[Federal Register Volume 60, Number 91 (Thursday, May 11, 1995)]
[Notices]
[Pages 25230-25235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11556]



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FEDERAL TRADE COMMISSION
[File No. 942-3027]


Third Option Laboratories, Inc., 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, a Muscle Shoals, Alabama company and its 
officers to pay $480,000 to be used either for refunds to consumers or 
as disgorgement to the U.S. Treasury and to send a notice to consumers 
advising them of the consent agreement, which settles allegations that 
the respondents made a number of deceptive health claims for their 
``Jogging in a Jug'' beverage. In future advertisements for that 
beverage or similar products, the respondents would have to clearly and 
prominently state that there is no scientific evidence that the product 
provides any health benefits.

DATES: Comments must be received on or before July 10, 1995.

ADDRESSES: .Comments should be directed to: FTC/Office of the 
Secretary, Room 159, 6th St. and Pa. Ave., NW., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:
Toby Milgrom Levin or Loren G. Thompson, FTC/S-4002, Washington, D.C. 
20580. (202) 326-3156 or (202) 326-2049.

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: Third Option Laboratories, Inc., a 
corporation, and William J. McWilliams, Danny Bishop McWilliams, and 
Susan McWilliams Bolton, individually and as officers of said 
corporation. File No. 942-3027.

Agreement Containing Consent Order to Cease and Desist

    The Federal Trade Commission, having initiated an investigation of 
certain acts and practices of Third Option Laboratories, Inc., a 
corporation, and William J. McWilliams, Danny Bishop McWilliams, and 
Susan McWilliams Bolton, 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 acts and practices being 
investigated,
    It is hereby agreed by and between Third Option Laboratories, Inc., 
by its duly authorized officer, and William J. McWilliams, Danny Bishop 
McWilliams, and Susan McWilliams Bolton, individually and as officers 
of said corporation, and their attorney, and counsel for the Federal 
Trade Commission that:
    1. Proposed respondent Third Option Laboratories, Inc. is a 
corporation organized, existing, and doing business 
[[Page 25231]] under and by virtue of the laws of the State of Alabama, 
with its office and principal place of business at 2806 Avalon Avenue, 
Muscle Shoals, Alabama 35661.
    Proposed respondents William J. McWilliams, Danny Bishop 
McWilliams, and Susan McWilliams Bolton are owners and 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 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 that the law has been 
violated as alleged in the draft of complaint, or that the facts as 
alleged in the 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 draft of complaint here attached 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 U.S. Postal Service 
of the complaint 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 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 proposed complaint 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

I

    It is ordered that respondents, Third Option Laboratories, Inc., a 
corporation, its successors and assigns, and its officers, and William 
J. McWilliams, individually and as an officer of said corporation, 
Danny Bishop McWilliams, individually and as an officer of said 
corporation, and Susan McWilliams Bolton, individually and as an 
officer of said corporation, and respondents' agents, representatives, 
and employees, directly or through any corporation, subsidiary, 
division or other device, in connection with the manufacturing, 
labeling, advertising, promotion, offering for sale, sale or 
distribution of Jogging in a Jug, or any substantially similar 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 such product:
    A. Cures or alleviates heart disease or its symptoms, including 
arterial blockages;
    B. Substantially lowers serum cholesterol or triglycerides;
    C. Cures or alleviates arthritis or its symptoms;
    D. Breaks down or eliminates calcium or other mineral or chemical 
deposits in the circulatory system;
    E. Improves the condition of the circulatory system;
    F. Cleans internal organs;
    G. Prevents or reduces the risk of cancer, leukemia, heart disease, 
or arthritis;
    H. Provides the same health benefits as a jogging regimen;
    I. Cures or alleviates lethargy;
    J. Cures or alleviates dysentery;
    K. Cures or alleviates constipation;
    L. Stabilizes blood sugar levels in insulin-dependent diabetics;
    M. Aids in the recovery from viral diseases;
    N. Cures or alleviates swelling of the legs or muscle spasms; or
    O. Is approved by the United States Department of Agriculture.

