UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
FEDERAL TRADE COMMISSION, Plaintiff,
v.
TRADENET MARKETING, INC., a corporation, L.W. COOPER, individually and
as an officer of Tradenet Marketing, Inc., ALBERTO GUERRERO, individually and as an
officer of Tradenet Marketing, Inc., TOP MARKETING BUSINESS CONSULTING, INC. a
corporation, and ERWIN RICHARD ANNAU, individually and as an officer of Top Marketing
Business Consulting, Inc., Defendants.
Civil Action No.
STIPULATED FINAL JUDGMENT
WHEREAS: Plaintiff, the Federal Trade Commission ("FTC" or the
"Commission") commenced this action by filing the Complaint herein; Defendants
have waived service of the Summons and Complaint; the parties have been represented by the
attorneys whose names appear hereafter; and the parties have agreed to the settlement of
this action upon the following terms and conditions, without adjudication of any issue of
fact or law and without Defendants admitting liability for any of the matters alleged in
the Complaint;
THEREFORE, on the joint motion of Plaintiff and Defendants, it is hereby ORDERED,
ADJUDGED, and DECREED as follows:
DEFINITIONS
- "Defendants" means Tradenet Marketing, Inc. ("Tradenet") and L.W.
Cooper ("Cooper"), their successors and assigns, and their officers, agents,
servants, employees and attorneys, and all persons in active concert or participation with
any one or more of them who receive actual notice of this Stipulated Final Judgment
("Judgment") by personal service or otherwise.
- "Competent and reliable scientific evidence" means tests, analyses, research,
studies, or other evidence based on the expertise of professionals in the relevant area,
that has been conducted and evaluated in an objective manner by persons qualified to do
so, using procedures generally accepted in the profession to yield accurate and reliable
results.
- "Laundry product" means any product used in the process of refurbishing
textiles, including but not limited to products described as replacing detergents or
bleaches, whether referred to as "boosters" or "brighteners," and
products described as changing the nature of water by any means that will have a
beneficial effect on washing, including water filters, water filtration systems, water
purification systems, or water cleaning systems.
- "Consumer" means a purchaser (including purchasers for resale) of one or more
products sold by Defendants, whether or not purchased directly from Defendants.
FINDINGS
- This Court has jurisdiction of the subject matter and of the parties;
- The Complaint states a claim upon which relief may be granted against Tradenet and
Cooper under Sections 5(a) and 13(b) of the Federal Trade Commission Act, 15 U.S.C.
§§ 45(a) and 53(b);
- Venue is proper as to all parties in the Middle District of Florida;
- The activities of Tradenet and Cooper are in or affecting commerce, as defined in the
FTC Act, 15 U.S.C. § 44; and
- Tradenet and Cooper have waived all rights that may arise under the Equal Access to
Justice Act, 28 U.S.C. § 2412, amended by Pub. L. 104-121, 110 Stat.
847, 863-64 (1996).
ORDER
I. PROHIBITED CLAIMS FOR CERTAIN PRODUCTS
IT IS HEREBY ORDERED THAT Defendants, directly or through any
corporation, subsidiary, division, distributor, or other device, in connection with the
advertising, promotion, offering for sale, sale, or distribution of The Laundry Solution,
The SuperGlobe, or any substantially similar product, in or affecting commerce, are hereby
permanently enjoined from representing in any manner, expressly or by implication:
A. that such product cleans as well as conventional laundry detergent;
B. that such product cleans laundry by emitting a negative charge that forces
positively charged dirt to leave fabric; or
C. that such product's active ingredients are "structured water," "IE
crystals," "IE solution," or "IE
structures."
II. CLAIMS REQUIRED TO BE TRUE AND SUBSTANTIATED
IT IS FURTHER ORDERED THAT Defendants, directly or through any
corporation, subsidiary, division, distributor, or other device, in connection with the
advertising, promotion, offering for sale, sale, or distribution of any product, in or
affecting commerce, are hereby enjoined from making any representation in any manner,
expressly or by implication:
A. that such product cleans as well as conventional laundry detergent;
B. that such product cleans laundry by emitting a negative charge that forces
positively charged dirt to leave fabric; or
C. that such product's active ingredients are "structured water," "IE
crystals," "IE solution," or "IE
structures"; or
D. regarding such product's comparative or absolute efficacy, benefits, mechanism of
action, or performance;
unless the representation is true and, at the time it is made, Defendants possess and
rely upon competent and reliable evidence, which when appropriate must be competent and
reliable scientific evidence, that substantiates the representation.
