[Federal Register Volume 86, Number 201 (Thursday, October 21, 2021)]
[Notices]
[Pages 58279-58284]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-22887]


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FEDERAL TRADE COMMISSION

[File No. 202 3179]


Resident Home, LLC; Analysis of Proposed Consent Order To Aid 
Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement; request for comment.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices. The attached Analysis of Proposed Consent Order to Aid 
Public Comment describes both the allegations in the draft complaint 
and the terms of the consent order--embodied in the consent agreement--
that would settle these allegations.

DATES: Comments must be received on or before November 22, 2021.

ADDRESSES: Interested parties may file comments online or on paper by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Please write ``Resident Home 
LLC; File No. 202 3179'' on your comment, and file your comment online 
at https://www.regulations.gov by following the instructions on the 
web-based form. If you prefer to file your comment on paper, mail your 
comment to the following address: Federal Trade Commission, Office of 
the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D), 
Washington, DC 20580, or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC 
20024.

FOR FURTHER INFORMATION CONTACT: Julia Solomon Ensor (202-326-2377), 
Bureau of Consumer Protection, Federal Trade Commission, 600 
Pennsylvania Avenue NW, Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned 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 thirty (30) days. The 
following Analysis to Aid Public Comment describes the terms of the 
consent agreement and the allegations in the complaint. An electronic 
copy of the full text of the consent agreement package can be obtained 
at https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before November 22, 
2021. Write ``Resident Home LLC; File No. 202 3179'' on your comment. 
Your comment--including your name and your state--will be placed on the 
public record of this proceeding, including, to the extent practicable, 
on the https://www.regulations.gov website.
    Due to the COVID-19 pandemic and the agency's heightened security 
screening, postal mail addressed to the Commission will be subject to 
delay. We strongly encourage you to submit your comments online through 
the https://www.regulations.gov website.
    If you prefer to file your comment on paper, write ``Resident Home; 
File No. 202 3179'' on your comment and on the envelope, and mail your 
comment to the following address: Federal Trade Commission, Office of 
the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D), 
Washington, DC 20580; or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW, 5th Floor, Suite 5610 (Annex D), Washington, DC 
20024. If possible, submit your paper comment to the Commission by 
courier or overnight service.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are solely responsible for 
making sure your comment does not include any sensitive or confidential 
information. In particular, your comment should not include sensitive 
personal information, such as your or anyone else's Social Security 
number; date of birth; driver's license number or other state 
identification number, or foreign country equivalent; passport number; 
financial account number; or credit or debit card number. You are also 
solely responsible for making sure your comment does not include 
sensitive health information, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 
16 CFR 4.10(a)(2)--including in particular competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). In particular, 
the written request for confidential treatment that accompanies the 
comment must include the factual and legal basis for the request, and 
must identify the specific portions of the comment to be withheld from 
the public record. See FTC Rule 4.9(c). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted on the https://www.regulations.gov website--as legally

[[Page 58280]]

