Fanning v. Fed. Trade Comm'n

Filing

OPINION issued by Juan R. Torruella, Appellate Judge; Sandra L. Lynch, Appellate Judge and David J. Barron, Appellate Judge. Published. [15-1520]

Case: 15-1520

Document: 00116996528

Page: 1

Date Filed: 05/09/2016

Entry ID: 5997965

United States Court of Appeals
For the First Circuit
No. 15-1520
JOHN FANNING,
Petitioner,
v.
FEDERAL TRADE COMMISSION,
Respondent.

PETITION FOR REVIEW OF AN ORDER
OF THE FEDERAL TRADE COMMISSION

Before
Torruella, Lynch, and Barron,
Circuit Judges.

Peter F. Carr, II, with whom Pamela C. Rutkowski and Eckert
Seamans Cherin & Mellott, LLC, were on brief, for petitioner.
Bradley Grossman, Attorney, Federal Trade Commission, with
whom Jonathan E. Nuechterlein, General Counsel, Joel Marcus,
Director of Litigation, Leslie Rice Melman, Assistant General
Counsel for Litigation, Sarah Schroeder and Boris Yankilovich,
Attorneys, were on brief, for respondent.

May 9, 2016

Case: 15-1520

Document: 00116996528

TORRUELLA,

Page: 2

Circuit

Date Filed: 05/09/2016

Judge.

Entry ID: 5997965

Defendant-Appellant

John

Fanning petitions this court for review of the Federal Trade
Commission's

("the

Commission")

summary

decision

finding

him

personally liable for misrepresentations contained on the website
Jerk.com in violation of the Federal Trade Commission Act ("FTC
Act").

We agree with the Commission's findings that Jerk.com

materially

misrepresented

membership benefits.

the

source

of

its

content

and

Nonetheless, we agree with Fanning that

portions of the Commission's remedial order are overbroad.
affirm

the

finding

its

of

liability

and

the

remedial

We

order

recordkeeping provisions and order acknowledgment requirement.
Because we conclude the remedial order's compliance monitoring
provisions as to Fanning are overbroad, we vacate that portion of
the Commission's order and remand for proceedings consistent with
this opinion.
I.

Background1

In 2009, Fanning founded Jerk LLC ("Jerk") and Jerk.com.2
From 2009 to 2014, Jerk operated Jerk.com.3

1

Unless otherwise noted, the facts in this case are undisputed.

2

Jerk also operated Jerk.be and Jerk.org. For simplicity, we
refer to these websites collectively as Jerk.com.
3

Jerk.com ceased operation in 2014.
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Jerk.com was a self-proclaimed reputation management
website.

Its homepage greeted users by asking them if they were

"[l]ooking for the latest scoop on a world filled with jerks" and
stated

that

"millions"

of

people

"use[d]

updates, business, dating, and more."

Jerk

for

important

The homepage listed several

benefits Jerk.com offered, including tracking one's own and other
people's reputations, "enter[ing] comments and reviews for [other]
people,"

"[h]elp[ing]

others

avoid

the

wrong

people,"

and

"prais[ing] those who help you."
Jerk.com's main feature was its profile pages.

Each

page corresponded with a particular individual and displayed that
person's name.

The profiles allowed users to vote on whether

someone was a "Jerk" or "not a Jerk" and displayed the total number
of "Jerk" and "not a Jerk" votes received.

Jerk.com users could

also post anonymous reviews about a person, which were visible on
that person's profile page.
million profiles pages.

By 2010, Jerk.com contained 85

Very few of these profile pages had

reviews posted and those reviews that were posted were largely
derogatory.
Jerk.com also had a "Remove Me!" page, which stated that
individuals could "manage [their] reputation and resolve disputes"
regarding

content

subscription.

on

their

profile

pages

through

a

paid

The "Remove Me!" page contained a link to a separate

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subscription page where users could enter their billing and credit
card information to purchase a $30 membership.

The subscription

page reiterated that only paid members could "create a dispute"
about the content of a profile.
Despite its large number of profile pages, Jerk.com had
relatively few users.

Jerk.com had a "Post a Jerk" page that

allowed users to create a profile for themselves or others by
entering a person's first and last name, e-mail address, university
affiliation, and location.

