Federal Trade Commission v. Garden of Life, Inc.

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 12-12382
________________________
D.C. Docket No. 9:06-cv-80226-DMM
FEDERAL TRADE COMMISSION,
Plaintiff - Appellant,
versus
GARDEN OF LIFE, INC.,
JORDAN S. RUBIN,
Defendants - Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(April 15, 2013)
Before MARCUS, HILL and SILER, * Circuit Judges.
MARCUS, Circuit Judge:
*
Honorable Eugene E. Siler, Jr., United States Circuit Judge for the Sixth Circuit, sitting by
designation.
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Appellant Federal Trade Commission (“FTC”) moved the U.S. District
Court for the Southern District of Florida to order Appellee Garden of Life
(“GOL”), a dietary supplement manufacturer, to show cause why it should not be
held in contempt of a Stipulated Final Order and Permanent Injunction
(“injunction”) that barred GOL from making misrepresentations in its
advertisements. The FTC contended that GOL violated the terms of the injunction
in its advertisements for its calcium supplements RAW Calcium and Grow Bone
System, and its omega-3 supplement Oceans Kids. At issue in this case is whether
the district court abused its discretion when it denied the FTC’s motion. We affirm
the district court’s decision except with regard to one of the FTC’s claims -- that
GOL misrepresented the six-month results of a bone density study in an
advertisement for Grow Bone System -- and remand for the district court to
address that claim in the first instance.
I.
This case arises in the wake of a 2006 settlement between the FTC and
Garden of Life concerning advertising misrepresentations. The district court
entered an order and injunction embodying that settlement. Section 1 of the
injunction barred unsubstantiated claims that GOL’s products treated an extensive
list of ailments, including cancer, high cholesterol, and cardiovascular disease,
unless it had competent and reliable scientific evidence for those claims. The
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section further barred unsubstantiated claims “[a]bout the absolute or comparative
health benefits, efficacy, performance, safety, or side effects of such product.”
Section 2 of the injunction barred misrepresentations of “the existence, contents,
validity, results, conclusions, or interpretations of any test or study.” The
definitions section of the injunction defined “[c]ompetent and reliable scientific
evidence” to “mean tests, analyses, research, studies, or other evidence based on
the expertise of professionals in the relevant area, that has been conducted and
evaluated in an objective manner by persons qualified to do so, using procedures
generally accepted in the profession to yield accurate and reliable results.” The
definitions section notably did not define what § 1 meant by “absolute or
comparative health benefits.”
In order to comply with the agreement, GOL retained a consulting firm, ISS,
to evaluate the scientific evidence supporting potential advertising claims. Dr.
Steven Weisman, the head of ISS, is a clinical pharmacologist with twenty years of
experience in evaluating advertising claims.
In 2009, GOL introduced three products: RAW Calcium and Grow Bone
System, both calcium supplements, and Oceans Kids Chewables, an omega-3
supplement for children. The crux of the controversy surrounds various
advertisements GOL used to promote these new products.
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GOL included numerous claims on the product packaging of its Oceans Kids
supplement, including that the product “help[ed] support” a child’s “[b]rain
[d]evelopment,” “[c]ognitive [f]unction,” “[e]ye [h]ealth & [v]ision,” and
“[p]ositive [m]ood & [b]ehavior.” Meanwhile, GOL advertised RAW Calcium and
Grow Bone System by touting the fact that those products are derived from marine
algae and contain multiple vitamins or minerals that assist in calcium uptake. The
product’s packaging included the claim that, “Until now, Calcium
supplementation, at best, helped to slow down the rate of bone loss.” In addition,
GOL published a magazine article explaining Raw Calcium and Grow Bone
System’s advantages over rock-source calcium supplements. Finally, a print
advertisement, since withdrawn by GOL, stated that “[i]n a six-month randomized,
open label human clinical study,” participants who “consumed the ingredients in
the Grow Bone System” for “just six months . . . experienced a significant average
INCREASE in bone mineral density of 2.8%” and those who were highly
compliant with the supplementation and exercise regimen “experienced an
INCREASE in bone mineral density by an amazing 3.7%.” GOL withdrew the last
advertisement upon discovering that it misstated the results of the clinical study
involved, based apparently on a mistake made by ISS. The study itself had found
increases of half those amounts (1.4% rather than 2.8%) in the six-month period
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and then had annualized the results by doubling them. Prior to releasing all these
advertisements, GOL relied on ISS reports to substantiate the relevant claims.