required by FTC Rule 4.9(b)--we cannot redact or remove your comment 
from that website, unless you submit a confidentiality request that 
meets the requirements for such treatment under FTC Rule 4.9(c), and 
the General Counsel grants that request.
    Visit the FTC website at http://www.ftc.gov to read this document 
and the news release describing the proposed settlement. The FTC Act 
and other laws that the Commission administers permit the collection of 
public comments to consider and use in this proceeding, as appropriate. 
The Commission will consider all timely and responsive public comments 
that it receives on or before November 22, 2021. For information on the 
Commission's privacy policy, including routine uses permitted by the 
Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``FTC'' or ``Commission'') has 
accepted, subject to final approval, an agreement containing a consent 
order from Resident Home LLC, also d/b/a Nectar Sleep, DreamCloud 
Sleep, Awara Sleep, Level Sleep, Bundle Living, 1771 Living, 
Cloverlane, Wovenly Rugs, Sleep Authority, and Home Well Designed, and 
Ran Reske (``Respondents''). The proposed consent order has been placed 
on the public record for thirty (30) days for receipt of comments from 
interested persons. Comments received during this period will become 
part of the public record. After thirty (30) 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 Respondents' advertising of DreamCloud 
mattresses as of U.S. origin. According to the FTC's complaint, 
Respondents represented that DreamCloud mattresses were ``proudly made 
with 100% USA-made premium quality materials.'' However, the complaint 
alleges that, in numerous instances, DreamCloud mattresses are wholly 
imported or incorporate significant imported materials. In all 
instances, DreamCloud mattresses are finished overseas. Based on the 
foregoing, the complaint alleges that Respondents engaged in deceptive 
acts or practices in violation of Section 5(a) of the FTC Act.
    The proposed consent order contains provisions designed to prevent 
Respondents from engaging in similar acts and practices in the future. 
Consistent with the FTC's Enforcement Policy Statement on U.S.-Origin 
Claims, Part I prohibits Respondents from making U.S.-origin claims for 
their products unless either: (1) The final assembly or processing of 
the product occurs in the United States, all significant processing 
that goes into the product occurs in the United States, and all or 
virtually all ingredients or components of the product are made and 
sourced in the United States; (2) a clear and conspicuous qualification 
appears immediately adjacent to the representation that accurately 
conveys the extent to which the product contains foreign parts, 
ingredients or components, and/or processing; or (3) for a claim that a 
product is assembled in the United States, the product is last 
substantially transformed in the United States, the product's principal 
assembly takes place in the United States, and United States assembly 
operations are substantial.
    Part II prohibits Respondents from making any country-of-origin 
claim about a product or service unless the claim is true, not 
misleading, and Respondents have a reasonable basis substantiating the 
representation.
    Parts III through V are monetary provisions. Part III imposes a 
judgment of $753,300. Part IV includes additional monetary provisions 
relating to collections. Part V requires Respondents to provide 
sufficient customer information to enable the Commission to administer 
consumer redress, if appropriate.
    Part VI is a notice provision requiring Respondents to identify and 
notify certain DreamCloud mattress purchasers of the FTC's action 
within 30 days after the issuance of the order, or within 30 days of 
the customer's identification, if identified later. Respondents are 
also required to submit reports regarding their notification program.
    Parts VII through IX are reporting and compliance provisions. Part 
VII requires Respondents to acknowledge receipt of the order, to 
provide a copy of the order to certain current and future principals, 
officers, directors, and employees, and to obtain an acknowledgement 
from each such person that they have received a copy of the order. Part 
VIII requires Respondents to file a compliance report within one year 
after the order becomes final and to notify the Commission within 14 
days of certain changes that would affect compliance with the order. 
Part IX requires Respondents to maintain certain records, including 
records necessary to demonstrate compliance with the order. Part X 
requires Respondents to submit additional compliance reports when 
requested by the Commission and to permit the Commission or its 
representatives to interview Respondents' personnel.
    Finally, Part XI is a ``sunset'' provision, terminating the order 
after twenty (20) years, with certain exceptions.
    The purpose of this analysis is to aid public comment on the 
proposed order. It is not intended to constitute an official 
interpretation of the proposed order or to modify its terms in any way.
    By direction of the Commission, Commissioners Phillips and Wilson 
dissenting.

April J. Tabor,
Secretary.

Joint Statement of Chair Lina M. Khan, Commissioner Rohit Chopra, and 
Commissioner Rebecca Kelly Slaughter

    The parties named in this matter are no strangers to the 
Commission. In 2018, the FTC finalized a settlement with Nectar Brand 
LLC (also doing business as DreamCloud, LLC, and DreamCloud Brand LLC) 
(``Nectar'') related to false ``Assembled in USA'' claims about the 
company's wholly imported mattresses. Shortly after that settlement, 
CEO Ran Reske and Nectar's other officers reorganized the company and 
its subsidiaries under a new ultimate parent entity, Resident Home LLC 
(``Resident''). Despite the reorganization and being under active 
compliance monitoring as part of the 2018 Nectar order, old habits die 
hard. Misleading made in USA (``MUSA'') claims continued to appear on 
the website of DreamCloud Brand LLC in 2019 and 2020, contrary to 
Reske's statements made under penalty of perjury as part of required 
compliance reports. Today's action sends an unambiguous message about 
the importance of complying with prior Commission orders. In addition 
to injunctive provisions, the proposed settlement contains monetary 
relief of $753,300 and requires Resident to notify consumers of the 
FTC's action. Together with the Commission's recent MUSA rule,\1\ these 
remedies signal to businesses that MUSA abuses--which harm both 
consumers and honest competitors--will not be tolerated by the FTC. Our 
dissenting colleagues suggest that the proposed settlement is not 
authorized by statute. This is incorrect. The settlement is squarely 
within the Commission's statutory

