Federal Trade Commission v. Precision Patient Outcomes, Inc. and Margrett Priest Lewis 

Photo: CEO of Precision Patient Outcomes, Inc. Margrett Lewis

CASE SUMMARY

NCLA challenged the Federal Trade Commission’s (FTC) lawsuit against Margrett Lewis and her California-based company Precision Patient Outcomes, Inc. (PPO), which the agency accused of illegally selling a supplement called “Covid Resist.”

PPO developed a supplement called “Covid Resist” in 2021. CEO and Ms. Lewis asked FTC if there were any problems with the product’s name and proposed marketing before selling it to any consumers. PPO dropped the trademark and changed the product’s name to remove all mention of “Covid” on their own initiative before selling any of it. FTC’s initial Complaint claimed PPO and Ms. Lewis of illegally sold Covid Resist, and the agency only filed an Amended Complaint removing this falsehood after NCLA reminded them that this was impossible.

In February 2024, NCLA reached an agreement with the FTC terminating the agency’s lawsuit.

In other cases, NCLA will continue arguing against FTC’s structure, which violates constitutional executive power requirements. Its commissioners serve staggered terms that prevent one president from controlling the whole agency, as the Chief Executive cannot fire them at will.

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CASE STATUS: Active

CASE START DATE: November 18, 2022

DECIDING COURT: U.S. District Court for the Northern District of California, Oakland Division

ORIGINAL COURT: U.S. District Court for the Northern District of California, Oakland Divisionn

CASE DOCUMENTS

February 15, 2024 | Stipulated Order for Permanent Injunction and Other Relief
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July 26, 2023 | Order of Recusal
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June 30, 2023 | Motion for Recusal of a District Judge Pursuant to 28 U.S.C. §455 and Reassignment
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May 17, 2023 | Answer to First Amended Complaint for Permanent Injunction, Monetary Relief, Civil Penalty Judgment and Other Relief and Counterclaim
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February 24, 2023 | Defendants’ Reply to Plaintiff’s Response to Motion to Dismiss
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February 3, 2023 | Notice of Motion to Dismiss Complaint and Memorandum In Support under Rules 8, 9(b), 12(b)(1) And 12(b)(6) of the Federal Rules of Civil Procedure
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January 13, 2023 | First Amended Complaint For Permanent Injunction, Monetary Relief, Civil Penalty Judgment, And Other Relief
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December 13, 2022 | Rule 11 Notice
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November 18, 2022 | Complaint for Permanent Injunction, Monetary Relief, Civil Penalty Judgment, and Other Relief
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PRESS RELEASES

February 16, 2024 | NCLA Secures Truce in Federal Trade Commission’s Unjust War Against Startup Company

Washington, DC (February 16, 2024) – The New Civil Liberties Alliance has reached an agreement with the Federal Trade Commission terminating the agency’s lawsuit against our clients, Precision Patient Outcomes, Inc. (PPO), a California-based company that develops dietary supplements, and against its CEO, Margrett Lewis. The Order signed by the court in FTC v. PPO is extraordinary in containing no monetary penalties and only a three-year duty to report to FTC, a departure from FTC’s long practice insisting that such settlements must last decades.

As a start-up, Ms. Lewis wrote to FTC at the pre-market stage, requesting guidance on her advertising before selling any product. FTC’s response cited warning letters to other companies. PPO and Ms. Lewis afterwards were not provided a warning letter, contrary to FTC’s usual practice. This settlement reflects steps PPO and Ms. Lewis are taking to follow FTC’s view of the law and to continue marketing high-quality dietary supplements.

The court-signed Order, noting PPO and Ms. Lewis do not admit nor deny the Amended Complaint’s allegations against them, merely requires the Defendants to make the same kinds of truthful statements about their products as the law requires of all similarly situated persons. FTC’s original Complaint falsely stated that PPO and Ms. Lewis had sold a product called Covid-Resist, but the Amended Complaint removed that inaccurate charge. The Order allows PPO and Ms. Lewis to keep selling all current products and imposes no monetary penalties. Nor does the Order limit the truthful things they can say about their products beyond what FTC states others may say.

FTC initially sought hundreds of thousands of dollars in monetary penalties, a permanent injunction, and a long period of ongoing compliance costs. This Order instead lacks such onerous provisions and is permanent only in requiring Defendants to follow the same legal requirements that apply to every other seller of dietary supplements.

