SMITH, Circuit Judge.
The Federal Trade Commission ("FTC") appeals from an order of the United States District Court for the District of New Jersey denying its motion to hold Lane Labs-USA, Inc., I. William Lane, and Andrew J. Lane in contempt for violation of consent judgments entered by the District Court on July 6, 2000 and September 26, 2000. For the reasons set forth below, we conclude that the District Court committed clear error. Accordingly, we will vacate the order of the District Court and remand for further proceedings.
Lane Labs-USA, Inc. ("Lane Labs") is a manufacturing distributor of specialty dietary
In June of 2000, the FTC charged the Lane defendants with deceptive acts in violation of § 5 of the Federal Trade Commission Act ("FTC Act").
Two provisions of the Final Order are pertinent to this appeal. In Section III, the Lane defendants agreed that "in connection with the manufacturing, labeling, advertising, promotion, offering for sale, or distribution of any food, dietary supplement, or drug," they would refrain from
"Competent and reliable scientific evidence" was defined as "tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that have been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results." Section IV of the Final Order forbade express or implied misrepresentations regarding "the existence, contents, validity, results,
Two products are at issue: AdvaCal, a calcium supplement, and Fertil Male, which, as the name suggests, purports to improve male fertility. We shall briefly consider the development and marketing of both products before turning to the proceedings that occasioned the instant appeal.
AdvaCal was developed by a renowned Japanese scientist named Takuo Fujita. The product primarily consists of calcium hydroxide derived from oyster shells smelted at extremely high temperatures. Once the smelting process is complete, the calcium component is combined with a heated algae ingredient ("HAI") extracted from Hijiki seaweed. This combination of active ingredients purportedly yields a calcium hydroxide product that is significantly more absorbable by the human body than competing calcium supplements.
Lane Labs began marketing AdvaCal in 2000 as a means to increase bone strength and combat osteoporosis. Over the next several years, the company utilized an array of print, television, and online media to promote its product. Each of these advertisements contained numerous representations regarding AdvaCal's efficacy, and many compared AdvaCal to competing calcium supplements. Typical among the claims appearing in AdvaCal marketing materials were assertions that the supplement (1) was unique in its ability to increase bone mineral density, (2) was clinically proven to be more absorbable than other calcium supplements, and (3) was clinically shown to increase bone density in the hip. In addition, Lane Labs distributed literature promoting AdvaCal as comparable or superior to prescription osteoporosis medicine, and Lane told at least one prospective retail purchaser that the calcium supplement was "on par with" prescription pharmaceuticals.
Consistent with its obligations under the Final Order, Lane Labs provided the FTC with compliance reports pertaining to AdvaCal in 2001, 2004, and 2006. Each report attached print copies of AdvaCal-specific advertisements, as well as the scientific research upon which Lane Labs relied for its representations. The parties do not dispute that many of the marketing claims at issue in this matter were disclosed to the FTC in the 2001 compliance report.
Fertil Male is derived from a Peruvian plant known as "maca." After it is gelatinised and heated, the plant is combined with HAI. This combination allegedly enhances the human body's capacity to absorb maca, which purportedly improves male fertility parameters such as sperm production and sperm motility.
On July 12, 2006, the FTC notified Lane Labs that certain Fertil Male advertisements contained misrepresentations which amounted to violations of the Final Order. One month later, the FTC provided Lane Labs with a similar notice concerning the marketing of AdvaCal. Both notices threatened litigation absent the negotiation of an appropriate settlement agreement. The parties did not reach a settlement. Thus, on January 12, 2007, the FTC filed a motion with the District Court to hold the Lane defendants in contempt for violating Sections III and IV of the Final Order. To remedy these purported violations, the FTC requested $24 million in monetary damages.
The District Court held a five-day evidentiary hearing on the motion beginning on April 20, 2009. Two expert witnesses testified on behalf of the FTC: Robert Heaney, a physician and researcher at Creighton University, offered testimony concerning AdvaCal, while Craig Niederberger, a urologist at the University of Illinois at Chicago, addressed matters pertaining to Fertil Male. The Lane defendants presented the testimony of two opposing experts. Boston University physician Michael Holick discussed Lane Labs' marketing of AdvaCal, and University of Massachusetts professor Machelle Seibel testified as an expert in reproductive medicine. Each of these witnesses discussed scientific studies relied upon by Lane Labs to support its marketing claims. The FTC experts generally opined that the claims in question were not substantiated by competent or reliable scientific research; not surprisingly, experts for the Lane defendants contradicted this viewpoint.
