*3 gotiable instruments and simulated ‘New C., Justice, Washington, appellee. D. for ” were “valuable and Car Certificates’ HUNTER, cashed, Before VAN DUSEN redeemed, exchanged [could] SLOVITER, Judges. car,” Circuit currency or a new United
when in fact the documents were not valua- redeemed, ble, cashed, could not be THE COURT OPINION OF exchanged currency Ap- or a new car. *4 III, HUNTER, Judge: Circuit JAMES 27a; complaint The pendix at 30a. includ- appeal This is an from a final order of the Digest’s example ed an of one of the simu- United District Court for the District checks, reprinted appendix which is in lated Delaware, which assessed a opinion. corresponding provi- 1 of this The $1,750,000against Digest the Reader’s Asso- required sion the consent order the Di- ciation, (“the Digest”) multiple Inc. vio- gest “[ujsing to cease and desist from or lations of a Federal Trade Commission checks, distributing currency, simulated (“FTC”) enjoined consent and also certificates;’ using ‘new car or distribut- company the from further violations. We ing confusingly any simulated item of val- will affirm. added). Appendix (emphasis ue.” at 38a. 1973, Digest In the first half of the initia- I. “Sweepstakes Passport” promotion. ted a 1970, investiga- In the FTC initiated an part promotional pamphlet, As of the the Digest’s tion of solicitation the direct-mail Digest mailed millions of “travel checks” campaigns. Characteristically, the solicita- purported pay grand prize which to win- tions mailing sweep- involved the mass sweepstakes ner in the “one hundred dollars promising money stakes or merchandise to specimen a month for life.” A check is percentage a small of those who returned opinion. reprinted appendix 2 of this sweepstakes entry the forms. At the con- 13, 1973, April attorney staff On an FTC later, investigation year clusion of its one Digest informed the that the travel checks Digest the FTC notified the that it found “clearly portion were violative” of the company’s sweepstakes the promotions to prohibiting the consent order the dissemina- deceptive, be unfair and and that intend- confusingly tion of simulated checks or sim- charge ed to Digest violating the with sec- Appendix ulated of value. at 728a. items tion 5 of the Federal Trade Commission Digest’s The FTC met with the then associ- Act, (1976):1 15 U.S.C. 45§ counsel, Blatch, general ate Mari Ann on 2, 1973, The FTC did issue an May administrative com- at which time the Commis- 2, 1971, plaint objections on promotion November but the com- sion’s were plaint 7, 1973, was May contained within a settlement voiced. On Blatch informed agreement agency between the and the Di- the FTC that “while not admit- gest ting any way to enter into a cease and order. desist ‘travel check’ agreement order],” stated that the order was violates C—2075 consent would [the 30, entered into for purposes only, settlement discontinue their use after June 1973. and did Appendix company not constitute an admission that the at 763-64a. The then Digest any parties proceeded complete mailing had violated law. The commerce, 45(a)(1) (1976) practices affecting provides 1. 15 § U.S.C. in or are de- “[ujnfair competition affecting methods of in clared unlawful.” commerce, deceptive and unfair or acts or 1978, sending “Sweepstakes Passport” promotion, granted district court the Govern- between out over four million travel checks summary judgment motion for ment’s on May and June liability. Digest United States v. Reader’s Association, Inc., (D.Del. November, September In 1978). The court held that consent or- approximately two mil- Digest distributed part of a lion “cash-convertible bonds” as der entered into between the FTC and the sweepstakes campaign. new apply advertising “was meant to pack- each enclosed three different bonds in material is similar the items men- et, prize purporting grand to award a one face, and, complaint on its tioned a month for winner “one hundred dollars capacity have same could said to life,” $24,000.00,and a another for third for consumers.” Id. at 1047. mislead “$2,000.00 year.” a month for first rejected court contention that reprinted appendix of these bonds 3 of prove had to that the trav- Government opinion. did The FTC not contact the el checks and cash-convertible bonds had at the time of the about bonds actually Judge deceived consumers. Chief mailing. rejected Digest’s argu- Latchum also July the Government filed On challenged ment documents were pursuant court to sec- protected speech commercial the first 5(7) 16(a)(1) of tions the Federal amendment. The district then exam- Act, Commission 45(7) Trade U.S.C. §§ bonds, ined travel checks and and con- *5 56(aXl) (1976), penalties and to recover for that, tendency cluded in terms of their to order, violations of the cease and desist and consumers, indistinguish- were they deceive injunctive Appendix at to secure relief.2 original giving able the check rise to complaint charged the Di- 7—10a. The the consent order. gest by had violated the consent order dis- tributing Following discovery, several million “simulated the further district checks,” “confusingly several and million hearing May, penalty court held a in of simulated items value.” considering by After the factors set forth Papercraft this court in United States Following discovery, Digest the moved (3d Corporation, F.2d Cir. judgment, for summary and the Govern- 1976), the partial district court concluded that the summary judgment ment moved for liability. 