[Federal Register Volume 59, Number 87 (Friday, May 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10943]


[[Page Unknown]]

[Federal Register: May 6, 1994]


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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