But Jerk created the vast majority of

profiles by using a computer program that populated profile pages
with names, photos, and other content obtained from searching
Facebook -- a fact Jerk.com did not disclose on any of its pages.
In

April

2014,

the

Federal

Trade

Commission's

enforcement arm ("FTC") filed a two-count administrative complaint
charging Jerk and Fanning with engaging in "deceptive acts or
practices in or affecting commerce" in violation of section 5(a)
of the FTC Act.

15 U.S.C. § 45(a)(2).

The first count alleged

that Jerk.com misrepresented the source of its content by claiming
that it was entirely user generated.

The second count alleged

that Jerk.com misrepresented the benefits of purchasing a $30
membership.
The FTC moved for summary decision (the administrative
equivalent of summary judgment) on both counts in September 2014.

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The Commission granted the motion on both counts and found Fanning
personally liable4 for Jerk's misrepresentations.

The Commission

also issued an order enjoining Jerk and Fanning from making certain
misrepresentations
requirements.

and

imposing

monitoring

and

recordkeeping

Fanning (but not Jerk) filed this timely petition.
II.

The

FTC

Rules

of

Liability
Practice

and

Procedure

allow

the

Commission to grant "summary decision," which is reviewed under
the same standard as summary judgment before a district court.
See 16 C.F.R. § 3.24(a)(2); P.R. Aqueduct & Sewer Auth. v. EPA, 35
F.3d

600,

607

(1st

Cir.

1994).

Under

the

summary

judgment

standard, we "draw all reasonable inference in favor of the nonmoving party," but disregard "conclusory allegations, improbable
inferences,

and

unsupported

speculation."

Méndez-Aponte

v.

Bonilla, 645 F.3d 60, 64 (1st Cir. 2011) (quoting Del Toro Pacheco
v. Pereira, 633 F.3d 57, 62 (1st Cir. 2011)).

This court then

asks whether a reasonable decision maker could conclude there was

4

Fanning makes some statements in his brief proclaiming that he
was merely an advisor to Jerk. In no part of his brief, however,
does Fanning state that he is petitioning for review of the
Commission's finding of personal liability, nor does he develop
any arguments about why the Commission's finding was wrong. We
therefore view this argument as waived.
See Rodríguez v.
Municipality of San Juan, 659 F.3d 168, 175 (1st Cir. 2011)
(finding waived claims that are "adverted to in a cursory fashion,
unaccompanied by developed argument").
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no "genuine issue of material fact" that "may affect the outcome
of the case."

P.R. Aqueduct, 35 F.3d at 605.

judicial review of FTC findings is deferential.
v. FTC, 970 F.2d 311, 316 (7th Cir. 1992).

Nonetheless,

See Kraft, Inc.

Although "the words

'deceptive practices' set forth a legal standard" and "must get
their final meaning from judicial construction," "the Commission
is often in a better position than are courts to determine when a
practice is 'deceptive'" and "the Commission's judgment is to be
given great weight by reviewing courts."

FTC v. Colgate-Palmolive

Co., 380 U.S. 374, 385 (1965).
In

determining

whether

a

defendant

has

engaged

in

deceptive acts or practices, the Commission uses a three-part test
considering (1) "what claims are conveyed;" (2) "whether those
claims

are

false,

misleading,

or

unsubstantiated;"

and

(3)

"whether the claims are material to prospective consumers."

POM

Wonderful, LLC v. FTC, 777 F.3d 478, 490 (D.C. Cir. 2015); see
also Kraft, 970 F.2d at 314; Novartis Corp., 127 F.T.C. 580, 679
(1999).

As explained below, Jerk.com contained false and material

statements about the source of its content and the benefits of a
paid

membership

such

that

the

Commission's

decision was proper.

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grant

of

summary

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Count I
Under Count I, the FTC alleged that Jerk.com contained

material misrepresentations that its content was user generated.
We agree.
1.

The Misrepresentation

Fanning does not dispute that if Jerk.com claimed all of
its profile pages were user generated, that claim would be false.
Rather, he argues that Jerk.com made no such claim.