17,940,521 on the issue of On guilty November had been of viola- 45(1) (1976) provides: empowering grant 2. 15 U.S.C. the district courts to § manda- tory injunctions equitable and further relief. Any person, partnership, corporation or 56(a)(1) (1976) provides: 15 U.S.C. § who violates an of order the Commission Except provided paragraph final, as otherwise after it has become and while such (2) (3), effect, pay or if— order shall forfeit and (A) commencing, defending, penalty before or in- United States a civil of not more than $10,000 violation, in, tervening any involving for each action which shall accrue civil may chapter (including the to United States and be an recovered action to collect a civil brought by Attorney Commission, penalty) civil a action the Gener- which the or Attor- separate Commission, ney al of the United States. Each viola- on of General behalf separate commence, defend, tion of such an shall a order or authorized to inter- offense, except in, that in the a case of violation gives vene the Commission written notifi- through continuing obey neglect failure to cation and undertakes consult with the obey Commission, a final order of the each Attorney respect action; General with to such day neglect of continuance such of failure or and separate shall be deemed a offense. In such (B) Attorney General fails within 45 actions, the United States district courts are days receipt after of such notification to com- empowered grant mandatory injunctions mence, defend, in, action; or intervene such equitable and such other and further relief as commence, defend, may the Commission they appropriate deem in the enforcement of in, supervise litigation of, intervene and such final orders of the Commission. any appeal such action and of such action in The 1973 Amendment to this statute raised the attorneys any desig- own name its penalty maximum each violation from purpose. nated it for such $5,000 $10,000, and added the last sentence words, tendency order. In other to confuse. The also of the consent tions question that each letter dis- claims that of whether the the district court held mailings mass con- travel check and cash-convertible bonds vio- tributed violation. The court lated the was separate ripe stituted a consent order not $1,750,000, a and issued summary adjudication assessed because of the exist- permanent injunction against a further vio- ence genuine issues material fact. of the consent order. portion Specifically, company argues lations of that that there genuine was dispute v. Reader’s Associa- as United to whether the Inc., (D.Del. 1980). check,” tion, travel check was a “simulated and Digest’s post- whether the “confusingly court denied bonds were The district simu- appeal lated prohibi- trial This followed.3 of value” within the motions. item[s]
tion of the consent order. II. In determining whether the travel check presented appeal. are in this Four issues bonds cash-convertible violated the con- First, by granting court err did the district order, sent court properly en- summary motion for the Government’s gaged inquiry; (1) two-step construc- Second, judgment liability? on the issue interpretation tion and of the consent order finding court’s does the district itself; (2) challenged whether docu- travel checks and cash-convertible bonds vi- ments fell within proscription. the order’s impinge upon olated the consent order con- Company, United States v. J. B. Williams protected speech? stitutionally commercial Inc., (2nd 1974). 498 F.2d 430-31 Third, did the district court conclude cor- order, In construing the terms of the rectly mailing that each individual consti- lower language court observed that the was separate tuted a violation of the consent “not clarity,” a model of and did “not indi- and did it abuse its discretion cate whether ‘confusingly’ or not term $1,750,000upon imposing penalty upon was impose meant to the FTC the Digest? Finally, did the district court burden proving actual confusion to es- by granting injunc- abuse its discretion an *6 tablish Digest, a violation.” Reader’s 464 against tion violations of the consent future F.Supp. at The district 1045-46. court con- order? We will examine each of these is- ambiguities cluded that of the resolution in separately. sues upon the order depended the intent of the Digest FTC and the at the time they that Summary Judgment A. negotiated the order. Digest The that the maintains by ambiguities
court erred
the
that
granting
Digest
Government’s
asserts
order,
summary judgment
motion for
on the issue
the terms of a consent
like those in
contract,
trial,
of liability. Appellant challenges
only
the dis- a
can
be resolved
not
order,
by
trict
summary adjudication.
g.,
court’s construction
con-
e.
