Opinion ID: 369355
Heading Depth: 2
Heading Rank: 2

Heading: Portions of the Order Applicable to Petitioners Porter & Dietsch and William Fraser.

Text: 64 Petitioners contend that the order violates their rights under the First Amendment, which protects commercial speech. Bigelow v. Virginia,421 U.S. 809, 95 S.Ct. 2222, 44 L.Ed.2d 600 (1975). They concede, however, as they must, that the First Amendment allows the prohibition of false and misleading advertising. Ohralik v. Ohio State Bar Association, 436 U.S. 447, 455-456, 98 S.Ct. 1912 (1978); Bates v. State Bar of Arizona, 433 U.S. 350, 381-384, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977); Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 771-772, 96 S.Ct. 1817, 48 L.Ed.2d 346 (1976); National Commission on Egg Nutrition v. FTC, supra, 570 F.2d at 161-162. Because the advertising material subject to the Commission's order was false and misleading, See Part IV, Supra, it receives no protection from the First Amendment. 65
66 Paragraph I of the order restricts the representations Porter & Dietsch and Fraser may make concerning any food, drug, cosmetic, or device as these terms are defined in the Federal Trade Commission Act. Petitioners contend that this breadth of product coverage makes the order overly broad, because there is no rational connection between the Commission's findings and restrictions placed on representations of products other than X-11. The record shows that Porter & Dietsch is continuously testing and marketing new products and, as a wholesale operation not faced with the expense of modifying manufacturing facilities to add new products to its line, it can do so comparatively cheaply. Fraser and wholly-owned subsidiaries of Porter & Dietsch have violated the Federal Trade Commission Act in the past. 12 These facts and the evidence of petitioners' readiness, in carrying out the advertising campaign for X-11, to go at least to the very limits of what the law might be argued, with some modicum of plausibility, to allow, justified the breadth of the order against the principal offenders. 67
68 Paragraph I,A of the order prohibits representations that a user of a product can lose weight without restricting caloric intake and while eating the foods of his or her choice. Petitioners contend that Paragraph I,A is not supported by substantial evidence, because it is premised on the assumption that a user of X-11 must consciously restrict caloric intake and consciously avoid foods of his or her choice to lose weight. That assumption is false, they argue, because PPA is an effective appetite suppressant which unconsciously and automatically reduces food intake. Petitioners' position is untenable in light of the findings upheld in Part IV,A,1, Supra, of this opinion. X-11 must be coupled with a conscious adherence to a restricted calorie diet to be effective and Paragraph I,A merely prohibits petitioners from making representations to the contrary. Paragraph I,A is reasonably related to the unlawful practice and is valid. 69
70 Paragraph I,B prohibits representations that a user of a product can achieve any result unless the representation is, when made, substantiated by competent scientific or medical tests and studies and requires that such tests or studies, the raw data gathered, and the procedures followed, be available to the Commission for inspection for three years following the representation. Petitioners contend that Paragraph I,B improperly relieves the Commission of the burden of proving their advertising representations false and imposes on petitioners the burden of proving the truthfulness of any claims they make. The Commission defends Paragraph I,B as a fencing in provision justified by the petitioners' false representation that they had scientific evidence which formed a reasonable basis from which to conclude that substantially all X-11 users would lose significant amounts of weight. 71 Petitioners rely on Federated Nationwide Wholesalers Service v. FTC, 398 F.2d 253 (2d Cir. 1968), for the proposition that in no event is the Commission warranted in decreeing what in effect is clearly a shifting of the burden of proof from itself to the petitioners. 398 F.2d at 260. There the challenged order prohibited the petitioners from representing themselves as wholesalers, but provided that  'it shall be a defense in any enforcement proceeding under this order for (petitioners) to show'  that they actually operated as wholesalers, 398 F.2d at 259. The court modified the order to prohibit petitioners from representing that they are wholesalers unless they in fact operate as wholesalers. 398 F.2d at 260. Paragraph I,B of the order before us resembles the modified order in Federated Nationwide more closely than the objectionable order in that case. Essentially, Paragraph I,B prohibits petitioners from making representations unless they are true; it does not make the truthfulness of the representation an affirmative defense petitioners must prove once the Commission establishes that petitioners have made representations. The burden of proof remains entirely on the Commission. 72 The authority of the Commission to impose fencing in restrictions is stated in FTC v. Colgate-Palmolive Co., supra, 380 U.S. at 395, 85 S.Ct. at 1048: 73 We think it reasonable for the Commission to frame its order broadly enough to prevent respondents from engaging in similarly illegal practices in future advertisements. As was said in Federal Trade Comm'n v. Ruberoid Co., 343 U.S. 470, 473 (72 S.Ct. 800, 803, 96 L.Ed. 1081): (T)he Commission is not limited to prohibiting the illegal practice in the precise form in which it is found to have existed in the past. Having been caught violating the Act, respondents must expect some fencing in. Federal Trade Comm'n v. National Lead Co., 352 U.S. 419, 431 (, 77 S.Ct. 502, 1 L.Ed.2d 438). 74 Although Paragraph I,B is as extreme a fencing in provision as we would sustain, we think it is justified in this case by the egregiousness of past misrepresentations and the propensity of the principal respondents to violate the Act. 13 75
