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1 JEFFERY A. KLURFELD
Regional Director
2 BARBARA CHUN
CA Bar No. 186907
3 Federal Trade Commission
10877 Wilshire Boulevard, Suite 700
4 Los Angeles, CA 90024
(310) 824-4312 (voice)
5 (310) 824-4380 (fax)
6 DAVID P. FRANKEL
THEODORE H. HOPPOCK
7 SERENA VISWANATHAN
Federal Trade Commission
8 600 Pennsylvania Avenue, NW, Room S-4002
Washington, DC 20580
9 (202) 326-2812, 3087, 3244 (voice)
(202) 326-3259 (fax)
10
ATTORNEYS FOR PLAINTIFF
11
12 UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
13
14 FEDERAL TRADE COMMISSION, CV 00-04376-JSL (CWx)
Plaintiff, Hon. J. Spencer Letts
15
16 v. MEMORANDUM IN
SUPPORT OF PLAINTIFF’S
17 ENFORMA NATURAL PRODUCTS, EX PARTE APPLICATION
INC. and ANDREW GREY, FOR AN ORDER TO SHOW
18 Defendants CAUSE WHY DEFENDANTS
ENFORMA NATURAL
19 and PRODUCTS, INC. AND
ANDREW GREY AND
20 TWENTY-FOUR SEVEN, LLC and RESPONDENTS TWENTY-
21 DONNA DiFERDINANDO, FOUR SEVEN, LLC AND
DONNA DiFERDINANDO
22 Respondents. SHOULD NOT BE HELD IN
CIVIL CONTEMPT AND
23 APPLICATION FOR
TEMPORARY
24 RESTRAINING ORDER,
PRELIMINARY
25 INJUNCTION AND
26 RELATED RELIEF
27
28
1 TABLE OF CONTENTS
2
3 I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
4
II. STATEMENT OF FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5
6 A. PROCEDURAL HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
7 B. DEFENDANTS AND RESPONDENTS’ LATEST
POST-ORDER CONDUCT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
8
1. Claims For Chitozyme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
9
2. Claims For Acceleron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
10 Unsubstantiated efficacy claims . . . . . . . . . . . . . . . . . . . . . . 8
a.
11 False claims concerning study results . . . . . . . . . . . . . . . . . 10
b.
12
13 III. LEGAL ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
14
A. CLEAR AND CONVINCING EVIDENCE PROVES
15 EACH OF THE ELEMENTS ESTABLISHING
DEFENDANTS AND RESPONDENTS’ CIVIL
16 CONTEMPT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
17 1. Defendants And Respondents Are Bound By A
Valid, Effective Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
18 The Order Requires Certain Substantiation And
2.
19 Prohibits Certain Misrepresentations By Defendants
And Respondents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
20 Defendants And Respondents Failed To Comply
3.
21 With The Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
22 a. Defendants and respondents have failed to
insert the Court-ordered disclosure into the
23 two new infomercials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
24 b. Defendants and respondents have no
competent and reliable evidence supporting
25 their claims that Chitozyme traps fat in
the human body . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
26
27
28
- ii -
1 c. Defendants and respondents have no
competent and reliable evidence that
2 Chitozyme causes substantial weight
loss without diet or exercise . . . . . . . . . . . . . . . . . . . . . . . . 17
3 Defendants and respondents have no
d.
4 competent and reliable evidence that
Acceleron increases metabolism . . . . . . . . . . . . . . . . . . . . 20
5
e. Defendants and respondents have no
6 competent and reliable evidence that
Acceleron causes weight loss . . . . . . . . . . . . . . . . . . . . . . . 22
7 Defendants and respondents have
f.
8 falsely claimed that clinical studies
demonstrate that Acceleron causes
9 weight loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10
B. THE COURT SHOULD ISSUE A TEMPORARY RESTRAINING
11 ORDER, FOLLOWED BY A
PRELIMINARY INJUNCTION, AND IMPOSE
12 OTHER SANCTIONS TO PROTECT THE
PUBLIC FROM FURTHER CONTINUING
13 INJURIES, TO COERCE COMPLIANCE WITH
THE ORDER AND TO COMPENSATE PAST
14 VIOLATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
15 1. Temporary and . . . . . . . . . .Injunctive Relief . . . . . . . . . . . . . . . . . 25
Is Appropriate Preliminary . . . . . . . . . . . .
16 a. The Commission is likely to succeed on
17 the merits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
18 b. There is a possibility of irreparable harm . . . . . . . . . . . . . . 26
19 c. The balance of hardships weighs in the
Commission’s favor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
20 d. The requested relief is in the public interest . . . . . . . . . . . . . 31
21
2. The Court Should Also Issue An Order
22 Redressing Injuries Caused By Defendants
And Respondents’ Numerous Order Violations . . . . . . . . . . . . . . 32
23
24 IV. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
25
26
27
28
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1 TABLE OF AUTHORITIES
2
Cases
3
American Home Prods. Corp. v. Johnson & Johnson,
4
654 F. Supp. 568 (S.D.N.Y. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5
Bala v. Idaho State Bd. of Corrections, 869 F.2d 461
6
(9th Cir. 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7
Castrol, Inc. v. Pennzoil Co., 799 F. Supp. 424 (D.N.J. 1992) . . . . . . . . . . . . . . 28, 32
8
Church & Dwight Co. v. S.C. Johnson & Son, 873 F. Supp. 893
9
(D.N.J. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10
Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187 (9th Cir. 1996) . . . . . . . . . . . . . . 32
11
FTC v. Affordable Media, LLC, 179 F.3d 1228 (9th Cir. 1999) . . . . . . . . . . . . . . . . 11
12
FTC v. Arlington Press, Inc., 1999-1 Trade Cas. (CCH) ¶ 72,415
13
(C.D. Cal. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 27
14
FTC v. California Pac. Research, Inc., 1991-2 Trade Cas. (CCH)
15
¶ 69,564 (D. Nev. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
16
FTC v. Chierico, Case No. 96-1754 (S.D. Fla. 1998),
17
aff'd sub nom. McGregor v. Chierico,
18
206 F.3d 1378 (11th Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
19
FTC v. Febre, No. 94 C.3625, 1996 WL 396117 (N.D. Ill. July 3, 1996),
20
adopted by, 1996 WL 556957 (N.D. Ill. Sept. 27, 1996),
21
aff’d, 128 F.3d 530 (7th Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
22
FTC v. Freedom Med., Inc., Case No. C2-95-510
23
(S.D. Ohio Nov. 7, 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
24
FTC v. Gill, 71 F. Supp. 2d 1030 (C.D. Cal. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
25
FTC v. Gill, 183 F. Supp. 2d 1171 (C.D. Cal. 2001), appeals dismissed,
26
No. 01-56650 (9th Cir. June 19, 2002), No. 01-56663
27
(9th Cir. July 2, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
28
- iv -
1 FTC v. Giving You Credit, Inc., Case No. 96 C 2088
2 (N.D. Ill. Mar. 4, 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3 FTC v. Pacific Med. Clinics Management, Inc., Case No. 90CV1277
4 (S.D. Cal. Mar. 10, 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5 FTC v. Paradise Palms Vacation Club, Case No. C81-1160 (V)
6 (W.D. Wash. June 29,1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7 FTC v. Pantron I Corp., 33 F.3d 1088 (9th Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . 18
8 FTC v. Productive Mktg., Inc., 136 F. Supp. 2d 1096
9 (C.D. Cal. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10 FTC v. Sabal, 32 F. Supp. 2d 1004 (N.D. Ill. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . 18
11 FTC v. SlimAmerica, Inc. 77 F. Supp. 2d 1263 (S.D. Fla. 1999) . . . . . . . . . . . . . 18, 23
12 FTC v. Sterling Drug, 317 F.2d 669 (2d Cir. 1963) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
13 FTC v. US Sales Corp., 785 F. Supp. 737, 745 (N.D. Ill. 1992) . . . . . . . . . . . . . . . . . 7
14 FTC v. World Wide Factors, Ltd., 882 F.2d 344 (9th Cir. 1989) . . . . . . . . . . . . . . . . 27
15 Gunn v. University Committee to End War, 399 U.S. 383,
16 90 S. Ct. 2013, 26 L. Ed. 2d 684 (1970) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
17 Harcourt Brace Javanovich Legal & Prof’l Publications
18 v. Multistate Legal Studies, Inc., 26 F.3d 948
19 (9th Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
20 Hutto v. Finney, 436 U.S. 678, 98 S. Ct. 2565,
21 57 L. Ed. 2d 522 (1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
22 In re Dual-Deck Video Cassette Antitrust Litig., 10 F.3d 693
23 (9th Cir. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
24 Iowa Utils. Bd. v. FCC, 109 F.3d 418 (8th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . 27
25 Jarrow Formulas, Inc. v. Nutrition Now, Inc., No. 01-55154
26 2002 WL 1163624 (9th Cir. June 4, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
27 McGregor v. Chierico, 206 F.3d 1378 (11th Cir. 2000) . . . . . . . . . . . . . . . . . . . . 24, 33
28
-v-
1 McNeilab, Inc. v. American Home Prods. Corp., 848 F.2d 34
2 (2d Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3 Miller v. California Pac. Med. Ctr., 19 F.3d 449 (9th Cir. 1994) . . . . . . . . . . . . . 26, 27
4 Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck
5 Consumer Pharmaceuticals Co., 129 F. Supp. 2d 351
6 (D.N.J. 2000), aff’d, 290 F.3d 578 (3d Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . 29
7 Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck
8 Consumer Pharmaceuticals Co., 290 F.3d 578
9 (3d Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30, 32
10 Petrolos Mexicanos v. Crawford Enters., Inc., 826 F.2d 392
11 (5th Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12 Removatron Int’l Corp. v. FTC, 884 F.2d 1489 (1st Cir. 1989) . . . . . . . . . . . . . . . . 18
13 Shillitani v. United States, 384 U.S. 364, 86 S. Ct. 1531,
14 16 L. Ed. 2d 622 (1966) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
15 Stone v. City & County of San Francisco, 968 F.2d 850
16 (9th Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
17 United States v. Odessa Union Warehouse Co-op, 833 F.2d 172
18 (9th Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
19 Upjohn Co. v. American Home Prods. Corp., 598 F. Supp. 550
20 (S.D.N.Y. 1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
21 Valu Eng’g v. Nolu Plastics, Inc., 732 F. Supp 1024
22 (N.D. Cal. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
23 W.L. Gore & Assoc., Inc. v. Totes, Inc., 788 F. Supp. 800
24 (D. Del. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
25
26
27
28
- vi -
1 Rules
2 Fed. R. Civ. P. 65(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3
4 Other Authorities
5 U.S. Dep’t of Health and Human Services, “The Surgeon
6 General’s Call to Action to Prevent and Decrease
7 Overweight and Obesity” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8 “Healthy People 2010,” Dep’t of Health and Human Services,
9 Office of Disease Prevention and Health Promotion . . . . . . . . . . . . . . . . . . . . . . 14
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
- vii -
1 I. INTRODUCTION
2 Plaintiff Federal Trade Commission (“Commission”) hereby respectfully
3 seeks a second Order to Show Cause in this case, along with a temporary
4 restraining order and a preliminary injunction, to stop the systematic and ongoing
5 dissemination of false and unsubstantiated advertising claims that are violative of
6 the Stipulated Final Order and Settlement of Claims for Monetary Relief as to
7 Defendants Enforma Natural Products, Inc. and Andrew Grey (the “Order”),
8 entered by the Court on May 11, 2000 (attached as Exhibit 1 to the Declaration of
