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IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

FEDERAL TRADE COMMISSION,

Plaintiff,

vs.

KEVIN TRUDEAU,

Defendant.

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No. 03 C 3904

Chicago, Illinois

July 22, 2008

10:00 a.m.

TRANSCRIPT OF PROCEEDINGS - HEARING

BEFORE THE HONORABLE ROBERT W. GETTLEMAN

APPEARANCES:

For the Plaintiff: FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue, NW

NJ-3212

Washington, DC 20580

BY: MS. LAUREEN KAPIN

MS. SANDYA PRABHU

MS. ELIZABETH TUCCI

For the Defendant: JENNER & BLOCK

One IBM Plaza

Chicago, Illinois 60611

BY: MR. DAVID J. BRADFORD

MR. DANIEL J. HURTADO

Official Reporter: JENNIFER S. COSTALES, CRR, RMR

219 South Dearborn Street

Room 1706

Chicago, Illinois 60604

(312) 427-5351

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(Proceedings in open court.)

THE CLERK: 03 C 3904, Federal Trade Commission versus

Kevin Trudeau; for hearing.

MR. BRADFORD: Good afternoon.

David Bradford here together with Kevin Trudeau and Dan

Hurtado.

MS. KAPIN: Good afternoon, Your Honor.

I'm here with my colleagues Sandy Prabhu, Elizabeth

Tucci, and Parrish Bergquist on behalf of the Federal Trade

Commission. I'm Laureen Kapin.

THE COURT: All right. We're here for hearing on this

contempt order. A couple of things to go over first.

First of all, Mr. Bradford, you filed a motion to

withdraw as counsel, but after these proceedings, is that

correct?

MR. BRADFORD: That's correct, Your Honor. We'd ask

that be put over until the end of the proceedings if the Court

would entertain that.

THE COURT: I guess I'm curious as to why you filed it.

MR. BRADFORD: Only to indicate to the Court that

because of financial circumstances we're obligated to do this. I

did not want to proceed after the hearing and leave any

impression that anything Your Honor might or might not do during

the hearing was the precipitating cause of this motion.

THE COURT: I would take your word for it whatever the

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reason was. But I think it's a premature motion if you are going

to be participating at this, unless it is there to emphasize

Mr. Trudeau's financial situation, which leads me to my next

question, and that is, I may have raised this before, and if I

did, maybe this is redundant, but I'm not sure why we have the

redactions that we have in this case.

I mean, you're relying on Mr. Trudeau's alleged

financial circumstances as part of your defense to the remedies

sought by the FTC. I think it should all be in the public

record. I can't base an opinion on something that's not in the

public record if I were to agree with you, even if I were to

disagree with you.

MR. BRADFORD: We agree, Your Honor, and I thought

previously had indicated we did agree everything should be filed

in unredacted form.

THE COURT: Okay. So why don't we just unseal whatever

has been filed in the sealed form. That way everything will be

in the public record.

There was also a motion by the FTC to strike the

testimony of your expert, of Mr. Trudeau's expert. And I think

I'm just going to reserve on that until I hear what he has to

say. I think I told you that before.

MR. BRADFORD: You did, Your Honor.

THE COURT: I'll listen to him. It's a bench matter.

It doesn't really need that type of prophylactic remedy at this

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point. I certainly will rule on whether or not I think he's

qualified to testify. I wanted to hear from him first obviously

before I did that. So I have to hear from him anyway.

All right. Now, with those things out of the way, are

there any other procedural matters that you want to address? And

then I would like you both to tell me what you have -- I got an

awful lot of paper, and I see an awful lot of stuff in the

courtroom. So tell me what you plan on doing. Let's start with

the FTC.

MS. KAPIN: Just in terms of one more housekeeping

matter, Your Honor. I believe that Mr. Hurtado had raised the

issue of whether we could defer one of our witnesses.

THE COURT: Right. Yes, that's fine.

MS. KAPIN: Okay. Then if you wouldn't mind, I'm going

to permit one of my colleagues to whisk away out of the courtroom

to cancel a hotel room and allow Ms. Hippsley to also cancel her

flight.

THE COURT: We can accommodate people.

I intend to go close to 5:00 o'clock today and tomorrow

to about 4:00 o'clock. That's the time I've reserved for this.

And if we need to resume it at some other point, we'll do that.

MS. KAPIN: Well, then moving on to your question, Your

Honor, despite the many books of exhibits and stuff in the

courtroom, the FTC as I think we previously indicated to you,

Your Honor, we believe that our briefs are the primary vehicle

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regarding the remedy portion of this hearing. We will be

engaging in cross-examination of Mr. Trudeau's witnesses. But as

far as our views and the evidence on the proper remedy in this

matter, we are relying on the evidence that we have already

submitted to the Court as to the proper remedy to compensate

consumers and as to what we believe the proper modifications to

the injunctive relief should be.

Your Honor, if necessary, we may call Ms. Hippsley in to

rebut certain arguments. And we will as we have informed

opposing counsel and with the Court's permission, we intend to

make our decision on that after we have heard Mr. Trudeau's

testimony.

THE COURT: So you're basically standing on the record

since you've got a leg up anyway. I guess that's a bad pun,

isn't it? But you're putting, you're really turning it over to

Mr. Trudeau and Mr. Bradford at this point.

MS. KAPIN: As far as Mr. Trudeau's, whether Mr. Trudeau

has been sufficiently diligent and energetic in complying with

the order, that is for defendant's to establish.

THE COURT: We have two matters. And I'll let

Mr. Bradford answer my question. We have two matters. One is,

Mr. Bradford wants to present whatever he's going to present to

try to convince me to modify my order of November -- it's a long

time ago.

MS. KAPIN: 21st, I believe. Was it the 16th?

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THE COURT: November 16th. Time flies.

And that I guess will be part of this whole thing. And

the other is to address, if I don't change my mind radically, I

told him he had an uphill battle there, if I don't change my mind

radically, what the appropriate remedy would be here.

So that's the two issues that I see. Do you agree?

MS. KAPIN: Yes, Your Honor.

MR. BRADFORD: Yes, Your Honor.

THE COURT: Okay. So Mr. Bradford, what do you have in

mind?

MR. BRADFORD: Your Honor, we do have an opening

statement that we'd like to present. We suggested to Ms. Kapin

and would like to ask the Court if we might proceed in a somewhat

unorthodox manner by calling our first witness, who is

Mr. Harris, only to ensure that he gets done today. He's the

first of our experts and needs to return to Washington.

THE COURT: The order of witnesses does not concern me.

MR. BRADFORD: What I would ask is the ability to defer

the opening statement until after he testifies so that we don't

take the time with the opening statement that might cause him to

spill over into tomorrow, but that as soon as he concludes, we'd

be prepared to proceed with opening statements.

I would be glad at this point to give the Court some

overview as to what we intend to prove, or I could save that for

the opening statement.

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THE COURT: Well, just give me a brief summary.

MR. BRADFORD: Sure.

THE COURT: And then we'll put your witness on.

MR. BRADFORD: Sure. We intend to call Mr. Harris, who

is a former assistant director of enforcement at the Federal

Trade Commission to give opinions about custom and practice and

interpretation of the language of this order.

We expect that he will testify that the language in this

order is commonly understood among attorneys who practice in the

field of FTC enforcement as incorporating the mirror image

doctrine, that mirror image doctrine is incorporated in other

orders with similar language, and that it would be reasonably

understood that the advertisements at issue in this case are

compliant with the mirror image doctrine and, therefore,

compliant with the order based upon common understandings of the

terms of this order.

He would be principally addressing our motion to

reconsider, although we would submit the fact that an established

practitioner with great expertise in this field would come to the

conclusion that these advertisements are, in fact, compliant with

the order speaks to the reasonableness of Mr. Trudeau's belief on

the topic.

We also intend to call the president of the American

Booksellers Association to present testimony on the relationship

between the infomercial and sales of books at retail stores.

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We further intend to present limited testimony from

Mr. Trudeau regarding the basis for the book and the basis for

his belief at the time that the infomercial was concluded that he

was in compliance with this Court's order.

And then we expect to present some testimony related to

the financial circumstances of Mr. Trudeau that would come

principally through Mr. Marc Lane.

We also have a 1006 summary of comments that have been

made on the website related to this book about people's reactions

to the book. And that may be presented, I understand that the

FTC wants to cross-examine the person who prepared the 1006

testimony, so that may involve a live witness at least subject to

cross-examination.

That principally covers our case, Your Honor.

MS. KAPIN: And, Your Honor, just in terms of also

logistics, both sides have proffered many books full of exhibits.

Both sides have various objections to those exhibits. Is that

something that it is your manner to take care of initially or as

we go along?

THE COURT: As we go along or even afterwards. I mean,

let's get the live witnesses on. That's what I had contemplated

today anyway.

MS. KAPIN: Well, in order to preserve our rights, we

would object as things go along.

THE COURT: Sure, or you can just have a standing

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objection to all their exhibits.

MS. KAPIN: That might make for a lack of clarity.

THE COURT: Well, whatever. I'll leave that up to you.

MS. KAPIN: Okay.

THE COURT: The timing is up to you.

MR. BRADFORD: We have a few objections to their

exhibits. They have a number of objections to ours that as I

recall are principally relevance and hearsay.

MS. KAPIN: That's correct.

MR. BRADFORD: We would propose to take those up at the

end. I don't think we have any serious foundational issues on

any.

THE COURT: Again, this is a bench matter, so we can

deal with those in due course. I would like to accommodate the

people who are here to testify first, and then we can determine

where we go from there.

So do you want to call Mr. Harris.

MR. BRADFORD: I do, Your Honor. At this time

Mr. Trudeau would call as his first witness Jeffrey Harris.

With the Court's permission, I have exhibit books, the

three volumes that have been submitted to chambers. I'd like to

put those up on the witness stand.

THE COURT: That's fine.

MR. BRADFORD: Thank you, Your Honor.

THE COURT: Mr. Harris, please raise your right hand.

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(Witness duly sworn.)

THE COURT: I got delivered to me today from your office

some, it looks like lists of exhibits, a declaration from Mary

Louise Cribbin. It looks like some more exhibits.

MR. BRADFORD: Those were intended to supplement the

books that should have been delivered previously. We have extra

copies of those books if that would be convenient for the Court.

THE COURT: The books are here.

MR. BRADFORD: With the Court's permission, at a break

we'd be glad to update the Court's books to include those

additional exhibits.

THE COURT: All right. Okay.

MR. BRADFORD: The exhibits of Mr. Trudeau are lettered

exhibits. Exhibits of the FTC are numbered exhibits. And I

think the examination of Mr. Harris will derive principally from

our exhibits, the lettered exhibits.

THE COURT: I have two books. Should I have three?

MR. BRADFORD: There should be two from Mr. Trudeau with

letters in them and one from the FTC with numbers in them.

THE COURT: Well, I have a whole bunch of FTC's.

MS. KAPIN: Well, we actually have four with numbers on

them.

THE COURT: But you have two?

MR. BRADFORD: We do.

THE COURT: Okay. Just make sure I have everything.

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Harris - direct 11

Okay.

MR. BRADFORD: Thank you, Your Honor.

THE COURT: Please proceed.

JEFFREY HARRIS, DEFENDANT'S WITNESS, SWORN

DIRECT EXAMINATION

BY MR. BRADFORD:

Q. Mr. Harris, could you please state your full name?

A. Jeffrey Harris.

Q. Mr. Harris, could you briefly describe your educational

background?

A. Sure. I graduated undergraduate from New York University

with a major in business administration, a minor in economics,

and graduated with Juris Doctorate from Syracuse University

College of Law, where I wrote for the Law Review and was the

Harry A. Dunsmore Memorial Scholar.

Q. What year were you admitted to practice law, sir?

A. 1969.

Q. And if you would turn please to Exhibit Z in your binder.

When you get there, my question would be whether that exhibit is

your report in this matter inclusive of your curriculum vitae?

A. Yes, yes, it is.

Q. The curriculum vitae is set forth following your report?

A. Yes, it is.

Q. Does that curriculum vitae accurately set forth your

experience and credentials?

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Harris - direct 12

A. Yes, it does.

Q. Could you describe briefly what you did following your

graduation from Syracuse Law School?

A. Sure. I enlisted in the Navy, went to Officer Candidate

School. Upon graduation from Officer Candidate School, I was

commissioned as an ensign in the Navy. I thereafter went to

Judge Advocate Naval Justice School in Newport, Rhode Island and

was certified by the JAG. So I was not a JAG officer, but I had

the dual designation as line officer and certified by the JAG.

I served, served as a legal officer for four different

admirals during two tours in Vietnam. And I was, I guess the way

to describe it, the admirals had appellate jurisdiction, I served

much like a law clerk.

I also prosecuted and defended courts marshal. And I

provided legal advice to sailors. Additionally, I acted in Hong

Kong as a trial observer to trials of U.S. servicemen in courts

of the crown as a trial observer. And I also advised Naval

personnel on status of forces agreements.

Q. Following your service in the Navy, what was your next

position?

A. I was an assistant United States Attorney in the Southern

District of New York. I was in the criminal division. And I was

a federal prosecutor prosecuting general crimes, then later

international narcotics conspiracies, and then the public

corruption unit prosecuting cases involving corruption by public

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Harris - direct 13

officials and other white-collar crimes.

Q. Approximately how many years were you an assistant U.S.

Attorney?

A. About five years.

Q. And following your service in that capacity, what did you do

next?

A. Attorney General Levy came into office shortly after

Watergate, and he asked me to come to Washington for a year to

review all the FBI's domestic intelligence investigations and

counter-intelligence investigations and to advise him which of

those investigations complied with guidelines that he issued to

the FBI for the prosecution of such investigations.

Q. And following that service, what did you do next?

A. I served as deputy chief counsel to the House Ethics

Committee, Koreagate Investigation, which investigated corruption

by members of Congress by a fellow named Tongsun Park.

Q. And following the service for the House of Representatives,

what did you do next?

THE COURT: You know, I have the CV.

MR. BRADFORD: Certainly. I'm coming right to the FTC

here, Your Honor.

THE COURT: Okay.

BY THE WITNESS:

A. After that assignment, I was appointed Assistant Director of

the Bureau of Consumer Protection at the Federal Trade

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Harris - direct 14

Commission, where I headed the division which was then known as

the Division of Marketing Abuses.

Q. Could you describe briefly your responsibilities at the

Federal Trade Commission?

A. Yeah. I headed a division of approximately 20 people, most

of whom were lawyers, some of whom were paralegals. And we were,

the areas that fell within our responsibility were false and

deceptive advertising; land sales; franchising; vocational

schools; point of sales practices, which means any economic fraud

that takes place at the point of a sale; and housing

construction.

Q. And as part of your responsibilities, did you have

responsibility for cases or matters involving false and deceptive

advertising?

A. Yes, I did.

Q. And at any point in the course of your responsibilities at

the Federal Trade Commission, did you participate in any

discussions or determinations of the Federal Trade Commission's

policy with respect to or application of policy with respect to

what is sometimes referred to as the mirror image doctrine?

A. Yes, I did.

Q. Could you describe how you participated in such discussions?

A. Sure. Well, the mirror image doctrine is a moniker for an

enforcement policy on advertising in books. And the commission

was always rightfully concerned with the intersection of its

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Harris - direct 15

enforcement, especially when it dealt with First Amendment

protected areas such as books and informational publications and

how the FTC's enforcement policy ought to, ought to be handled so

that it was consistent with First Amendment rights, didn't

infringe on First Amendment rights.

And as a result, the commission had an enforcement

policy called the enforcement in the advertising of books known

as the mirror image doctrine.

The purpose of this doctrine was to set up some ground

rules for the advertising of books so that the general public,

businesses, authors would understand that if they complied with

the requirements of this doctrine, that they would generally not

be subject to enforcement actions by the FTC in the advertisement

of books.

Q. And with respect to your participation in discussions related

to the mirror image doctrine, in what form or manner would you

participate in such discussions?

A. Well, generally there were several divisions under the Bureau

of Consumer Protection. And the director of the bureau at that

time used to hold weekly meetings, the purpose of which was to

discuss pending actions or actions that were being contemplated

from each of the divisions.

During those discussions, whenever you get into

advertising, you inevitably are led to consider the First

Amendment. And when the advertising involved informational

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Harris - direct 16

things as opposed to products, the mirror image doctrine would

often come up in terms of trying to define the line between

enforcement and a healthy respect for the First Amendment.

Q. And as a consequence of your experience at the FTC, do you

believe you came to have an understanding of FTC enforcement

policy related to the mirror image doctrine and its purpose?