In determining

whether a claim has been made, the Commission looks at the "overall
net impression," POM Wonderful, 777 F.3d at 490 (quoting Kraft,
970 F.2d at 314), left with "consumers acting reasonably under the
circumstances," id. (quoting Thompson Med. Co., 104 F.T.C. 648,
788 (1984)).
"Claims can either be express or implied."
127 F.T.C. at 680.

Novartis,

"[I]mplied claims fall on a continuum, ranging

from the obvious to the barely discernable."

Kraft, 970 F.2d at

319; see also Novartis, 127 F.T.C. at 680; Thompson Med. Co., 104
F.T.C. at 788-89.

Although the Commission may look at extrinsic

evidence of consumer perceptions to guide its interpretation, this
is not required.

Kraft, 970 F.2d at 319-20. "When confronted with

claims that are implied, yet conspicuous, . . . common sense and
administrative experience provide the Commission with adequate
tools to make its findings."

Id. at 320.

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Moreover, the Commission need not find that all, or even
a majority, of consumers found a claim implied.

The Commission

has previously stated that if "a[] [claim] conveys more than one
meaning, only one of which is misleading, a seller is liable for
the

misleading

interpretation

interpretations are possible."

even

if

nonmisleading

Telebrands Corp., 140 F.T.C. 278,

291 (2005), aff'd, 457 F.3d 354 (4th Cir. 2006).

Liability may

be imposed if "at least a significant minority of reasonable
consumers [would be] likely to take away the misleading claim."
Id.
Starting with Jerk.com's content, the Commission viewed
Jerk.com's references to its "millions" of users; its disclaimers
that it could not be held liable for content because its content
reflected the views of its users; and the "Post a Jerk" page
inviting

users

to

create

profile

pages

as

creating

a

"net

impression" that implied Jerk.com contained wholly user generated
content. 5

Based

on

its

logical

5

interpretation

of

Jerk.com's

Fanning also argues that the Commission violated his due process
rights by finding an implied misrepresentation when the FTC's
motion for summary decision focused primarily on an express
misrepresentation theory. As Fanning conceded at oral argument,
the FTC's complaint and motion for summary decision contained
references to both implied and express misrepresentations.
We
therefore find no merit in his claim that he lacked notice that
the Commission could impose liability based on an implied
misrepresentation theory.
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content, we see no basis for setting aside the Commission's
conclusion that at least a significant minority of users could
reasonably view Jerk.com as claiming its content was wholly user
generated.
Fanning's

main

argument

is

that

the

statements

on

Jerk.com's "About Us" page that the Commission relied upon were
"part of standard terms and conditions of use" such that "[n]o
reasonable consumer . . . could possibly have been misled to
believe that all content [on Jerk.com] was created by individual
'users.'"

Jerk.com's "About Us" page was divided into twelve

sections, three of which stated that users were responsible for
the content they posted.6

Subsection 2 of that page, "Online

Conduct," restricted what users could post on profiles pages and
stated that Jerk.com users agreed to be "solely responsible for
the content or information [they] publish[ed] or display[ed]."
Subsection

4,

"Online

Content,"

stated

"[o]pinions,

advice,

statements, offers or other information or content" on Jerk.com
were "those of their respective authors and not of Jerk LLC."
Subsection 5, "Removal of Information," told users they were

6

The other nine sections discussed limitations on Jerk's
liability ("Indemnity," "Disclaimer of Warranty," and "Limitation
of Liability"), privacy policy ("Information Supplied by You"),
and general legal terms ("Proprietary Rights," "Membership Terms
& Conditions," "State by State Variations," "General Provisions,"
and "Copyright Policy").
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"solely

responsible

for

Page: 10

the

Date Filed: 05/09/2016

content

of

[their]

Entry ID: 5997965

postings

on

jerk.com."
Fanning is correct that the disclaimers on the "About
Us"

page

would

be

insufficient

to

support

misrepresentation claim standing on their own.

an

implied

But the Commission

did not view these statements in isolation -- rather, it looked at
statements made throughout Jerk.com and noted that the statements
on the "About Us" page contributed to an overall net impression
that all content was user generated.

Even if the "About Us" page

generally consisted of legal disclaimers, the Commission focused
its analysis on Jerk.com's homepage and "Post a Jerk" pages.