76 Paragraph I,C prohibits representing that any testimonial for a product represents the typical or ordinary experience of members of the public who use the product unless this is the case. As we held in Part IV,B,1, Supra, the advertisements did falsely and deceptively represent that the testimonials were indicative of the typical experience of X-11 users. This is a sufficient basis for Paragraph I,C. 77 Petitioners argue that the words unless this is the case shift the burden of proof but we think they do not. As we said of the words unless they establish in Western Radio Corp. v. FTC, 339 F.2d 937, 940 (7th Cir. 1964), Cert. denied, 381 U.S. 938, 85 S.Ct. 1770, 14 L.Ed.2d 701 (1965), (w)e take this to mean no more than that petitioners must not speak falsely in advertising . . . . Paragraph I,C is reasonably related to the unlawful practices and valid as issued. 78
79 Paragraph I,D prohibits representations that a product contains one or more unique ingredients or components, unless respondents can establish that any such ingredients or components are unavailable in products sold by others. Petitioners contend that Paragraph I,D is arbitrary in establishing only one definition for the word unique. In Part IV,A,3, Supra, we sustained the FTC's finding that unique, in the context in which it was used, falsely represented to consumers that none of petitioners' competitors used PPA. This is a sufficient basis for Paragraph I,D. 80 Petitioners also argue that the words unless (petitioners) can establish improperly shifts the burden of proof, but Western Radio again controls. Paragraph I,D is reasonably related to the unlawful practices and is valid as issued. 81
82 Paragraph I,E requires petitioners to include in all advertisements the statements DIETING IS REQUIRED and WARNING: THIS PRODUCT POSES A SERIOUS HEALTH RISK FOR SOME USERS. READ THE LABEL CAREFULLY BEFORE USING. Petitioners urge us to vacate this much of the order because it is unsupported by substantial evidence, creates an inconsistency in the treatment given to different persons engaged in the same conduct, and violates the First Amendment. 14 83 Substantial evidence in the record as a whole supports the underlying findings on which these affirmative disclosures are based. In Part IV,A,1 and B,3, Supra, we affirmed the Commission's findings concerning the necessity of a low calorie diet regimen, 15 and the health risk caused by PPA. 84 Petitioners' inconsistent treatment argument is premised upon the fact that the Commission did not impose a DIETING IS REQUIRED disclosure requirement on the manufacturer in Carlay Co. v. FTC, 153 F.2d 493 (7th Cir. 1946), and the Commission did not require the inclusion of either disclosure in Alleghany Pharmacal, supra. The Carlay case involved an entirely different product, which did not include PPA, and consequently comparison is not justified. In Alleghany Pharmacal, which did involve the same product, the advertisement quoted in the Commission's opinion made no representations concerning weight loss without dieting, the Commission found the advertisements contained no representations concerning safety, and the complaint apparently did not allege the failure to include the warning as an omission of material fact. In any event, when the safety of consumers is involved, as it is here, we would not preclude the Commission from imposing such a sanction simply because it failed to do so years before in another case. 16 85 The fact that other firms in the market are not similarly burdened does not affect the validity of this order.  'The purpose of Commission orders is not to put those employing deceptive acts or practices In pari delicto with each other.'  Spiegel, Inc. v. FTC, 494 F.2d 59, 64 (7th Cir.), Cert. denied, 419 U.S. 896, 95 S.Ct. 175, 42 L.Ed.2d 140 (1974) (quoting Collier & Son Corp. v. FTC, 427 F.2d 261, 276 (6th Cir. 1970)). 17 86 The First Amendment permits the imposition of disclosure requirements in appropriate cases. Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, supra, 425 U.S. at 771-772 n.24, 96 S.Ct. 1817; Warner-Lambert Co. v. FTC, supra, 183 U.S.App.D.C. at 239-240, 562 F.2d at 758-759. We described the limitations placed on the scope of the authority to require disclosure in National Commission on Egg Nutrition v. FTC, supra, 570 F.2d at 164: 87 The First Amendment does not permit a remedy broader than that necessary to prevent deception, . . . or to correct the effects of past deception. 88 The DIETING IS REQUIRED disclosure is necessary to prevent deception. The record shows the X-11 tablets do not cause weight loss in the absence of a restricted calorie diet regimen. An advertisement that does not disclose this is deceptive. We therefore uphold the requirement that the phrase DIETING IS REQUIRED be included in future advertisements. 89 Unnecessarily broad, however, is the requirement that the advertising by Porter & Dietsch and Fraser of any product contain the words WARNING: THIS PRODUCT POSES A SERIOUS HEALTH RISK FOR SOME USERS. READ THE LABEL CAREFULLY BEFORE USING. The Commission itself recognizes in its brief that this warning should not be required for products that do not contain PPA or similar compounds, because PPA is the only ingredient in X-11 shown by the record to cause a health risk. Yet the order is not so limited. 90 Moreover, the quoted words are not sufficiently specific even as to products to which they may appropriately be applied. So far as the evidence shows, PPA is dangerous only to users who suffer from certain ailments. 91 The order is modified by making the warning requirement applicable only to products that contain PPA or similar compounds and changing it to read, WARNING: THIS PRODUCT POSES A SERIOUS HEALTH RISK FOR USERS WITH HIGH BLOOD PRESSURE, HEART DISEASE, DIABETES, OR THYROID DISEASE. READ THE LABEL CAREFULLY BEFORE USING. 92