A. I certainly do.

Q. And following your service at the FTC, did you ultimately

begin to practice law privately?

A. Right. After going back to the Department of Justice, where

I was the Deputy Associate Attorney General of the United States,

I went into private practice after a year as general counsel to a

bank. And in that private practice, I have dealt with many

matters involving commercial speech as well as many matters with

the FTC.

Q. What firm are you presently affiliated with?

A. The name of the firm is Rubin, Winston, Diercks -- which is

D-i-e-r-c-k-s -- Harris & Cooke.

Q. And how long have you been affiliated with that firm?

A. Since 1990.

Q. What is your position at that firm?

A. I am the managing partner. And I've been unable to get any

of my partners to accept the position.

Q. Apart from yourself, does your firm have any expertise in FTC

matters or matters of commercial speech?

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Harris - direct 17

A. Yes. Actually my firm has, we have seven partners, three,

three of us are alumni of the FTC. One of my partners was

director of the Division of Compliance, I was head of Marketing

Abuses, and the third partner was a senior staff attorney.

Q. And approximately what portion of your own practice has been

devoted to issues of FTC compliance and related issues of

commercial speech?

A. It's hard to say. It varies over the years. But probably on

the average there are one or two matters in the house at any

given time dealing with the FTC as an opponent.

Q. And with respect to matters in the office to the extent that

any of your partners are primarily responsible for those matters,

have you had occasion to consult on those matters as well?

A. Yeah. The way we operate is, if we have an FTC matter, the

three, myself and my two partners are invariably fully engaged in

each of those matters. We do it as a team approach.

Q. And are the matters involving the FTC in which you have been

involved set forth in your curriculum vitae?

A. It's an attachment to it. Yes, it is. It's the last page.

Q. And similarly, are the commercial speech cases that you have

been involved with as to which there are published opinions also

identified in your curriculum vitae?

A. Yes. A couple of those dates, which have dates before 1990,

my firm was involved in, but I personally wasn't.

Q. And with respect to your service in the firm, do you have

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Harris - direct 18

occasion to advise clients on matters that do not result in

cases?

A. Absolutely. Very often the FTC will make an inquiry of a

business person. They will seek counsel, and the matter doesn't

ultimately end up in an administrative or a U.S. District Court

action.

Q. In fact, in your experience, how frequently is it that you

have opportunities to discuss matters with the FTC prior to their

bringing any such action to court?

A. Whenever we get approached by a client, it is always our

first phone call, frankly, to the FTC to try and engage them in

discussion.

I know from my days at the FTC that the FTC is

interested in voluntary compliance. They really don't have the

resources to have a full-scale battle on every matter that comes

in their purview.

So discussion with the FTC to see if matters can be

resolved short of an administrative order is always our first

priority. If we can't do that, we like to talk to them about

settling a matter via administrative order. And then there is

some cases which end up in having to go to U.S. District Court.

Q. Have there been any cases that have actually gone to court

that you've been personally involved in that involved the mirror

image doctrine?

A. Yes. One of the first major cases that involved the mirror

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Harris - direct 19

image doctrine involved a client of ours named Wayne Phillips.

And that involved an order with the FTC. And it addressed the

mirror image doctrine.

Q. In your opinion, was that case of any significance?

A. Yes. Frankly, that case has been and is always one of the

cases cited on the rather infrequent occasions in which people

write about the mirror image doctrine.

Q. And with respect to your experience advising clients, with

what frequency have you had occasion to advise clients or discuss

with them the mirror image doctrine?

A. The mirror image doctrine almost invariably comes up, and the

way it usually does is that the first thing a business person is

likely to say to you when the FTC is attacking some ad or

promotion that they have is: What about my right, my First

Amendment right? Isn't there a right of free speech?

And we generally go through the litany of explaining to

them that in the advertising -- that there are rules with regard

to the advertising of commercial products.

And then in the middle, there are those cases in which

you're advertising a third-party's product, and you're required

to have ad substantiation.

And on the other extreme where the mirror image doctrine

comes in, when you're advertising or promoting books or other

informational kind of products as opposed to what I would call a

hard product.

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Harris - direct 20

Q. So with what frequency then do you have occasion to discuss

the mirror image doctrine with clients?

A. I go routinely when there is an advertising issue with a

client, I routinely go through that with every one of them, even

if their case does not involve a book or an informational

publication to try and place for them in some context a

commercial, how the First Amendment and commercial speech fit

together.

Q. And in the course of your professional work, do you endeavor

to stay current on and read various articles that relate to the

mirror image doctrine?

A. I do.

Q. I'd like to draw your attention to Exhibit JJ.

A. I have it.

Q. Are you familiar with Exhibit JJ?

A. Yes, I am.

Q. What is that exhibit?

A. It is a Law Review article that appeared in the spring 2008

edition of the West Virginia Law Review written by a senior staff

attorney at the FTC named Keith Fentonmiller, which deals with

the mirror image doctrine and his analysis of it.

Q. Is this one of the articles that you've read in the course of

your professional work?

A. Yes, it is.

Q. Is it an article that you rely upon in forming opinions about

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Harris - direct 21

the mirror image doctrine?

A. Yes, it is. It's an excellent piece of work.

Q. And does this article address the case that you handled that

you referred to previously, the Wayne Phillips case?

A. Yes. It goes through the Wayne Phillips case in some detail.

Q. I'd like to further draw your attention to Exhibit AAA,

that's triple A, and I'd ask you, sir, when you get a chance to

get there what that document is?

THE COURT: What was the year the West Virginia article

was published?

THE WITNESS: Spring 2008.

BY THE WITNESS:

A. You're asking me to look at AAA, did you say?

BY MR. BRADFORD:

Q. Yes, please.

A. I have it.

Q. What is AAA?

A. AAA is a reproduction of a page from the Federal Register of

July 21st, 1971 that contains the official publication of the

FTC's enforcement policy for advertising in books, which is

commonly known as the mirror image doctrine.

Q. And do you have an understanding as to why this particular

enforcement policy is referred to as the mirror image doctrine?

A. I do, because it basically, if you wanted to give it a

shorthand moniker, it provides a safe harbor from enforcement in

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Harris - direct 22

most cases in which the advertising for a book restates what's in

the book or states an opinion of the author.

Q. And finally, I'd like to draw your attention to Exhibit RRR.

A. I have it.

Q. What is Exhibit RRR?

A. RRR is a case that the FTC had in 1994 called Wyatt, in the

matter of Wyatt Marketing Corporation, Inc.

Q. And is that a case that you became familiar with in the

course of your practice?

A. Yes, I'm familiar with that case.

Q. Why is it you became familiar with that case?

A. Well, in the course of deciding the case, one of the FTC

commissioners, a fellow named Commissioner Roger Starek,

S-t-a-r-e-k, wrote about the mirror image doctrine in conjunction

with the order that the FTC was considering entering in this

case.

The FTC order was to contain language which prohibited

generally the misrepresentation of the contents of books. Roger

Starek, Commissioner Starek wrote a concurring opinion and which

appears at page JH150, in which he basically explains what the

mirror image doctrine is, what its purpose is, and expresses the

view that in FTC orders, it would have been his preference to

actually quote or lift the mirror image doctrine language and put

it in the order rather than give it the shorthand of not

misrepresenting the contents of the book or language similar to

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Harris - direct 23

that. He said he thought that that would be more appropriate.

He concurred in the result, but was in the minority on

the view that he expressed that the order contain the quoted

language from the mirror image doctrine.

Q. And is the Wyatt decree a matter that you've relied upon in

your professional work?

A. Yes.

MR. BRADFORD: At this time, Your Honor, we would move

to qualify Mr. Harris as an expert in the field of custom and

practice with respect to the enforcement of FTC laws,

regulations, and orders related to advertising and commercial

speech.

MS. KAPIN: Objection, Your Honor. May I engage in voir

dire, or would you prefer me to do that as part of my

cross-examination?

THE COURT: Why don't we just note your objection and

let Mr. Bradford finish, and then you can cross him.

MS. KAPIN: That would be fine. Just to be clear about

the basis of our objection, it's the FTC's view that Mr. Harris's

opinion is as a matter of fact actually a legal conclusion about

the Court's order and hence is irrelevant. And we also dispute

whether Mr. Harris is qualified to opine on the matters he is

opining on.

THE COURT: Well, he certainly has had a lot of

experience with the FTC and enforcement and that sort of thing.

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Harris - direct 24

Whether or not his testimony meets the Daubert standards or 702,

we'll see.

MS. KAPIN: Thank you, Your Honor.

THE COURT: Okay.

BY MR. BRADFORD:

Q. Mr. Harris, do you have an opinion based on your years of

experience both at the FTC and in private practice as to what

role, if any, custom and practice plays in the field of FTC

enforcement?

A. Yeah. Custom and practice is extremely important in FTC

practice, and the reason is as follows. I also, as I said, was a

federal prosecutor. Federal criminal statutes are pretty

specific, if they're not, they may fail for vagueness. So they

generally set a bright-line standard from which a person knows

what conduct he has to adhere to to avoid being in violation of a

criminal law.

The FTC enforces, has enforcement authority, which is

very generic and very broad such as the Section 5 fairness

requirement, the FTC, the standard for enforcement is: Is the

action fair?

So in order to, in order to flesh out and give some

definition to a generic standard like fairness, the FTC has a

number of vehicles that they use to provide further information

and guidance to the public, the business community, the legal

community. And those take the form of things like advisory

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Harris - direct 25

opinions, commission letters, staff letters. And one of the most

formal of these various kinds of informational vehicles is

something called an enforcement policy. And this is a policy

which the commission approves, and it is published in the Federal

Register. And it sets standards for when the FTC will exercise

its enforcement policy in a specific field. The one we're

dealing here today in is the enforcement policy related to

advertising in books.

Q. And that enforcement policy --

A. Let me state one other thing. The reason the FTC does this

is the FTC, like the IRS, relies to a large extent on voluntary

compliance of the public to accomplish their mission. They feel

and I know from being at the FTC, it was our view that we felt

that if we put that information out there, most businesses in the

United States want to comply with the law, and if you give them

guidance, they will do it.

One of the things I did often as an assistant director

was addressing industry groups, and I can recall one here at the

McCormick Center, to advise industry what the standards were and

then ask for their voluntary compliance.

Q. And is the mirror image doctrine an FTC enforcement policy

that's been published in the Federal Register as you've referred

to?

A. Yes. And you just showed me a page in the exhibit book which

contained that.

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Harris - direct 26

Q. And based on your experience and custom and practice in the

field of FTC enforcement, do you have an opinion as to whether it

is reasonable for a business to rely upon the mirror image

doctrine in determining what advertising it can publish?

A. Yes, I do have an opinion, and the opinion is that businesses

do and are entitled to rely on FTC enforcement policies such as

the mirror image doctrine.

Q. What is the basis for your opinion as it pertains to the

mirror image doctrine?

A. Well, with regard to, generally with regard to all

enforcement policies at the FTC, one of the jobs of the assistant

directors was public outreach. And we often would speak to

groups to promulgate enforcement policies that may be out there

but which were not known very well to members of the public or

businesses, to tell them that the FTC will engage in enforcement

pursuant to the following standards.

If you obey the following standards or are within the

following standards under the ordinary case, in most cases, you

will not be subject to enforcement action.

The other way that I know it is I've seen publications,

business publications in which general counsels of trade

associations and the like write to the members and inform them

about the mirror image doctrine specifically with the purpose of

telling them that if they adhere to the requirements of the

mirror image doctrine as to the advertising of books, they will

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Harris - direct 27

be -- have a safe harbor from FTC enforcement actions.

Q. And in your report, have you identified some of those

industry publications that address the mirror image doctrine?

A. Yes, I have.

Q. If you could turn to your report, which is Exhibit Z, I'd

appreciate your identifying those articles.

MR. BRADFORD: Your Honor, for the record, the complete

copy of the articles have been submitted as Exhibit UUU. I

believe that may be one of the exhibits that was delivered to

chambers most recently and may not yet be contained in the binder

that Your Honor has. But the relevant portions of those articles

are in his report. And for convenience, I'm going to refer him

to his report rather than the actual articles.

BY THE WITNESS:

A. Okay. I have Exhibit Z.

MS. KAPIN: Your Honor, just a standing objection to

Mr. Harris's report. The report is hearsay. Mr. Harris's

testimony is what is important. We have no objection, of course,

to him referring to the report as a shorthand, but we just want

to make clear our objection to the report itself.

THE COURT: The report will not be admitted into

evidence. The CV can be admitted into evidence.

MS. KAPIN: We have no objection to that.

THE COURT: The report itself cannot be.

BY MR. BRADFORD:

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Harris - direct 28

Q. Are the articles that are identified as Exhibit UUU from

which you have excerpted portions in your report articles that

you have relied upon in forming an opinion in this matter and

more generally in forming professional opinions about the mirror

image doctrine?

A. Yes.

Q. Do you believe that these articles are sufficiently reliable

for you to rely upon them for that purpose?

A. Yes.

Q. Could you identify the articles and portions of the article

that you've relied upon in forming your opinion that it is

reasonable for businesses to rely upon the mirror image doctrine?

A. Sure. I relied on three that I incorporated and I can speak

to.

The publication called the Direct Marketing News, which

is an industry publication to direct marketers, had an article in

August of 2000, the year 2000 written by, written by legal

counsel for the Direct Marketing News. And it said, and it said

in relevant part that "Direct," and this is a quote, "Direct

marketers selling books or videotapes have long relied upon the

mirror image doctrine." And it went on to say that "the policy

provides a safe haven afforded by the doctrine." That was one

example.

Another was in a publication called Response, and it was

an article written by two attorneys, who I believe are at

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Harris - direct 29

Venable, but I'm not a hundred percent certain of that, but I

believe that's where they --

Q. But by "Venable," you're referring to the name of the law

firm?

A. Yes, a law firm in Washington and Baltimore and other places.

The article contained the following, it said, "Selling a

controversial weight loss or healthcare product might result in

the demand for substantiation that supports your claims. But

selling a book or tapes about the product should keep you out of

harms way if you comply with the requirements of the mirror image

doctrine."

The third example I've given is something from a

publication called The Electronic Retailer Magazine. And it was

discussing a trade regulation rule of the Federal Trade

Commission called The Business Opportunity Trade Regulation Rule,

which was in my purview when I was at the commission. And it was

addressing a book which was entitled, How to Earn Up to a Hundred

Thousand a Year Or More From Home By Mail, the Complete Guide to

Starting Your Own Home Based Mail Order Business.

And the article said that, and this was again counsel

for this organization, "I am confident that the FTC staff would

never bring a rule enforcement action against the author or

publisher of this book or a book store that advertises and sells

it. Such an action would be inconsistent with the First

Amendment and the FTC enforcement policy."

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Harris - direct 30

So those are the three examples I've given, I gave in

this report.

Q. Have you had an opportunity to review the Court order that

was entered in this case?

A. Yes.

Q. I believe for the record it is Exhibit 1.

And you're familiar with the provisions of that order

that effectively state that Mr. Trudeau may not misrepresent the

content of a book or informational publication?

A. Yes, I've read it.

Q. And do you have an opinion based upon your years of

experience, including your experience at the FTC, as to whether

there is a custom and practice in the field of FTC regulations

and orders as to whether the provisions of the order in this case

would reasonably be understood as coextensive with the mirror

image doctrine?

A. I do have an opinion, and my opinion is that it would be

understood as coextensive with the mirror image doctrine.

Q. And what is the basis for that opinion?

A. Several. One, I've seen it in other orders. That language

that is intended to address the mirror image doctrine is often

expressed in language similar to the one entered by Judge

Gettleman here, namely, "not misrepresent the contents of the

book" to mean the compliance with the mirror image doctrine.

In other words, if you comply with the mirror image

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Harris - direct 31

doctrine, you ipso facto have not misrepresented the contents of

the book. And the reason I say that is the mirror image doctrine

has been in existence and extant for 37 years. The FTC has never

modified it, changed it, or revoked it.

And I can tell you that based upon having been in a

fairly high level of management at the FTC, the FTC would never,

would never promulgate an enforcement policy that in their view

allowed one to misrepresent the contents of a book. That's --

Q. I'm sorry. That was one reason?

A. That's another reason. The other is if you look at

Mr. Fentonmiller's excellent article, which contains excellent

legal analysis, he goes through and interchangeably talks about

the mirror image doctrine and not misrepresenting the contents of

the book.

