FTC v. Kevin Trudeau ( 2009 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 08-4249
F EDERAL T RADE C OMMISSION,
Plaintiff-Appellee,
v.
K EVIN T RUDEAU,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 03-C-3904—Robert W. Gettleman, Judge.
A RGUED M AY 14, 2009—D ECIDED A UGUST 27, 2009
Before R IPPLE, M ANION, and T INDER, Circuit Judges.
T INDER, Circuit Judge. If you have a problem, chances
are Kevin Trudeau has an answer. For over a decade,
Trudeau has promoted countless “cures” for a host of
human woes that he claims the government and corpora-
tions have kept hidden from the American public. Cancer,
AIDS, severe pain, hair loss, slow reading, poor memory,
debt, obesity—you name it, Trudeau has a “cure” for it. To
get his messages out, Trudeau has become a marketing
2 No. 08-4249
machine. And the infomercial is his medium of choice.
He has appeared in dozens of them, usually in the form
of a staged, scripted interview where Trudeau raves
about the astounding benefits of the miracle product
he’s pitching. But Trudeau’s tactics have long drawn the
ire of the Federal Trade Commission (“FTC”). By pro-
moting his cures, Trudeau claims he is merely exposing
corporate and government conspiracies to keep Americans
fat and unhealthy. But the FTC accuses Trudeau of being
nothing more than a huckster who preys on unwitting
consumers—a 21st-century snake-oil salesman. For
years Trudeau has dueled with the FTC in and out of court.
Trudeau’s latest run-in concerns his cure for weight
loss, which he explains in his book, The Weight Loss Cure
“They” Don’t Want You to Know About. By the time
Trudeau began promoting the book, courts had sharply
curbed his marketing activities. A consent decree
banned Trudeau from appearing in infomercials for any
products, except for books, provided that he did not
“misrepresent the content of the book.”
That proviso forms the basis for this latest lawsuit.
The FTC claimed that Trudeau’s Weight Loss Cure
infomercial misled consumers by describing a weight loss
program that was “easy,” “simple,” and able to be com-
pleted at home, when in fact it was anything but. The
program requires a diet of only 500 calories per day,
injections of a prescription hormone not approved for
weight loss, and dozens of dietary and lifestyle restric-
tions. The district court sided with the FTC, concluded
that Trudeau had misrepresented his book, and held
No. 08-4249 3
Trudeau in contempt. As sanctions, the court ordered
Trudeau to pay $37.6 million and banned Trudeau
from appearing in any infomercials, even for books, for
the next three years.
Trudeau appeals everything. He argues he should not
have been held in contempt because he merely quoted
his book and expressed his opinions. And he contends
that the court’s sanctions were not appropriate for civil
(as opposed to criminal) contempt proceedings. We
disagree with Trudeau about the contempt finding—he
clearly misrepresented the book’s content—but we are
troubled by the nature of both the $37.6 million fine
and the infomercial ban. So we must remand those
aspects of the court’s judgment.
I. Background
A. Trudeau and the FTC
Trudeau’s troubles with the FTC started over a decade
ago. In 1998, the FTC sued Trudeau for deceptive
practices and false advertising in connection with a
variety of products that Trudeau promoted through his
infomercials. For example, Trudeau participated in an
infomercial for the “Sable Hair Farming System,” which
was guaranteed to regrow hair and “actually end hair
loss in the human race.” An infomercial for “Howard
Berg’s Mega Reading” claimed to significantly increase
reading speed, up to as much as ten times, even for indi-
viduals with severe brain damage. And promoting his
very own “Kevin Trudeau’s Mega Memory System,”
4 No. 08-4249
Trudeau claimed that users would achieve a photo-
graphic memory.
Trudeau settled that case and paid $500,000 to compen-
sate purchasers of these products. Trudeau also agreed
not to make any representations about the benefits or
performance of any product without “competent and
reliable evidence” of his claims, and he agreed not to
misrepresent the existence or contents of any research
study. He further agreed to be up front about the fact
that his infomercials were advertisements and not
actual interviews. Stipulated Order for Permanent Inj. &
Final J. Against Kevin Trudeau, FTC v. Trudeau, No. 98-CV-
168 (N.D. Ill. Jan. 14, 1998).
But five years later, Trudeau was at it again. The FTC
went after him for marketing two products: “Coral Cal-
cium Supreme,” as a cure for cancer, heart disease, multi-
ple sclerosis, lupus, and many other serious ailments;
and “Biotape,” as a cure for severe pain. Trudeau even
claimed that his cancer cure had been proven by an
article in the Journal of the American Medical Associa-
tion. The FTC again alleged deception and false adver-
tising, and it sought to hold Trudeau in contempt for
violating the 1998 injunction. In response, Trudeau stipu-
lated to a preliminary injunction to cease marketing
these products without first submitting the infomercials
to the FTC. Stipulated Prelim. Inj. Order, FTC v. Trudeau,
No. 03-CV-3904 (N.D. Ill. July 1, 2003) (R. 26.)
But that didn’t stop him—he kept marketing Coral
Calcium as a cure for cancer. So in June 2004, the court
held Trudeau in contempt for violating the preliminary
No. 08-4249 5
injunction and ordered him to cease marketing that
product altogether. Contempt Order, FTC v. Trudeau,
No. 03-CV-3904 (N.D. Ill. June 29, 2004) (R. 55.)
But Trudeau still wanted to promote his “cures.” This
time, though, instead of marketing the curative sub-
stances themselves, he sought to advertise his book,
Natural Cures “They” Don’t Want You To Know About,
which reveals “natural cures” for everything from
herpes and AIDS to MS and cancer. So Trudeau began
negotiating with the FTC about a new stipulated agree-
ment that would govern Trudeau’s future marketing
activities.
In September 2004, the court entered a Consent Order,
which ordered Trudeau to pay $2 million for consumer
redress and prohibited Trudeau from advertising any
products in infomercials. But the Order contained an
exception: Trudeau could participate in infomercials
for publications, including his own publications, as long
as the publication did not refer to any other product
Trudeau was marketing. In addition, and of particular
importance to this case, the Order specifically provided
that “the infomercial for any such book . . . must not
misrepresent the content of the book.” Stipulated Final
Order for Permanent Inj. & Settlement, FTC v. Trudeau,
No. 03-CV-3904 (N.D. Ill. Sept. 2, 2004) (R. 56.)
In connection with the 2004 Consent Order, Trudeau
submitted to the FTC an infomercial for his Natural
Cures book. Trudeau claims that this infomercial merely
quoted and paraphrased his book and gave his personal
opinion about topics in the book. The FTC viewed the
6 No. 08-4249
infomercial and didn’t object to it being put on the air.
Over the next two years, Trudeau aired that and a
number of other infomercials promoting several of his
books.
In mid-2006, Trudeau’s company, Trucom, LLC, sold
all of its assets to ITV Global, Inc., an entity allegedly not-
at-all affiliated with Trudeau. ITV agreed to pay
Trucom $121 million. In exchange, Trudeau agreed that
ITV may market his books and publications via
infomercials and that Trudeau would appear in those
infomercials for the purpose of promoting those books.
Trudeau attests he would not receive any additional
compensation for those appearances beyond the $121
million. But Trudeau claims that Trucom has received
only $2 million of that $121 million from ITV.
B. The Weight Loss Cure Infomercial
Trudeau was on good terms with the FTC until 2007,
when he appeared in infomercials promoting his Weight
Loss Cure book. The Weight Loss Cure book touts a four-
phase program to permanently shed pounds:1
1
Trudeau’s weight loss program claims to be modeled after
the “Simeons Protocol,” a controversial weight loss program
developed by a British physician over fifty years ago. Kevin
Trudeau, T HE W EIGHT L OSS C URE “T HEY ” D ON ’T W ANT Y OU
TO K NOW A BOUT 44-53 (2007). Combining hormonal injections
with strict dietary and caloric-intake restrictions, the Protocol
claims to redistribute one’s body fat and “reset” one’s hypothal-
(continued...)
No. 08-4249 7
• Phase One lasts 30 days and consists of a list of
60 dos and don’ts, dozens of which the book
claims dieters “MUST” follow. 2 Among other
things, dieters are advised to eat an all-organic
diet of six meals per day; eat 100 grams of or-
ganic meat just before bed; not eat any food
1
(...continued)
amus, an area of the brain that controls among other things
hunger, thereby reducing the urge to eat. Id. at 73-76. The
effectiveness of the Simeons Protocol, and particularly the
hormone injections, as a weight loss aid has long been dis-
puted. See Chorionic Gonadotropin, 39 Fed. Reg. 42,397-01 (Dec.
5, 1974) (discussing clinical studies).
2
Trudeau argues that Phase One is not mandatory but only
“strongly encouraged.” He is correct that the book occasionally
states that Phase One is “not required.” E.g., W EIGHT L OSS
C URE , supra, at 74. However, in the book’s final chapter, “Putting
It All Together: Summary and Conclusions,” Trudeau pro-
vides a “summary list of check sheets that contain the steps of
each phase of the protocol.” Id. at 211. For all four phases, the
check sheets outline the things dieters “MUST” and “MUST
NOT” do. The check sheets also outline what is “STRONGLY
RECOMMENDED” and “STRONGLY SUGGESTED you NOT
do.” Id. at 213-27. Given that the checklist refers to some
items as “recommended” or “suggested,” we think it rea-
sonable that dieters would find the items they “must” do as
mandatory parts of each phase. This belies the statement earlier
in the book that Phase One as “not required.” Even if Trudeau
subjectively believes Phase One is optional, dieters could
reasonably conclude otherwise. The same goes for Phase Four,
which Trudeau also argues is optional.
8 No. 08-4249
cooked in a microwave; receive 15 “colonics” (a
procedure like an enema with water performed
only by specialists); walk an hour a day; take
infrared saunas; and avoid all skin creams,
lotions, and prescription and over-the-counter
medications. Instead of medications, Trudeau
advocates using the “all-natural non-drug alter-
natives” explained in his Natural Cures book.
• Phase Two, which requires physician supervi-
sion, involves a restricted, all-organic diet of only
500 calories per day, along with daily injections
of Human Chorionic Gonadotropin (hCG) hor-
mone.3 In addition, dieters must drink at least
one-half to one gallon of water per day, along
3
HCG is a prescription drug often prescribed to stimulate
ovulation in infertile wom en. See http://www.
ferringfertility.com/medications/novarel/ (last visited Aug. 24,
2009). It is not approved for weight loss in the United States.