The

Commission viewed Jerk.com's homepage, referencing its "millions"
of existing users, as "introduc[ing] the website as a vibrant
source

of

user

participation

and

social

interaction."

The

Commission also noted that the benefits Jerk.com advertised on its
homepage -- "[e]nter[ing] comments and reviews for people you
interact with," "[h]elp[ing] others avoid the wrong people," and
"[p]rais[ing] those who help you" -- all "convey[ed] the essential
message that Jerk.com is based on content generated by its users."
This message, the Commission continued, was "further underscored
by the 'Post a Jerk' feature which invited consumers to post
profiles of other individuals to the site."

Only after noting

these features did the Commission cite the statements on Jerk.com's

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"About Us" page as also enforcing the impression Jerk.com's content
was user generated.
As the Commission concluded, these pages all "sp[oke] in
terms of user-posted content."
expressly

represented

that

Moreover, even if Jerk.com never
its

profile

pages

were

created

exclusively by users, it never expressly stated how the pages were
created.

The only information regarding the origin of the profile

pages was the "Post a Jerk" page allowing users to create profiles
for other people.7

Given Jerk.com's emphasis on user-generated

content and the lack of information to the contrary, reasonable
consumers

could

conclude

other

Jerk.com

users

created

their

profile pages.

7

Fanning briefly suggests that Jerk.com disclosed the source of
its content in the "Remove Me" page. That page stated "No one's
profile is ever removed because Jerk is based on searching free
open internet searching databases and it's not possible to remove
things from the Internet."
Disclaimers, however, can mitigate
false statements only if "they are sufficiently prominent and
unambiguous to change the apparent meaning of the claims and to
leave an accurate impression."
FTC v. Direct Mktg. Concepts,
Inc., 624 F.3d 1, 12 (1st Cir. 2010) (quoting Removatron, 884 F.2d
at 1497).
As discussed above, Jerk.com contained several
statements on its homepage and "About Us" page (those pages that
described Jerk.com for users) stating its content was user
generated.
The single statement on a separate page is not
prominent enough to counteract these statements. Thus, we agree
with the Commission that the ambiguous language on the "Remove Me"
page did little to dispel the net impression that Jerk.com's
content was entirely user generated.
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The Commission's interpretation is further bolstered by
extrinsic

evidence. 8

Consumers

complained

to

the

FTC

about

Jerk.com and in many of these complaints, consumers stated concern
that someone they knew created their profile page.

The Commission

need only rely on "its own reasoned analysis" in determining
whether a claim has been made, Kraft 970 F.2d at 319, but this
additional evidence is further proof that reasonable consumers
believed Jerk.com claimed its content was user generated.

In

light of this record, we see no genuine issue of material fact as
to whether Jerk.com contained an implied misrepresentation about
the source of its content.
2.

Materiality

The FTC Act imposes liability for misrepresentations
only if they are material.

See POM Wonderful, 777 F.3d at 490.

"A claim is considered material if it 'involves information that
is important to consumers and, hence, likely to affect their choice
of, or conduct regarding a product.'"

Kraft, 970 F.2d at 322

(quoting Cliffdale Assocs., 103 F.T.C. 110, 165 (1984)).

The

Commission presumes materiality with at least four types of claims:
(1)

express

claims;

(2)

intended

8

implied

claims;

(3)

claims

Based on the adequacy of the record to support the other findings
made, we do not analyze the contention that Jerk and Fanning fully
intended to convey at least implicitly that profiles were user
generated.
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involving health or safety; and (4) claims pertaining to a central
characteristic of the product about "which reasonable consumers
would be concerned."
(1984)

(noting

characteristic

Id.; see Cliffdale Assocs., 103 F.T.C. 110

that
of

the

"information
product

pertaining

or

service

to
will

the

central

be

presumed

material").
Fanning

argues

that

the

Commission

relied

upon

"advertising cases" in which "consumers made product purchasing
decisions

in

reliance

upon

purported

implied

representations

within the advertisements at issue," and that nothing on Jerk.com
could be construed as an advertisement.

There is no requirement

that a misrepresentation be contained in an advertisement.
FTC

Act

prohibits

"deceptive

acts

or

practices,"

15

The

U.S.C.

