11-1301
GEMTRONICS, INC.,
a corporation, and
WILLIAM H. ISELY,
individually and as the owner of
Gemtronics, Inc.,
Petitioners,
v.
Respondent.
S.M. Oliva
128 Old Fifth Circle
Charlottesville, VA 22903
(434) 253-1179
director@antitrusthall.com
Table of Authorities ii
Preliminary Statement 1
Summary 1
Argument 2
Conclusion 26
Certificate of Compliance
Certificate of Service
i
TABLE OF AUTHORIT IES
Cases
Hess Mechanical Corp. v. NLRB, 112 F.3d 146 (4th Cir. 1997) 3, 7–9
Humphrey's Executor v. United States, 295 U.S. 602 (1935) 16
In the Matter of M. Catherine Higgins, No. 051-0252 (F.T.C. 23–24
2010)
Morgan v. Perry, 142 F.3d 670 (3rd Cir. 1998) 6
Pierce v. Underwood, 487 U.S. 552 (1988) 3, 4
Rambus, Inc. v. FTC, 522 F.3d 456 (D.C. Cir. 2008) 23
Schering-Plough Corp. v. FTC, 402 F.3d 670 (11th Cir. 2005) 22
United States v. Hallmark Construction Co., 200 F.3d 1076 (7th 4, 5
Cir. 2000)
ii
S.M. Oliva, "FTC Thinks Concealing Information Helps the 24
Public," Mises Economics Blog, April 1, 2010,
http://blog.mises.org/12350
S.M. Oliva, "Realcomp Challenges FTC 'Right' to Dictate 19, 20
Website Content," Mises Economics Blog, Dec. 1, 2009,
http://blog.mises.org/11130
S.M. Oliva, "When Experts Lack Expertise," Mises Economics 25
Blog, April 15, 2010, http://blog.mises.org/12491
iii
Preliminary State ment
Amicus stated his identity and interest in this case, as well as his
accompanying motion for leave to file, and he will not burden the Court
Summary
hold him legally responsible for a website he did not own, operate, or
control. Isely now seeks to recover some of the $130,000 in attorney fees
award under the Equal Access to Justice Act (EAJA), 5 U.S.C. § 504,
Commission affirmed.
-1-
2. Was the Commission's position "substantially justified" given the
Argume nt
The answers are "no" to the first two questions and "yes" to the
of the EAJA and the statute's clearly stated objectives require the
-2-
Commission erroneously equated "substantially justified" with the
56(a) — but the mere declaration that there were disputed facts does
not satisfy the Commission's burden of proof under the EAJA. This is
to apply.
-3-
Adjudicative Proceeding."5 The ALJ previously denied both sides'
noting, "[S]ummary disposition proves only that the district judge was
-4-
"substantially justified" with the standard for summary judgment. The
merits.11
any kind. The record shows he simply denied both parties' motions
-5-
When the Pierce court said the "substantially justified" standard is
"factual dispute."
-6-
This Court's decision in Hess Mechanical Corp. v. NLRB 18 further
the fired employee, who claimed he'd been fired for engaging in legally
application for attorney fees under the EAJA. The Hess ALJ said that
justified."
-7-
proceeding. The Court noted, "[T]he weaknesses of the [NLRB's] case
was obvious before the complaint was filed."20 The only evidence was an
20 Ibid. at 150.
21 Ibid.
-8-
complaint. If the Commission chose not to conduct an adequate inquiry,
it cannot then, consistent with Hess, plead such failure as grounds for
avoiding an award under the EAJA. Yet that is exactly what the
Commission did.
weaker then the NLRB's case in Hess, where there was at least a
-9-
appearance of Isely's contact information on various pages of the
would have led a "reasonable" person to discover Isely was not the
person responsible for the website and its advertising claims. The
cancer provided Isely's name and telephone number with the statement,
"If you are living in the US, just call Mr. Isely and he will explain how it
- 10 -
distributor controls the website — the Commission argued the presence
Did the Commission call Isely to see if he'd explain how RAAX11 could
from the Commission ever called Isely to see if he'd repeat or verify the
trial does not indicate there was any investigation of Dr. Hall" or the
23 Ibid. at 21.
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investigate another U.S. distributor of RAAX11 identified on the
website.24
24 Ibid. at 32.
25 Ibid. at 29.
26 Ibid. at 28.
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Otto.27 The Commission made no effort to investigate or explain these
inconsistencies.
