Reproductive Genetics in Vitro, P.C

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IN THE MATTER OF REPRODUCTIVE GENETICS IN VITRO , P. , ET AL. CONSENT ORDER , ETC. , IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3357. Complaint, Dec. 1991-Decision, Dec. 1991 This consent order prohibits, among other things, a provider of infertility services and its president from making false and unsubstantiated claims regarding the success of their in vitro fertilization program.

Appearances For the Commission: Walter Gross and Michael A. Katz. For the respondents: Kevin Kuhn, Montgomery, Little, Young, Campbell McGrew Englewood, CO.

COMPLAe.1T The Federal Trade Commission, having reason to believe that Reproductive Genetics In Vitro, P. , a corporation, and George P. Henry, president, director and sole stockholder of Reproductive Genetics In Vitro, P. , hereinafter collectively referred to as respondents, have violated Section 5(a) of the Federal Trade Commission Act ("FTC Act"), 15 U. C. 45(a), and that an action by it is in the public interest, issues this complaint and alleges that: PARAGRAPH 1. Respondent Reproductive Genetics In Vitro, P.C. is a Colorado corporation with its principal office and place of business located at 455 South Hudson Street, Denver, Colorado. PAR. 2. Respondent George P. Henry, M. , is the president director and sole stockholder of Reproductive Genetics In Vitro, P. Dr. Henry s place of business is also located at 455 South Hudson Street, Denver, Colorado.

PAR. 3. Respondents are, and have been, engaged in offering and providing services for the treatment of infertilty through in vitro fertilzation ("IVF"

PAR. 4. Respondents have created and disseminated promotional materials, including, but not limited, the promotional materials REPRODUCTIVE GENETICS IN VITRO, P. , ET AL. 803 802 Complaint referred to herein, promoting the services provided in treating infertility and in particular, the IVF program. PAR. 5. The acts and practices of respondents alleged in this complaint are, and have been, in or affecting commerce, as "commerce" is defined in the FTC Act.

PAR. 6. In the course and conduct of their business, respondents have created and disseminated a promotional brochure entitled " VITRO FERTILIZATION AND EMBRYO TRANSFER" which has been distributed through the mail across state lines to prospective infertility patients, for the purpose of inducing, and which was likelyand to induce, directly or indirectly, the purchase of respondents' infertility services. (Attachment A) The brochure contains the following statements:

1. " At Reproductive Genetics In Vitro, the success rate (in establishing a pregnancy) of the IVF procedure is 25% per attempt since the inception of the program. "

2. "The reported worldwide experience suggests a less than 10% chance of success (in establishing a pregnancy) with no increased risks of abnormalities, PAR. 7. Through the use of the statement and representation referred to in paragraph six (1), respondents have represented directly or by implication, that women who participate in a single attempt at conception in their IVF treatment program have a 25 percent chance of establishing a pregnancy. PAR. 8. In truth and in fact, the likelihood that women who participate in a single attempt at conception in respondents' IVF treatment program wil achieve pregnancy is considerably less than 25 percent. Therefore, respondents' representation as set forth in paragraph six (1) was and is false and misleading. PAR. 9. Through the use of the statement referred to in paragraph six (1), respondents have represented, directly or by implication, that at the time they made such a representation they possessed and relied upon a reasonable basis for such a representation. PAR. 10. In truth and in fact, at the time respondents made the representation referred to in paragraph nine, respondents did not possess and rely upon a reasonable basis for such representation. Therefore, respondents' representation as set forth in paragraph nine was and is false and misleading.

PAR. 11. Through the use of the statements referred to in paragraph six, respondents have represented, directly or by implica- Complaint 114 F.

tion, that it had a success rate that was about two and one-half times greater than the worldwide average and that at the time it made such a representation it possessed and relied upon a reasonable basis for such a representation.

PAR. 12. In truth and in fact, at the time respondents made the representation referred to in paragraph eleven, respondents did not possess and rely upon a reasonable basis for such a representation. Therefore, respondents ' representation as set forth in paragraph eleven was and is false and misleading.

PAR. 13. Through the use of the statement referred to in paragraph six (1), respondents have represented, directly or by implication, that they have a specified "success rate" in achieving pregnancies without disclosing that it has excluded from that statistic patients who had begun respondents' IVF treatment program, but who were unable to complete the program and achieve pregnancies because they could not achieve an embryo transfer.