In addition to these dueling experts, the Court heard testimony from, among others, Lane and Jennifer Morganti, a naturopathic doctor employed by Lane Labs from 2001 to 2004. Lane testified that he took the Final Order "extremely serious[ly]," and he spoke at length about the measures the company pursued to comply with the decree. Lane explained that: the Final Order was distributed to all senior management personnel; copies were sent to Lane Labs' customers; an outside company was retained to compile existing research and to monitor research updates; and Lane hired Morganti to serve as manager of nutritional research. Morganti testified that her primary responsibility was to scrutinize Lane Labs' marketing claims to ensure that each representation was supported by scientific research.
By order dated August 10, 2009, the District Court denied the FTC's motion for contempt. The Court explained that it reached its decision after "carefully considering the complete record" and weighing the testimony of each party's witnesses. In the Court's view, "[a]ll four expert witnesses were credible and knowledgeable in their respective fields of expertise," but those testifying on behalf of the Lane defendants were more impressive "because their testimony and approach to the subject matter seemed more reasonable and in accordance with the [Final] Order[]." The Court also characterized Lane's testimony in a favorable fashion, stating that it "found Mr. Lane to be forthcoming and credible, and consider[ed] his testimony to be evidence of the efforts undertaken by
Against this backdrop, the Court ultimately found that the Lane defendants' marketing claims were supported by competent and reliable scientific evidence. Absent from the decision, however, was any detailed examination of the particular representations challenged by the FTC. Rather, the Court simply set forth, in a series of bullet points, a "representative selection" of the challenged assertions,
The Court further concluded that even if the Lane defendants violated the Final Order, they were entitled to a defense of substantial compliance. According to the Court, the Lane defendants undertook "considerable effort[s] to comply with the [Final] Order[]," even if "the materials relied upon by Defendants are in hindsight not perfect." These efforts were frustrated by the FTC, which failed for several years to notify Lane Labs of potential Final Order violations. The Court explained that such governmental foot dragging "raise[s] a significant issue of fundamental fairness." In other words, the Lane defendants attempted to comply with the Final Order, believed in good faith that they were successful in doing so, and received no indication from the government that their efforts were misguided. Under these circumstances, the Court found that "Defendants took all reasonable steps to substantially comply with the [Final] Order[]." The motion for contempt was accordingly denied.
The FTC timely appealed.
We review the denial of a contempt motion for abuse of discretion. See
Proof of contempt requires a movant to demonstrate "(1) that a valid order of the court existed; (2) that the defendants had knowledge of the order; and (3) that the defendants disobeyed the order." Marshak, 595 F.3d at 485 (internal quotations omitted); Roe, 919 F.2d at 871. These elements "must be proven by `clear and convincing' evidence, and ambiguities must be resolved in favor of the party charged with contempt." John T. v. Del. Cnty. Intermediate Unit, 318 F.3d 545, 552 (3d Cir.2003). Although courts should hesitate to adjudge a defendant in contempt when "`there is ground to doubt the wrongfulness of the conduct,'" Robin Woods Inc. v. Woods, 28 F.3d 396, 399 (3d Cir.1994) (quoting Quinter v. Volkswagen of Am., 676 F.2d 969, 974 (3d Cir.1982)), an alleged contemnor's behavior need not be willful in order to contravene the applicable decree, John T., 318 F.3d at 552; Harley-Davidson, 19 F.3d at 148-49. In other words, "good faith is not a defense to civil contempt." Robin Woods, 28 F.3d at 399.
The first two elements of contempt are not in dispute. Both parties agree that the Final Order constitutes a valid court order and that the Lane defendants were well aware of its existence and prohibitions. Thus, it is only the final element of contempt—disobedience of a valid court order—about which the parties quarrel. The FTC argues that the Lane defendants disobeyed Sections III and IV of the Final Order, and that the District Court erred in holding otherwise. Section III requires that each of Lane Labs' marketing claims find substantiation in competent or reliable scientific research. According to the FTC, the District Court failed to consider the specific marketing claims challenged during the contempt proceeding. The FTC challenges four claims pertaining to AdvaCal:
The FTC also challenges the assertion that Fertil Male can cause sperm count to "skyrocket" in as little as one month. Finally, the government argues that it proved Lane Labs violated Section IV of the Final Order by distorting research regarding AdvaCal and other forms of calcium. We will address each of these contentions in turn.
