[Federal Register Volume 60, Number 127 (Monday, July 3, 1995)]
[Notices]
[Pages 34540-34543]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16256]



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FEDERAL TRADE COMMISSION
[File No. 942-3058]


Live-Lee Productions, Inc.; 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 Los Angeles based corporation, and Ruta 
Lee, who directs and controls the corporation, from making claims for 
any food, dietary supplement or drug unless they have competent and 
reliable scientific evidence to support the claims.

DATES: Comments must be received on or before September 1, 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:
Lisa B. Kopchik or Joel Winston, FTC/S-4002, Washington, DC 20580. 
(202) 326-3139 or (202) 326-3153.

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: Live-Lee Productions, Inc., a corporation, and 
Ruta Lee, individually and as an officer and director of said 
corporation, File No. 942-3058.

Agreement Containing Consent Order to Cease and Desist

    The Federal Trade Commission having initiated an investigation of 
certain acts and practices of Live-Lee Productions, Inc., a 
corporation, and Ruta Lee, individually and as an officer and director 
of said corporation, hereinafter sometimes referred to as proposed 
respondents, and it now appears 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 Live-Lee Productions, Inc., a 
corporation, by its duly authorized officer, and Ruta Lee, individually 
and as an officer and director of said corporation, and counsel for the 
Federal Trade Commission that:
    1. Proposed respondent Live-Lee Productions, Inc. is a corporation 
organized, existing, and doing business under and by virtue of the laws 
of the States of Texas, with its offices and principal place and 
business at 2761 Laurel Canyon Boulevard, Los Angeles, California 
90046.
    Proposed respondent Ruta Lee is an officer and director of said 
corporation. She formulates, directs, and controls the policies, acts, 
and practices of said corporation. She resides at 2436 Shirley Avenue, 
Fort Worth, Texas 76109.
    2. Proposed respondents admit all the jurisdictional facts set 
froth in the draft of the 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.

[[Page 34541]]

    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 
the complaint contemplated thereby, will be placed in 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 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 to the draft of 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 
complaint and decision containing the agreed-to order to proposed 
respondents' addresses 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 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 Live-Lee Productions, Inc., a 
corporation, its successors and assigns, and its officers; and Ruta 
Lee, individually and as an officer and director 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, advertising, packaging, 
labeling, promotion, offering for sale, sale or distribution of Life 
Way Vitamin C and Zinc Spray, Life Way Antioxidant Spray, Life Way 
Vitamin B-12 Spray, or any other food, food or dietary supplement, or 
drug, as ``food'' and ``drug'' are defined in section 15 of the Federal 
Trade Commission Act, 15 U.S.C. 55, 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:
    A. That such product:
    1. Is more fully absorbed by the human body than any other product;
    2. Heals lesions in the mouth, cold sores on the mouth, or cracking 
of the corners of the lips;
    3. Prevents common colds;
    4. Effectively treats symptoms related to hangovers;
    5. Increases energy;
    6. Ensures the proper functioning of the immune system;
    7. Reduces the risk of contracting infectious diseases;
    8. Prevents facial lines; or
    B. That use of the product can or will have any effect on the 
user's health, or on the structure or function of the human body,

unless, at the time of making such representation, respondents possess 
and rely upon competent and reliable scientific evidence that 
substantiates the representation. For the purpose 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 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;
    Provided that it shall be a defense hereunder that the respondents 
neither knew nor had reason to know of the inadequacy of substantiation 
for the representations.

II

    It is further ordered that respondents Live-Lee Productions, Inc., 
a corporation, its successors and assigns, and its officers; and Ruta 
Lee, individually and as an officer and director 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, advertising, packaging, 
labeling, promotion, offering for sale, sale or distribution of Life 
Way Smoke-Less Nutrient Spray or any other smoking cessation product, 
program, or service, 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:
    A. That such product, program, or service enables smokers, 
regardless of how long they have smoked or how much they smoke, to stop 
smoking easily;
    B. That such product, program, or service satisfies the 
physiological urge to smoke a cigarette, or eliminates the quivering, 
anxiety and weight gain attendant with quitting smoking; or
    C. Regarding the performance, benefits, efficacy or safety of any 
such product, program, or service,

unless, at the time of making such representation, respondents possess 
and rely upon competent and reliable scientific evidence that 
substantiates the representation;
    Provided that it shall be a defense hereunder that the respondents 
neither knew nor had reason to know of the inadequacy of substantiation 
for the representation.

III

    It is further ordered that, for five (5) years after the last date 
of dissemination of any representation covered by this Order, 
respondents Live-Lee Productions, Inc., a corporation, its successors 
and assigns, and its officers; and Ruta Lee individually and as an 
officer and director of said corporation, 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 

[[Page 34542]]
contradict, qualify, or call into question such representation, or the 
basis relied upon for such representation, including complaints from 
consumers.