9 David P. Frankel, “Frankel Decl. Ex. 1”).
10 The Order to Show Cause would require defendants Enforma Natural
11 Products, Inc. (“Enforma”) and Andrew Grey (“Grey”) and respondents Twenty-
12 Four Seven, LLC (“Twenty-Four Seven” or “24/7") and Donna DiFerdinando
13 (“DiFerdinando”) to explain why they should not be held in civil contempt for
14 violating the Order. Until the final resolution of the requested show cause
15 hearing, the Commission respectfully requests that the Court enter a temporary
16 restraining order, followed by a preliminary injunction, to prevent the
17 dissemination of various advertising, packaging and labeling claims and thereby
18 reduce the continuing consumer injury.
19 Among other things, the underlying Enforma Order prohibits defendants
20 and their agents, employees and all other persons or entities in active concert or
21 participation with them who receive actual notice of the Order from making
22 certain unsubstantiated claims in connection with the labeling, advertising,
23 promotion, offer for sale, sale, or distribution of certain of their products. For
24 the second time, defendants, acting in concert with respondents, have blatantly
25 disregarded the Order by making numerous unsubstantiated claims in connection
26 with the sale of purported weight loss products. This time, instead of making
27 unsubstantiated claims for Fat Trapper Plus and Exercise In A Bottle, defendants
28
-1-
1 and respondents are making unsubstantiated claims for Chitozyme and
2 Acceleron.1 As with the first civil contempt application, these ongoing
3 unsubstantiated claims go to the very heart of the Order entered by this Court.
4 Accordingly, the Commission respectfully requests that the Court order
5 both interim and final relief in this matter as follows. In order to protect the
6 consuming public from defendants and respondents’ ongoing, blatant,
7 unsubstantiated advertising and promotion of Chitozyme and Acceleron,
8 defendants and respondents should be required immediately and prior to the final
9 resolution of this matter to: (1) cease making and disseminating certain
10 unsubstantiated claims for Chitozyme and Acceleron, including via television
11 advertisements (or infomercials), via Internet web sites and via product packaging
12 and labels; and (2) recall, repackage or relabel any offending packages and labels
13 of these two products to ensure that the unsubstantiated claims are not
14 disseminated to consumers. In addition to the above, and as final relief in this
15 matter, defendants and respondents should be required to (1) account for and turn
16 over to the Commission for possible consumer redress or as a payment to the
17 U.S. Treasury all gross revenues, including shipping and handling revenues, they
18 have received from the sale of these products since the challenged claims were
19
20 1
Defendants and respondents may also be making unsubstantiated claims
21 concerning their Carb Trapper Plus products’ purported ability to reduce hunger,
22 appetite and cravings and to cause weight loss without reducing caloric intake or
23 exercise. However, the Commission has been unable to analyze sufficiently
defendants and respondents’ purported substantiation for Carb Trapper Plus
24 because they seriously delayed producing the relevant data that underlies the main
25 study relied upon and they continue to refuse to provide documents concerning
26 their communications with the author of that study. If, after analysis, the
Commission determines that claims for Carb Trapper Plus are also
27 unsubstantiated, it will file a supplemental contempt application requesting
28 appropriate findings and relief.
-2-
1 first disseminated to the public (after May 11, 2000); and (2) compensate the
2 Commission for its expenses in bringing and pursuing this application. A
3 proposed second order to show cause, including a temporary restraining order, is
4 lodged with this application.
5 II. STATEMENT OF FACTS
6 A. PROCEDURAL HISTORY
7 On January 4, 2002, the Commission filed its first application for civil
8 contempt in this case. It was filed against defendants Enforma Natural and
9 Andrew Grey and non-defendant Michael Ehrman. That application, which is
10 pending, concerns defendants and Ehrman’s post-Order advertising, promotion
11 and sale of “Fat Trapper Plus” and “Exercise In A Bottle” and alleges that
12 numerous claims (including those two trade names themselves) violate paragraphs
13 I, III, and IV of the Stipulated Final Order.
14 In March 2002, the Court approved the joint recommendation of the parties
15 to the first civil contempt proceeding and entered an Order Appointing David
16 Heber, M.D., Ph.D. as the Court-Appointed Expert in that proceeding. The parties
17 subsequently filed their separate lists of scientific issues that they felt the Court
18 should submit to Dr. Heber for his examination, analysis and opinions. The
19 Commission suggested eight issues and defendants and Ehrman suggested 18
20 issues. The docket in this case does not indicate that the Court has submitted
21 anything yet to Dr. Heber for his review.
22 B. DEFENDANTS AND RESPONDENTS’ LATEST
POST-ORDER CONDUCT
23
In May 2002, the Commission learned that two new infomercials, both
24
hosted by Kevin Trudeau, are being broadcast on television in the United States
25
for additional weight loss products formulated by defendants Enforma Natural and
26
Grey or by entities and individuals associated with them. These dietary
27
supplements are Chitozyme, Acceleron and Carb Trapper Plus. As described in
28
-3-
1 the “relationship diagram” that is attached to Frankel Decl. Ex. 2, two of these
2 products, Acceleron and Carb Trapper Plus have been sold directly by Enforma
3 Natural via its official Internet web site at www.enforma2000.com (Frankel Decl.
4 Ex. 10) and at retail under the Enforma name (Frankel Decl. Exs. 17-18 (Rite Aid
5 and CVS)). Acceleron and Carb Trapper Plus are also sold by 24/7, a California
6 corporation having three general partners: Enforma Natural, Grey and
7 Bonagenics, Inc., a Delaware corporation. See Frankel Decl. Exs. 3 and 4.
8 Defendant Grey is listed as the CEO of 24/7 and is also the President of
9 Bonagenics. Thus, defendant Grey appears to be the common thread connecting
10 Enforma Natural with 24/7. See id. The other product at issue in this second civil
11 contempt application, Chitozyme, does not appear to have been marketed under
12 Enforma Natural’s name, but only by 24/7. However, counsel for defendants and
13 respondents have informed the Commission that the product formula for
14 Chitozyme is exactly the same as the formula for Fat Trapper Plus,2 the chitosan-
15 based “miracle” pill that was the subject of the Order and is the subject of the
16 Commission’s first pending application for civil contempt.
17 In addition to 24/7, the only other new respondent in this second civil
18 contempt application is DiFerdinando. Respondent DiFerdinando appears in two
19 infomercials touting Chitozyme, Acceleron and Carb Trapper Plus. She is
20 identified there as the “Vice President for Research and Development” and the
21 “Product Developer,” but no corporate affiliation is disclosed.3 See Frankel Decl.
22
23
2
I.e., 350 mg of chitosan and 50 mg of psyllium husks. See Frankel Decl.
24
Ex. 14.
25
3
Because the Internet web site that advertises Chitozyme, Acceleron and
26
Carb Trapper Plus in combination is purported to be affiliated with 24/7 and these
27 are the same products respondent DiFerdinando touts in the two infomercials, it
28 is reasonable to conclude that respondent DiFerdinando is the Vice President for
-4-
1 Ex. 7 at 4:1-3, 5:1-2; Frankel Decl. Ex. 9 at 3:23-25, 4:17-18. Respondent
2 DiFerdinando is also the Director of Marketing for Enforma Natural.4 See
3 Frankel Decl. Ex. 5 at 25:13 to 27:6; Frankel Decl. Ex. 14; Frankel Decl. Ex. 23.
4 The post-Order advertising and packaging claims for Chitozyme and
5 Acceleron are strikingly similar to the claims that the Commission challenged in
6 its original complaint that led to the settlement containing various injunctive
7 provisions and the payment of $10 million as consumer redress.
