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Previously published by DRMA Voice on July 9, 2012,
It has been a busy couple of months in court for the Federal
Trade Commission (FTC). Recently, the FTC won on the merits but saw
an Administrative Law Judge reject its proposed substantiation
standard in the Pom Wonderful case. In another contempt case
(Daniel Chapter One) filed in the federal District Court for the
District of Columbia, the FTC also won on the merits but the judge
then gave the defendants two weeks to purge their order violations
before imposing any civil penalty. Not surprisingly, the defendants
availed themselves of that opportunity.
There is yet another declaratory judgment/contempt battle
unfolding in federal district court in Utah, Basic Research, et
al. v. Federal Trade Commission. In that case, the judge's
recent ruling on Basic Research's motion for partial summary
judgment helps demonstrate why the FTC is so eager to modify its
definition of "competent and reliable scientific
evidence." The case may also help determine whether the
decision in POM is merely a bump in the road or the beginning of a
substantial roadblock for the FTC's efforts to tighten its
substantiation standards.
Basic Research was subject to a consent order with the
traditional definition of "competent and reliable scientific
evidence" and asked the judge to determine what standard the
company would be held to under that order. Consistent with the
order's language, the judge held that any representation is
satisfied by "competent and reliable scientific evidence"
if it is:
" Based upon expertise of professionals in the relevant
area
" Conducted and evaluated in an objective manner
" Conducted by a person qualified to do so
" And uses procedures generally accepted in the profession to
yield accurate and reliable results
None of those requirements, by themselves, should give the FTC
heartburn as they come directly from the language in the order.
However, the judge also held that any study proffered by the FTC
reaching a conclusion contrary to the supporting evidence offered
by Basic Research does not prove that the defendants lacked a
reasonable basis for its claims unless the FTC's study proves
that one of the four bullet points above has not been met.
The judge made this point in oral argument, as well. He
suggested that the FTC's burden was to disprove that the
defendant's experts and/or science qualified under each of the
elements above. It was not, the judge suggested, sufficient for the
FTC's experts to simply testify about what quality or quantity
of substantiation they would consider reasonable for the claims at
issue.
The judge's ruling, of course, does not resolve the
underlying merits of the case, but it is yet another sign that the
courts may not be fully aligned with the Commission's views on
substantiation.
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