George Otto, not Isely, was the sole owner and responsible party for the
27 Ibid.
28 Ibid.
29 Ibid. at 32.
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cannot be excused as anything other then nonfeasance by the
Commission.
challenged website using falsified names and credit card numbers. The
payments from Liggins via PayPal.31 Isely then fulfilled the orders as a
30 No doubt this was, in part, because the Commission did not have
jurisdiction over George Otto, a non-U.S. citizen, or his foreign
companies. Isely was the only available target in the United States.
31 Gemtronics Decision at 23.
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Liggins's aliases, and these were the only shipments Isely made on
Commission itself:
that Isely fulfilled the order as a courtesy to his foreign supplier does
32 Ibid. at 25.
33 Ibid. at 23.
34 Ibid. at 24.
35 Ibid.
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not establish any connection between Isely and the content of the
challenged website.
grounds alone, the Court should vacate the Commission's order denying
The Commission is not acting as an Article III court that was bound
only to consider the strict text of a statute (as the Supreme Court was in
- 16 -
agency when it targeted Isely as part of a broader campaign restrict
compensating Isely.
38Equal Access to Justice Act, 96th Cong., 1st sess., 1979, S. Rep. 253,
at 5, n1.
- 17 -
More than 30 years later, Dr. Scherer's testimony remains an
businessmen like William Isely face when dealing with the Commission.
Congress enacted the EAJA to try and level the playing field:
precisely because they do not have the resources to fully litigate the
39 Ibid. at 1.
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issue," and the EAJA was necessary to prevent "truncated justice" from
Congress did not anticipate EAJA fee awards only in cases where there
of the law," because only a contested hearing could prove "that the
their tax dollars unreasonable government action and also bear the
40 Ibid. at 5.
41 Ibid at 5–6.
42 Ibid.
- 19 -
b. The Commissio n's recent histor y suggests a lac k of
institutio nal co ntrol that e mphasizes the necessity
of meaningful EAJA relief.
careers:
43 Ibid. at 5, n1.
- 20 -
sites marketing everything from essiac tea and other herbal
blends (some containing highly toxic herbs), to laetrile, shark
cartilage, coral calcium, mushroom extract, and black salve (a
corrosive product that can cause burns and scarring) – all
promoted to prevent, cure, or treat cancer. Of the 112 sites
contacted by the FTC, nearly 30 percent either shut down their
sites or removed the cancer claims. The remainder were reviewed
to determine whether law enforcement was appropriate, with
some referred to FDA or Canadian authorities. The FTC followed
this effort with 11 enforcement actions charging companies and
individuals with making false or unsubstantiated cancer claims,
and in some cases even misrepresenting that there was scientific
proof that their products worked.44
Isely whose income from the sale of herbal and dietary supplements
could never cover the fees for attorneys with the type of "specialized
positives, as was the case with Isely. In the absence of market forces,
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there is no incentive for Commission staff to get the facts right. The
- 22 -
• In 2008 the District of Columbia Circuit ended the
48 Rambus, Inc. v. FTC, 522 F.3d 456, 469 (D.C. Cir. 2008).
49 Ibid. at 467.
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previous agreement, undermining the Commission's ability to
were not eligible for an award under the EAJA because of their net
parties who are eligible. The EAJA is one of the few mechanisms
$2 million and businesses with a net worth of less than $7 million. See 5
U.S.C. § 504(b)(1)(B).
- 24 -
available for holding the Commission — which is composed of unelected
III judge reviews the pleadings and evidence. But in an agency case,
judge, such a standard effectively renders the EAJA moot.54 There will
the Commission can — and would — overrule that decision and remand
54In some cases, the Commission has dispensed with the pretense of
ALJ independence altogether by designating a commissioner — even
one who participate in the decision to issue the complaint — as the ALJ.
See S.M. Oliva, "When Experts Lack Expertise," Mises Economics Blog,
April 15, 2010, http://blog.mises.org/12491.
- 25 -
Conclusio n
with this Court's decision in Hess, the law clearly requires the
and not simply fall back on the platitude that surviving summary
from EAJA liability. Such arguments defy the plain meaning of the
Respectfully Submitted,
S.M. Oliva
128 Old Fifth Circle
Charlottesville, VA 22903
(434) 253-1179
director@antitrusthall.com
- 26 -
CERTIFICATE OF COMPLIANCE
S.M. Oliva
CERTIFICATE OF SERV ICE
Donald S. Clark
Office of the Secretary
Federal Trade Commission
600 Pennsylvania Avenue NW, Room H-135
Washington, DC 20580-0000
Barbara E. Bolton
Federal Trade Commission
Southeast Region
225 Peachtree Street NE, Suite 1500
Atlanta, GA 30303
William H. Isely
300 Finsbury Street
Durham, NC 27703
S.M. Oliva