In various marketing fora, the Lane defendants claimed that AdvaCal was unique in its ability to increase bone density. One full-page print advertisement proclaimed, "Clinical studies show that AdvaCal does what no other calcium does: actually increases bone density in women." A direct mail circular asserted, "Other calcium supplements cannot increase bone mass. AdvaCal can." Yet another print publication explains,
In a 2003 infomercial, William Lane described AdvaCal as "the only calcium that I know of where you can actually increase bone density." Finally, on two occasions in 2005, Lane wrote to a book publisher to promote AdvaCal. In a February 9, 2005 email, Lane portrayed AdvaCal as "the one calcium clinically shown to build bone density in multiple human clinical studies. No other calcium can make that claim." Lane followed this electronic correspondence with a March 2005 letter stating, "AdvaCal offers the following benefits versus other calciums: Actually builds bone density. That's something no calcium has demonstrated consistently in clinical research." Although each of these marketing claims were admitted into the record, none was substantively discussed in the District Court's order.
The FTC presented evidence demonstrating that these claims of uniqueness were unsupported by competent and reliable scientific research. According to its expert, Dr. Heaney, nearly all calcium supplements "produce a measurable increase in bone density." He characterized this effect of calcium intake as "common," and reinforced his opinion by pointing to his own research and the results of at least two other peer-reviewed calcium studies. Both studies showed increases in bone density when human subjects were provided with calcium supplements other than AdvaCal. Dr. Morganti, Lane Labs' former manager of nutritional research, bolstered Dr. Heaney's opinion, explaining that "there's a general consensus that calcium can build bone density." She also remarked, "[t]o say that no other calciums can build bone is probably not true."
The record is devoid of credible evidence to contradict the government's proffer. Dr. Holick did not even address AdvaCal's purported uniqueness, much less dispute Dr. Heaney's interpretation of research indicating that most calcium supplements increase bone density. In fact, Lane was the sole witness who testified in defense of this claim, but his effort was without scientific support. Lane stated that clinical research on other forms of calcium had not produced results demonstrating an increase in bone density above baseline value; the peer-reviewed studies discussed
On the basis of Lane's lay speculation, and in spite of expert testimony to the contrary, the District Court ruled that the Lane defendants "offered support and substantiation" for the claim that AdvaCal was unique in its ability to increase human bone density. The Court's finding is not plausible in view of the entire record. The Lane defendants were not merely asserting that AdvaCal produced beneficial bone-building results or outcomes that were superior to other calcium supplements; rather, the claims indicated that other supplements did not build bone at all. Dr. Heaney showed that such an assertion was untrue, and Dr. Holick offered no testimony to contradict him. We are thus left with the definite conviction that the District Court's finding is clearly erroneous and must be reversed.
The FTC moved into evidence two print documents—one a direct mailing, the other a two-page advertisement—in which Lane Labs touts clinical research exhibiting AdvaCal's ability to increase bone density in the hip. It is undisputed that no such clinical research exists,
Dr. Holick pointed to two clinical studies supportive of Lane Labs' claims. Both appeared in peer-reviewed journals, and both showed that calcium increased bone density in the human hip. Although neither study administered AdvaCal to its subjects, Dr. Holick explained that the results were applicable to AdvaCal because "[o]nce the calcium is in your bloodstream, it doesn't make any difference what it was associated with before."
In direct mailers, print advertisements, and in an infomercial, the Lane defendants represented that AdvaCal was three to four times more absorbable than other calcium supplements. One assertion characteristic of these claims appeared in a direct mail article distributed to Lane Labs' customers. In it, AdvaCal was described as "an extremely high-potency calcium supplement that is absorbed four times better than typical calcium-carbonate supplements."
Dr. Heaney characterized such a contention as "not physically possible." He explained that the typical calcium carbonate supplement is absorbed at a rate of 30-35%; were AdvaCal capable of performing at the advertised rate, its absorption value would rise to 120%. Dr. Heaney testified that this is physiologically—and mathematically—unattainable. In fact, Dr. Heaney stated, "No adult that I've ever measured under any circumstance would ever have an absorption value above, say, 60 percent, and that's highly unusual."
