Opinion ID: 768048
Heading Depth: 3
Heading Rank: 1

Heading: Extent of the Misrepresentation

Text: 34 Michael Chierico asserts that the district court's award of consumer redress in the amount of gross sales was inappropriate because the FTC did not prove actual reliance on false and misleading statements for each of his customers. He argues instead that the court should limit its assessment of consumer redress to those losses specifically proven by the FTC. 35 The inherent equitable powers of the federal courts authorize the district court to order payment of consumer redress for injury caused by Michael Chierico's contumacious conduct. See Granfinanciera v. Nordberg, 872 F.2d 397, 400-01 (11th Cir.1989). In the underlying action, the sanctions imposed by the district court would have been authorized by Section 13(b) of the Federal Trade Commission Act, 15 U.S.C. 53(b), which provides a remedy, specifically in the form of injunctive relief, for consumers harmed by unfair or deceptive acts or practices in or affecting commerce. 15 U.S.C. 45(a)(1). Federal courts have used their inherent equitable power to justify the use of non-injunctive equitable sanctions as permissible remedies under section 13(b). See FTC v. Security Rare Coin & Bullion Corp., 931 F.2d 1312, 1314 (8th Cir.1991) (Where Congress allows resort to equity for the enforcement of a statute, all the inherent equitable powers of the district court are available for the proper and complete exercise of the court's equitable jurisdiction, unless the statute explicitly ... limits the scope of that jurisdiction.); accord FTC v. Gem Merchandising Corp., 87 F.3d 466, 470 (11th Cir.1996) (holding that section 13(b) permits a district court to order a defendant to disgorge illegally obtained funds). The analysis which applies to consumer remedies issued under section 13(b) is instructive in the case before us because the remedy for Michael Chierico's contemptuous conduct is closely akin tothe remedy for the statutory violation which lies at the heart of this action. 36 Liability under the FTC Act is predicated upon certain misrepresentations or misleading statements, coupled with action taken in reliance upon those statements. Proof of individual reliance by each purchasing customer is not a prerequisite to the provision of equitable relief needed to redress fraud. See FTC v. Figgie Int'l, Inc., 994 F.2d 595, 605 (9th Cir.1993). A presumption of actual reliance arises once the [FTC] has proved that the defendant made material misrepresentations, that they were widely disseminated, and that consumers purchased the defendant's product. Id. at 605-06; see also Security Rare Coin, 931 F.2d at 1316. 37 The FTC presented evidence that Michael Chierico's businesses routinely used deceptive calling scripts to induce the purchase of toner. 11 In most cases, the telemarketer made credible and persuasive misrepresentations concerning the existence of a preexisting relationship between Michael Chierico's businesses and the purchasing company. The evidence provided by the FTC creates a presumption that the fraudulent statements of Michael Chierico's telemarketers induced customers to accept and pay for unordered toner. Given this presumption, the FTC need not prove subjective reliance by each customer, as [i]t would be virtually impossible for the FTC to offer such proof, and to require it would thwart and frustrate the public purposes of FTC action. Security Rare Coin, 931 F.2d at 1316. Because it is clear from the record that Michael Chierico failed to successfully rebut the presumption of fraud raised by the FTC's evidence, all that is left for us to review is the district court's valuation of the losses sustained by Michael Chierico's customers. 38