8 1. Claims For Chitozyme
9 At the outset, it must be emphasized that Chitozyme is no more than the Fat
10 Trapper Plus product with a new name. Thus, it is not surprising that the two new
11 infomercials make claims for Chitozyme that mimic the fat trapping and weight
12 loss claims for Fat Trapper Plus presently pending before the Court in the
13 Commission’s first application for civil contempt. For example, in one of the
14 infomercials, consumers are enticed to purchase Acceleron and Carb Trapper
15 Plus for $39.95 plus shipping and handling by being offered a “free” bottle “of the
16 chitosan product, Chitozyme.” Infomercial host Kevin Trudeau asks
17 DiFerdinando, the purported Vice President for Research and Development for
18 the three products, what Chitozyme does. They then engage in the following
19 colloquy:
20
21
22 Research and Development of 24/7.
23 4
At this time, the Commission has no information concerning Michael
24 Ehrman’s involvement with the new claims being made for Chitozyme or
25 Acceleron. Thus, while he is named as a respondent in the first, pending contempt
26 application he has not been named as such in this second contempt application. If
during discovery Mr. Ehrman or others are deemed to be in active concert or
27 participation with defendants and they have actual notice of the Order, the
28 Commission reserves it right to seek to name them later.
-5-
1 DiFerdinando: It’s – it’s chitosan, which is a natural fiber and it helps to
2 trap fat. And when you’re trapping fat, you’re losing
3 weight. So, it’s just an added bonus.
4 Trudeau: And there’s some research, also, on chitosan, if you take
5 it to lose weight?
6 DiFerdinando: Oh, yes. Chitosan’s been studied for years now and
7 there’s lab studies, animal studies, human studies
8 that show both trapping fat and also a lot of weight
9 loss.
10 See Frankel Decl. Ex. 7 at 37:18 to 38:2 (emphasis added).
11 The two infomercials are replete with similar fat trapping and weight loss
12 claims for Chitozyme. See, e.g., id. at 19:23 to 20:22 (clinical studies conducted
13 over years show that Chitozyme “traps fat” and “promotes weight loss”); Frankel
14 Decl. Ex. 9 at 7:21-23 (“you also have a chitosan-based product that traps fat”),
15 11:25 to 12:4, 24:10-12 (Chitozyme “is a chitosan-based product for trapping
16 fat”), 39:2-19 (studies show that the chitosan in Chitozyme traps the fat from
17 fatty foods, such as cheeseburgers and ice cream, and promotes weight loss),
18 51:10-12 (Chitozyme “is a chitosan-based product for trapping fat”).5
19
20 5
The 24/7 web site describes Chitozyme as “a revolutionary fat trapping
21 product that promotes weight loss while letting you still eat your favorite foods
22 guilt free!” See Frankel Decl. Ex. 12. Similarly, the label for Chitozyme contains
23 a section titled, “SCIENTIFIC PROOF” which states in part:
24 Scientific experts have been studying chitosan’s ability to trap fat and
25 help promote weight loss for almost a decade. More than 15 human
26 studies, animal studies and in vitro studies exist indicating that
chitosan, the main ingredient in Chitozyme has the ability to trap fat,
27 promote weight loss and/or help maintain healthy cholesterol levels.
28
-6-
1 The infomercials clearly leave reasonable consumers with the net
2 impression that the weight loss Chitozyme produces occurs without the need for
3 dieting or exercise.6 Each infomercial repeatedly assures consumers that they
4 “can eat the types of foods that they enjoy” or “usually ate” or “want” (Frankel
5 Decl. Ex. 7 at 7:3-6, 25:22-24, 48:18-24; Frankel Decl. Ex. 9 at 7:24 to 8:3. The
6 infomercials explicitly illustrate this point by identifying various high fatty foods
7 that consumers can eat and still lose weight while taking these products, such as
8 cake, candy bars, cheesecake, chocolate, doughnuts, french fries, hamburgers, ice
9 cream, pies, pizza, and potato chips. Frankel Decl. Ex. 7 at 7:5-8, 34:5-8, 40:5-
10 10; Frankel Decl. Ex. 9 at 37:19 to 38:2, 39:3-10. Similarly, the infomercials
11 dismiss the need to exercise to lose weight with these products. See Frankel
12 Decl. Ex. 7 at 7:1-2, 24:12-19, 49:11-15; Frankel Decl. Ex. 9 at 32:5-6.
13
14
15
16 See Frankel Decl. Ex. 13 (emphasis in original).
17 6
It is well established that the court evaluates the net impression created
18 by the totality of the advertisement and not just any one isolated phrase or
19 element. See FTC v. Sterling Drug, 317 F.2d 669, 674 (2d Cir. 1963) (must
20 examine “the entire mosaic, rather than each tile separately”); FTC v. Gill, 71 F.
Supp. 2d 1030, 1043 (C.D. Cal. 1999) (“In deciding questions of ad
21 interpretation, the Court looks at the ‘overall net impression made by the
22 advertisement in determining what message may reasonably be ascribed to it.’”);
23 FTC v. Arlington Press, Inc., 1999-1 Trade Cas. (CCH) ¶ 72,415 at 83,889 (C.D.
Cal 1999) (court determines the “impression” created by advertising materials);
24 FTC v. Febre, No. 94 C. 3625, 1996 WL 396117 at *4 (N.D. Ill. July 3, 1996)
25 (magistrate judge recommendation), adopted by, 1996 WL 556957 (N.D. Ill.
26 Sept. 27, 1996), aff’d, 128 F.3d 530 (7th Cir. 1997) (relying on “the net
impression” to determine that ad communicated false claim); FTC v. US Sales
27 Corp., 785 F. Supp. 737, 745 (N.D. Ill. 1992) (court evaluates the “overall net
28 impression”).
-7-
1 2. Claims For Acceleron
2 a. Unsubstantiated efficacy claims
3 In the first infomercial, show host Trudeau and the purported product
4 developer, DiFerdinando, engaged in the following colloquy concerning the
5 purported proven efficacy of Acceleron:
6 Trudeau: So, this has been proven to increase metabolism?
7 DiFerdinando: Yes.
8 ....
9 Trudeau: Okay, well, this is my question. This has been proven
10 to increase metabolism.
11 DiFerdinando: Yes.
12 Trudeau: Which means you’ll burn more calories.
13 DiFerdinando: Right.
14 Trudeau: Is there any research that says if you take this, you’ll
15 also lose weight?
16 DiFerdinando: Well, the only way that you can lose weight is to burn
17 more calories than you’re taking in.
18 Trudeau: Un-hum.
19 DiFerdinando: That’s the only way you’re going to lose weight. This
20 will help you, at least, burn those calories more. Now,
21 the other product, Carb Trapper Plus, why we sell it
22 together, will help you eat less because it’s – it curbs
23 your appetite and curbs your carving [sic].
24 See Frankel Decl. Ex. 7 at 9:12 to 10:15 (emphasis added). See also id. at 26:3-
25 16, 45:18-21, Frankel Decl. Ex. 9 at 16:7 to 17:3, 23:3-16, 37:8-17, 40:18-23,
26 48:5-14, 49:21 to 50:25.
27
28
-8-
1 During the first infomercial, one testimonialist, Christen Hulse, described
2 how she lost 20 pounds and 8 dress sizes in only two months while using
3 Acceleron and Carb Trapper Plus. See Frankel Decl. Ex. 7 at 20:24 to 24:24.
4 Further, Ms. Hulse stated that she achieved these remarkable results without
5 engaging in any dieting or exercise: “No, not at all [did I go on a crazy diet] . . . . I
6 didn’t even exercise. I wasn’t exercising at all. All I was doing was taking the
7 pills.” See id. at 24:12-21. Indeed, as previously discussed, the net impression
8 of both infomercials is that the weight loss that results from the use of the
9 Acceleron product is not dependent on adherence to any diet or exercise program.
10 See pages 6-7, supra.7
11
12 7
Another testimonialist from the first infomercial, Lisa Mansfield, stated
13 that while she used Carb Trapper Plus, she mostly used Acceleron, especially
14 after she “started losing so much weight.” See Frankel Decl. Ex. 7 at 42:7-10.
15 Many of these claims are also contained on packages for Acceleron sold at
16 retail outlets. Acceleron packaging contains such claims as: (1) “TURN UP
17 YOUR METABOLISM – BURN MORE CALORIES”; (2) “ADVANCED
METABOLIC FORMULA FOR DIET AND ENERGY”; (3) “Increases
18 Metabolism”; and (4) “Burns Calories.” See Frankel Decl. Ex. 15. The 24/7 web
19 site goes even further. Under a section titled, “SCIENTIFICALLY PROVEN,” it
20 states:
21 Acceleron™ has been shown in a recent study to increase
22 metabolism without causing harmful side effects. Increasing
23 metabolic rate will help the body burn more calories. Three
additional scientific studies showed that the main ingredients in
24 Acceleron increased metabolism without causing harmful side
25 effects.
26
See Frankel Decl. Ex. 12. One version of Enforma Natural’s web site referred to
27 Acceleron as:
28 “***THE NEW NON-EPHEDRA***
-9-
1 b. False claims concerning study results
2 Product packaging for Acceleron that is presently on retail store shelves
3 contains the following statement:
4 SCIENTIFIC AND SAFETY STUDIES: A recent double-blind
placebo controlled study, indicated that Acceleron™ increases
5 metabolism and burns more calories without causing harmful side
effects. A second study containing nine individuals published in
6 Current Therapeutic Research, showed that subjects using the main
ingredients in Acceleron™ lost significantly more weight than
7 subjects who did not. Negative side effects such as increase in blood
pressure, palpitations or tremor did not occur with subjects in the
8 study. Two other studies conducted at the McGill Nutrition and Food
Science Center showed that the main ingredient in Acceleron™
9 caused a measurable increase in rested metabolic rate indicating that
the compound causes an increase in calorie burning. Heart rates and
10 blood pressure of all subjects remained constant throughout the
entire study.
