Put differently,
civil contempt sanctions are available if a defendant is
not an “unwitting victim[] of the law” but rather has
taken “a calculated risk * * * under the threat of contempt.” Id. at 193.
The court of appeals here applied McComb’s
“common-sense” conclusion that a defendant cannot
avoid civil contempt by “staying silent about purported
ambiguities” in an injunction, “deliberately engaging in
activities that risk violating” it, and then “pleading ignorance after those risky activities are indeed found to
11
violate the injunction.” Pet. App. 12. The court explained that petitioners were “calculating actors” who
had “deliberately engaged in self-serving activities they
knew seriously risked violating the injunction.” Id. at
14-15. Although petitioners now suggest (Pet. 24) that
they merely neglected to “immediately object to even
latent uncertainties when [the] injunction [wa]s entered,” the court found that they had affirmatively and
repeatedly declined opportunities to contest the injunction’s standard of “competent and reliable scientific evidence,” and that they understood the consequences of
that choice. See Pet. App. 15-16.
Petitioners contend (Pet. 25) that this case is governed
not by McComb but by three subsequent decisions—
International Longshoremen’s Ass’n v. Philadelphia
Marine Trade Ass’n, 389 U.S. 64 (1967), Schmidt v. Lessard, 414 U.S. 473 (1974) (per curiam), and Granny
Goose Foods, Inc. v. Brotherhood of Teamsters & Auto
Truck Drivers, 415 U.S. 423 (1974)—that they assert
“painted” McComb’s holding “into a corner.” But none
of those decisions discussed McComb or addressed a
failure to promptly apprise the district court of an alleged ambiguity in an injunction. In Schmidt, the parties had sought timely clarification from the district
court. 414 U.S. at 476 n.1. In Longshoremen, counsel
likewise asked the district court for clarification several
times, yet the court “steadfastly refused to explain the
meaning of the order.” 389 U.S. at 70-71. And in
Granny Goose Foods, the underlying temporary restraining order had expired by the time of the conduct
that had allegedly violated it, so the Court did not interpret a duly issued injunction at all—much less one to
which the bound party had failed to object. 415 U.S. at
431-433; see Tivo Inc. v. Echostar Corp., 646 F.3d 869,
12
887 (Fed. Cir. 2011) (en banc) (distinguishing Granny
Goose and Longshoremen on similar grounds).
In a related vein, petitioners contend (Pet. 27-28)
that applying the waiver doctrine in civil contempt proceedings relieves the complaining party of its burden to
show that the injunction was clear and unambiguous.
That argument is incorrect. Here, the court of appeals
was “satisfied that the FTC ha[d] carried its prima facie
burden of showing the clarity of the injunction,” Pet.
App. 17, and the district court likewise properly placed
on the Commission the burden to establish the elements
of contempt, see id. at 69-70.
b. Petitioners assert (Pet. 25) that the court of appeals’ decision deepens a circuit split over whether “defendants can challenge the specificity of an injunction in
contempt proceedings.” No such circuit split exists or
is implicated here.
As an initial matter, the court of appeals’ unpublished decision here does not establish binding precedent in the Eleventh Circuit. See Pet. App. 2. As a
result, it cannot “add[] to” any circuit split, as petitioners contend (Pet. 25).
In any event, the court of appeals did not hold that
defendants can never challenge the specificity of an injunction in contempt proceedings. Instead, it merely
found that, on these facts, petitioners had affirmatively
waived any challenge to the injunction’s requirement of
“competent and reliable scientific evidence.” See Pet.
App. 16 (finding waiver because petitioners “stayed silent about the supposed ambiguity of which they now
complain, were repeatedly informed by counsel that
they risked contempt for using anything other than
RCTs to substantiate their claims, knowingly proceeded anyway in the face of that risk * * * and now
13
plead ignorance”). None of the decisions on which petitioners rely involved a defendant who failed to seek
clarification of a known purported ambiguity despite
several opportunities to do so. And none of those decisions held that the doctrine of waiver is categorically inapplicable in contempt proceedings—or even discussed
waiver at all. See H. K. Porter Co. v. National Friction
Prods. Corp., 568 F.2d 24, 26-27 (7th Cir. 1978) (concluding that a judgment incorporating the parties’ settlement agreement was not a true injunction that could
trigger a contempt finding); Williams v. United States,
402 F.2d 47, 48-49 (10th Cir. 1967) (rejecting defendant’s argument that an injunction was insufficiently
specific); Russell C. House Transfer & Storage Co. v.
