Fanning v. Federal Trade Commission

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
 TORRUELLA, Circuit Judge. 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 the source of its content and its

membership benefits. Nonetheless, we agree with Fanning that

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

affirm the finding of liability and the remedial 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.

-2-
 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] Jerk for important

updates, business, dating, and more." 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. By 2010, Jerk.com contained 85

million profiles pages. 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 on their profile pages through a paid

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

-3-
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.

-4-
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 and imposing monitoring and recordkeeping

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

II. Liability

The FTC Rules of 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 non-

moving 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").

-5-
no "genuine issue of material fact" that "may affect the outcome

of the case." P.R. Aqueduct, 35 F.3d at 605. Nonetheless,

judicial review of FTC findings is deferential. See Kraft, Inc.

v. FTC, 970 F.2d 311, 316 (7th Cir. 1992). 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 grant of summary

decision was proper.

-6-
A. 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." Novartis,

127 F.T.C. at 680. "[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.

-7-
 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 even if nonmisleading

interpretations are possible." 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 interpretation of Jerk.com's

5 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.

-8-
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").

-9-
"solely responsible for the content of [their] postings on

jerk.com."

Fanning is correct that the disclaimers on the "About

Us" page would be insufficient to support an implied

misrepresentation claim standing on their own. 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

-10-
"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." Moreover, even if Jerk.com never

expressly represented that 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.

-11-
 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 implied claims; (3) claims

8 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.

-12-
involving health or safety; and (4) claims pertaining to a central

characteristic of the product about "which reasonable consumers

would be concerned." Id.; see Cliffdale Assocs., 103 F.T.C. 110

(1984) (noting that "information pertaining to the central

characteristic of the product or service will 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. The

FTC Act prohibits "deceptive acts or practices," 15 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.

-13-
 On this point, Fanning does not provide us with any

arguments as to why the Commission concluded incorrectly that

consumers altered their behavior based on Jerk.com's

misrepresentation that its content was user generated. The

Commission concluded that a presumption of materiality applied

because Jerk.com misrepresented one of its central

characteristics. 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

-14-
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. Margarian v.

Hawkins, 321 F.3d 235, 240 (1st Cir. 2003) (quotation mark

omitted).

We also conclude Jerk.com's misrepresentation was

material. As the Commission found, this misstatement triggers two

-15-
separate presumptions of materiality -- it was both express and

about a central characteristic of the $30 membership. See Kraft,

970 F.2d at 322. 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

-16-
the unfair practices found." 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." FTC v. Ruberoid Co., 343 U.S. 470, 473 (1952).

A. Injunction on Misleading Speech

We find no merit to Fanning's objections to the

Commission's order enjoining him from making 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

-17-
it "did not solely involve economic interests." 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 misleading commercial speech. Contrary to

Fanning's assertions, the Commission's order reaches only

misrepresentations. We recognize that the First 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

-18-
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). We evaluate these

factors using a "sliding scale" approach. Telebrands Corp., 457

F.3d at 358-59. "[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)).

-19-
 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 two monitoring

provisions for which Fanning now seeks review. 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 are

reasonably related to Fanning's FTC Act violations. 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.

-20-
Under the Commission's order, Fanning need only maintain

advertisements and promotional material containing representations

about the content on a website or the benefits of joining a

service. These monitoring provisions seem particularly reasonable

based on "the adaptability or transferability of the unfair

practice to other products." 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 the Commission's recordkeeping provisions

reasonable, we turn our attention to the broader reporting

requirements. Part IV of the order requires Fanning to give "a

-21-
copy of [the Commission's] order to all current 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 the compliance monitoring provisions are not

reasonably related to Fanning's violation. In response to

Fanning's argument that the order acknowledgment provisions are

overly broad, the Commission notes that Fanning need only notify

individuals who have responsibilities related to the subject

matter of its order. As with the recordkeeping provisions, we

-22-
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 the prohibited conduct and thus makes it more

difficult for Fanning to receive assistance in replicating

Jerk.com's deceptive practices. 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. Fanning must notify the

Commission of all business affiliations and employment --

regardless of whether or not the affiliate or employer has

responsibilities relating to the order. Notably, the compliance

monitoring provisions applicable to Jerk require it to report only

those changes in its structure "that may affect compliance

obligations arising under this order." Both the order

acknowledgment and Jerk's compliance monitoring provisions are

tied to Jerk.com's FTC Act violations. Fanning's compliance

monitoring provisions are the only parts of the order not

containing such a requirement of relevance. When asked at oral

argument, the Commission conceded that this provision would

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

-23-
restaurant. 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. 10-
cv-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

-24-
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.

-25-