II

    It is further ordered that respondents, Third Option Laboratories, 
Inc., a corporation, its successors and assigns, and its officers, and 
William J. McWilliams, individually and as an officer of said 
corporation, Danny Bishop McWilliams, individually and as an officer of 
said corporation, and Susan McWilliams Bolton, individually and as an 
officer of said corporation, and respondents' agents, representatives, 
and employees, directly or through any corporation, subsidiary, 
division or other device, in connection with the manufacturing, 
labeling, advertising, promotion, offering for sale, sale or 
distribution of any food, food or dietary supplement, or drug, as 
``food'' and ``drug'' are defined in sections 12 and 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, regarding the performance, safety, benefits, or efficacy 
of such product, unless such representation is true and, at the time of 
making such representation, respondents possess and rely upon competent 
and reliable scientific evidence that substantiates such 
representation.
    For purposes of this Order, ``component and reliable scientific 
evidence'' shall mean tests, analyses, research, studies, or other 
evidence based on the expertise of professionals in the relevant area, 
that have 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.

III

    It is further ordered that respondents, Third Option Laboratories, 
Inc., a [[Page 25232]] corporation, its successor and assigns, and its 
officers, and William J. McWilliams, individually and as an officer of 
said corporation, Danny Bishop McWilliams, individually and as an 
officer of said corporation, and Susan McWilliams Bolton, individually 
and as an officer of said corporation, and respondents' agents, 
representatives, and employees, directly or through any corporation, 
subsidiary, division or other device, in connection with the 
manufacturing, labeling, advertising, promotion, offering for sale, 
sale or distribution of any product 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, that such product has been tested, 
approved, or endorsed by any person, firm, organization, or government 
agency.

IV

    It is further ordered that respondents, Third Option Laboratories, 
Inc., a corporation, its successors and assigns, and its officers, and 
William J. McWilliams, individually and as an officer of said 
corporation, Danny Bishop McWilliams, individually and as an officer of 
said corporation, and Susan McWilliams Bolton, individually and as an 
officer of said corporation, and respondents' agents, representatives, 
and employees, directly or through any corporation, subsidiary, 
division or other device, in connection with the manufacturing, 
labeling, advertising, promotion, offering for sale, sale or 
distribution of any product 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 any 
such product represents the typical or ordinary experience of members 
of the public who use such product, unless such is the fact.

V

    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.

VI

    Nothing in this Order shall prohibit respondents from making any 
representation that is specifically permitted in labeling for any 
product by regulations promulgated by the Food and Drug Administration 
pursuant to the Nutrition Labeling and Education Act of 1990.