United States, 189 F.2d 349, 351 (5th Cir. 1951) (finding
that an injunction was not broad enough to prohibit defendant’s conduct).
2. Petitioners contend (Pet. 28-36) that the court of
appeals’ waiver ruling “stripped” them of their right to
appeal the injunction. Pet. 28 (emphasis omitted). They
assert (Pet. 29) that, because the district court decided
“on the merits” that the injunction was specific enough,
the court of appeals was powerless to find waiver. That
contention misapprehends both decisions below.
a. The court of appeals concluded that the district
court had found waiver and had addressed the substance of petitioners’ arguments only in the alternative.
Pet. App. 17-18. The court of appeals observed that the
district court had “expressed doubt that [petitioners’
ambiguity] arguments were properly before it.” Id. at
18. And the court of appeals stated that “there can be
no doubt that the district court in fact concluded that
the defendants had waived their ambiguity arguments.”
Ibid.
14
Petitioners contest (Pet. 34) the court of appeals’
characterization of the district court’s decision, relying
in large part on the district court’s statement that “the
court does not find the absence of a timely appellate
challenge dispositive,” Pet. App. 86. But that observation does not indicate that the district court rejected
waiver. Rather, it shows that the district court viewed
the lack of an appeal as merely one of petitioners’ several failures to “object to any of the provisions that they
ostensibly challenge now.” Id. at 85; see id. at 84-86.
Given that, the court of appeals reasonably concluded
that the district court in fact found waiver. See id. at
18. And in all events, that factbound question about the
appropriate construction of the district court’s decision
does not warrant this Court’s review.
If a district court relies on “multiple rationales”—
including both waiver and a claim’s lack of substantive
merit—a court of appeals “can affirm on any basis.”
Pet. App. 18. This Court has never suggested to the
contrary, as petitioners acknowledge. See Pet. 29; cf.
Washington v. Confederated Bands & Tribes of the Yakima Indian Nation, 439 U.S. 463, 476 n.20 (1979) (explaining that a prevailing party is “of course free to defend its judgment on any ground properly raised below”). Petitioners instead rely (Pet. 29) on “another line
of cases” concerning this Court’s jurisdiction to review
questions passed on by a state court, though not
pressed by the parties there. See Schad v. Arizona,
501 U.S. 624, 630 n.2 (1991) (opinion of Souter, J.); Orr
v. Orr, 440 U.S. 268, 274-275 (1979). Those decisions are
inapposite. The question here is not whether a reviewing court has jurisdiction to review questions passed on
by a lower court, but whether a reviewing court must
address a merits question if a lower court has rejected
15
a claim both because it was waived and because it lacks
merit.
b. Petitioners contend (Pet. 30) that the courts of appeals are divided over whether they are required, or
merely permitted, to address a question that was waived
or forfeited in the district court yet decided on the merits there. Even assuming that some division exists
among the courts of appeals, this case does not implicate it.
First, as discussed, the court of appeals concluded
only that it could find an issue waived on appeal where,
as one of “multiple rationales,” a district court had “in
fact concluded that the defendants had waived their
* * * arguments.” Pet. App. 18. By contrast, petitioners identify (Pet. 31-32) decisions from six courts of appeals that treated an issue as preserved where a district
court decided it solely on the merits despite circumstances that might have suggested waiver. See United
States v. Clariot, 655 F.3d 550, 556 (6th Cir. 2011) (finding issue preserved where “[n]o one disagree[d] that the
district court addressed the issue”); PFS Distribution
Co. v. Raduechel, 574 F.3d 580, 598 (8th Cir. 2009) (finding appellate review appropriate where “the district
court did address the arguments”); Blackmon-Malloy
v. United States Capitol Police Bd., 575 F.3d 699, 707
(D.C. Cir. 2009) (finding appellate review appropriate
where the district court “clearly addressed the merits”);
Negrón-Almeda v. Santiago, 528 F.3d 15, 26 (1st Cir.