§ 45(a)(2) (emphasis added), and we have upheld the Commission
when it imposed liability based on misstatements not contained in
advertisements, see, e.g., Sunshine Art Studios, Inc. v. FTC, 481
F.2d 1171, 1173-74 (1st Cir. 1973) (finding FTC Act violation based
on company's practice of sending customers excess merchandise and
using "a fictitious collection agency to coerce payment").

We see

no reason why it would not be a deceptive act or practice to place
misrepresentations

on

websites

if

those

misrepresentations

"affect[ed] [consumers'] choice of, or conduct" regarding the
website.

Kraft, 970 F.2d at 322.

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On this point, Fanning does not provide us with any
arguments as to why the Commission concluded incorrectly that
consumers

altered

misrepresentation

their

that

behavior

its

content

based

was

on

user

Jerk.com's

generated.

The

Commission concluded that a presumption of materiality applied
because

Jerk.com

characteristics.

misrepresented

one

of

its

central

We see no logical gap in the Commission's view

that the source of profile pages goes to a central characteristic
of a social networking website.

A consumer's belief that Jerk.com

had many users or that an acquaintance made his or her profile
page would influence that consumer's decision to use Jerk.com or
purchase a membership.

The Commission also cited evidence that

some consumers, in fact, purchased memberships from Jerk.com based
on concerns that someone they knew created their profile pages and
it would be seen by others.

We thus conclude summary decision was

proper on Count I.
B.

Count II
We

also

agree

with

the

Commission

that

Jerk.com

contained material and false statements about the benefits of its
$30

paid

membership.

Jerk.com's

"Remove

Me"

and

"billing

information" pages stated that a $30 paid membership would allow
users to "manage [their] reputation and "create a dispute" about
the content of a profile page.

As the Commission found, Jerk.com

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expressly represented that a $30 membership would allow users to
contest and potentially remove negative reviews on their profile
pages.
Fanning has failed to create a genuine dispute about the
falsity

of

this

claim.

Two

FTC

investigators

paid

the

$30

membership fee and never received any communication from Jerk.
The FTC received numerous complaints stating the same.

Fanning

adduces no evidence showing Jerk.com provided services to (or even
communicated with) users who paid the membership fee.

He argues

only that there was a factual dispute about whether Jerk or Fanning
engaged in a "pattern [or] practice . . . to take money from
consumers

without

providing

benefits

as

promised."

Fanning,

however, fails to cite any evidence to the contrary -- the record
is bereft of any evidence that Jerk.com provided even one paid
member the opportunity to contest information on a profile page.
There is no evidence suggesting the people who paid but received
no

benefits

were

an

aberration

or

mistake.

"[C]onclusory

allegations . . . are insufficient to defeat summary judgment" and
Fanning has failed to provide more than that.
Hawkins,

321

F.3d

235,

240

We

also

conclude

(1st

Cir.

2003)

Margarian v.
(quotation

mark

omitted).

material.

Jerk.com's

misrepresentation

was

As the Commission found, this misstatement triggers two

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separate presumptions of materiality -- it was both express and
about a central characteristic of the $30 membership.
970 F.2d at 322.

See Kraft,

The Commission also found ample evidence that

the misrepresentation affected consumer behavior, as reflected in
the numerous complaints from consumers stating they paid the
membership fee so that they could have their profiles (or reviews
contained therein) removed.

We find summary decision proper on

Count II as well.
III.

The FTC's Order

Even if the Commission properly held him liable, Fanning
argues that the Commission's injunctive order against him is
overbroad on both statutory and First Amendment grounds.

In Part

I of its order, the Commission enjoins Jerk and Fanning from
misrepresenting the "source of any content on a website" and "the
benefits of joining any service."

Fanning argues that this

provision abridges his First Amendment right to free speech.

In

addition, the Commission subjects Fanning to several monitoring
and reporting provisions, which Fanning challenges as overbroad.
The Commission may enter a cease and desist order if it
finds that a method of competition or practice violates other parts
of the FTC Act.

15 U.S.C. § 45(b).

The Supreme Court has

interpreted the FTC Act as giving the Commission "wide discretion
in determining the type of order that is necessary to cope with

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the unfair practices found."

