AJM Packaging Corporation, et al.; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 922 3170]

AJM Packaging Corporation, et al.; Proposed Consent Agreement

With Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting

unfair acts and practices and unfair methods of competition, this

consent agreement, accepted subject to final Commission approval, would

prohibit, among other things, a Michigan seller of disposable paper

plates and its president from representing that any product it sells

offers any environmental benefit unless it can substantiate the claim,

or from misrepresenting that any paper product or package is capable of

being recycled, or the extent to which recycling collection programs

for them are available.

DATES: Comments must be received on or before July 5, 1994.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Mary Engle, FTC/H-476, Washington, DC

20580. (202) 326-3161.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the

Commission's Rules of Practice (16 CFR 2.34), notice is hereby given

that the following consent agreement containing a consent order to

cease and desist, having been filed with and accepted, subject to final

approval, by the Commission, has been placed on the public record for a

period of sixty (60) days. Public comment is invited. Such comments or

views will be considered by the Commission and will be available for

inspection and copying at its principal office in accordance with

Sec. 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR

4.9(b)(6)(ii)).

AJM Packaging Corporation, a Corporation, and Abram Epstein,

Individually and as Officer of Said Corporation; Agreement

Containing Consent Order To Cease and Desist

[File No. 922 3170]

The Federal Trade Commission having initiated an investigation of

certain acts and practices of AJM Packaging Corporation, a corporation,

and Abram Epstein, individually and as officer of said corporation

(``proposed respondents''), and it now appearing that proposed

respondents are willing to enter into an agreement containing an order

to cease and desist from the acts and practices being investigated,

It is hereby agreed by and between AJM Packaging Corporation, and

Abram Epstein, by their duly authorized officer and their attorney, and

counsel for the Federal Trade Commission that:

1. Proposed respondent AJM Packaging Corporation is a Michigan

corporation with its office and principal place of business at 6910 Dix

Avenue, Detroit, Michigan 48209.

Proposed respondent Abram Epstein is the president of said

corporation. In his capacity as president, he formulates, directs, and

controls the acts and practices of said corporation, and his business

address is the same as that of said corporation.

2. Proposed respondents admit all the jurisdictional facts set

forth in the attached draft complaint.

3. Proposed respondents waive:

(a) Any further procedural steps;

(b) The requirement that the Commission's decision contain a

statement of findings of fact and conclusions of law;

(c) All rights to seek judicial review or otherwise to challenge or

contest the validity of the order entered pursuant to this agreement;

and

(d) All claims under the Equal Access to Justice Act.

4. This agreement shall not become a part of the public record of

the proceeding unless and until it is accepted by the Commission. If

this agreement is accepted by the Commission, it, together with the

attached draft complaint, will be placed on the public record for a

period of sixty (60) days and information in respect thereto publicly

released. The Commission thereafter may either withdraw its acceptance

of this agreement and so notify the proposed respondents, in which

event it will take such action as it may consider appropriate, or issue

and serve its complaint (in such form as the circumstances may require)

and decision, in disposition of the proceeding.

5. This agreement is for settlement purposes only and does not

constitute an admission by proposed respondents that the law has been

violated as alleged in the attached draft complaint, or that the facts

as alleged in the attached draft complaint, other than the

jurisdictional facts, are true.

6. This agreement contemplates that, if it is accepted by the

Commission, and if such acceptance is not subsequently withdrawn by the

Commission pursuant to the provisions of Sec. 2.34 of the Commission's

Rules, the Commission may without further notice to proposed

respondents, (1) issue its complaint corresponding in form and

substance with the attached draft complaint and its decision containing

the following order to cease and desist in disposition of the

proceeding, and (2) make information public in respect thereto. When so

entered, the order to cease and desist shall have the same force and

effect and may be altered, modified, or set aside in the same manner

and within the same time provided by statute for other orders. The

order shall become final upon service. Delivery by the U.S. Postal

Service of the decision containing the agreed-to order to proposed

respondents' address as stated in this agreement shall constitute

service. Proposed respondents waive any right they might have to any

other manner of service. The complaint may be used in construing the

terms of the order, and no agreement, understanding, representation, or

interpretation not contained in the order or in the agreement may be

used to vary or contradict the terms of the order.