[[Page 58281]]

authority. The dissent contends that the monetary relief in this 
settlement goes beyond what is permitted by Section 19 of the FTC Act. 
In fact, Section 19 expressly authorizes payment of redress and 
damages. The dissent attempts to sidestep this clear statutory 
authority by narrowly equating ``damages'' with restoration of money to 
particular consumers. However, such an interpretation runs contrary to 
the standard legal meaning of the term.\2\ Furthermore, MUSA fraud can 
result in significant consequential damages, both to consumers and, 
especially, to honest businesses that lose out on sales. Against this 
backdrop, the proposed monetary relief, far from being a penalty of the 
sort prohibited by Section 19, is reasonable and well within the 
Commission's legal authority. The dissent also presents a highly 
restrictive reading of the types of relief ``explicitly authorized'' by 
Section 19. But despite admonishing the Commission ``that the words of 
a statute matter'', the dissent misses the statute's language expressly 
stating that the relief available is not limited to the types 
explicitly enumerated (``Such relief may include, but shall not be 
limited to . . .''). Thus, even if the dissent were not mistaken about 
what is covered under ``damages'', the relief obtained here still would 
not be foreclosed by the statutory language. Finally, even if the 
dissent were not incorrect about the extent of the relief the 
Commission could obtain under Section 19 at trial, it would still be 
wrong about the lawfulness of the relief obtained in this settlement. 
Supreme Court precedent makes clear that federal courts may approve 
settlements that include relief beyond what could have been awarded at 
trial.\3\ We agree with our dissenting colleagues that Congress should 
act swiftly to restore our Section 13(b) authority, and like them we 
have directly urged Congress to do so.\4\ But, as we have also 
consistently emphasized, the FTC needs to use all its tools to protect 
consumers and competition within the bounds of our existing 
authority.\5\ While Congress works to deliver a Section 13(b) fix, 
Section 19 and other extant statutory tools \6\ will be crucial in 
allowing the FTC to obtain monetary redress in consumer protection 
cases.
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    \1\ See Press Release, Fed Trade Comm'n, FTC Issues Rule to 
Deter Rampant Made in USA Fraud (July 1, 2021), https://www.ftc.gov/news-events/press-releases/2021/07/ftc-issues-rule-deter-rampant-made-usa-fraud.
    \2\ See Rohit Chopra and Samuel Levine, The Case for 
Resurrecting the FTC Act's Penalty Offense Authority, U. PA. L. REV. 
(forthcoming), fn. 37, https://papers.ssrn.com/sol3/papers.cfm?abstract_id= 3721256 (``Black's Law Dictionary defines 
consequential damages as `[l]osses that do not flow directly and 
immediately from an injurious act but that result indirectly from 
the act.' DAMAGES, Black's Law Dictionary (11th ed. 2019). We have 
been unable to identify a Section 19 matter where the FTC pursued 
damages, which is traditionally understood to be a legal remedy 
rather than an equitable remedy. Unlike equitable relief, damages 
can conceivably capture a broad range of harms, including indirect 
consequences of deception. As the FTC faces threats to its authority 
to seek equitable relief, the agency should consider pursuing this 
alternative form of relief in more cases.'').
    \3\ Firefighters v. City of Cleveland, 478 U.S. 501, 525 (1986) 
(``a federal court is not necessarily barred from entering a consent 
decree merely because the decree provides broader relief than the 
court could have awarded after a trial'').
    \4\ See Press Release, Fed. Trade Comm'n, FTC Asks Congress to 
Pass Legislation Reviving the Agency's Authority to Return Money to 
Consumers Harmed by Law Violations and Keep Illegal Conduct from 
Reoccurring (Apr. 27, 2021), https://www.ftc.gov/news-events/press-releases/2021/04/ftc-asks-congress-pass-legislation-reviving-agencysauthority. See also Hearing on ``Strengthening the Federal 
Trade Commission's Authority to Protect Consumers'': Before the U.S. 
Senate Committee on Commerce, Science, and Transportation, Prepared 
Oral Statement of FTC Commissioner Noah Joshua Phillips, Fed. Trade 
Comm'n (Apr. 20, 2021), https://www.ftc.gov/system/files/documents/public_statements/1589176/formatted_prepared_statement_0420_senate_hearing_42021_final.pdf; 
Hearing on ``Strengthening the Federal Trade Commission's Authority 
to Protect Consumers'': Before the U.S. Senate Committee on 
Commerce, Science, and Transportation, Oral Statement of 
Commissioner Christine S. Wilson, Fed. Trade Comm'n (Apr. 20, 2021), 
https://www.ftc.gov/system/files/documents/public_statements/1589180/opening_statement_final_for_postingrevd.pdf; Hearing on 
``Strengthening the Federal Trade Commission's Authority to Protect 
Consumers'': Before the U.S. Senate Committee on Commerce, Science, 
and Transportation, Opening Statement of Acting Chairwoman Rebecca 
Kelly Slaughter, Fed. Trade Comm'n (Apr. 20, 2021), https://www.ftc.gov/system/files/documents/public_statements/1589184/opening_statement_april_20_senate_oversight_hearing_420_final.pdf; 
Hearing on ``Strengthening the Federal Trade Commission's Authority 
to Protect Consumers'': Before the U.S. Senate Committee on 
Commerce, Science, and Transportation, Prepared Opening Statement of 
Commissioner Rohit Chopra, Fed. Trade Comm'n (Apr. 20, 2021), 
https://www.ftc.gov/system/files/documents/public_statements/1589172/final_chopra_opening_statement_for_senate_commerce_committee_20210420.pdf.
    \5\ See, e.g., Joint Statement of Commissioner Rohit Chopra and 
Commissioner Rebecca Kelly Slaughter Concurring in Part, Dissenting 
in Part, In the Matter of Flo Health, Inc., Fed. Trade Comm'n (Jan. 
13, 2021), https://www.ftc.gov/system/files/documents/public_statements/1586018/20210112_final_joint_rmrks_statement_on_flo.pdf; Remarks of 
Commissioner Rebecca Kelly Slaughter, FTC Data Privacy Enforcement: 
A Time of Change, Cybersecurity and Data Privacy Conference, New 
York University School of Law (Oct. 16, 2020), https://www.ftc.gov/system/files/documents/public_statements/1581786/slaughter_-_remarks_on_ftc_data_privacy_enforcement_-_a_time_of_change.pdf.
    \6\ For instance, violators of administrative orders are subject 
to penalties and various forms of relief under Section 5(l) of the 
FTC Act. See Statement of Rohit Chopra In the Matter of Resident 
Home LLC Commission File No. 202 3179, Oct. 8, 2021.
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Statement of Commissioner Rohit Chopra