Land
See
tending
Corporation
that
the ban on dissemination
tec t
of
v.
Mutual Life As
State
America,
75,
“confusingly
of value” re-
Company
simulated
surance
605 F.2d
item[s]
quired
government
proof
(3d
1979).
appellant
the
to offer
of 79-80
While
re
consumers,
just
actual
not
correctly
accepted principle
confusion of
a cites
an
of con
3. The
maintains
that
the district
tó
court’s
reflect
the accurate
number
of violations.
finding that
17,940,521
there were
The district
violations of
court denied the motion. While
conceding
the consent order is incorrect.
It
that
16,100,820
states that
its
fact
viola
only
amended
occurred,
answers
tions
the
stated that
Government’s
inter-
did
rogatories
that
it
not
alter
that
a
establish
mailed
conclusion
16,100,-
only
$1,750,000
items:
travel
and
15,894,278
“wholly
checks
was
reasona
proper
and cash-
rejected
mailings;
convertible
ble.”
the
bonds in bulk
The court
conten
and 206,-
mailings.
travel
tion
at the
checks and bonds in
that
had arrived
penalty by
test
simply
assessing
After
judgment,
10 cents
entry
the
the
violation.
company
per
a motion
judgment,
for relief
from
at 842-46a.
that
the
requested
Appendix
penalty be reduced to not
$1,610,082
more than
law,
meaning
undisputed
expressly
herein,”
that
not
out
tract
it is nonetheless
set
the
order,
construing
meaning of
consent
the
represented directly
had
or impliedly
one,
question
ambiguous
even an
is a
of law
checks,
‘money’ and other
“[s]imulated
court,
capable
the
of resolution
sum
negotiable instruments and simulated ‘New
Williams,
mary judgment proceedings.
498 Car
by
Certificates’
received
individuals
(“what
at 431
the order means
F.2d
[is]
Digest] are valuable and can be
[the
court”);
concededly
the
a task for
United cashed, redeemed,
exchanged
for United
Co.,
Fifty
States v. Golden
Pharmaceutical
currency
States
Appen-
new car.”
Inc.,
1199,
(N.D.Ill.
F.Supp.
1201-02
complaint
dix at 26-27a. The
by
concluded
1976).
Comment,
Right
See also
asserting
promotional practices
these
5(1)
Trial in FTCA
Jury
Section
Civil Pen
by
capacity
had “the
and tenden-
Actions,
alty
60 Iowa L.Rev.
390-91
cy to
purchasing
mislead members of the
(1974) (“
general
affirmed the
rule
Williams
public . . .
many
induced
mem-
ha[d]
or
[interpretation
consent
public
participate
bers of the
in [the
law
”
question
is a
to be decided
der]
Digest’s] ‘sweepstakes,’
in violation of sec-
Thus,
sitting
jury.”).
the court
without a
tion 5 of the Federal Trade Commission
properly
the district court
undertook the Act. Appendix at 31a.
interpreting
task
the consent order.
Reading
against
the consent order
construing
In
the consent
background provided by
complaint,
district court
underlying
scrutinized the
ad
district court concluded
in-
the order
ministrative
issued
the FTC.
prevent
tended to
the distribution of simu-
Although
ordinarily
a consent order must
checks,
lated
money, and new car certifi-
be interpreted
only
examination of
cates
reproduced
similar to those
in the
document,
“four corners” of the
United
complaint,
confusingly
and all other
simu-
Co.,
v.
Armour &
U.S.
lated items of value. The court concluded
(1971),
S.Ct.
962
confusingly
ulated checks and
simulated
court’s
with the district
agree
We
asserts that
the order
items of value.
order:
consent
reading of the
determined on a motion
prove
issue could not be
require the Government
does not
judgment
of the ex-
actually
summary
de
because
challenged material
that
company
disputed facts.6 The
Beneficial
istence of
consumers.
or confused
ceived
travel
FTC,
611,
(3d
position
that whether the
F.2d
617
takes
v.
542
Corporation
check,”
983,
denied,
was a “simulated
and wheth-
1976),
430
97 check
cert.
U.S.