7. Proposed respondents have read the complaint and the order

contemplated hereby. They understand that once the order has been

issued, they will be required to file one or more compliance reports

showing that they have fully complied with the order. Proposed

respondents further understand that they may be liable for civil

penalties in the amount provided by law for each violation of the order

after it becomes final.

Order

Definition

For purposes of this Order, the following definition shall apply:

``Product or package'' means any product or package, including but not

limited to bags and plates, that is offered for sale, sold, or

distributed to the public by respondents, their successors and assigns,

under the ``Nature's Own Green Label'' brand name or any other brand

name of respondents, their successors and assigns; and also means any

such product or package sold or distributed to the public by third

parties under private labeling agreements with respondents, their

successors and assigns.

I

It is ordered that respondents AJM Packaging Corporation, a

corporation, its successors and assigns, and its officers, and Abram

Epstein, individually and as officer of said corporation, and

respondents' representatives, agents, and employees, directly or

through any corporation, subsidiary, division, or other device, in

connection with the advertising, labeling, offering for sale, sale, or

distribution of any paper product or package, in or affecting commerce,

as ``commerce'' is defined in the Federal Trade Commission Act, do

forthwith cease and desist from representing, in any manner, directly

or by implication:

(1) That any such product or package is degradable, biodegradable,

or photodegradable; or,

(2) Through the use of such terms as degradable, biogradable,

photodegradable, or any other substantially similar term or expression,

that the degradability of any such product or package offers any

environmental benefit when disposed of as trash that is ordinarily

buried in a sanitary landfill,

unless, at the time of making such representation, respondents possess

and rely upon competent and reliable scientific evidence that

substantiates the representation. For purposes of this Order, competent

and reliable scientific evidence shall mean 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.

II

It is further ordered that respondents AJM Packaging Corporation, a

corporation, its successors and assigns, and its officers, and Abram

Epstein, individually and as officer of said corporation, and

respondents' representatives, agents, and employees, directly or

through any corporation, subsidiary, division, or other device, in

connection with the advertising, labeling, promotion, offering for

sale, sale, or distribution of any paper product or package in or

affecting commerce, as ``commerce'' is defined in the Federal Trade

Commission Act, do forthwith cease and desist from misrepresenting, in

any manner, directly or by implication, the extent to which any such

paper product or package is capable of being recycled or the extent to

which recycling collection programs for such product or package are

available.

III

It is further ordered that respondents AJM Packaging Corporation, a

corporation, its successors and assigns, and its officers, and Abram

Epstein, individually and as officer of said corporation, and

respondents' representatives, agents, and employees, directly or

through any corporation, subsidiary, division, or other device, in

connection with the advertising, labeling, promotion, offering for

sale, sale, or distribution of any product or package in or affecting

commerce, as ``commerce'' is defined in the Federal Trade Commission

Act, do forthwith cease and desist from representing, in any manner,

directly or by implication, that any such product or package offers any

environmental benefit, unless, at the time of making such

representation, respondents possess and rely upon competent and

reliable evidence, which when appropriate must be competent and

reliable scientific evidence, that substantiates such representation.

IV

It is further ordered that respondents may continue to deplete

their existing inventory of ``Penthouse'' brand paper plates product

packaging in the normal course of business without violating this Order

until October 31, 1993.

V

It is further ordered that for five (5) years after the last date

of dissemination of any representation covered by this Order,

respondents, or their successors and assigns, shall maintain and upon

request make available to the Federal Trade Commission for inspection

and copying:

A. All materials that were relied upon in disseminating such

representation; and

B. All test reports, studies, surveys, demonstrations or other

evidence in their possession or control that contradict, qualify, or

call into question such representation or the basis relied upon for

such representation, including complaints from consumers.

VI

It is further ordered that respondent AJM Packaging Corporation

shall distribute a copy of this Order within sixty (60) days after

service of this Order upon it to each of its operating divisions and to

each of its officers, agents, representatives, or employees engaged in

the preparation of labeling and advertising and placement of newspaper,

periodical, broadcast, and cable advertisements covered by this Order.