And it's clear from the context of reading that article

that he as an FTC staff member, and I recognize he's speaking for

himself, and the article contains the usual disclaimer you would

expect, but that it is reasonably understood by FTC staff, FTC

practitioners that that phrase or phrases like it refer to

compliance with the mirror image doctrine.

Q. Are you familiar with any decrees that have language similar

to this that have been interpreted as inclusive of the mirror

image doctrine?

A. Yes, I am.

Q. Can you identify one such decree?

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Harris - direct 32

A. Well, the Wayne Phillips case is one, and Mr. Fentonmiller's

article refers to a couple of others.

Q. Do you have any understanding as to whether the Wyatt case

that you referred to previously is consistent?

A. Yes, the Wyatt case is another example. And that was

Commissioner Starek's, it was a concurring opinion, but he was

dissenting from that language.

Basically it contained language very similar to the "not

misrepresent the contents of the book." And Commissioner Starek

said: Since you're talking about the mirror image doctrine, I

would prefer to see you use the actual language of the doctrine.

But that, that position was not adopted by the

commission. He was outvoted, and the Wyatt order was approved

with the language that was in it.

Q. Which was a shorthand form of language as opposed to the

entire doctrine, is that correct?

A. That's correct.

Q. Could you please describe what you understand the mirror

image doctrine to be or to provide?

A. Well, the mirror image doctrine is an enforcement policy in

which the FTC announces to the public that they will normally not

engage in an enforcement action in the advertising of books

where, and here are the requirements, the advertising contains

the opinions of the author or quotes from the contents of the

book and the source of the advertising is the author.

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Harris - direct 33

Q. I'm sorry, you said that it's opinion or it quotes from the

content of the book. Is that disjunctive?

A. That is disjunctive. If you hit either bench mark, you have

the safe harbor protection afforded by the mirror image doctrine.

Q. So if a statement is a statement of fact, as you understand

the mirror image doctrine, can that qualify for protection?

A. If the statement of fact is also a statement contained in the

book, the answer to your question is yes, it does qualify and

does provide a safe haven.

Q. And in addition to the material you've identified, have you

had the opportunity to look at other publications of Mr. Trudeau

and other informercials of Mr. Trudeau other than the Weight Loss

infomerical and book?

A. Yes. I looked at the infomercial and the book called, and I

don't remember the full name, but Natural Cures.

Q. And did you also look at the infomercial for the Natural

Cures book?

A. Yes, I did.

Q. And did you have an understanding as to whether prior to and

at the time of the entry of this order the FTC had approved and

identified that book and that infomercial as acceptable and

whether it was held up as an example of what Mr. Trudeau could do

in this case?

A. Yes.

Q. And based upon your review of the specific infomercial and

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Harris - direct 34

book that were identified in court as examples of what

Mr. Trudeau was permitted to do under the order, did that further

inform your opinion as to whether this order incorporated the

mirror image doctrine?

A. Yes, it did. To be very frank about it, the Natural Cures

book, when you read the book, which is about natural cures, when

you get to what you expect is the denouement where Mr. Trudeau is

finally to reveal to you the cures, lo and behold, he said:

Sorry, can't tell you what they are, because I've been prohibited

from doing so by the FTC and the FDA.

When you look at the infomercial for that book, I think

it is, it is undeniably clear that the advertising for the book

leads one to believe that if you buy the book, you're going to

find out what the cures are.

So I regard it, if the FTC didn't have a problem with

that, I regard that as far more on the edge than the book which

causes us to be in court today.

Q. In your mind, is it possible to reconcile the FTC 's

agreement that Mr. Trudeau could proceed with the original

Natural Cures book and original Natural Cures infomercial with a

view the order does not contain the mirror image doctrine?

A. Can you repeat that question?

Q. Sure. In your opinion, could the FTC have approved that

original book for Natural Cures and that original infomercial if

the order did not have the mirror image safe harbor?

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Harris - direct 35

A. No, no, I don't think so. And, you know, in my own mind's

eye when I think about that book and the other, I think of, say,

an archery target, and I'd say that Natural Cures book was

somewhere on the outer circle as compared to the book that brings

us to court today.

Q. Did you have an opportunity to review the Weight Loss book

and the weight loss informercials that do bring us to court

today?

A. Yes. I read the book and reviewed the infomercials.

Q. And based upon your years of experience, do you have an

opinion as to whether or not Mr. Trudeau's informercials for the

Weight Loss book are compliant or not with the mirror image

doctrine?

A. Yes. I believe that the informercials fall within the safe

harbor protection of the mirror image doctrine.

Q. What's the basis for that opinion?

A. Well, there are two bases. As I said, there are two prongs

or two ways that you can fall within the protection of the mirror

image doctrine. One is to express the opinion, where the author

expresses his opinion.

Now, I understand from having been deposed by Ms. Kapin

that the FTC does not -- is not of the view that what Mr. Trudeau

said are opinions. I would disagree with her. But let me deal

with opinions first and then go to facts.

If, in fact, what Mr. Trudeau said are opinions of the

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Harris - direct 36

author, then they're absolutely protected under the mirror image

doctrine. And if you're interested, I can tell you why I think

they're opinions. But let me go on to the second prong.

Even if they are to be regarded as facts and not

opinions, if those facts are repeating facts that are in the

book, they are entitled to the safe harbor protection of the

mirror image doctrine under the second prong of the doctrine.

Q. Did you have occasion to compare whether the various

statements that the FTC complained about in this case were, in

fact, contained in the book?

A. Yes, I did.

Q. And is that comparison set forth in your report?

A. It is. I gave, I gave a lot of examples of it in the report.

Q. Could you -- and also I guess I'd like to draw your attention

at this time to Exhibit B?

A. B as in boy?

Q. B as in boy.

A. Yes, I have it in front of me.

Q. What is Exhibit B?

A. Well, it appears to be a chart which compares, which compares

objections cited in the FTC's briefs or problems the FTC cited in

their brief with lists of references that appear in the Weight

Loss Cures or the Weight Loss book.

Q. And did you form a conclusion as to whether, to start with

the assertions in the infomercial, that this weight loss cure or

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Harris - direct 37

regime was easy, was compliant with the mirror image doctrine?

MS. KAPIN: Your Honor, we have an objection to this

exhibit under the best evidence rule. The best evidence of a

comparison of the statements in the book or the infomercial would

be to look at the book and the infomercial, not to a selective

chart of such statements.

THE COURT: Well, I mean, it is really a demonstrative

exhibit in aid of argument, if you would. I don't have a problem

with it, unless there is something inaccurate about the excerpts

that are in it. I haven't looked at it before, I must tell you.

MS. KAPIN: Some of the excerpts are incomplete. I

mean, it is referenced, there are ellipses in there.

THE COURT: There is an objection to completeness.

Well, all right. Let's let this go forward right now.

MR. BRADFORD: We're using this as a demonstrative.

THE COURT: I'll take that into account. Go ahead.

MR. BRADFORD: Thank you.

BY MR. BRADFORD:

Q. Did you form an opinion, sir, as to whether the assertions in

the infomercial that this diet program was or diet protocol was

easy was compliant with the mirror image doctrine?

A. Yes, I did.

And let me just state I looked at that exhibit that we

just talked about that Ms. Kapin objected to, and I also read the

Judge's order, and it seemed to me that the two major categories

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Harris - direct 38

of information were this question about is the program easy and

the second being, when you're in phase four, the life-long phase,

can you eat anything you want. So I focused on those two general

areas.

Q. What did you determine in your opinion with respect to

statements about the protocol being easy?

A. As I said, it is my view that that's an opinion and not a

fact. But even assuming that the FTC's position that it's

factual and not opinion is correct, I found that the book

contains numerous, numerous statements that the program is easy

to do, easy to follow, enjoyable and easy. And I set some of

those out in my report. I did not quote them, but I paraphrased,

and those are referenced in my report.

And from that I concluded that the statements in the

infomercial that the program was easy to follow, easy to do, easy

to stay on was repeating the same statements that were made in

the book and, therefore, was entitled to protection under prong

two of the mirror image doctrine.

Q. How about with respect to statements that somebody using this

protocol can eat anything they want, mashed potatoes and ice

cream and so forth?

A. Right. The infomercial is replete with statements about

being able to eat pasta, pizza, mashed potatoes, apple pie, et

cetera, ice cream. And when I read the book, and I cite in my

report, there were many examples in which Mr. Trudeau says that

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Harris - direct 39

during phase four, the life-long phase, that both he and readers

of the book, and he talks about himself personally, what he eats,

but he also says that once you're in phase four, you can eat

anything you want. He goes through the litany of just about

every high caloric food known to man and says that you can eat

those.

Q. With respect to your opinion, does it affect your opinion

that in the book Mr. Trudeau states that those foods should be

organic, whereas that is not referred to in the infomercial?

A. No, I don't think that's an issue here, because, I mean, let

me give you the example, Mr. Trudeau says you can eat mashed

potatoes. I think it's of little moment for the purposes that

bring us together today whether that Idaho potato was grown by an

organic farmer who didn't use pesticides or the guy next door who

did. I don't think that's relevant to this discussion.

Q. And how about the fact that in the book there is a

requirement to take up to six weeks of injections as part of this

protocol, and that fact is not mentioned in the infomercial?

A. Well, you know, one of the criticisms by people like

Mr. Fentonmiller of the FTC of the mirror image doctrine is he

doesn't think it really serves the FTC well. But the fact is

that the enforcement policy promulgated by the FTC has two

prongs. It protects opinions of the author, and it protects

statements made in advertising that are also contained in the

book.

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Harris - direct 40

There is no requirement that it have additional

disclosures or anything else. You are protected. And I would so

advise a client, I think it's understood by business people who

understand the doctrine, if the advertising repeats what's in the

book. It doesn't have to obviously, if you have an advertisement

for a 400-page book, you certainly can't put the entire book in

the advertisement. I mean, that --

Q. What about where you have a book that makes certain

assertions, but also has other assertions that are contradictory

to the first set of assertions?

A. Well, that's actually the exact question that Ms. Kapin asked

me during my deposition with regard to a book called The

Beardstown Ladies, which was an investment book. And she said,

"Well, what about if they say you're going to earn 30 percent on

page 10, but on page 170 they say you're only going to earn 5

percent? What if your advertisement only has the 30 percent in

it?"

And my opinion is that you are protected if you say 30

percent and that's what is contained in the book.

The question about whether that's good policy or whether

the rule is constructed in a way to properly balance enforcement

needs and First Amendment needs, that's beyond the scope of my

testimony. But it's clear that the enforcement policy, which has

been in effect 37 years, the FTC has never modified it or changed

it, that what I can tell you is the policy says that if your

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Harris - direct 41

advertisement repeats something that is in the book, it is

protected.

Q. Apart from your review of the book and the informercials at

issue in this case, did you rely upon any other facts or

documents in forming your opinion about whether these particular

informercials were in compliance with this order?

A. Well, you know, as I said, I looked at the Natural Cures, the

other or the prior book that Mr. Trudeau wrote and promoted

through an infomercial, and I looked at Mr. Fentonmiller's

scholarly work in the West Virginia Law Review.

Q. You mentioned the first book that Mr. Trudeau did related to

Natural Cures. Are you familiar with the fact that he then

revised that book to actually include some 50 different cures for

different diseases?

A. Yes. I'm not sure if they're two editions of the same book

or revisions of it, but, yes, I've seen both, the original, the

original one, and I've seen the one that contains what appears to

be many pages of charts of diseases and cures.

Q. And did the fact that the FTC had no objection to the second

book have any bearing on your opinion?

A. Well, it did to the extent, because when I told you that the

original book I thought was closer to the edge because it didn't

contain the cures, and you were led to believe it would, the

second one does contain the cures and, therefore, I think fits

within the mirror image doctrine.

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Harris - direct 42

It also had a chapter dealing with dieting. And it

contained many of the statements that appear in his later book

about what you can eat after you achieve your dietary objective.

Q. If Mr. Trudeau had come to you with his order and with the

informercials at issue in this case and with his Weight Loss book

and asked you to advise him as to whether those informercials

were compliant with the order, what would you have told him?

A. What I would have said, I would have explained the mirror

image doctrine to him and said that these are the benchmarks, and

if you stay within this conduct, namely, that when you advertise

your book, if you express an opinion, one, you identify yourself

as the author so there is no question as to the source of the

opinion, and that that opinion is protected; and, two, that if

you make a statement in the advertising that is also contained in

the book, it is protected even if the statement is blatantly

false.

And let me give you an example. For example, if the

president of Iran, who believes that the Holocaust never took

place wrote a book that said the Holocaust never took place, and

he wanted to promote that book, the statements, even though we

all know that that statement is blatantly false, that statement

in advertising is protected, because it is repeated in the book.

Q. Do you believe that Mr. Trudeau's informercials complied with

that doctrine and that order as you observed them?

A. I do for two reasons, one, I believe that the statement, the

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Harris - cross 43

statements about easiness are opinions; but even if they aren't,

both the statements about easiness and the statements about what

you can eat, even if they're considered factual statements, they

are repeated in the book, and, therefore, they are permissible in

the advertising.

MR. BRADFORD: I have no further questions at this time,

Your Honor.

THE COURT: Thank you.

Your witness.

MS. KAPIN: Your Honor, just as a housekeeping matter,

we may be putting some exhibits up on the screen, so if you have

no objection, I would like my paralegal, Ms. Bergquist, to be

able to handle that.

THE COURT: Sure.

CROSS-EXAMINATION

BY MS. KAPIN:

Q. Good afternoon, Mr. Harris.

A. Hello again, Ms. Kapin.

Q. Mr. Harris, you've never testified as an expert before a

federal court?

A. Or any other court.

Q. My next question, you anticipated it.

You've never acted as a consulting expert before either,

have you?

A. Well, we have in some commercial speech cases, we have

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Harris - cross 44

consulted with counsel. So I'm not sure if that would qualify as

an answer to the question. But as an expert witness, no.

Q. And my question is whether you've acted as an expert

consulting witness?

A. And I think the answer to that is on commercial speech cases,

yes, not as a witness, as a consultant to other lawyers.

Q. Mr. Harris, do you remember having your deposition taken in

this case?

A. Sure.

Q. And you swore to tell the truth in that deposition?

A. Absolutely.

Q. And you did tell the truth, in fact, is that right?

A. I certainly did.

MS. KAPIN: Counsel, I want to focus your attention on

page 48 of Mr. Harris's deposition.

Can you get that up here?

BY MS. KAPIN:

Q. I'm going to focus, Mr. Harris, during your deposition I

asked you at line 12:

"Have you ever testified as an expert before?

"Answer: No.

"Question: Have you ever acted as a consulting witness

before?

"Mr. Hurtado: Consulting expert, you mean?

"Ms. Kapin: I'm sorry. Yes, that's exactly what I

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Harris - cross 45

mean, Dan.

"Have you ever acted as a consulting expert before?

"The witness: No."

A. That's correct, that's what I said.

The only distinction I'm trying to make here is I have

provided consultation to other lawyers in commercial speech

cases.

Q. Now, Mr. Harris, you worked at the FTC for approximately two

years, is that correct?

A. Correct.

Q. And that was back in 1979 through 1981?

A. Yes.

Q. Approximately 27 years ago?

A. Yes.

Q. At that time, only about 25 to 30 percent of your caseload at

the FTC involved advertising cases?

A. That's correct.

Q. During your time at the Federal Trade Commission, you weren't

personally involved with any matters involving the mirror image

doctrine, were you?

A. No, other than as I described in meetings of the senior staff

discussing potential matters that might come before the FTC, I

was not involved in a mirror image doctrine case. And, frankly,

I don't remember one being before the commission during that

period.

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Harris - cross 46

Q. You've never written any articles that addressed commercial

speech, have you?

A. No, no, I haven't written articles.

Q. You've never written any articles on the mirror image

doctrine either?

A. Correct.

Q. Other than this matter, you only worked on one case that

involved the mirror image doctrine?

A. That's right. And I would say probably in the last 20 years

my guess is that nationally there probably haven't been more than

10 or 12 cases involving the doctrine.

MS. KAPIN: Your Honor, even though I know your answer

in advance, I still at this time would move to exclude the

testimony of Mr. Harris because of his limited experience as a

Federal Trade Commission insider, so to speak, and his limited

experience with the mirror image doctrine in addition to the

reasons set forth in our motion in limine.

THE COURT: All right. I'll take it under advisement.

BY MS. KAPIN:

Q. Mr. Harris, prior to writing your report, I'm going to put

down my pencil, because otherwise I'm going to have this terribly

irritating habit of pointing at you with it, prior to writing

your report, Mr. Harris, you never spoke with Mr. Trudeau, isn't

that correct?