(1977). A con
er the cash-convertible bonds were “confus-
L.Ed.2d 377
S.Ct.
value,”
light
ingly
are factu-
interpreted
be
simulated
sent order must
item[s]
which,
Williams,
questions
disputed,
when
can be
498 F.2d at
al
purpose.
principal
observed,
plenary
only after
review.
resolved
the trial court
431. As
“[t]he
court,
hand, deter-
the induce
on the other
in this case was
district
prohibited goal
court,
questions
were
for the
sweepstakes
mined these
participation
ment of
summary proceed-
appeared
capable
to be valua
of resolution
items that
means of
below, we
ings. For the reasons articulated
were not.” Reader’s
ble but in fact
in the conclusion reached
phrase
“confus
concur
F.Supp. at 1047.
was,
court.
of value”
as the
district
ingly simulated item
held,
apply
intended to
district court
Hindman,
In United States
that was similar to
promotional material
(D.N.J.1960),
the district court held
reproduced
in the administrative
items
in a
question
of whether a defendant
face,
complaint, and on its
could be said
5 of the
civil
action under section
tendency to mis
capacity
have the same
violated
Federal Trade Commission Act had
proof
While
of actual con
lead consumers.
previous
the terms of a
consent order
probative
of a
fusion of consumers would
presented
issues of fact
that could
triable
mislead,
required.
is not
tendency to
only by jury
This case
be resolved
trial.
617;
Corporation,
Beneficial
542 F.2d at
Re
criticized, however, by
was later
our court
FTC,
System, Inc. v.
sort Car Rental
in United
v. Vulcanized Rubber &
denied,
Cir.),
(9th
cert.
F.2d
(3d Cir.),
Company,
963
erroneous,
tionally
by juries.
since
decided
holding
was
the
See 498 F.2d at
before the court was whether
Judge
observed,
sole issue
421-30. As
Oakes
labeling practice
the
or not
was within
only
exception,
with
one
and that a case
proscription
the
of the order and not
subsequently subjected to severe criticism
practice
the labeling
decep-
whether
was
by its
appeals
own circuit court of
[Hind-
[m]oreover, creating
tive ..
issue of
.
an
man],
among
many
no case
the
in
cited
Hindman,
the
in
fact as
court did
would
part
majority
III
the
opinion
of
holds
usurp the function exclusively vested in
that,
in an action brought
the United
the Federal Trade Commission to deter-
States
recover
penalties
to
civil
viola-
mine
labeling prac-
the issue of whether a
tion of the valid order of an administra-
misleading
deceptive
pub-
tice is
the
or
to
tive
the
agency,
right
defendant had a
to
lic.
jury
a
as
statutory
trial
a matter of
Id.7
constitutional law.
Thus, Vulcanized Rubber stands for the
(emphasis
Id. at 440
original). Subsequent
proposition
5(7)
that in a section
suit for the
cases have
been
contrary.9
not
recovery
penalties,
of civil
question
the
of
Moreover, we
position
believe that our
in
practice
challenged
whether a
lies within
Vulcanized Rubber is consistent
with
prohibition
previous
of a
consent order
purpose
overall
and structure of the Feder-
question
is a
of
capable
law
of resolution
Trade
al
Commission Act—fair
effec-
and
on
summary
the court
a
judg-
motion
regulation
tive
of
deceptive
false and
adver-
however,
ment. The
relies on the
Williams,
tising. See
965 dispute Reich, beyond it is now F.2d at 619. while established See also Consumer Pro speech that commercial comes within the tection and First Amendment: A Di amendment,14 FTC?, protection 705, of the first it is lemma for the 61 Minn.L.Rev. speech (1977) clear is equally (arguing that commercial sub- 718 that of the inclusion ject regulation might speech to “modes that commercial within the first amend impermissible in the realm of non-commer- ment does not mean that the FTC “can no expression.” longer shape v. cial Ohralik Ohio Bar remedial relief State to ‘fence in’ Association, 447, 456, 1912, proscribe violators and deception 436 U.S. 98 and un S.Ct. 1918, forms.”); all (1978). 56 444 fairness in its various L.Ed.2d The Govern- Pitof- 10, sky, supra (asserting note at 671-73 power regulate ment “does lose its that not not first amendment will serve as shield activity commercial harmful to the deemed against FTC enforcement public speech decep a actions component wherever is advertising). activity.” evaluating that tive Id. here,
consent order at
issue
the district
analysis,
Within this framework for
it is
of assessing
court undertook “the task
apparent
properly
district court
First Amendment
interest
at stake and
concluded that
the consent order did not
weighing
against
the public interest al-
require
deception.
evidence of actual
As
legedly
regulation.”
served
Reader’s
observed, “[g]iven
the court
the incontesta-
1051,
Digest, 464 F.Supp.
quoting, Bige-
at
premise
ble
that the simulated check includ-
809, 826,
Virginia,
low v.