11
See Frankel Decl. Ex. 15. As is described at pages 23-24 infra, much of this
12
summary of purported science is simply false and is directly in violation of
13
Paragraph IV of the Order.
14
These advertisements, particularly the two new infomercials, continue to be
15
disseminated to consumers even after infomercial host Kevin Trudeau has
16
requested their cessation. See Frankel Decl. Exs. 19 and 20.
17
Although defendants and respondents have submitted purported
18
substantiation, they have not provided any competent and reliable evidence to
19
support the claims made above, and therefore are in contempt of court for their
20
actions in advertising and promoting Chitozyme and Acceleron.
21
III. LEGAL ARGUMENT
22
Courts possess the inherent authority to enforce compliance with their
23
orders through civil contempt. See, e.g., Gunn v. University Committee to End
24
War, 399 U.S. 383, 389, 90 S. Ct. 2013, 2016-17, 26 L. Ed. 2d 684, 688-89
25
26
WEIGHT LOSS ALTERNATIVE.”
27
28 See Frankel Decl. Ex. 11.
- 10 -
1 (1970); Shillitani v. United States, 384 U.S. 364, 370, 86 S. Ct. 1531, 1535-36,
2 16 L. Ed. 2d 622, 627 (1966). To establish liability for civil contempt, the
3 plaintiff must show by clear and convincing evidence that the defendant has
4 violated a specific and definite order of the court. FTC v. Affordable Media,
5 LLC, 179 F.3d 1228, 1239 (9th Cir. 1999). Clear and convincing evidence
6 requires proof by more than a preponderance of the evidence but less than proof
7 beyond a reasonable doubt. See, e.g., Bala v. Idaho State Bd. of Corrections,
8 869 F.2d 461, 466 (9th Cir. 1989). The burden is on the complainant to
9 demonstrate by clear and convincing evidence that the defendant is in contempt;
10 then the burden shifts to the contemnor to demonstrate why he was unable to
11 comply. Affordable Media, 179 F.3d at 1239. The contemnor must show he
12 took every reasonable step to comply. Stone v. City & County of San Francisco,
13 968 F.2d 850, 856 n.9 (9th Cir. 1992).
14 The elements that must be proven to establish civil contempt are: (1) the
15 existence of a court order; (2) the order either prohibited or required certain
16 conduct by the alleged contemnor; and (3) the alleged contemnor failed to
17 comply with such order. Petrolos Mexicanos v. Crawford Enters., Inc., 826 F.2d
18 392, 401 (5th Cir. 1987). The failure to comply need not be willful, and may in
19 fact consist of a party’s failure to take all reasonable steps within its power to
20 comply. In re Dual-Deck Video Cassette Antitrust Litig., 10 F.3d 693, 695 (9th
21 Cir. 1993). The Ninth Circuit has also stated: “Intent is irrelevant to a finding of
22 civil contempt and, therefore, good faith is not a defense.” Stone, 968 F.2d at
23 856.
24 A. CLEAR AND CONVINCING EVIDENCE PROVES EACH OF
THE ELEMENTS ESTABLISHING DEFENDANTS AND
25 RESPONDENTS’ CIVIL CONTEMPT
26 1. Defendants And Respondents Are Bound By A Valid,
Effective Order
27
28
- 11 -
1 The Order entered by this Court on May 11, 2000 is a valid court order
2 that requires defendants and respondents to have competent and reliable scientific
3 substantiation for certain types of claims and prohibits them from
4 misrepresenting the results of scientific tests or studies in their advertisements.
5 Federal court injunctions bind not only the parties but also “those persons in
6 active concert or participation with them who receive actual notice of the order
7 by personal service or otherwise.” Fed. R. Civ. P. 65(d). Given defendants
8 Enforma Natural and Grey’s role in 24/7, and 24/7's role in selling Chitozyme and
9 Acceleron, 24/7 is clearly in active concert with defendants. Likewise,
10 respondent DiFerdinando is employed by defendant Enforma Natural and is
11 therefore in active concert with it. On September 19, 2000, DiFerdinando
12 acknowledged that she was a person having responsibilities with respect to the
13 subject matter of the Order and that she received a copy of the Order within the
14 prescribed time frame. See Frankel Decl. Ex. 23.8 As Enforma’s Director of
15 Marketing and as a star in both infomercials, she clearly is in active concert or
16 participation with defendants Enforma and Grey with actual notice of the Order
17 and its terms. Thus, she is also bound by the Order.
18 2. The Order Requires Certain Substantiation And Prohibits
Certain Misrepresentations By Defendants And
19 Respondents
20 Paragraph I of the Order specifically enjoins defendants and respondents
21 from disseminating certain specified express or implied claims unless they
22 possess “competent and reliable scientific evidence that substantiates the
23 representation[s].” Frankel Decl. Ex. 1 (Order ¶ I).9 The express and implied
24
25 8
DiFerdinando’s “acknowledgment” form was required by Paragraph IX of
26 the Order.
27 9
“Competent and reliable scientific evidence” is defined in the Order to
28 mean “tests, analyses, research, studies, or other evidence based on the expertise
- 12 -
1 claims covered by Paragraph I include claims that the products (a) enable
2 consumers to lose weight, avoid weight gain or maintain weight loss without the
3 need for a restricted calorie diet or exercise; (b) prevent the absorption of fat in
4 the human body; (c) increase metabolism at the cellular level, burns sugar or
5 carbohydrates before they turn to fat, or burns off fat already in the human body;
6 or (d) enable consumers to lose weight even if consumers eat foods high in fat,
7 including fried chicken, pizza, cheeseburgers, butter, and sour cream. Id.
8 Paragraph II of the Order enjoins defendants and respondents from
9 advertising that their products enable consumers to lose weight, avoid gaining
10 weight or maintain weight loss unless they disclose clearly and prominently that
11 reducing caloric intake and/or increasing exercise is required to lose weight. Id.
12 ¶ II. This provision further requires that in video ads of fifteen minutes or longer,
13 the required disclosure must be displayed within the first 30 seconds of the ad and
14 immediately before each presentation of ordering instructions for the product.
15 Id. ¶ II.C.
16 Paragraph III of the Order enjoins defendants and respondents from
17 disseminating express or implied representations concerning weight loss
18 benefits, performance or efficacy of certain of their products, unless they
19 possess “competent and reliable scientific evidence that substantiates the
20 representation[s].” Id. ¶ III.
21 Paragraph IV of the Order prohibits defendants and respondents from
22 “misrepresenting, in any manner, expressly or by implication, the existence,
23
24 of professionals in the relevant area, that have been conducted and evaluated in an
25 objective manner by persons qualified to do so, using procedures generally
26 accepted in the profession to yield accurate and reliable results.” See Frankel
Decl. Ex. 1 at 3. Thus, studies and reports offered by Enforma as support are not
27 necessarily adequate “substantiation;” they must fit the above criteria of
28 reliability.
- 13 -
1 contents, validity, results, conclusions or interpretations of any test, study, or
2 research.” Id. ¶ IV.
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
- 14 -
1 3. Defendants And Respondents Failed To Comply With The
Order
2
Defendants and respondents have blatantly ignored the core conduct
3
provisions of the Order by: (a) ignoring Paragraph II of the Order and failing to
4
display in the two new infomercials the required disclosure that reduced caloric
5
intake or increased exercise is required to lose weight; (b) making numerous
6
unsubstantiated claims for their newer products, Chitozyme and Acceleron; and
7
(c) misrepresenting the results of studies. These flagrant, consistent and
8
pervasive transgressions of the Order have caused, and will continue to cause,
9
additional monetary injury to vulnerable consumers who seek the elusive miracle
10
pill that will permit them to enjoy calorie-laden foods without experiencing the
11
weight gain that such foods typically cause.10 Defendants and respondents persist
12
13
10
14 In 1999, an estimated 61 percent of all U.S. adults were overweight or
obese. Overweight and obesity are increasing in both genders and among all
15 population groups. Overweight and obesity substantially raise the risk of illness
16 from high blood pressure, high cholesterol, type 2 diabetes, heart disease and
17 stroke, gallbladder disease, arthritis, sleep disturbances and problems breathing,
and certain types of cancers. Approximately 300,000 deaths a year in this country
18 are currently associated with overweight and obesity. Obese individuals also may
19 suffer from social stigmatization, discrimination, and lowered self-esteem. The
20 number of overweight children, adolescents, and adults has risen over the past
four decades. Today there are nearly twice as many overweight children and
21 almost three times as many overweight adolescents as there were in 1980. In
22 1995, the total (direct and indirect) costs attributed to obesity amounted to an
23 estimated $99 billion, and had risen to an estimated $117 billion in 2000 ($61
billion direct and $56 billion indirect). See “Healthy People 2010,” Dep’t of
24 Health and Human Services, Office of Disease Prevention and Health Promotion,
25 http://www.health.gov/healthypeople/Document/HTML/Volume2/
26 19Nutrition.htm; U.S. Dep’t of Health and Human Services, “The Surgeon
General’s Call to Action to Prevent and Decrease Overweight and Obesity,”
27 http://www.surgeongeneral.gov/topics/obesity/calltoaction/CalltoAction.pdf
28 (released Dec. 13, 2001).