A. That is correct.

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Harris - cross 47

Q. At the time you wrote your report, you had no idea how

Mr. Trudeau attempted to comply with the order?

A. That is also correct.

Q. At the time you --

A. Let me just say I watched the informercials. So to the

extent you might consider what he said as attempting to comply, I

did watch the informercials. But other than that qualification,

I gave you the answer I gave.

Q. At the time you wrote your report, you didn't review

correspondence between the Federal Trade Commission and

Mr. Trudeau's attorneys about the order of compliance, did you?

A. No. I did not review any written correspondence at that time

between the FTC and the attorneys at Jenner & Block.

Q. Mr. Trudeau is compensating you for your work on his behalf,

is that correct?

A. He certainly is.

Q. Earlier this year you received a $20,000 retainer from

Mr. Trudeau?

A. That's correct.

Q. And you're being paid $500 an hour for your testimony?

A. That is what I am charging him, which is within the range of

what I charge clients. In other words, I'm not charging any

premium.

Q. I'm sure Mr. Trudeau is happy to hear that.

I want to draw your attention now to the language of our

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Harris - cross 48

order that is at issue in this case. You're familiar with the

Court's 2004 injunction, is that correct?

A. You're referring to the order in this case --

Q. Yes.

A. -- that Judge Gettleman entered?

Q. Yes.

A. Yes, I am familiar with it.

MS. KAPIN: If we can get the language up on the screen,

this is in Exhibit 1, not the First Amendment language. We're

going to focus on page 8 in section 1.

(Discussion off the record.)

BY MS. KAPIN:

Q. Mr. Harris, I just want you to know that from time to time

I'll be referring to FTC exhibits. And this exhibit, if it's

hard to read, although we'll zoom in on it, will be in Exhibit 1

of our exhibit book.

A. Okay, because if this is an eye test, I would fail this one.

Q. No eye tests.

THE COURT: You're not the only one.

MS. KAPIN: Can you zoom in, Ms. Bergquist, on the

"Additionally, the infomercial for any such book." That's about

two-thirds of the way down, "additionally," keep going up, there

we go. Okay. "Must not move to misrepresent the content."

There we go, just zoom in on that. There we go.

BY THE WITNESS:

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Harris - cross 49

A. What page are we on, Ms. Kapin?

BY MS. KAPIN:

Q. This is page 8 of Exhibit 1.

A. Okay.

Q. Okay. Now, the language of part 1 that's highlighted, that

language does not set forth the mirror image doctrine verbatim,

does it, Mr. Harris?

A. No, it doesn't.

Q. Okay. Your own, your own testimony referenced Commissioner

Starek's views from the Wyatt Marketing case, is that correct?

A. Correct.

Q. And Commissioner Starek in that case preferred that if safe

harbor, designed to incorporate or accommodate, accommodate the

mirror image doctrine or use in the future, Commissioner Starek

would prefer they incorporate all of the doctrine's clauses. I

believe you referred to that portion of Commissioner Starek's

opinion in your direct testimony, is that correct?

A. I did.

Q. And you yourself agree with that view, isn't that correct?

A. Agree with what view?

Q. You agree with the view that if an order wants to

incorporate, it wants to include safe harbors designed to

accommodate the mirror image doctrine, that said orders should

incorporate all of the doctrine's clauses?

A. Well, if you're asking me, I would have to say yes. And the

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Harris - cross 50

best example I could give you is that the more -- that we

probably wouldn't be here today if, in fact, this order was more

specific.

But I have not seen any order in my experience in which

the FTC -- and while Judge Gettleman signed this order, we know

how these orders are crafted. The FTC sends a draft order to

respondent's counsel. Counsel makes comments. Eventually it

gets worked out, and if the Judge approves it, the Judge signs

it.

But this language is generally language that is

suggested by the FTC staff. And this is the kind of language

that I have seen or variations of it in FTC orders that are

attempting to address the mirror image doctrine. I can't recall

ever seeing one in which the mirror image doctrine is set out in

an order.

Q. Well, in fact, there are other FTC orders that incorporate

the mirror image doctrine language, isn't that correct,

Mr. Harris?

A. What I have said is I haven't seen one. But I can tell you

that I have, you know, have not looked at every single FTC order

issued in the last 37 years. That, I can assure you of.

Q. Commissioner Starek in Wyatt cites to the National Credit

Savers case.

MS. KAPIN: Can we see where that happens, Ms. Parrish?

BY MS. KAPIN:

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Harris - cross 51

Q. This is the concurring statement of Commissioner Starek in a

brief, and if we go to the next to the last page. There is a

footnote 2 that is cited with the language we had just discussed,

and that footnote refers to the National Credit Savers case.

Now, he does cite the National Credit Savers case. Do

you see that, Mr. Harris?

A. Right. And I noted that in the Wyatt case, I did.

Q. And, in fact, the National Credit case incorporates verbatim

the language of the mirror image doctrine. Are you aware of

that, Mr. Harris?

A. Well, I'm aware of Commissioner Starek's footnote. But as I

said, I have not, I have not seen any cases in which it did. And

I have no reason to doubt that Commissioner Starek accurately

reflected what the order says.

Q. Well, just so we see for ourselves, this is the National

Credit Savers case that Commissioner Starek cites. And we're

going to jump to the portion that here, we can take a look at

that. That, in fact, incorporates language from the mirror image

doctrine, isn't that correct, Mr. Harris?

A. Let me just read that.

Q. Sure.

A. If it's not verbatim, it's close to verbatim.

Q. Close to verbatim from the mirror image doctrine?

A. Yes.

Q. Okay. The better practice is to incorporate this language in

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Harris - cross 52

full if one intends the order to reference the mirror image

doctrine, isn't that correct?

A. Is it the better practice? I would say, I would say that to

the extent that it would avoid future litigation, it would be a

better practice.

Q. As a lawyer, one of your jobs is to protect your clients?

A. Absolutely.

Q. You've suggested yourself adding language to FTC consent

decrees in order to protect your clients?

A. Sure.

Q. One of your jobs as a lawyer is if you expect protection for

your client in a settlement document, then you make sure it's in

the document explicitly?

A. Not necessarily, because sometimes you cannot get the FTC to

agree to the language that you would like to see in the order.

Q. But if you can do that, that would be the better practice,

isn't that correct, Mr. Harris?

A. If you can get the FTC to agree, sure.

Q. Mr. Harris, the FTC has discretion to bring an enforcement

action whenever they want, isn't that true?

A. Yes, they do. And the mirror image doctrine, Ms. Kapin, has

a specific -- what it says is that in the ordinary course or in

the normal course, that the FTC will not bring an enforcement

action if you comply with the mirror image doctrine.

But I might add that the key distinction here is that

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Harris - cross 53

this is not a question of whether you had a right to bring an

enforcement action even if the mirror image doctrine was complied

with. The issue here is did Mr. Trudeau, if he was aware of the

mirror image doctrine, reasonably rely on the doctrine in

attempting to comply with the order?

So that -- so I don't believe that the issue about

whether you could have brought a de novo enforcement action is

what brings us here today.

Q. But the FTC could bring an enforcement action even if there

has been compliance with the mirror image doctrine?

A. What the policy says is that ordinarily the FTC will not.

And of all the FTC enforcement policies, and there are other

enforcement policies as you well know about, the contents of

labeling fur coats and such things, that I would, I would imagine

that an enforcement policy that touches on the First Amendment

would be dealt with with more care or more -- not "care" is the

wrong word -- but the FTC would be less likely to bring an

enforcement action where the First Amendment might be implicated.

But, yes, the FTC can bring it even, bring an

enforcement action even where the mirror image doctrine is

complied with. And there are cases in which respondents have

gone to federal court and said, "Judge, they can't do this

because I complied with the doctrine," and the courts point out,

as your question suggested, the FTC does have that authority.

Q. Of course, someone who misrepresents the content of a book

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Harris - cross 54

isn't entitled to protection of the mirror image doctrine?

A. That is because they are synonymous. If you comply with the

mirror image doctrine, you have not misrepresented the contents

of the book as a legal matter. That, that I think is one of the

points or one of the opinions I've suggested.

THE COURT: Is that in any case? Has any case ever held

that, any court ever held that?

THE WITNESS: No, not as I've just expressed it, Your

Honor.

BY MS. KAPIN:

Q. In deciding whether to bring an enforcement action,

defendant's recidivism would be a permissible factor for the FTC

to consider, wouldn't it, Mr. Harris?

A. In terms of exercising its prosecutorial discretion, I think

there are very few limits that the agency has.

Q. You stated in your direct examination, Mr. Harris, that in

your view, the Wyatt case contains a shorthand reference to the

mirror image doctrine. Did I hear you correctly?

A. I think what I said was that Commissioner Starek in his

concurring opinion about issuing the order contains a view, a

sentence or two about the purpose of the mirror image doctrine in

his own words.

MS. KAPIN: Now, can we go to page 19 of the Wyatt

opinion, Ms. Bergquist?

BY THE WITNESS:

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Harris - cross 55

A. What exhibit is that?

BY MS. KAPIN:

Q. This is actually one of the defendant's exhibits.

MS. KAPIN: David, may I ask for your number?

MR. HURTADO: RRR.

MS. KAPIN: RRR. Thank you. If we can go to page 19 of

RRR.

BY MS. KAPIN:

Q. You can tell me when you're there and we'll also highlight.

A. I'm looking for this reference at page 19. I see the copy I

have has my --

Q. Your copy is going to have different numbering than my copy.

Why don't we look on the screen together. But this is from part

three of the order in Wyatt. And I believe this is the language

here -- let me rephrase this.

The language here states, "Whenever respondent

represents that any book or other writing contains information

about a particular subject or topic, subpart B shall not be

construed to require respondent to possess and rely upon evidence

that such information in said book or other writing is true, but

only that it, only that it is present in said book or other

writing."

A. Right.

Q. Do you see where I'm referring to?

A. Yeah, I do.

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Harris - cross 56

Q. And that's what Commissioner Starek was referring to as a

reference to "some but not all of the mirror image doctrine," is

that correct?

A. Yes.

Q. That language is distinct from the language that's at issue

in this case, isn't that true, Mr. Harris?

A. If distinct, by "distinct" you mean it is not exactly the

same, that is correct. But I think the language in both is

intended to incorporate the mirror image doctrine.

And the reason I say that, Ms. Kapin, is because if the

language in this case didn't include the mirror image doctrine,

the doctrine would have no meaning. There is nothing in this

case that says that Mr. Trudeau is not entitled to rely on the

FTC enforcement policy to guide him in his attempt to comply with

the Court's order.

As a matter of fact, if you were looking for how do you

define diligently, you know, what steps do you need to take to

comply with what Judge Gettleman told him he had to do, the FTC

has an enforcement policy on this very subject that in my view if

he was aware of that policy would inform him as to the conduct

that he could engage in and the conduct that he was prohibited

from engaging in.

Q. Mr. Harris, I want to move on to another topic.

A. Are we done with, can I put Wyatt aside?

Q. Yes, yes. Mr. Harris, you would agree that commercial speech

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Harris - cross 57

is not protected by the First Amendment in the same way as

noncommercial speech?

A. Yes.

Q. It's often afforded less protection, isn't that correct?

A. Yes.

Q. And an ad for a book is commercial speech?

A. You're now -- you've now drawn me into the nub of the issue.

And the issue is that if the book is protected, and you take

steps which chills the promotion of the book, haven't you then

invaded the First Amendment?

And Mr. Fentonmiller wrestles with this problem in his

law review article. He and I, I come to a different conclusion

than he does. He thinks, as your question suggests, that the

advertisement is commercial speech and, therefore, is entitled to

no greater protection than any other commercial speech. I don't

believe that.

Q. Mr. Harris, my question is: An ad for a book is commercial

speech?

A. Yes, it is commercial speech that is entitled to

noncommercial speech protection because of the fact that it is

promulgating a protected product, namely, a book.

Q. The First Amendment doesn't give you a license to

misrepresent though, does it, Mr. Harris?

A. It does. If you wrote a book that contained

misrepresentations, you certainly do have a license to do that.

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Harris - cross 58

I could write a book which says that UFOs landed in Chicago last

week. And if we all agreed that that was absolutely not true, I

could publish that book today, and I'd be entitled to protections

of the First Amendment.

Q. Mr. Harris, do you remember having your deposition taken in

this case?

A. I do.

Q. And you swore to tell the truth?

A. I did.

Q. And you did tell the truth, didn't you?

A. To the best of my ability, I certainly did.

MS. KAPIN: Counsel, I'm on page 75 of Mr. Harris's

deposition.

MR. BRADFORD: Thanks.

MS. KAPIN: And I am reading his answer starting at page

8.

"Answer: Well, that's an example. An order which said,

which prohibits you from selling in a line of business which is

otherwise lawful, you won't sell credit cards, you won't sell

telemarketing services since the selling implicates the First

Amendment, that would be a case.

"It does not -- I would not consider it to be an

infringement on the First Amendment where it said that you agree

not to lie, cheat, and misrepresent, because I don't believe the

First Amendment gives you a license to do that."

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Harris - cross 59

BY THE WITNESS:

A. We were talking about selling products as I recall and not

books. To the extent that my answer there is clear, let me tell

you, be clear here. I believe that you can publish a book which

contains lies, and that book is entitled to the First Amendment.

Now, of course, to the extent it might be regarded as

defamatory, there are certain limits. But generally if you're

stating a statement of fact that is not true in a book, it is

entitled to protection.

BY MS. KAPIN:

Q. But you would agree that the First Amendment does not entitle

you to lie about your book in an advertisement?

A. I believe that -- well, there are two schools of thought.

Let me repeat it. There is one which thinks that because it is

the promotion of a protected right, that the promotion enjoys the

same protection as the book.

There are others, and I think Mr. Fentonmiller is an

advocate for that, who would say that the advertisement of the

book is no different ultimately than the advertisement of any

commercial product and, therefore, is subject to the limitations

that commercial speech for a product is subject to.

So what I'm saying to you is I don't think the answer is

clear. I think that the FTC, if you want my opinion, I'll tell

you, I think the FTC promulgated this enforcement policy to try

and walk the line between the kinds of questions you and I are

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Harris - cross 60

discussing, okay.

And by using this vehicle, they have avoided having

ultimately a test in which this question is answered definitively

by the Supreme Court. But I think people look at it differently.

Now, we're beyond the scope of my opinion, but I'm

answering your questions, Ms. Kapin, as best I can.

Q. Mr. Harris, at the time you wrote your report, you didn't

review any correspondence between the Federal Trade Commission

and Mr. Trudeau's attorneys about order compliance, did you?

A. No.

Q. At the time you wrote your report, you relied on

Mr. Hurtado's statement that the FTC basically cleared Natural

Cures informercials with the caveat that if consumer complaints

were received, they might need to revisit it, is that correct?

A. Yes.

Q. If you learned that the FTC hadn't cleared or approved

certain Natural Cures informercials, that would change your

opinion, isn't that correct?

MR. BRADFORD: Objection, lack of foundation, except the

question is a hypothetical.

THE COURT: You asked enough of those yourself. I'll

let him answer if he can.

BY THE WITNESS:

A. With regard to the natural -- the one that I rely on is the

Natural Cures, the approval of the Natural Cures book, Ms. Kapin,

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Harris - cross 61

if it turned out that contrary to my understanding you had not

approved it, that certainly would lessen that prong of my

rationale for my opinion.

BY MS. KAPIN:

Q. For example, if the FTC said, "We've got a problem," then

that would not permit Mr. Trudeau to say he thought it was okay

by the FTC?

MR. BRADFORD: Objection, ambiguous.

BY THE WITNESS:

A. I guess it would depend on what the problem you've then

described is. But if you said, if you said it in a way which

implicated the point that I tried to make, namely, that with

regard to Natural Cures book, it was further out on the spectrum,

yeah, you're right, I mean, if the facts change, the conclusions

you draw from those facts necessarily would be altered.

MS. KAPIN: Your Honor, may I have a moment to confer

with my co-counsel?

(Discussion off the record.)

MS. KAPIN: Your Honor, at this time I would conclude.

THE COURT: Thank you.

Any redirect, Mr. Bradford?

MR. BRADFORD: Yes, Your Honor. May I proceed? Thank

you.

THE COURT: I'd like to finish this witness, and then

we'll take a break.

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Harris - redirect 62

MR. BRADFORD: Yes, Your Honor.