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Colgate-Palmolive, 380 U.S. at 391.

Thus, the Commission may "frame its order broadly enough to prevent
respondents from engaging in similarly illegal practices" in the
future.

Id. at 395.

The Court has similarly held that "the

Commission is not limited to prohibiting the illegal practice in
the precise form in which it is found to have existed in the past.
If the Commission is to attain the objectives Congress envisioned
. . . it must be allowed effectively to close all roads to the
prohibited goal."
A.

FTC v. Ruberoid Co., 343 U.S. 470, 473 (1952).

Injunction on Misleading Speech
We

Commission's

find

no

order

merit

to

Fanning's

enjoining

him

objections
from

to

making

the
any

misrepresentations about the "source of any content on a website"
and

"the

benefits

of

joining

any

service."

Fanning's

only

objection to this provision is on First Amendment grounds.

The

First Amendment, however, does not protect misleading commercial
speech.

Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n of

N.Y., 447 U.S. 557, 563 (1980); see also Wine & Spirits Retailers,
Inc. v. Rhode Island, 481 F.3d 1, 8 (1st Cir. 2007) ("[A]dvertising
that

is

actually

misleading

'may

be

prohibited

entirely.'"

(quoting In re R.M.J., 455 U.S. 191, 203 (1982))).
Fanning

counters

that

the

Commission

erred

by

categorizing the content of Jerk.com as commercial speech because

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it "did not solely involve economic interests."

Entry ID: 5997965

Even if Jerk.com

did not contain only commercial speech, the Commission's order
explicitly

states

Fanning

may

not

engage

in

two

types

of

misrepresentations "in connection with the marketing, promoting,
or offering for sale of any good or service."

This language

unambiguously limits the order's reach to commercial speech.
In

the

alternative,

Fanning

argues

that

commercial

speech is still subject to First Amendment protection.

Although

that statement is true, as we previously noted, the First Amendment
does

not

protect

Fanning's

misleading

assertions,

misrepresentations.

the
We

commercial
Commission's

recognize

that

speech.
order
the

Contrary
reaches

First

to

only

Amendment

requires the Commission's order to have a "'reasonable fit' between
the restriction and the government interest it serves," but that
requirement has been satisfied.

Id. at 117 (quoting Bd. Of Trs.

v. Fox, 492 U.S. 469, 480 (1989)).

The Commission limited its

injunction to misrepresenting a website's source of content and
the benefits of joining a service, the two violations related to
its findings regarding Jerk.com.

We therefore uphold Part I of

the Commission's order.
B.

Monitoring Provisions
More problematic, however, are the order's monitoring

provisions.

We may interfere with a Commission order if "the

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remedy selected bears no reasonable relation to the unlawful
practices found to exist," Removatron Int'l Corp. v. FTC, 884 F.2d
1489, 1499 (1st Cir. 1989) (quoting FTC v. Nat'l Lead Co., 352
U.S. 419, 428 (1957)), or "the order's prohibitions are not
sufficiently

'clear

and

precise

in

order

that

they

may

be

understood by those against whom they are directed,'" id. (quoting
Colgate-Palmolive,

380

U.S.

at

392).

On

this

former

reasonableness prong, we have found seven factors as instructive
in guiding our analysis:
(1) the deliberateness of the violation; (2) the
violator's past record . . . ; (3) the adaptability
or transferability of the unfair practice to other
products;
(4)
the
seriousness
of
potential
violations, including health hazards; (5) the length
of time the deceptive ad [or practice] has been used;
(6) the difficulty for the average consumer to
evaluate such claims through personal experience;
and (7) whether the pervasive nature of government
regulation of the product at issue is likely to
create a climate in which questionable claims have
all the more power to mislead.
Id. (quotations marks and citations omitted).
factors using a "sliding scale" approach.
F.3d at 358-59.

We evaluate these

Telebrands Corp., 457

"[N]o single factor [is] determinative" and the

"more egregious the facts with respect to a particular element,
the less important it is that another negative factor be present."
Removatron, 884 F.2d at 1499 (second alteration in original)
(quoting Sterling Drug, Inc. v. FTC, 741 F.2d 1146, 1155 (9th Cir.
1984)).
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Parts III, IV, and VI of the Commission's order contained
various monitoring provisions and Fanning challenges them all.