2008) (finding issue preserved where the district court
addressed it “head-on” and “without reservation”);
United States v. Hernandez-Rodriguez, 352 F.3d 1325,
1328 (10th Cir. 2003) (considering issue that the district
court “raised * * * sua sponte”); Moriarty v. Svec,
164 F.3d 323, 328 (7th Cir. 1998) (rejecting argument
16
that an appeals court “cannot consider the merits” of a
theory that was actually “relied upon in deciding the
case”) (citation omitted). Far from discussing the merits “without reservation,” Negrón-Almeda, 528 F.3d at
26, the district court here described in detail petitioners’ repeated failures to object to the injunction. See
Pet. App. 84-86.
Second, petitioners assert that the Eleventh Circuit
itself has issued a published decision adopting their preferred rule, under which a litigant is “entitled to challenge” a district court ruling on an argument that the
litigant failed to preserve before the district court itself.
Pet. 33 (quoting Hi-Tech Pharms., Inc. v. HBS Int’l
Corp., 910 F.3d 1186, 1194 (11th Cir. 2018)). Even if the
unpublished decision here could be construed to adopt
a conflicting view, it would not affect the prevailing rule
in the Eleventh Circuit. And to the extent petitioners
rely on any “equivocation” within the Eleventh Circuit,
Pet. 32, that would not justify this Court’s review, as
“[i]t is primarily the task of a Court of Appeals to reconcile its internal difficulties.” Wisniewski v. United
States, 353 U.S. 901, 902 (1957) (per curiam).
Finally, even if this case implicated a circuit conflict,
this Court’s review would not be warranted. The Court
“do[es] not often review the circuit courts’ procedural
rules,” including rules about waiver. See Joseph v.
United States, 574 U.S. 1038, 1040 (2014) (Kagan, J., respecting the denial of certiorari).
3. Petitioners separately contend (Pet. 14-23) that
the court of appeals erred in determining that they had
fair notice of the injunction’s requirements.
a. To the extent petitioners are repurposing the arguments made before the court of appeals “that the injunction is too ambiguous to be enforced,” the court did
17
not reach that question. Pet. App. 12. Instead, as discussed above, the court found that this argument was
waived. Id. at 12-19. And the court of appeals’ waiver
decision does not independently warrant this Court’s
review. See pp. 10-16, supra.
In any event, petitioners’ challenge to the clarity of
the injunction lacks merit. Federal Rule of Civil Procedure 65(d) requires an injunction to “state its terms specifically” and “describe in reasonable detail—and not by
referring to the complaint or other document—the act
or acts restrained or required.” Fed. R. Civ. P.
65(d)(1)(B) and (C). The Rule is meant “to prevent uncertainty and confusion” by those bound by an order
“too vague to be understood.” Lessard, 414 U.S. at 476;
see Abbott v. Perez, 138 S. Ct. 2305, 2321 (2018) (“Rule
65(d) protects the party against which an injunction is
issued by requiring clear notice as to what that party
must do or refrain from doing.”).
Petitioners received the required clear notice here.
The injunction barred petitioners from representing
that their products cause a rapid or substantial loss of
weight or fat, or that they affect human metabolism, appetite, or body fat, unless those representations are
supported by “competent and reliable scientific evidence.” Pet. App. 244. It defined “[c]ompetent and reliable scientific evidence” as “tests, analyses, research,
studies, or other evidence based on the expertise of professionals in the relevant area, that has been conducted
and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the
profession to yield accurate and reliable results.” Id. at
234.