421 U.S.
95 S.Ct.
decep-
ed
the administrative
2222, 2235,
(1975).
44 L.Ed.2d
Striking
600
tive, the
presumption
Government’s
that all
balance,
the court concluded that
similarly
probably
situated
items
value
“passe[d]
consent order
constitutional mus-
deceptive
will be
is not unreasonable.”
requirement
proof
ter without a
of de-
Digest,
F.Supp.
Reader’s
464
at 1052. The
ception.”
Digest,
F.Supp.
464
Reader’s
at
effectiveness of the FTC’s
pre-
efforts to
agree.
1052. We
vent the
of confusingly
dissemination
simu-
“substantially
lated items of value would be
recently
As the Second Circuit
required
if it
prove
diminished”
were
Norris,
Jay
Inc.,
FTC,
noted
598 F.2d
deception.
Ohralik,
actual
436
See
U.S. at
1244,
(2nd Cir.),
denied,
1252
cert.
444 U.S.
466, 98
governmental
S.Ct. at 1924. These
980,
481,
(1980),
100
62
S.Ct.
L.Ed.2d 406
do,
found,
interests
as the district court
charged by Congress
FTC is
with the
“[t]he
substantially outweigh the value of the af-
duty
protecting
consumers
from
de
speech.
Digest,
fected commercial
Reader’s
ceptive and misleading use of commercial
F.Supp.
Accordingly,
464
at 1052.
we hold
speech
advertising.”
Commensurate
there has been no violation of the
duty
power
with this
is the
to fashion broad
rights.
first amendment
prevent
a company
remedial relief
en
gaging in deceptive practices
engag
Penalty
C.
ing
deceptive practices
similarly
Brothers, Inc.,
future. FTC v. Mandel
Digest challenges
359
the district court’s
818,
U.S.
79
$1,750,000
S.Ct.
3 L.Ed.2d
assessment
for its
(1959);
893
National
Egg
Commission on
-compa-
violation of the
consent order.
FTC,
157, 164 (7th
Nutrition v.
ny’s
F.2d
first assertion
trial
denied,
1977),
cert.
erroneously
determined the number of vio-
(1978). Any
58 L.Ed.2d
remedy
formu
argues
lations of the
It
order.
each
not,
lated
reasonably
mailing,
FTC that is
neces
bulk
as the district court
sary
prevention
concluded,
of future violations
“each
individual distribution of
upon
Bond,”
does
impinge
constitutionally pro
not
Travel
Check
Cash Convertible
Norris,
speech.
tected
Jay
commercial
separate
constituted
violation
the or-
1252;
Corporation,
F.2d at
Beneficial
542 der.
Reader’s
Doctrine,
generally,
Comment,
14. New
First Amendment
Constitutional
U.Chi.L.Rev.
Advertising:
Protection for Commercial
*11
subject
separate
is therefore a
offense
the district
maintains
Digest also
The
Id.
$1,750,000
penalties.”
penalty
of the
calculation
court’s
improper analysis
upon an
was based
Co.,
Fifty Pharmaceutical
In Golden
Papercraft,
by
forth
factors set
fourteen
sought penalties for
Government
given
reasons
141. For the
F.2d at
540
mailings
mailings
individual
mass
and two
below,
disagree.
we
which,
admitted, violated a FTC
defendants
concluded
The district court
consent order.
number of vio
determining the
In
viola
only had there been sixteen
that not
order, we must exam
lations of the consent
tions,
mailing could
but that each individual
statute,
provisions of
applicable
ine the
sepa
have
a
been construed to
been
have
statute,
15 U.S.C.
and the order itself.
prohibiting
of the order
rate violation
pertinent part,
45(7) (1976) provides,
§
mailing “any advertisement
company from
a FTC cease and desist
a violator of
representa
proscribed
a
which contained]
pay to the United
forfeit and
order “shall
origi
F.Supp.
