RN Nutrition, et al.; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 9123145]

RN Nutrition, 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

require, among other things, the California marketers of the calcium

supplement product, BoneRestore, to possess competent and reliable

scientific evidence to substantiate the claims that any food, drug, or

food or dietary supplement products will treat or cure any disease or

condition; would prohibit the respondents from using the name

BoneRestore in a misleading way; and would restrict the use of

testimonial endorsements that do not represent typical results.

DATES: Comments must be received on or before November 14, 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:

Phoebe Morse, Boston Regional Office, Federal Trade Commission, 101

Merrimac St., Suite 810, Boston, MA 02114-4719 (617) 424-5960.

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).

In the Matter of RN Nutrition, a limited partnership, and George

Page Rank and James W. Nugent, individually and as co-partners,

trading and doing business as RN Nutrition; Agreement containing

consent order to cease and desist.

The Federal Trade Commission having initiated an investigation of

certain acts and practices of RN Nutrition, a limited partnership, and

George Page Rank and James W. Nugent, individually and as co-partners,

trading and doing business as RN Nutrition, hereinafter sometimes

referred to as proposed respondents, and it is now appearing that

proposed respondents are willing to enter into an agreement containing

an order to cease and desist from the use of the acts and practices

being investigated,

It is hereby agreed by and between proposed respondents, and their

attorney, and counsel for the Federal Trade Commission that:

1. Proposed respondent RN Nutrition is a limited partnership

organized, existing and doing business under and by virtue of the laws

of the State of California, with its principal office or place of

business at 3402-M West MacArthur, Santa Ana, California 92704.

2. Proposed respondent George Page Rank is an individual who has

been, and is now, a general partner of RN Nutrition. As such, he

formulates, or participates in the formulation of, directs and controls

the acts and practices of RN Nutrition. His business address is 3402-M

West MacArthur, Santa Ana, California 92704.

3. Proposed respondent James W. Nugent is an individual who has

been, and is now, a general partner of RN Nutrition. As such, he

formulates, or participates in the formulation of, directs and controls

the acts and practices of RN Nutrition. His business address is 3402-M

West MacArthur, Santa Ana, California 92704.

4. Proposed respondents admit all the jurisdictional facts set

forth in the draft complaint here attached.

5. 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.

6. This agreement shall not become 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.

7. 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

alleged in the attached draft complaint, other than jurisdictional

facts, are true.

8. 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 Section 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 the agreement may be used

to vary or contradict the terms of the order.

9. Proposed respondents have read the proposed complaint and order

contemplated hereby. Proposed respondents 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

I

It is ordered that RN Nutrition, a limited partnership, and George

Page Rank and James W. Nugent, individually and as co-partners, trading

and doing business as RN Nutrition, or under any other name, their

successors and assigns, and respondents' agents, representatives, and

employees, directly or through any partnership, corporation,

subsidiary, division or other device, in connection with the labeling,

advertising, promotion, offering for sale, sale, or distribution of

BoneRestore or any food or dietary supplement, food, or drug, as

``food'' and ``drug'' are defined in section 15 of the Federal Trade

Commission Act, 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 such

product:

1. builds new bone, builds strong bones, increases bone and causes

significant bone gain;

2. builds bone better than estrogen or other forms of calcium;

3. slows or stops bone loss;

4. helps persons who suffer from weak or weakening bones;

5. prevents and heals osteoporosis;

6. rebuilds bone and restores lost bone;

7. eliminates pain associated with bone ailments;

8. is absorbed by the body better than other forms of calcium;

9. prevents bone fractures;

10. straightens spinal curvatures; and

11. provides any benefit in the prevention, treatment, or cure of

osteoporosis, arthritis, back pain, or any other bone ailment or

condition;

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 RN Nutrition, a limited partnership, and

George Page Rank and James W. Nugent, individually and as co-partners,

trading and doing business as RN Nutrition, or under any other name,

their successors and assigns, and respondents' agents, representatives,

and employees, directly or through any partnership, corporation,

subsidiary, division or other device, in connection with the labeling,

advertising, promotion, offering for sale, sale, or distribution of

BoneRestore or any food or dietary supplement, food, or drug, as

``food'' and ``drug'' are defined in section 15 of the Federal Trade

Commission Act, in or affecting commerce, as ``commerce'' is defined in

the Federal Trade Commission Act, do forthwith cease and desist from

representing, directly or by implication, that any endorsement (as

``endorsement'' is defined in 16 CFR 255.0(b)) of the product

represents the typical or ordinary experience of members of the public

who use the product, 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.

