United States District Court, D. Oregon, Medford Division
OPINION AND ORDER
D. CLARKE United States Magistrate Judge
case comes before the Court on Plaintiff FTC's motion for
summary judgment (#348), as well as the motions for summary
judgment filed by the defendants (##320, 321, 323, 325, 327,
329, 333, 339, 341, 342). As discussed below, the FTC's
motion is GRANTED in part and DENIED in part. The
defendants' motions are DENIED. Plaintiffs motions to
strike (##416, 449) and Hoyal defendants' motion to
strike (#410) are all DENIED. The case will proceed to trial
on the issues of common scheme, individual liability, and
Plaintiff FTC is entitled to summary judgment on the issue of
5 of the Federal Trade Commission Act prohibits
"deceptive acts or practices in or affecting
commerce." FTCA § 5(a)(1), 15 U.S.C. § 45(a).
As the Ninth Circuit Court of Appeals has explained, a
practice falls within this prohibition: (1) if it is likely
to mislead consumers acting reasonably under the
circumstances (2) in a way that is material. FTC v.
Gill, 265 F.3d 944, 950 (9th Cir.2001) (citing FTC
v. Pantron I Corp., 33 F.3d 1088, 1095 (9th Cir.1994)).
Deception may be found based on the "net
impression" created by a representation, and a
solicitation may be likely to mislead by virtue of the net
impression it creates even though the solicitation also
contains truthful disclosures. F.T.C. v. Cyberspace.Com
LLC, 453 F.3d 1196, 1199-200 (9th Cir. 2006). A
misleading impression created by a solicitation is material
if it "involves information that is important to
consumers and, hence, likely to affect their choice of, or
conduct regarding, a product." Cliffdale Associates,
Inc., 103 F.T.C. 110, 165 (1984).
including the Supreme Court, have uniformly rejected imposing
a requirement on the FTC to provide extrinsic evidence to
show deceptiveness. Kraft, Inc. v. F.T.C, 970 F.2d
311, 319 (7th Cir. 1992) (citing Colgate-Palmolive,
380 U.S. at 391-92) (FTC not required to conduct consumer
surveys before determining that a commercial has a tendency
to mislead); see also F.T.C v. Bronson Partners,
LLC, 564 F.Supp.2d 119, 126 (D. Conn. 2008) ("Even
if an advertisement makes a claim by implication, extrinsic
evidence is not always necessary.") When evaluating the
net impression of an advertisement, it is necessary "to
consider the advertisement in its entirety and not to engage
in disputatious dissection. The entire mosaic should be
viewed rather than each tile separately." Bronson
Partners, LLC, 564 F.Supp.2d at 125 (citing FTC v.
Sterling Drug, Inc., 317 F.2d 669, 675 (2d Cir. 1963)).
The consumer "does not ordinarily carefully study or
weigh each word in an advertisement. The ultimate impression
upon the mind of the reader arises from the sum total of not
only what is said but also of all that is reasonably
The mailer is deceptive as a matter of law.
case, the newspaper subscription mailer is deceptive as a
matter of law, based on the net impression that the mailer is
either from or authorized by the newspaper publication in
question, that any current subscription would be
"renewed" automatically, and that the consumer was
being offered the lowest price available. The mailers create
this impression by including a single newspaper's name in
several prominent positions in bold and capital letters, by
suggesting a connection with consumers' existing
subscriptions, and by using a similar format to a routine
invoice or renewal service.
contrast to the visibility and repetition of the
newspaper's title, the full name of the defendants'
dbas typically appears only once in the mailers. The dba name
itself is generic-sounding and implies that the dba is a
service or a department within the named newspaper's
organization, such as "Reader's Payment
Service" or "Publisher's Payment." The
payment-return envelope defendants included with the mailer
contributes to this impression and disguises the true payment
recipient by bearing only the words: "ATTN: Mail
Processing Department." The net impression that the
mailer is either from or authorized by the newspaper is also
created by the suggestion that it is connected to a
consumer's existing subscription. The word
"Renewal" is featured prominently, more than once,
and the mailer refers to the consumer's "regular
subscription" and a purported deadline to return
payment. It offers an "installment" option,
implying that the consumer can arrange to pay the full
subscription cost in more than one payment during the
subscription period. Additionally, the formatting of the
mailer implies that it is an invoice or renewal service. It
includes a payment stub with framed boxes showing a
"Control Number," and a "Total Amount,"
along with the due date and installment payment amount.
Nothing on the mailer indicates that it is an advertisement.
the mailer makes other statements that are confusing at best,
and wholly false at worst. "Your subscription to [THE
NEWSPAPER] is automatic with receipt of your payment when you
choose to renew or order a new subscription." Undisputed
evidence submitted by the FTC demonstrates that the
defendants would attempt to fill a subscription after
receiving full payment from the consumer. Thus, rather than
being "automatic," subscriptions were actually not
even guaranteed to be filled. The mailer also states,
Fortunately, by acting now, you can lock in one of our lowest
rates! You're receiving one of the lowest
available rates we can offer for your regular
in original.) While the defendants point out that this is
technically true, due to the qualifying words, "one
of," and, "we can offer," the statements
undeniably imply that the consumer is getting the best deal
available, when in fact the price is significantly higher
than it would be if ordering through the newspaper itself.
The fact that the mailer gives the impression that the
consumer is ordering through the newspaper itself compounds
the misleading nature of this representation.
The disclaimers are not adequate to cure the mailer's
advertisement's net impression is deceptive,
"disclaimers or qualifications in any particular ad are
not adequate to avoid liability unless they are sufficiently
prominent and unambiguous to change the apparent meaning of
the claims and to leave an accurate impression."
Removatron Int'l Corp. v. F.T.C., 884 F.2d 1489,
1497 (1st Cir. 1989). "Anything less is only likely to
cause confusion by creating contradictory double
meanings." Id. (citing Giant Food, Inc. v.
FTC, 322 F.2d 977, 986 (D.C.Cir.1963), cert,
dismissed, 376 U.S. 967 (1964)).
case, the purported disclaimers included on the mailer are
confusing and inadequate to cure the deception. First, small
words on the bottom of the mailer state "Renewal Offer -
Not a Bill." This statement continues to imply that the
offer is a renewal, and thus connected to their regular
subscription and sent from the newspaper publisher. The
helpful part of the statement, "Not a Bill," does
nothing to clarify this issue.
the block of text on the reverse side of the mailer is
confusing and unlikely to be read by the consumer. The text
refers to magazine subscriptions, not newspapers, and a
reasonable consumer would likely believe it to be
inapplicable to their particular newspaper subscription. The
language states that the defendants "do not necessarily
have a direct relationship with the publishers or
publications" offered. This leaves open the possibility
that the defendants actually do have a relationship with the
newspaper, when in fact they do not.
the text states, "This is a magazine subscription offer,
not a bill or an invoice. You are under no obligation to
either buy a magazine or renew at this time." This
language once again is confusing because it relates to
magazines, not newspapers. Even if it were not confusing, it
would be ineffective because it is buried in the middle of a
block of text, with no prominent placement or distinguishing
Consumer complaints confirm the mailers were likely to, and