39 Fed. Reg. 42,397-03. To obtain hCG, dieters must either
leave the United States or find a doctor who will prescribe hCG
“off-label.”
HCG should not be confused with hGH (Human Growth
Hormone), which has been the subject of countless enhanced
substance investigations in amateur and professional sports.
A.J. Perez, HGH detection faces new hurdle: Emerging compounds
elude tests, spur hormone production, USA T ODAY , May 28, 2008,
at C1. HCG has not been without its own controversy, how-
ever, as major-league slugger Manny Ramirez was recently
suspended for 50 games for using the substance. Phil Rogers,
Column, Manny Ramirez Suspended 50 Games: Just Another
Baseball Cheat?, C HICAGO T RIBUNE , May 8, 2009, at C1.
No. 08-4249 9
with at least four cups of various teas. And it’s
strongly suggested that dieters do yoga, walk an
hour per day, and do resistance training. Dieters
must also avoid all skin creams and lotions,
MSG, artificial sweeteners, and any prescription
or over-the-counter medications.4 Phase Two
lasts between 21 and 45 days.
• Phase Three, which lasts 21 days, involves
many of the dietary and lifestyle restrictions
contained in the earlier phases. Among other
things, dieters must drink at least one-half to
one gallon of water per day, drink four cups of
tea per day, eat six times per day, eat only 100%
organic food, walk an hour a day, and get
colonics as recommended by a colon therapist.
Dieters must refrain from eating sugars, starches,
food cooked in a microwave, and food prepared
by fast-food or national chain restaurants. No
prescription or over-the-counter drugs either.
Dieters are strongly encouraged to avoid expo-
sure to air conditioning and fluorescent lights,
and told, “Don’t buy heavily advertised prod-
ucts.” 5
4
How the daily hCG injections square with the prohibition
on all prescription drugs is unclear.
5
How purchasing the Weight Loss Cure book squares with this
requirement is also unclear. The FTC maintains that, from
December 2006 to December 2007, Trudeau’s infomercials for
the book aired approximately 32,000 times.
10 No. 08-4249
• Phase Four lasts for the rest of one’s life and
consists of a list of 50 do’s and don’ts. Dieters
must eat only 100% organic food, along with a
host of vitamins and other supplements. Dieters
should avoid artificial sweeteners, food cooked
in microwaves, and food sold by fast-food res-
taurants, national restaurant chains, and publicly
traded companies. And again, dieters should
not take medications of any kind. Dieters should
also continue to avoid air conditioning and
fluorescent lights, and must continue to receive
colonics and liver, parasite, heavy metal, and
colon cleanses.
During all four phases, dieters are instructed that they
“MUST” take daily doses of coral calcium.6
In the infomercials, Trudeau explains what he believes
causes obesity and discusses generally how his weight
loss “cure” eliminates that root cause by “resetting” one’s
hypothalamus and lessening one’s urge to eat. He
claims that this method has been used for decades by
celebrities, royalty, and the ultra-rich, but has been sup-
pressed from the mainstream by food and restaurant
companies and government agencies. Trudeau cites a
number of success stories, giving examples of how much
weight people lost in short amounts of time (e.g., 21
pounds in 14 days).
6
Trudeau has proven to be quite an effective salesman of the
Weight Loss Cure book. Despite the rigors of the protocol, the
FTC maintains that over 1.6 million copies of the book have
been sold.
No. 08-4249 11
In the infomercials, Trudeau also claims repeatedly
that the Weight Loss Cure protocol is “easy,” “simple,”
“very inexpensive,” can be completed at home, and is in
fact “the easiest [weight loss] method known on planet
Earth.” However, Trudeau never mentions the hCG
injections (though he does mention the need to take a
“miracle, magical, all-natural substance”), the 500-calorie
per day limitation, the colonics, or any of the other
dietary and lifestyle restrictions outlined in the book.
Trudeau also claims that, after completing the program,
dieters can eat “everything they want, any time they
want.” As evidence, in one infomercial, Trudeau boasts
that the night before the infomercial he had a heaping
helping of fatty but delicious foods: “I had . . . real
mashed potatoes with cream and butter, gravy loaded with
fat . . . a big prime rib marbled with fat . . . [and] a big
hot fudge sundae with real ice cream and real hot
fudge and real nuts and real whipped cream.” But, accord-
ing to Trudeau, once you’ve completed the Weight Loss
Cure program, “you’ll keep the weight off forever. You’ll
never have to diet again.”
C. The Contempt Proceedings
The FTC took issue with Trudeau’s infomercials and
took him back to court. In September 2007, the FTC
sought to hold Trudeau in contempt for violating the
2004 Consent Order’s command that Trudeau “must not
misrepresent the content of the book.” In the FTC’s view,
the diet was anything but “easy.” Going phase-by-phase,
the FTC argued that Trudeau’s diet program was in
fact incredibly arduous but that, in the infomercials,
12 No. 08-4249
Trudeau never explained what the program entailed.
To the FTC, Trudeau was simply deceiving consumers
to sell books. The FTC also argued that Trudeau’s claim
that “you can eat anything you want” after completing
the program was bogus. Phase Four, which lasts for-
ever, requires a far stricter diet.
Trudeau countered that he was merely quoting what
he wrote in the book. On a number of pages, Weight Loss
Cure describes the diet as “easy to do.” And the
book also states that dieters in Phase Four can eat “any-
thing you want, as much as you want, as often as
you want.” This approach of quoting phrases from
the book, in Trudeau’s view, was no different than his
Natural Cures infomercial, which the FTC apparently
approved.
The district court didn’t buy it. Even though the book
might mention that the diet is “easy,” the court concluded
that Trudeau’s “cherry-picking” a few choice phrases did
not accurately portray the book’s overall content. And
“content” was what the 2004 Consent Order prohibited
Trudeau from misrepresenting. The diet was not at
all easy, the court observed, and nowhere in his
infomercials did Trudeau mention anything like
colonics, organ cleanses, eating only organic food, and
the 500-calorie-per-day diet in Phase Two. The court
also homed in on Trudeau’s claim that the program
could be completed at home, which the court viewed
as impossible given that the diet requires daily injections
of a prescription substance not approved for use in diet
programs. Trudeau even admitted at a hearing that he
received the first three weeks of injections in Germany.
No. 08-4249 13
Finally, the court took issue with Trudeau’s claim
that dieters who completed the program could eat “any-
thing you want,” like prime rib and hot fudge sundaes;
“nothing is restricted,” according to the infomercial. But
Phase Four, which lasts indefinitely, has 50 restrictions,
ranging from eating only organic food to avoiding fast
food and food prepared by “national chain restaurants.”
Because the court found that Trudeau’s statements
misled consumers and thus violated the Consent Order,
the court found Trudeau in contempt.7 FTC v. Trudeau,
7
Trudeau moved to reconsider the contempt finding, arguing
among other things that FTC policy prohibited it from
initiating enforcement proceedings against him. The FTC’s so-
called “Mirror Image Doctrine” states that the FTC, “as a
matter of policy, ordinarily will not proceed against adver-
tising that promotes the sale of books and other publications:
Provided, The advertising only purports to express the opinion
of the author or to quote the contents of the publication . . . .”
Advertising in Books, 36 Fed. Reg. 13414-02 (July 21, 1971)
(emphasis in original). Trudeau argued that he merely gave
his opinion and quoted his book in the Weight Loss Cure
infomercial. The court disagreed for several reasons. First, the
2004 Consent Order never contemplated this Doctrine. Second,
the Doctrine merely states a general policy approach—“ordi-
narily,” the FTC will refrain from proceeding against ads for
books. Even if the Doctrine applied to this case, the court
observed, it would be unsurprising if the FTC made an excep-
tion for Trudeau, “who has a long history of consumer
deception as well as findings of contempt by this court.” FTC
v. Trudeau, 572 F. Supp. 2d 919, 922 (N.D. Ill. 2008). The court
then reiterated its conclusions that Trudeau’s claims in the
(continued...)
14 No. 08-4249
567 F. Supp. 2d 1016 (N.D. Ill. 2007).
D. The Sanctions
Trudeau and the FTC then duked it out over remedies.
The FTC requested reimbursement for all consumers
who purchased the book, via the infomercial or in stores,
totaling over $46 million (of that, approximately
$37 million came from infomercial sales and about
$9 million from retail). Alternatively, the FTC argued
that at least Trudeau should disgorge his profits, which
the FTC estimated to be around $12 million (over
$6 million from infomercial sales, over $5 million from
retail sales, and around $250,000 in salary). (R. 186.) In
addition, the FTC moved to modify the 2004 Consent
Order to ratchet up the injunction’s deterrent effects.
Primarily, the FTC sought to require Trudeau to post a
$10 million performance bond before participating in
book-related infomercials. (R. 187.)
Trudeau disputed all of this. He argued that consumers
suffered no harm from his infomercials, and even if they
had, he should not be punished beyond what money he
received for participating in the infomercials. Conve-
niently, Trudeau claimed he received nothing for ap-
pearing in the infomercials; he had already sold his
rights to ITV and agreed to seek no additional compensa-
tion. He only received royalties from the retail sales.
7
(...continued)
Weight Loss Cure infomercial misled consumers and violated
the 2004 Consent Order. Id. at 922-24.
No. 08-4249 15
But those, he argued, could not be tied to the infomer-
cials (despite the big, gold sticker on the cover of the
book which reads, “AS SEEN ON TV”). In the end, Tru-
deau contended that he should be held responsible for
only a fraction of total revenues, if any at all; and that,
should the court impose a stiffer sanction, he was
without the financial means to satisfy it. (R. 117.) Trudeau
also challenged the FTC’s motion to modify the Consent
Order, calling the $10 million bond requirement
excessive and punitive. (R. 122).
The district court was troubled by the FTC’s calculations
and found the $46 million figure “rather Draconian.” (Tr.
355, July 25, 2008.) But the court also found Trudeau’s
arguments incredible and the evidence of his financial
condition “not worth the paper it is written on.” FTC v.