VII

    It is further ordered that respondents, Third Option Laboratories, 
Inc., a corporation, its successors and assigns, and its officers, and 
William J. McWilliams, individually and as an officer of said 
corporation, Danny Bishop McWilliams, individually and as an officer of 
said corporation, and Susan McWilliams Bolton, individually and as an 
officer of said corporation, and respondents' agents, representatives, 
and employees, directly or through any partnership, corporation, 
subsidiary, division or other device, in connection with the 
manufacturing, labeling, advertising, promotion, offering for sale, 
sale or distribution of Jogging in a Jug or any substantially similar 
product in or affecting commerce, as ``commerce'' is defined in the 
Federal Trade Commission Act, do forthwith cease and desist from 
employing the name ``Jogging in a Jug'' or any other name that 
communicates the same or similar meaning for such product; provided, 
however, that nothing in this Order shall prevent the use of such name 
if the material containing the name clearly and prominently contains 
the following disclosure:
    ``THERE IS NO SCIENTIFIC EVIDENCE THAT JOGGING IN A JUG [OR OTHER 
NAME] PROVIDES ANY HEALTH BENEFITS.''
    For the purposes of this Order, ``clearly and prominently'' shall 
mean as follows:
    A. In a television or video advertisement less than fifteen (15) 
minutes in length, the disclosure shall be presented simultaneously in 
both the audio and visual portions of the advertisement, accompanying 
the first presentation of the name. When the first presentation of the 
name appears in the audio portion of the advertisement, the disclosure 
shall immediately follow the name. When the first presentation of the 
name appears in the visual portion of the advertisement, the disclosure 
shall appear immediately adjacent to the name. The audio disclosure 
shall be delivered in a volume and cadence sufficient for an ordinary 
consumer to hear and comprehend it. The video disclosure shall be of a 
size and shade, and shall appear on the screen for a duration, 
sufficient for an ordinary consumer to read and comprehend it;
    B. In a video advertisement fifteen (15) minutes in length or 
longer, the disclosure shall be presented simultaneously in both the 
audio and visual potions of the advertisement, accompanying the first 
presentation of the name and immediately before each presentation of 
ordering instructions for the product. When the name that triggers the 
disclosure appears in the audio portion of the advertisement, the 
disclosure shall immediately follow the name. When the name that 
triggers the disclosure appears in the visual portion of the 
advertisement, the disclosure shall appear immediately adjacent to the 
name. The audio disclosure shall be delivered in a volume and cadence 
sufficient for an ordinary consumer to hear and comprehend it. The 
video disclosure shall be of a size and shade, and shall appear on the 
screen for a duration, sufficient for an ordinary consumer to read and 
comprehend it. Provided that, for the purposes of this provision, the 
oral or visual presentation of a telephone number or address for 
viewers to contact to place an order for the product in conjunction 
with the name shall be deemed a presentation of ordering instructions 
so as to require the presentation of the disclosure provided herein;
    C. In a radio advertisement, the disclosure shall immediately 
follow the first presentation of the name and shall be delivered in a 
volume and cadence sufficient for an ordinary consumer to hear and 
comprehend it;
    D. In a print advertisement, the disclosure shall be in close 
proximity to the largest presentation of the name, in a prominent type 
thickness and in a type size that is at least one-half that of the 
largest presentation of the name; provided, however, that the type size 
of the disclosure shall be no smaller than twelve (12) point type. The 
disclosure shall be of a color or shade that readily contrasts with the 
background of the advertisement;
    E. On a product label, the disclosure shall be in close proximity 
to the largest presentation of the name, in a prominent type thickness 
and in a type size that is at least one-half that of the largest 
presentation of the name; provided, however, that the type size of the 
disclosure shall be no smaller than twelve (12) point type. The 
disclosure shall be of a color or shade that readily contrasts with the 
background of the label; and
    F. On any packaging of the product shipped directly to consumers, 
the disclosure shall appear on each side of the packaging on which the 
name appears, in close proximity to the largest presentation of the 
name. The total area of the disclosure shall be at least half that of 
the name that triggers the disclosure. The disclosure shall be of a 
[[Page 25233]] color or shade that readily contrasts with the 
background of the packaging.
    Nothing contrary to, inconsistent with, or in mitigation of the 
above-required language shall be used in any advertising or labeling.
    Nothing in this part shall apply to: (1) Advertising appearing on 
items that are sold or given or caused to be sold or given by 
respondents to consumers for their personal use and that display the 
name ``Jogging in a Jug'' or any other name that communicates the same 
or similar meaning; or (2) the use of such name in a nonpromotional 
manner and solely for purposes of identification of the respondent 
corporation, including the use of such name as part of respondents' 
letterhead, on shipping labels, or on crates provided only to 
purchasers for resale.

