Hi-Tech Pharmaceuticals, Inc., et al. v. Federal Trade Commission, et al.
AdministrativeLaw DueProcess Securities Privacy
Can the FTC unilaterally reinterpret an injunction to seek contempt sanctions based on a more restrictive standard?
QUESTIONS PRESENTED The Eleventh Circuit affirmed a $40-million contempt sanction based on a standard found nowhere within the four corners of the injunction that Petitioners Hi-Tech Pharmaceuticals, Inc., Jared Wheat, and Stephen Smith allegedly violated. But Federal Rule of Civil Procedure 65(d) mandates, and courts have consistently held, that injunctions must “describe in reasonable detail—and not by referring to the complaint or other document—the act or acts restrained or required.” More than a decade ago, the district court enjoined Hi-Tech from making certain advertising claims about dietary supplements without “competent and reliable scientific evidence.” According to Respondent the Federal Trade Commission’s published guidance, that standard is flexible and context-specific, with no “fixed formula for the number or type of studies required.” Since then, the FTC has repeatedly asked courts to hold that that injunctive standard can be satisfied only by product-specific, randomized, double-blind, placebo-controlled human clinical trials—the kind of substantiation required for drugs, not dietary supplements. Until now, courts have consistently rejected this post-hoc reinterpretation of existing injunctions. But the Eleventh Circuit permitted it, concluding that HiTech had waived the argument by failing to anticipate and preemptively challenge the FTC’s change in position. In so doing, the Eleventh Circuit discounted the fact that the district court had decided the case on the merits, without mentioning waiver. Instead, it looked to events and evidence outside and after the ii entry of the injunction to find waiver and to provide the missing specificity. The questions presented are: I. Can the FTC unilaterally reinterpret an injunction years after its entry to seek contempt sanctions based on a more restrictive standard found nowhere in the injunction itself or does that violate Fed. R. Civ. P. 65(d) and due process? II. Did Hi-Tech waive all challenges to the specificity of the injunction in contempt proceedings by not previously raising an argument Hi-Tech couldn’t have foreseen? III.Does an appellate court have discretion to find an issue waived even though the district court did not and its ruling on the merits was necessary to the judgment from which Hi-Tech appealed?