United States District Court, District of Columbia
Jessica R. Gunder, U.S. Department of Justice, Washington, DC, for Plaintiff.
Robert M. Sanger, Sanger & Swysen, Santa Barbara, CA, Stephen Kerr Dunkle, Sanger & Swysen, Santa Barbara, CA, for Defendant.
EMMET G. SULLIVAN, District Judge.
Plaintiff United States brings this action against Daniel Chapter One and James Feijo (" Defendants" ) under Sections 5( l ), 13(b), and 16(a) of the Federal Trade Commission Act, 15 U.S.C. §§ 45( l ), 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.
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 Commission,
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"  that any product marketed by Defendants:
[P]revents, 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.
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.]
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
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( l ), 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. The Court denied the United States' Motion for a Preliminary Injunction without prejudice on September 14, 2010, finding that the Court lacked jurisdiction to enforce the Modified Final Order while Defendants' appeal challenging the legality of the Modified Final Order was pending before the D.C. Circuit. See Order, Sept. 14, 2010, Docket No. 11. The FTC then filed an emergency motion for an order of enforcement pendente lite with the D.C. Circuit. The Circuit granted the United States' motion on November 22, 2010. See Per Curiam Order, Daniel Chapter One, No. 10-1064 (D.C.Cir. Nov. 22, 2010) (" Daniel Chapter One is hereby enjoined to obey forthwith the modified final order of the Federal Trade Commission issued January 25, 2010, in Docket No. 9329, In the Matter of Daniel Chapter One and James Feijo. " ); see also Pl.'s SMF ¶ 17. Defendants then filed a motion with the D.C. Circuit seeking a stay of the enforcement of Part V.B of the Modified Final Order. The D.C. Circuit rejected this request on December 7, 2010. See Per Curiam Order, Daniel Chapter One, No. 10-1064 (D.C.Cir. Dec. 7, 2010); Pl.'s SMF ¶ 18.
On December 10, 2010, the D.C. Circuit denied Defendants' petition for review of the Modified Final Order, concluding that " the Commission properly exercised jurisdiction over [Daniel Chapter One]," and that " [Daniel Chapter One]'s arguments based upon the Constitution and the Religious Freedom Restoration Act are wholly without merit." Daniel Chapter One v. FTC, 405 Fed.Appx. 505, 505-06 (D.C.Cir.2010). Defendants then filed a petition for a writ of certiorari, which was denied on May 23, 2011. See Daniel Chapter One v. FTC,
__ U.S. __, 131 S.Ct. 2917, 179 L.Ed.2d 1248 (2011).
Following issuance of the D.C. Circuit's mandate, the United States renewed its Motion for a Preliminary Injunction in this Court. In addition, Defendants filed a Motion to Stay the proceedings pending completion of a federal criminal investigation, and disposition of any resulting indictments and prosecutions, of James Feijo
and Daniel Chapter One in the State of Rhode Island. See Defs.' Mot. to Stay, Docket No. 22. The Court denied Defendants' Motion to Stay without prejudice during a hearing held on May 9, 2011. On June 22, 2011, 793 F.Supp.2d 157 (D.D.C.2011), the Court granted the United States' Motion for Preliminary Injunction and enjoined Defendants from violating the FTC's Modified Final Order. See Order and Memorandum Opinion, Docket Nos. 31 and 32.
On July 29, 2011, the United States filed a Motion for an Order to Show Cause why Daniel Chapter One, James Feijo, and Patricia Feijo  should not be held in contempt of the Court's June 22, 2011 Order. The Court subsequently ordered Defendants to show cause why they should not be held in contempt. The Court held a contempt hearing on May 9, 2012. During that hearing, the United States presented evidence and testimony regarding Defendants' purported violations of the Modified Final Order. After receiving evidence and hearing argument, the Court found Daniel Chapter One, James Feijo, and Patricia Feijo in civil contempt. Specifically, the Court concluded that James Feijo, Patricia Feijo, and Daniel Chapter One (the " Contemnors" ) had continued to violate the Modified Final Order by (1) continuing to make representations on their radio show that their products treat or cure cancer without competent and reliable scientific evidence to substantiate those representations, (2) encouraging potential customers to visit websites containing Daniel Chapter One publications that contain prohibited information and endorsements of the prohibited supplements, (3) not removing certain representations from the websites within their control, which Contemnors conceded included www. daniel chapterone. com, www. dc 1 ministry. com, and www. dc 1 freedom. com, and (4) failing to mail the required notice to all consumers who purchased the Products between January 1, 2005, and April 2, 2010. The Court allowed the Contemnors two weeks to attempt to purge the contempt and scheduled another hearing in order to determine whether or not the contempt had been purged.