NCLA pressed a Counterclaim that FTC’s structure is unconstitutional, which will be dismissed as part of this agreed-to Order. When the Supreme Court decided Humphrey’s Executor v. FTC in 1935, FTC did not possess the power to initiate suits or seek penalties. These core executive powers were added to FTC’s authority in the 1970s. The Court itself has recognized that its “conclusion that the FTC did not exercise executive power has not withstood the test of time.” Article II vests executive power solely in the President, who must “take Care that the Laws be faithfully executed.” As NCLA’s representation in this important case emphasized, the President cannot effectively fulfill that duty if Congress restricts his removal power over the federal officials under his command.

NCLA released the following statements:

“We are quite pleased that our clients will not be liable for any monetary penalties and the administrative burdens on the clients are also relatively light as such agreements go. FTC backed off its maximalist demands and agreed to a reasonable settlement of this matter, which never should have been brought against a small, start-up business that approached the FTC for guidance in advance, as our clients did.”
— John Vecchione, Senior Litigation Counsel, NCLA

“The favorable terms we secured for our clients will enable them to continue to develop and grow their business.”
— Kara Rollins, Litigation Counsel, NCLA

“FTC is at long last backing down from a lawsuit that it had no business bringing in the first place. The agreement our clients have reached marks a major victory for all small businesses that wish to operate free from the Commission’s bullying and imposing of unconstitutional executive authority. Let’s hope that FTC picks its battles more wisely in the future.”
— Casey Norman, Litigation Counsel, NCLA

“As favorable as this settlement is for our clients, FTC must know that the Humphrey’s Executor issue is not going away for the Commission—nor for any of the similarly constituted agencies in the executive branch. NCLA will keep pressing this claim on behalf of other clients until the Supreme Court overturns Humphrey’s Executor.”
— Mark Chenoweth, President and Chief Legal Officer, NCLA

For more information visit the case page here.

ABOUT NCLA

NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.

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February 6, 2023 | NCLA Asks Federal Court to Dismiss Unconstitutional Lawsuit FTC Has No Authority to Bring

Washington, DC (February 6, 2023) – The New Civil Liberties Alliance, a nonpartisan, nonprofit civil rights group, has filed a Motion to Dismiss the Federal Trade Commission’s (FTC) lawsuit against Precision Patient Outcomes, Inc. (PPO), a California-based company which, among other things, develops dietary supplements, and its CEO, Margrett Lewis. NCLA argues FTC cannot rightfully exercise executive power by initiating and prosecuting this lawsuit, especially considering the Justice Department refused to bring this case. Congress cannot empower FTC Commissioners to file lawsuits while shielding them from at-will removal by the President.

In 2021, PPO developed a supplement called “Covid Resist.” Prior to selling any to consumers, CEO Lewis asked FTC if there were any problems with the product’s name and proposed marketing. FTC responded with a letter that refused to answer her question, but did provide hundreds of pages for her to pore over of companies that the agency had sued or to which it had issued warning letters. On its own initiative, and before any product was sold, PPO abandoned the trademark and changed the product’s name to remove any mention of “Covid.” FTC’s initial Complaint accused PPO and Ms. Lewis of illegally selling Covid Resist. After NCLA’s lawyers reminded FTC why this was impossible, the agency filed an Amended Complaint removing this falsehood. No Covid Resist was sold, nor does the Amended Complaint allege that it was, so FTC cannot maintain a suit on such a claim.

FTC has no particular competence in what dietary supplements can and cannot do. The agency does not have dieticians or even medical professionals on staff. None of the statutes relied upon by FTC say anything about dietary supplements, and FTC has issued no regulations on dietary supplements. In fact, Congress has explicitly charged another agency, the Food and Drug Administration, with setting the standard of what can and cannot be said about dietary supplements in a statute over which FTC has no jurisdiction.

When the Supreme Court decided Humphrey’s Executor in 1935, FTC did not possess the power to initiate suits or seek penalties. These core executive powers were only added to FTC’s authority in the 1970s. The Supreme Court itself has recognized that its 1935 “conclusion that the FTC did not exercise executive power has not withstood the test of time.” Article II vests executive power in the President, who must “take Care that the Laws be faithfully executed.” The President cannot effectively fulfill that duty when Congress restricts his removal power over the federal officials under his command. The FTC v. PPO case thus provides the federal courts an opportunity to apply Humphrey’s Executor to prevent FTC’s unconstitutional exercise of executive authority.

