United States of America Department of Justice v. Daniel Chapter One

896 F. Supp. 2d 1, 2012 U.S. Dist. LEXIS 137024
CourtDistrict Court, District of Columbia
DecidedSeptember 24, 2012
DocketCivil Action No. 2010-1362
StatusPublished
Cited by7 cases

This text of 896 F. Supp. 2d 1 (United States of America Department of Justice v. Daniel Chapter One) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States of America Department of Justice v. Daniel Chapter One, 896 F. Supp. 2d 1, 2012 U.S. Dist. LEXIS 137024 (D.D.C. 2012).

Opinion

MEMORANDUM OPINION

EMMET G. SULLIVAN, District Judge.

Plaintiff United States brings this action against Daniel Chapter One and James Feijo (“Defendants”) under Sections 5(1), 13(b), and 16(a) of the Federal Trade Commission Act, 15 U.S.C. §§ 45(1), 53(b), and 56(a), alleging that Defendants have violated a final cease and desist order of the Federal Trade Commission (“FTC” or the “Commission”). Pending before the Court is the United States’ Motion for Summary Judgment on Liability. The United States requests that the Court find that Defendants have violated the FTC’s order and accordingly are liable for civil penalties, injunctive relief, and consumer redress. Upon consideration of the motion, the opposition and reply thereto, the relevant case law, and the entire record in this case, the Court will GRANT the United States’ Motion for Summary Judgment on Liability-

I. BACKGROUND 1

Defendant Daniel Chapter One is incorporated under the laws of the State of Washington, with its principal place of business in Portsmouth, Rhode Island. See Pl.’s SMF ¶ 1. Defendant James Feijo is the sole member and overseer of Daniel Chapter One. PL’s SMF ¶ 2. Defendants advertise and sell dietary supplements, including BioShark, 7 Herb Formula, GDU, and BioMixx (the “Products”), which Defendants claim can treat, cure, or prevent cancer. PL’s SMF ¶¶ 3-4.

A. Procedural Background

On September 18, 2008, the FTC initiated an administrative proceeding alleging that Defendants’ marketing of the Products constituted deceptive acts and practices in violation of Sections 5(a) and 12 of the Federal Trade Commission Act (the “FTC Act”), 15 U.S.C. §§ 45(a) and 52. PL’s SMF ¶¶4-5. Following a trial, an administrative law judge concluded that Defendants had violated the FTC Act by making unsubstantiated claims that the Products prevented, treated, or cured tumors or cancer. PL’s SMF ¶ 6. Defendants appealed this decision to the Com *3 mission, and on December 24, 2009, the Commission upheld the decision and issued a Final Order to cease and desist certain practices. PL’s SMF ¶¶ 7-8.

On January 25, 2010, the FTC issued a Modified Final Order, copies of which were served on Defendants and their attorneys on January 29, January 30, and February 1, 2010. Pl’s SMF ¶¶ 9-10; see also PL’s Mem. in Supp. of Mot. for Summ. J. on Liability (hereinafter, “PL’s MSJ”), Exs. D and V. Part II of the Modified Final Order prohibits Defendants (referred to in the Modified Final Order as “Respondents”) from making “any representation, in any manner, expressly or by implication, including through the use of product or program names or endorsements” 2 that any product marketed by Defendants:

[PJrevents, treats, or cures or assists in the prevention, treatment, or cure of any type of tumor or cancer, including but not limited to representations that:
1. BioShark inhibits tumor growth;
2. BioShark is effective in the treatment of cancer;
3. Herb Formula is effective in the treatment or cure of cancer;
4. 7 Herb Formula' inhibits tumor formation;
5. GDU eliminates tumors;
6. GDU is effective in the treatment of cancer;
7. BioMixx is effective in the treatment of cancer; or
8. BioMixx heals the destructive effects of radiation or chemotherapy;
unless the representation is true, non-misleading, and, at the time it is made, Respondents possess and rely upon competent and reliable scientific evidence that substantiates the representation.

Pl’s SMF ¶ 11; see also PL’s MSJ, Ex. D, at 2. In addition, Part V.B of the Modified Final Order requires that:

Within forty-five (45) days after the final and effective date of this order, Respondents shall send by first class mail, postage prepaid, an exact copy of the notice ... to all persons [who purchased the Products between January 1, 2005 and the date of the order.]

Pl’s SMF ¶ 12; see also PL’s MSJ, Ex. D, at 3. The notice, which is attached to the Modified Final Order, informs consumers of the FTC’s conclusion that Defendants’ advertising claims were deceptive because they were not substantiated by competent and reliable scientific evidence. See PL’s MSJ, Ex. D, at 7.

Defendants filed an appeal with the United States Court of Appeals for the District of Columbia Circuit, contesting the legality and constitutionality of the Modified Final Order. See PL’s SMF ¶ 13; Petition for Review, Daniel Chapter One v. FTC, No. 10-1064 (D.C.Cir. Mar. 17, 2010). Defendants also applied to the FTC for a stay of the Modified Final Order pending the outcome of their appeal, but their request was denied. PL’s SMF ¶ 14. Defendants then filed with the D.C. Circuit an emergency motion for a stay of the Modified Final Order. This motion was denied on April 1, 2010. See Per Curiam Order Denying Emergency Motion to Stay Case, Daniel Chapter One, No. 10-1064 (D.C.Cir. Apr. 1, 2010); see also Pl’s MSJ, Ex. F. Because Defendants failed to obtain a stay, the Modified Final Order became *4 effective on April 2, 2010. See PL’s MSJ at 4; see also 15 U.S.C. § 45(g)(2) (“An order of the Commission to cease and desist shall become final ... upon the sixtieth day after such order is served, if a petition for review has been duly filed; except that any such order may be stayed, in whole or in part and subject to such conditions as may be appropriate, by — (A) the Commission; (B) an appropriate court of appeals of the United States ...; or (C) the Supreme Court, if an applicable petition for certiorari is pending.”).

On August 13, 2010, the United States filed its Complaint in this Court seeking civil penalties and other injunctive relief pursuant to §§ 5(1), 13(b), and 16(a) of the FTC Act. Simultaneous therewith, the United States filed a Motion for a Preliminary Injunction seeking an order enjoining Defendants from violating the Modified Final Order. PL’s SMF ¶ 16.

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Bluebook (online)
896 F. Supp. 2d 1, 2012 U.S. Dist. LEXIS 137024, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-of-america-department-of-justice-v-daniel-chapter-one-dcd-2012.