Quantum Electronics Corp., et al.; Proposed Consent Agreement with Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 932-3111]

Quantum Electronics Corp., 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 Warwick, Rhode Island based company and

its principal officers from making unsubstantiated claims about the

ability of any air cleaning product to eliminate, remove, clear or

clean any indoor air pollutant--or any quantity of indoor air

pollutants--from a user's environment.

DATES: Comments must be received on or before September 5, 1995.

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: Jeffrey Klurfeld, Kerry O'Brien, and

Linda Badger, San Francisco Regional Office, Federal Trade Commission,

901 Market Street, Suite 570, San Francisco, CA 94103. (415) 744-7920.

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)).

The Federal Trade Commission having initiated an investigation of

certain acts and practices of Quantum Electronics Corporation, a

corporation, Albert O. Coates, Maurice Lepenven, and Jacqueline J.

Maynard, individually and as officers 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 use of the acts and practices being investigated,

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

duly authorized officers, and their attorney, and counsel for the

Federal Trade Commission that:

1. Proposed respondent Quantum Electronics Corporation is a

corporation organized, existing, and doing business under and by virtue

of the laws of the State of Rhode Island, with its office and principal

place of business located at 110 Jefferson Blvd., in the City of

Warwick, State of Rhode Island.

Proposed respondents Albert O. Coates, Maurice Lepenven,and

Jacqueline J. Maynard are officers of said corporation. They formulate,

direct, and control the policies, acts and practices of said

corporation and their address is the same as that of said corporation.

2. Proposed respondents admit all the jurisdictional facts set

forth in the draft of 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; and

c. All rights to seek judicial review or otherwise to challenge or

contest the

[[Page 35030]]

validity of the order entered pursuant to this agreement.

4. 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 draft of

complaint contemplated thereby, 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 of facts, other than

jurisdictional facts, or of violations of law as alleged in the draft

complaint.

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, (a) issue its compliant corresponding in form and

substance with the draft of complaint here attached and its decision

containing the following order to cease and desist in disposition of

the proceeding and (b) 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 compliant and decision containing the agreed-to order to proposed

respondents' address as stated in this agreement shall constitute

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

other manner of service. The complaint may be used in canstruing 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.

7. Proposed respondents have read the proposed compliant and 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

For the purposes of this Order, the following definitions shall

apply:

A. The term ``air cleaning product'' shall mean any product,

equipment, or appliance designed or advertised to remove, treat, or

reduce the level of any pollutant(s) in the air.

B. The terms ``indoor air pollutant(s)'' or ``pollutant(s)'' shall

mean one or more of the following: Odors, nitrogen dioxide,

formaldehyde, sulfur dioxide, ammonia, trichlorethylene, carbon

dioxide, hydrogen sulfide, methane, mold, mildew, bacteria, dust,

chlorine, fungi, volatile organic compounds, viruses, or any other

gaseous or particulate matter found in indoor air.

C. The term ``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.

I.

It is ordered that respondents Quantum Electronics Corporation, a

corporation, its successors and assigns, and its officers, and Albert

O. Coates, Maurice Lepenven, and Jacqueline J. Maynard, individually

and as officers of said corporation, and respondents' agents,

representatives, and employees, directly or through any corporation,

subsidiary, division or other device, in connection with the

manufacturing, labelling, advertising, promotion, offering for sale,

sale, or distribution of any air cleaning product 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,

A. Such product's ability to eliminate, remove, clear, or clean any

indoor air pollutant from a user's environment; or

B. Such product's ability to eliminate, remove, clear, or clean any

quantity of indoor air pollutants from a user's environment;

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

and rely upon competent and reliable scientific evidence that

substantiates the representation.

II.

It is ordered that respondents Quantum Electronics Corporation, a

corporation, its successors and assigns, and its officers, and Albert

O. Coates, Maurice Lepenven, and Jacqueline J. Maynard, individually

and as officers of said corporation, and respondents' agents,

representatives, and employees, directly or through any corporation,

subsidiary, division or other device, in connection with the

manufacturing, labelling, advertising, promotion, offering for sale,

sale, or distribution of any air cleaning product 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:

A. The use of ozone is more effective in cleaning or purifying

indoor air than other air cleaning methods;

B. The product does not create harmful by-products; or

C. When used as directed, the product prevents or provides relief

from allergies, asthma, and viruses;

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

and rely upon competent and reliable scientific evidence that

substantiates the representation.

III.