THE COURT: That's a hint, Mr. Bradford.

MR. BRADFORD: I'm sorry, I missed that.

THE COURT: I said, "That's a hint."

MR. BRADFORD: I understand.

REDIRECT EXAMINATION

BY MR. BRADFORD:

Q. Mr. Harris, does the case cited in the footnote by

Commissioner Starek affect your opinion as to whether the order

in this case is coextensive with the mirror image doctrine?

A. No.

Q. Why not?

A. Because in the practice, the term "not misrepresent the

contents of the book," and you can take a look at

Mr. Fentonmiller's article from the point of view of an FTC's

staff member, the terms are used interchangeably to refer to the

mirror image doctrine.

Q. Ms. Kapin asked you if it was a better practice to

incorporate verbatim the mirror image doctrine. Is it a common

practice in your experience to do so?

A. It is not a common practice.

Q. And Ms. Kapin asked you about methods that attorneys utilize

to protect their clients. In your experience, is one of the

methods that's utilized obtaining an example and presenting in

open court an example of what is and isn't permitted under an

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Harris - redirect 63

order?

A. Can you say that again?

Q. Sure. Is one of the ways in which you protect your client

coming up with an exemplar of what is permitted advertising under

a particular order?

A. Yes. Often dealing with the FTC, what you want to do is say:

Look, here is what my client going forward would like to do. Is

this going to cause you a problem?

Q. Ms. Kapin asked you about the FTC's de novo enforcement

authority. Does that enforcement authority affect your opinion

with respect to whether or not the FTC has legal authority to

proceed for contempt of an order that's coextensive with the

mirror image doctrine?

A. No, because the question of contempt has to do with whether

Mr. Trudeau reasonably and diligently did what the Court told him

to do, not whether the FTC could in an appropriate case bring an

enforcement action.

Q. One final area. You were asked about the First Amendment.

Have you had an opportunity to review Article 11 of this consent

decree, which relates to the First Amendment? I think it was put

up on the screen initially and then questions were asked about

it. Do you recall that?

MS. KAPIN: Objection, Your Honor. This does not relate

to my cross-examination or Mr. Harris's direct testimony.

MR. BRADFORD: There were many questions on the First

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Harris - redirect 64

Amendment, Your Honor.

MS. KAPIN: But not the particular issue --

THE COURT: Well, I'll let him answer --

MS. KAPIN: Okay.

THE COURT: -- because, very frankly, I think it's up to

the Court to determine the scope of the First Amendment.

MS. KAPIN: I will give you a heads up, Your Honor, then

I'm going to need to recross.

THE COURT: Let's see what he says first.

BY MR. BRADFORD:

Q. Are you familiar with that provision in the order?

A. Yes.

Q. Have you seen similar provisions in other orders?

A. Yes. As a matter of fact, I've written some of them myself.

Q. And what is your general understanding based upon your own

experience and custom and practice in this field of the

significance of such a provision, if any?

A. Other than the references to the specific prohibition, so

there is somewhere in that sentence I recall there is a comma,

after the comma, the reservation of rights is something in my

experience that I have never, ever in my 30 years of practice

seen the FTC suggest in a draft order.

It is always suggested by respondent's counsel to ensure

that, other than the specifics that have been agreed to, that

there is no waiver of First Amendment rights beyond that.

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Harris - recross 65

MR. BRADFORD: I have no further questions, Your Honor.

MS. KAPIN: Your Honor, may I?

THE COURT: Sure.

MS. KAPIN: I can wait until after the break.

THE COURT: No. Go ahead.

RECROSS-EXAMINATION

BY MS. KAPIN:

Q. Mr. Harris, you've drafted, I'm using your phrase now,

reservation of rights clauses yourself, isn't that a fact?

A. Yes.

Q. In fact, RRR and Salzano are two cases that you've worked on

that involved these types of clauses, isn't that correct?

A. Yes.

Q. Salzano and RRR, in fact, have the same retention of rights

language, isn't that true? We can put them on the screen.

A. I'll take your word for it. They should be pretty close.

Q. Okay. In fact, I believe you testified in your deposition

that you typed out the language and question yourself, isn't that

true?

A. In the RRR case, I certainly recall doing it. I can recall

where I was.

MS. KAPIN: Ms. Parrish, can we focus on the RRR case

and the retention of rights clause. Can we pop that out. Is

that RRR? Okay, great. Can we zoom in on the language that we

just read. Terrific.

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Harris - recross 66

BY MS. KAPIN:

Q. That provision is entitled "Retention of Rights," isn't that

true?

A. Yes, it is.

Q. And it states, "It is further ordered that nothing herein

shall constitute or be construed or applied as a waiver by any

defendant of all rights otherwise accorded under the United

States Constitution."

That's what it says, right, Mr. Harris?

A. Yes, that's what it says.

Q. Now, if we can go back to our Exhibit 1, which is the order

in this case. If you want to look at it, you can save some

strain on your eyes.

A. What page?

Q. This is going to be page 14.

MS. KAPIN: So this is the language you originally

brought up, Ms. Bergquist, Exhibit 1, page 14.

BY THE WITNESS:

A. Yes, I'm there.

BY MS. KAPIN:

Q. Are you there? We're on the same page?

MS. KAPIN: Okay. If you can zoom in on, I think we

have, you can highlight it. We have a highlight for that already

though.

BY MS. KAPIN:

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Harris - recross 67

Q. Now, the order language in the order that's at issue before

this Court is distinct from the language we just read, isn't that

true?

A. Well, if we're talking about after the comma, if there

follows the word "herein," okay, so I'm starting from the

language that says "Nothing in this order." Do you see that?

Q. How about starting from "With the exception of."

A. Well, the answer to your question is the language is

different.

Q. In fact, this order states, "With the exception of any waiver

in connection with parts 1 through 10 herein, nothing in this

order shall constitute a waiver of the defendant's right to

engage in speech protected by the First Amendment."

A. That's certainly what it says.

Q. Now, this first clause of part 11 exempts or has an exception

if there is a waiver somewhere in parts 1 through 10 of this

order, isn't that true?

A. That's the way I would read it.

Q. And you agree that to the extent there has been a waiver in

parts 1 through 10 of First Amendment rights, that this

reservation of rights clause would not apply by its terms?

A. That's the way I would read it.

MS. KAPIN: No further questions, Your Honor.

THE COURT: I have a couple.

No, we're done. This is not a deposition, Mr. Bradford.

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Harris 68

MR. BRADFORD: I'm sorry.

THE COURT: But I have a couple questions. First of

all, Mr. Harris, do you have any knowledge of whether Mr. Trudeau

ever heard of the mirror image doctrine before doing these

informercials?

THE WITNESS: No. Frankly, until today, I've never met

Mr. Trudeau.

THE COURT: Okay. Do you have any knowledge as to

whether I've ever heard of the mirror image doctrine before I

signed that order?

THE WITNESS: Do I have knowledge?

THE COURT: Yes.

THE WITNESS: No. I have a suspicion.

THE COURT: What's your suspicion?

THE WITNESS: I would think -- I don't know too many

judges or practitioners who are familiar with it.

THE COURT: Your suspicion is correct.

Do you have any knowledge as to whether the mirror image

doctrine was ever mentioned by either party or anybody in this

litigation before these contempt proceedings?

THE WITNESS: I sort of come to this encapsulated with a

specific task. So the answer is no.

THE COURT: It wouldn't surprise you if the answer was

no?

THE WITNESS: No. And I can tell you also that,

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Harris 69

strangely enough, if you look up the citation for the mirror

image doctrine on Lexis, you will not find it. It's an error in

the Lexis system.

THE COURT: Maybe, maybe not.

Now, the mirror image doctrine, this is Exhibit AAA,

which is enough to scare any judge, certainly enough to scare me,

UUU is downright frightening, but anyway, the mirror image

doctrine, the language that we're talking about in this

publication, that the advertising only purports to express the

opinion, and I know you have a view of that, but with all due

respect, it's my view I think that would govern on that one, or,

this is really where the rub comes here, quote the contents of

the publication.

So looking at this language, isn't "quote the contents

of the publication" quite different than the language of the

order that we're talking about, the 2004 order which says he must

not misrepresent the contents of the book?

Let me be a little more specific, because basically

you're giving another argument for counsel, and I enjoy that sort

of thing. So, you know, I'm not taking, I'm not taking most of

what you say as expert opinion, because I think it really is a

lawyer's view of the case, and I'll take it for that.

But you can quote the contents of a publication and

maybe come within this doctrine. But when you're talking about

misrepresenting the contents of the book, I've already held the

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Harris 70

contents refers to the book, the entire book, aren't those

different concepts?

THE WITNESS: Well, I think that one has to inform the

other. And I guess what I'm saying is that as an FTC

practitioner, if I had a case like this, and someone said to me

"A judge has ordered me not to misrepresent the contents of the

book. What can I say, what can't I say?" I would say to him,

"Let's look at what the FTC's enforcement policy," because after

all, they're the complainant in this case, they bring it before

the Court, and that someone who follows the FTC's enforcement

policy would not be misrepresenting the contents of the book,

because the FTC would not promulgate a policy which permitted one

to misrepresent the contents of the book. That is not what an

enforcement agency would do, would be to craft a policy which

they believed allowed you to misrepresent the contents of the

book.

So I think what the -- and the longevity with which this

policy has been in effect without any modifications indicates to

me that at least the FTC is at this point satisfied that that

policy is sufficient to protect against a charge that one has

misrepresented the contents of the book.

I don't know if that answers your question directly, but

it's the best I can do.

THE COURT: Well, no, I appreciate that, because you're

an advocate here for your client.

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Harris 71

But what I, what I -- I know, I know what you're going

to say.

But I guess what does come within your experience here

is when the language of the order differs from the language of

this doctrine, don't you think that before exercising the

presumption that you just made, you would want to clear that with

the FTC? Wouldn't that be the prudent course?

THE WITNESS: Sure. And at least I understand, and

maybe this is an issue in contention between the parties that

that was done, but I would respectfully suggest to Your Honor

that if you look at Mr. Fentonmiller's article, you will see, you

will I think conclude that he uses the terms "not misrepresent

the contents of the book" and the FTC's mirror image requirements

as being the same.

THE COURT: Well, I guess the problem I'm having with

this, and I don't know if this has anything to do with your

testimony or with my giving it weight is that I've never heard of

that article or this doctrine before these briefs.

And when I issue an order, even though you're right, of

course, you're experienced enough to know that, and your

experience and what happens in the course of dealings with the

FTC, I'll take it, I'll accept that testimony, but it would seem

to me that if I were to be looking at an order presented to me as

an agreed order by a party, an injunction that I know I'm going

to have to enforce, and it is incorporating something like this

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Harris 72

doctrine, I would want to be told about it before I signed the

order.

In your experience, with that preface, do you know of

whether or not practitioners in this field generally bring to the

Judge's attention who is asked to sign such orders this doctrine

and their view of the doctrine?

THE WITNESS: Well, again, with all due respect to Your

Honor and to federal judges, my experience has been that that

kind of discussion as to the scope of what's permitted and not

permitted generally is engaged in between counsel for a

respondent and counsel for the FTC, because after all, if the FTC

doesn't find it objectionable, it will never again come before

the Court. It's only when the FTC feels that the order has been

violated that they would bring to the Court.

So I don't mean to be disrespectful to the role of the

Court, but I think as a practical matter in the world that these

discussions often occur between counsel for respondent and the

FTC and not with the Court.

If you're asking would it be a better practice? You

know, based on the way you asked the question, the answer seems

to be obvious.

THE COURT: Well, I think the next time you do write an

article about this, that will be a good subject for it.

All right. Any questions of this witness based on my

questions and dialogue with him?

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Harris 73

MR. BRADFORD: No, Your Honor.

RECROSS-EXAMINATION

BY MS. KAPIN:

Q. Just one question just for clarification, Mr. Harris. You do

acknowledge that Mr. Fentonmiller does not speak for the FTC in

his article, isn't that true?

A. I think I said, the article contains the disclaimer and I

think I mentioned that.

Q. You did, and I just wanted to clarify. In fact, that article

was written years after this order was entered into, isn't that

true?

A. That's right. And the example he uses in his article, you

know, the set-up piece is remarkably similar.

THE COURT: Thank you, sir. You're excused.

THE WITNESS: Thank you.

THE COURT: You'll make your flight home.

(Witness excused.)

THE COURT: All right. Let's take a 10-minute break.

MR. BRADFORD: Thank you, Your Honor.

MS. KAPIN: Thank you, Your Honor.

(Recess.)

THE COURT: Do you want to call your next witness,

Mr. Bradford?

MS. KAPIN: Your Honor, at this time may we be allowed

to make our opening statements?

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Prabhu - opening 74

THE COURT: Oh, sure. Haven't you already?

MS. KAPIN: We'd like to do it formally, Your Honor.

THE COURT: Keep it short, because I have read all the

briefs and reviewed all the orders and everything. But since

you're all raring to go --

MS. KAPIN: We appreciate it.

MS. PRABHU: I'm in a suit, Your Honor, and this is my

first time.

THE COURT: Okay. Mr. Bradford will keep that in

consideration too, I'm sure. All right.

OPENING STATEMENT ON BEHALF OF THE FTC

MS. PRABHU: We are here today because of Kevin

Trudeau's violations of a simple and direct order of this Court.

Mr. Trudeau's flagrant misrepresentations of his book, The Weight

Loss Cure "They" Don't Want You to Know About caused this Court

to find him in contempt. So we focus now on a determination of

the proper remedy for his violations.

Notwithstanding the extensive testimony we've already

heard on the mirror image doctrine, briefly, Your Honor, I'll

first be addressing the two questions before the Court in this

remedy proceeding: First, should consumers be fully compensated

for the harm caused by Mr. Trudeau's order violations? And,

second, should the 2004 order be modified to protect consumers

going forward?

This is a straightforward case, and the answer to both

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Prabhu - opening 75

questions is yes. To the first question before the Court, should

consumers be fully compensated for their losses, which total over

$46.9 million spent on the Weight Loss Cure book, here is why the

answer is yes. The law is clear that the Court has inherent

authority to administer justice and enforce its own orders

through civil contempt proceedings, and as part of that

authority, the Court may compensate consumers for the harm caused

by the order violations.

Consumers here are entitled to compensation in the full

amount of their losses. In fact, this is the proper measure of

monetary relief for contempt. The informercials for the Weight

Loss Cure book blanketed the airwaves. They were broadcast

nationwide over 32,000 times in roughly a one-year period. And

the result, over 1.6 million copies sold.

Mr. Trudeau must be compelled to make those consumers

whole, and that means holding him liable for $46.9 million in

sales generated by his violative informercials. This includes

compensating both the consumers who ordered the book directly by

calling the phone number provided in the informercials as well as

the consumers who bought the book through various other retail

channels.

Now, the defense seeks to avoid having Mr. Trudeau pay

any compensation whatsoever. They do that first by attempting to

rebut the presumption of consumer harm by pointing to refund

policies, return rates, and purported evidence of satisfied

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Prabhu - opening 76

customers. None of the proffered evidence rebuts the presumption

of consumer harm.

The law is clear that an offer of a money back guarantee

is no remedy for consumer injury. Indeed, if it were, deceptive

advertising laws would be nullified, because anyone could falsely

advertise as long as they offered a refund.

Return rates are similarly irrelevant to the remedy

determination, because there are numerous reasons why consumers

fail to seek refunds. Not only is the process often burdensome,

but in cases like this one, pursuing a return is simply not cost

effective. Consumers have already incurred nonrefundable

shipping costs, and they would have to spend additional money to

ship the book back.

THE COURT: Well, have you thought about a remedy that

would include offering the purchasers of these books a full

refund or returning the book and getting a full refund including

the shipping, making them whole that way, and seeing who actually

had a complaint about it?

MS. PRABHU: Certainly, Your Honor. And I know my

colleague Ms. Kapin intends to explore that fully with Your

Honor.

THE COURT: You're doing your own here.

MS. PRABHU: I understand. And I think the key here,

Your Honor, is the difference between an opt-in and an opt-out.

Opt-ins put the burden on the victims. And history has shown us

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Prabhu - opening 77

that consumers often don't actually have the opportunity to

opt-in or don't take advantage, not because they haven't been

harmed, but because the process of the opt-in similar to the

process of making a return is itself burdensome.

The onus here should not be on the consumers who have to

take the action. It should be on Mr. Trudeau to make them whole.

If, in fact, they say they are satisfied, and no, no, they don't

want the money, then certainly, they can opt-out. I hope that

answers Your Honor's question.