III

It is further ordered that RN Nutrition, a limited partnership, and

George Page Rank and James W. Nugent, individually and as co-partners,

trading and doing business as RN Nutrition, or under any other name,

their successors and assigns, and respondents' agents, representatives,

and employees, directly or through any partnership, corporation,

subsidiary, division or other device, in connection with the labeling,

advertising, promotion, offering for sale, sale, or distribution of

BoneRestore or any food or dietary supplement, food, or drug, as

``food'' and ``drug'' are defined in section 15 of the Federal Trade

Commission Act, in or affecting commerce, as ``commerce'' is defined in

the Federal Trade Commission Act, do forthwith cease and desist from

using the name ``BoneRestore,'' or any other name, in a manner that

represents, directly or by implication, that such product has the

ability to restore, build, or increase bone unless, at the time of

making the representation, respondents possess and rely upon competent

and reliable scientific evidence that substantiates the representation

that it restores, builds, or increases bone. This provision does not

otherwise affect respondents' ability to use the trade name

``BoneRestore,'' or any other brand name, to make a qualified

representation that is substantiated by competent and reliable

scientific evidence.

IV

It is further ordered that RN Nutrition, a limited partnership, and

George Page Rank and James W. Nugent, individually and as co-partners,

trading and doing business as RN Nutrition, or under any other name,

their successors and assigns, and respondents' agents, representatives,

and employees, directly or through any partnership, corporation,

subsidiary, division or other device, in connection with the labeling,

advertising, promotion, offering for sale, sale, or distribution of

BoneRestore or any food or dietary supplement, food, or drug, as

``food'' and ``drug'' are defined in section 15 of the Federal Trade

Commission Act, 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

existence, contents, validity, results, conclusions, or interpretations

of any test or study.

V

It is further ordered that RN Nutrition, a limited partnership, and

George Page Rank and James W. Nugent, individually and as co-partners,

trading and doing business as RN Nutrition, or under any other name,

their successors and assigns, and respondents' agents, representatives,

and employees, directly or through any partnership, corporation,

subsidiary, division or other device, in connection with the labeling,

advertising, promotion, offering for sale, sale, or distribution of

BoneRestore or any food or dietary supplement, food, or drug, as

``food'' and ``drug'' are defined in section 15 of the Federal Trade

Commission Act, in or affecting commerce, as ``commerce'' is defined in

the Federal Trade Commission Act, do forthwith cease and desist from

making any representation, in any manner, directly or by implication,

that any such product will treat, cure, alleviate the symptoms,

prevent, or reduce the risk of developing any disease, disorder, or

condition, unless, at the time of making such representation,

respondents possess and rely upon competent and reliable scientific

evidence that substantiates the representation.

VI

Nothing in this Order shall prohibit respondents from making any

representation that is specifically permitted in labeling for any such

product by regulations promulgated by the Food and Drug Administration

pursuant to the Nutrition Labeling and Education Act of 1990.

VII

Nothing in this Order shall prohibit respondents from making any

representation for any drug that is permitted in labeling for any such

drug under any tentative final or final standard promulgated by the

Food and Drug Administration, or under any new drug application

approved by the Food and Drug Administration.

VIII

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 tests, 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.

IX

It is further ordered that respondents shall forthwith distribute a

copy of this Order to all principals and managers and to all personnel,

agents, licensees and distributors, engaged in the preparation or

placement of advertisements or promotional materials covered by this

Order and shall obtain from each such employee, agent, licensee and

distributor a signed statement acknowledging receipt of the Order.

X

It is further ordered that for a period of five (5) years from the

date of entry of this Order, respondents George Page Rank and James W.

Nugent shall provide written notice to the Federal Trade Commission

within thirty (30) days of:

A. Any change in his business or employment that may affect

compliance obligations arising out of this Order;

B. The discontinuance of his business or employment; and

C. His affiliation with any new business or employment; each such

notice to include his business address and telephone number, home

address, and a statement describing the nature of the business or

employment and his duties and responsibilities.