- 15 -
1 in using express and strongly implied claims to continue to spread the same
2 messages that led to the original Order – that with Chitozyme, consumers can eat
3 fatty foods without fear that the fat will be absorbed by the body and lose “a lot of
4 weight,” and that with Acceleron, consumers can increase their metabolism and
5 thereby lose weight.
6 a. Defendants and respondents have failed to include
the Court-ordered disclosure into the two new
7 infomercials
8 Paragraph II of the Order enjoins defendants and those in active concert or
9 participation with them from advertising that a product enables consumers to lose
10 weight, avoid gaining weight or maintain weight loss unless they disclose clearly
11 and prominently that reducing caloric intake and/or increasing exercise is
12 required to lose weight. This provision further requires that in video ads of
13 fifteen minutes or longer, the required disclosure must be displayed within the
14 first 30 seconds of the ad and immediately before each presentation of ordering
15 instructions for the product.11
16 Despite this very clear Order provision, neither of the two new
17 infomercials contains the required disclosure. This flagrant, unambiguous
18 violation of the Order requires no analysis by experts and is – in and of itself – a
19 completely separate justification for the issuance of a temporary restraining
20 order.
21
22
23
24 11
The mere addition of the specified disclosure at the intervals required by
25 the Order would not change the net impression that the advertised products cause
26 weight loss without diet or exercise. The numerous references to the ability to
eat the foods that consumers “enjoy,” “want,” or “usually” eat, the repetition of
27 those foods by name, and the touted lack of any need to exercise creates an
28 overwhelming net impression that diet and exercise are not required.
- 16 -
1 b. Defendants and respondents have no competent and
reliable scientific evidence supporting their claims
2 that Chitozyme traps fat in the human body
3 In its January 4, 2002, first application for civil contempt, the Commission
4 filed two declarations from its outside expert, David Levitsky, Ph.D., a professor
5 in the Division of Nutritional Sciences and the Department of Psychology at
6 Cornell University. Those declarations discussed in detail Dr. Levitsky’s opinion
7 that defendants possessed no competent and reliable scientific substantiation for
8 the claim that Fat Trapper Plus trapped or absorbed fat in the human body. Since
9 Chitozyme is identical to Fat Trapper Plus, the Commission incorporates and
10 relies upon those two declarations (Docket Nos. 42, 53) as its primary evidence
11 that the identical claim for Chitozyme is likewise unsubstantiated.
12 In the interim, counsel for defendants have provided the Commission with
13 one additional study of Fat Trapper Plus that purports to show that consumption of
14 that product, in dosages higher than most consumers would likely consume,12
15 results in increased fat absorption as measured by fecal fat excretion. However, it
16 is Dr. Levitsky’s opinion that this new study was ineptly reported, improperly
17 conducted, in that it excluded data from some subjects who completed the study,
18 and incorrectly statistically analyzed. Levitsky Decl. ¶¶ 4-6. In fact, when
19 properly analyzed, the data do not show the statistical significance required for
20 scientists to conclude that the treatment had any effect. See id. at ¶ 5. This
21 newly-produced study neither refutes nor undercuts the results of the two
22 previous fecal fat studies of Fat Trapper Plus that failed to show the product had
23
24
12
25 The tested dosage was six capsules prior to each of three daily meals.
26 Levitsky Decl. Ex.1. The Fat Trapper Plus package recommends taking three to
six capsules prior to “eating any high-fat meals.” Thus, unless consumers both eat
27 three high-fat meals daily and take the maximum dose each time, this study tested
28 a higher dosage than consumers will consume.
- 17 -
1 any effect on fat excretion. Id. The fat trapping claim for Chitozyme is
2 unsubstantiated and therefore violates Paragraphs I and III of the Order.
3 c. Defendants and respondents have no competent and
reliable evidence that Chitozyme causes substantial
4 weight loss without diet or exercise
5 The infomercials very clearly connect Chitozyme’s purported ability to trap
6 fat to the logical benefit of reduced fat absorption – weight loss. For example,
7 Ms. DiFerdinando states, “when you’re trapping fat, you’re losing weight” and
8 Chitozyme results in “a lot of weight loss.” Frankel Decl. Ex. 7 at 37:20 to
9 38:2.13 As is discussed in detail in Dr. Levitsky’s declaration (¶¶ 8-32), none of
10 the studies defendants have submitted to the Commission provide competent and
11 reliable scientific substantiation of the claim that Chitozyme will result in
12 substantial weight loss without diet or exercise.14 Id. at ¶ 8. At the outset, the
13 purported substantiation defendants submitted for this claim is marred by the
14 absence of any weight loss study actually testing the Chitozyme product itself. It
15 is just such a well-designed study of the product itself that qualified scientists
16 would consider to be appropriate substantiation for such a claim. Id.
17 Rather than proffer a study of Chitozyme (or Fat Trapper Plus), defendants
18 rely upon various published and unpublished studies of chitosan, the primary (by
19 volume) constituent of Chitozyme. Those studies do not provide competent and
20
21 13
In this connection, even if the newly produced Fat Trapper Plus fecal fat
22 study (Levitsky Decl. Ex. 1) was properly conducted and analyzed, Dr. Levitsky
23 calculated that it showed a reduction of only an additional 3.1 grams of fat
24 absorbed each day. At that rate, it would take approximately 125 days to lose one
pound of body weight from reduced fat absorption. Levitsky Decl. ¶ 7.
25
14
There can be no doubt that the infomercials are promising “substantial”
26
weight loss with Chitozyme when they say that “human studies . . . show both
27 trapping fat and also a lot of weight loss.” Frankel Decl. Ex. 7 at 38:1-2
28 (emphasis added).
- 18 -
1 reliable scientific support for the substantial weight loss without diet and exercise
2 claim. Most notably, there are three randomized clinical control trials published
3 in peer reviewed scientific journals that test the weight loss effect of chitosan
4 under the conditions that defendants and respondents advertise it, without
5 modification of consumers’ normal diet. None of those studies show that
6 chitosan had any scientifically measurable weight loss effect under those
7 conditions. Levitsky Decl. ¶¶ 9-11. These studies constitute strong evidence that
8 the Chitozyme weight loss without diet claim is not substantiated.15
9
10 15
The published literature contains one other double-blind chitosan weight
11 loss study in which subjects were not placed on a restricted calorie diet. See
Levitsky Decl. ¶¶ 12-15. That study failed to present a statistical analysis of the
12
difference in weight loss between the chitosan and placebo groups, thereby
13 making it inconclusive regarding the effect, if any, of chitosan in that study. See
14 id. ¶ 12. Additionally, one of the statistical analyses that was presented was
wrong, the reported data was internally inconsistent, and the data showed that the
15 chitosan group, on the whole, did not lose any fat. Id. ¶¶ 12-14. Accordingly,
16 this study provides no reliable data supporting the challenged Chitozyme weight
17 loss claim. Id. at 14. Likewise, the remaining studies defendants have relied upon
as support for this weight loss claim are seriously flawed and do not constitute a
18 scintilla of competent and reliable scientific substantiation for that claim. See id.
19 ¶¶ 16-20. In fact, two of those studies were not double-blind, placebo-controlled
20 studies. See id. ¶¶ 16-17, 19-20.
21 The courts have held that double-blind, placebo-controlled studies are
22 required to provide adequate substantiation for advertising claims, including
23 claims for dietary supplements. See, e.g., FTC v. Pantron I Corp., 33 F.3d 1088,
1097-98 (9th Cir. 1994) (placebo-control required for hair growth product);
24 Removatron Int’l Corp. v. FTC, 884 F.2d 1489, 1500 (1st Cir. 1989) (double-
25 blind studies for cosmetic hair removal treatment); FTC v. SlimAmerica, Inc. 77
26 F. Supp. 2d 1263, 1274 (S.D. Fla. 1999) (“Scientific validation of the defendants’
product claims [a chitosan weight loss product] requires a double blind study of
27 the combination of ingredients used in [the product].”) (emphasis added); FTC v.
28 Sabal, 32 F. Supp. 2d 1004, 1008-09 (N.D. Ill. 1998) (rejecting study as
- 19 -
1 Lastly, defendants have proffered as substantiation a group of studies that
2 test chitosan in a manner that is totally contrary to the way they market
3 Chitozyme. Specifically, they rely upon studies that test chitosan taken in
4 conjunction with severely restricted calorie diets ranging from 950 to 1200
5 calories per day, and assert that such results show what happens when consumers
6 take Chitozyme without varying from their normal diet. That extrapolation does
7 not constitute competent and reliable scientific evidence of the effect that will
8 occur on non-dieting consumers because the human body responds metabolically
9 differently when placed on a restricted calorie diet. Levitsky Decl. ¶ 21. Thus,
10 none of these studies can substantiate the challenged weight loss without dieting
11 claim. Id.
12 The published studies in this genre were all published in one Italian journal,
13 and are missing such fundamental data or contain such fundamentally unsupported
14 conclusions as to raise serious questions regarding whether the journal is even
15 peer reviewed.16 See Levitsky Decl. ¶¶ 22-27. Moreover, four of the six
16 published articles failed to report the most fundamentally important data, the
17 dosage of chitosan given the subjects. Without such data, a scientist cannot tell if
18 the dosage was similar to the chitosan content of Chitozyme or many times
19 greater. See id. at ¶ 23. This flaw alone renders them incapable of scientifically
20
21
22
23
24 substantiation, in part, because it was not blinded or placebo-controlled); FTC v.
California Pac. Research, Inc., 1991-2 Trade Cas. (CCH) ¶ 69,564 at 66,503 (D.