According to the FTC, these advertising claims were inadequately supported
by competent and reliable scientific evidence. Therefore, in August 2011, the FTC
filed a motion with the district judge who had originally issued the injunction and
requested that he order GOL to show cause why it should not be held in civil
contempt. Along with its motion, the FTC presented declarations from two experts,
Dr. David Bellinger and Dr. Connie Weaver, who stated that GOL lacked
sufficient competent and reliable scientific evidence to support its claims. To rebut
Bellinger’s and Weaver’s declarations, GOL submitted a declaration from
Weisman explaining the support for GOL’s advertising claims and his critiques of
Bellinger’s and Weaver’s findings. Weisman did not dispute that his firm had
made a mistake with regard to the results of the bone density study referenced in
GOL’s Grow Bone System advertisements.
In February 2012, the district court denied the motion. The district court
rejected the FTC’s Oceans Kids claim because it considered the dispute between
Bellinger and Weisman to be a battle of the experts. Based on Weisman’s
declaration, the district court found that the FTC had failed to prove by clear and
convincing evidence that GOL violated the injunction.
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The court then turned to the issues surrounding GOL’s calcium supplements.
The FTC claimed that GOL violated § 1’s “comparative health benefits” clause by
advertising Grow Bone System as superior to other supplements. In addition, the
FTC claimed that GOL violated § 2 of the injunction because GOL’s
advertisements misrepresented the results of a bone density study and because that
study was, in any case, insufficiently rigorous.
The district court first determined that GOL’s calcium supplement
advertisements did not violate § 1 as a matter of law. According to the court, the
term “comparative” referred to “a claim that individuals who take a product will
notice an improvement in their health compared to those who do not” and did not
cover product superiority claims that GOL’s products were better than a
competitor’s products. The court also determined that, even if the injunction did
cover superiority claims, GOL’s advertisements fell short of stating superiority
claims. As for the § 2 claim, the district court rejected the FTC’s argument that the
clinical study was insufficiently rigorous. However, the district court did not
expressly address the advertisement’s false statement that the reported six-month
increases were in fact annualized figures that doubled the study’s six-month
findings.
The FTC appealed.
II.
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We review the denial of a motion to show cause why a party should not be
held in contempt only for abuse of discretion. Thomas v. Blue Cross & Blue Shield
Ass’n, 594 F.3d 814, 821 (11th Cir. 2010). “A district court abuses its discretion if
it applies an incorrect legal standard, applies the law in an unreasonable or
incorrect manner, follows improper procedures in making a determination, or
makes findings of fact that are clearly erroneous.” Id. (internal quotation marks
omitted).
“Construction of a consent judgment is . . . a question of law subject to de
novo review.” Turner v. Orr, 759 F.2d 817, 821 (11th Cir. 1985). In cases
involving the construction of an injunction by the district court that entered it,
however, we defer to the district court’s interpretation as long as it is reasonable.
See Ala. Nursing Home Ass’n v. Harris, 617 F.2d 385, 388 (5th Cir. 1980) (“Great
deference is due the interpretation placed on the terms of an injunctive order by the
court who issued and must enforce it.”); accord Com. Union Ins. Co. v. Sepco Co.,
918 F.2d 920, 924 (11th Cir. 1990).1
“[A] finding of civil contempt” requires “a showing that the alleged
contempt is clear and convincing.” Ga. Power Co. v. NLRB, 484 F.3d 1288, 1291
(11th Cir. 2007). “The clear and convincing evidence must establish that: (1) the
allegedly violated order was valid and lawful; (2) the order was clear and
1
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), we adopted as
binding precedent all decisions of the former Fifth Circuit handed down prior to October 1, 1981.
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unambiguous; and (3) the alleged violator had the ability to comply with the
order.” Id.
A.
There was no abuse of discretion in the district court’s decision to deny the
motion as to the FTC’s § 1 claims. The FTC maintains that GOL violated § 1 of
the injunction by failing to substantiate advertising claims that Oceans Kids
benefitted children’s cognitive development, mental focus, and mood and
behavior. The FTC’s primary support for its position is Bellinger’s declaration, in
which he opined that GOL relied on insufficiently rigorous studies, or studies of
populations other than healthy children over the age of two, and that, therefore,
there was not enough substantiation for the Oceans Kids claims. GOL in turn
submitted a declaration from Weisman describing the various studies upon which
he relied and contesting Bellinger’s report. Specifically, Weisman pointed to four
studies that did test the effect of omega-3 intake on young children, along with two
dozen others that tested different populations, e.g., children with attention deficit
disorder or malnutrition. Although acknowledging Bellinger’s criticism of the
studies’ methodologies, Weisman adhered to his opinion that the statements on the
Oceans Kids packaging had sufficient scientific support.