    Wow, that was fast. Soon after the Federal Trade Commission 
``punished'' Nectar Sleep through a no-money, no-fault order, the 
company and its affiliates clearly realized the FTC wasn't serious 
about Made in USA fraud, so here we are again.
    FTC orders are not suggestions, but many bad actors view them as 
such.\1\ And when companies do not adhere to agency orders, it is often 
a sign of more serious problems.\2\ Violations of FTC orders are 
punishable with civil penalties and a broad range of other relief.
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    \1\ This follows a slew of other repeat offenders when it comes 
to Made in USA requirements, a clear demonstration of the need for 
the policy shift the FTC is now making. See Rohit Chopra, 
Commissioner, Fed. Trade Comm'n., Statement of Commissioner Rohit 
Chopra Regarding the Notice of Proposed Rulemaking on Made in USA 
(June 22, 2020), https://www.ftc.gov/system/files/documents/public_statements/1577107/p074204musachoprastatementrev.pdf. See 
e.g., In the Matter of Williams-Sonoma, Inc., No. C-4724 (July 
2020), https://www.ftc.gov/system/files/documents/cases/2023025c4724williamssonomaorder.pdf. The Commission opened an 
investigation but, after some behavior alterations by Williams-
Sonoma, the 2018 investigation was closed, only to be renewed in 
2020 when Williams-Sonoma was at it again. See also U.S. v. iSpring 
Water Systems, LLC, et al., No. 1:16-cv-1620-AT (N.D. Ga. 2019). 
After making false claims that its water filtration systems were 
made in the United States and entering into an administrative order 
with the FTC in 2017, iSpring went back to making false claims only 
a year later, triggering the violation of the 2017 order.
    \2\ Rohit Chopra, Comm'r, Fed. Trade Comm'n. Repeat Offenders 
Memo (May 14, 2018), https://www.ftc.gov/system/files/documents/public_statements/1378225/chopra_-_repeat_offenders_memo_5-14-18.pdf.
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    The Commission is proposing to settle the matter by ordering 
Resident Home, Nectar Sleep's new parent company, to pay $753,300. The 
Commission's complaint also charges Resident's CEO, Ran Reske, with 
serious wrongdoing. Reske signed a report, under penalty of perjury, 
stating that Resident Home had removed all covered Made in USA claims 
from its subsidiaries' websites and that Resident had never made Made 
in USA claims about its DreamCloud mattress. This was false.
    The proposed settlement binds Nectar Sleep, as well as its new 
parent company, ensuring that any corporate musical chairs will not 
allow the company to dodge the FTC's order. The proposed order also 
requires the companies to provide notice to consumers who purchased a 
mattress while the false claims appeared.
    Commissioner Slaughter has rightfully noted that the Commission 
must use all of its tools to protect the marketplace and make victims 
whole. This case is no exception. The settlement is reasonable and 
squarely within the Commission's legal authority.