25 Nev. 1991) (only placebo-controlled, double-blind clinical studies meet “the
26 most basic and fundamental requirements for scientific validity and reliability”).
27 16
The Cornell University library could not locate this journal on any list of
28 peer reviewed scientific journals. Levitsky Decl. ¶ 22.
- 20 -
1 substantiating the Chitozyme weight loss claim at issue here.17 Id. These studies
2 are otherwise flawed as well, and in toto, cannot scientifically substantiate
3 defendants and respondents’ Chitozyme substantial weight loss without diet
4 claims.18 See id. at ¶¶ 21-28. In short, although defendants and respondents may
5 point to studies of chitosan, those studies either fail to report a weight loss
6 effect, are severely flawed, or test chitosan under inapplicable conditions, and, as
7 such, cannot constitute scientific substantiation for the challenged weight loss
8 claim.
9 Because defendants and respondents have made unsubstantiated claims that
10 Chitozyme allows consumers to lose weight without the need to diet or exercise,
11 they have violated Paragraphs I and III of the Order.
12 d. Defendants and respondents have no competent and
reliable evidence that Acceleron increases
13 metabolism
14 In the challenged advertising, Acceleron is repeatedly touted as a pill that
15 has been “proven” to “speed up” metabolism and “burn more calories.”
16 Metabolism is related to weight loss, and when a product is touted as “increasing
17 metabolism,” consumers understand that this product is promising weight-loss.
18 Indeed, “increasing metabolism” merely describes the mechanism of action by
19
17
20 The remaining two Italian studies gave chitosan dosages but failed to
21 provide a statistical analysis of the difference in weight loss between the chitosan
and placebo groups. Levitsky Decl. ¶¶ 24-26. The omitted statistical analysis is
22 the only one that would constitute scientifically valid evidence regarding whether
23 the chitosan actually caused an effect. Id. ¶ 25.
24 18
Defendants have submitted three other unpublished chitosan weight loss
25 studies that employ various forms of restricted calorie diets as well. Dr. Levitsky
26 opines that all are either flawed, fail to report statistically significant results, or
are so incomplete in their data reporting as to fail to provide any competent and
27 reliable scientific evidence supporting the Chitozyme weight loss claim. See
28 Levitsky Decl. ¶¶ 29-32.
- 21 -
1 which such a product will cause weight loss.19 As discussed infra, there is no
2 competent and reliable evidence that Acceleron causes weight loss, and as set
3 forth below, there is no such evidence that Acceleron increases metabolism.
4 It is well-established that if one can significantly increase their metabolic
5 rate and maintain that increased rate over time, the body will burn calories at an
6 increased rate and it is likely that some weight loss will likely occur. Id. ¶ 45.
7 Defendants and respondents have claimed that Acceleron will cause just such a
8 significant metabolic increase; however, their studies are insufficient to support
9 such claims.
10 As detailed in Dr. Levitsky’s declaration, none of the studies relied upon
11 by defendants and respondents support the claim that Acceleron increases
12 metabolism. Id. ¶¶ 45-59. The primary problem with the studies is the failure to
13 measure metabolism over any significant period of time. Metabolism should be
14 measured over a longer period of time because metabolic measurements can
15 fluctuate a great deal in the short-term based upon an enormous variety of factors.
16 For example, if someone is startled or eats a meal, their metabolism increases –
17 but this does not mean that these activities will cause weight loss. Moreover, very
18 often, there is a compensatory decline in metabolism that follows the metabolic
19 increase, thereby negating that short term increase. A mere short-term increase
20 in metabolism will not cause any weight loss. Id. ¶ 45.
21 The only study seemingly conducted on the actual Acceleron product (the
22 unpublished “Kaats study”) measured metabolism approximately one to two hours
23 after the subjects consumed either the treatment or placebo. Measuring
24 metabolism at one point in time, one hour after an intervention, is wholly
25
26 19
The infomercials very clearly make this connection between increasing
27 metabolism and burning more calories. See, e.g., Frankel Decl. Ex. 7 at 6:1-11;
28 Frankel Decl. Ex. 9 at 16:7 to 17:13.
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1 inadequate to demonstrate that such intervention caused any measurable, overall
2 metabolic change. Id. ¶ 49. Furthermore, this study is flawed because of the
3 substantial differences between the active and placebo groups at baseline – the
4 treatment group was nine pounds heavier, and the placebo group had a baseline
5 metabolic rate that was over 220 calories per day higher than the active group. Id.
6 ¶ 50.
7 The remaining studies relied upon by defendants and respondents for the
8 metabolism claims are similarly flawed for the reasons set forth in detail in Dr.
9 Levitsky’s declaration. Id. ¶¶ 52-58. In summary, these studies measured
10 metabolism over an insufficient period of time and failed to use adequate
11 controls. Further, any difference in metabolism observed in the studies was
12 clinically insignificant for purposes of weight loss, even if one were to assume
13 that the effect would persist beyond the period measured.20 Id. ¶ 56. Thus,
14 despite defendants and respondents’ claims, there is no reliable and competent
15 evidence supporting the contention that Acceleron or its active ingredient
16 increases metabolism, and they are in violation of Paragraphs I and III of the
17 Order.
18 e. Defendants and respondents have no competent and
reliable evidence that Acceleron causes weight loss
19
As discussed in Section II.B.2, supra, the net impression of the
20
infomercials is that Acceleron causes weight loss without the need to diet or
21
exercise. In fact, according to Dr. Levitsky’s analysis of the studies relied upon
22
by defendants and respondents, they have no reliable scientific evidence that
23
Acceleron causes any weight loss. Levitsky Decl. ¶¶ 33 to 44. Of the five
24
primary studies relied upon by defendants and respondents, only one analyzed
25
26
27 20
The authors state that the clinical benefit remains to be demonstrated.
28 Levitsky Decl. Ex. 14 at 00123.
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1 body weight in humans.21 As detailed in the Declaration of Dr. Levitsky, this
2 study (the “Colker study”) does not support weight loss claims for Acceleron.
3 First, it used a dosage of active ingredient (citrus aurantium) that is much higher
4 than that found in Acceleron and contained an ingredient that is not in Acceleron.
5 Moreover, Acceleron contains several ingredients that were not in the test
6 compound studied in the Colker study. It is not scientifically acceptable to draw
7 conclusions about one product based on the results of a study of a second product
8 when there are such differences between the active ingredients and their dosage.
9 Id. ¶ 39. See SlimAmerica, 77 F. Supp. 2d at 1274.
10 Second, the appropriate statistical analysis in a placebo-controlled study
11 compares the change in weight for the active group to the change for the placebo
12 group. The Colker study indicates that such an analysis failed to find any
13 statistically significant difference in weight loss between the active and placebo
14 group. Accordingly, the only study offered as substantiation that purports to
15 measure weight loss fails to provide any support for a weight loss claim.
16 Finally, the subjects in this study were put on a restricted calorie diet and
17 exercise program, a crucial fact that defendants and respondents failed to note
18 when describing this study on the most recent version of the Acceleron
19 packaging.22 Id. ¶ 42. These factors alone make it impossible to draw reliable
20
21 21
Another study relied upon by defendants and respondents looked at the
22 antiobesity effects of Acceleron’s active ingredient on rats. It is not directly
23 relevant to the ability of Acceleron to cause weight loss in humans. Even if it
24 could be extrapolated to humans, defendants and respondents fail to note that the
rats given the product suffered a high rate of cardiovascular toxicity and death,
25 ranging from 10-50%, depending on dosage.
26 22
Earlier versions of the Acceleron packaging conceded that this study and
27 others cited were only “preliminary findings.” Such preliminary studies do not
28 support the absolute effectiveness claims touted in the infomercials.
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1 scientific conclusions about the efficacy of Acceleron when used as advertised in
2 the infomercials.
3 This weight loss study – conducted on a product that differs substantially
4 from Acceleron – does not constitute competent and reliable evidence that
5 Acceleron causes weight loss. See id. ¶¶ 36-44. Defendants and respondents
6 have therefore violated Paragraphs I and III of the Order.
7 f. Defendants and respondents have falsely claimed
that clinical studies demonstrate that Acceleron
8 causes weight loss
9 The most recent packaging for Acceleron states, inter alia, that the Colker
10 study “showed that subjects using the main ingredients in Acceleron™ lost
11 significantly more weight than subjects who did not.” Frankel Decl. Ex. 15. This
12 is a false statement for two reasons. First, as Dr. Levitsky explains, the Colker
13 study failed to find any statistically significant difference in weight loss between
14 the active and placebo groups. Levitsky Decl. ¶ 41. Second, the packaging fails
15 to mentions that subjects in this study were on a calorie-restricted diet and
16 participated in a regular exercise program – essential facts when interpreting the
17 applicability of the study to the product claims. Id. ¶ 42. Accordingly, defendants
18 and respondents have violated Paragraph IV of the Order which prohibits
19 “misrepresent[ing], in any manner, expressly or by implication, the existence,
20 contents, validity, results, conclusions or interpretations of any test, study, or
21 research.”
