Opinion ID: 617945
Heading Depth: 1
Heading Rank: 2

Heading: The Coercive Sanction

Text: We held in Trudeau I that a three-year infomercial ban was an improper coercive sanction because it did not give Trudeau the opportunity to purge. 579 F.3d at 776. On remand, the district court replaced the infomercial ban with a requirement that Trudeau post a $2 million bond before he participates in any infomercial for any book, newsletter, or other informational publication, about the benefits, performance, or efficacy of any product, program or service referenced in any such [publication]. This sanction is purgeable because Trudeau's bond is not forfeited to the FTC unless he makes a deceptive infomercial, as defined by the district court's original and supplemental orders. FTC v. Trudeau, 708 F.Supp.2d 711, 722 (N.D.Ill.2010). According to Trudeau, however, the coercive sanction (the bond requirement) is still impermissible because it violates the First Amendment. And moreover, Trudeau argues, before we even reach the First Amendment question, we should reject the addition of a performance bond because the district court was powerless to modify the consent order under Rule 60(b)(5) without identifying significant changed circumstances. Trudeau, again, is incorrect. It was well within the district court's discretion to modify the consent order. Lee v. Village of River Forest, 936 F.2d 976, 979 (7th Cir.1991) (Rule 60(b) modification is reviewed for abuse of discretion). Trudeau believes that the district court incorrectly applied United States v. United Shoe Machinery Corp., 391 U.S. 244, 252, 88 S.Ct. 1496, 20 L.Ed.2d 562 (1968)which allows for modification of an order if it is not achieving its purposeinstead of Rufo v. Inmates of the Suffolk County Jail, 502 U.S. 367, 383, 112 S.Ct. 748, 116 L.Ed.2d 867 (1992)which requires the moving party establish that there has been a significant change of circumstances that warrants modification. Trudeau reaches further to assert that Rufo actually overruled United Shoe, so a modification because the order was not achieving its purpose is out of the question. Butunquestionably Rufo did not overrule United Shoe. Rufo applies when a defendant seeks to modify an injunction in an institutional reform case. 502 U.S. at 383, 112 S.Ct. 748. United Shoe, by contrast, supplies the rule where a plaintiff is seeking to impose additional restrictions on an enjoined party. 391 U.S. at 251-52, 88 S.Ct. 1496. There is simply no conflict between the two. Indeed, Rufo cites with approval the page in United Shoe explaining that the new and unforeseen conditions requirement for defendants asking for relief from an injunction does not apply to requests for increased protections by a plaintiff. Rufo, 502 U.S. at 380, 112 S.Ct. 748; United Shoe, 391 U.S. at 248, 88 S.Ct. 1496. Because the FTC is seeking to modify the original injunction to better achieve its purpose, this case falls squarely under United Shoe. So, if the FTC proved that the order was not achieving its purpose, the district court had discretion to modify the decree so as to achieve the required result with all appropriate expedition. United Shoe, 391 U.S. at 252, 88 S.Ct. 1496; see also United States v. Krilich, 303 F.3d 784, 789 (7th Cir.2002) (holding that the general rules for modification of judgments under Rule 60(b) apply to consent orders). The required result or purpose of the consent order in this case is to protect consumers from [Trudeau's] deceptive practices and to compensate those already allegedly deceived. Trudeau I, 579 F.3d at 764. The remedial sanction discussed above addresses the compensatory purpose of the order while the performance bond has been added primarily to reinforce the order's protections going forward. In light of Trudeau's 32,-000-plus broadcasts of deceptive infomercials for The Weight Loss Cure, we have little trouble agreeing with the district court that its original order provided insufficient consumer protections. It was within the district court's discretion to reinforce the order by clarifying its terms and adding a performance bond. See United States v. Vlahos, 884 F.Supp. 261, 266-67 (N.D.Ill.1995), aff'd, No. 95-1484, 1996 WL 459937, at  (7th Cir. Aug. 9, 1996) (unpublished) (holding that a performance bond was an acceptable method of deterring additional instances of unlawful commercial speech). And the bond requirement does not violate the First Amendment. See id. (holding that a similar performance bond did not violate the First Amendment). Trudeau raises a variety of First Amendment arguments, but the only one that merits discussion is whether his right to engage in commercial speech is violated by the requirement that he post a bond before he participate in any infomercial, misleading or not. Insofar as the court order applies to misleading commercial speech, there is no possible First Amendment violation, of course, because misleading commercial speech gets no constitutional protection. Florida Bar v. Went For It, Inc., 515 U.S. 618, 624-25, 115 S.Ct. 2371, 132 L.Ed.2d 541 (1995). The First Amendment is implicated here, however, because Trudeau is required to post a bond before he participates in an infomercial regardless of whether it contains a misleading statement. His bond will not be forfeited unless he makes a misrepresentation in violation of the court order, but that does not eliminate the need for First Amendment scrutiny: The bond requirement is itself a restriction on commercial speech entitled to intermediate scrutiny. Id. at 623, 115 S.Ct. 2371. Therefore, it is the FTC's burden to show that (1) there is a substantial interest supporting the restriction, (2) the restriction directly advances that substantial interest, and (3) the restriction is narrowly drawn. Central Hudson Gas & Elec. Corp. v. Public Serv. Comm'n, 447 U.S. 557, 564-5, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980); Florida Bar, 515 U.S. at 624, 115 S.Ct. 2371. On these facts, the first two constitutional requirements are obviously met. The protection of consumers is a substantial interest. And the performance bond directly advances that interest in at least two ways: It makes it more likely that consumers will be compensated for future violations and, more importantly, it makes it less likely that there will be future violations because Trudeau will face a considerable financial loss if he is involved in a deceptive infomercial. The tailoring prong requires more discussion but the result is the same. Central Hudson stated that a restriction on commercial speech must not be more extensive than necessary. 447 U.S. at 566, 100 S.Ct. 2343. That language led some courts to require a least-restrictive-means approach. Bd. of Trs. of the State Univ. of New York v. Fox, 492 U.S. 469, 477, 109 S.Ct. 3028, 106 L.Ed.2d 388 (1989). An extensive discussion in Fox, however, clarified that, commensurate with [the] subordinate position of [commercial speech] in the scale of First Amendment values, the fit needn't be perfect, but only reasonable[,] . . . not necessarily the single best disposition but one whose scope is in proportion to the interest served. Id. at 477, 480, 109 S.Ct. 3028. But to say that the restriction must be reasonably well tailored to its stated objective, Florida Bar, 515 U.S. at 633, 115 S.Ct. 2371, is not to confuse it with a rational basis analysis; rational basis allows a legitimate end to be achieved even at inordinate cost, whereas here, dealing with a restriction on protected commercial speech, the cost of achieving the substantial interest must be carefully calculated, Fox, 492 U.S. at 480, 109 S.Ct. 3028. The performance bond meets this standard. First, a bond is required only if Trudeau decides to resume making infomercials. It does not limit Trudeau as an author; it does not curtail Trudeau's attempt to pitch products in any print medium; it does not even apply if Trudeau makes a TV or radio ad under two minutes. Its application targets only the commercial conduct that has caused such tremendous consumer harm in the past infomercials. Second, the district court set the performance bond at $2 million but took seriously Trudeau's claim that it is beyond what he can afford by allowing him to file an audited financial statement and prove as much in a hearing. Third, the bond requirement is proportional to the amount of harm Trudeau caused by previous deceptive infomercials. If anything, the number seems low given that, over the course of nearly a year, Trudeau's Weight Loss Cure infomercial sold thousands of books each day for many months. AFFIRMED.