PAR. 14. Respondents' exclusion from the calculation of their success rates of patients whose treatment programs were unsuccessful because they could not achieve an embryo transfer is a material fact to consumers considering treatment for infertility. PAR. 15. Respondents failure to disclose, in the representations set forth in paragraph thirteen, that they have excluded from their success statistics patients who had begun respondents' treatment programs, but who were unable to complete those programs because they could not achieve an embryo transfer, renders respondents representation of success deceptive because it is likely to mislead potential purchasers of respondents' services into believing that the chances of becoming pregnant are greater than they actually are. PAR. 16. The acts and practices of respondents alleged in this complaint constitute unfair and deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the FTC Act, 15 C. 45(a) of the FTC Act.

, P. , ET AL. 805 REPRODUCTIVE GENETICS IN VITRO Complaint 802 ATTACHMENT A The IVF Team George Henry. M. D. graduated from the University\.' of Michigan Medical School. anc was board certified in Obs.tenics nd GI.m(" co\ogy af1er residency i!1 the Universil;' o! Colorado He completed a 2 year fellov.:ship in Human Genetics at the University of Colorado Heahh Science Center, In December. 1981 Dr Henr)' v.'as certified in Clinical Genetics and Clnical Cylogene1ics (Chromosomes), He is IN VITRO FERTILIZATION 1heRegionfirs!boardphysiciancertified inin bothIhe RockyObstetricsMoun1a:nG):n€. (olog." cmd Genetics, and the ani." person in Ih!? AND EMBRYO TRASFER Region cert:fied in C.,1oge:1elics Jonathan Van Blerkom. Ph. D.. has been AS A TREATMENT FOR INFERTILITY actl eJv involved since 1970 in res.arch cOflce;ning molecular and cellular lIspects of mammal;an reproduction lind early embr ar.ic development including the areas of sperma. togenesis. oogenesis. ovulation, pre. ,md post. implantation embryogenesi!i. Dr. Van Bletkom received a Ph. D, in Mol€cular. Cellular and De\' elopmental Biology from Ihe Universi1)' of Colorado in 1974, is a Professor in the Depar:. men! of Molecillar. Cellular and Developmental 81010g)' 111 C.U. Bou\der, and has lIulhOTed or coauthored over 80 scienlifi ar1icles and 3 books, Dr. Vim Blerkom s research experience emcompasses all aspects of preovulalOT).' oocyl€ developmen1. fertiliztion and earl\.' postenill2!ion embryogenesis RichZlrd Poneco. M. D. graduated from the Universitj.' of Colorado School of Medicine where he also completed his residency in Obstetrics and Gynecology- He comp\e1ed a Fellowship in Matemlll. Fetal Medicine and Genetics a: the University of California, San Diego He is Board Cet1:fied in Maternal. Fetal Medicine and Clinical Genetics. In addition to his association with Reproduc1:ve Genetics, In Vitro, he is Direc10r of Perinatal Services in the S:. Luke /Denver Children s Hospital PeriMtal Program A SERVICE OF Reproductive GENETICS IN VITRO. P.

.I Thh ss SO lh H"d\o" SITUI Dtn ., Color&do 80222 i3031 39' 1'\04 Complaint Nanette L. Doyle, R.N. graduated from Pus due Universi... West Lafavene. IN. in 193] with a Bacheior of Science in Nursing After graduation she worked the postpartum. post: surgic2! unit. which included the newborn nursery. for two years at the Lafayette Home Hospital. Nanette then relocated to Denver and was employed by Denver General Hospital in the high risk labor and delvery depanment She has been the Nurse Coordinator at Reproductive Genetics Center since June of 1985. Susan Strobel Maly, R.N. graduated from Emory University Schooi of Nursing in Atlanta “A in 1978 with a Bachelors of Science degree After graduation. she was a staff nurse in medical-surgical nursing at Jackson Memorial Hospital in Miami. Florida for two years Upon arriving in Denver in 1980. she was a high nsk Labor and Delivery nurse for 4 years at Denver Genera! Hospitai. She also spent two years in both the high risk and well baby nurseries at DGH Since November 1986. she has been the Assistant Nurse Coordinator at Reproductive Genetics Center.

Who Is An Appropriate Candidate for IVF? While this technique is of great potential benefit to infertile couples it should only be considered after extensive infertility evaluation has already been accomplished. For most infertile couples other established treatment options will be more economical and more effective.

The most ideal candidates for IVF are women who have blocked or absent fallopian tubes or other complications that cannot be surgically corrected. Women with endometriosis. a common abnormality in which uterine tissue grows around the fallopian tubes and ovaries. are also good candidates.