Trudeau, 572 F. Supp. 2d 919, 925 (N.D. Ill. 2008). So, with
respect to the monetary sanction, the court required
Trudeau to pay the FTC a little over $5.1 million to dis-
gorge some of the royalties he received from sales of the
Weight Loss Cure book. Id. at 925-26 & n.8. Also in its
order on contempt remedies, the court concluded that,
given Trudeau’s prior willingness to flout court
orders, only a complete ban on infomercials for three
years would achieve compliance and protect consumers.8
8
The relevant text of the three-year infomercial ban reads:
For a period of three (3) years from the date of entry of
this Supplemental Order and Judgment, Kevin Tru-
deau, directly or through any . . . entity under his direct
or indirect control, and . . . all persons and entities in
(continued...)
16 No. 08-4249
Id. at 925-26.
A few months later, the court revisited these sanctions
as a result of the FTC’s Rule 59(e) motion to correct a
8
(...continued)
active concert or participating with Trudeau . . . , are
hereby enjoined and restrained from disseminating, or
assisting others in disseminating, any infomercial for
publication in connection with the manufacturing,
labeling, advertising, promotion, offering for sale,
sale, or distribution of any book, newsletter, or other
informational publication in any format, in or
affecting commerce, in which Trudeau has any interest.
“Infomercial” means any written or verbal statement,
illustration or depiction that is 120 seconds or longer
in duration that is designed to effect a sale or create
an interest in the purchasing of goods or services,
which appears in radio, television (including network
and cable television), video news release, or the
Internet.
“Interest” means any direct or indirect monetary,
financial, or other material benefit, including but not
limited to royalty payments on the sale of any . . .
publication . . . endorsed by Trudeau, or any benefit
received in exchange for partial or full ownership of, or
rights to, any . . . publication . . . written or created by
him, but excluding payments made to Trudeau solely
in exchange for his appearance as a spokesman for a
book . . . in which he does not have an interest. Trudeau
is presumed to have an ongoing interest in any . . .
publication . . . written or created by him unless con-
clusive evidence establishes otherwise.
No. 08-4249 17
mathematical error. The FTC argued that the court
slightly undercounted the royalties Trudeau received
and requested an increase of a couple hundred thousand
dollars. (R. 165, 166.) The court, however, upped its
monetary award to $37.6 million, “representing a rea-
sonable approximation of the loss consumers suffered as
a result of defendant’s deceptive infomercials.” The
court also reiterated its three-year infomercial ban.
Supp. Order & J., FTC v. Trudeau, No. 03-CV-3904 (N.D. Ill.
Nov. 4, 2008) (R. 220.) After the court denied Trudeau’s
motions to amend and alternatively stay the judgment,
Trudeau appealed, challenging every aspect of the
district court’s decision—the contempt finding, the
$37.6 million sanction, and the infomercial ban. We
address each in turn.
II. The Contempt Finding
Trudeau argues that he should not have been held in
contempt of the 2004 Consent Order. We review the
district court’s contempt finding for abuse of discretion
and “will not reverse ‘unless the result was clearly errone-
ous or unless we find an abuse of discretion by the
district court.’ ” Autotech Techs. LP v. Integral Research &
Dev. Corp., 499 F.3d 737, 751 (7th Cir. 2007) (quoting D.
Patrick, Inc. v. Ford Motor Co., 8 F.3d 455, 460 (7th
Cir. 1993)), cert. denied, 128 S. Ct. 1451 (2008); see also
United States v. Silva, 140 F.3d 1098, 1101 n.4 (7th Cir.
1998) (“It suffices to articulate the abuse of discretion
standard as the general standard of review in this area.
The district court abuses its discretion when it makes an
18 No. 08-4249
error of law or when it makes a clearly erroneous find-
ing.”).9
9
Though not argued by either party, there is some authority
that the appropriate standard of review in this case given
the consent order is de novo. See Bailey v. Roob, 567 F.3d 930,
940 (7th Cir. 2009) (“A court interprets the meaning of a
consent decree in the same way it interprets the meaning of a
contract, and a reviewing court examines that interpretation
de novo.”); Schering Corp. v. Ill. Antibiotics Co., 62 F.3d 903,
908-09 (7th Cir. 1995) (consent decree is a form of contract
over which appellate court has plenary power to review); Goluba
v. Sch. Dist. of Ripon, 45 F.3d 1035, 1037-38 (7th Cir. 1995)
(“Because a consent decree is a form of contract, we typically
review the district court’s interpretation of the consent decree
as we would its interpretation of a contract: de novo.”). But see
Autotech, 499 F.3d at 751 (applying an abuse of discretion
standard for district court’s interpretation of an “Agreed
Order”).
Nonetheless, we have also held that, even in the con-
sent-decree context, district court interpretations are entitled
to deference where the district court has overseen the
consent decree for a significant period of time. In such cases,
we have held that abuse of discretion or some similar deferen-
tial standard applies. See South v. Rowe, 759 F.2d 610, 613 n.4
(7th Cir. 1985) (“The appellate court must give some deference,
however, to the district judge’s views on interpretation
where the judge oversaw and approved the decree. [citation
omitted.] Indeed, where the district judge has overseen the
litigation generated by the decree and the underlying dispute
for an extensive period of time, his interpretation of the
decree will be reversed only for an abuse of discretion.”); see
(continued...)
No. 08-4249 19
To succeed on a contempt petition, the FTC must
“demonstrate by clear and convincing evidence that the
respondent has violated the express and unequivocal
command of a court order.” Autotech, 499 F.3d at 751(emphasis omitted); see also Manez v. Bridgestone Firestone N.
Am. Tire, LLC, 533 F.3d 578, 591 (7th Cir. 2008); Goluba, 45
F.3d at 1037. Restated in terms of elements, the FTC must
show that
(1) the Order sets forth an unambiguous command;
(2) [Trudeau] violated that command; (3) [Tru-
deau’s] violation was significant, meaning it did
not substantially comply with the Order; and
(4) [Trudeau] failed to take steps to reasonable
[sic] and diligently comply with the Order.
9
(...continued)
also Goluba, 45 F.3d at 1038 & n.5 (“Where, as in the present
case, the district court oversaw and approved the consent
decree, we will nonetheless give some deference to the court’s
interpretation. . . . [Abuse of discretion] is applicable where,
as in Ferrell [v. Pierce, 743 F.2d 454, 461 (7th Cir. 1984)], the
judge oversaw the consent decree for an extended period of
time and the decree is particularly complex or intricate.”). The
district court has overseen the Consent Order for nearly five
years and has overseen Trudeau’s conduct for over ten. Given
that history, the district court’s conclusions deserve a degree
of deference. Whether such deference is equivalent to an abuse-
of-discretion standard is immaterial, though, because our
conclusion would not change even with a less deferential
standard.
20 No. 08-4249
Prima Tek II, L.L.C. v. Klerk’s Plastic Indus., B.V., 525 F.3d
533, 542 (7th Cir. 2008); see also Goluba, 45 F.3d at 1037(“The district court does not, however, ordinarily have
to find that the violation was ‘willful’ and may find a
party in civil contempt if that party has not been rea-
sonably diligent and energetic in attempting to
accomplish what was ordered.” (internal quotations
omitted)).
At the heart of this case is the court’s command in its
2004 Consent Order that “the infomercial for any such
book . . . must not misrepresent the content of the book.”
A.
Trudeau raises several arguments challenging the
court’s contempt finding; they focus principally on the
second and fourth elements. Regarding the second ele-
ment, Trudeau argues that his infomercials didn’t mis-
represent anything and thus didn’t violate the Consent
Order. In Trudeau’s view, describing the protocol as “easy”
and saying dieters who complete the protocol can eat
“anything you want” merely quoted or paraphrased
the book.
We aren’t persuaded. Trudeau agreed not to “misrepre-
sent the content of the book.” We concur with the district
court that “the word ‘content’ does not refer to a few
cherry-picked phrases.” Trudeau, 567 F. Supp. 2d at
1022. The 2004 Consent Order had two purposes: to
protect consumers from deceptive practices and to com-
pensate those already allegedly deceived. (R. 56.) The
No. 08-4249 21
Order wouldn’t go very far in accomplishing that first
goal if it merely prohibited misquoting the book, as
Trudeau suggests. In the consumer protection context,
the word “content” refers to the substance of a publica-
tion, its “essential meaning” or the “topics” and “ideas”
contained within. See W EBSTER’S T HIRD N EW INTERNA-
TIONAL D ICTIONARY 492 (1986). When people buy
books, they purchase the author’s ideas, as expressed
through an amalgamation of many individual state-
ments. They don’t purchase select quotes (unless it’s a
book of quotes). So it’s possible to accurately recount
specific statements in isolation but still completely mis-
represent the “content” of the book by allowing con-
sumers to infer that the quotations are indicative of the
content, when in fact they are not.
That’s precisely what Trudeau did when he described
the protocol as “easy” and “inexpensive,” said that dieters
can “do it at home,” and boasted that after completion
a dieter can eat “anything you want” with “no restric-
tions.” No one disputes that Trudeau’s book repeatedly
states that the protocol is “easy.” But the principal
content of the book is the diet protocol itself, along
with how it works, why it was suppressed, and how
successful it is. Like the district court, we think the proto-
col is anything but easy, simple, or able to be done at
home. Phase One alone contains 60 separate rules for
dieters to follow, three dozen of which the book says a
dieter “MUST” or “MUST NOT” do. But in the
infomercials, Trudeau fails to mention a single aspect of
his weight loss protocol. He never talks about the 500-
calorie-per-day limitation, the colonics (or water ene-
22 No. 08-4249
mas), the organ cleanses, the 100% organic diet (which
the book even acknowledges is “next to impossible”), or
any of the other dietary or lifestyle restrictions that the
book says dieters “must” adhere to.1 0 The closest he
comes to letting viewers know what is actually
involved with the diet is to say that dieters must take
a “miracle, magical, all-natural substance” that will
reset their hypothalamus and reduce their hunger. But
Trudeau leaves out the fact that the magical substance
is actually a prescription drug taken by injection that
cannot be prescribed for weight loss in the United States
and can cause several serious adverse reactions.1 1 So
10
Trudeau does say in his infomercials that physical exercise
is recommended. But he also repeatedly says that exercise is not
required and that one can achieve the weight loss results
without exercise. However, according to the Weight Loss Cure
book, walking outside for an hour a day is something that
dieters “MUST” do during Phases One, Three, and Four, and
something that is “STRONGLY SUGGESTED” in Phase Two.