VII

It is further ordered that the individual respondent named herein

promptly notify the Commission of the discontinuance of his present

business or employment and of his affiliation with a new business or

employment. In addition, for a period of five (5) years from the

service date of this Order, the respondent shall promptly notify the

Commission of each affiliation with a new business or employment whose

activities relate to the manufacture, sale, or distribution of paper

products, or of his affiliation with a new business or employment in

which his own duties and responsibilities relate to the manufacture,

sale, or distribution of paper products. When so required under this

paragraph, each such notice shall include the individual respondent's

new business address and a statement of the nature of the business or

employment in which such respondent is newly engaged, as well as a

description of such respondent's duties and responsibilities in

connection with the business or employment. The expiration of the

notice provision of this paragraph shall not affect any other

obligation arising under this Order.

VIII

It is further ordered that respondents shall notify the Commission

at least thirty (30) days prior to any proposed change in the corporate

respondent such as a dissolution, assignment, or sale resulting in the

emergence of a successor corporation, the creation or dissolution of

subsidiaries, or any other change in the corporation which may affect

compliance obligations under this Order.

It is further ordered that respondents shall, within sixty (60)

days after service of this Order upon them, and at such other times as

the Commission may require, file with the Commission a report, in

writing, setting forth in detail the manner and form in which they have

complied with this Order.

Analysis of Consent Order To Aid Public Comment

The Federal Trade Commission has accepted an agreement, subject to

final approval, to a proposed consent order from respondents AJM

Packaging Corporation, a Michigan corporation, and Abram Epstein, an

officer of said corporation.

The proposed consent order has been placed on the public record for

sixty (60) days for reception of comments by interested persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

agreement and the comments received and will decide whether it should

withdraw from the agreement and take other appropriate action, or make

final the agreement's proposed order.

This matter concerns the package labeling of ``Nature's Own Green

Label'' disposable paper plates. The Commission's complaint in this

matter charges that respondents' labeling falsely represented that

``Nature's Own Green Label'' disposable paper plates are recyclable

after ordinary use. In fact, the complaint alleges, while ``Nature's

Own Green Label'' disposable paper plates are capable of being

recycled, the vast majority of consumers cannot recycle the product

because there are virtually no collection facilities that accept used

paper plates for recycling. The complaint further charges that the

respondents' labeling contained unsubstantiated representations

concerning the plates' alleged degradability and the environmental

benefits that could be obtained when the bags were disposed of as trash

that is subsequently buried in a sanitary landfill (customary

disposal). The complaint alleges that the respondents represented that

``Nature's Own Green Label'' disposable paper plates offer a

significant environmental benefit when consumers customarily disposed

of them, and that ``Nature's Own Green Label'' disposable paper plates

will completely break down, decompose and return to nature--i.e.,

decompose into elements found in nature--within a reasonably short

period of time after customary disposal.

The proposed consent order contains provisions designed to remedy

the violations charged and to prevent the respondents from engaging in

similar acts and practices in the future.

Part I of the proposed order requires that the respondents cease

representing, in any manner, directly or by implication, that any of

their paper products or packages are ``degradable,'' ``biodegradable,''

or ``photodegradable,'' or through the use of such terms or similar

terms, that any such product or package offers any environmental

benefits when consumers dispose of them as trash that is buried in a

sanitary landfill, unless the respondents have competent and reliable

scientific evidence to substantiate the representations at the time

they are made.

Part II of the proposed order requires that the respondents cease

misrepresenting, in any manner, directly or by implication, the extent

to which any paper product or package is capable of being recycled or

the extent to which recycling collection programs are available.

Part III of the proposed order requires the respondents to cease

representing that their products or packages offer any environmental

benefit, unless at the time of making such a representation, the

respondents possess and rely upon competent and reliable evidence,

which when appropriate must be competent and reliable scientific

evidence, that substantiates such representations.

Part IV of the proposed order permitted the respondents to deplete

their existing inventory of certain paper plate product packaging in

the normal course of business without violating the order until October

31, 1993.

The proposed order also requires the respondents to maintain

materials relied upon to substantiate the claims covered by the order,

to distribute copies of the order to certain company officials, to

notify the Commission of any changes in corporate structure that might

affect compliance with the order, to notify the Commission of any

changes in the business or employment of the named individual

respondent, and to file one or more reports detailing compliance with

the order.

The purpose of this analysis is to facilitate public comment on the

proposed order. It is not intended to constitute an official

interpretation of the agreement and proposed order or to modify in any

way their terms.

Donald S. Clark,

Secretary.

[FR Doc. 94-10943 Filed 5-5-94; 8:45 am]

BILLING CODE 6750-01-M