In men. compromised semen quality may indicate !VF as a possible solution to an infertility problem.

In same cases. the reason for a couple's inferuhty is unknown, so IVF may be an appropriate treatment Other conditions may be considered appro:

pnate after careful review of medical records The IVF Procedure In vitro fertilization presently involves: 1 Administration of fertility drugs to stimulate maturation of egg cells 2. Monitoring the growth of the follicles in the ovary by daily measurement of hormone levels in the woman's bloodstream and daily examination of the ovaries by ultrasound imaging.

3. Administration of a medication to complete the maturation of the eggs and allow the timing of surgery prior to ovulation.

4. Ultrasound guided ovum retrieval to withdraw the maturing eggs from the ovary 5 Transter of the eggs to the laboratory for microscopic examination to assess maturation. 6. Addition of prepared semen cells to allow ferzzation to occur in the laboratory (in vitro historically has meant “in glass’).

7 Transfer of the fertilized eggs to the uterus via a small tube inserted through the cervix Success Rates for IVF The service requires the combined efforts of a team with expertise in Obstetrics and Gynecology. Reproductive Biology. Embryology. and Genetics with a goal of establishing a pregnancy which can proceed in the usual fashion once the infertility has been overcome. The reported worldwide experience suggests a less than 10% chance of success with no increased risk of abnormalities.

At Reproductive Genetics In Vitro. the success rate of the IVF procedure is 25% per attempt since the inception of the program in September of 1982 as one of the earliest programs in this country.

. . ,. . \ . REPROD!JCTIVE GENETICS IN VITRO, P.C., ET AL. 807 802 Complaint Referral to an IVF Program WE ARE LOCATED AT Referro:s do no! hilw 10 be made b).' physicians Level Three, 455 South Hudson Street ' (o'-ple who has been identified as an "p' Denver, Colorado / (303) 399.146 proprlak IVF candiaa,,? IS \I' ekorne into the program You mal.' col: (303J 399. 146'1 for more detailed inlmmat;on Aher a te le\, 0/ records to be cenain couple has the potential to bene/it from the technique. a counselmg session is neceSSiu) to reliev.' a1l of th", 51eps In th" program including goal. bend:!s. risks and limitations I I . I Cost The cost of the program r7i'\.' be prohibithe for man ' cOiJples at This time, \Ae anticipate the sequence of steps necessar)' to aMempt in \':tro fenilization. embryo transfer will COST 50000 and the entire amount is due prior to a emp!:ng the procedures This does noi induce Ih" initial (one lime onl 1 in iro counseling fee of S1OQ, QQ, This also does no! include transportalion or lodging COS1 for couples oulside 1he Dem:"rarea ! Th, REPRODUCTNE 455 So GENETICS Den"n Colo,.do,h H dK)nBOn2Sun' IN VITRO Pc. 1303)399- 1464 808 FEDERAL TRADE COMMISSIO:- DECISIONS Decision and Order 114 F.

DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the Bureau of Consumer Protection proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act; and The respondents, their attorneys, and counsels for the Commission having thereafter executed an agreement containing a consent order an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission s Rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such an agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in Section 2. 34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1. Respondent Reproductive Genetics In Vitro, P.C. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Colorado, with its office and principal place of business located at 455 South Hudson Street, Denver, Colorado. Respondent George P. Henry, M.D. is the president of said corporation. He formulates, directs and controls the policies, acts and practices of said corporation, and his principal place of business is located at the above stated address.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

REPRODUCTIVE GENETICS II' VITRO , P. , ET AL. 809 802 Decision and Order ORDER It is ordered That respondents Reproductive Genetics In Vitro , and George P. Henry, M. , individually, and respondent Reproductive Genetics In Vitro, P. C.'s officers, agents, representatives, and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, promotion, sale or offering for sale of services relating to the treatment of infertility through in vitro fertilization do forthwith cease and desist from representing, directly or by implication: A. That the success rate in achieving pregnancies for their patients is higher than or compares favorably with the success rates of other providers of these services, unless at the time of making such representations, respondents possess and rely upon a reasonable basis for making such comparison which shall, at a minimum, consist of results for their own patients that are based upon either the same or essentially equivalent test procedures for determining pregnancy that were used to produce the results with which the comparison is made. B. That any of their patients have achieved pregnancies through respondents' treatment program unless at the time of making such representation, respondents possess and rely upon a reasonable basis for making such representation. Such reasonable basis shall consist of competent and reliable scientific evidence substantiating the representation. For any test to be "competent and reliable" it must be conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the relevant profession to yield accurate and reliable results, and shall not consist solely of human chorionic gonadotrophin laboratory blood analysis. C. That a percentage of respondents' patients have given birth or achieved prcgnancy, unless the percentage represented accounts for all patients who received medication in an effort to stimulate ovulation in connection with the provision of in vitro fertilization services; or, in lieu thereof, respondent discloses the basis used in calculating or arriving at the percentage represented. Such disclosure shall include the numerator and denominator used in calculating the percentage represented, and shall be made clearly and prominently, in close proximity to such percentage, and in a manner that can be easily understood by prospective purchasers of respondents ' services. 810 FEDERAL TRADE COMMISSION DECISIO:;S Decision and Order 114 F.