III. CLAIMS ABOUT TESTS, STUDIES OR RESEARCH
IT IS FURTHER ORDERED THAT Defendants, directly or through any
corporation, subsidiary, division, distributor, or other device, in connection with the
advertising, promotion, offering for sale, sale, or distribution of any product, in or
affecting commerce, are hereby enjoined from misrepresenting, in any manner, expressly or
by implication, the existence, contents, validity, results, conclusions, or
interpretations of any test, study, or research.
IV. CLAIMS MADE THROUGH TESTIMONIALS AND/OR ENDORSEMENTS
IT IS FURTHER ORDERED THAT Defendants, directly or through any
corporation, subsidiary, division, distributor, or other device, in connection with the
advertising, promotion, offering for sale, sale, or distribution of any product, in or
affecting commerce, are hereby enjoined from representing in any manner, expressly or by
implication, that the experience represented by any user testimonial or endorsement of
such product represents the typical or ordinary experience of members of the public who
use the product, unless:
A. The representation is true and, at the time it is made, Defendants possess and rely
upon competent and reliable evidence, which when appropriate must be competent and
reliable scientific evidence, that substantiates the representation; or,
B. Defendants disclose clearly and prominently, and in close proximity to the
endorsement or testimonial, either:
(1) what the generally expected results would be for users of the product, or
(2) the limited applicability of the endorser's experience to what consumers may
generally expect to achieve, that is, that consumers should not expect to experience
similar results. For purposes of this Paragraph, "endorsement" shall mean as
defined in 16 C.F.R. § 255.0(b).
V. ENVIRONMENTAL CLAIMS
IT IS FURTHER ORDERED THAT Defendants, directly or through any
corporation, subsidiary, division, distributor, or other device, in connection with the
advertising, promotion, offering for sale, sale, or distribution of any product, in or
affecting commerce, are hereby enjoined from making any representation, in any manner,
expressly or by implication:
A. that such product is a solution to the problems of pollution of rivers, streams,
lakes, and oceans;
B. regarding such product's comparative or absolute safety to individuals or to the
environment; or
C. such product's environmental benefits,
unless, at the time the representation is made, Defendants possess and rely upon
competent and reliable evidence, which when appropriate must be competent and reliable
scientific evidence, that substantiates the representation.
VI. PROHIBITED DISTRIBUTION OF CONSUMER INFORMATION
IT IS FURTHER ORDERED THAT Defendants are hereby enjoined from
offering for sale, selling, or distributing to any person other than to a named defendant,
an entity in which a named defendant is an owner, or a law enforcement agency, any list of
any consumer's name, telephone number, mailing address, bank or credit card account
number, or other identifying information.
VII. PROHIBITED ACTIVITIES
IT IS FURTHER ORDERED THAT Defendants are hereby enjoined from
providing knowing substantial assistance to others to engage in any of the activities
prohibited by Paragraphs I through VI of this Judgment.
VIII. MONETARY JUDGMENT
IT IS FURTHER ORDERED THAT a judgment in the amount of THREE HUNDRED
THOUSAND DOLLARS ($300,000) is hereby entered against Defendants Tradenet and Cooper, and
their successors and assigns. Based on Defendants' sworn representations in their
financial disclosure statements dated May 14, 1998 and the attachments thereto (W-2 Forms,
1099 Forms, "Balance Sheet as of May 14, 1998," "Profit and Loss Statement
from January 1 through May 14, 1998," "Balance Sheet as of December 31,
1997," "Profit and Loss Statement from January through December, 1997," and
"Balance Sheet for Year Ended Dec. 31, 1996"), hereinafter together designated
"Financial Disclosure Statements," payment of the foregoing monetary judgment is
waived except for TEN THOUSAND FOUR HUNDRED AND SIXTEEN DOLLARS WITH SIXTY-SEVEN CENTS
($10,416.67), contingent upon the accuracy and completeness of the Financial Disclosure
Statements. Defendants are jointly and severally responsible for paying the monetary
judgment.
Defendants shall make the required payment by certified or cashier's check to Plaintiff
by September 1, 1998 or the date of entry of this Judgment, whichever is later. In the
event of any default in payment, which default continues for ten (10) days beyond the due
date of payment, the entire unpaid judgment, together with interest, as computed pursuant
to 28 U.S.C. § 1961, from the date of default to the date of payment, shall
immediately become due and payable.
Plaintiff's agreement to this monetary judgment is expressly premised upon the
truthfulness, accuracy, and completeness of the financial condition of Defendants Tradenet
and Cooper, as represented in the Financial Disclosure Statements referenced above, which
contain material information upon which the Plaintiff relief in negotiating and agreeing
to the waiver of all but $10,416.67 of the $300,000 monetary judgment. In all other
respects, this Judgment shall remain in full force and effect unless otherwise ordered by
this Court.