VIII

    It is further ordered that respondents, Third Option Laboratories, 
Inc., its successors and assigns, William J. McWilliams, Danny Bishop 
McWilliams, and Susan McWilliams Bolton, shall pay to the Federal Trade 
Commission, by cashier's check or certified check made payable to the 
Federal Trade Commission and delivered to the Associate Director for 
Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 
6th and Pennsylvania Ave., NW, Washington, DC 20580, the sum of four 
hundred and eighty thousand dollars ($480,000). Respondent shall make 
this payment on or before the tenth day following the date of entry of 
this Order. In the event of any default on any obligation to make 
payment under this section, interest, computed pursuant to 28 U.S.C. 
1961(a), shall accrue from the date of default to the date of payment. 
The funds paid by respondents shall, in the discretion of the Federal 
Trade Commission, be used by the Commission to provide direct redress 
to purchasers of Jogging in a Jug in connection with the acts or 
practices alleged in the complaint, and to pay any attendant costs of 
administration. If the Federal Trade Commission determines, in its sole 
discretion, that redress to purchasers of this product is wholly or 
partially impracticable or is otherwise unwarranted, any funds not so 
used shall be paid to the United States Treasury. Respondent shall be 
notified as to how the funds are distributed, but shall have no right 
to contest the manner of distribution chosen by the Commission. No 
portion of the payment as herein provided shall be deemed a payment of 
any fine, penalty, or punitive assessment.

IX

    It is further ordered that respondents, Third Option Laboratories, 
Inc., its successors and assigns, William J. McWilliams, Danny Bishop 
McWilliams, and Susan McWilliams Bolton, shall, within thirty (30) days 
after the date of service of this Order, send by first class mail, 
postage prepaid and address correction requested, to the last address 
known to respondents of each consumer who purchased Jogging in a Jug in 
any manner directly from respondents since January 1, 1993, an exact 
copy of the notice attached hereto as Attachment A. The mailing shall 
not include any other documents.

X

    It is further ordered that respondents, Third Option Laboratories, 
Inc., its successors and assigns, William J. McWilliams, Danny Bishop 
McWilliams, and Susan McWilliams Bolton, shall:
    A. Within thirty (30) days after the date of service of this Order, 
send by first class certified mail, return receipt requested, to each 
purchaser for resale of Jogging in a Jug with which respondents have 
done business since January 1, 1993 an exact copy of the notice 
attached hereto as Attachment B. The mailing shall not include any 
other documents;
    B. In the event that respondents receive any information that 
subsequent to its receipt of Attachment B any purchaser for resale is 
using or disseminating any advertisement or promotional material that 
contains any representation prohibited by this Order, respondents shall 
immediately notify the purchaser for resale that respondents will 
terminate the use of said purchaser for resale if it continues to use 
such advertisements or promotional materials; and
    C. Terminate the use of any purchaser for resale about whom 
respondents receive any information that such purchaser for resale has 
continued to use advertisements or promotional materials that contain 
any representation prohibited by this Order after receipt of the notice 
required by subparagraph B of this part.

XI

    It is further ordered that respondents, Third Option Laboratories, 
Inc., its successors and assigns, and William J. McWilliams, Danny 
Bishop McWilliams, and Susan McWilliams Bolton, shall, for five (5) 
years after the last correspondence to which they pertain, maintain and 
upon request make available to the Federal Trade Commission for 
inspection and copying:
    A. Copies of all notification letters sent to consumers pursuant to 
part IX of this Order;
    B. Copies of all notification letters sent to purchasers for resale 
pursuant to subparagraph A of part X of this Order; and
    C. Copies of all communications with purchasers for resale pursuant 
to subparagraphs B and C of Part X of this Order.

XII

    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. Any advertisement making any representation covered by this 
order;
    B. All materials that were relied upon in disseminating such 
representation; and
    C. 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, and 
complaints or inquiries from governmental organizations.

XIII

    It is further ordered that respondents, Third Option Laboratories, 
Inc., its successors and assigns, shall:
    A. Within thirty (30) days after the date of service of this Order, 
provide a copy of this Order to each of respondent's current 
principals, officers, directors, and managers, and to all personnel, 
agents, and representatives having sales, advertising, or policy 
responsibility with respect to the subject matter of this Order; and
    B. For a period of seven (7) years from the date of service of this 
Order, provide a copy of this Order to each of respondent's principals, 
officers, directors, and managers, and to all personnel, agents, and 
representatives having sales, advertising, or policy responsibility 
with respect to the subject matter of this Order within three (3) days 
after the person assumes his or her position.