The district court in substance viewed this as a battle of the experts and
found that the FTC “failed to establish by clear and convincing evidence that
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[GOL] violated Section One of the injunction by making the . . . representations
with respect to Oceans Kids.” As the court put it, “[t]o find that GOL violated the
terms of the Order solely because another well-respected expert defines ‘brain
development’ differently or disagrees with certain aspects of a study’s ‘trial
design’ would require this Court to read additional requirements into the Consent
Decree.”
The finding that the FTC failed to meet its burden based on conflicting
expert testimony is a quintessentially factual determination, and therefore we
would have to find it clearly erroneous to upset the district court’s decision. See,
e.g., St. Martin v. Mobil Exploration & Producing U.S., Inc., 224 F.3d 402, 408
(5th Cir. 2000) (“The district court admitted testimony from experts on both sides,
and was entitled to weigh the evidence presented by each . . . . It did not commit
clear error in choosing one explanation over another where both were properly
admitted.”). The FTC’s argument on appeal is that the district court abused its
discretion, and that the finding was clearly erroneous, because Bellinger was the
only one qualified to speak to the Oceans Kids’ claims. Weisman was not an expert
in the field of children’s cognitive and behavioral development and thus was
unqualified to evaluate the relevant studies. The FTC pins this argument on the
definition of “competent and reliable scientific evidence” in the injunction, which
requires the opinion of a “professional[] in the relevant area.” According to the
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FTC, Weisman did not qualify as a professional in the relevant area because the
relevant area should have been construed narrowly to include only experts in child
cognitive and behavioral development.
However, the FTC fails to provide any support for this narrow reading of
what it means to be a professional in the relevant area. The FTC’s citations merely
beg the question by reciting the idea that a claim must be substantiated based on,
for instance, “what evidence would in fact establish such a claim in the relevant
scientific community.” FTC v. Direct Mktg. Concepts., Inc., 624 F.3d 1, 8 (1st Cir.
2010) (internal quotation marks omitted). The salient question, however, is at what
level of generality we must define the “relevant area” or “relevant scientific
community.” Since the district court did not contravene any law on this issue, it did
not abuse its discretion by treating Weisman as a qualified expert.
What the FTC is really attacking is the district court’s implicit interpretation
of its own injunction. But we defer to that interpretation as long as it is reasonable,
Ala. Nursing Home Ass’n, 617 F.2d at 388; Com. Union Ins. Co., 918 F.2d at 924,
and interpreting “professionals in the relevant area” to mean experts in medicine or
pharmacology in general rather than specialists in the given medical subspecialty is
reasonable. We are unpersuaded by the assertion that Weisman is unqualified to
interpret the results of medical studies. He is a clinical pharmacologist, with a
Ph.D. in Pharmacology and twenty years of experience in evaluating scientific
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evidence to substantiate advertising and label claims. Much of his professional life
has been spent analyzing the health effects of various products. Since Weisman
provided expert testimony that GOL did have competent and reliable scientific
evidence to substantiate its claims, and the district court credited that testimony,
we cannot discern clear error in the district court’s finding.
The FTC’s other set of § 1 claims concerns GOL’s calcium supplement
advertisements. The FTC argued to the district court that GOL had made
unsubstantiated superiority claims about its calcium supplements RAW Calcium
and Grow Bone System. However, the district court read § 1.J of the injunction,
which bars unsubstantiated claims regarding “comparative health benefits,” as not
covering superiority claims comparing different products. As we have noted, the
district court that entered the injunction is entitled to substantial deference in the
interpretation of its own injunction. Moreover, as GOL points out, we are obliged
to “construe any ambiguities or uncertainties in such a court order in a light
favorable to the person charged with contempt.” Ga. Power Co., 484 F.3d at 1291.
Since the district court’s interpretation of its injunction was reasonable, we are
obliged to affirm this portion of the district court’s order as well.
The relevant provision of the injunction forbids GOL from making a claim
about “the absolute or comparative health benefits, efficacy, performance, safety,
or side effects of such product” without competent and reliable scientific evidence.
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The ambiguity in this provision lies in the meaning of the term “comparative health
benefits.” The FTC insists the language could not be clearer, and that a claim about
comparative health benefits is one comparing GOL’s product to other
manufacturers’ products. The district court, on the other hand, explained in its
order that “comparative” referred to “a claim that individuals who take a product
will notice an improvement in their health compared to those who do not.” In other
words, the district court interpreted its injunction to cover use vs. non-use
comparisons and not to cover “comparisons between [GOL’s] products and a
competitor’s products.”