The Lane defendants argue that AdvaCal was not marketed to the average individual, but rather to elderly females, a substantial number of whom suffer from conditions of achlorhydria and osteoporosis. Achlorhydric individuals cannot produce stomach acid and, as a result, absorb calcium at a rate significantly below average. In some patients, this rate is as low as 4%. Dr. Holick explained that it would not be unusual for an achlorhydric individual, whose calcium absorption rate is far below 30-35%, to absorb AdvaCal three to four times more effectively than calcium carbonate. In such circumstances, Dr. Heaney's criticism is inapplicable, for an achlorhydric patient may absorb AdvaCal three to four times more effectively and still not attain the average absorption rate of 30-35%.
The problem with this argument is its failure to account for the actual language of the challenged representations. Lane Labs' marketing did not include phraseology limiting its claims to elderly females suffering conditions of achlorhydria. A 2003 infomercial was typical: "Osteoporosis now strikes women and men of all ages, races and nationalities. But osteoporosis can be prevented. A key is taking the right calcium and the right calcium supplement is AdvaCal. . . . AdvaCal has been clinically shown to be three times more absorbable than other calciums."
The District Court did not address the incongruity between the Lane defendants' argument and the actual language of the marketing claims identified by the FTC. We consider this omission problematic, for the record contains some evidence that AdvaCal was, as a matter of fact, marketed toward individuals at risk of, or suffering from, achlorhydria. Lane testified that the company targeted "[o]lder women, [or] postmenopausal women," and much of its advertising generally appears to focus upon this segment of the population. In addition, Dr. Holick's testimony indicates that among this population segment, AdvaCal could be three to four times more absorbable than calcium carbonate. The District Court credited the testimony of both Lane and Dr. Holick, but it did not indicate whether AdvaCal was, as a matter of fact, marketed to elderly females at risk of, or suffering from, achlorhyrdria.
Clearly, AdvaCal does not produce ideal outcomes in every patient, but the question is whether Lane Labs' claims promised results that were unattainable for large segments of its audience. The District Court implicitly found that they did not. Were we sitting as the finder of fact, we likely would reach the opposite result. We are not, of course, sitting as a court of first impression; rather, our role is to review the District Court's factual findings. Unfortunately, our attempt to do so is frustrated by the absence of a detailed discussion of whether Lane Labs over-promised on results that could not be attained. In fact, we are unable to say with certainty that the District Court implicitly addressed these claims because the opinion fails to discuss the AdvaCal target market, and gives no indication that the Court considered—and disposed of—this factual dispute. We therefore consider it appropriate to remand so that the District Court may address these particular claims more exhaustively.
In 1999, Lane sent a "pitch letter" to Monica Reinagel, who was then the editor of the Health Sciences Institute ("HSI") newsletter. In this correspondence, Lane lauded AdvaCal's potential, describing it as "a revolutionary calcium supplement . . . that has been clinically shown to actually build postmenopausal bone density, without the side effects of hormonal drugs or supplements." HSI published an article praising AdvaCal shortly thereafter. The article proclaimed, inter alia, that AdvaCal "works as well or better than [leading prescription drugs], and without the substantial side effects and risks."
AdvaCal has never undergone scientific testing for comparison with any prescription drug, and Dr. Heaney opined that the above-described claim of comparability/superiority was without competent or reliable substantiation. Notably, the Lane defendants made no attempt to dispute Dr. Heaney's opinion, and our review of the record has revealed no evidence supportive of this particular marketing claim. However, the Lane defendants argued before the District Court that the representation was not their own, and that they had no control over the content appearing in
The District Court did not address Lane Labs' comparability/superiority claim or its use of the HSI article to promote AdvaCal. It is therefore unclear whether the Court found substantiation for the claim or whether it accepted Lane Labs' attempt to absolve itself from propagating the representation. In either event, the District Court's finding was clearly erroneous; there is no dispute that the comparability/superiority claim was unsupported by competent or reliable scientific evidence and, by their own admission, the Lane defendants used this claim to market AdvaCal. Thus, this claim violates Section III of the Final Order and the District Court's holding to the contrary is clear error.
Lane Labs published an advertisement for Fertil Male which claims, inter alia, that the supplement caused a male customer's sperm count to "skyrocket" after one month's use. This is the sole Fertil Male representation challenged by the FTC on appeal. Although the District Court did not discuss this specific representation, it expressly credited the testimony of Dr. Seibel, who stated that there was competent or reliable scientific evidence suggesting that Fertil Male improves male fertility parameters such as sperm count, sperm motility, and sperm production.