THE COURT: Well, how do you envision that happening?

MS. PRABHU: Your Honor, the FTC regularly implements

redress programs. When we obtain judgments when there is

sufficient money to, in fact, implement a redress program,

because there is a certain amount of administrative costs also

involved, the FTC has mechanisms by which it actually identifies

the pool of victims and gets the money to them through a redress

program.

THE COURT: And allows people to opt-out and say "I

don't want the money"?

MS. PRABHU: Certainly.

THE COURT: That doesn't happen too often probably.

MS. PRABHU: Probably not very much.

THE COURT: All right.

MS. PRABHU: But I can't speak with certainty.

THE COURT: All right. Well, that's something I think

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Prabhu - opening 78

we should be -- that's something that occurred to me as at least

a possibility here.

MS. PRABHU: Certainly.

THE COURT: Go ahead.

MS. PRABHU: As for the evidence of, quote,

"overwhelmingly satisfied customers," that evidence is

overwhelmingly deficient. It consists of comments on a social

networking site run by ITV, the company which worked with

Mr. Trudeau to distribute the Weight Loss Cure informercials.

The comments themselves are unreliable hearsay. On top

of that, they fail to support the contention that consumers were,

in fact, satisfied with the Weight Loss Cure book. That's

because the comments on that site are not about the Weight Loss

Cure book. They're about the Simeons protocol, a different

weight loss regimen. Now, Mr. Trudeau discusses and incorporates

the Simeons protocol into his book. But by no means are the two

protocols the same.

And the defense proffers no evidence to show that the

people making comments on that social networking site, in fact,

saw the Weight Loss Cure informercials or bought the Weight Loss

Cure book.

Next, the defense attempts to cut retail sales out of

the calculation. They do so through an expert from the retail

book industry, Mr. Domnitz. But Mr. Domnitz himself admits that

television marketing is a rare occurrence in the book industry.

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Prabhu - opening 79

Consequently, he has no experience analyzing the impact of

widespread infomercial advertising on sales in retail bookstores.

Furthermore, Mr. Domnitz has not performed any case

specific analysis of the impact of the Weight Loss Cure

informercials on retail sales of the Weight Loss Cure book.

Therefore, his opinions fail to rebut the presumption that all

consumers were harmed by the widespread Weight Loss Cure

informercials.

And, finally, as a last ditch effort to avoid monetary

relief, the defense argues that Mr. Trudeau is too poor. He

simply couldn't afford to pay a judgment.

Mr. Trudeau's financial condition does not spare him the

obligation to compensate consumers for the harm he caused. And

his financial condition is not static. At a minimum, he is owed

many, many millions of dollars from a contract with ITV.

Beyond that, there is no reason to think that

Mr. Trudeau, the consummate salesman, will not be earning an

income in the future.

As between consumers and Mr. Trudeau, consumers should

not get the short end of the stick. Therefore, they should be

fully compensated for the $46.9 million in harm caused by

Mr. Trudeau's order violations.

Turning now to the second question before the Court,

should the 2004 order be modified to protect consumers going

forward? Specifically, should it include a provision that would

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Prabhu - opening 80

require Mr. Trudeau to obtain a $10 million bond before

participating in any informercials in the future.

Here is why the answer is yes, the law provides that an

order may be modified if it has not achieved its purpose. The

purpose of the 2004 order was to protect the public from

Mr. Trudeau's deceptive sales tactics. So has the order actually

protected consumers from Mr. Trudeau's deceptive sales tactics?

The very violations of the order that bring us here today are

sufficient to demonstrate that it has not.

A bond is necessary here, because history has taught us

that mere prohibitions on paper will not work with Mr. Trudeau,

even if those prohibitions are federal court orders.

In 1998, ten years ago, the FTC filed its first

complaint against Mr. Trudeau for claims he made in informercials

touting various health-related products. That action resulted in

the entry of a court order. Five years later, the FTC initiated

another action against Mr. Trudeau for what it believed to be

serious violations of the 1998 order. The Court at the time

entered a preliminary injunction against Mr. Trudeau. What was

Mr. Trudeau's response to the preliminary injunction? He

violated it.

So while in the midst of litigation over an order

violation, Mr. Trudeau engaged in yet another order violation.

For that the Court held him in contempt. And in 2004, the Court

entered another order against Mr. Trudeau banning him from

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Prabhu - opening 81

informercials in all but a very narrow set of circumstances.

But here we are today, because Mr. Trudeau has violated

the latest order entered against him. Mr. Trudeau has truly

demonstrated his contempt for court orders. So the only way to

protect consumers is to guarantee that a pool of money will be

available to compensate them in the event that Mr. Trudeau's

overzealous salesmanship oversteps the law again.

The defense has argued that a bond would be an

unconstitutional prior restraint and in violation of

Mr. Trudeau's First Amendment rights. But applying the framework

laid out by the Supreme Court in Madsen v Women's Health Center

shows clearly that the bond would be constitutional. And the FTC

has, in fact, obtained multimillion dollar bonds against

defendants in its prior cases, such as FTC v Capital Choice

Consumer Credit and FTC v Sloan America just to name two.

The 2004 order, therefore, can and must be modified to

include a bond provision that will protect consumers going

forward.

Now let me briefly address the defense motion for

reconsideration of the contempt finding and why it should be

denied. In its memorandum opinion and order, this Court found

that Mr. Trudeau was, quote, "in flagrant violation," unquote, of

the 2004 order and that he made patently false claims in his

informercials.

As a preliminary matter, the defense has pointed to

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Prabhu - opening 82

neither manifest errors of law or fact nor to newly discovered

evidence as the law requires in support of a motion for

reconsideration.

But Mr. Trudeau now has his day in court, and he will

likely work hard to persuade the Court that he has been

reasonably diligent and energetic in his compliance efforts. To

that end, the defense relies on communications from the FTC that

purportedly led Mr. Trudeau to believe that the Weight Loss Cure

infomercial were in compliance with the order.

Did these communications concern the Weight Loss Cure

book and informercials? No. These communications were about a

different book and different informercials. The record simply

does not bear out Mr. Trudeau's characterization of those

communications.

The FTC repeatedly advised Mr. Trudeau of its concerns

regarding his past informercials. And Mr. Trudeau never

communicated with the FTC directly himself or through his lawyers

about the Weight Loss Cure book and informercials before this

case.

Well, that leaves but one remaining avenue for

Mr. Trudeau, his assertion that he truly believed he was in

compliance with the order. Of course, it's for the Court to

determine whether Mr. Trudeau is credible on that point, but it

does not affect the contempt determination, because subjective

good faith intent is not a defense to contempt.

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Bradford - opening 83

None of the evidence or testimony presented would alter

the clear, unavoidable fact that Mr. Trudeau flagrantly violated

this Court's simple and direct order. Therefore, the Court's

well reasoned contempt finding should not be disturbed.

As the Court has noted, Kevin Trudeau is one heck of a

salesman. But consumers should not be left holding the bag

because Mr. Trudeau's salesmanship has once again gone too far.

They should be fully compensated for their losses and have the

assurance that they will be protected in the event of his future

violations.

So the FTC asks this Court to enter a monetary judgment

in the amount of $46.9 million and modify the 2004 order to

include a $10 million bond.

THE COURT: Thank you, counsel.

Mr. Badford?

MR. BRADFORD: Thank you, Your Honor.

OPENING STATEMENT ON BEHALF OF THE PLAINTIFF

MR. BRADFORD: Your Honor, we are here on a contempt

motion on which the government bears a burden of clear and

convincing evidence. And contempt is appropriate only if the

order is clear and unequivocal.

I agree with the FTC, it's an objective standard.

Mr. Trudeau's subjective belief may be a relevant equitable

consideration, but at the end of the day the question is: Was it

reasonable for anyone in his position to believe that this

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Bradford - opening 84

infomercial complied with the order?

If that was an objectively reasonable belief, there

cannot be contempt of this Court, whatever other enforcement

actions may be appropriate, and that belief was completely

objectively reasonable and we submit, in fact, the correct view

of the order and of the law.

And we go back to what led to the order, which was the

coral calcium infomercial. And the resolution of that

circumstance was that Mr. Trudeau got out of the product business

altogether. And to this day he has never put forward an

advertisement for a product, has never been involved in a sale of

a product. He has respected completely the thrust of that order.

There was a specific agreement that he could write books

and that in those books he could effectively say what he

wanted -- and I will come back to the proof of that -- and that

he could do informercials for those books. It was the last

opportunity for him.

And before we entered into that order, we had extensive

dialogue with the FTC about what Mr. Trudeau could and could not

do under that order. And, in fact, at the September hearing

where the order was entered, and I'll read the passage, I

specifically stated to the Court that "We have agreed on things

that aren't specifically referenced in the order, but we've

agreed on them as examples. I'm going to put them in the record

lest there ever be a dispute about what he can and cannot do

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Bradford - opening 85

under the order."

And that's part of the September transcript, and I'll

read it. But leading up to that, we submitted the original

Natural Cures book and the original Natural Cures infomercial to

the FTC.

In Exhibit HHH, which is a July 20, 2004 letter from

Daniel Kaufman, who was counsel of record, to Mr. Hurtado and

myself, they reviewed the book and they reviewed the infomercial.

And on the second page, I don't know if I could get, get this

working Elmo --

THE COURT: July of '04, this was before the order was

entered.

MR. BRADFORD: Before the order was entered. This was

leading up to the order.

I don't know if I can -- I guess not.

But I'll read this to the Court. It's Exhibit EEE --

I'm sorry -- HHH, July 20, 2004, page 2, the last large

paragraph:

"There is first concern that Mr. Trudeau's website not

mention branded products." And that was something that he

complied with, that he got the branded products off of the

website that was referred to in the book.

Your Honor will recall that the whole concern at that

point was he not author books that were essentially

advertisements for other products and that he would use this book

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Bradford - opening 86

exception as a way to hawk products.

And so there was agreement that if he referred to a

website or anything else in the book, there was going to be no

branded products, and that's what the first two-thirds of this

letter addresses.

But then on page 2 of the letter in the large paragraph,

the first full paragraph on that page, Mr. Kaufman writes, "In

addition, having compared the content of the book to the

representations made about the book in the infomercial, it also

appears there are a few statements in the infomercial that do not

accurately describe the content of the book."

So here is an example of what we're talking about. And

he says, "Most notably, on page 25 of the transcript, consumers

are led to believe that the book will contain cures for multiple

sclerosis, muscular dystrophy, and other illnesses, and it

appears that these ailments are not even mentioned in the book."

And then he goes on to say I believe, "Several other

ailments are pictured in calls in the infomercial but not

referenced in the book. Mr. Trudeau is responsible for the

express and implied representations describing the content of the

book he has marketed."

And then in Exhibit EEE, Mr. Hurtado writes back and

says, he did a search, and the book does mention every disease or

putative disease that's referenced in the Natural Cure show,

including, I'm sorry, multiple sclerosis, muscular dystrophy, and

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Bradford - opening 87

he references the page numbers, and he goes on to identify that

each of these are referred to in the book.

In response Mr. Kaufman writes on July 23rd, 2004,

"Based on Dan's representation, the website will not have any

content in it for several months. We approve of the book, and we

approve of the infomercial as compliant."

THE COURT: Where are you reading?

MR. BRADFORD: Now this is, I'm sorry, this is Exhibit

O. This is the e-mail back that indicates that, and it says, "If

the website is activated, the general rule under the final order,

specific branded products, should not be included."

When we appeared before you on September 2, 2004, the

best way that we knew how to set forth concretely what Trudeau

could do and not do was to have an actual book and an actual

infomercial that demonstrated what was permissible and what was

not permissible. And I specifically referenced that, and

Ms. Hippsley actually referenced it during her presentation to

the Court.

So at page 3 of the transcript of September 2, 2004,

which is Defendant's Exhibit A, after speaking to the bans in

place at page 3, line 14, Ms. Hippsley says, "And there is an

exception to this, which is for what we both have agreed is an

area where he has more First Amendment protections in his

interest in putting forward advertisements that deal with

basically fully protected speech, which would be his ability to

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Bradford - opening 88

have a book or other informational publication that are not

related in a commercial setting to the sale of a product or

program or service, but merely provides his views and opinions on

various topics."

Your Honor then asked, "So if he writes a book about

coral calcium -- and I would submit the premise there was a book

that says coral calcium cures cancer, because that's why we were

here."

And Ms. Hippsley says: "Correct."

Your Honor says: "That would be an infomercial."

And Ms. Hippsley says: "If he writes a book about coral

calcium, and it's not linked to the product sale or a branded

product, he would be able to do that, i.e., he could write a book

and say 'In my opinion coral calcium does this' as long as he's

not in the business of selling coral calcium."

We then come back to the specific book that's before the

Court. And I state on page 8 at line 11, "Here are a number of

understandings that for good reason were not reflected in the

order but which we agreed we wanted to make of record just in

case we have different people involved in this somewhere down the

road. I wanted to avoid all potential for misunderstanding to

the extent we could."

And then the specific example that I gave among others

of things we had agreed to, and this is at page 10, line 17,

"Then a further understanding was Mr. Trudeau did complete what's

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Bradford - opening 89

referred to as the Natural Cures book. He has developed an

infomercial for that Natural Cures book. This has been provided

to the FTC, and they have no objection to the dissemination of

the infomercial -- I'm sorry -- of the book or the infomercial in

its current format."

I'm continuing my quote, "This I think falls within the

book exception that we had talked about previously. So we have

the first tangible example of something that is acceptable under

that provision."

And the FTC never took issue with that. They were in

open court. Mr. Trudeau sat there and observed that.

Mr. Trudeau understood that that's what he could do.

Now, when we look at what that infomercial said, as

Mr. Harris testified, under the standard the FTC is now

advocating, that is so much farther off the mark than anything in

this Weight Loss infomercial, it is impossible to reconcile the

notion that he could do that infomercial and that book and not be

permitted to do what he did here.

Specifically, he promised in that infomercial that "In

the book, I will tell you that there is a cure for heart disease.

I will tell you that there is a cure for cancer. I will tell you

that there is a cure for herpes." And you know what you found

when you opened the book? Mr. Trudeau said "There is a cure for

heart disease, there is a cure for herpes, there is a cure for

cancer, but I can't tell you what they are, because the FTC has

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Bradford - opening 90

banned me from telling you. I can't even say what the cures

are."

And the FTC approved that. Why? Because he said in the

infomercial "There is a cure for cancer, there is a cure for

herpes, and I tell you about it in the book." And in the book he

said the same things. Would a reasonable consumer have believed

they were going to actually get those cures in the book?

Absolutely that was a reasonable interpretation. And could

consumers be disappointed on their 25 bucks, that they didn't get

what he was representing? Absolutely.

The very same arguments that are being made here were

criticisms that could be leveled of that book. And in fairness,

Your Honor, those criticisms were thereafter leveled by critics

and by certain consumers. And, in fact, thereafter the FTC wrote

to Mr. Trudeau and they said: You know, if you're getting a lot

of complaints that the cures aren't in the book, then that's a

concern insofar as you do short-form advertisements, that is, if

you are doing two-minute spots, and you're promising cures and

you're not delivering them, we could take action on that.

And when we pushed back and said, and this is all

contained in exhibits that I'll draw the Court's attention to,

when we pushed back and said "You've just approved this," the FTC

said, "We're drawing a distinction between the infomercial, which

is 30 minutes, and the short form. In the infomercial it's not

as big a deal because it's 30 minutes. We're not taking back our

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Bradford - opening 91

position about what he can do in the infomercial, but we are

taking a different position on the short form."

And rather than have an issue with the FTC, Mr. Trudeau

republished the book. And what did he do? He put in the book 50

specific diseases and 50 specific cures for those diseases.

And an examination of the book demonstrates that those

cures were much like the diet regime. In fact, as Mr. Harris

testified, there were statements about a diet regime that were

not very different from those made in this book.

He talked in that book about the cures being

intracellular injections of medications that were not available

in the United States by way of prescription or medical

prescription, precisely what he's doing here.

He talked about in certain cases you have to go through

this regimen of taking various medications or off-the-shelf types

of products that aren't available in the United States. He

promised a cure for herpes when medical science says there is

none.

And the FTC not only blessed that approach and took no

action with that approach, but there was actually a court case,

not before this Court, but before another court on whether or not

that was permissible, because notwithstanding the FTC's agreement

with that, there was a consumer protection agency in New York

called the New York Consumer Protection Bureau. And the New York

Consumer Protection Bureau started sending letters to television

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Bradford - opening 92

stations saying: We urge you not to run the ads for the Natural

Cures revised book, because Trudeau is telling you in the

infomercial that he's giving you a cure for cancer and herpes and

heart disease, and we don't believe the cures in the book work,

and we think the cures in the book are preposterous, and this is

misleading.