It is further ordered that respondents, Quantum Electronics

Corporation, a corporation, its successors and assigns, and its

officers, and Albert O. Coates, Maurice Lepenven, and Jacqueline J.

Maynard, individually and as officers of said corporation, and

respondents' agents, representatives and employees, directly or through

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

with the manufacturing, labelling, advertising, promotion, offering for

sale, sale, or distribution of any air cleaning product 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, the efficacy, performance, or health-

related benefit of any such 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 the representation.

IV.

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

[[Page 35031]]

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.

V.

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 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 arising out of this Order.

VI.

It is further ordered that each individual respondent shall, for a

period of five (5) years after the date of service of this Order upon

him/her, promptly notify the Commission, in writing, of his/her

discontinuance of his/her present business or employment and of his/her

affiliation with a new business or employment. For each such new

affiliation, the notice shall include the name and address of the new

business or employment, a statement of the nature of the new business

or employment, and a description of respondent's duties and

responsibilities in connection with the new business or employment.

VII.

It is further ordered that the corporate respondent shall, within

ten (10) days from the date of service of this Order upon it,

distribute a copy of this Order to each of its officers, agents,

representatives, independent contractors, and employees involved in the

preparation and placement of advertisements or promotional materials,

or who is in communication with customers or prospective customers, or

who has any responsibilities with respect to the subject matter of this

Order; and for a period of three (3) years, from the date of issuance

of this Order, distribute a copy of this Order to all of respondent's

future such officers, agents, representatives, independent contractors,

and employees.

VIII.

It is further ordered that the corporate respondent shall, within

ten (10) days from the date of service of this Order upon it, deliver

by first class mail or in person a copy of this Order to each of its

present distributors or retailers of its ozone generators.

IX.

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

days from the date of 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 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 Quantum

Electronics Corporation, a Rhode Island corporation, and Albert O.

Coates, Maurice Lepenven, and Jacqueline J. Maynard, individually and

as officers of the 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 advertising of ozone generators, including

the ``Panda 200,'' as air cleaning products for use in homes, offices,

other commercial establishments, and boats. The Commission's complaint

charges that respondents' advertising contained unsubstantiated

representations concerning the efficacy of their ozone generators in

cleaning the air.

Sepcifically, the complaint alleges that the respondents lacked

substantiation for their claims that: (1) When used as directed, the

Panda 200 eliminates, removes, clears, or cleans formaldehyde, sulfur

dioxide, ammonia, trichlorethylene, carbon dioxide, hydrogen sulfide,

methane, odors, nitrogen dioxide, mold, mildew, bacteria, dust,

chlorine, fungi, volatile organic compounds, viruses, and noxious or

toxic gasses from a user's environment; (2) the use of ozone is more

effective in cleaning or purifying indoor air than air cleaning

products that use filters; (3) the Panda 200 does not create harmful by

products; and (4) when used as directed, the Panda 200 prevents or

provides relief from allergies, asthma, and viruses.

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 respondents from

representing any air cleaning product's ability to eliminate, remove,

clear, or clean any indoor air pollutant or any quantity of indoor air

pollutants from a user's environment, unless respondents possess

competent and reliable scientific evidence that substantiates the

representation.

Similarly, Part II of the proposed order prohibits respondents from

claiming that (1) the use of ozone is more effective in cleaning or

purifying indoor air than other air cleaning methods, (2) any air

cleaning product does not create harmful by-products, or (3) when used

as directed, any air cleaning product prevents or provides relief from

allergies, asthma, and viruses, unless respondents possess competent

and reliable scientific evidence that substantiates the representation.

As fencing-in relief, Part III of the proposed order provides that

if respondents represent the efficacy, performance, or health-related

benefit of any air cleaning product, respondents must possess competent

and reliable evidence that substantiates the representation.

The proposed order also requires respondents to maintain materials

relied upon to substantiate claims covered by the order; to notify the

Commission of any change in the corporate structure that might affect

compliance with the order; to notify the Commission of certain changes

in the business or employment of the named individual respondents; to

provide a copy of the consent agreement to their employees involved in

the preparation and placement of respondents' advertisements, or in

communication with respondents' customers or prospective customers; to

distribute a copy of the order to their present distributors or

retailers of their ozone generators; 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

[[Page 35032]]

the agreement and proposed order or to modify in any way their terms.

Donald S. Clark,

Secretary.

[FR Doc. 95-16447 Filed 7-3-95; 8:45 am]

BILLING CODE 6750-01-M