## Facts

- The FTC and Kevin Trudeau entered a court-approved consent order barring Trudeau from misrepresenting the content of his books in infomercials.
- Trudeau promoted a weight-loss book through an infomercial claiming the program was “easy,” required “no exercise,” and allowed consumers to eat what they wanted while losing weight.
- The district court found the infomercial’s claims inconsistent with the book’s actual program requirements and held Trudeau in civil contempt for violating the consent order.
- After a prior appeal vacated certain sanctions and required a civil contempt remedy with a remedial structure, the district court on remand imposed a $37.6 million monetary sanction.
- The district court calculated the award as the book’s price multiplied by the number of infomercial-driven 1-800-number orders, plus shipping, minus returns, excluding other sales channels.
- The court ordered the FTC to distribute funds to affected consumers who purchased through the 1-800 number; any remainder would revert to Trudeau.
- The court also required Trudeau to post a $2 million performance bond for at least five years as a condition of future infomercial activity.
- Trudeau appealed, challenging the monetary award as improperly measured and the bond as violating the First Amendment.

## Issues

1. Whether a compensatory civil-contempt monetary sanction enforcing an FTC consent order may be measured by consumer loss, rather than limited to the contemnor’s unjust gain, and whether the amount was adequately supported and remedial.
2. Whether requiring a $2 million performance bond as a condition of future infomercials impermissibly burdens speech under the First Amendment.

## Decision

- The court affirmed the $37.6 million civil-contempt award as a compensatory, remedial sanction tied to consumer losses attributable to the contemptuous advertising.
- The court held that consumer loss was a permissible measure of compensatory contempt relief and that the district court’s aggregate calculation was adequately supported as a reasonable estimate.
- The court affirmed the $2 million performance bond requirement, rejecting the First Amendment challenge because the condition targeted compliance and consumer protection in an area of prior deceptive commercial speech.

## Legal Principles

- Civil-contempt sanctions must be coercive (to compel compliance) or compensatory (to remedy harm), not punitive.
- A compensatory contempt award may be based on consumer loss caused by contemptuous conduct and is not limited to the contemnor’s net profits, so long as the amount reasonably approximates harm.
- In FTC consumer-redress settings, aggregate and inferential evidence may support a reasonable estimate of consumer loss; uncertainty in calculation is allocated to the contemnor whose misconduct created it.
- Restitutionary structures that direct payment to injured consumers, with any remainder reverting to the defendant, support the remedial character of a civil-contempt award.
- Deceptive or misleading commercial speech receives reduced First Amendment protection, and courts may impose compliance tools (including performance bonds) aimed at preventing recurrence and ensuring funds for consumer redress, so long as lawful advertising remains permitted.

## Conclusion

The Seventh Circuit upheld a civil-contempt remedy enforcing an FTC consent order by approving restitution measured by consumer loss using aggregate proof and sustaining a performance bond requirement as a permissible compliance measure consistent with limits on protection for deceptive commercial speech.


Fed. Trade Comm'n v. Trudeau, 662 F.3d 947 (7th Cir. 2011)