And we went into federal court in upstate New York and

filed an action in Albany on this issue. And the FTC was asked

publicly its position on this question. And they are

specifically, they were specifically quoted, Ms. Hippsley was

quoted and the FTC was quoted as saying, "This is fully protected

speech. This is not a violation of the order."

They were obviously under some pressure to take action

on this. And Exhibit E is a press article in the Buffalo News.

And after discussing the FTC's role in prosecuting Trudeau, the

FTC attorney stated, quote, "Trudeau's current infomercial is

exempt from the settlement agreement, because it's expression of

an opinion protected by the First Amendment." That's the FTC

talking on an infomercial that is indistinguishable from what we

have here on any substantive basis.

Ms. Hippsley was quoted on MSNBC, this attracted

national attention, this lawsuit, and MSNBC reports, quote, "FTC

Attorney Heather Hippsley said, 'The agency reviewed the book and

earlier versions of the infomercial hawking the book and found

them in compliance with the settlement.' The article quotes

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Bradford - opening 93

Ms. Hippsley as saying, quote, 'To ban advertising for fully

protected speech would be quite extraordinary and not something

you want your government to be doing.'"

So that's the framework that existed when Mr. Trudeau

set out to do the Weight Loss book.

But, further, the statement that he sought no advice

with respect to the Weight Loss issue is not entirely correct,

because in 2004, Mr. Trudeau submitted to the FTC a CD of a

weight loss program. It was entitled How to Lose 30 Pounds in 30

Days, and he submitted that among other things to the FTC.

And I would note that this is part of years of

communication and correspondence with the FTC where every time

they told him not to do something or they had a problem, we

didn't come before this court to seek modification or

clarification of the order. We just didn't do it. We just

complied with whatever their interpretation of the order was so

there would be no dispute and no question about his compliance.

So he submitted this CD. And Exhibit 31-M, this is an

FTC exhibit which goes through the correspondence, and in there

you'll see the correspondence where they complain about the

concern that the short-form advertisements might leave consumers

to expect actual cures. In there that subject is addressed.

But they say, "We have looked at a copy of Trudeau's CD

entitled How to Lose 30 Pounds in 30 Days." And they say that

the first issue with the CD is there are some passages that make

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Bradford - opening 94

references to branded products. That's obviously all topic for

today's purposes.

But then they say, "Second, the second issue we have

with the weight loss CD is veering quite close to being a

prohibited program."

And then they say, "As you know, as of January 1, 2004,

under part one of the order, Mr. Trudeau cannot disseminate,

directly or indirectly, informercials for his Mega Memory

program. Although there may be some uncertainty at the edges as

to whether a book or CD constitutes informational material or is

instead a prohibited program, such as the Mega Memory program, we

want to take this opportunity to describe our opinion."

And then it says, "In general, if books or CDs are

marketed as enabling a person to accomplish a specific goal, such

as losing 30 pounds in 30 days, making large sums of money

trading stocks, or substantially increasing their memory skill,

it's a program and is covered under parts one and two of the

order. Part one prohibits informercials for programs. Part two

prohibits health benefit claims for programs."

So the concern they expressed to us was not: You can't

make these assertions because, in fact, there is no diet that's

going to cause you to lose those 30 pounds. The concern is it

better be a real book. This can't be a "Here is the 12 steps,

and there is nothing more to it," because that could be called a

program.

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Bradford - opening 95

So when Mr. Trudeau wrote this book, he didn't write a

program, and they're not here today contending it's a program.

They're not contending that he did anything inconsistent with the

advice that they gave him on this topic.

He put in a bibliography. He put in references. He

puts in all kinds of history about this protocol. He discusses

his views of the health industry and the drug industry. There is

no question but that this is a real book. And nobody has ever

suggested it's a mere program rather than a book.

They also took an issue with the title of the CD,

calling it How to Lose 30 Pounds in 30 Days, and they said that

that was problematic. So he didn't use that title when he

published this book. Once again, he complied with the advice

that they gave him, even though he disagreed with that, and I

disagreed with that as far as the title goes. And we expressed

that disagreement, but we abided by it.

They went on to say that "There is the same issue we

have," it says, "It mirrors the issue we repeatedly stated with

Mr. Trudeau's Natural Cures book. False claims cannot be made

about the content of the book, that the content of the book will

cure people of specific diseases. Similarly, claims should not

be made that the content of the CD will enable consumers to lose

30 pounds or a specific amount of weight."

Well, again, he didn't violate that command. He was

very careful not to say, "If you read this book, you will, in

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Bradford - opening 96

fact, lose 30 pounds." There is no efficacy claim about the

book. Rather, he was very careful to say: In this book I give

you examples of people who have lost this kind of weight in this

book. I tell you about the following. And, in fact, everything

he says is in the book.

So guidance was sought on this topic. A show was

produced that was compliant with the guidance that was given by

the FTC on the very issue of a how to lose weight type of

publication. And every issue that they raised in that letter is

not an issue that they're raising in their complaint or their

memorandum, because he was responsive to each and every issue

that they raised.

And I would further note, Your Honor, we've submitted,

and I won't go into it at great length today, but we have

submitted extensive responses to requests to admit and

interrogatories that reference the fact that throughout the year

2007, in the beginning of the year, the FTC sent Mr. Trudeau a

draft complaint not related to this book or anything he was doing

on this book, even though this book was blown off the charts at

the newsstands, it was related to a Natural Cures newsletter.

And they expressed concern that the marketing of that

newsletter had not involved adequate disclosures. There were at

least two dozen telephone calls between our office and the FTC

persuading them that that complaint lacked merit. And ultimately

they agreed, and they never filed that complaint.

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Bradford - opening 97

But as the request to admit indicate, we were in weekly

dialogue with the FTC about whatever their concern of the week

was related to Mr. Trudeau, the whole time this show is the

biggest thing on television, this book is selling hundreds of

thousands of copies.

You've heard Mr. Harris say the FTC in his experience

doesn't sue without warning first. The first we heard that they

had any question, concern, or problem with this book was the day

they filed that contempt proceeding before Your Honor.

We were talking to them days before and not a word was

said about this, not a "Would you please modify this" or "We've

got a concern" or "This veers close to the line. Please get it

off the air."

And as soon as they did come forward and Your Honor

expressed concerns, Mr. Trudeau wrote ITV and said "Get it off

the air." He would not have gone down this road if he believed

for a minute he was going to be held in contempt of court or he

was doing something wrong. It would have been suicidal. And his

entire basis of conduct from the day that order was entered

through the Natural Cures book, through everything else he

marketed was to assure compliance.

And he had every reason to believe based on what the FTC

stipulated to in open court as acceptable that this was, in fact,

acceptable, that the simple formula was if you say it in the

infomercial, it better be in the book. And you better make it

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Bradford - opening 98

clear that what you are doing is saying it's in the book, but

that he did not have to worry about giving a hundred percent of

what's in the book or giving the limitations of what's in the

book or saying, "By the way, these cures I'm telling you about

may not work" or "These cures involve injections" or "These cures

involve products that you're not going to find in the United

States," the same criticisms that we have here.

And so with all respect, Your Honor, I urge the Court to

find at the conclusion of this hearing that Mr. Trudeau has not

by clear and convincing evidence violated a clear and unequivocal

command of this Court. He did not intend to do that. The

evidence shows it was very reasonable for him to believe he was

not and did not do that.

There was, in fact, financially, it would have been

completely crazy for him to do that. He wasn't even making the

money off of these infomercial sales. That had all been given to

ITV. As the record shows, the only moneys he was receiving here

was from the retail sales of that book. And I know we have an

issue with the relationship between the two.

But for Mr. Trudeau to expose himself to contempt of

court and that kind of risk for that kind of reward truly makes

no sense. And on the record before him, before this Court, he

did nothing different in connection with the Weight Loss book

than he did with the very book that was given as an example of

what was permitted under that order.

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Bradford - opening 99

And for those reasons we will urge Your Honor at the

conclusion of the hearing to reconsider the finding of contempt.

I would be happy to address the remedy issues that Your Honor has

raised at this point, or I could do that at the time of closing.

THE COURT: We can do it then.

But let me just ask a question. Did either you or

Mr. Trudeau consult this mirror image doctrine in connection with

the drafting of this order?

MR. BRADFORD: Your Honor, I don't want to waive

privilege, but I'm happy to respond to the Court's question if I

can without waiving privilege.

THE COURT: You're right, that really does get into a

privilege question. But to the extent that you don't waive

privilege, can you answer that?

MR. BRADFORD: Yes. I can comment that I believe --

THE COURT: Or will I be hearing evidence to that?

MR. BRADFORD: Certainly. I believe that in my

communications with the FTC, we were fully conscious of the

mirror image doctrine, that that is something that any

practitioner in this area knows about, that the FTC was cognizant

of the mirror image doctrine. I'd love to be able to pull out a

piece of correspondence that used those words. But I have every

confidence that that was discussed, that that is consistent with

what was said in that letter from Mr. Kaufman. That's exactly

why we were approaching the issue the way that we did.

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Bradford - opening 100

If he mentions six diseases in that show, they had to be

in the book. But nobody cared about whether the cures really

worked. Nobody cared about whether, in fact, he was leading

people to believe they would be cured and, in fact, these were

good or bad cures.

Ms. Hippsley specifically mentioned the First Amendment

protection still applying in this sphere of books before the

Court. And I believe we had a very clear understanding with them

that this was permissible and that the mirror image doctrine as

it's known, that you can say something about what's in a book as

long as it's really in the book, is exactly what we were trying

to accomplish with this order.

This is I can represent to the Court not something we

thought about after the order was entered. It was something we

were fully mindful of when the order was entered. I know

Ms. Hippsley has been listed as a rebuttal witness. They can

bring her in here and ask her if she was thinking about and

cognizant of the mirror image doctrine.

And I'm very confident there were no waivers of that or

any statements that "we're going to lose the traditional rights

afforded by that doctrine."

And I also submit that when you look to what can you and

what can you not say about a book, that it is a very different

set of rules on what you can say about a product, and that was

the field we were operating in; and that the first place you

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Bradford - opening 101

would go to to find out what you can say about a book would be

this doctrine, the FTC's policy on what you can and can't say

about a book. This has always been the guidelines.

There has always been a lot of controversy about would

they one day terminate that doctrine? Would they one day

overrule it? And that I could understand if there was some kind

of notice. If the FTC came out and said "We're no longer going

to be bound by this doctrine," or "We've reconsidered it," there

have been people who have written about this doctrine as

affording some kind of, quote, "loophole" to put in certain

things and not other things that are in the book. But that's

always been the so-called breathing room that the First Amendment

allows. That's a very well understood doctrine.

I'm confident those at the FTC negotiating this were

cognizant of that and that that was intended by the very example

we gave to be a part of this order.

THE COURT: Okay, great. Thank you.

Would you like to call your first witness?

MR. BRADFORD: Sure. At this time, Your Honor, we'll

call Mr. Trudeau.

THE COURT: We're going to go about another half hour

just to let you know.

MR. BRADFORD: Certainly, Your Honor.

We have some exhibit books specifically for this

witness, if I might provide one to the witness and the Court. I

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Trudeau - direct 102

think it will make it easier.

THE COURT: Okay. That would be fine.

Would you please raise your right hand, sir.

(Defendant duly sworn.)

THE COURT: Okay. Mr. Bradford.

MR. BRADFORD: I do have a copy for the Court if I might

approach with that, too?

THE COURT: Sure. If I could put these big ones away

for now?

MR. BRADFORD: I think yes, Your Honor. I hope so.

THE COURT: Okay.

MR. BRADFORD: Thank you.

KEVIN TRUDEAU, DEFENDANT HEREIN, SWORN

DIRECT EXAMINATION

BY MR. BRADFORD:

Q. Mr. Trudeau, could you explain how it is you came to focus on

the idea of writing a weight loss book?

A. Well, I struggled with weight my whole life, so I've always

been interested in the subject and kind of searched the world for

something that would work for me. And if it worked for me, my

pattern is if I get really excited about something, if I really

believe in something, if it's something that I, you know, want my

friends and family to have or benefit from, then I'll want to

kind of tell the world.

Since right now my scope is informational publications,

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Trudeau - direct 103

weight loss was a book that I was looking to write provided I

could find something that would work.

Q. Did you at some point find something that, quote, worked for

you?

A. Yes, I did.

Q. What was that?

A. It was the Simeons protocol.

Q. What is the Simeons protocol as you refer to it?

A. Dr. Simeons discovered in 1959 what he called the cure for

obesity, what I call the weight loss cure. And it's a protocol

that involves injections or sublingual or other methods of

getting a substance called HCG into the system with a very

specific diet.

Q. And how did you first come to learn about this protocol?

A. At a clinic in Germany that I frequent, I frequented, a well

known anti-aging clinic. Dr. Klaus Martin is the director. And

I chatted with him about various anti-aging protocols. And he's

using new things that he's developed or found around the world.

And the subject came about weight loss, and he said that this was

something that really worked.

Q. And approximately when was this first communication with him?

A. I believe the first communication where he told me about the

Simeons protocol was in the summer or fall of '05 I believe.

Q. Was that in person?

A. Yes, while I was in Germany.

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Trudeau - direct 104

Q. What was your response when he told you about this protocol?

A. Well, he gave me a manuscript that he had copies of called

Pounds and Inches by Dr. Simeons. And I read that manuscript.

And my first impression was it seemed really scary to do, kind of

difficult to do. It seemed like it would be a really hard thing

to do. So I kind of put it off for about a year, but continued

communication with him, inquiring about the results and how

people did on the program, how much weight they lost, did they

find it easy, and afterwards did they gain the weight back.

So it took about a year before I got the courage to give

it a try myself.

Q. And did you, in fact, give it a try yourself?

A. Yes.

Q. When was that?

THE COURT: Who was the doctor in Germany? What was his

name again?

THE WITNESS: Dr. Klaus Martin.

THE COURT: All right.

BY MR. BRADFORD:

Q. Did you, in fact, give it a try?

A. Yes, I did.

Q. When was that approximately?

A. I believe to the best of my recollection it was the late

summer or early fall of '06.

Q. Where did you do that?

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Trudeau - direct 105

A. I started the protocol, it's a six-week protocol for the

injections. So I did three weeks while I was in Germany at the

clinic.

Q. And did you continue the full six weeks?

A. Yeah. I did three weeks while I was at the clinic so I could

talk to other patients who were doing it and see how they were

reacting, review patient records, and make sure I was doing it

correctly so I could learn all about it. So I would inquire with

the nurses and the doctors and the staff and the other patients

who were doing it.

And then for the next three weeks, I was traveling

around the U.S. on business. So in my travels, I continued to do

the protocol. I took my HCG with me and did the injections while

I was the road.

Q. And did you follow the protocol as prescribed to you?

A. Yes. I did the Simeons protocol exactly as it was described

in the Pounds and Inches book.

Q. What was your experience with this protocol?

A. Well, I've been on numerous programs to lose weight over the

years, all the things that are sold on television, all the easy

programs that are on TV, the NutriSystems, Jenny Craigs,

Slimfast, the protein powders, the Hoodias, the ephedras, green

teas, you name it, if it has been sold, and I know most of the

guys who are selling a lot of this stuff, I've tried it over the

years.

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Trudeau - direct 106

I've had personal trainers in. I've had chefs come in

to do raw food cooking. High protein, Dr. Atkins I knew. I did

an infomercial with him years ago, so I did the Atkins program,

which again was promoted as a very easy program to do.

So I've done all these programs, and I would lose some

weight, but it would always be challenging. Even if I lost

weight on the program, I was hungry. I was depriving myself. I

felt like I wanted food. So it was always a challenge to do the

program. And even if I lost weight, when I stopped the program

and went back to normal, the weight always came back, and I

gained probably 10 or 15 pounds more, which is the general effect

that most people have globally when they kind of yo-yo diet.

So on this diet when I did it, I found it to be

incredibly effective. I lost 45 pounds in 45 days.

Q. And what has been your experience since you've completed the

six weeks of injections in that phase of the protocol?

A. It's been a miraculous life-changing experience for me. For

me personal doing the program, I was very nervous to start it, I

talked about this in the book, I was scared. I thought it was

going to be challenging. I was going to be hungry or tired or

grumpy, or I would fail, I would, you know, get off the program.

