As someone who has litigated extensively against federal regulators on advertising issues, I have first-hand knowledge of how difficult it is to prevail in a case brought by the feds. For example, the FTC’s “win percentage” is astonishing; some have rated it over 99% of all cases brought. It is fair to say that the deck is stacked against the target of any such litigation.
Typically, in order to prevail against a case brought by a federal regulator, it takes deep pockets and patience. The deck is stacked. Not only does the federal government, including regulators such as the FTC, have the power to freeze assets on a pretrial basis – thereby potentially depriving their targets of the funds to right to counsel – but the legal standards limiting the FTC’s powers are significantly lower than the standards for other non-government civil litigants. For example, the standard for the FTC to obtain a civil preliminary injunction is lower than that used for other federal litigants. For a more detailed discussion of the history and background of the FTC’s powers and the lax injunction standards it enjoys, see http://anantitrust.wordpress.com/2014/04/09/the-ftc-at-100-now-doj-jr/.
Although the linked article, directly above, deals with the FTC’s considerable antitrust powers under section 13(b) of the FTC Act, its powers under Section 5 of the FTC Act (covering nebulous and elastically worded “unfair or deceptive acts or practices”) are no less. Additionally, government “enforcers” acting under Section 5 often trumpet the filing of a lawsuit in public PR releases, which alone is often enough to put a target out of business. The take-away is that advertisers and manufacturers need to be careful when making advertising claims because if the federal regulators decide to target you or your company, there is relatively little that can be done without deep pocketbooks and the will to take on a massive and powerful bureaucracy that has the legal power to inflict crippling litigation costs — win or lose.
Continue Reading “Buckyballs” and The Perils of Challenging Federal Powers Of Advertising Regulation