FTC and Brain-Pad Settlement Provides New Substantiation Standard and Highlights Issues with Enforcement of Consent Decrees on Non-Parties
On August 16, 2012, the Federal Trade Commission (“FTC“) announced a proposed settlement with the mouthguard marketer Brain-Pad, Inc. (“BPI”). According to the FTC Administrative Complaint, BPI violated Sections 5(a) and 12 of the Federal Trade Commission Act (“FTC Act“) by making deceptive advertising claims that its mouthguards are clinically proven to reduce the risk of concussions from lower jaw impacts. However, a careful analysis of the Consent Decree reveals yet another definition for the FTCs substantiation requirement for health claims and illustrates the FTCs attempt to exceed the scope of the consent decree and bind non-parties.
Substantiation Requirement
The BPI Consent Decree states that BPI must possess “competent and reliable scientific evidence” to substantiate claims that BPIs products will reduce the risk of concussions. “Competent and reliable scientific evidence” is defined as “tests, analysis, research, or studies that have been conducted and evaluated in an objective manner by qualified persons and are generally accepted in the profession to yield accurate and reliable results.”
The definition contained in the BPI Consent Decree marks another attempt by the FTC to employ and enforce a heightened level of substantiation for health related claims through consent decrees. As we have previously reported (here, here, here, and here), the FTC has sought to enforce the definition of “competent and reliable scientific evidence” to require “two adequate and well-controlled human clinical studies for all absolute or comparative claims” or “one [a]dequate and well-controlled human clinical study” in litigation with companies such as Garden of Life, The Dannon Company, Nestle HealthCare, Iovate Health Sciences, POM Wonderful, and Medifast, Inc.
The varying definitions of “competent and scientific evidence” may be due to the recent trend of courts disagreeing with the FTCs attempts to redefine and enforce a heightened level of substantiation requiring two adequate and well-controlled human clinical studies for health related claims. As we previously reported, the Garden of Life decision is one example. In FTC v. Garden of Life, the FTC sought to modify a previous consent decree by changing the definition of “competent and reliable scientific evidence” to require “two adequate and well-controlled human clinical studies for all absolute or comparative claims” and FDA approval for disease claims. In rejecting the FTCs position, the Court stated that competent and reliable evidence does not mean “uncontroverted proof.”
Enforcement of Consent Decrees on Non-Parties
At the bottom of its press release, the FTC stated that “[w]hen the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions.” However, in reality, FTC consent decrees have the force and effect of law solely with respect to the future actions by the party, or parties, and products subject to the decree. Porter & Dietsch, Inc. v. FTC, 605 F.2d 294 (7th Cir. 1979). For enforcement purposes, FTC consent decrees must be construed as contracts. US v. ITT Cont’l Baking Co., 420 U.S. 223, 237 (1975). Therefore, the scope of consent decrees must be discerned within its four corners, and not by reference to what might satisfy the purposes of one of the parties to the decree. Id at 245.
In this case, the parties subject to the decree are (1) BPI, “its successors and assigns and their officers, and each of the aboves [sic] agents, representative and employees” and (2) “Joseph Manzo [the President of BPI] and his agents, representatives and employees.” The covered product refers to “any (1) mouthguard or (2) equipment used in athletic activities that is intended in whole or in part, to protect the brain from injury.” Thus, the FTC consent decree carries the force and effect of law solely with respect to future actions of those specific parties and products.
Our previous report regarding the Garden of Life decision highlights one example of the FTCs attempt to broaden the scope of enforcement through the use of consent decrees. In Garden of Life, the Court noted that “consent decrees generally do not have overarching purposes” such as consumer protection, and the actually negotiated purpose of consent decrees is usually far more limited. Furthermore, the Court stated that “decree[s] cannot be interpreted as requiring whatever might be necessary and appropriate to achieve [consumer protection.]” Order at 8 (citing Sierra Club v. Meiberg, 296 F.3d 1021, 1031-1032 (11th Cir. 2002)).
For more information on FTC regulations and substantiation requirements, or on how to ensure that your business maintains regulatory compliance at both the state and federal levels, please contact us at contact@fidjlaw.com.