[[Page 58282]]

Disguised Opposition

    My dissenting colleagues purport that this proposed action--which 
was agreed to by Resident Home and Reske--is not authorized by statute. 
Their arguments fail on policy and legal grounds.
    Commissioners Phillips and Wilson have consistently supported no-
money, no-fault settlements, even in cases of egregious Made in USA 
fraud.\3\ I understand that, as a matter of policy, they do not support 
serious consequences for Made in USA fraud and have expressed support 
for the longstanding permissive policy of the past.\4\ However, their 
dissenting statement disguises this policy opposition as an argument 
about the Commission's legal authority. There are several pieces of 
evidence to suggest that Commissioners Phillips and Wilson's resistance 
is based on policy grounds, not on legal grounds.
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    \3\ See Press Release, Fed Trade Comm'n, FTC Approves Final 
Consents Settling Charges that Hockey Puck Seller, Companies Selling 
Recreational and Outdoor Equipment Made False `Made in USA' Claims 
(Apr. 17, 2019), https://www.ftc.gov/news-events/press-releases/2019/04/ftc-approves-final-consentssettling-charges-hockey-puck-seller; In the Matter of Sandpiper Gear of California, Inc. et al., 
No. 182-3095, https://www.ftc.gov/enforcement/cases-proceedings/182-3095/sandpiper-california-inc-et-al-matter; In the Matter of 
Underground Sports d/b/a Patriot Puck, et al., No. 182-3113 (Apr. 
2019), https://www.ftc.gov/enforcement/casesproceedings/182-3113/underground-sports-inc-doing-business-patriot-puck-et-al.
    \4\ Id.
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    First, Commissioners Phillips and Wilson argue they must have 
express statutory authorization to accept monetary remedies in 
settlements. However, less than two months after the Supreme Court 
ruled that the FTC cannot obtain monetary relief in certain federal 
court actions, both Commissioners Phillips and Wilson voted for an $18 
million order to settle a complaint brought under Section 13(b) of the 
FTC Act--the exact authority the Supreme Court explicitly ruled against 
the FTC on.\5\ This not the only example where Commissioners Phillips 
and Wilson have agreed to settle complaints with remedies that are not 
specifically enumerated by statute.
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    \5\ See Press Release, Fed Trade Comm'n, LendingClub Agrees to 
Pay $18 Million to Settle FTC Charges (July 14, 2021), https://www.ftc.gov/news-events/press-releases/2021/07/lendingclub-agrees-pay-18-million-settle-ftccharges. Given the alternative paths the 
Commission could have pursued to address the conduct at hand, I 
believe the settlement was appropriate even in spite of the Supreme 
Court's ruling. Indeed, the Commission's proposed stipulated 
judgment was entered by the court.
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    To further disguise the nature of their opposition, Commissioners 
Phillips and Wilson assert that the Commission is accepting monetary 
remedies in an administrative settlement not permitted by Section 19 of 
the Federal Trade Commission Act. In reality, Section 19 of the FTC Act 
expressly authorizes the payment of redress and damages. Consequential 
damages in Made in USA fraud can be considerable, particularly when it 
comes to harms to law-abiding businesses whose sales were siphoned. In 
settlements, parties can save time and resources by making the best 
estimates--adjusted for risk--on the right resolution. It would have 
been costly to specifically identify each harmed consumer and business, 
but it is clear the proposed monetary relief is reasonable, given our 
legal authority.
    In addition, Commissioners Phillips and Wilson imply that to obtain 
the proposed remedies, the Commission must file multiple complaints in 
our administrative tribunal and in federal court. However, Commissioner 
Phillips and Wilson know that the Commission does not regularly 
prosecute the same conduct in multiple fora. Commissioners need not 
concurrently charge an entity for the same consumer protection 
violation of law in its administrative tribunal and in federal court, 
even when it may be authorized, like in civil penalty actions under 
Section 5(l).
    The facts and evidence clearly show that DreamCloud violated an 
administrative order, triggering penalties and a broad range of relief 
under Section 5(l) of the FTC Act. Even if Section 19 of the FTC Act 
did not authorize damages, it is perfectly appropriate for the 
Commission to settle all of these claims at once, rather than pursue an 
additional action for civil penalties. It is obvious that today's 
proposed action is legally sound. If Commissioners Phillips and Wilson 
are voting against the proposed settlement because of their preference 
for no-consequences settlements in Made in USA fraud matters, then they 
should be upfront with the public and state so plainly.