XI

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

days after service upon them of this Order, 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 Proposed 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 RN

Nutrition, a limited partnership, and George Page Rank and James W.

Nugent, individually and as co-partners, trading and doing business as

RN Nutrition.

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 claims made in respondents' direct mail and

mail order catalog advertisements for their calcium supplement,

``BoneRestore.'' The Commission's complaint alleges that respondents

engaged in deceptive advertising by making unsubstantiated claims that

BoneRestore prevents, treats, and cures bone disease, bone ailments and

their related symptoms, and that the product is superior in this regard

to other calcium supplements and/or estrogen. The complaint also

alleges that respondents falsely claimed to have scientific

substantiation for these claims. In addition, the complaint alleges

that respondents made unsubstantiated claims that consumer testimonials

appearing in their advertisements reflect the typical or ordinary

experience of members of the public who have used BoneRestore.

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

prohibits the respondents from representing that BoneRestore, or any

food or dietary supplement, food, or drug: builds and restores bone;

stops bone loss; helps persons with weak bones; treats osteoporosis;

relieves pain; is superior to calcium or estrogen; prevents fractures;

straightens spinal curvatures; and that it provides any benefit in the

prevention, treatment or cure of osteoporosis, arthritis, back pain, or

other bone ailments, unless respondents possess competent and reliable

scientific evidence that substantiates the representation.

Part II of the proposed order prohibits respondents from

representing that any endorsement of BoneRestore represents the typical

or ordinary experiences of members of the public who have used the

product, unless respondents possess competent and reliable scientific

evidence that substantiates the representation.

Part III of the proposed order requires respondents to cease using

the name ``BoneRestore'' or any other brand name that represents that

such product has the ability to restore, build, or increase bone,

unless respondents possess competent and reliable scientific evidence

that substantiates the representation.

Part IV of the proposed order prohibits respondents from

misrepresenting the existence, contents, validity, results,

conclusions, or interpretations of any test or study.

Part V of the proposed order prohibits respondents from

representing that BoneRestore or any food or dietary supplement, food,

or drug, will treat, cure, prevent, or reduce the risk of developing

any disease, disorder, or condition, unless respondents possess

competent and reliable scientific evidence that substantiate the

representation.

Parts VI and VII of the proposed order include safe harbor

provisions allowing respondents to make any representation permitted in

labeling by the Food and Drug Administration for food under the

Nutrition Labeling and Education Act of 1990, and for drugs under any

tentative final or final standard promulgated by the Food and Drug

Administration.

The remaining portions of the proposed order require respondents to

maintain materials relied upon in disseminating any representation

covered by this order, to distribute copies of the order to certain

officials and employees, to notify the Commission of changes in the

business and employment of the individual respondents, and to file

reports detailing respondents' compliance with the order.

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

proposed consent 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.

Dissenting Statement of Commissioner Deborah K. Owen in the Matter of

RN Nutrition (File No. 912-3145)

The reasons for my dissenting vote in this matter are identical to

those expressed in my separate statement in the companion case,

Metagenics, Inc. (File No. 912-3347), which is attached.

Dissenting Statement of Commissioner Deborah K. Owen in the Matter of

Metagenics, Inc. (File No. 912-3347)

Although I believe that certain of Metagenics' claims were

unsubstantiated and, therefore, I would have been inclined to support a

more narrow complaint, I must dissent from today's Commission action

because I believe that, on balance, it runs contrary to the public

interest. I fear that the breadth of the allegations in the

administrative complaint may convey the wrong message to the public and

thereby discourage not only truthful and nondeceptive claims about

calcium supplements but, ultimately, their use.

The Commission has taken great pains in recent years to articulate

and justify its standards for advertising interpretation and

substantiation. In taking this action today, I believe that the

Commission has essentially ceded its authority to the FDA on both

counts. In short, I find today's Commission action overly restrictive

and inconsistent with the previously announced policies of the

Commission. Accordingly, I respectfully dissent.

[FR Doc. 94-22432 Filed 9-9-94; 8:45 am]

BILLING CODE 6750-01-M