Read and research cases 44.2 and44.3in your text (partial decisions are in the text) for the complete opinions of the court. These cases examine the issues of deceptive advertising. Answer these questions after completing your research.

Support your answer with legal concepts from this week's learning.

• Compare and contrast the facts in each case.
• What specific facts led to the complaints by the FTC?
• How is/could the First Amendment be applied in these cases?
• How would you deal with the scenarios in these cases to prevent future claims?
• What conclusions can you draw?

It needs websites researched.

Case 44.2 FEDERAL COURT CASE Deceptive Advertising

Federal Trade Commission v. Bronson Partners, LLC

654 F.3d 359, 2011 U.S. App. Lexis 17203 (2011) United States Court of Appeals for the Second Circuit

"Disgorgement is a distinctively public-regarding remedy."

Lynch, Circuit Judge

Facts

Bronson Partners, LLC, Martin Howard, H & H Marketing, and Sandra Howard (collectively Bronson) advertised and sold two purportedly miraculous weight-loss products. Bronson advertised that its Chinese Diet Tea "SHEDS POUND AFTER POUND OF FATFAST!" Bronson's advertisements claimed the tea "eliminates an amazing 91% of absorbed sugars," "prevents 83% of fat absorption," and "doubles your metabolic rate to burn calories fast." Bronson advertised its Bio-Slim Patch would achieve "LASTING weight loss." The advertisements promised that by "carrying on with your normal lifestyle" and wearing the patch, "repulsive, excess ugly fatty tissue will disappear at a spectacular rate." The claims were bogus. The Federal Trade Commission (FTC) sued Bronson for engaging in deceptive advertising in violation of the Federal Trade Commission Act (FTC Act). The U.S. district court held that Bronson had engaged in false advertising. The court ordered Bronson to pay $1,942,325 in monetary damages, which is the disgorgement of the revenues earned from the sales of the tea and patch, and entered a permanent injunction against Bronson engaging false advertising.

Issue

Did Bronson engage in false advertising that warranted the assessment of monetary damages and the imposition of a permanent injunction?

Language of the Court

The FTC Act provides in proper cases the court may issue a permanent injunction. The FTC Act permits courts to award ancillary relief, including monetary relief. Disgorgement is a distinctively public-regarding remedy. The district court properly assessed Bronson's unjust gains as $1,942,325, the amount Bronson received from the sales of the Chinese Diet Tea and the Bio-Slim Patch.

Decision

The U.S. court of appeals upheld the district court's finding of false advertising, the imposition of a permanent injunction, and the disgorgement of profits.

Case 44.3 FEDERAL COURT CASE Deceptive Internet Advertising

Federal Trade Commission v. Ross

743 F.3d 886, 2014 U.S. App. Lexis 3476 (2014) United States Court of Appeals for the Fourth Circuit

"The district court had sufficient statutory power to award complete relief, including monetary consumer redress."

Davis, Circuit Judge

Facts

The Federal Trade Commission (FTC) sued Innovative Marketing, Inc. (IMI), and several of its high-level executives and founders, including Kristy Ross, a vice president of IMI, for violating Section 5 of the Federal Trade Commission Act. The defendants operated a massive, internet-based scheme that tricked consumers into purchasing computer security software, referred to as "scareware." The internet advertisements would advise consumers that a scan of their computers had been performed and had detected a variety of dangerous files, like viruses, spyware, and illegal pornography, when no scans were ever conducted. Computers users would then pay IMI to install its scareware on their computers. The advertisements could also cause consumers to automatically download unwanted IMI products. The scheme racked in millions of dollars from unsuspecting consumers. The U.S. district court held that the advertising was deceptive in violation of Section 5 and entered summary judgment in favor of the FTC against IMI.

Ross, a vice president at IMI, hired counsel and defended against the lawsuit. The district court found that Ross had broad responsibilities at IMI, oversaw a large quantity of employees, and had a hand in the creation and dissemination of the deceptive ads. The court found that she had authority to control and directly participated in the deceptive acts and had actual knowledge of the deceptive marketing scheme. The court held that Ross violated Section 5 of the FTC Act and entered a judgment enjoining Ross from engaging in similar deceptive marketing practices and holding her jointly and severally liable for equitable monetary consumer redress of $163,167,539. Ross appealed, contending that the district court did not have authority to award consumer redressa money judgmentunder the FTC Act.

Issue

Was the imposition of consumer redress damages of $163,167,539 a valid penalty under Section 5 of the FTC Act?

Language of the Court

The district court had sufficient statutory power to award complete relief, including monetary consumer redress. Nor did the court clearly err in finding that Ross directly participated in the deceptive marketing scheme.

Decision

The U.S. court of appeals affirmed the district court's findings and upheld the monetary penalty against Ross.