If, upon motion by the Commission, this Court finds that Defendants made any material
misrepresentation in or omission from the Financial Disclosure Statements, the entire
remaining amount of the THREE HUNDRED THOUSAND DOLLARS ($300,000) suspended judgment
entered against Defendants will be immediately due and payable. In connection with any
such motion, the only issue shall be whether the financial information Defendants provided
in the Financial Disclosure Statements was fraudulent, misleading, inaccurate or
incomplete in any material respect.
The Commission may apply any or all funds received from Defendants pursuant to this
monetary judgment, and any interest received thereon, to a consumer redress program and to
related administrative expenses; provided, however, that if the Commission in its
sole discretion determines that a consumer redress program is not feasible, the Commission
may pay such funds to the United States Treasury as disgorgement. Defendants shall have no
right to contest the manner of distribution chosen by the Commission.
Defendants are hereby required, in accordance with 31 U.S.C. § 7701, to furnish
to the Commission their taxpayer identifying numbers (social security number or employer
identification number), which shall be used for purposes of collecting and reporting on
any delinquent amount arising out of their relationship with the government.
For purposes of this Paragraph, and any subsequent proceedings to enforce payment,
including but not limited to a nondischargeability complaint filed in a bankruptcy
proceeding, each Defendant waives any right to contest any of the allegations of
Plaintiff's Complaint.
IX. ALLEGATIONS IN THE COMPLAINT TAKEN AS TRUE
IT IS FURTHER ORDERED THAT the facts as alleged in the Complaint filed
with this Judgment shall be taken as true in any subsequent litigation filed by the FTC to
enforce its rights under this Judgment.
X. PRODUCTION OF SALES RECORDS
IT IS FURTHER ORDERED THAT within 30 days after the entering of this
Judgment, Defendants Tradenet and Cooper, their successors and assigns, shall provide to
the FTC a description of the available records regarding their sales of The Laundry
Solution and The SuperGlobe from January 1, 1996 to the date of entry of this Stipulated
Final Judgment, in order for the FTC to design a redress plan. Tradenet and Cooper shall
assist the FTC, and its agents, in locating and producing all records necessary to conduct
the proposed claims procedure, including, but not limited to, records identifying the
names, addresses, and telephone numbers of consumers who paid for goods from January 1,
1996, the amount the consumer paid, and the amount of any price reduction negotiated by
the consumer.
XI. ORDER DISTRIBUTION
IT IS FURTHER ORDERED THAT Defendants Tradenet and Cooper, their
successors and assigns, shall send a copy of this Judgment to all current and future
principals, officers, directors, and managers and to all current and future agents,
employees, distributors, and independent contractors having responsibility with respect to
this Judgment's subject matter, and shall secure from each such person a signed statement
acknowledging receipt of the Judgment. Defendants shall deliver this Judgment to current
personnel within 30 days of the entry of this Judgment, and to future personnel within 30
days after the person assumes such position or responsibilities. Within 60 days of entry
of this Judgment, Tradenet and Cooper shall file with the Federal Trade Commission an
affidavit setting forth the fact and manner of their compliance, including the name and
title of each person to whom a copy of the Judgment has been provided, and a copy of their
acknowledgment.
XII. RECORDKEEPING
IT IS FURTHER ORDERED THAT for a period of 5 years from the date of
entry of this Judgment, Tradenet and Cooper shall create and maintain:
A. Records sufficient to demonstrate compliance with the provisions of this Judgment,
including but not limited to:
(1) All advertisements and promotional materials for any laundry or cleaning products
offered for sale by Defendants;
(2) All materials that were relied upon in disseminating any representation covered by
this Judgment; and
(3) All tests, reports, studies, surveys, demonstrations, or other evidence in their
possession or control that contradict, qualify, or call into question any representation
covered by this Judgment, or the basis relied upon for the representation, including
complaints and other communications with consumers or with governmental or consumer
protection organizations;
B. Records containing the name, address, and telephone number of each consumer who
purchases products from Defendants either directly or though any third party;
C. A record of each written consumer complaint (including complaints referred from any
third party, such as any office of the Better Business Bureau or any State Attorney
General), and each refund request received by any named defendant, including:
(1) The consumer's name, address, telephone number and the dollar amount paid by the
consumer;
(2) The consumer's written complaint or refund request and the date the complaint or
refund request was received;
(3) The basis of the complaint or refund request, if known, and the nature and result
of any investigation conducted as to the complaint;
(4) The response to the complaint or refund request and the date of the response; and
(5) The final resolution, the date of the resolution, and, in the event of a denial of
a refund request, the reason for the denial; and
D. With regard to complaints or refund requests received by telephone, Tradenet and
Cooper shall develop and maintain a program to create and maintain the same information as
identified in Parts C.(1) through C.(5) of this Paragraph above.