(emphasis
1207
421
at
tion.”
of not more than
penalty
a civil
defend
nal).
court reasoned that
“[i]f
$10,000
(emphasis add
each violation.”
single
mailed a
advertisement
ant had
ed).
provides that
The statute
further
I,
find
we would have little trouble
Court
violation of such an order
separate
“[e]ach
they
The fact that
mailed
ing a violation.
Turning
separate offense.”
Id.
shall be a
two,
millions,
or
as in Court
rather than one
order,
applicable terms of the consent
III,
not diminish the- seriousness
does
“[u]sing or
prohibited
was
Id.
also
each individual violation.”
checks, currency,
distributing
simulated
Williams,
(S.D.N.Y.
F.Supp.
547-48
354
certificates;’
using
‘new
or
or distribut
car
part,
1973),
part
and rev’d in
498
aff’d
val
ing any confusingly simulated item of
(broadcast
(2d
1974)
of eleven
F.2d 414
Cir.
added).
Appendix
(emphasis
ue.”
at 38a
separate tele
offending commercials on 100
language of the statute
Juxtaposing the
viola
programs held to constitute 100
vision
the same conclusion
and the
we reach
order);
v. Wilson
tions of the
United States
as the district court —the distribution
Inc.,
Company,
1962 CCH Trade
Chemical
comprised a
any simulated item of value
aff’d,
¶ 70,478 (W.D.Pa.1962),
Cases
each
separate violation of
order.
1963)
(3d
(offending advertise
F.2d 133
Cir.
mailing of an individual
travel check
books;
25,000,000 comic
appeared
ment
constituted a distinct
cash convertible bond
grouped the viola
although government
order, punishable
violation of the consent
depending upon
categories
nine
tions into
$10,000.
penalty
a
not to exceed
“in
publication,
reali
publisher and date
ty
published and mailed
each comic book
mailings
question
of whether bulk
recipient
a
is a
which reaches the hands of
multiple violations of a
single
constitute
Order.”)
violation of the
impression
consent order is one of first
strong
circuit court. We nonetheless find
included as
holding that each letter
Our
support
holding
for our
in several district
sepa-
mailing
part of a mass
constitutes
In
v. Floer-
court decisions.
United States
predicated upon our
rate violation is also
63,368
sheim,
Trade Cases
legisla-
CCH
H
with the
belief that
it is consistent
[1980-2]
aff’d,
(9th
(C.D.Cal.1980),
19. The that maintains that after its is regulation on FTC, 1973 with the it believed that May because the construed inapposite campaign discontinuance of the travel check in that case was the Court subsequently June 1973 would the Commission’s satisfy it did in that “[a] amended to as provide, Flowever, concerns. the cross-examination will be considered request ordinarily inappro- Digest’s Blatch, Mari Ann then associate (2) same for such advice ... where the priate general counsel, revealed that the FTC never the same course of action is or substantially or the continued implicitly explicitly approved investigation has been the sub- under or is or mailing the travel after checks 1973: May ject proceedings, order, or decree of current Did Mr. FTC, member of the or Q: any Ryder or an- initiated or obtained the Commission Sanger Mr. else, or ever or anyone approve governmental agency.” other C.F.R. mailing authorize the continued of the travel 3.61(d) (1973). Digest to be § appears meeting check at or at time May any contending of the FTC this amendment thereafter? seeking rules relieved it advice from the duty No, A: and I didn’t ask them to I had because distributing the Commission prior said we would discontinue, which we did. But, travel checks bonds. and cash-convertible On number of occasions after I did any Digest arguing fact, this, cannot be be- doing, ask how we were did have they any admitting cause it would be tantamount suggestions, other were there other mat- any campaigns “the these constituted promotional ters still or reason we weren’t open any why same or the same course of action substantially receiving our and that I is re- report, why subject . has been the of a current . . [that] saying ceived for the letter “No example, order.” Id. construc- Moreover, cause for concern.” 3.61(d) meaningless. tion of would render it § I but in fact your elaboration, Q: appreciate should have requested prior there was never letter any communication, from the opinion FTC. written communication, communication, oral authorizing the continued use of the travel rule is codified as 16 currently FTC check? 