18
Petitioners assert (Pet. 14-15) that “no reasonable
person would have understood [the] text” of the injunction to require RCTs on the specific weight-loss products at issue. But in its then-recent order granting the
Commission’s motion for summary judgment, the district court had construed the term “competent and reliable scientific evidence” in precisely that way as applied
to petitioners’ weight-loss products. Pet. App. 316-317.
The court’s incorporation of the same standard into the
injunction itself clearly apprised petitioners that
weight-loss claims were required to be substantiated by
RCTs, or at least equivalently reliable evidence. Petitioners’ own lawyers interpreted the injunction the
same way and advised petitioners accordingly. Id. at 67. And petitioner Wheat also understood the injunction
that way, as he acknowledged in several communications. Id. at 15, 110 & n.23. To the extent the court of
appeals addressed the clarity of the injunction in the
course of its waiver determination, it thus properly observed that, “[a]t the very least, * * * the defendants
were on notice that RCTs were likely to be required.”
Id. at 18-19.
Petitioners appear to contend (Pet. 12, 16-17, 23) that
a party who is alleged to have violated an injunction cannot be subjected to contempt sanctions if a court or restrained party must look to any evidence outside the
four corners of the injunction to determine its application to a particular factual context. But petitioner relies
on decisions criticizing injunctions that did not impose
the relevant standards in a standalone document, or
that merely cross-referenced another document for
their substance. See, e.g., Auto Driveaway Franchise
Sys., LLC v. Auto Driveaway Richmond, LLC, 928 F.3d
670 (7th Cir. 2019); Farmer v. Banco Popular of N. Am.,
19
557 Fed. Appx. 762 (10th Cir. 2014); Max’s Seafood Cafe
ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669 (3d Cir.
1999). By contrast, the relevant standard at issue here
(“competent and reliable scientific evidence”) appears
within the injunction itself. Pet. App. 244. And courts
routinely uphold injunctions that use a term of art or
otherwise require resort to outside sources to determine how the terms of the injunction apply to certain
facts. See, e.g., Tivo Inc., 646 F.3d at 882-883 (explaining that, in patent cases, “[t]he primary question on contempt should be whether the newly accused product is
so different from the product previously found to infringe that it raises ‘a fair ground of doubt as to the
wrongfulness of the defendant’s conduct’ ”) (citation
omitted).
Indeed, this Court has recognized that the level of
specificity that petitioners appear to demand is not
practical for many injunctions. Requiring an injunction
to delineate all possible specific violations—rather than
identify a general class of identifiable, impermissible
behavior—“would give tremendous impetus to [a] program of experimentation with disobedience of the law”
and would “operate to prevent accountability for persistent contumacy.” McComb, 336 U.S. at 192-193. The
Court reaffirmed a similar principle in FTC v. ColgatePalmolive Co., 380 U.S. 374 (1965), where it rejected a
challenge to the specificity of a Commission cease-anddesist order. The Court explained that such orders
must be “ ‘sufficiently clear and precise’ ” to be understood, but also broad enough to encompass possible variations in wrongdoing—especially where the bound parties have already “been caught violating the [FTC]
Act.” Id. at 392, 395 (citation omitted). The Court accordingly upheld the challenged order, which it found
20
was “as specific as the circumstances will permit.” Id.
at 393; see Boyce Motor Lines, Inc. v. United States,
342 U.S. 337, 340 (1952).
Petitioners’ several other attacks on the clarity of
the “competent and reasonable scientific evidence”
standard likewise lack merit. First, petitioners contend
(Pet. 2-3, 20-21) that the Commission “changed its
mind” about the substantiation required for their claims
and improperly sought to “reinterpret” the injunction
by reading a more stringent requirement “backwards
into” it. To the contrary, the Commission has maintained from the beginning of this litigation that weightloss claims for petitioners’ dietary supplements must be
substantiated by product-specific RCTs. See D. Ct.
Doc. 172-1, at 40 (Aug. 24, 2007). Indeed, the district
court found that at “no point in the nine years after the
summary judgment order and injunctions were entered
did anyone from the FTC tell the defendants that anything but RCTs were required.” Pet. App. 89.
