Federal Trade Commission v. Trudeau
2011 U.S. App. LEXIS 23704
| 7th Cir. | 2011Background
- Trudeau violated a court-approved settlement with the FTC by misleadingly promoting his book; the district court found him in contempt and ordered $37.6 million remedial relief and a three-year infomercial ban (later replaced on remand).
- On remand, the district court computed the remedial amount as 800-number book sales, plus shipping, minus returns, yielding $37.6 million; it directed funds to victims and allowed remainder to Trudeau.
- As a coercive sanction, the district court imposed a $2 million performance bond to be posted before Trudeau engages in any infomercial activity related to the cited publications.
- The Seventh Circuit previously held the three-year infomercial ban improper as a purgeable coercive sanction and vacated it; on remand, the court refined protections by Bond and revised administration.
- Trudeau appeals arguing the remedial sanction is improper for measuring unjust gain rather than consumer loss, and the bond modification violates the consent order authority and the First Amendment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the remedial sanction must measure consumer loss rather than unjust gain | Trudeau I relied on unjust gain; loss-based measure adequate | Remedies should reflect consumer losses to compensate victims | Remedial loss-based measure affirmed |
| Whether the district court could modify the consent order to add a performance bond | Modification within authority to strengthen protections | Modification requires proper legal standard | Modification upheld under United Shoe/Rule 60(b) framework |
| Whether the bond violates the First Amendment | Bond is permissible if narrowly tailored | Bond restricts commercial speech | Bond survived intermediate scrutiny; no First Amendment violation |
| Whether the coercive sanction is purgeable and properly tailored | Bond serves purgeable, targeted deterrence | Sanction is improper or overbroad | Coercive sanction is purgeable and narrowly tailored |
| Whether the district court acted within discretion in administrative remedies | Remedies align with protecting consumers | Alternative measures possible but not required | Within discretion to reinforce protections and administer relief |
Key Cases Cited
- McComb v. Jacksonville Paper Co., 336 U.S. 187 (1949) (remedial sanctions compensate losses)
- United Mine Workers of Am. v. United States, 330 U.S. 258 (1947) (backward-looking, compensate victims)
- Verity Int'l, Ltd. v. FTC, 443 F.3d 48 (2d Cir. 2006) (middleman damages in 13(b) action; not a contempt case)
- Direct Marketing Concepts, Inc. v. FCC, 624 F.3d 1 (1st Cir. 2010) (damages based on consumer loss in remedial context)
- United Shoe Machinery Corp., 391 U.S. 244 (1968) (modification vs. injunction—framework for relief adjustments)
- Rufo v. Inmates of the Suffolk County Jail, 502 U.S. 367 (1992) (modification of consent orders/institutional reform cases)
- United States v. Krilich, 303 F.3d 784 (7th Cir. 2002) (Rule 60(b) modification standards applied to consent orders)
- Lee v. Village of River Forest, 936 F.2d 979 (7th Cir. 1991) (modification discretion standard under Rule 60(b))