2.41(d) § C.F.R. A: No. Appendix 625-26a. Turning to the the second factor at Defendant Reader’s Digest Association, issue, public injury, Inc., officers, directors, servants, asserts that em- ployees, is agents, record devoid of representatives, evidence consumer assigns, persons deception. confusion or and all argument partic- But this active concert or ipation defendant, fails for the with same reason who did with shall have respect received actual notice construction of the contents of consent Judgment this Final proof of Permanent actual In- decep confusion or order— tion is junction, by personal otherwise, service or required. not pp. 962-964 directly or through any corporate or other supra. observed, As the district court device, are hereby enjoined permanently principal purpose of a cease and de “[t]he in connection with publication, adver- sist prevent order having material offering sale, sale, tising, or distribu- capacity to confuse or deceive from reach books, magazines, tion of prod- or other ing the . public [t]hus, . . whenever such ucts in commerce as ‘commerce’is defined promotional items public, reach the that in in the Federal Trade Commission Act and of itself causes harm and injury.” ‘[u]sing from: or distributing simulated (em Reader’s at 777-78 checks, currency, certificates”; “new car phasis original). The trial court al had using distributing any confusingly ready determined that the travel check and simulated item of value.’ possessed cash-convertible bond capaci deceive; toty accordingly, the Government Appendix at 826a. obligated was not to adduce evidence of injunction asserts that:
specific injuries to consumers. impermissibly vague; the district court did *14 issuance; not set forth the reasons its Finally, the respect with to benefits injunction the unsupported by is evidence in violation, the the by derived district court record; and, injunction the the purports to “sub Digest concluded that the received persons restrict the beyond conduct of the violative stantial benefits from the distribu jurisdiction of the court. We find these ample support tions.” Id. at 778. We find contentions to be without merit. for the court’s conclusion. The district found the obtained more court that scope injunctions The form $5,000,000 subscription gross than reve by 65(d) mandated Fed.R.Civ.P. which nues from the travel check and cash-con provides, part, injunctive that an order promotions. The vertible bond travel check terms; specific “shall shall de [and] campaign among top ranked the three of all detail, scribe in by reasonable and not refer company’s promotions. dis the the document, the ence to or other properly rejected Digest’s trict court the act or to the acts be restrained.” These particular contention that it received no injunc mailings. from the an prerequisites benefit the violative to issuance designed protect “are those who are tion sum, dis In we conclude that the they of what by informing them enjoined carefully doing considered the relevant trict court refrain upon to do or called are $1,750,000 assessing prior the factors injunction.” with the 11 comply in order upon Digest. hold that We Miller, Wright & A. Federal Practice and C. by the there was no abuse of discretion Procedure, (1973). The.Digest 2955at 536 § court. district that, the termina hardly argue after can litigation, it will not be on
tion of activity pro type of to what notice as Injunction The D. The injunction. district scribed court, court, both con and now this have assessing monetary pen- In addition to portion en- upon Digest, the district court strued the of the consent in alty order injunction. injunc- injunction cluded within the an which stated: tered it vague;21 reject broad, Finally, Digest’s we contention it is not but may be tion prac- what specificity injunction purports binding to be sufficient with states prohibited.22 jurisdic- tices are upon persons beyond the Court’s order, enjoining language of the tion. The injunc that an 65(d) provides also Rule directors, “officers, ser- and its reasons for forth the tion “shall set vants, agents, representatives, employees, the or refers to provision This issuance.” notice, merely relief, assigns” who have and the granting the opinion [and] der or within the language provided by be set forth Rule need not tracks reasons States, Miller, Hunter v. United injunction itself. 65(d).23 Wright A. C. & 1967). (9th 155 n.6 Cir. F.2d Procedure, 2956 at Federal Practice and § grant that it decided to court stated (1973). Accordingly, we hold that 566-68 it was “con injunctive relief because court did not abuse its discretion the district remedy should this additional vinced request for by granting the Government’s in order to be afforded Government injunctive relief. will that Reader’s further assure n the order to provisions abide 1971.” Reader’s agreed which HI statement, when F.Supp. at 779. This entire context of the court’s read in the conclusion, the district we hold that In good detailing Digest’s lack opinion granted the Government’s properly compliance with the consent prior faith in issue summary judgment on the motion order, reason for the provides sufficient finding district court’s liability. injunction. United issuance of Cf. and cash-convertible the travel checks Company, 500 F.2d & Haas Rohm order did not the consent bonds violated denied, (5th 1974), cert. constitutionally impinge upon