IV

    It is further ordered that respondents Live-Lee Productions, Inc. 
shall, within thirty (30) days after 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.
V

    It is further ordered that respondent Live-Lee Productions, Inc. 
shall notify the Federal Trade Commission at least thirty (30) days 
prior to any proposed change in its corporate structure, including but 
not limited to dissolution, assignment or sale resulting in the 
emergence of a successor corporation, the creation or dissolution of 
subsidiaries or affiliates, the planned filing of a bankruptcy 
petition, or any other corporate change that may affect compliance 
obligations arising out of this Order.

VI

    It is further ordered that respondent Ruta Lee shall, for a period 
of five (5) years from the date of issuance of this Order, notify the 
Commission within thirty (30) days of the discontinuance of her present 
business or employment and of her affiliation with any new business or 
employment which involves the sale of consumer products. Each notice of 
affiliation with any new business or employment shall include the 
respondent's new business address and telephone number, current home 
address, and a statement describing the nature of the business or 
employment and her duties and responsibilities.

VII

    It is further ordered that respondents Live-Lee Productions, Inc., 
a corporation, its successors and assigns, and its officers; and Ruta 
Lee, individually and as an officer and director of said corporation, 
shall, within sixty (60) days after service of this Order, and at such 
other times as the Federal Trade 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 to a 
proposed consent order from Live-Lee Productions, Inc. (``Live-Lee'') 
and Ruta Lee (``Lee'').
    The proposed consent order has been placed on the public record for 
sixty (60) days for receipt 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 involves alleged deceptive representations for three 
spray vitamin products and a spray smoking cessation product. The 
products at issue are Life Way Vitamin C and Zinc Spray, Life Way 
Antioxidant Spray, Life Way Vitamin B-12 Spray, and Life Way Smoke-Less 
Nutrient Spray. The complaint charges that Lee performed the functions 
of an advertising agency by creating and disseminating the 
representations, and that she received a royalty for each unit of 
product that was sold. The claims were made on television 
advertisements called ``Spotlight on Ruta Lee.'' These advertisements 
were broadcast on the Home Shopping Club, commercial programming shown 
on the Home Shopping Network.
    Live-Lee is Lee's closely-held corporation, which is engaged in the 
business of providing the services of Ruta Lee in connection with the 
marketing, advertising, sale and distribution of consumer products. Lee 
is an officer, director, and sole shareholder of Live-Lee.
    According to the FTC complaint, Lee made claims that the vitamins 
in the spray products are more fully absorbed by the human body than 
vitamins taken in pill form; and that the vitamins would heal mouth 
lesions, cold sores, and cracking of the corners of the lips; prevent 
common colds; treat hangover symptoms; increase users' energy; ensure 
the proper functioning of the immune system; reduce the risk of 
contracting infectious diseases; and prevent facial lines. The 
complaint also alleges that Lee made claims that the smoking cessation 
spray would enable smokers, regardless of how long they have smoked or 
how much they smoke, to stop smoking easily; and would satisfy the 
physiological urge to smoke a cigarette and eliminate the quivering, 
anxiety and weight gain that go along with quitting smoking. The 
complaint alleges that the respondents did not have substantiation for 
these representations at the time they were made. The complaint further 
alleges that the respondents knew or should have known that the 
representations were not substantiated.
    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 
representing that any food, food or dietary supplement, or drug can or 
will have any effect on the user's health, or on the structure or 
function of the human body, unless, at the time they make the 
representation, they possess and rely upon competent and reliable 
scientific evidence that substantiates the representation.
    Part II of the proposed order prohibits respondents from making any 
representation about the performance, benefits, efficacy, or safety of 
any smoking cessation product, program, or service, unless they have 
competent and reliable scientific evidence that substantiates the 
representation. With respect to both Parts I and II, the proposed order 
provides a defense to respondents if they neither knew nor had reason 
to know of the inadequacy of the substantiation for the representation.
    Part III requires that the respondents keep records concerning 
claims covered by the order, including materials that they relied upon 
when making the claims.
    Part IV requires respondent Live-Lee to provide a copy of the order 
to each of its 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 the 
order.
    Part V requires respondent Live-Lee to notify the Commission of any 
change in its corporate structure that might affect its compliance with 
the order.
    Part VI requires respondent Ruta Lee for 5 years to notify the 
Commission of any change in her business or employment or her 
affiliation with any new business or employment that involves the sale 
of consumer products.
    Part VII requires respondents to file compliance reports with the 
Commission.
    On March 3, 1995, the Commission issued a complaint against Home 
Shopping Network, Inc.; Home Shopping Club, Inc.; and HSN Lifeway 
Health Products, Inc. for their role in making and disseminating the 
same allegedly deceptive representations (Docket No. 9272). That case 
is now 

[[Page 34543]]
pending before an Administrative Law Judge.
    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.
[FR Doc. 95-16256 Filed 6-30-95; 8:45 am]
BILLING CODE 6750-01-M