Conclusion

    The FTC has a troubling history of strong-arming small and 
independent business owners--including church organists \6\ and skating 
teachers \7\--into settlements, while allowing those who repeatedly 
break the law to escape unscathed,\8\ often with the help of high-
priced FTC alumni. In this matter, the Commission is proposing a 
settlement to hold accountable a repeat offender represented by a 
sophisticated law firm. I am pleased that the agency's abusive and 
inappropriate double standard is starting to fade away.
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    \6\ In the Matter of American Guild of Organists, Fed. Trade 
Comm'n, https://www.ftc.gov/enforcement/casesproceedings/151-0159/american-guild-organists.
    \7\ In the Matter of Professional Skaters Association, Inc., 
Fed. Trade Comm'n, https://www.ftc.gov/enforcement/cases-proceedings/131-0168/professional-skaters-association-inc-matter.
    \8\ See e.g. Devin Coldewey, 9 reasons the Facebook FTC 
settlement is a joke, TechCrunch (July 24, 2019), https://techcrunch.com/2019/07/24/9-reasons-the-facebook-ftc-settlement-is-a-joke/.
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    Finally, for decades, there was a bipartisan consensus among FTC 
Commissioners that Made in USA fraud should not be penalized. In 1994, 
Congress granted the FTC strong tools to combat Made in USA fraud, but 
Commissioners essentially ignored them. Fortunately, that era is also 
over.
    Effective August 13, 2021, individuals and companies engaging in 
Made in USA fraud, including first-time offenders, will be subject to 
stricter sanctions under the FTC's Made in USA Labeling Rule. I hope my 
colleagues will fully support enforcement actions to hold bad actors 
accountable under this rule. The families and honest businesses--long 
ignored by past Commissioners--are counting on us to live up to the 
law.

Dissenting Statement of Commissioners Noah Joshua Phillips and 
Christine S. Wilson

    That didn't take long. Soon after the Supreme Court unanimously 
rebuked the Federal Trade Commission for seeking monetary remedies not 
permitted by Section 13(b) of the FTC Act \1\--remedies that, in 
fairness to the agency, were blessed by appellate courts for decades 
\2\--the Commission now votes to accept monetary remedies not permitted 
by Section 19.
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    \1\ AMG Capital Management, LLC v. FTC, 141 S. Ct. 1341 (2021).
    \2\ See, e.g., FTC v. H.N. Singer, Inc., 668 F.2d 1107, 1112-
1113 (9th Cir. 1982); FTC v. Rare Coin & Bullion Corp., 931 F.2d 
1312, 1314-1315 (8th Cir. 1991); FTC v. Bronson Partners, LLC, 654 
F.3d 359, 365 (2d Cir. 2011).
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    We commend staff for their diligent work on this case, and remain 
committed to continued Made in the U.S.A. enforcement.\3\ But we 
believe that the monetary redress in this case

[[Page 58283]]