II.

It is ordered That respondents George P. Henry, M.D. and Reproductive Genetics In Vitro, P. , a corporation, its successors and assigns, officers, agents, representatives, and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, promotion, sale or offering for sale of services relating to the treatment of infertility, do forthwith cease and desist from representing, directly or by implication, that a number or percentage of respondents' patients give birth or achieve pregnancy, or have given birth or achieved pregnancies, unless such is the case, or otherwise misrepresent respondents' success rate in achieving births or pregnancies.

It is further ordered That respondents, their successors or assigns shall forthwith distribute a copy of this order to each of their officers agents, representatives, and employees, who are engaged in the preparation and placement of advertisements or promotional materials, who communicated with patients or prospective patients, or who have any responsibilities with respect to the subject matter of this order; and for a period of ten (10) years from the date of entry of this order, distribute same to all of respondents' future officers, agents representatives, and employees having said responsibilities. IV.

It is further ordered That respondents shall maintain for a period of three (3) years after the date the representation was last made, and make available to the Federal Trade Commission upon request business records supporting any claims of success in connection with their infertility treatment programs.

It is further ordered That respondents shall notify the Commission at least thirty (30) days prior to any proposed change in respondents such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries or any REPRODUCTIVE GENETICS IN VITRO , P. , ET AL. 811 802 Decision and Order other change in respondents which may affect compliance obligations arising out of this order.

VI.

It is further ordered That respondents shall, within (60) days after service of this order, file with the Commission a report, in writing, setting forth in detail the manner and form in which they have complied with all requirements of this order. 812 FEDERA TRADE COMMISSION DECISIONS 114 F.

The proposed Code of Conduct of the Association of Trial Lawyers of America does not appear likely to have a significant anti competitive effect and therefore, to violate Section 5 of the FTC Act. r Association of Trial Lawyers America, P894002) January 2, 1991 Dear Mr. Herman:

This letter responds to your request for a Federal Trade Commission FTC" or "Commission ) advisory opinion concerning the proposed Code of Conduct ("Code ) of the Association of Trial Lawyers of America ("ATLA"). The Commission understands that ATLA is a voluntary national bar association of approximately 65 000 trial lawyers, most of whom represent injured victims in civil actions and defendants in criminal cases. You have requested that the Commission advise A TLA whether its proposed Code complies with Section 5 1 A TLA has conditionally ap-the Federal Trade Commission Act. proved the Code, but has made implementation dependent upon a favorable evaluation by the Commission.

The federal antitrust laws do not prohibit professional associations from adopting reasonable ethical codes designed to protect the public. Such self-regulatory activity serves legitimate purposes, and in most cases can be expected to benefit, rather than to injure, competition and consumers of professional services. We note in this regard that A TLA has stated that its Code "was developed to respond to growing public criticism of abusive forms of solicitation and client representation by members of the legal profession.

In some instances, however, particular ethical restrictions can unreasonably restrict competition and thereby violate the antitrust laws. Even ethical restrictions that appear reasonable on their face may be interpreted or applied in an anti competitive manner. Our approval of any particular Code provision does not extend, of course to anticompetitive interpretations or applications of that provision. I This opinion letter addresses only the proposed Code as set forth in Exhibit A (Revised) (Tab 2) of ATLA' January 13, 1989 filing. It does not address Sections 4 or 7 of the proposed Code, except to note that those sections2 Letterdofromnot BillraiseWagner.antitrustPresident,concerns.ATLA, to Donald S, Clark, Secretary, FTC (Jan. 13 , 1989). ADVISORY OPINION 813 CODE PROVISIONS Code Enforcement We begin our analysis by noting that the proposed Code may have a significant impact on how ATLA members compete with one another. An A TLA Code violation could lead to internal discipline by A TLA , 3 and to the extent that A TLA confers substantial benefits on its members, the threat of loss of those benefits wil give members an incentive to abide by the Code. In addition, an A TLA member may legitimately fear that disciplinary action will affect his reputation. Finally, professionals are likely to regard their association s professional norms as authoritative even if the association s disciplinary sanctions do not include the possibilty of loss of license. ' Thus, the proposed Code, if adopted, is likely to guide the conduct of A TLA members.