XIV

    It is further ordered that respondents, William J. McWilliams, 
Danny Bishop McWilliams, and Susan McWilliams Bolton, shall, for a 
period of seven (7) years after the date of service of this Order, 
notify the Commission within thirty (30) days of the discontinuance of 
[[Page 25234]] his or her present business or employment and of his or 
her affiliation with any new business or employment involving the 
manufacturing, labeling, advertising, marketing, promotion, offering 
for sale, sale, or distribution of any food, food or dietary 
supplement, or drug, as ``food'' and ``drug'' are defined in sections 
12 and 15 of the Federal Trade Commission Act. Each notice of 
affiliation with any new business or employment shall include 
respondent's new business address and telephone number, current home 
address, and a statement describing the nature of the business or 
employment and his or her duties and responsibilities.

XV

    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 under this order.

XVI

    It is further ordered that respondents shall, within sixty (60) 
days after service 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.

Attachment A

By First Class Mail, Postage Prepaid and Address Correction 
Requested

[To Be Printed on Third Option Laboratories, Inc. Letterhead]

[date]

    Dear Consumer: Our records indicate that you purchased Jogging 
in a Jug from Third Option Laboratories, Inc. This letter is to 
inform you of our settlement of a civil dispute with the Federal 
Trade Commission (``FTC'') regarding certain claims made in our 
advertising for Jogging in a Jug.
    The FTC alleged that advertisements for Jogging in a Jug have 
made false and unsubstantiated claims that the product can cure, 
treat, or prevent: (1) Heart disease (including arterial blockages); 
(2) arthritis; (3) cancer; (4) leukemia; (5) dysentery; (6) 
constipation; (6) lethargy; (8) swelling of the legs; and (9) muscle 
spasms. The FTC has also alleged that our claims that Jogging in a 
Jug can ``clean'' internal organs, break down or eliminate deposits 
in the circulatory system, aid in the recovery from viral diseases, 
lower serum cholesterol and triglyceride levels, and stabilize blood 
sugar levels in diabetics, are false and unsubstantiated. Finally, 
the FTC has alleged that we have made false and unsubstantiated 
claims that Jogging in a Jug provides the same health benefits as 
jogging.
    Our settlement with the FTC prohibits us from making these or 
other claims for Jogging in a Jug or any other food, drug, or 
supplement in the future unless the claims are supported by 
competent and reliable scientific evidence. We deny the FTC's 
allegations, but have agreed to send this letter as a part of our 
settlement with the FTC.

      Sincerely,
William J. McWilliams,
President, Third Option Laboratories, Inc.

Attachment B

By Certified Mail, Return Receipt Requested

[To Be Printed on Third Option Laboratories, Inc. letterhead]

[date]

    Dear [purchaser for resale]: Third Option Laboratories, Inc. 
recently settled a civil dispute with the Federal Trade Commission 
(``FTC'') regarding certain claims for our product, Jogging in a 
Jug. As a part of the settlement, we are required to make sure that 
our distributors and wholesalers stop using or distributing 
advertisements or promotional materials containing those claims.
    The FTC alleged that the advertisements for Jogging in a Jug 
have made false and unsubstantiated claims that the product can 
cure, treat, or prevent: (1) Heart disease (including arterial 
blockages); (2) arthritis; (3) cancer; (4) leukemia; (5) dysentery; 
(6) constipation; (7) lethargy; (8) swelling of the legs; and (9) 
muscle spasms. The FTC has also alleged that our claims that Jogging 
in a Jug can ``clean'' internal organs, break down or eliminate 
deposits in the circulatory system, aid in the recovery from viral 
diseases, lower serum cholesterol and triglyceride levels, and 
stabilize blood sugar levels in diabetics, are false and 
unsubstantiated. Finally, the FTC has alleged that we have made 
false and unsubstantiated claims that Jogging in a Jug provides the 
same health benefits as jogging.
    Our settlement with the FTC prohibits us from making these or 
other claims for Jogging in a Jug or any other food, drug, or 
supplement in the future unless the claims are supported by 
competent and reliable scientific evidence. We deny the FTC's 
allegations, but have agreed to send this letter as a part of our 
settlement with the FTC.
    We request your assistance by asking you to discontinue using, 
relying on or distributing any of your current Jogging in a Jug 
advertising or promotional material. Please also notify any of your 
retail or wholesale customers who may have such materials to 
discontinue using them. If you continue to use those materials, we 
are required by the FTC settlement to stop doing business with you.
    Thank you very much for your assistance.