On May 22, 2012, James Feijo submitted a certification of compliance with the Court's Order. In that certification, Mr. Feijo stated that all notices had been sent out in compliance with the Court's order; that prohibited representations had been removed from www. dc 1 freedom. com, www. daniel chapterone. com, the dc1 online store, and www. dc 1 ministry. com; that Contemnors had ceased answering health questions on their radio show or inviting other
callers to answer questions; and that Contemnors were not mentioning other people's websites containing Daniel Chapter One information. See James Feijo's Certification of Compliance at 2-4, Docket No. 51. At a subsequent hearing on May 23, 2012, the United States presented additional evidence that Contemnors had not purged the contempt, but the Court gave Contemnors until May 24, 2012 at 3:30 p.m. to make a showing to the Court sufficient to demonstrate their compliance with the Court's Order. On May 24, 2012, Defendants filed a Supplemental Certification of Compliance with the Court's Order, and the United States filed a Notice of Failure to Purge. See Defs.' Supplemental Certification of Compliance with Order, Docket No. 52; Pl.'s Notice of Failure to Purge, Docket No. 53. The Court determined that Contemnors had taken sufficient actions to purge themselves of contempt, and therefore the Court vacated its Contempt Order. Minute Order, May 24, 2012.
On September 30, 2011, the United States filed a Motion for Summary Judgment on Liability. That motion is ripe for determination by the Court.
B. Violations of the Modified Final Order
The United States alleges that Defendants have made prohibited representations on their radio show and on websites within their control without possessing competent and reliable scientific evidence.
According to the United States, from April 2, 2010 through June 6, 2011, Defendants controlled the website www. dc 1 freedom. com/ guilty- of- healing- cancer. Pl.'s SMF ¶ 21. That website contained textual content asserting that Daniel Chapter One had healed people of cancer, specifically, the web page was titled " Guilty of Healing Cancer" and it stated, " Daniel Chapter One World Ministry for Jesus Christ found guilty of healing people of cancer!" Pl.'s SMF ¶¶ 22-24; see also Pl.'s MSJ, Ex. K. The United States also alleges that Defendants and their associates have established online forums and groups where treatment advice is provided. For example, the United States contends— and Defendants dispute— that Daniel Chapter One controlled and had administrative privileges over the content on the online forum http:// dc 1 fellowship. com. Pl.'s SMF ¶ 25. That forum contains a post requesting information about treating throat cancer. In response, a user named David states: " [t]o help in healing cancer, we believe the Lord has provided the following products," and then David provided dosing information for 7 Herb Formula, BioShark, and GDU. The post by David is dated July 16, 2010, and it appeared on the website http:// dc 1 fellowship. com/ forum/ viewtopic. php? f= 1& t= 291 from July 16, 2010 through June 6, 2011. Pl.'s SMF ¶¶ 26-27; see also Pl.'s MSJ, Ex. L. Additionally, the United States alleges— and Defendants dispute— that Defendants controlled and had administrative privileges to remove the content on the website http:// health fellowship. org. Pl.'s SMF ¶ 28. That website contains a forum post requesting advice about treating pancreatic cancer, along with a response from the user David on September 21, 2010, stating, " [f]or cancer, we believe the Lord has provided the following products to help with healing," and listing dosing information for 7 Herb Formula, BioShark, and GDU. Pl.'s SMF ¶¶ 29-30; see also Pl.'s MSJ, Ex. M.