Section 1: Uninvited Solicitations Section 1 of the proposed Code states that no A TLA member shall personally, or through a representative, contact any injured party or an aggreved survvor in an attempt to solicit a potential client when there has been no request for such contact from or on behalf of the injured party, an aggrieved survivor, or a relative or friend of either. It is the Commission s understanding that Section 1 is intended to apply only to direct, personal contact between a lawyer (or his representative) and an injured party, and that it does not restrict advertising or written communication. 5 Direct solicitation by lawyers, like advertising, can be a useful source of information about a consumer s legal rights and remedies and also can provide information about the terms and availability of legal services. Depending on the approach of the individual lawyer or his agent, personal solicitation also can provide an opportunity for the potential purchaser of services to ask questions of the seller. Section 1 of the proposed Code is intended to protect persons particularly vulnerable to undue influence from being pressured to ATLA' s letter of January 13 , 1989, cited Bylaw 1I(3)(d) for the proposition that if the proposed Code is adopted and an ATLA member violates it, the violation will " serve as a basis for a complaint against the member under the disciplinary procedures of the ATLA Bylaws." This Bylaw provides that a member may be expelled, suspended, or censured for " unethical conduct, or for, .. misconduct which brings discredit to said member, The Association, or the profession of law, Goldfarb 11. Virginia State Bar Association 421 C. S. 773 , 791 n. 21 (1975). 5 For example, under the Code, a lawyer or his representative, would hI' permitted to send targeted mail. A prohibition against targeted mailings would clearly be problematic from an antitrust standpoint.Cf. Shapero 11. Kentw:ky Bar Ass 108 S. Ct. 1916 (1988). , 114 F.

6 As the Supreme Court reasoned inpurchase legal servces. Ohralik v. Ohio State Bar Association 436 U. S. 447, 457- , 465 (1978), inperson solicitation by lawyers may actually disserve the individual and societal interest in informed and reliable decisionmaking where it discourages persons needing counsel from engaging in a critical and unhurried comparison of the terms and availability of legal services. Such in-person solicitation may exert pressure and often demands an immediate response, without providing an opportunity for comparison or reflection. The aim and effect of in-person solicitation may be to provide a one-sided presentation and to encourage speedy and perhaps uninformed decisionmaking; there is no opportunity for intervention or counter education by agencies of the Bar, supervisory authorities, or persons close to the solicited individual.