The FTC attempts to overcome Dr. Seibel's testimony by focusing on the one-month time span identified in Lane Labs' advertisement. According to the FTC, it is impossible for a fertility supplement to increase sperm count in such a short time. The government did not challenge this specific aspect of the Fertil Male claim during the contempt hearing, however, and thus there is little testimony which addresses the contention directly. Dr. Seibel explained that the process of spermatogenesis requires at least three months,
The Court then attempted to clarify whether it was possible for male sperm count to increase over the course of one month's time.
Neither party pursued this line of questioning any further after this exchange.
Dr. Seibel testified unequivocally that there was competent or reliable scientific research to substantiate the claim that Fertil Male increased sperm count. In the excerpt above, he indicates that the "absolute effect" of an increase requires a period of three months, but appears to imply that some positive change also occurs within the first month. The FTC declined to delve further into this inquiry when it had the opportunity, but now asks that we set aside the District Court's factual findings on the basis of testimony that is ambiguous at best. We decline this invitation. The finding of the District Court with respect to this marketing claim will stand.
According to the FTC, the District Court committed error by finding that Lane Labs did not violate Section IV of the Final Order. Section IV forbids express or implied misrepresentations regarding "the existence, contents, validity, results, conclusions, or interpretations of any test, study or research" pertaining to "the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any food, dietary supplement, or drug." The District Court's Section IV analysis is brief. It began by acknowledging that "some of the statements contained in the advertising claims made by [the Lane defendants] were incorrect," and that "errors were made over a number of years." These misstatements and errors are nowhere identified. Instead, the Court focused upon AdvaCal's general efficacy, noting that the supplement was considered to be "a good source of calcium" and "will most likely help the people who take [it]." The Court then concluded that the evidence was insufficient to show that the representations in question created a "false impression" in violation of Section IV.
The District Court's analysis is problematic. Section IV of the Final Order prohibits the Lane defendants from misrepresenting the results of research and data; it is simply unconcerned with a product's overall salutary effects. That AdvaCal is efficacious in delivering calcium to the body does not, ipso facto, preclude the Lane defendants from misrepresenting scientific research. Nor did the District Court's characterization of AdvaCal as a "good product[]" relieve it of the duty to make particularized findings of fact germane to the purported misrepresentations challenged by the FTC. Rather, it was incumbent upon the Court to examine the alleged misrepresentations in detail and to explicitly find whether each transgressed the proscriptions of Section IV.
Other challenged representations appear equally misleading. Rather than speculate as to the factual basis underlying the District Court's ultimate conclusions, we will return this matter to the District Court so that it may make findings that are more specific than those presently before us. Some of the representations are unlikely to survive careful factual scrutiny, but we leave the initial resolution of each issue to the District Court. The findings pertaining to the Lane defendants' alleged violation of Section IV will therefore be vacated.
The District Court held that even if the Lane defendants violated Sections III and IV of the Final Order, they were entitled to a defense of substantial compliance. We have never explicitly recognized the validity of the substantial compliance defense, see Robin Woods, 28 F.3d at 399, but we note that several of our sister circuits have done so, see Morales-Feliciano v. Parole Bd. of P.R., 887 F.2d 1, 4-5 (1st Cir.1989); Gen. Signal Corp. v. Donallco, Inc., 787 F.2d 1376, 1379 (9th Cir. 1986); see also Food Lion, Inc. v. United Food & Commercial Workers Int'l Union, AFL-CIO-CLC, 103 F.3d 1007, 1017 (D.C.Cir.1997) (assuming substantial compliance defense "survives" in the D.C. Circuit). Neither party has objected to the District Court's application of the defense, and, in fact, both appear to proceed under the assumption that the defense is cognizable under this Court's jurisprudence.
In Robin Woods, we favorably referenced a decision of the Court of Appeals for the Ninth Circuit and set forth the two-part substantial compliance defense adopted therein. The rule permits a party cited for contempt to assert the defense if it (1) has taken all reasonable steps to comply with the court order at issue, and (2) has violated the order in a manner that is merely "`technical'" or "`inadvertent.'" See 28 F.3d at 399 (quoting Gen. Signal Corp., 787 F.2d at 1379). Other courts apply a variation on this rule. The District of Columbia Circuit has stated the defense this way: "In order to prove good faith substantial compliance, a party must demonstrate that it `took all reasonable steps within [its] power to comply with the court's order.'" Food Lion, 103 F.3d at 1017 (quoting Glover v. Johnson, 934 F.2d 703, 708 (6th Cir.1991)); see also Salazar v. District of Columbia, 602 F.3d 431, 441 (D.C.Cir.2010) (same). In the First Circuit, the rule is even less definitive: "substantiality," like reasonableness, "depend[s] on the circumstances of each case, including the nature of the interest at stake and the degree to which noncompliance affects that interest." Fortin v.