One might wonder how a person can walk for an hour each
day when consuming only 500 calories.
11
The label for Novarel, a brand name for hCG, states,
INDICATIONS AND USAGE: HCG HAS NOT BEEN
DEMONSTRATED TO BE EFFECTIVE ADJUNCTIVE
THERAPY IN THE TREATMENT OF OBESITY. THERE
IS NO SUBSTANTIAL EVIDENCE THAT IT IN-
CREASES WEIGHT LOSS BEYOND THAT RESULT-
ING FROM CALORIC RESTRICTION, THAT IT
CAUSES A MORE ATTRACTIVE OR “NORMAL”
DISTRIBUTION OF FAT, OR THAT IT DECREASES
(continued...)
No. 08-4249 23
dieters are left with either convincing their doctor to
prescribe hCG off-label or traveling to a foreign country,
as Trudeau did, to get the drug. But only after the
infomercial viewer spends the money to buy the book
does he or she learn any of this.
Trudeau counters that his calling the protocol “easy”
merely describes his subjective opinion; in his view, the
FTC shouldn’t be able to call him a liar for simply
speaking his mind. In many circumstances, using such
subjective, comparative terms as “easy” constitutes
mere “puffing,” an exaggerated opinion expressed for
the intent to sell something. B LACK’S L AW D ICTIONARY
1269 (8th ed. 2004); see also Corley v. Rosewood Care Ctr., Inc.,
388 F.3d 990, 1008-09 (7th Cir. 2004) (claim that service
was “high quality” was mere puffery). In Carlay Co. v. FTC,
153 F.2d 493 (7th Cir. 1946), for example, the FTC sought
to stop a company from advertising its weight-loss plan
as “easy” and without dietary restrictions. The plan
involved eating a few pieces of caramel candy before
meals to decrease hunger. Id. at 494. After examining
what the diet required, we set aside the FTC’s cease-and-
11
(...continued)
THE HUNGER AND DISCOMFORT ASSOCIATED
WITH CALORIE-RESTRICTED DIETS.
See http://www.ferringfertility.com/medications/novarel/
novarelpi.pdf (last visited Aug. 24, 2009).
The principal serious adverse reactions are ovarian enlarge-
ment, enlargement or rupture of preexisting ovarian cysts,
multiple births, and arterial thromboembolism. Id.24 No. 08-4249
desist order because we concluded the advertisements
were harmless puffery and not deceptive. Id. at 496 (“This,
comparatively speaking when one thinks of reduction
of obesity, anyone must declare comparatively
simple, comparatively easy.”). Trudeau argues that his
infomercials are no different from the advertising in
Carlay, espousing subjective opinions incapable of mis-
leading consumers.
Trudeau misreads Carlay. Carlay does not stand for the
proposition, as Trudeau suggests, that bragging about
the relative ease of a product is always puffery per se.
Puffery is ordinarily defined as “empty superlatives on
which no reasonable person would rely . . . .” All-Tech
Telecom, Inc. v. Amway Corp., 174 F.3d 862, 868 (7th Cir.
1999); see also Speakers of Sport, Inc. v. ProServ, Inc., 178
F.3d 862, 866 (7th Cir. 1999). Given the large number
of weight loss programs on the market, we think a rea-
sonable person would rely on statements about the
relative ease of the program being marketed. Therefore,
in Carlay, we examined what the diet actually required
and then determined, under those circumstances, that
the advertised claim that the diet was easy was not mis-
leading. Carlay, 153 F.2d at 496 (“[W]e think the only
inference possible to draw from the undisputed facts
lead necessarily to the conclusion that the plan is not a
complicated one, but rather a relatively easy one
involving no drugs, no restricted or rigorous diet . . . .”).
But subjective, comparative terms are not always purely
innocuous; courts, including the Supreme Court, have
found that such terms are capable of deceiving consum-
ers. See Reilly v. Pinkus, 338 U.S. 269, 271-75 (1949) (finding
No. 08-4249 25
that weight loss program advertising could support
finding of fraud when it claimed that dieters could “eat
plenty” and reduce their weight “surely and easily, ‘with-
out tortuous diet,’ ” when in fact there was little evidence
that diet had any weight-loss benefits and the diet could
not be “pursued in ease and comfort”); Goodman v. FTC,
244 F.2d 584, 603 (9th Cir. 1957) (finding that, under the
circumstances, seller’s representations about the “ease” of
learning how to weave from seller’s products were decep-
tive). Such is the case here. The Weight Loss Cure proto-
col—which does involve drugs and a restricted and
rigorous diet—is hardly “easy” when compared to the diet
examined in Carlay or any number of other diet programs
that do not involve the combination of daily injections,
heavily restricted diets, colonics, organ cleanses, and daily
exercise, among dozens of other restrictions.
Furthermore, Trudeau’s puffery argument misses the
point of the court’s do-not-deceive order. The order
applies to more than singular statements in the
infomercials—the order regulates the infomercials them-
selves. To determine whether Trudeau violated the
Order, we look not to isolated claims of relative ease but
to what the infomercial as a whole conveyed. Cf. Alpine
Bank v. Hubbell, 555 F.3d 1097, 1106 (10th Cir. 2009)
(“In determining whether a statement is puffery, the
context matters.”).
Through a repetitive mosaic of vague, glowing state-
ments, Trudeau creates an image of a safe, simple, inexpen-
sive way to shed pounds without exercise or dietary
restrictions. But, as we discussed, that’s hardly the
26 No. 08-4249
regimen the book describes. In the infomercials, Trudeau
never mentions the hCG injections but instead talks
about a “miracle all-natural substance” that is “easy to
get” (in fact, he claims “you can get it anywhere”), and
which he claims is the “[s]afest, most effective way to
lose weight on Planet Earth.” Beyond the fact that hCG
is a prescription medication unable to be prescribed for
weight loss (so dieters can hardly pick it up at any corner
store, as viewers are led to believe), we find Trudeau’s
claim about the safety of the “miracle substance” particu-
larly troubling given the potentially devastating side
effects associated with taking hCG, see note 11, supra.
Furthermore, Trudeau reinforces his “easy to do” with
comments like, “[T]his substance, combined with a
few other little things in the protocol, triggers the hypo-
thalamus gland.” The 500-calorie-a-day diet in Phase
Two and the dozens of diet and lifestyle restrictions
are hardly “a few other little things.” These kinds of
statements, combined with Trudeau’s repeated claims
that the diet is “easy,” misrepresent the content of the
book.
Moreover, even if we assume that part of Trudeau’s
pitch was mere puffery, the infomercials are still loaded
with other statements that are patently false. Trudeau
repeatedly claimed in the infomercials that the protocol
can be completed “at home” and that “you don’t have
to go to a clinic to do it.” But the book instructs that all
hCG injections must be administered under a physician’s
supervision and that trips to a licensed colon therapist
for colonics are required. Even if dieters administer
their own hCG injections, at least some visits to the doc-
No. 08-4249 27
tor’s office are necessary. As the district court noted,
house calls are exceedingly rare these days and would
likely be cost-prohibitive, which would contradict Tru-
deau’s claim that the diet is “inexpensive.”
Trudeau’s claim that upon completion of the protocol
dieters can eat anything they want—that “nothing is
restricted”—is equally erroneous and deceiving. Trudeau
is correct that the book echoes this statement: “eat any-
thing you want, as much as you want, as often as you
want.” But in the very next sentence, which Trudeau
never mentions in the infomercials, the book reads: “The
only caveat is only eat 100% organic food.” W EIGHT L OSS
C URE, supra, at 106. The book then goes on to list dozens
of “dos and don’ts” that prescribe precisely what to
eat, what not to eat, when to eat, and how much to eat.
No food produced by publicly traded companies. No
fast food or food served in regional or national chain
restaurants. No corn syrup. No artificial sweeteners. No
trans fats. No MSG. No food prepared in a microwave.
No farm-raised fish. These are dietary restrictions;
dieters cannot eat anything they want.
In sum, Trudeau misrepresented the content of his
Weight Loss Cure book. Trudeau may have quoted parts
of his book, but he did so deceptively. These selective
quotations mislead because they present consumers
with an incomplete picture of what the protocol requires,
thereby inducing consumers to purchase the book on
false hopes and assumptions. True, Trudeau’s belief
that the protocol is “easy” is his subjective opinion. But
without giving consumers a fuller picture of what the
28 No. 08-4249
protocol entails while claiming that the protocol is “the
easiest method known on planet Earth,” consumers are
led to believe that Trudeau’s statements are more than
just his beliefs; they appear as objective facts. Moreover,
Trudeau did more than just quote his book; he outright
lied. In one infomercial, Trudeau claimed the protocol
was “not a diet, not an exercise program, not portion
control, not calorie counting, . . . no crazy potions, powder
or pills . . . .” None of that is true. Dieters “MUST” eat
only 100% organic food, walk an hour a day, eat six
meals per day, eat only 500 calories per day for up to
45 days, drink organic raw apple vinegar cider, and take
probiotics, krill oil, Vitamin E, digestive enzymes, and
Acetyl-L Carnitine. Consequently, we conclude Trudeau
violated the 2004 Consent Order by misrepresenting
the content of his book.1 2
12
Given Trudeau’s blatant misrepresentations, we cannot
accept Trudeau’s argument that the FTC’s enforcement pro-
ceedings violate the FTC’s own policy, the Mirror Image
Doctrine, which says that the FTC will ordinarily stay its hand
if an ad for a book merely quotes the book or expresses the
author’s opinion. Advertising in Books, 36 Fed. Reg. 13414-02
(July 21, 1971). Trudeau did not merely quote his book or
express his opinions. He made factual assertions that directly
contradict what he wrote in the book. The Mirror Image
Doctrine was adopted to help the FTC avoid running afoul
of the First Amendment when regulating advertising for
publications. But, under the First Amendment, “false or mis-
leading commercial speech receives no protection at all.”
United States v. Benson, 561 F.3d 718, 725 (7th Cir. 2009) (citing
(continued...)
No. 08-4249 29
B.
Turning to the fourth element of the standard for con-
tempt, Trudeau contends that he diligently tried to
adhere to the court’s command. He submits that the
Weight Loss Cure infomercial was no different from his
previous Natural Cures infomercials, which the FTC
implicitly blessed by not objecting to them. Moreover,
Trudeau claims he had been in fairly regular contact
with the FTC after the court issued the 2004 Consent
Order. He complains that the FTC never gave him a heads-
up that his Weight Loss Cure infomercial was prob-
lematic until it filed its contempt complaint, though it
had first seen the infomercial eight months before filing.