      Sincerely,
William J. McWilliams,
President, Third Option Laboratories, Inc.

Analysis of Proposed Consent Order to Aid Public Comment

    The Federal Trade Commission has accepted an agreement to a 
proposed consent order from Third Option Laboratories, Inc. (``Third 
Option''), and William J. McWilliams, Danny Bishop McWilliams, and 
Susan McWilliams Bolton, officers of Third Option.
    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 or make final the agreement's proposed 
order.
    This matter concerns Jogging in a Jug, a juice and vinegar beverage 
marketed by Third Option. The Commission's proposed complaint alleges 
that the respondents falsely represented in its advertising and 
promotional material that Jogging in a Jug would: (1) Cure or alleviate 
heart disease and its symptoms, including arterial blockages; (2) 
substantially lower serum cholesterol and triglycerides; (3) cure or 
alleviate arthritis and its symptoms; (4) break down or eliminate 
calcium or other mineral or chemical deposits in the circulatory 
system; (5) improve the condition of the circulatory system; (6) clean 
internal organs; (7) prevent or reduce the risk of cancer, leukemia, 
heart disease, and arthritis; (8) provide the same health benefits as a 
jogging regimen; (9) cure or alleviate lethargy; (10) cure or alleviate 
dysentery; (11) cure or alleviate constipation; (12) stabilize blood 
sugar levels in insulin-dependent diabetics; (13) aid in the recovery 
from viral infections; and (14) cure or alleviate swelling of the legs 
and muscle spasms. The proposed complaint further alleges that 
respondents falsely represented that they relied on a reasonable basis 
for these claims.
    In addition, the proposed complaint alleges that respondents 
falsely represented that Jogging in a Jug was approved by the United 
States Department of Agriculture and that the testimonials or 
endorsements from consumers contained in the advertisements and 
promotional materials for Jogging in a Jug reflect the typical or 
ordinary experiences of members of the public who use the product. The 
proposed complaint further alleges that respondents falsely represented 
that they relied on a reasonable basis for these claims.
    The proposed consent order contains provisions designed to prevent 
the respondents from engaging in similar acts and practices in the 
future. Part I of the proposed order prohibits the respondents from 
making the [[Page 25235]] representations challenged as false in the 
proposed complaint for Jogging in a Jug or any substantially similar 
product.
    Part II of the proposed order prohibits the respondents from making 
any representation about the performance, safety, benefits, or efficacy 
of any food, food or dietary supplement, or drug, unless the 
representation is true and respondents possess competent and reliable 
scientific evidence that substantiates it.
    Part III of the proposed order prohibits the respondents from 
misrepresenting that any product has been tested, approved, or endorsed 
by any person, firm, organization, or government agency.
    Part IV of the proposed order prohibits the respondents from 
misrepresenting that any endorsement for any product reflects the 
typical or ordinary experience of members of the public who use the 
product.
    Parts V and VI of the order are safe harbor provisions. Part V 
allows representations for any drug that is permitted in the labeling 
for that drug under any tentative final or final standard promulgated 
by the Food and Drug Administration (``FDA''), or under any new drug 
application approved by the FDA. Part VI allows representations 
permitted in labeling for any product by regulations promulgated by FDA 
pursuant to the Nutrition Labeling and Education Act of 1990.
    Part VII of the order requires that the respondents cease using the 
name ``Jogging in a Jug'' or any name that communicates the same or 
similar meaning unless the material containing such name clearly and 
prominently contains the disclosure ``THERE IS NO SCIENTIFIC EVIDENCE 
THAT JOGGING IN A JUG [OR OTHER NAME] PROVIDES ANY HEALTH BENEFITS.'' 
The terms of Part VII do not apply to: (1) The use of such name on 
items that are sold or given or caused to be sold or given to consumers 
for their personal use; or (2) the use of such name in a nonpromotional 
manner and solely for purposes of identification of the respondent 
corporation, including the use of such name as part of corporate 
letterhead, on shipping labels, or on crates provided only to 
purchasers for resale.
    Part VIII of the order requires respondents to pay to the 
Commission the sum of four hundred and eighty thousand dollars 
($480,000). The Commission will then determine, in its sole discretion, 
whether to use the payment to provide direct redress to consumers or to 
pay the funds to the United States Treasury if redress is not 
practicable.
    Part IX of the order requires the respondents to send a letter 
describing this settlement to identifiable past purchasers of Jogging 
in a Jug. Part X of the order requires the respondents to send a 
similar letter to their purchasers for resale. Part X further requires 
the respondents to notify their purchasers for resale that if the 
purchasers for resale do not stop using promotional materials 
containing claims covered by the order, the respondents are required to 
stop doing business with them. Part XI of the order requires that the 
respondents maintain for five years copies of all communications with 
consumers and purchasers for resale pursuant to the terms of Parts IX 
and X.
    Parts XII, XIII, XIV, XV, and XVI relate to the respondents' 
obligation to maintain records, distribute the order to current and 
future officers and employees, notify the Commission of changes in 
employment or corporate structure, and file compliance reports with the 
Commission.
    The purpose of this analysis is to facilitate public comment on the 
proposed order, and 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.