exceeds our authority, and so we respectfully dissent.
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    \3\ See, In the matter of Chemence, Inc., File No. X1600321 
(Feb. 2021), https://www.ftc.gov/enforcement/casesproceedings/X160032/chemence-inc; In the matter of Gennex Media, File No. 
2023122 (Apr. 2021), https://www.ftc.gov/enforcement/cases-proceedings/2023122/gennex-media-matter; In the matter of Williams-
Sonoma, Inc., File No. 2023025 (July 2020), https://www.ftc.gov/enforcement/cases-proceedings/202-3025/williams-sonoma-inc-matter. 
Unlike Commissioners Chopra and Slaughter, we have supported every 
Made in U.S.A. enforcement action brought during our tenure.
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    In 2018, the Commission entered an administrative order against 
Nectar Brand LLC, also d/b/a Nectar Sleep, DreamCloud LLC, and 
DreamCloud Brand LLC (``Nectar Order'') and its successors and assigns 
for making ``Assembled in USA'' claims for wholly-imported mattresses. 
Despite being under order, over at least two periods between December 
2018 and June 2020, the Complaint alleges that Nectar deceptively 
advertised DreamCloud mattresses as ``proudly made with 100% USA-made 
premium quality materials''.
    Since entry of the Nectar Order, the 2018 Respondent underwent 
several changes to its corporate structure. In 2019, Resident Home LLC 
was created as the parent company of Nectar Brand LLC and DreamCloud 
Brand LLC. We do not have reason to believe that Resident Home LLC is a 
successor or assign of Nectar Brand LLC and is covered by the Nectar 
Order.
    This state of play left the Commission with at least two choices. 
It could choose to pursue an order enforcement action in federal court 
and seek civil penalties.\4\ Alternatively, or in addition to taking 
action against Nectar Brand, LLC, it could choose to pursue a de novo 
administrative action and seek a new order that would cover the 
company, its corporate parent Resident Home LLC, and Resident Home's 
CEO Ran Reske, while ensuring that any future violations would result 
in a civil penalty. While valid justifications support any of these 
approaches, the Commission ultimately determined that seeking a new, 
broader order would best protect consumers.
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    \4\ The Commission statement and Commissioner Chopra's separate 
statement assert that evidence clearly showed that DreamCloud 
violated an administrative order. Despite the majority's paean to 
the value of vindicating Commission orders, we do not plead an order 
violation in the complaint. We support the FTC's longstanding view 
that order obligations should reflect pleadings.
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    The Commission statement and Commissioner Chopra's separate 
statement assert that evidence clearly showed that DreamCloud violated 
an administrative order. Despite the majority's paean to the value of 
vindicating Commission orders, we do not plead an order violation in 
the complaint. We support the FTC's longstanding view that order 
obligations should reflect pleadings.
    In choosing to proceed only administratively, the Commission gave 
up its ability to obtain civil penalties; but it can still seek redress 
on behalf of injured consumers pursuant to Section 19 of the FTC Act. 
While the process is somewhat convoluted, Section 19 permits the 
Commission to secure certain monetary relief, including, inter alia, 
``the refund of money'' and ``the payment of damages''.\5\ As the 
legislative history underscores, the purpose of this relief is to allow 
the Commission to act ``to make specific consumers whole . . .''.\6\ 
Section 19 allows the Commission to obtain refunds for specific, 
identified injured consumers.\7\ It expressly precludes ``the 
imposition of any exemplary or punitive damages''.\8\ Under Section 19, 
the FTC does not have authority to obtain disgorgement of ill-gotten 
gains, another (more penal) \9\ form of equitable monetary relief.
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    \5\ 15 U.S.C. 57b(b).
    \6\ S. Rept. 93-151, 93d Cong., 2d Sess., at 27-28 (May 14, 
1973).
    \7\ See FTC v. Figgie Int'l, Inc., 994 F.2d 595 (9th Cir. 1993).
    \8\ 15 U.S.C. 57b(b).
    \9\ See Liu v. Securities and Exchange Commission, 140 S. Ct. 
1936 (2020).
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    Despite these clear limitations, the Commission's proposed order 
includes monetary redress of $753,300, with any remainder not used for 
redress to be disgorged to the Treasury. The complaint does not include 
details that would help the public understand how the Commission 
arrived at this amount, and we are not at liberty to reveal non-public 
information. But our view of the facts is that the figure obtained far 
exceeds any injury suffered by those consumers who saw the deceptive 
statement and purchased a DreamCloud mattress or any reasonable 
estimate of damages. The majority points to language in Section 19 that 
also authorizes redress of injury to ``other persons'' (besides 
consumers) resulting from the unlawful practices alleged.\10\ We have 
seen no evidence of such harm in this matter. No one quibbles that the 
amount of money here exceeds any reasonable estimate of injury.\11\ It 
might plausibly be consistent with a penalty or with the disgorgement 
of ill-gotten gains, but we have no authority to obtain such relief 