But amazingly from day one I wasn't hungry. Day two, I

wasn't hungry. Day three, I wasn't hungry, I wasn't tired. And

all the other people that were at the clinic were experiencing

the same almost miraculous results with the protocol. We just

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Trudeau - direct 107

weren't hungry. We had a lot of energy and lost the weight, lost

about a pound a day.

And we would take photos in the mirrors. And the other

thing that was interesting, not only would the weight come off,

it was about a pound a day depending on how big the person was

and what they needed to lose, and men and women were slightly

different, but it was about that, it was the average, I lost a

pound a day.

But there was also resculpting of the body, you know,

kind of the areas that had a lot of fat or have normal fat

reserves would seem to shrink. So it really was a great

resculpting of the figure. It looked really good.

Q. What has been your experience in terms of your appetite and

food intake since then?

A. Well, the thing that was really scary to me, I wasn't hungry.

And I thought when I stopped the protocol, and which was the

injection phase and I went to the last phase, there is one phase

before the last phase, so when I stopped the injections, then I

went on to eating, eating this, I just wasn't hungry. I just

wasn't hungry afterwards. It was an amazing surprise to me.

Q. Now, before you wrote the book, did you read any medical

journal type of articles on this protocol?

A. Yeah. When I first heard about it from Dr. Klaus Martin, the

first document, of course, was Dr. Simeons manuscript, Pounds and

Inches. And in Simeons manuscript, he listed a series of

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Trudeau - direct 108

references, which I Google searched and read many of the

references and reports. And there were a lot more since the

writing of that manuscript. Many doctors around the world have

used this protocol. So I read a whole series of reports before I

wrote the book.

Q. For the Court's convenience, have you identified three of

those articles among the exhibits being presented to the Court in

this proceeding?

A. Yes, I did, and they're in this book here.

MS. KAPIN: Objection, Your Honor. My objection is as

to relevance. The FTC is not challenging the efficacy of this

protocol, whether it works or not. This entire line of

questioning sounds to me like it is focusing on whether

Mr. Trudeau sincerely believes this protocol works or not, and

that is not why we're here, Your Honor.

MR. BRADFORD: Your Honor, I believe this will also go

to the expression of opinion that this is an easy program to use

and also the expression of opinion that people will be able to

eat whatever they feel like and not gain weight and the bases for

his opinions or statements that that was, in fact, the case.

THE COURT: I'll overrule the objection.

MR. BRADFORD: Thank you.

BY MR. BRADFORD:

Q. Mr. Trudeau, is the first of those articles that you

identified and read before you authored the book Exhibit FF?

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Trudeau - direct 109

A. Yes, it is.

Q. And have you for the Court's convenience on the cover page of

this notebook, where it says "Excerpts from exhibits" culled out

certain statements that were made in that article?

A. Yes.

Q. And was that article published in the American Journal of

Clinical Nutrition in 1973?

A. Yes.

Q. Could you please read the portions of the study that you

read?

A. Well, I read the whole study. But I think the relevant

sentence here is, "The HCG group," which is the substance taken

or, in other words, the group that were on the Simeons protocol,

"lost significantly greater mean weight loss per injection and

lost a significantly greater mean percentage of their starting

weight, the percentage of affirmative daily patient responses

indicating little or no hunger. And feeling good to excellent

was significantly greater in the HCG group than in the placebo

group. Additional investigation of the influence of HCG on

weight loss, hunger, and wellbeing seems indicated."

Q. Is this a study that you specifically reference in the

annotations to the book?

A. I believe so, yes.

Q. That is, it's contained in the book itself or reference to it

exists in the book itself?

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Trudeau - direct 110

A. Correct, yes.

Q. And let's turn to the second of these documents. Is this

Exhibit GG a study that you observed that was published in 1966

in the American -- I'm not sure if I can pronounce this right,

but the record will reflect it, I think it's Geriatrical Society?

A. Yes, it is. And this is a study that I've read also.

Q. What are the salient parts of this study that you identified

here?

A. Well, the key elements of this particular study say that we

found that by use of the Simeons technique, the patients lost

weight safely, rapidly, and effectively, and the key part here is

with little discomfort.

"Aside from the matter of the amount of weight loss by

this method of treatment as compared to other methods, we

confirmed Simeons' observation that there is a striking

redistribution of body fat. Simeons' technique for reducing

weight in cases of obesity is a safe and effective procedure

without undue discomfort for the patient."

Q. And, finally, the third study that you have referenced, is

that a 1961 study?

A. Yes, it is.

MS. KAPIN: Just objection, Your Honor, one further

ground, to the extent that these are being relied upon for the

truth of the matter asserted, I'm raising a standing hearsay

objection to them.

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Trudeau - direct 111

THE COURT: Well, no, they're being offered for his

state of mind I believe, correct?

MR. BRADFORD: Yes, they are.

BY MR. BRADFORD:

Q. And what was the salient portion of that study that you have

identified?

A. This particular study, again, the key element in relation to

what we're discussing here, "Is the technique as described by

Simeons and illustrated by the patient series is a satisfactory

and safe method of reducing-weight patients without hardship."

Q. At the time that you wrote the book, what was your opinion or

belief as to whether, in fact, this protocol was difficult or

easy to use?

A. When I wrote the book and when I shot the infomercial and to

this day, I categorically believe that this is absolutely an easy

way to lose weight. I think it was easy for me out of my own

personal experience. That's why I believed it to be easy. I did

it myself. I've done all these other programs that weren't easy

that claimed to be easy. So I know the difference between what's

easy and what isn't. And for me, this was easy.

All the patients I talked to at the clinic in Germany

and around the world that have used the protocol or were in the

process of using the protocol reported to me in huge, huge

percentages that it was the easiest thing they ever did to lose

weight.

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Trudeau - direct 112

And then the experts themselves in these studies claim

in effect that it's easy by using words like "undue hardship" or

what have you.

So I believed at that time that the program was

absolutely easy. I still believe it today. And I believe it is

the easiest way for anyone who wants to lose weight to lose

weight.

Q. And with respect to your belief that people can eat whatever

they want after the first phases of the protocol and not gain

weight, what was your belief at the time that you wrote the book?

A. When I wrote the book, again, I had done the protocol myself.

And when I stopped doing the protocol and after and went into

phase four eating pizza, pasta, ice cream, cheeseburgers, French

fries, virtually anything and everything you want is absolutely

true.

And the reason I believed it is, number one, I did it.

I drank beer. I've got pictures of me in Germany with beer and

ice cream. And I would weigh myself every day. And the hunger

wasn't there. So you ate less. So you could virtually eat

anything you want, but the body metabolism seems to be so much

higher that the body seemed to just burn it off without massive

gaining of weight.

I also reviewed from Dr. Klaus Martin where he told me

that 80 percent or 85 percent of his patients five years later

still have not gained any significant amount of weight back, even

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Trudeau - direct 113

though they were eating pretty much anything they wanted and went

back to their natural routine before losing the weight.

So I believed when I wrote the book, and I say it in the

book, and I believe when I shot the infomercial, that once you do

this protocol, that your body has reset, that the hypothalamus

gland seems to be reset, and you can pretty much eat anything you

want.

Q. You were party to a consent decree and court order in this

case, is that correct?

A. Yes.

Q. And is compliance with that order of importance to you?

A. Compliance with that order is very important to me. I

respect the Court. I respect the order. And being diligent and

prudent in doing everything that the order said is of prime

importance.

The amount of correspondence that I've had with the FTC

trying to cross every T, dot every I is really important. And

everything that I've done since that order was signed -- that was

kind of: Look, I can write books now. I'm out of the

infomercial business. They won. I'm off the air. I'm not

selling any more products. Everything I've done since that order

was signed was to be 100 percent in compliance.

Q. Have you been involved whatsoever in the sale of product

since you signed that order?

A. Absolutely not.

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Trudeau - direct 114

Q. What did you do with the businesses that you owned at the

time that you signed the order?

A. Well, pretty much all the businesses which were in relation

to the informercials, I decided just to get out of and sell and

only focus on writing books and appearing in informercials and

making public appearances on radio shows and so forth and being a

citizen advocate and a whistle-blower and an author. So I --

Q. Now, on the day --

A. So I sold those companies.

Q. On the day that you signed the order, what was your

understanding of what you could and could not do with respect to

informercials for books?

A. On the day I signed the order, as you know, we had massive

amounts of conversations back and forth with the FTC. My fear

was the order would be vague and ambiguous, and we wouldn't have

any clear direction on what to do going forward, and that this

was just a set-up, so whatever I did the next day, they would

come after me.

Q. Let me, if I can, ask the witness to be more responsive to

the question, which is simply: What was your understanding of

your obligations under the order?

A. My understandings under the order was I could produce, I

could write any book or informational publication, I could say

anything I wanted in those books or informational publications,

and I could produce any type of advertisement for those

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Trudeau - direct 115

informational publications provided I did one thing, anything I

said in the advertisement had to be an accurate description of

the contents of the book. It had to be in the book.

It didn't mean I had to put everything in the book in

the infomercial or commercial. But everything in the

advertisements had to be in the book. And the standard that I

used, which was very clear, was the Natural Cures infomercial and

book. That was the standard that the FTC gave me and said: You

can do this going forward.

Q. And you were in court in September when the statements that I

read in my opening statement were made?

A. Yes, I was.

Q. And at the time you signed the order, you were familiar with

what you had written in your book and what you had put in the

Natural Cures infomercial that was referenced in open court?

A. I was intimately familiar with what was in the book, what was

in the infomercial, and why the FTC said that infomercial is

completely in compliant, because it accurately describes what's

in the book. Even though we may disagree with what's in the

book, it's compliant.

Q. And is Exhibit N a transcript of that infomercial?

A. Let's take a look. Yes, it is.

Q. And did you select certain excerpts from that infomercial to

draw to the Court's attention today?

A. Yes.

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Trudeau - direct 116

Q. Could you identify what those excerpts are in that

infomercial that you relied upon in your understanding of what

you could and could not do?

A. Yes. I don't want to rush over this, because this is very

important, because this is the whole crux of what I understood,

that and knowing as the interviewer is talking to me doing the

informercial.

This was the show that the FTC took apart, pulled apart,

looked under a microscope with my book. And they told me that if

you do this, you've done this, this is in compliance with the

order. This infomercial does not misrepresent the contents of

the book as described in the order. So this was my template

going forward.

And so there were certain things that I said in here

very specifically when I made the show to see what I could and

couldn't do with the FTC. And the FTC agreed that this is a

compliance show in relation to the order which states I can't

misrepresent the contents of the book. So they claim that this

is not misrepresenting the contents of the book.

I say in the infomercial "There are cures for diabetes.

There are cures for chronic fatigue syndrome. There are cures,

all natural cures for attention deficit disorder, migraine

headaches. Absolutely, 100 percent, there are absolute natural

cures for all of these problems. They don't cost a lot.

"For example, obesity, weight loss, there are natural

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Trudeau - direct 117

remedies for weight loss. The drug companies and the food

industry don't want you to know about it.

"There are ways to cure migraine headaches forever so

they never come back. And there is a natural remedy you can put

on the skin that will get rid of pain forever. Arthritis pain

will go away. There is a natural herbal supplement that the

Asian Diabetes Association has called the final cure for

diabetes. It is an absolute cure. It's an herbal remedy. It's

taken for three months approximately. And it will dramatically

reduce or eliminate the need for any insulin shots. And it can

cure diabetes, Type I and Type II, in the majority of cases."

Q. Now, just to be clear, you're reading from portions of the

transcript at Exhibit HH that you've highlighted in yellow.

For the record, we've taken the liberty of highlighting

everybody's copy of those particular segments in yellow as they

have been submitted, is that correct?

THE COURT: Did you just say HH?

MR. BRADFORD: I apologize, I'm missing an exhibit.

It's Exhibit N. I apologize for the confusion.

BY MR. BRADFORD:

Q. So this is Exhibit N?

A. Correct.

Q. And in Exhibit N, Mr. Trudeau has yellow highlighted certain

portions that he's reading from in the transcript. I think the

last quotation came from page 7 of 25 from the transcript.

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Trudeau - direct 118

These are, to be clear on the record, not the entirety

of the transcript, but certain excerpts that he's highlighting

for purposes of today's testimony.

Is that correct, Mr. Trudeau?

A. That's correct.

MS. KAPIN: Your Honor, for the record, we do have a

standing objection to testimony and evidence regarding the

Natural Cures book and infomercial as that is not the subject of

today's proceeding. So I just want to for the record make a

relevance objection.

THE COURT: Fine. Thank you.

BY MR. BRADFORD:

Q. I'm sorry, Mr. Trudeau, I think I interrupted you, but you

were on page 7.

A. Yeah, now on page 8. And, again, these are very relevant,

because this is what I relied on in terms of whether or not I was

in compliance with the order.

"And there is a cure for cancer. Cancer, there are

cures for cancer. There are ways to prevent cancer."

Page 10, "Now, this book, Natural Cures "They" Don't

Want You to Know About covers arthritis, migraines, pain,

headaches, cancer, heart disease, depression, stress, phobias,

fibromyalgia, herpes."

Page 12, "The book covers all these diseases and the

cures. But there are so many new things that come out and I

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Trudeau - direct 119

find."

And I think those are the main relevant parts there. I

think there may be one more, yeah, on page 21. "And I took it,

some of your advice, and the particular product, which I can't

mention because the government prohibits me to, sort of changed

my life.

"My knee was in so much pain. I couldn't walk. I

started taking it, and within two days, the pain left. And

within two weeks, I walked perfectly. I'm giving this to all my

friends." He was a professional soccer player in England.

"Now I can tell you the Federal government is forbidding

me to tell you these stories, because they claim they don't mean

anything."

Page 22, "Natural remedies are curing people of cancer,

curing people of diabetes, curing people of depression, curing

kids of attention deficit disorder within days."

24, "The rest of your life, herpes, there is a cure for

herpes. And on television they say 'There is no cure for herpes.

You need to take our drug every day for the rest of your life.'

Well, there is a cure. There could be simple cures. They are

there. There are natural cures.

"You'll never hear about them, because the manufacturers

can't tell you what they are. Diabetes, migraines, cancer, heart

disease, acid reflux, attention deficit disorder, depression,

stress, phobias, fibromyalgia, pain of all sorts, arthritis, and

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Trudeau - direct 120

the list goes on, lupus, multiple sclerosis, there are cures for

multiple sclerosis. There are cures for muscular dystrophy that

are all natural, and people are not being allowed to tell the

truth."

Q. And now if you turn, if you would, to Exhibit BBB, that's

three Bs, is that the Natural Cures book that was submitted to

the FTC in conjunction with the infomercial?

A. Yes, it was.

Q. And did you again identify certain passages or sections from

the book in highlighting to draw to the Court's attention?

A. This is what's in the book in relation to everything I just

said in the infomercial. If you listen to what's in the

infomercial, you'd think you'd draw some type of conclusion of

what was probably going to be in the book, but here is what is in

the book that the FTC made it compliant:

"There are natural non-drug and non-surgical cures for

virtually every disease, illness, and physical ailment. These

cures are inexpensive and have virtually no negative side

effects."

On page 249, "I would like to give you the cures for

virtually every disease. I would like to tell you the natural

treatments available that can eliminate your symptoms and at the

same time address the cause instead of simply suppressing the

symptom.

"However, as I began to write this book, the Federal

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Trudeau - direct 121

Trade Commission and the Food and Drug Administration took

unprecedented action. I am forbidden to give you specific cures

in this book. The FTC has ordered me not to give you any

specific product recommendations or say where you can acquire the

cures and receive treatment. This entire chapter has been

censored by the FTC."

THE COURT: And with that, it's a good point to break.

I think we'll adjourn for the day. We will begin right after my

call tomorrow. We should certainly be able to start by 10:00.

MR. BRADFORD: Certainly, Your Honor. We'll be here a

little early.

THE COURT: Why don't we say 10:00 o'clock.

All right. Thank you, Mr. Bradford.

MR. BRADFORD: Thank you very much, Your Honor. Have a

good evening.

THE COURT: Thank you.

I could give you these back, but I'm not sure there is

any need to do that right now.

MR. BRADFORD: Sure. We apologize for the

inconvenience.

THE COURT: No, that's okay. I've got a lot of other

junk up here, so I just as soon you don't do it up here. Okay.

MR. BRADFORD: Thank you, Your Honor.

(Adjournment 4:45 p.m. until 10:00 a.m., July 23, 2008.)

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