Statement of Commissioner Mary L. Azcuenaga, Concurring in Part and 
Dissenting in Part, Third Option Laboratories, Inc., File No. 942 3027

    Today, the Commission accepts for public comment a consent 
agreement to remedy various misrepresentations concerning the purported 
health benefits of a drink called ``Jogging in a Jug.'' The record 
shows that the claims are far removed from reality, and there is ample 
reason to believe they violated section 5 of the FTC Act. I concur in 
the complaint on which the order is based except to the extent that it 
alleges as a violation the content of newspaper articles that are 
reproduced in the respondents' promotional materials and those 
materials accurately identify and reproduce such articles in their 
original format without modification. Complaint 7 and Exhibit F.
    Second, I dissent from Part VII of the order. Although the 
complaint does not challenge as materially misleading the unadorned use 
of the product's name, Jogging in a Jug (nor would I, given the absence 
of evidence), Part VII of the order prohibits, in connection with the 
advertising and sale of Jogging in a Jug (or any similar product), use 
of the name Jogging in a Jug, or any other name communicating a similar 
meaning, unless the name is accompanied clearly and prominently by a 
disclosure stating: ``THERE IS NO SCIENTIFIC EVICENCE THAT JOGGING IN A 
JUG [or other name] PROVIDES ANY HEALTH BENEFITS,'' and which includes 
six extensive paragraphs minutely detailing what will constitute 
``clearly and prominently'' for purposes of compliance with this 
requirement.
    The Commission in the past has used this form of relief, which can 
substantially limit potentially lawful conduct, to remedy health claims 
that seem more credible than those likely to be taken by reasonable 
consumers here. For example, the Commission imposed a similar 
requirement to remedy the pain relief claim it found to have been 
conveyed by the name ``Aspercreme'' in Thompson Medical Co., 104 F.T.C. 
648 (1984). The likelihood that a consumer would except that a product 
named Aspercreme would contain aspirin and would rely on that claim to 
his or her detriment seems to me far greater than the likelihood that a 
consumer would rely to his or her detriment on an implied message that 
a product called Jogging in a Jug would provide the health benefits of 
jogging.

[FR Doc. 95-11556 Filed 5-10-95; 8:45 am]
BILLING CODE 6750-01-M