Finally, the United States asserts— and Defendants dispute— that Defendants controlled the content published on http:// health. groups. yahoo. com/ group/ daniel chapterone/ files/ (the " Yahoo Group" ). Pl.'s SMF ¶ 31. As discussed in more detail infra, Section I.B.2., the Yahoo
Group has also been promoted on Defendants' radio show. The Yahoo Group contains several Daniel Chapter One publications that can be downloaded, including " The Most Simple Guide to the Most Difficult Diseases" (the " Guidebook" ) and a publication titled " Cancer Newsletter, Millennium Edition, 2002" (the " Cancer Newsletter" ). See Pl.'s MSJ, Ex. N. The Guidebook was available on the Daniel Chapter One Yahoo Group from January 2, 2011 through June 6, 2011. Pl.'s SMF ¶ 33. The " Introduction" to the Guidebook states that it contains " protocols we used successfully," and that " [m]any have testified that these basic protocols are effective, when adhered to as part of an overall health plan." Pl.'s SMF ¶ 34; see also Pl.'s MSJ, Ex. O. A page within the Guidebook titled " CANCER" lists 7 Herb Formula, BioShark, BioMixx, and GDU Caps as " the most essential products" for treating cancer. Pl.'s SMF ¶ 35; see also Pl.'s MSJ, Ex. P. The Cancer Newsletter was also available on the Daniel Chapter One Yahoo Group from January 10, 2011 through June 6, 2011. This publication contains information about using Defendants' products to treat and cure cancer, as well as stories about individuals who have allegedly used Daniel Chapter One products successfully to treat cancer. For example, the Cancer Newsletter states, " Daniel Chapter One GDU Caps contain[ ] proteolytic enzymes that metabolize protein and can aid the body in breaking down a tumor[,]" " 7 Herb Formula helps battle cancer[,]" " [BioMixx] is used to assist the body in fighting cancer and in healing the destructive effects of radiation and chemotherapy treatments." Pl.'s SMF ¶¶ 36-37; see also Pl.'s MSJ, Ex. Q.
2. Radio Show
In addition, Defendants provide information on their radio show about using their products to treat or cure cancer, and they solicit endorsements from others by encouraging listeners to call the show and answer health questions. The United States asserts that Defendants controlled the audio content published on http:// feeds. thepodzone. com/ dc 1 hw from April 2, 2010 through June 6, 2011. Pl.'s SMF § 38. This website contains recordings of Defendants' past radio shows. The United States has also preserved recordings of these shows on CD and filed them with the Court. For example, in a show broadcast on May 27, 2010, Defendants had the following conversation with a caller named Phil:
PHIL: I've been diagnosed with Stage 4 lung cancer with lymph node involvement and I had a brain tumor, which they did gamma knife surgery on and that resolved that.
JAMES FEIJO: Yeah.
PHIL: But it's gotten into the central lymph nodes. I have a reoccurring tumor in the left lung and two smaller tumors in the right lung. What would be— what would be— you know, what would work for that? Is there anything that you have that would [inaudible]?
JAMES FEIJO: Well, did they tell you they've never had a successful— they've never had a person survive lung cancer with their treatments?
PHIL: Pretty much. Pretty much that's what the doctor said.
JAMES FEIJO: Yeah.
PATRICIA FEIJO: Yeah.
PHIL: He suggested chemo starting next week.
JAMES FEIJO: Yeah, that's a waste of time.
PATRICIA FEIJO: Well, yeah, the most recent studies that we have looked at, they actually had come to the conclusion that the chemotherapy and radiation
for lung cancer doesn't extend life, it does the opposite.
JAMES FEIJO: We really need to have somebody call in right now. This is—
PATRICIA FEIJO: Yeah, we can't tell you, Phil—
JAMES FEIJO:— very important.
PATRICIA FEIJO:— what we would do only because we're under a cease and desist order right now from the FTC. It's quite an evil order. But it's prohibiting us from free speech right now.
Pl.'s SMF § 41; see also Pl.'s MSJ, Ex. R, at 14:35-15:42. James Feijo went on to state: " You know, Phil, there's so many people, I give you this statement here— many, many people, we have, in just two months we gathered about eight inches high of affidavits of people with all types of cancers and illnesses that were supposed to be dead, who were told that they had nothing that could be done for them. They're still alive, they're free of their cancers.... We do have someone calling in with an answer for you." Pl.'s MSJ, Ex. R, at 15:55-16:30. Later, with the caller Phil still on the line, Defendants accepted a call from a caller named Bob, who discussed what Defendants' products had done for his family, and then stated:
BOB: Since you're in advanced stage— that's what ...