Id. at 457. The potential for overreaching is significantly greater when a lawyer a professional trained in the art of persuasion personally solicits a prospective client who may be physically or emotionally overwhelmed by the circumstances giving rise to the need for legal services. Id. at 465. A more narrowly tailored restriction on injurious solicitation practices may readily be contemplated, and indeed has been adopted in at least one jurisdiction. 7 A broad ban may nonetheless be justified if a narrower restriction (such as the one adopted by the District of Columbia Court of Appeals) would be ineffective-because, for example, direct solicitation "is not visible or otherwise open to public scrutiny" and, as a result, may be "virtually immune to effective oversight" unless banned entirely. Id. at 466. This is a plausible contention that cannot either be credited or rejected without further factual inquiry. For example, we presently have no evidence on the prevalence of abusive in-person solicitation practices by trial lawyers, or the likely success (or failure) of narrower restrictions aimed at remedying such abuses. Although Section 1 of the proposed Code could be interpreted or applied in an anticompeti- 6 The Commission has recognized this type of public interest rationale in trade regulation rules such as those governing door-to-door sales, 16 CFR 429 , and funeral industry practices, 16 CFR 453. 7 The District of Columbia s Rules of Professional Conduct permit uninvited in-person solicitation so long as: (1) the solicitation does not involve false or misleading statements or claims; (2) the solicitation does not involve the use of undue influence; and (3) the potential client's apparent physical or mental condition would not prevent him or her from exercising "reasonable, considered judgment" when selecting a lawyer. Rule 1(b). Rules of Professional Cunduct, District of Columbia Court of Appeals, adopted :-larch 1 , 1990 (effective date January 1 , 1991). InAmerican Medual Association 94 FTC 701 (1979). afrd 638 F. 2d 443 (2d Cir. 1980), ulrd memo by an equally divided G0"1. , 455 U. S. 676 (1982), the VIC ordered the A::IA to cease and desist from banning all solicitation, but permitted it to proscribe uninvited, in-person solicitation of persons who, because of their particular circumstances, are vulnerable to unaue infJuencc. ADVISORY OPINION 815 tive manner, we currently have no basis for concluding that Section 1 would likely have an anticompetitive effect. Section 2: Uninvited Presence at Accident Scenes Section 2 states that no ATLA member shall go to the scene of an event that caused injury unless requested to do so by an injured party, an aggreved survivor, or a relative of either. A lawyer who anticipates being retained by an injured party or survivor might want to go to the scene of an accident as soon as possible in order to locate or interview witnesses or examine the accident site for helpful clues about the accident. It is possible that lawyers who do field investigations soon after the accident have found such investigations to be the most efficient way to gather information relevant to representing their clients. If that is so, then a ban on accident scene visitation may raise some lawyers ' costs of doing business, which could have an adverse effect on competition. Section 2 may be a prophylactic provision intended to prevent abusive personal solicitation of accident victims or survivors. This goal is entirely compatible with the antitrust laws. But Section 2 may be overbroad to the extent it prevents A TLA members from visiting the scene of an injury-causing event even when there is no danger that such solicitation could occur. Because there is no time limit in Section , it would preclude a lawyer from visiting the scene of an accident even after the accident victims or aggreved survivors have been removed from the scene. Section 2, therefore, may have an unreasonably anticompetitive effect.

Section 3; Media Appearances Section 3 would prohibit an A TLA member (other than a bar association designee) from initiating a television appearance or commenting to any news media concerning an injury-causing event within 10 days of the event unless the member forgoes any financial return resulting from the compensation of those injured or kiled. It is possible that this rule could have the effect of limiting the flow of truthful, nondeceptive information to people who may benefit from it and in circumstances that could limit potential problems associated with in-person solicitations. We understand, however, that this rule is designed to ensure that attorneys who appear on television or in other news media, ostensibly as disinterested commentators on the legal consequences of injury-causing events, have no direct financial 816 FEDERAL TRADE COMMISSIOK DECISIONS 114 F.

incentive to use this occasion to solicit clients or to attempt to prejudice potential jurors. That purpose is valid, but because we do not have suffcient information to permit us to weigh the countervailing effects, we currently have no basis for concluding that Section 3 would likely have an anticompetitive effect. It is also our understanding that Section 3 would not prohibit advertising on television or in other news media. If Section 3 were interpreted as a ban on advertising within 10 days of an injurycausing event, it could restrict competition unreasonably and violate the antitrust laws.

Section 5: False or Misleading Advertising Section 5 would prohibit ATLA members from personally, or through a representative, making false or misleading representations of trial experience or past results of litigation. We recognize that professional associations have an important role to play in policing false and deceptive advertising because of their professional expertise and their interest in protecting the image of the profession. Although it is possible to interpret the term "misleading advertising" so broadly as to prohibit virtually any representations about past experience or litigation, which could lead to anti competitive results, on its face this provision is not a violation of the antitrust laws. Section 6: Personal Contact to Advise of Unrecognized L€gal Claim Section 6 would prohibit an A TLA member from initiating personal contact with anyone other than a client, former client, relative, or close friend to advise them of the possibility of an unrecognized legal claim for damages, unless the attorney forgoes any financial interest in the compensation of the injured party.