This interpretation is reasonable. The word “comparative” standing alone is
susceptible to multiple meanings -- a comparison between before-use and after-use
health effects in the same individual, a comparison between use and non-use health
of different individuals, or a comparison between using GOL calcium and using a
different manufacturer’s calcium. The district court’s interpretation does no
violence to the injunction’s plain language and preserves the meaning of all the
terms in the provision. An “absolute” claim about a health benefit, for instance,
would be something akin to, “This product provides all the calcium your body
needs.” In contrast, a “comparative” claim, by the district court’s lights, would be
something like, “People who take Grow Bone System experience a three percent
increase in bone density.” Similar examples can be constructed for “efficacy”
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(“This product works!”), “performance,” (“This product works well!”), “safety”
(“This product is absolutely safe for all age groups.”), and “side effects” (“This
product has no meaningful side effects.”).
In fact, there are some reasons to find the district court’s interpretation not
only reasonable but preferable to the FTC’s interpretation. For one thing, as GOL
points out, all the other parts of § 1 target highly specific claims regarding the
effects of GOL’s products on named ailments, such as claims “[t]hat such product
reduces or helps lower users’ blood cholesterol levels.” Notably, all of these claims
relate to either absolute or comparative health benefits as the district court
interpreted the term “comparative,” and none of them address claims that a GOL
product was superior to a competitor’s product. When a court considers a list of
specific terms that is then followed by a more general term, such as § 1.J of the
injunction, the canon of ejusdem generis applies to resolve ambiguities in meaning.
Under that canon, “when general words follow the enumeration of particular
classes, the general words should be construed as applying only to things of the
same general class as those enumerated.” Edison v. Douberly, 604 F.3d 1307, 1309
n.4 (11th Cir. 2010); see Eastern Air Lines, Inc. v. McDonnell Douglas Corp., 532
F.2d 957, 988-89 & n. 90 (5th Cir. 1976). In this case, § 1 of the injunction has
nine subparts that cover a series of absolute claims (for example, that a GOL
product will treat cancer) and comparative claims (for example, that a GOL
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product lowers blood cholesterol levels). Applying ejusdem generis to the term
“comparative health benefits” in § 1.J, it is logical to assume that a § 1.J claim
must be of the same species as the claims specifically forbidden by the rest of § 1.
Thus, ejusdem generis supports interpreting “comparative health benefits” in a way
that excludes superiority claims, which are an entirely distinct type of claim from
those covered by § 1’s first nine subparts.2
The FTC cites as contrary persuasive authority FTC v. Lane Labs-USA, Inc.,
624 F.3d 575 (3d Cir. 2010). While the facts of Lane Labs are similar to the
present case, there are several substantial differences that render that case
inapposite. The language of the order at issue in Lane Labs was arguably broader
than the injunction in this case. That injunction covered any representations
regarding the effect of Lane Labs’ product and “any other health benefits of such
product.” Id. at 578. Moreover, the Third Circuit’s opinion gave no indication that
the order against Lane Labs contained a long list of specific prohibitions, as the
injunction against GOL does. Thus, the principle of ejusdem generis had no
application, whereas in this case we must read the broad language of § 1.J in light
2
Indeed, there is a more specific phrase for the claims that the FTC now characterizes as
“comparative” within the meaning of § 1. In its brief, the FTC uses the term “superiority claim”
to describe claims that a product is better than competitors’ products, and this phrase seems to be
a term of art. E.g., Kraft, Inc. v. FTC, 970 F.2d 311, 314 (7th Cir. 1992) (evaluating claim that
Kraft’s “process cheese food slices . . . are nutritionally superior to imitation slices”); Am. Home
Prods. Corp. v. Johnson & Johnson, 577 F.2d 160, 162 (2d Cir. 1978) (reviewing a district court
injunction of “advertising of certain product superiority claims of ‘Anacin’ over ‘Tylenol’”).
Notably, the injunction does not use the term “superiority claim.”
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of the scope of the preceding narrowing clauses. Finally, unlike in this case, the
district court in Lane Labs did not deny the motion based on its interpretation of
the injunction’s language as categorically excluding superiority claims. Rather, the
district court found Lane Labs’ testimony more persuasive and concluded that
Lane Labs had substantially complied with the order. See id. at 580-81. The Third
Circuit reversed that factual finding as “not plausible in view of the entire record,”
id. at 584, a decision that did not confront the deference due to a district court’s
legal interpretation of an injunction that it entered.