None of this convinces us that we should reverse.
First, that the FTC did not object to the Natural Cures
infomercial is largely irrelevant. Estoppel against the
government is available only under narrow circumstances.
See United States v. Lindberg Corp., 882 F.2d 1158, 1164 (7th
Cir. 1989). Trudeau’s are not among them. Nothing about
the FTC’s prior approval should have led Trudeau to
believe that he could selectively quote his weight loss
book as being “easy” and “simple,” while leaving out
nearly every relevant detail about the weight loss proto-
col. Moreover, as we just discussed, Trudeau didn’t merely
“quote” the weight loss book. He falsely described the
12
(...continued)
Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of New
York, 447 U.S. 557, 562-63 (1980)). So we see no constitutional
problem with the finding of contempt in this case.
30 No. 08-4249
weight loss protocol to make it sound safer and less
arduous than it actually is. The extent to which Trudeau
could reasonably rely on the FTC’s approval of the Natural
Cures infomercial ended when Trudeau began uttering
false statements and quotes that mischaracterized the
content of the Weight Loss Cures book.
Trudeau’s focus on the 8-month delay between the
time the infomercials first hit the airwaves and the date
the FTC filed its contempt petition is equally unavailing.
Though the FTC knew the infomercials were on the air
by January 2007, they didn’t receive a copy of the Weight
Loss Cure book until March. This could have been
because the book was not yet published when the
infomercials first started running. By July of that year, the
FTC’s division of enforcement concluded its review of
the matter and recommended that contempt pro-
ceedings were necessary. That recommendation moved
through the FTC’s bureaucracy over the next two months,
and on September 10, the Commission authorized the
Division of Enforcement to file a civil contempt action
against Trudeau. We cannot say that any delay associated
with this seemingly ordinary review process was “pro-
longed and inexcusable” such that it would support
Trudeau’s laches-like argument.1 3 See id. at 1164 (“Re-
13
For these reasons, Trudeau’s one-sentence attempt at a laches
argument in the remedy portion of his brief also fails. Trudeau
cannot show “an unreasonable lack of diligence by the party
against whom the defense is asserted” or “prejudice arising
therefrom.” Hot Wax, Inc. v. Turtle Wax, Inc., 191 F.3d 813,
820 (7th Cir. 1999).
No. 08-4249 31
garding the application of laches against the govern-
ment, this court has stated that ‘[l]aches bars the
assertion of a claim where deferment of action to
enforce claimed rights is prolonged and inexcusable
and operates to . . . [a party’s] material prejudice.’ ” (quot-
ing Woodstock/Kenosha Health Ctr. v. Schweiker, 713 F.2d
285, 291 (7th Cir. 1983))).
We see nothing that would justify overturning the
district court’s conclusions. Trudeau did not diligently
comply with the Consent Order at all. Beyond the fact
that Trudeau repeatedly distorted the content of the
Weight Loss Cure book in multiple infomercials, we
have insufficient indication in the record, despite Tru-
deau’s assertions to the contrary, that Trudeau was regu-
larly in contact with the FTC regarding the Weight Loss
Cure infomercial. Trudeau complains about the FTC not
starting its review of the infomercial sooner. But we see
no evidence that Trudeau provided the FTC with an
unpublished manuscript or some other means to speed
up the review process. And we have nothing to indicate
that either Trudeau or ITV ceased airing the infomercial
upon the FTC’s filing for contempt. In short, we see no
reason to conclude that Trudeau diligently complied
with the Consent Order’s command not to misrepresent
the content of his books. Accordingly, the district court
did not err in finding Trudeau in contempt.
III. The Monetary Sanction
Though the district court was right in finding Trudeau
in contempt, the monetary sanction imposed to
32 No. 08-4249
remedy that contempt is a different story. We review the
sanction amount for clear error, but we review the cal-
culation method used to reach that amount de novo.
FTC v. Kuykendall, 371 F.3d 745, 763 (10th Cir. 2004) (en
banc). Ultimately, the final $37.6 million figure the
district court settled on might be correct. But the court’s
order, as it stands now, does not give us enough infor-
mation to affirm that conclusion. The order tells us
little about such things as how the court arrived at the
figure it did, whether the award will be used to
reimburse consumers, and what happens if there’s
money left over after all reimbursements are paid. So we
must remand to allow the court to provide greater detail
on these questions. Beyond more detail in the order,
Trudeau seeks greater procedural protections, such as
a jury trial and a proof-beyond-a-reasonable-doubt stan-
dard, on remand. We decline to find such safeguards
required in this case.
A.
Contempt sanctions come in two forms—criminal and
civil. In a given case, which form a sanction takes
depends on the “character of the relief itself,” and not
on the “subjective intent of . . . courts.” Int’l Union,
United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 828
(1994); see also Shillitani v. United States, 384 U.S. 364, 369
(1966) (“ ‘It is not the fact of punishment, but rather
its character and purpose, that often serve to distinguish’
civil from criminal contempt.”) (quoting Gompers v.
Buck Stove & Range Co., 221 U.S. 418, 441 (1911)). The
No. 08-4249 33
form of the sanction matters because criminal sanctions
require certain constitutional safeguards before they are
imposed (e.g., right to counsel, notice of charges, double
jeopardy, proof beyond a reasonable doubt). Bagwell, 512
U.S. at 826-27, 831; In re Troutt, 460 F.3d 887, 893 (7th Cir.
2006); see also F ED. R. C RIM. P. 42(a). Civil sanctions, by
contrast, may be imposed without as many safeguards,
Bagwell, 512 U.S. at 831, though some level of due
process is always required, and might vary depending
on the circumstances, id. at 833-34 (“Contempts involving
out-of-court disobedience to complex injunctions often
require elaborate and reliable factfinding.”); see generally
11A C HARLES A LAN W RIGHT, A RTHUR R. M ILLER &
M ARY K AY K ANE, FEDERAL P RACTICE AND P ROCEDURE § 2960
(2d ed. 2009).
It’s undisputed th at Trudeau’s contempt proceedings
had none of the bells and whistles of a criminal trial. See
F ED. R. C RIM. P. 42(a) (requiring, in most circumstances,
elaborate notice, appointment of a prosecutor, and a jury
trial). And the government has not yet sought criminal
punishment. So for the $37.6 million judgment to stand,
we must conclude that the sanction was a “civil” one.
The differences between criminal and civil contempt
sanctions are not always easy to discern. See Bagwell, 512
U.S. at 827. Generally, civil contempt “is remedial, and
for the benefit of the complainant,” while criminal con-
tempt “is punitive, to vindicate the authority of the
court.” Id. at 827-28; Manez, 533 F.3d at 590. In terms
of monetary sanctions, civil sanctions fall in two cate-
gories. They can compensate the complainant for his losses
34 No. 08-4249
caused by the contemptuous conduct. Bagwell, 512 U.S. at
829; United States v. United Mine Workers of Am., 330 U.S.
258, 303-04 (1947). Or they can coerce the contemnor’s
compliance with a court order. A coercive sanction
must afford the contemnor the opportunity to “purge,”
Bagwell, 512 U.S. at 829, meaning the contemnor can
avoid punishment by complying with the court order,
Penfield Co. v. SEC, 330 U.S. 585, 590 (1947). On the other
hand, a criminal contempt sanction is “a ‘flat, uncondi-
tional fine’ totaling even as little as $50 announced after
a finding of contempt . . . [where] the contemnor has no
subsequent opportunity to reduce or avoid the fine
through compliance.” Bagwell, 512 U.S. at 829.
Trudeau argues that the sanction imposed was neither
coercive nor compensatory and thus not civil. We
think Trudeau is clearly right on the coercive part. The
district court described its sanction as “coercive,” in the
sense that it would “convince somebody like Kevin
Trudeau to not disobey the orders of the Court.” But
that’s not quite what the Supreme Court intended
coercive contempt sanctions to be. “Where a fine is not
compensatory, it is civil only if the contemnor is afforded
an opportunity to purge.” Id. Trudeau must be able to
avoid the penalty, or some part of it, by complying
with the order. If Trudeau were incarcerated for his
contempt, we would say he “carries the keys of his prison
in his own pocket.” Gompers, 221 U.S. at 442 (quotation
omitted). This is because coercive sanctions are “not
intended as a deterrent to offenses against the public.”
Penfield, 330 U.S. at 590; see also In re Grand Jury Pro-
ceedings, 280 F.3d 1103, 1107 (7th Cir. 2002) (“A contempt
No. 08-4249 35
order is considered . . . criminal if its purpose is to
punish the contemnor, vindicate the court’s authority, or
deter future misconduct.”). As the order stands now,
Trudeau has no opportunity to purge any of the
$37.6 million judgment by representing his books truth-
fully from here on out. Without a purge provision, the
order is not coercive.
So for the sanction to stand, it must “compensate the
complainant for losses sustained.” United Mine Workers,
330 U.S. at 303-04. The FTC explicitly sought a compensa-
tory remedy. (R. 186.) And the district court stated at
the hearings on remedies and, to some extent, in its
order that it intended to compensate those who bought
the Weight Loss Cure book as a result of the infomercial.
But, as we mentioned, the court’s subjective intent is
largely irrelevant; what counts are the characteristics of
the sanction actually imposed. Bagwell, 512 U.S. at 828;
Shillitani, 384 U.S. at 369.
For the most part, we agree with Trudeau that the
characteristics that make a contempt sanction compensa-
tory are missing from the $37.6 million order. The
court’s order lacks two key ingredients needed in any
compensatory contempt sanction: (1) the order fails to
explain how the court arrived at the $37.6 million figure;
and (2) the order lacks any mention of how the sanction
should be administered. See Kuykendall, 371 F.3d at 763-67.
Though we can’t promise a “cure” from reversal, we
endeavor in the following discussion to provide some
general guidelines for imposing a compensatory con-
tempt sanction in this case.
36 No. 08-4249
1.