We

address their validity in turn.
1.

Recordkeeping Provisions

Part

III

of

the

FTC

order

contains

provisions for which Fanning now seeks review.

two

monitoring

First, Fanning

challenges the provision requiring him to "maintain" and "make
available" "advertisements and promotional materials containing
any representation covered by [the] order" for a period of five
years.

Fanning argues that compliance with this provision is

"unmanageable" and "nonsensical" because Jerk.com did not contain
any

advertisements

or

promotional

material.

Second,

Fanning

argues that the Commission's requirement that he notify it of any
"[c]omplaints or inquiries relating to any website or other online
service" for a period of five years are overly punitive in light
of the Commission's finding of an implied misrepresentation.
We

conclude

these

recordkeeping

provisions

reasonably related to Fanning's FTC Act violations.

are

They ensure

the Commission will know about Fanning's other business ventures,
how Fanning portrays them to the public, and how the public
perceives them.

These requirements are also tied to the subject

matter of Fanning's violation -- misrepresenting the source of
Jerk.com's content and the benefit of its membership subscription.

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Case: 15-1520

Under

Document: 00116996528

the

Commission's

Page: 21

order,

Date Filed: 05/09/2016

Fanning

need

only

Entry ID: 5997965

maintain

advertisements and promotional material containing representations
about the content on a website or the benefits of joining a
service.
based

on

These monitoring provisions seem particularly reasonable
"the

adaptability

or

practice to other products."

transferability

of

the

unfair

Removatron, 884 F.2d at 1499.

As

the Commission noted, Jerk.com appeared under different domain
names.

Fanning also started a similar website called "Reper"

while running Jerk.com.

The ease with which Jerk.com's practices

could be transferred to other websites weighs in favor of requiring
Fanning to comply with some reporting requirements.
Moreover,

we

reject

Fanning's

contention

that

the

complaint monitoring provision must be invalidated because it is
disproportionate to an implied misrepresentation claim.

Although

Jerk.com contained only an implied misrepresentation of the source
of its content, it expressly misrepresented the benefits of paying
for a membership subscription.

The deliberateness of Jerk.com's

express representation that it provided membership services also
favors allowing the Commission to engage in tailored monitoring.
2.

Order Acknowledgment & Compliance Monitoring

Finding
reasonable,

we

requirements.

the

turn

Commission's
our

attention

recordkeeping
to

the

broader

provisions
reporting

Part IV of the order requires Fanning to give "a

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copy

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of

[the

Page: 22

Commission's]

order

Date Filed: 05/09/2016

to

all

current

Entry ID: 5997965

and

future

principals, officers, directors, and managers, and to all current
and

future

employees,

agents,

and

representative

having

responsibilities with respect to the subject matter of [the] order,
and shall secure from each such person a signed and dated statement
acknowledged receipt" for a period of twenty years.

Fanning

argues this provision is "overly-broad" and does not serve a
legitimate government interest.

Part VI of the order, "compliance

monitoring," requires Fanning to "notify the Commission of . . .
his affiliation with any new business or employment," and submit
information including the new business's "address and telephone
number and a description of the nature of the business" for a
period of ten years.

Fanning argues that requiring him to report

all "affiliation[s]" with any business venture is both overly vague
and onerous.

He also argues that this reporting lacks a reasonable

relation to his violation.
Although we uphold the order acknowledgment provisions,
we

conclude

reasonably

the

related

compliance
to

monitoring

Fanning's

provisions

violation.

In

are

response

not
to

Fanning's argument that the order acknowledgment provisions are
overly broad, the Commission notes that Fanning need only notify
individuals

who

have

matter of its order.

responsibilities

related

to

the

subject

As with the recordkeeping provisions, we

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view the transferability of Jerk.com's deceptive practices and the
deliberateness of Fanning's violations as key.

Distribution of

the order to individuals with related responsibilities puts them
on

notice

of

difficult

for

the

prohibited

Fanning

to

conduct

receive

Jerk.com's deceptive practices.

and

thus

assistance

makes
in

it

more

replicating

Rather than serving no legitimate

government interest, as Fanning claims, the order acknowledgment
provisions are permissible fencing-in provisions that help "close
all roads to the prohibited goal."