XIII. ACCESS TO BUSINESS PREMISES
IT IS FURTHER ORDERED THAT for a period of 5 years from the date of
entry of this Judgment, for purposes of determining or securing compliance with this
Judgment, Tradenet and Cooper shall:
A. Upon reasonable written notice by any representative of the Commission, permit
representatives of the Commission access during normal business hours to the offices of
any business owned or controlled in whole or in part by any one or all of them to inspect
and copy all documents relating in any way to any conduct subject to this Judgment;
B. Upon written request by any representative of the Commission produce documents on 30
days' notice concerning any conduct subject to this Judgment;
C. Defendants, their officers, directors, and employees, shall appear within 30 days'
notice to be deposed concerning any conduct subject to this Judgment, or within such time
as is jointly agreed to by the counsel for the Commission and Defendants' counsel, if
Defendants have counsel; and
D. The Commission may otherwise monitor compliance with this Judgment by all lawful
means available, including the use of investigators posing as consumers, distributors or
vendors.
XIV. MONITORING
IT IS FURTHER ORDERED THAT for a period of 3 years from the date of
entry of this Judgment, Defendant Cooper shall promptly inform the Commission by written
notification at least 30 days in advance, or in the case of involuntary termination of
employment, within 30 days of such termination, of:
A. Any change in his residential address, occupation, place of business, or place of
employment;
B. Any change in the name, address, type of business, or identity of each company,
corporation, partnership, or business owned or controlled directly or indirectly by him;
C. Any proposed change in any company, corporation, partnership, or business that is
owned or controlled, directly or indirectly, by him including, but not limited to,
dissolution, assignment, or sale resulting in the emergence of a successor corporation,
the creation or dissolution of subsidiaries, or any other change in their business
relationship(s) that may affect compliance obligations arising out of this Judgment;
D. His affiliation with a new business or employment that involves the advertising,
promotion, offering for sale, sale, or distribution of laundry or cleaning products,
including a description of such business, the business address, and of his interest in and
duties in connection with such business or employment;
E. The formation of any corporation, sole proprietorship, partnership, or independent
consulting business or any other business entity that is engaged directly or indirectly in
the advertising, promotion, offering for sale, sale, or distribution of laundry or
cleaning products, in which he is or is to become an officer or director, or in which he
is or is to become a holder of 10% or more of the stock; and
F. Any termination or suspension of business operations by him, the resumption of
business operations, or any termination, suspension or establishment of any type of
consulting relationship with any third party relating to the advertising, promotion,
offering for sale, sale, or distribution of laundry or cleaning products.
XV. NOTIFICATION OF CHANGES IN BUSINESS STRUCTURE
IT IS FURTHER ORDERED THAT Defendant Tradenet, its successors and
assigns, shall notify the Associate Director, Division of Enforcement, Bureau of Consumer
Protection, Federal Trade Commission, Washington, D.C. 20580, at least 30 days prior to
any change in the business of Tradenet including, but not limited to, merger,
incorporation, dissolution, assignment, sale resulting in the emergence of a successor
corporation, the creation or dissolution of a subsidiary or parent, or any other change
that may affect Defendants' obligations under this Judgment.
XVI. NOTICES
IT IS HEREBY ORDERED THAT all notifications required of Defendants
Tradenet and Cooper, their successors and assigns, by this Judgment, or concerning this
Judgment, shall be sent to the following address:
Associate Director
Division of Enforcement
Federal Trade Commission
Washington, D.C. 20580
XVII. CONTINUING JURISDICTION
IT IS HEREBY ORDERED THAT this Court shall retain jurisdiction of this
matter for purposes of construction, modification, and
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enforcement of this Judgment.
SO ORDERED, this ______ day of __________, 1998 in ________,
Florida.
_______________________________________
THE HONORABLE
UNITED STATES DISTRICT JUDGE
The parties hereby consent to the terms and conditions set forth above and consent to
entry of the Final Judgment without further notice to the parties. Each party to this
Judgment hereby agrees to bear its own costs and attorneys fees incurred in connection
with this action.
FEDERAL TRADE COMMISSION
__________________________
Constance M. Vecellio
Pablo M. Zylberglait__________________________
Counsel for Plaintiff
Federal Trade Commission
Washington, DC 20580
202-326-3143;3222 |
__________________________
Defendant L.W. Cooper,
on behalf of himself.__________________________
Defendant L.W. Cooper,
on behalf of Tradenet
Marketing, Inc. |
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