The district court must explain how it arrived at the
specific amount of the sanction imposed. Mid-Am. Waste
Sys., Inc. v. City of Gary, Ind., 49 F.3d 286, 293 (7th Cir. 1995)
(“A judge reckoning a compensatory award must make
subsidiary findings that permit the parties (and the
court of appeals) to know the basis of the decision.”); see
also Autotech, 499 F.3d at 752 (“The amount of the
sanction must be supported in the record.”). This means
not only explaining where the numbers came from, but
also outlining the methodology the court used to crunch
those numbers and arrive at what it believed to be the
appropriate amount. See Mid-Am. Waste Sys., 49 F.3d at
293; SEC v. McNamee, 481 F.3d 451, 457 (7th Cir. 2007);
Kuykendall, 371 F.3d at 763-64. This information is crucial
to ensuring that the award is not greater than necessary.
If any part of it winds up being punitive instead of reme-
dial, then criminal proceedings are required to sustain
it. Nye v. United States, 313 U.S. 33, 43-44 (1941); see also
Bagwell, 512 U.S. at 831.
We agree with Trudeau that the district court’s con-
tempt sanction was deficient in this regard. The court’s
order gives little indication of how the court arrived at
the award it did. Perhaps more importantly, we’re left
clueless as to how or why the award ballooned from
around $5 million in the original order to over $37 million
in response to the FTC’s Rule 59 motion, which never
requested such an increase (the FTC’s motion merely
endeavored to correct a “mathematical error” and
increase the award by a couple hundred thousand dollars).
No. 08-4249 37
All we have is a statement that the $37,616,161 figure
“represent[s] a reasonable approximation of the loss
consumers suffered as a result of defendant’s deceptive
infomercials.” Supp. Order & J., FTC v. Trudeau, No. 03-CV-
3904 (N.D. Ill. Nov. 4, 2008) (R. 220). What kinds of “loss”
does that figure approximate? Does it include all book
sales, or only sales made through the 800-number
provided in the infomercials (and not retail book sales)?
What about Internet sales? Does the figure include ship-
ping and handling fees? What about returns—does it net
those out against the book sales? See Autotech, 499 F.3d at
752 (“When the purpose of sanctions in a civil contempt
proceeding is compensatory, a fine, payable to the com-
plainant, must be based on evidence of actual loss.”
(quoting S. Suburban Housing Ctr. v. Berry, 186 F.3d 851,
854 (7th Cir. 1999))). And why did the court switch its
basis for the award from disgorging a portion of Trudeau’s
royalties (the original $5.1 million judgment) to fully
compensating consumer losses? Though we can guess
where the $37,616,161 figure comes from (that’s the
amount the FTC in its original remedies brief argued was
attributable to book sales from infomercials less
returned books), the order contains hardly any findings
to substantiate it. In other words, the district court failed
to sufficiently “calibrate the fines to damages caused by
[Trudeau’s] contumacious activities.” Bagwell, 512 U.S. at
834. On remand, the district court should make
sufficient factual findings to substantiate its award
amount. Mid-Am. Waste Sys., 49 F.3d at 293. This means the
court must explain the method it used to calculate the
award, why the court chose that method, and how the
38 No. 08-4249
evidence of record supports the figures plugged into
that method.
Trudeau asks us to go further and tell the district court
which calculation method it should use. Relying on the
Second Circuit’s opinion in FTC v. Verity Int’l Ltd., 443
F.3d 48, 66-70 (2d Cir. 2006), Trudeau contends that the
district court should base its award not on consumers’
losses but rather on Trudeau’s gain, a sum he argues
is only a fraction, if anything, of what book purchasers lost.
We decline Trudeau’s invitation to be so exacting at
this stage in the proceedings. Courts have broad
discretion to fashion contempt remedies and the par-
ticular remedy chosen should be “based on the nature of
the harm and the probable effect of alternative sanc-
tions.” Connolly v. J.T. Ventures, 851 F.2d 930, 933 (7th Cir.
1988). Consumer loss is a common measure for civil
sanctions in contempt proceedings and direct FTC actions.
See, e.g., FTC v. Febre, 128 F.3d 530, 536 (7th Cir. 1997)
(direct FTC action under FTC Act § 13(b)); Kuykendall, 371
F.3d at 764-66 (contempt proceeding); McGregor v. Chierico,
206 F.3d 1378, 1388-89 (11th Cir. 2000) (direct FTC action
under FTC Act § 13(b)); FTC v. Figgie Int’l, Inc., 994 F.2d
595, 606-07 (9th Cir. 1993) (direct FTC action under FTC
Act § 19). Indeed, some courts, including ours, have held
that in certain cases consumer loss is a more appropriate
measure than ill-gotten gains. See FTC v. Stefanchik,
559 F.3d 924, 932 (9th Cir. 2009); Febre, 128 F.3d at 536;
Figgie, 994 F.2d at 606-07. Nonetheless, we have held, in
both contempt proceedings and direct FTC actions, that
the defendant’s profits can be a proper measure for
No. 08-4249 39
sanctions. See Connolly, 851 F.3d at 933-34 (holding that
United Mine Workers, 330 U.S. at 304, which stated “such
[compensatory] fine[s] must of course be based upon
evidence of complainant’s actual loss,” did not limit
contempt sanctions to only consumer loss); FTC v. QT, Inc.,
512 F.3d 858, 863 (7th Cir. 2008) (“Disgorging profits is
an appropriate remedy” in direct FTC action); cf. Leman v.
Krentler-Arnold Hinge Last Co., 284 U.S. 448, 456-57 (1932)
(“Profits are thus allowed as an equitable measure of
compensation” in patent infringement cases). In fact,
some courts have imposed hybrid awards that include
some combination of ill-gotten gains and consumer
losses. See QT, 512 F.3d at 864; Figgie, 994 F.2d at 601, 607-
08. So, in the abstract, more than one measure could
be reasonable; the circumstances of the case will dictate
which is most appropriate. For example, as a prerequisite
to basing sanctions on consumer loss, courts often
require a finding that the defendants were “engaged in a
pattern or practice of contemptuous conduct” as opposed
to “isolated instances of contumacy.” Kuykendall, 371 F.3d
at 764; see also Figgie, 994 F.2d at 606 (allowing consumer
loss as measure of sanction where defendant’s misrepre-
sentations were “widely disseminated”); FTC v. Sec. Rare
Coin & Bullion Corp., 931 F.2d 1312, 1316 (8th Cir. 1991)
(same). Here, however, the district court’s order gives
no indication why consumer loss is the better remedy.
Likewise, the court’s order contains no factual findings
that would justify our mandating that the court adopt
the Second Circuit’s approach in Verity on remand. The
court in Verity, which dealt with a direct FTC action, held
that certain circumstances require courts to limit dis-
40 No. 08-4249
gorgement to the defendant’s profits. The court explained
that, at bottom, the equitable remedy available under
§ 13(b) of the FTC Act is restitution, which is properly
measured as “the benefit unjustly received by the defen-
dants.” Verity, 443 F.3d at 67. The court observed that the
amount of that benefit would often equal the amount
consumers lost. So consumer loss would often be an
appropriate measure for restitution. However, in some
situations—“for example, when some middleman not
party to the lawsuit takes some of the consumer’s
money before it reaches the defendant’s hands”—the
amount the defendants unjustly received might equal
only a fraction of total consumer loss; in those cases, the
Second Circuit held that restitution must be limited to
that fraction, as opposed to total loss. Id. at 68.
Trudeau likens his case to Verity, claiming that ITV
operated as a “middleman” who skimmed the revenue
from the book sales before Trudeau could pocket any of
it. But we lack any factual finding from the district court
to that effect. In an earlier order, the district court noted
that one of Trudeau’s companies sold its assets to ITV
in exchange for monthly payments of $1 million for
121 months. But the court also noted that Trudeau had
taken no steps to enforce his contractual rights. As
such, we are somewhat dubious as to whether ITV is
completely unaffiliated with Trudeau, as Trudeau
claims, and thus whether it could be an independent
“middleman” at all. But that is beside the point. Consider-
ing whether Verity’s reasoning applies here would be
premature absent a finding that ITV indeed operated as
a middleman. We will leave the first crack at the factual
No. 08-4249 41
and legal questions posed by Trudeau’s Verity argument
to the district court.
So in sum, we reiterate that the district court has
broad discretion to fashion an appropriate remedy in a
civil contempt action. Connolly, 851 F.2d at 933.
Ultimately, the court’s $37.6 million award might be
reasonable. But so might a lesser figure based only on
Trudeau’s profits. Whether the court chooses consumer
losses or ill-gotten gains, though, the court must explain
why it chose the calculation method it did and how the
record supports its calculations. The FTC bears the
initial burden of establishing the baseline figure: a rea-
sonable approximation of losses, gains, or some other
measure the court finds appropriate. See Kuykendall, 371
F.3d at 764; Febre, 128 F.3d at 535. “[T]hen the burden
shifts to the defendant[ ] to show that those figures were
inaccurate.” Febre, 128 F.3d at 535; see also QT, 512 F.3d
at 864; Kuykendall, 371 F.3d at 766 (“[T]he defendants
must be allowed to put forth evidence showing that
certain amounts should offset the sanctions assessed
against them.”). For example, Trudeau might be able to
show that he already compensated some customers
with full refunds for their purchases.1 4 See Kuykendall,
371 F.3d at 766. But see Verity, 443 F.3d at 69 (placing this
burden on the FTC). Also, if the court chooses con-
sumer loss as its baseline, Trudeau might show that
some customers were wholly satisfied with their
14
We note that a money-back guarantee is not a general defense
to a contempt action. FTC v. Think Achievement Corp., 312
F.3d 259, 261 (7th Cir. 2002).