Second, petitioners emphasize (Pet. 17) the general
principle that the Commission’s standard of “ ‘competent and reliable scientific evidence’ ” is “flexible” and
“varies by product.” Although that is true, the district
court found in 2008 that the same kinds of claims for the
same kinds of products at issue here require productspecific RCTs. See Pet. App. 316. That finding, combined with several indicators of petitioners’ actual
knowledge “that RCTs were likely to be required” for
the advertising claims at issue, id. at 18-19, made sufficiently clear the application of the “competent and reliable scientific evidence” standard in the circumstances
here. And contrary to petitioners’ repeated assertion
(e.g., Pet. i, 1, 2, 13), the district court did not require
the equivalent of a drug-level clinical trial. See Pet.
21
App. 109-115. Indeed, the court of appeals found that
the district court had not necessarily required RCTs
themselves but had “used as the standard the level of
reliability and competency afforded by RCTs on the advertised products.” Id. at 23.
Third, petitioners suggest (Pet. 20) that the Commission was forbidden from taking the position in this litigation that RCTs are required for certain weight-loss
products, because it should have made that stance clear
in formal rulemaking. But agencies have broad discretion in deciding whether to proceed by case-by-case adjudication or rulemaking. See, e.g., NLRB v. Bell Aerospace Co., 416 U.S. 267, 294 (1974); SEC v. Chenery
Corp., 332 U.S. 194, 203 (1947). Petitioners provide no
reason to cabin that discretion for the specific types of
weight-loss marketing claims at issue here. And here,
the Commission sought and obtained from the district
court a summary-judgment decision holding that RCTs
were required to substantiate petitioners’ weight-loss
claims.
b. The district court did not clearly err when it found
that petitioners lacked competent and reliable scientific
evidence to substantiate the particular claims at issue.
Pet. App. 19-24. As the court of appeals observed, “the
district court detailed its extensive reasoning as to why
the defendants’ evidence was inadequate and why protections offered by tests like RCTs would be necessary
for the claims at issue.” Id. at 20. That analysis included the district court’s assessment of the qualifications and credibility of the Commission’s experts, as
compared to the “lacking” credentials and “disturbing”
credibility problems it perceived with some of petitioners’ experts. Id. at 21. The court of appeals ultimately
determined that the district court had not clearly erred
22
in finding that petitioners had failed to introduce substantiation evidence “as reliable and as competent as results derived from RCTs on the marketed products.”
Id. at 23. That factbound application of the clear-error
standard was correct and does not warrant this Court’s
review.
4. Petitioners briefly suggest (Pet. 21 n.5) that this
Court should grant the petition, vacate the decision below, and remand for further consideration in light of
Liu v. SEC, 140 S. Ct. 1936 (2020). In Liu, the Court
determined that Congress had incorporated equitable
principles into 15 U.S.C. 78u(d)(5), so that the SEC in a
civil enforcement action can obtain disgorgement only
of “a defendant’s net profits from wrongdoing.” 140 S. Ct.
at 1946. But petitioners’ passing argument about the
amount of the district court’s contempt sanction here
has been forfeited. Petitioners did not press below, and
the court of appeals did not pass on, any argument that
the $40 million sanction was improperly calculated
based on gross revenues rather than net profits. In addition, the limitation announced in Liu does not apply
to civil contempt proceedings, where a court’s power extends to “the requirements of full remedial relief.”
McComb, 336 U.S. at 193; see Pet. App. 160-161, 163
(finding that “consumer redress in the amount of the
gross receipts” was an appropriate contempt sanction,
particularly in light of petitioners’ “pattern of contemptuous conduct” and “intentional defiance of the court’s
injunctions”).
23
CONCLUSION
The petition for a writ of certiorari should be denied.
Respectfully submitted.
ALDEN F. ABBOTT
General Counsel
JOEL MARCUS
Deputy General Counsel
MARIEL GOETZ
Attorney
Federal Trade Commission
SEPTEMBER 2020
JEFFREY B. WALL
Acting Solicitor General
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.