The Lane defendants cite to our decision in Harris v. City of Philadelphia, 47 F.3d 1311 (3d Cir.1995), and urge us to adopt a substantial compliance test akin to that which is applied in the District of Columbia Circuit. In other words, they argue that "`a defendant may not be held in contempt as long as it took all reasonable steps to comply.'" Appellee's Br. at 42 (quoting Harris, 47 F.3d at 1324). In Harris, we were concerned not with substantial compliance, but the defense of impossibility. The City of Philadelphia was under court order to improve conditions in its prisons; it failed to fulfill the terms of the order and contempt sanctions were pursued. On appeal, we recognized that "the City would have a valid defense were it able to show physical impossibility" to comply with the court order. Id. at 1324. We then cited authority recognizing the impossibility defense and holding that such a position is available only to those defendants that show they have made "in good faith all reasonable efforts to comply." Id. (internal quotations omitted).
The impossibility defense necessarily requires the defending party to assert a present inability to comply with the relevant court order. See Hicks v. Feiock, 485 U.S. 624, 638 n. 9, 108 S.Ct. 1423, 99 L.Ed.2d 721 (1988); United States v. Rylander, 460 U.S. 752, 757, 103 S.Ct. 1548, 75 L.Ed.2d 521 (1983). It "refers to physical impossibility beyond the control of the alleged contemnor."
Recognizing that we did not formally adopt the defense of substantial compliance in Robin Woods, we do so here. In order to avail oneself of the defense, a party must show that it (1) has taken all reasonable steps to comply with the valid court order, and (2) has violated the order in a manner that is merely "technical" or "inadvertent." The District Court's application of the appropriate test for substantial compliance is a legal issue to be reviewed de novo. See Anderson v. City of Phila., 845 F.2d 1216, 1220 (3d Cir.1988). Whether the alleged contemnors took all reasonable steps to comply with the court order, and the extent to which contumacious conduct constitutes a "technical" or "inadvertent" violation, are factual questions subject to review for clear error. Resolution of these questions will naturally depend upon the unique facts of each case, the nature of the conduct precluded, and the capabilities of the parties subject to the order.
In the instant matter, the District Court set forth the correct standard for substantial compliance, explaining that "[i]f a respondent has made in good faith all reasonable efforts to comply with a court order, technical or inadvertent violations of the order will not support a finding of contempt." The Court then applied this rule to the facts, emphasizing the Lane defendants' considerable efforts to comply with the Final Order. In particular, the Lane defendants submitted timely compliance reports disclosing the representations in question; the FTC did not respond to these disclosures and, as the Court explained, "to tell Defendants that their efforts were not good enough years after not advising them of any compliance issues is disingenuous and is highly relevant to the inquiry into whether Defendants should have done something different in the first instance." The Court concluded by recognizing "that the materials relied upon by Defendants are in hindsight not perfect," but that "Defendants took all reasonable steps to substantially comply with the [Final Order]." It did not explicitly address the extent to which violations of the Final Order were "technical" or "inadvertent."
The FTC assails this omission, arguing that the District Court's opinion contains no findings addressing the second step of the substantial compliance inquiry. We are hard-pressed to disagree. The entirety of the Court's substantial compliance analysis is focused upon the reasonableness of the Lane defendants' actions. The Court underscores Lane Labs' submission of compliance reports; its retention of additional compliance personnel; and the government's delay in commencing an enforcement proceeding.
Accordingly, we will vacate the District Court's finding that the Lane defendants substantially complied with the Final Order, and will remand for reconsideration consistent with the discussion set forth above.
The District Court examined the record in its entirety and concluded that the Lane defendants complied with "the spirit" of the Final Order. This was insufficient. The District Court was not petitioned for an assessment of the general efficacy of AdvaCal and Fertil Male. Rather, the FTC contended that specific marketing claims were violations of two previously-entered consent decrees. Unfortunately, the able District Judge did not provide sufficiently detailed findings or sufficient rationale to allow us to perform effective appellate review. For the reasons set forth above, we will remand this matter to the District Court for further proceedings consistent with this opinion.