22 B. THE COURT SHOULD ISSUE A TEMPORARY RESTRAINING
ORDER, FOLLOWED BY A PRELIMINARY INJUNCTION,
23 AND IMPOSE OTHER SANCTIONS TO PROTECT THE
PUBLIC FROM FURTHER CONTINUING INJURIES, TO
24 COERCE COMPLIANCE WITH THE ORDER AND TO
COMPENSATE PAST VIOLATIONS
25
District courts are afforded wide discretion in determining appropriate
26
sanctions for civil contempt. McGregor v. Chierico, 206 F.3d 1378, 1385 n.5
27
(11th Cir. 2000). Sanctions in civil contempt serve two purposes – to coerce the
28
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1 defendant into compliance with the Court’s order and to compensate for losses
2 sustained as a result of the contumacious behavior. FTC v. Productive Mktg.,
3 Inc., 136 F. Supp. 2d 1096, 1112 (C.D. Cal. 2001). Thus, the Court may impose
4 in its civil contempt citation an order awarding consumer redress based on the
5 amount of gross sales of a product. McGregor, 206 F.3d at 1387-88. Several
6 courts have in fact granted ex parte provisional relief in civil contempt
7 proceedings brought by the Commission.23 In this case, defendants and
8 respondents’ past and continuing violations of the Order warrant stringent
9 sanctions to put an end to their current violations and to compensate for prior
10 infractions.
11 1. Temporary and Preliminary Injunctive Relief Is
Appropriate
12
Because the consumer injury caused by defendants and respondents’
13
ubiquitous and unsubstantiated advertising, packaging and labeling claims is
14
ongoing and cannot be remedied after the fact, the Commission respectfully
15
requests that the Court issue a temporary restraining order, followed by a
16
17
18 23
See FTC v. Chierico, Case No. 96-1754 (S.D. Fla. 1998), aff'd sub nom.
19 McGregor v. Chierico, 206 F.3d 1378 (11th Cir. 2000) (ex parte order pending
20 contempt hearing freezing assets, appointing temporary receiver, allowing
immediate access to defendants' premises, and allowing expedited discovery);
21 FTC v. Giving You Credit, Inc., Case No. 96 C 2088 (N.D. Ill. Mar. 4, 1997) (ex
22 parte TRO pending contempt hearing ordering asset freeze, immediate access to
23 premises, expedited discovery and other equitable relief); FTC v. Freedom Med.,
Inc., Case No. C2-95-510 (S.D. Ohio Nov. 7, 1995) (ex parte order pending
24 contempt hearing permitting immediate access to premises and continuing asset
25 freeze); FTC v. Paradise Palms Vacation Club, Case No. C81-1160 (V) (W.D.
26 Wash. June 29,1992) (ex parte TRO pending a contempt hearing ordering asset
freeze, immediate access to premises and other equitable relief); FTC v. Pacific
27 Med. Clinics Management, Inc., Case No. 90CV1277 (S.D. Cal. Mar. 10, 1992)
28 (ex parte order pending contempt hearing ordering asset freeze).
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1 preliminary injunction, requiring the immediate and complete cessation of (1) the
2 dissemination of the two new infomercials; (2) various claims being made on
3 Enforma and 24/7's Internet web sites; and (3) similar claims made on product
4 packaging and labeling for Chitozyme and Acceleron. Moreover, since Acceleron
5 is being sold at retail throughout the United States, all packaging and labeling for
6 that product that contains unsubstantiated claims should also be removed from the
7 marketplace immediately.
8 In order to obtain a preliminary injunction, the moving party must show
9 that: (1) it is likely to succeed on the merits; (2) there is a possibility of
10 irreparable harm; (3) the balance of hardships weighs in its favor; and (4) issuance
11 of the requested relief will advance the public interest. See, e.g., Miller v.
12 California Pac. Med. Ctr., 19 F.3d 449, 456 (9th Cir. 1994); see also United
13 States v. Odessa Union Warehouse Co-op, 833 F.2d 172, 174 (9th Cir. 1987).
14 The Commission has satisfied each of these elements here.
15 a. The Commission is likely to succeed on the merits
16 As detailed previously in this memorandum, it is clear that defendants and
17 respondents are making numerous strong claims on television, over the Internet
18 and on product packaging and labeling that Chitozyme traps fat and causes weight
19 loss and that Acceleron increases metabolism and causes weight loss. These
20 products are further touted to work without the need to diet or exercise.
21 Defendants and respondents also claim that they have scientific proof for these
22 claims. The challenged claims are clearly encompassed by Paragraphs I to IV of
23 the Order. The violation of Part II of the Order, the absence of the prescribed
24 disclaimer, is facially apparent.
25 The Order places the burden of producing competent and reliable scientific
26 evidence substantiating the challenged claims squarely on defendants and
27 respondents. As Dr. Levitsky points out in great detail in his declaration,
28
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1 defendants and respondents do not have such competent and reliable scientific
2 evidence. Defendants and respondents are therefore unable to sustain their Court-
3 ordered burden. Taken together, this evidence demonstrates that the Commission
4 is likely to succeed on the merits of its contempt application.
5 b. There is a possibility of irreparable harm
6 When the Commission seeks temporary or preliminary relief pursuant to
7 the Federal Trade Commission Act, courts presume that irreparable harm has
8 occurred because passage of the statute is deemed to be an implied finding by
9 Congress that violations will harm the public. See, e.g., FTC v. World Wide
10 Factors, Ltd., 882 F.2d 344, 347 (9th Cir. 1989) (“irreparable injury must be
11 presumed in a statutory enforcement action”); Arlington Press, 1999-1 Trade
12 Cas. (CCH) ¶ 72, 415, at 83,888, quoting Miller, 19 F.3d at 459. This contempt
13 application is based on a Court Order that was itself grounded on enforcement of
14 the FTC Act. When the Court entered its May 2000 Order, it expressly stated:
15 “Entry of this Order is in the public interest.” See Order at 2 (finding number 8).
16 Therefore, as with a direct violation of the FTC Act, any violation of the Order
17 should also be presumed to cause irreparable harm.
18 Nevertheless, consumers suffer two types of injuries as a result of
19 defendants and respondents’ unsubstantiated advertising. First, there is the direct
20 economic injury that arises from purchasing these products. No matter how
21 meticulous defendants and respondents’ records are, it will be impossible to
22 locate and reimburse each and every purchasing consumer. This is especially true
23 for consumers who purchase Acceleron at retail – there will likely be no records
24 available to identify such consumers, let alone calculate how much each individual
25 spent. As one appellate court has held, “[t]he threat of unrecoverable economic
26 loss . . . does qualify as irreparable harm.” See Iowa Utils. Bd. v. FCC, 109 F.3d
27 418, 426 (8th Cir. 1996).
28
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1 Second, consumers are injured to the extent that they purchase these
2 products as a substitute for other treatments that may offer them real health
3 benefits. So, for example, purchasers of Chitozyme or Acceleron may forego
4 making such lifestyle changes as reducing their caloric intake or beginning an
5 exercise program as, indeed, the infomercials assure can be foregone, so long as
6 the advertised products are consumed. This decision can cause irreparable harm
7 to consumers’ health – especially to a group of consumers that is likely to be
8 overweight or obese, and therefore subject to the serious health consequences
9 that are associated with these conditions. These adverse health consequences
10 include high blood pressure, high cholesterol, type 2 diabetes, heart disease and
11 stroke, gallbladder disease, arthritis, sleep disturbances and problems breathing,
12 and certain types of cancers. See note 10 supra.
13 In the context of comparative advertising claims, it is well-established that
14 there is a presumption of irreparable harm for false or misleading advertising
15 claims. McNeilab, Inc. v. American Home Prods. Corp., 848 F.2d 34, 38 (2d
16 Cir. 1988) (“the district court did not err in presuming harm from a finding of
17 false or misleading advertising”); Valu Eng’g v. Nolu Plastics, Inc., 732 F. Supp.
18 1024, 1025 (N.D. Cal. 1990) (“[I]n cases of false comparative advertising,
19 irreparable harm is presumed.”); see also Castrol, Inc. v. Pennzoil Co., 799 F.
20 Supp. 424, 440 (D.N.J. 1992) (in evaluating irreparable injury, court was
21 “cognizant of the compelling public interest to protect competitors and
22 consumers from false commercial advertising claims.”).
23 Thus, absent immediate relief, there is a strong possibility that purchasing
24 consumers will irreparably suffer both direct economic injury and adverse health
25 consequences.
26 c. The balance of hardships weighs in the
Commission’s favor
27
28
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1 The Commission has never taken the position that defendants and
2 respondents are prohibited from selling these products (or any other dietary
3 supplements). Rather, the Commission is merely seeking to prevent the
4 dissemination of false and unsubstantiated advertising, packaging and labeling
5 claims to the public. If defendants and respondents wish to promote these
6 products using different claims, they may do so, provided that they abide by this
7 Court’s Order and maintain competent and reliable substantiation for those
8 claims. The Commission has always stood ready to work with defendants and
9 respondents to evaluate or provide advice with respect to potential claims, but
10 they have never sought the Commission’s (or the Court’s) guidance. In fact,
11 warnings by the Commission that certain claims appeared to violate the Order
12 have been ignored and the unsubstantiated advertising has continued or has
13 become even more strident.24
14 This contempt application should not be viewed in a vacuum. In January
15 2002, the Commission filed its first contempt application against defendants and
16 Michael Ehrman and raised issues that are similar to those presented here, albeit
17 for the products Fat Trapper Plus and Exercise In A Bottle. In its first contempt
18 application the Commission did not seek preliminary injunctive relief, despite the
19
20 24
For example, even before it learned of the existence of the latest
21 infomercials, the Commission put Enforma and Grey on notice that it believed
22 that the same claims – which were being made on the Internet and on product
23 packaging – were unsubstantiated. On April 23, 2002, the FTC sent Enforma and
Grey’s counsel a letter expressly stating that claims that Acceleron “cause[d]
24 weight loss” or “increase[d] metabolism” were “not substantiated by competent
25 and reliable scientific evidence.” Frankel Decl. Ex. 21. And on April 26, 2002,
26 the Commission sent a more detailed follow-up letter explaining some of the
reasons why these claims were unsubstantiated. Id. Ex. 22. Tellingly, in this
27 letter, the Commission also reminded Enforma and Grey’s counsel of the “diet
28 and exercise” disclosure requirement in Paragraph II of the Order. Id.