L.Ed.2d 439 U.S. We find that speech. protected commercial correctly that court concluded the district We that the district court’s conclude also sepa- mailing constituted each individual findings sup- opinion provides sufficient consent violation of the rate injunctive relief. port its decision to afford abuse its discretion court did not grounded opinion reveals that it The court’s *15 $1,750,000 upon the assessing injunction upon its grant its decision to Finally, we hold that Digest. that the acted in bad determination by enjoin- its discretion court did not abuse rec- ample faith. is evidence in the There future violations of ing support ord to the court’s conclusion consent order. expected to reasonably cannot be Therefore, of the district judgment in the future comply with the consent order imposed prohibition. court will be affirmed. judicially without a appropriate the District Court.” range 21. deemed “Broadness refers of the de- activity brought only injunction purview in the instant at issue within the Not is the fendant’s decree; Digest may sufficiently specific, vagueness particu- but refers case to the larity range activity proce- with which this is de- administrative also resort FTC’s Developments Injunc- advisory opinions prior scribed.” obtaining dure for Law — tions, 78 Harv.L.Rev. See advertising campaigns. embarking upon future Jaffe, also The Judicial Enforcement of Admin- supra. p. 970 & note Orders, istrative (1963). 76 Harv.L.Rev. -86 part, 65(d) provides, in relevant Fed.R.Civ.P. injunction “[ejvery granting . . . an order case, 22. This is not a like United action, binding upon parties their Corp., (3d Cir.) Vitasafe 345 F.2d cert. servants, officers, agents, employees, and attor- denied, 86 S.Ct. 15 L.Ed.2d neys notice.” .. . who receive actual (1965), placed in which the defendant “ peril contempt’ ‘at the of a summons with providing any guidelines carrying out for the on advertising program of a future in a manner APPENDIX
APPENDIX *17 APPENDIX *18 judges regular of the circuit in active ser-
SLOVITER, concurring. Judge, Circuit rehearing by having vice not voted for majority’s disposition of I with the agree banc, petition rehearing in for comprehen- almost all of its this case and denied. separately only opinion. I write be- sive Aldisert, Adams and Weis would Judges the discussion of cause I believe judge jury grant petition rehearing for in banc. pp. between division 963- goes necessary further than under The case before us is the facts of this case. BY JUDGE ADAMS STATEMENT clearly appro- in which the issues were one rehearing because Judge Adams votes for court, priate disposition by the trial for imposition penalty, he believes the of a request did not a because Reader’s here, context based on the number jury trial. However one characterizes the (simulated travel individual documents Reader’s conduct issue of whether public is bonds) checks and mailed to the order, it proscribed by prior was consent statute, governing inconsistent with the case, it the trial is clear that in this was provides “penalty which for a of not more required court which would have been $10,000 than for each violation.” The sole only make that decision. Therefore support holding point on this is dicta for question before us on that issue is whether opinions. only from three district court summary judgment appropriate. was Be- appeals opinion court of which addresses dispute, relevant cause the facts were not Williams, subject, A. v. J. U. S. B. agree majority summary I with the (2d 1974), appear F.2d 414 would judgment appropriate. was Further, point in the it is other direction. I day would leave for another the issue questionable Congress at least would whether the dictum in the footnote Unit $10,000 up authorize a for ed States Vulcanized Rubber & Plastics piece of mail is sent. If the each Co., (3d Cir.), 288 F.2d 258 n.2 cert. opinion rationale of the in this case were to denied, 7 L.Ed.2d applied newspapers, example, (1961), precludes jury trial in all in penalties could result in of millions of dol- respondent’s stances on a claim that single press run. In the absence lars for proscribed by prior actions were not or language sanctioning of clear a result of der. kind, I would be reluctant to attribute
Congress.
such an intent to
SUR PETITION FOR REHEARING SEITZ, Judge, Before Chief and VAN Judges join Judge ALDISERT and WEIS DUSEN, ALDISERT, ADAMS, GIBBONS, statement. ADAMS’ HUNTER, WEIS, GARTH, HIGGINBOT- VITER, HAM Judges. and SLO Circuit HUNTER, III, Judge.
JAMES Circuit petition rehearing by appel- filed having lant in the above entitled case been judges participated submitted to the who the decision of this court and to all the judges
other available circuit of the circuit service, regular judge active and no who having concurred in the decision asked for rehearing, majority and a of the circuit