This provision could harm consumers by decreasing an A TLA member s incentive to inform potential clients of unrecognized legal claims, which decreases the likelihood that injured parties will seek and obtain redress for their injuries. On the other hand, a lawyer initiation of personal contact to apprise a potential client of an unrecognized legal claim, like in-person solicitation, may involve "the coercive force of the personal presence of a trained advocate" and pressure on the potential client for an immediate yes-or-no answer. Zauderer v. Office of Disciplinary Counsel 471 U. S. 626 , 642 (1985). Although Section 6 , like Section 1 , could be interpreted or ADVISORY OPINION 817 applied in an anticompetitive manner, we currently have no basis for concluding that Section 6 would likely have an anticompetitive effect. CONCLUSION While Section 2 of the Code may be somewhat overbroad, the other provisions of the Code do not appear likely on their face to have a significant anticompetitive effect and, therefore, to violate Section 5 of the FTC Act. If those provisions are interpreted or applied in an anticompetitive manner, then the proposed Code could unreasonably hinder competition among lawyers who handle personal injury cases and thus violate Section 5 of the FTC Act. This advisory opinion, like all those issued by the Commission, is limited to the proposed conduct described in the petition being considered. It does not constitute approval for specific instances of implementation of the Code that may become the subject of litigation before the Commission or any court, since interpretations and enforcement of the Code in particular situations may prove to cause significant injury to competition and consumers, and thereby violate the Federal Trade Commission Act. The Commission maintains the right to reconsider the questions involved and, with notice to the requesting party in accordance with Section 1.3(b) of the Commission s Rules of Practice, to rescind or revoke its opinion. Copies of your request and this response are being placed on the public record pursuant to Section 1.4 of the Commission s Rules of Practice.

By direction of the Commission, Commissioner Owen recused and Commissioner Starek not participating.

Letter of Request January 13 , 1989 Dear Mr. Clark:

Pursuant to the procedures set forth in 16 CFR 1.2, the Association 8 The Commission has successfully challenged a professional association s restriction on truthful nondeceptive advertising and solicitation under Section 5 of the erc Act.See AMA , Sllpra. In addition, the Commission has obtained numerous consent orders from professional groups requiring them to cease and desist from imposing restrictions on truthful, nondeceptive advertising. If ATLA adopts the proposed Code and the Code results in substantial anticompetitive effects, the Commission may take such actions as would be the public interesl.

S In preparing an advisory opinion, it is the Commission s practice to rely on information provided by the requesting entity, and not to conduct an independent investigation 114 F.

of Trial Lawyers of America ("ATLA") respectfully requests an advisory opinion from the Federal Trade Commission as to the legality under the federal antitrust laws of a Code of Conduct which prohibits various forms of unethical conduct by A TLA members. The A TLA Code of Conduct, conditionally approved by the A TLA membership on July 31 , 1988, was developed to respond to growing public criticism of abusive forms of solicitation and client representation by members of the legal profession. The Code principally was designed as a client protection measure to restrict solicitation of clients in circumstances where they are particularly vulnerable and under severe emotional and physical duress. In addition, the Code was designed to improve ATLA's image as a lobbying organization. The negative publicity and popular outcry surrounding the phenomenon of lawyers rushing to mass disaster scenes threatened to snowball into a crusade for short-sighted tort reforms, which would disadvantage A TLA members and consumers of legal services. A TLA recognized that the better approach was to use the controversy as an impetus to formulate much-needed rules to protect consumers from the conduct of unscrupulous attorneys. Above all, ATLA wanted to take the lead in "cleaning-up" the image of the legal profession.

ATLA requests a favorable advisory opinion from the Commission in order to implement the Code of Conduct. An advisory opinion is necessary because the application of federal antitrust laws to codes of ethics, such as the A TLA Code, has been unpredictable and uncertain. There is no clear Commission or court precedent to guide a voluntary professional organization which takes action to prohibit unethical practices through the adoption of rules which apply only to its members. Without a favorable Commission opinion, ATLA will be unable to implement the Code. Thus, it is important that the Commission clarify its position on the reach of the antitrust laws to the adoption of the Code of Conduct as a credible means of curbing professional misconduct. I Initially, ATLA requested review of the Code of Conduct by the Department of Justice pursuant to the business review procedures of 28 CFR 50.6. (See letters of June 16, 1988 and September 6, 1988 Tabs 1 and 2). However, on September 19, 1988, the Department of 1 It is ATLA' s position that an advisory opinion from the Commission would offer the mo;;t reliabie guidance to ATLA and other professional organizations similarly situated. However, if the Commission dekrmines that an advisory opinion is not warranted, ATLA alternatively requests the issuance of an advisory opinion from the ITC staff pursuant to 16 CFR l.(b).