NCLA released the following statements:

“FTC is claiming suzerainty over ever larger swaths of the American economy based on vague language and old court cases that diverge sharply from modern judicial thinking on the separation of powers. This ill-chosen strike against a small businesswoman trying to provide high-quality vitamins should soon lead to curtailing FTC’s ability to exercise executive power unaccountable to the President.”
— John J. Vecchione, Senior Litigation Counsel, NCLA

“Inspired by her family’s personal experience, Ms. Lewis is a tireless consumer and burn survivor advocate, yet FTC is punishing our clients for trying to do the right thing. They sought FTC’s advance input. FTC declined to provide it. At great cost, they then voluntarily changed the product’s name and labeling. FTC didn’t care. They stopped selling the product under the new name. FTC filed this case anyway. NCLA’s clients tried to comply with FTC’s edicts at every turn, but it was never enough. Now we’ll just have to beat FTC at its own game.”
— Kara Rollins, Litigation Counsel, NCLA

For more information visit the case page here.

ABOUT NCLA

NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.

Download the full document

December 6, 2022 | NCLA Condemns Federal Trade Commission’s Inclusion of Untrue Claims in Federal Court Complaint

Washington, DC (December 6, 2022) – The Federal Trade Commission (FTC), in its initial filing before the U.S. District Court for the Northern District of California, has falsely accused Precision Patient Outcomes, Inc. (PPO) and CEO Margrett Lewis of unlawfully marketing and selling a dietary supplement called COVID Resist. The problem for FTC is PPO and Ms. Lewis never sold such a product—and FTC knows that. During six months or more of investigation, PPO provided FTC clear proof such sales never happened. So, there is simply no excuse for the agency to repeat this untrue claim, which undermines its entire groundless case. The New Civil Liberties Alliance will vigorously defend our clients PPO and Ms. Lewis and expose FTC’s deceit here in the process. 

Inspired by her personal experiences with health and wellness, Ms. Lewis became a tireless consumer and patient advocate. Drawing on a wide-cross section of information, she founded PPO, which develops precision medical solutions for wound care, scar management, and skin-renewing technologies. More recently, PPO began to develop and sell vitamin, mineral, and nutraceutical supplements. Prior to selling any supplements, PPO contacted FTC and asked it if there was any problem with the proposed product’s name and marketing. FTC would not say either way, so out of an abundance of caution and at great expense, PPO abandoned its trademarked name, removed and relabeled products, and changed its website and marketing. PPO never sold any “COVID Resist.” 

Despite PPO’s drastic changes, the fact that it sold no product under the COVID Resist label, and that PPO ceased selling any product called “VIRUS Resist” before FTC filed suit, FTC has continued to pursue an enforcement action against the company—and against Ms. Lewis individually—under the newly enacted Covid-19 Consumer Protection Act. FTC seeks to monitor Ms. Lewis’s and PPO’s activities for the next 20 years and obtain substantial penalties for selling fewer than 250 bottles of a supplement containing ingredients thousands of physicians across the country recommend to support immune health. FTC lacks the statutory and constitutional authority to pursue these penalties or this action.  

FTC unlawfully seized assets through disgorgement for 40 years until stopped by the Supreme Court in AMG Capital Management, LLC v. FTC in 2021. Now, the Commission is trying to eliminate truthful statements citizens make about their products and implement ruinous fines on a small business owner who did no wrong—and one who, in fact, sought advance agency approval. It is no accident that the Justice Department declined to bring this meritless case, and it is only being carried forward by FTC after a divided Commission vote. Actions like these explain why independent federal agencies have no business undertaking executive activities. And, in fact, existing U.S. Supreme Court precedent forbids FTC’s conduct, which NCLA will bring to heel. 

NCLA released the following statements:  

These dietary supplements contain things like zinc and vitamin D. The whole world thinks vitamins improve your system’s resistance. No one should have her livelihood taken for saying so. FTC has begun this case with a Complaint riddled with falsehoods. It will likely end this suit with diminished power—as happened in AMG.
— John J. Vecchione, Senior Litigation Counsel, NCLA 

“Despite the Commission’s recent admonition from the Supreme Court in AMG, FTC continues heedlessly to push the boundaries of its powers, real or imagined. It is high time for courts to recognize the Commission wields substantial, forbidden executive power and re-examine the constitutionality of its purported independence.”
— Kara Rollins, Litigation Counsel, NCLA 

For more information visit the case page here 

ABOUT NCLA 

NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.  

Download the full document

OPINION