42 No. 08-4249
purchase.15 See Kuykendall, 371 F.3d at 766. Though
Trudeau argues that the FTC should bear these burdens,
“ ‘the risk of uncertainty should fall on the wrongdoer
whose illegal conduct created the uncertainty.’ ” Febre, 128
F.3d at 535 (quoting SEC v. First City Fin. Corp., Ltd., 890
F.2d 1215, 1232 (D.C. Cir. 1989)). In its order, the court
must make sufficient factual findings to support its
ultimate award. Mid-Am. Waste Sys., 49 F.3d at 293. If
consumer loss is the measure, the court must explain
what that figure represents: for instance, which consumer
purchases are included (e.g., infomercials, retail, or
Internet sales) and whether shipping and handling fees
are included.16 If ill-gotten gains is the measure, the
15
This should allay Trudeau’s concern that he should not have
to pay for purchasers who “spurn the opportunity” for a
refund. We disagree with Trudeau, however, that the FTC
should bear the burden of proving that customers were dis-
satisfied with their purchases. Just as the FTC is not required to
prove individual customer reliance on the defendant’s misrepre-
sentations, see McGregor, 206 F.3d at 1388; Figgie, 994 F.2d at 605;
Sec. Rare Coin, 931 F.2d at 1316, the FTC is not required to
prove individual customer dissatisfaction, see Kuykendall, 371
F.3d at 765. “[I]t would be virtually impossible for the FTC to
offer such proof, and to require it would thwart and frustrate
the public purposes of FTC action.” McGregor, 206 F.3d at 1388(quoting Security Rare Coin, 931 F.2d at 1316). “To the extent
the large number of consumers affected by the defendant[’s]
deceptive trade practices creates a risk of uncertainty, the
defendants must bear that risk.” Kuykendall, 371 F.3d at 765.
16
Furthermore, if consumer loss is the measure, we agree
with our sister circuits that the award amount need not be
(continued...)
No. 08-4249 43
court must explain such things as the source of those
gains and why those gains are less than gross revenues.
And if the court chooses a hybrid approach, see QT, 512
F.3d at 864; Figgie, 994 F.2d at 601, 607-08, the court
should address both sets of issues. (We note that these
are just some examples, not an exhaustive list, of the
types of variables the court might include in its calcula-
tions.) Finally, the court may include in its calculation
the costs associated with locating and reimbursing de-
frauded purchasers. See Kuykendall, 371 F.3d at 767;
Figgie, 994 F.2d at 607. Accordingly, we remand for addi-
tional findings with respect to the amount of the sanction.
16
(...continued)
reduced by the “value” of the books. See Kuykendall, 371 F.3d at
766; McGregor, 206 F.3d 1388-89; Figgie, 994 F.2d at 606. In unfair
and deceptive trade practices cases, the difference between
the price paid and the market value of the good bought is
irrelevant, “because if the customers had known the truth, they
might not have bought any [goods] at all.” Kuykendall, 371 F.3d
at 766 (citing Figgie, 994 F.2d at 606). “The fraud in the selling,
not in the value of the thing sold, is what entitles consumers
in this case to full refunds.” Figgie, 994 F.2d at 606. Our decision
in SEC v. McNamee, 481 F.3d 451 (7th Cir. 2007), a securities
case, in which the ordinary civil remedy was rescission, id. at
457, not restitution and disgorgement, see Febre, 128 F.3d at 536-
37; FTC v. Gem Merch., 87 F.3d 466, 469-70 (11th Cir. 1996), does
not compel a different result.
44 No. 08-4249
2.
Beyond explaining its calculations, the court must also
outline how the sanction should be administered. See
Kuykendall, 371 F.3d at 767. As it stands now, the
court’s order is silent on this point. The order merely
commands Trudeau to pay $37.6 million to the FTC.
Simply ordering money to be paid to the U.S. Treasury
rather than to reimburse consumers looks more like a
criminal fine than a compensatory sanction. See Bagwell,
512 U.S. at 834 (“At no point did the trial court . . . indicate
that the fines were to compensate the complainant for
losses sustained.”). Though we do not question the
FTC’s integrity in that it will dutifully disperse the pro-
ceeds to defrauded book purchasers, we still think it
necessary in a contempt sanction of this kind that the
court’s order specify that the FTC must use the funds to
reimburse book purchasers. See Kuykendall, 371 F.3d at 767;
see also McDowell v. Phila. Hous. Auth., 423 F.3d 233, 241 (3d
Cir. 2005) (“ ‘Whether an award in civil contempt be
measured in terms of a plaintiff’s loss or a defendant’s
profit, such an award, by very definition, must be an
attempt to compensate plaintiff for the amount he is
out-of-pocket or for what defendant by his wrong may
be said to have diverted from the plaintiff or gained at
plaintiff’s expense.’ ” (quoting Nat’l Drying Mach. Co. v.
Ackoff, 245 F.2d 192, 194 (3d Cir. 1957))).
Along these lines, the court should “set forth proce-
dures by which the FTC may . . . reimburse consumers
who have established their right to compensation.”
Kuykendall, 371 F.3d at 767. Preferably, the court should
No. 08-4249 45
order Trudeau to deposit the money in an escrow
account, see Figgie, 994 F.2d at 605, or into the registry
of the court in accordance with 28 U.S.C. § 2041, see
Kuykendall, 371 F.3d at 767, with instructions on how the
FTC can access those funds and disperse them to de-
frauded consumers. Furthermore, the court should
provide that the FTC may use some part of the sanction
award to cover the costs of reimbursement, such as locat-
ing purchasers and mailing checks. See id.; Figgie, 994
F.2d at 607.
Finally, Trudeau contends that our decision in
McNamee, 481 F.3d at 457, compels the district court to
include a provision requiring excess money not
reimbursed to consumers to be returned back to
Trudeau, to avoid any portion of the award becoming
punitive rather than compensatory. We disagree. Courts
can fashion contempt sanctions based on the defen-
dant’s unjust enrichment, even if that amount might
exceed the plaintiff’s loss. See Connolly, 851 F.2d at 932-34.
As we have held in direct FTC actions, “[d]isgorgement
to the United States Treasury does not transform compen-
satory damages into punitive damages. . . . [D]isgorge-
ment is designed to be remedial.” Febre, 128 F.3d at 537;
see also Gem Merch, 87 F.3d at 469-70 (“[B]ecause it is not
always possible to distribute the money to the victims
of defendant’s wrongdoing, a court may order the
funds paid to the United States Treasury.”). McNamee
does not hold otherwise. That case involved a contempt
sanction for a violation of an injunction that prohibited
selling unregistered stock, for which the ordinary civil
46 No. 08-4249
remedy was rescission. 481 F.3d at 457. We reversed
largely because the district court’s sanction failed to
resemble rescission in ways that unduly punished the
contemnor. Id. McNamee never dealt with disgorgement,
nor did it foreclose our belief that fraudsters should not
be “unjustly enriched by retaining some of their
unlawful proceeds by virtue of the fact that they cannot
identify all the consumers entitled to restitution,” Febre,
128 F.3d at 537. As such, to the extent the aggregate
amount reimbursed to consumers is less than Trudeau’s
ill-gotten gains, the district court need not necessarily
require that the excess be returned to Trudeau.
We express no opinion, however, on whether the
district court must include a return-to-contemnor pro-
vision should the court find that Trudeau’s unjust en-
richment represents only some, or none, of the total
sanction amount. The remainder of the sanction could
be dedicated to redressing consumer losses, and in such
a situation, the logic in McNamee might have more
force. See Kuykendall, 371 F.3d at 756 n.6 (“[A]ny damages
the FTC receives must be distributed to injured con-
sumers and cannot be retained.”). But without knowing
whether some part of the sanction will not correspond
to Trudeau’s ill-gotten gains, it would be premature for
us to decide that issue today. So we won’t.
We remand for the district court to consider how best
to administer a compensatory sanction, should it choose
to impose one.
No. 08-4249 47
B.
Beyond attacking the sanction itself, Trudeau wants
greater procedural safeguards when that sanction is
imposed. Trudeau suggests that on remand he is entitled
to a “neutral factfinder” (presumably a jury or at least a
different district judge) and a proof-beyond-a-reasonable-
doubt standard, even if the district court imposes a
valid civil contempt sanction. We disagree.
Trudeau’s argument stems from the Supreme Court’s
decision in Bagwell, where the Court concluded the sanc-
tion imposed was punitive and thus required criminal
process. 512 U.S. at 838. In dicta, the Court commented
on procedures that might be necessary in certain civil
contempt cases:
Contempts involving out-of-court disobedience to
complex injunctions often require elaborate and
reliable factfinding. . . . [T]he risk of erroneous
deprivation from the lack of a neutral factfinder
may be substantial. Under these circumstances,
criminal procedural protections such as the rights
to counsel and proof beyond a reasonable doubt
are both necessary and appropriate to protect the
due process rights of parties and prevent the
arbitrary exercise of judicial power.
Id. at 833-34. Trudeau argues that his is a case of “out-of-
court disobedience to [a] complex injunction[ ]” requiring
nearly all the trimmings of criminal proceedings.
We find more than a few flaws with Trudeau’s reasoning.
First, even Trudeau admits that civil contempt is
48 No. 08-4249
an equitable action, see In re Grand Jury Proceedings
Empanelled May 1988, 894 F.2d 885, 884 (7th Cir. 1989), and
litigants have never been entitled to a jury trial for suits
in equity, Verity, 443 F.3d at 67 (citing Granfiananciera
S.A. v. Nordberg, 492 U.S. 33, 41 (1989)). See also Shillitani,
384 U.S. at 365 (“We hold that the conditional nature
of these sentences renders each of the actions a civil
contempt proceeding, for which indictment and jury
trial are not constitutionally required.”); Daniels v. Pipe
Fitters Ass’n, 113 F.3d 685, 688 (7th Cir. 1997) (“Accused
contemnors are not entitled to jury trials before judges
may enter remedial civil orders.”). Moreover, we have
no indication on this record that the district judge’s
neutrality is compromised. Second, we have never
adopted the dicta in Bagwell and required a more
exacting burden of proof on the complainant in a civil
contempt case. Instead, we have held in countless con-
tempt cases involving violations of injunctions that the
complainant’s burden is one of “clear and convincing
evidence.” E.g., Prima Tek II, 525 F.3d at 542; Autotech, 499
F.3d at 751; Goluba, 45 F.3d at 1037. Third, Trudeau has
never been denied counsel in any proceedings, and in
fact has been ably represented by more than one presti-
gious Chicago law firm. Absent some live controversy
on this point, we see no need to determine whether
Trudeau has a due process right to counsel in civil con-
tempt proceedings.
Furthermore, we share the Tenth Circuit’s skepticism
of the feasability and fairness of varying the process due
in civil contempt cases on the “complexity” of the injunc-
tion at issue. In Kuykendall, 371 F.3d at 754, the Tenth
No. 08-4249 49
Circuit sitting en banc rejected the panel’s decision to
adopt the flexible due process model outlined in
Bagwell. The en banc court concluded that “the panel
decision would . . . create an exception the district courts
would have difficulty applying on many levels, in-
cluding during the determination of whether an injunc-
tion is complex, when a jury is required, and what the
jury’s burden of proof should be.” Id. We echo these
concerns and thus refrain from wholeheartedly
adopting the Court’s dicta in Bagwell at this time.