ADVISORY OPINION 819 Justice advised ATLA counsel that since the Code "is presently being investigated by the Federal Trade Commission. . . the Antitrust Division has agreed to allow the Commission to handle this inquiry. (Tab 4) A TLA counsel immediately contacted the FTC staff and forwarded to them copies of the materials filed with the Department of Justice. In a letter dated September 15 , 1988, ATLA counsel requested that the FTC convert its investigation into an advisory opinion proceeding since the DOJ filing had antedated the commencement of the FTC investigation. (Tab 3) A meeting with FTC staff was held on September 23, 1988. At the request of the FTC staff, ATLA voluntarily provided extensive information and documentation relating to the origins, vote, and reasons for promulgation of the Code. A TLA also provided information on A TLA demographics, membership, affiiates, organization and other documents. (For the Commission s convenience, copies of the ATLA Information Response of October 27, 1988 accompany this letter.) (Tab 5) In December 1988, FTC staff advised ATLA counsel that they had completed their investigation. A TLA counsel was further advised that the staff would not convert this matter to an advisory opinion proceeding as A TLA counsel had requested. Instead, the FTC staff indicated that, if A TLA filed a formal request for an advisory opinion from the Commission, FTC staff would recommend that the Bureau of Competition terminate its investigation of A TLA. Now that A TLA has fied for an advisory opinion, it is our expectation that the staff will recommend termination of the FTC investigation and the matter wil be ripe for the FTC to review the Code of Conduct under advisory opinion procedures.

To faciltate our request for a favorable advisory opinion, we have enclosed all of the documents that were presented to both the Department of Justice and the FTC staff to assist in the evaluation of the ATLA Code of Conduct. The materials include a narrative documents concerning the creation and adoption of the Code information about the Association, its services, and its membership. In addition, we direct the Commission s attention to the legal memorandum annexed to our June 16, 1988 letter to the Department of Justice which provides an antitrust analysis of the ATLA Code. (Tab 1) ATLA believes that it is entitled to a favorable advisory opinion since implementation of the Code does not raise any antitrust concerns. ATLA is a voluntary professional society without market 114 F.

power in any relevant market. A showing of market power is a prerequisite to a finding of an antitrust violation under the rule of reason, which clearly governs this case.

The Code is motivated by ethical rather than commercial concerns and is narrowly drafted to protect clients and potential clients from solicitation when they are under severe physical and mental distress and particularly vulnerable to undue influence. The Code, in most respects, parallels ethical provisions already in place in most states and reflects an effort by ATLA to publicly declare that it expects its members to adhere to the highest ethical standards concerning client representatfon. When the Code is implemented violation of its provisions by an A TLA member only wil serve as a basis for a complaint against the member under the disciplinary procedures of the ATLA Bylaws. (Bylaw II(3)(d)). In order to update the information previously filed with the FTC Tab 6 contains a copy of a Resolution of the A TLA Board of Governors approved on November 11 , 1988 which clarifies that the Code of Conduct will not be implemented by A TLA until the FTC issues a favorable ruling.

Under these circumstances, ATLA requests the FTC to issue a formal advisory opinion approving implementation of the Code of Conduct. In the event that the Commission finds that some portions of the Code raise antitrust concerns, we request specific comments relating to individual Code provisions so that conforming amendments can be implemented and presented to the ATLA membership for ratification.

Respectfully submitted Bil Wagner Enclosures EXHIBIT A (REVISED) ASSOCIATION OF TRIAL LAWYERS OF A)1ERICA Code of Conduct Kansas City, :\missouri July 31 , 1988 1. No ATLA member shall in person, or through a representative, contact any injured party, or an aggreved survivor in an attempt to solicit a potential client when ADVISORY OPINION 821 there has been no request for such contact from or on the behalf of the injured party, an aggrieved survivor, or a relative or friend of either. 2. No ATLA member shall go to the scene,ff an event which caused injury unless requested to do so by an injured party, an ag eved survvor, or a relative of either. 3. No ATLA member shall initiate a television appearance or injtiate any comment to any news media concerning an event causing injury within 10 days of the event unless the member foregoes any financial return from the compensation of those injured or kiled, provided, however, that an individual designated by a bar assocjation to state the offcial position of such bar association may initiate such media contact to communicate such position.

4. No ATLA member shall personally, or through an associate attorney, fie complaint with a specific ad damnum amount unless required by local rules of court. If such amount is stated, it shall be based upon good faith evaluation of facts which the member can demonstrate.

5. No ATLA member shall personally, or through a representative, make representations of trial experience or past results of litigation either of which is in any way false or misleading.

6. No ATLA member shall personally, or through a representative, initiate personal contact with a potential client (who is not a client, former client, relative or close personal friend) for the purpose of advising that individual of the possibilty of an unrecognized legal claim for damages unless the member foregoes any financial interest in the compensation of the injured party. 7. No ATLA member shall fie or maintain a frivolous suit, issue, or position. However, no ATLA member should refrain from urging or arguing any suit, issue or position that is believed in good faith to have merit.