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1 fact that some of the challenged claims were ongoing. Although the first
2 contempt application remains pending, defendants and respondents have
3 apparently taken this as a license to make new, unsubstantiated advertising,
4 packaging and labeling claims for new products. Certainly, defendants and
5 respondents did this knowing the risks they face being held in contempt of the
6 Order.
7 In Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck
8 Consumer Pharmaceuticals Co., 129 F. Supp. 2d 351, 369 (D.N.J. 2000), aff’d,
9 290 F.3d 578 (3d Cir. 2002), the district court entered a preliminary injunction
10 that, inter alia, enjoined Johnson & Johnson from “claiming, either explicitly or
11 implicitly, in any packaging, advertising, or other promotional materials, that
12 Mylanta Night Time Strength is specially formulated for night time heartburn,
13 provides all night relief, and/or possesses a strength that correlates with its
14 efficacy.” The broad preliminary injunction in that case, which also prohibited the
15 further marketing of the product trade name, was affirmed in its entirety by the
16 Third Circuit. In addressing the balance of the harms element in its decision, the
17 appellate court stated that “the injury a defendant might suffer if an injunction
18 were imposed may be discounted by the fact that the defendant brought the injury
19 upon itself.” 290 F.3d at 596. Like Johnson & Johnson, defendants and
20 respondents in this case have also “brought the injury upon” themselves.25
21
22
23 25
The appellate court in Novartis was also persuaded that because the
24 preliminary injunction did “not prohibit J&J from shipping the product currently
25 in inventory under a different name, label and advertising,” this reduced the harm
26 it suffered under the injunction. See 290 F.3d at 597. The Commission has been
careful to craft the proposed injunction here to specifically permit defendants and
27 respondents to disseminate and sell Chitozyme and Acceleron with new packages
28 and labels that contain none of the violative claims. See Proposed Order ¶ II.
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1 If preliminary injunctive relief is not granted here and the Commission
2 ultimately prevails on the merits, the Commission will likely be unable to provide
3 redress to thousands of injured consumers for the monies they continue to pay to
4 purchase products bearing false and unsubstantiated claims on their packaging and
5 labeling. Instead, most recovered revenues will likely have to be disgorged to the
6 U.S. Treasury. Thus, any costs that accrue to defendants and respondents from
7 having to stop disseminating the two new infomercials, having to change their
8 Internet web sites, and having to recall product packaging and labeling should be
9 outweighed by the fact that consumers who purchased Chitozyme and Acceleron
10 on the basis of unsubstantiated claims, will likely never be made whole.
11 d. The requested relief is in the public interest
12 The provisions of the Order that the Commission is seeking to have
13 enforced are clear and concern the core conduct that was meant to be proscribed.
14 Certainly, both the public and the Court have an overarching interest in ensuring
15 that core order provisions relating to dietary supplements are enforced vigorously
16 and fairly.
17 As an agency charged by statute with promoting the public interest, the
18 Commission is acutely aware of the effects unsubstantiated advertising has on
19 unsuspecting consumers of dietary supplements, on sellers of competing
20 products or services that offer legitimate remedies, and on the overall
21 marketplace for health-related goods and services – since deceptive advertising
22 devalues all legitimate advertising.
23 The public interest is served by the proposed Order requiring the immediate
24 cessation of the dissemination of the two new infomercials, the immediate
25 cessation of certain claims on defendants and respondents’ Internet web sites, and
26 the immediate recall or relabeling of product packaging and labeling containing
27 false and unsubstantiated claims, for the following reasons. First, those under
28
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1 Court order need to understand that they cannot flout those orders with impunity.
2 Second, the requested order will, if entered, validate, reinforce and provide
3 additional substance to the competent and reliable scientific evidence standard set
4 out in this Court’s May 2000 Order. Third, an immediate injunction will greatly
5 reduce the direct economic injuries suffered by consumers who would otherwise
6 see or read false and unsubstantiated claims and purchase Chitozyme and
7 Acceleron on the basis of deception. Fourth, it will reduce the natural tendencies
8 of consumers to seek a magic pill to solve their problems with overweight or
9 obesity and may result in a shift towards proven remedies of reduced caloric
10 intake and exercise. Fifth, it will help promote consumers’ beliefs that advertised
11 claims for health-related products are based on some measure of substantiation.
12 The Ninth Circuit and other courts have found that “the public has a
13 particularly strong interest in an accurate description of health and medical
14 products.” Jarrow Formulas, Inc. v. Nutrition Now, Inc., No. 01-55154 2002
15 WL 1163624, at *10 (9th Cir. June 4, 2002) (citing Conopco, Inc.v. Campbell
16 Soup Co., 95 F.3d 187, 194 (9th Cir. 1996) (“We have consistently held that the
17 public’s interest is especially significant when health and safety concerns are
18 implicated as with the advertising of over the counter medications.”)); see also
19 Novartis, 290 F.3d at 597 (“there is a strong public interest in the prevention of
20 misleading advertisements, and this interest is particularly strong where over-the-
21 counter drugs are concerned”), quoting American Home Prods. Corp. v.
22 Johnson & Johnson, 654 F. Supp. 568, 590 (S.D.N.Y. 1987) (citing Upjohn Co.
23 v. American Home Prods. Corp., 598 F. Supp. 550, 557 (S.D.N.Y. 1984));
24 accord Church & Dwight Co. v. S.C. Johnson & Son, 873 F. Supp. 893, 912
25 (D.N.J. 1994) (public interest element satisfied in a permanent injunction
26 deceptive advertising case); Castrol, Inc. 799 F. Supp. at 440 (there is a
27 “compelling public interest to protect competitors and consumers from false
28
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1 commercial advertising claims.”) W.L. Gore & Assoc., Inc. v. Totes, Inc., 788 F.
2 Supp. 800, 814 (D. Del. 1992) (“The public has a right not to be deceived or
3 confused.”).
4 Defendants and respondents have demonstrated a propensity to flaunt the
5 law and this Court’s Order in the past. The public interest is well served by the
6 preliminary injunctive relief sought by the Commission.
7 2. The Court Should Also Issue An Order Redressing
Injuries Caused By Defendants And Respondents’
8 Numerous Order Violations
9 As detailed in this memorandum, defendants and respondents have engaged
10 in a willful and disturbing pattern of flagrant Order violations. A Court order to
11 require defendants and respondents to stop their ongoing violations immediately
12 – while a significant step in the right direction – will not make consumers whole.
13 Thus, in addition to the preliminary injunctive relief described above and as part
14 of the final relief in this civil contempt matter, the Commission also respectfully
15 requests that the Court order defendants and respondents to provide a detailed
16 accounting of all their revenues (including shipping and handling revenues) and
17 their compensation associated with the sale of Chitozyme and Acceleron, and that
18 they be ordered to turn those revenues and compensation over to the Commission
19 for consumer redress or as disgorgement to the United States Treasury. FTC v.
20 Gill, 183 F. Supp. 2d 1171 at 1186 (C.D. Cal. 2001), appeals dismissed, No. 01-
21 56650 (9th Cir. June 19, 2002), No. 01-56663 (9th Cir. July 2, 2002); see also
22 McGregor, 206 F.3d at 1388 (where consumers are induced to buy product
23 through deceptive means, contempt sanction in amount of gross sales is
24 appropriate).
25 In addition, the Commission respectfully requests that the Court order
26 defendants and respondents to reimburse the Commission for all of its fees and
27 expenses (including reasonable attorneys fees) incurred in investigating and
28
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1 prosecuting this contempt application. See, e.g., Hutto v. Finney, 436 U.S. 678,
2 690, 98 S. Ct. 2565, 2573, 57 L. Ed. 2d 522, 534 (1978); Harcourt Brace
3 Javanovich Legal & Prof’l Publications v. Multistate Legal Studies, Inc., 26
4 F.3d 948, 953 (9th Cir. 1994) (“An award of attorney’s fees for civil contempt is
5 within the discretion of the district court.”).
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1 IV. CONCLUSION
2 For the foregoing reasons, the Commission respectfully requests that the
3 Court issue an Order to Show Cause why defendants Enforma Natural Products,
4 Inc. and Andrew Grey and respondents 24/7 and DiFerdinando should not be held
5 in civil contempt for violating the Stipulated Final Order and Settlement of
6 Claims for Monetary Relief as to Defendants Enforma Natural Products, Inc. and
7 Andrew Grey. As part of this relief, the Commission further respectfully
8 requests that the Court enter a temporary restraining order, followed by a
9 preliminary injunction, prohibiting the further dissemination of further
10 unsubstantiated claims presently being made through various media, such as via
11 television infomercials, Internet web sites, and on product packaging and labeling.
12
13 Dated: July 22, 2002 Respectfully submitted,
14 ________________________
15 BARBARA CHUN
CA Bar No. 186907
16 Federal Trade Commission
10877 Wilshire Boulevard, Suite 700
Los Angeles, CA 90024
17
(310) 824-4312 (voice)
18 (310) 824-4380 (fax)
19 DAVID P. FRANKEL
THEODORE H. HOPPOCK
20 SERENA VISWANATHAN
Federal Trade Commission
21 600 Pennsylvania Avenue, NW
Washington, DC 20580
22 (202) 326-2812, -3087, -3244
(voice)
23 (202) 326-3259 (fax)
24 ATTORNEYS FOR PLAINTIFF
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