under Section 19.\12\ The Commission makes clear in its statement that 
the purpose of the monetary relief in question is to penalize, not to 
make consumers whole.\13\
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    \10\ 15 U.S.C. 57b(b) (``The court . . . shall have jurisdiction 
to grant such relief as the court finds necessary to redress injury 
to consumers or other persons, partnerships, and corporations 
resulting from the rule violation or the unfair or deceptive act or 
practice, as the case may be.''); see also Joint Statement of 
Commissioner Slaughter, Chair Khan, and Commissioner Chopra In the 
Matter of Resident Home, 2, FN4 File No. 202317.
    \11\ In his separate statement, Commissioner Chopra 
misrepresents our position in LendingClub. In that case, the 
Commission would have been entitled to consumer redress for injuries 
under Section 19. In LendingClub, unlike here, the settlement amount 
was not punitive; it reflected the monetary harm suffered by 
consumers. See, In the matter of LendingClub Corporation, File No. 
1623088 (July 2021), https://www.ftc.gov/enforcement/casesproceedings/162-3088/federal-trade-commission-v-lendingclub-corporation.
    \12\ The majority is correct that Section 19 permits 
``damages''. The majority, though, is not entitled to its own facts. 
The facts alleged in the complaint and Analysis to Aid Public 
Comment provide no basis for a Section 19 damages remedy of this 
amount. Although we cannot share the underlying analysis with the 
reader, the monetary remedy far exceeds any reasonable estimate of 
Section 19 damages. As the majority makes clear in the Commission 
statement, it is assessing a penalty under cover of Section 19.
    \13\ In his separate statement, Commissioner Chopra also claims 
that we do not support consequences for Made in the U.S.A. fraud. By 
that logic, Commissioner Chopra's votes against privacy enforcement 
in cases like Facebook and Google/YouTube show his enthusiasm for 
their business models and distaste for enforcement against large 
technology platforms. The issue here is the Commission trying to eat 
its Section 19 cake and have its civil penalties too. We cannot do 
both, however we feel about policy. See Statement of Rohit Chopra In 
the Matter of Resident Home LLC, Commission File No. 202317. See 
also, Dissenting Statement of Commissioner Rohit Chopra In re: 
Facebook, Inc., Commission File No. 1823109 (July 24, 2019), https://www.ftc.gov/system/files/documents/public_statements/1536911/chopra_dissenting_statement_facebook_7-24-19.pdf; Dissenting 
Statement of Commissioner Rohit Chopra In the Matter of Google LLC 
and YouTube, LLC, Commission File No. 1723083 (Sep. 4, 2019), 
https://www.ftc.gov/system/files/documents/public_statements/1542957/chopra_google_youtube_dissent.pdf.
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    The Supreme Court handed down its decision in AMG Capital 
Management, LLC v. FTC in April,\14\ and made clear that the words of a 
statute matter. Those words trump the policy preferences of 
commissioners. That decision should have been a wake-up call, a 
reminder to the Commission that, no matter how egregious the conduct or 
righteous our cause, the Commission is not entitled to go beyond the 
bounds of what the law permits. If we continue to flout the limits of 
our authority, the Commission should fully expect additional rebukes 
from the courts.
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    \14\ AMG Capital Mgmt., LLC v. FTC, 141 S. Ct. 1341 (2021).
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    The AMG decision has significantly impacted the ability of the FTC 
to pursue wrongdoers and remediate law violations through the 
imposition of monetary relief. So we reiterate our call to Congress to 
pass legislation to restore the ability of the FTC to seek monetary 
remedies under Section 13(b) of the FTC Act in appropriate 
circumstances. But the law says what it says, and we do not support 
using the cloak of a settlement to overstep the authority we have.\15\
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    \15\ The majority is correct that, as a practical matter, the 
government has the ability to extort that to which it is not 
entitled under law. As we have said on other occasions, though, just 
because we can does not mean that we should. Joint Statement of 
Commissioners Noah Joshua Phillips and Christine S. Wilson, U.S. v. 
iSpring Water Systems, LLC, Commission File No. C4611 (Apr. 12, 
2019), https://www.ftc.gov/system/files/documents/public_statements/1513499/ispring_water_systems_llc_c4611_modified_joint_statementof_commissioners_phillips_and_wilson_4-12.pdf.

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[[Page 58284]]

    If the goal in this case were to maximize money paid by the 
Respondents as punishment and to deter others from engaging in similar 
conduct, the Commission was free to enforce the original Nectar Order 
and seek civil penalties. That was the road not taken. In choosing this 
road, with a new and broader order, the Commission is obligated to 
limit monetary relief to the amount necessary to redress injury, as 
explicitly authorized by Section 19. Because this settlement exceeds 
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those clearly delineated bounds, we must respectfully dissent.

[FR Doc. 2021-22887 Filed 10-20-21; 8:45 am]
BILLING CODE 6750-01-P