Ruberoid, 343 U.S. at 473.

In contrast, Fanning's compliance monitoring provisions
do not contain a similar restriction.
Commission

of

regardless

of

all

business

whether

or

Fanning must notify the

affiliations

not

the

and

affiliate

responsibilities relating to the order.

employment

or

employer

-has

Notably, the compliance

monitoring provisions applicable to Jerk require it to report only
those

changes

obligations

in

its

arising

structure
under

"that

this

may

affect

order."

Both

compliance
the

order

acknowledgment and Jerk's compliance monitoring provisions are
tied to Jerk.com's FTC Act violations.
monitoring

provisions

are

the

only

Fanning's compliance

parts

containing such a requirement of relevance.
argument,

the

Commission

conceded

that

of

the

order

not

When asked at oral

this

provision

would

ostensibly require Fanning to report if he was a waiter at a

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The only explanation offered by the Commission for

this breadth is that it has traditionally required such reporting.
The Commission cites several district courts approving proposed
orders by the FTC containing similar provisions.

The orders,

however, are not only less onerous 9 than the one imposed on
Fanning, but also almost entirely bereft of analysis that might
explain the rationale for such a requirement. 10

Without any

9

The Commission cites several orders that require individuals to
report any change of business and that business's contact
information for twenty years. See FTC v. HES Merchant Servs. Co.,
No. 6:12-cv-1618, 2015 WL 892394, at *8 (M.D. Fla. Feb. 11, 2015)
(requiring defendant to report change in title or role and identify
name, physical address, and any Internet address of the business
for twenty years); FTC v. Wellness Support Network, Inc., No. 10cv-4879, 2014 WL 644749, at *20-22 (N.D. Cal. Feb. 19, 2014)
(same); FTC v. Ivy Capital, Inc., No. 2:11-cv-283, ECF No. 409, at
17 (D. Nev. July 5, 2013), aff'd in part and vacated and remanded
in part on unrelated grounds, 616 F. App'x 360 (9th Cir. 2015)
(same); FTC v. John Beck Amazing Profits LLC, No 2:09-cv-4719, ECF
No. 643, at 27-28 (C.D. Cal. Aug. 21, 2012) (same); FTC v.
Navestad, No. 09-cv-6329, 2012 WL 1014818, at *11 (W.D.N.Y.
Mar. 23, 2012) (same). Those orders that do require individuals
to also provide descriptions of their employers and business last
only for three to five years. See FTC v. Neovi, No. 3:06-cv-1952,
ECF No. 118, at 10 (S.D. Cal. Jan. 7, 2009) (requiring defendant
to report change in employment with name, address, and description
of business for five years); FTC v. Pac. First Benefit, 472 F.
Supp. 2d 981, 988 (N.D. Ill. 2007) (requiring defendant to report
name, address, and description of employment or business for five
years); FTC v. Gill, 71 F. Supp. 2d 1030, 1051 (C.D. Cal. 1999)
(requiring defendant to report name, address, and description of
employment or business for three years).
10

Of the cited cases, only FTC v. Wellness Support Network, Inc.
contains an explanation for the compliance reporting requirements.
The defendants in that case made misleading representations about
diabetes products over the course of eight years.
Wellness
Support, 2014 WL 644749, at *2. The district court concluded that
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guidance from the Commission, we cannot find these provisions are
reasonably related to Fanning's violation.

As a result, we

conclude the Commission's order, in this respect, must be vacated
and remanded.
IV.

Conclusion

We affirm the Commission's entry of summary decision as
to liability and all provisions of its remedial order except for
compliance monitoring as to Fanning.

As to that, we vacate and

remand that portion of its order for proceedings consistent with
this opinion.

The parties shall bear their own costs.

Vacated and Remanded.

lengthy monitoring was necessary because the defendants had been
"personally involved in serious violations of the FTC Act over a
period of many years." Id. at *22. The district court simply
states that the Commission must know the defendant's business
affiliation "in order. . . to monitor Defendants' compliance."
Id. We do not find this bare analysis persuasive.
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