The district court did not abuse its discretion by interpreting its own
injunction as not covering superiority claims. In light of this determination, we
have no occasion to address the district court’s alternative reasons for denying the
motion -- for instance, the finding that GOL’s advertisements did not even make
superiority claims -- and affirm this portion of the district court’s decision.
B.
We must vacate and remand, however, the portion of the district court’s
order concerning the FTC’s § 2 claim. This claim pertained to a print
advertisement for Grow Bone System that stated that “[i]n a six-month
randomized, open label human clinical study,” participants who “consumed the
ingredients in the Grow Bone System” for “just six months . . . experienced a
significant average INCREASE in bone mineral density of 2.8%.” All parties
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concede this advertisement misstated the results of the relevant bone density study,
which had shown only a 1.4 percent increase in six months. The FTC made two
distinct attacks on this advertisement in the district court. First, the FTC claimed
that GOL’s misrepresentation, whether or not it was inadvertent, violated § 2.
Second, the FTC claimed that GOL was not entitled to rely on the study at all
because it was methodologically flawed and unscientific. The district court
addressed only the second argument and did not explain why it did not order GOL
to show cause with regard to the first.
GOL argues that this matter is moot because the advertisement has already
been withdrawn. By GOL’s lights, there is no need for a civil contempt sanction to
compel compliance with the injunction because it has already brought itself into
compliance. However, “sanctions in civil contempt proceedings may be employed
for either or both of two purposes: to coerce the defendant into compliance with
the court’s order, and to compensate the complainant for losses sustained.” Local
28 of Sheet Metal Workers’ Int’l Ass’n v. EEOC, 478 U.S. 421, 443 (1986)
(internal quotation marks omitted). While the need for coercive sanctions vanishes
when the contumacious conduct ceases, a court retains the power to assess
compensatory fines in civil contempt. See Jim Walter Res., Inc. v. Int’l Union,
United Mine Workers of Am., 609 F.2d 165, 170 (5th Cir. 1980) (if a court could
not assess fines after contumacious conduct ceased, it “would invite lightning-
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quick breaches of court orders, timed to make it impossible for the court to act
during the breach”). Obviously, compensatory sanctions are not moot simply
because the injurious conduct ends.
Alternatively, GOL urges us to treat the district court’s order as implicitly
resolving both of the FTC’s arguments. At oral argument, GOL suggested that the
district court must have attached an element of willfulness to the act of
misrepresentation or at the very least have interpreted § 2 as not imposing strict
liability on GOL for inadvertent misrepresentations. However, after thorough
review of the district court’s order, we cannot see any indication that it considered
the FTC’s first argument. The court denied the FTC’s § 2 claim by stating that
GOL was never required “to conduct its own studies to authenticate its claims.”
This conclusion goes to the FTC’s complaint about the study’s reliability but does
not address the factual misrepresentation; even if GOL was not required to conduct
its own studies, § 2’s plain language still required GOL to report truthfully the
results of studies it cited. The court further stated that the FTC’s “real qualm with
GOL’s statements appears to rest on GOL’s reliance on a” fatally flawed study.
But again, this was only half of the FTC’s claim. The other half of the claim was
that GOL’s advertisement said 2.8 percent in six months when the study said 2.8
percent in a year.
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The district court may have understood its injunction as only barring willful
or reckless misrepresentation, as GOL supposes. Or the district court may have felt
that the offense was too minor to trigger the exercise of its contempt power. We
decline to speculate as to the district court’s reasons in the absence of any
explanation of those reasons or to decide the merits of the claim ourselves. “‘A
district court abuses its discretion when it misconstrues its proper role [or] ignores
or misunderstands the relevant evidence . . . .’” Jove Eng’g, Inc. v. IRS, 92 F.3d
1539, 1546 (11th Cir. 1996) (quoting Arlook v. S. Lichtenberg & Co., 952 F.2d
367, 374 (11th Cir. 1992)). As to the § 2 claim, the district court’s order did not
speak to the relevant evidence: the misstatement in the Grow Bone System
advertisement, which the FTC included as an exhibit and referenced in its briefs.
Therefore, we lack an adequate record to review its decision as an appellate court
and will remand in order to give the district court the opportunity to address the
FTC’s claim in the first instance.
In short, we affirm the district court’s denial of the FTC’s motion as to the
alleged § 1 violations and vacate and remand its denial of the FTC’s motion as to
the alleged § 2 violation. On remand, the district court should specifically address
whether GOL’s false description of the bone density study’s results constituted a
violation of § 2.
AFFIRMED IN PART; VACATED AND REMANDED IN PART.
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