Even if we did, though, we don’t think the injunction
at issue would trigger the heightened protections.
Trudeau calls his injunction “complex” because the
Consent Order was 29 pages long. But the portion at
issue here was just 14 words: “the infomercial for any
such book . . . must not misrepresent the content of the
book.” A do-not-deceive order is not overly onerous.
That Trudeau continues to flout such orders and face
increasingly stiffer penalties is not a reason to call the
injunction “complex.” Moreover, the specific circum-
stances of this case alleviate some of the concerns the
Court expressed in Bagwell. Though Trudeau’s violation
occurred out of court, the infomercial recordings and
transcripts enabled the judge to review the offending
conduct first-hand. So we are confident in concluding
that Trudeau is not entitled to any special process on
remand. To be sure, Trudeau is entitled to notice, discov-
ery, and an opportunity to present evidence. See Manez,
533 F.3d at 592; Autotech, 499 F.3d at 746-47; Tranzact Techs.,
Inc. v. 1Source Worldsite, 406 F.3d 851, 855 (7th Cir. 2005).
And Trudeau is entitled to the detailed justification for
50 No. 08-4249
the court’s decision that we outlined above. But the law
does not require more than that for civil contempt sanc-
tions. Should the government or the district court seek
to impose criminal sanctions on remand, a different
measure of due process is required. See F ED. R. C RIM. P. 42;
Bagwell, 512 U.S. at 826-27.
IV. The Infomercial Ban
Finally, Trudeau challenges the district court’s three-year
ban on Trudeau appearing in infomercials for any
product, including books and other publications. He
assails the infomercial ban on two grounds, but we
need only address the first. We agree with Trudeau that
the court erred in imposing the ban as a sanction for
civil contempt because it fails to give Trudeau an oppor-
tunity to purge. The ban runs for three years regardless
of Trudeau’s compliance with the underlying order not
to misrepresent his books.
Courts have broad discretion to fashion an appropriate
remedy for civil contempt. See Connolly, 851 F.2d at 933;
see also 11A W RIGHT, M ILLER & K ANE, supra § 2960 (“A
federal court’s discretion includes the power to frame a
sanction to fit the violation.”). But as explained in our
discussion of the monetary penalty, civil contempt sanc-
tions come in two breeds, and two breeds only. They either
compensate those harmed by the contemnor’s violative
conduct or coerce the contemnor to cut it out. Bagwell, 512
U.S. at 828-29; Bailey, 567 F.3d at 933. Otherwise they
are criminal sanctions and require criminal process.
Bagwell, 512 U.S. at 826-27, 831-33, 838.
No. 08-4249 51
The infomercial ban is clearly not compensatory.
Whether it’s coercive is a somewhat closer question. A
coercive sanction seeks to bring the contemnor’s
conduct into compliance with the court’s order. Id. at 829;
In re Grand Jury Proceedings, 280 F.3d at 1107. In this
broad sense, the infomercial ban appears to “coerce”
compliance with the 2004 Consent Order prohibiting
Trudeau from misrepresenting the content of his books.
Trudeau can’t produce or participate in deceptive
infomercials if he can’t produce or participate in any
infomercials at all. However, the Supreme Court has
made clear that an essential ingredient to any coercive
contempt sanction is the opportunity to purge. Bagwell,
512 U.S. at 829 (citing Penfield, 330 U.S. at 590). A
“purgeable” sanction is one that allows the contemnor
to free himself of the sanction “by committing an affirma-
tive act,” namely complying with the court’s order. Id.
at 828. “[A] per diem fine imposed for each day a
contemnor fails to comply with an affirmative court
order” is a purgeable sanction. Id. at 829. So is a fixed fine
if “imposed and suspended pending future compliance.”
Id. (citing United Mine Workers, 330 U.S. at 307). Even
imprisonment can be considered coercive, and thus not
criminal, if the contemnor can obtain his release through
compliance. See Gompers, 221 U.S. at 442. But “[t]o the
extent that ‘a sanction operates whether or not a party
remains in violation of the court order, it obviously does
not coerce any compliance.’ ” Harris v. City of Philadelphia,
47 F.3d 1311, 1329 (3d Cir. 1995) (quoting In re Magwood,
785 F.2d 1077, 1082 (D.C. Cir. 1986)); see also Lance v.
Plummer, 353 F.2d 585, 592 (5th Cir. 1965) (“[T]he sanction
52 No. 08-4249
cannot be one that does not come to an end when he
repents his past conduct and purges himself.”).
The trouble with the infomercial ban is that it lasts
for three years no matter what Trudeau does. Trudeau
could take all the steps in the world to convince the
FTC and the district court that he will be truthful in
his next infomercial, but even if he offers to read his
book word-for-word and say nothing else, he cannot
free himself of the court’s sanction. Rather, the three-year
ban is like a “prison term[ ] of a definite, pre-determined
length without the contemnor’s ability to purge,” which
we have held is “generally considered punitive and
therefore criminal contempt.” In re Grand Jury Proceedings,
280 F.3d at 1108. Simply put, the infomercial ban is not
purgeable and therefore not a proper coercive contempt
sanction. See Harris, 47 F.3d at 1329 (dismissal of defen-
dant’s motion to modify decree was not civil sanction
because it failed to permit defendant to refile motion
should defendant comply); Lance, 353 F.2d at 592 (order
unconditionally prohibiting deputy sheriff from serving
as law enforcement or peace officer not coercive sanction).
But see Gregory v. Depte, 896 F.2d 31, 34 (3d Cir. 1990)
(upholding injunction limiting quantity of defendant’s
future sales as civil because it coerced compliance with
previous order, of which court had found defendant
in contempt).
The FTC attempts to solve this problem by arguing that
the infomercial ban need not be coercive or compensatory
because it’s not a contempt sanction at all. Rather, in
the FTC’s view, it’s simply a modification of the 2004
No. 08-4249 53
Consent Order brought about by the court’s granting the
FTC’s Rule 60(b) motion to modify the Order. (R. 187.)
We see a couple of problems with this argument. First,
the court never explicitly granted the FTC’s motion to
modify. The court crafted the infomercial ban in its
order on contempt remedies. In fact, the court introduced
the ban in the very same sentence as it imposed the
original $5.1 million fine. FTC v. Trudeau, 572 F. Supp. 2d at
925. The court never discussed the FTC’s motion or Rule
60(b). Instead, the court cited some classic contempt cases,
id. at 925-26 (citing Shillitani, 384 U.S. at 370, and Spallone
v. United States, 487 U.S. 1251, 1255, 1260 (1988) (Marshall,
J., concurring in denial of stay)), and framed the ban as
a vindication of the court’s “inherent power to enforce
its orders,” id. at 925. Modifying a court order and enforc-
ing one are two different things—enforcing a court
order is achieved through contempt. See 11A W RIGHT,
M ILLER & K ANE, supra, § 2960. Furthermore, the court’s
statements in subsequent proceedings confirm that the
court intended to impose the infomercial ban as a con-
tempt sanction: “This is not a prior restraint the way
we normally look at prior restraints. This is a remedy
for contempt.” (Hr’g Tr. 4, Sept. 2, 2008) (emphasis added).
Second, there wasn’t a peep in the FTC’s motion to
modify about anything like the three-year infomercial
ban the court imposed. The FTC’s motion sought two
changes to the 2004 Order: (1) to require Trudeau to
obtain a $10 million performance bond in connection
with producing any infomercial; and (2) more stringent
compliance reporting requirements. (R. 187.) So we find
it hard to hold that the court simply granted the FTC’s
54 No. 08-4249
motion, when the motion never mentioned the remedy
the court ultimately imposed.
Finally, even if we construed the court’s order as a sua
sponte modification of the Consent Order (though the
district court didn’t construe its order this way and
though the FTC failed to mention this option in its ap-
pellate briefing), we still must reverse. It’s true that courts
can on their own motion modify or vacate their decrees
pursuant to Rule 60(b)(5). See O’Sullivan v. City of
Chicago, 396 F.3d 843, 866 n.6 (7th Cir. 2005) (“A district
court need not wait for the parties explicitly to request
such changes; ‘the court can on its own motion vacate’—or
modify—‘the decree pursuant to Rule 60(b)(5).’ ” (quoting
United States v. Bd. of Educ. of Chi., 799 F.2d 281, 297 (7th
Cir. 1986))). However, we see no indication in the
record that Trudeau had any notice that the court was
considering such a broad sanction as an outright ban
on infomercials; the FTC’s motion didn’t give any such
notice. But notice to the defendant is imperative, particu-
larly when the court is considering a stiffer injunction
than the one currently in force or the one proposed in a
party’s motion to modify. See W. Water Mgmt., Inc. v.
Brown, 40 F.3d 105, 109 (5th Cir. 1994) (notice required
for modification of injunction imposed sua sponte, despite
defendants’ motion for relief from injunction, because
modification was more stringent than relief defendants
requested). So in short we cannot construe the ban as
arising from some modification of the 2004 Consent
Order; rather the court imposed it as a sanction for Tru-
deau’s contempt.
No. 08-4249 55
Though we might be able to modify the infomercial
ban on our own to fashion a proper coercive contempt
remedy, see Lance, 353 F.2d at 592 (modifying order to
incorporate purge provision allowing ex-deputy sheriff
to be reinstated as law enforcement or peace officer
upon district court’s satisfaction that ex-deputy was no
longer in violation of original order and would in good
faith comply with order), we decline to do so here. The
district court is in a better position to fashion an appro-
priate coercive remedy, should it choose to do so on
remand. The court could also, of course, choose to impose
a criminal sanction instead. Or the district court could
modify the Consent Order, on motion from the FTC or on
its own motion, provided it give Trudeau sufficient
notice and an opportunity to be heard on the matter. But
it cannot impose a non-purgeable, three-year penalty as
a civil contempt sanction. Accordingly, we vacate the
infomercial ban and remand.
V. Conclusion
We A FFIRM the district court’s finding Trudeau in
contempt of the 2004 Consent Order. However, we
V ACATE the monetary sanction and the infomercial ban
and R EMAND for further proceedings consistent with
this opinion.
8-27-09