Oak Hill Industries Corp

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IN THE MATTER OF OAK HILL INDUSTRIES CORP., ET AL.

CONSENT ORDER, ETe. , IN REGARD TO ALLEGED VIOLA non OF SEe. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3507. Complaint, Julv 1994- lJecisiol1, July 19, 1994 This consent order prohibits, among other things, a New Yark manufacturer, of plastic plates, bowls and utensils, and its officer from misrepresenting that any product or package is capable of being recycled, or the extent to which recycling collection programs are available for such products, and from making an)! unsubstantiated representation that any product or package it markets offers any environmental benefit.

Appearances For the Commission: Michael Dershowitz.

For the respondents: Nancy Cascella, Hahn & Hessen New York, N.

COMPLAI The Federal Trade Commission, having reason to believe that , a corporation, and Malcolm FosterOak Hill Industries Corp. individually and as an officer of said corporation ("respondents have violatcd the provisions of the Federal Trade Commission Act and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, alleges: PARAGRAPH 1. Respondent Oak Hill Industries Corp. ("Oak Hill"), is a New York corporation with its principal office or place of business at 330 East 59th Street, New York, NY. Respondent Malcolm Foster is an officer of the corporate respondent. Individually or in concert with others, he formulates practices of the corporate directs, and controls the acts and respondent, including the acts and practices alleged in this complaint. His principal offce or place of business is the same as that of the corporate respondent.

OAK HILL INDUSTRIES CORP. , ET AL.

Compaint PAR. 2. Respondents have advertised, labeled, offered for sale, sold, and distributed Oak Hill brand plastic plates, bowls and utensils and other products to the public.

PAR. 3. The acts and practices of respondents alleged in this complaint have been in or affccting commerce, as "commerce " is defined in Section 4 of the Federal Trade Commission Act. PAR. 4. Oak Hill brand plastic plates, bowls and utensils are made from non-foam polystyrene and are packaged in thin plastic packaging which is sometimes made from polypropylene film and at other times from low-density polyethylene film. The plastic plates bowls, utensils and plastic packaging do not identify the type(s) of plastic resin from which they are made.

PAR. 5. Respondents have disseminated or have caused to bc disseminated advertisements, including product labcling, for their Oak Hill brand plastic plates, bowls and utensils, including but not necessarily limited to the attached Exhibits A - e. The aforesaid product labeling for Oak Hill brand plastic plates and bowls (Exhibits A - B) includes the following statement on the front of the plastic film packaging:

recyclable The aforesaid product labeling (Exhibits A - B) also includcs the following depiction of a three chasing arrow symbol on the front of the plastic film packaging:

The aforesaid product labeling for Oak Hill brand plastic utensils (Exhibit C) includes the following statement on the front of the plastic film packaging:

RECYCLABLE Complaint J 18 FTC. The aforesaid product labeling (Exhibit C) also includes the following depiction of a three chasing arrow symbol on the front of the plastic film packaging:

PAR. 6. Through the use of the statements and depictions contained in the advertisements rcfened to in paragraph five including but not necessarily limited to the advertisements attached as Exhibits A - C , respondents have represented, directly or by implication, that Oak Hill brand plastic plates, bowls and utensils are recyclable.

PAR. 7. In truth and in fact, while Oak Hill brand plastic plates, bowls and utensils are capable of being recycled, the vast majority of consumers cannot recycle them hecause there are only a few collection facilities nationwide that will accept the non-foam polystyrene plates, bowls or utensils for recycling. Therefore, the representation set forth in paragraph six was, and is, false and misleading.

PAR. 8. Through the use of the statements and depictions contained in the advertisements referred to in paragraph five including but not necessarily limited to the advertisements attached as Exhibits A - C , respondents have represented, directly or by implication, that the plastic film packaging of Oak Hill brand plastic plates, bowls and utensils is recyclable. PAR. 9. In truth and in fact, while the plastic film packaging of Oak Hill brand plastic plates, bowls and utensils is capable of being recycled, the vast majority of consumers cannot recycle it because there are only a few collection facilities nationwide that will accept the polypropylene film or low-density polyethylene film plastic packaging for recycling. Therefore, the representation set forth in paragraph eight was, and is, false and misleading. PAR. 10. Through the use of the statements and depictions contained in the advertisements referred to in paragraph five including but not necessarily limited to the advertisements attached as Exhibits A - C , respondents have represented, directly or by implication, that at the time they made the representations set forth in paragraphs six and eight, respondents possessed and relied upon a reasonable basis that substantiated sucb representations. OAK HILL IJ\DUSTRIES CORP. , ET AL.

Complaint PAR. II. In truth and in fact, at the time they made the representations set forth in paragraphs six and eight, respondents did not possess and rely upon a reasonable basis that substantiated such representations. Therefore, the representation set forth in paragraph ten was, and is, false and misleading.

PAR. 12. The acts and practices of respondents as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section Sea) of the Federal Trade Commission Act.

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Complaint J IR FTC. EXHIBIT A plat 2" Z r.,..,- Exhibit A .; :.. . . .. . : .

OAK HILL INDUSTRIES CORP., ET At.

Complaint EXHIBIT B 1 , I . ilh:

12 ounc ware Pla i'':

Ex: ibi t B :: /: .. Complaint 118 F.TC. EXHIBIT C '?t,::i. . '-:7 . oak"AIiI Washable plastic talere vs"* z Ex:,:ibit C OAK HILL INDlJSTRIES CORP., ET At.

Decision and Order 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 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 and counsel 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 complaint, a statement that the signing of the agreement is for settlement 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 Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on thc 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 ordcr: I. Respondent Oak Hill Industries Corp. is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York, with its office and principal place of business located at 330 East 59th Street, in the City of New York State of New York.

Respondent Malcolm Foster is an officer of said corporation. He formulates, directs, and controls the acts and practices of said corporation. His address is the same as that of said corporation. 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 intercst.

Decision and Order 118 F.TC. ORDER DEFINITONS For purposes of this order, the following definitions shall apply: The term product or package means any product or package that is offered for sale, sold or distributed to the public by respondents, their successors and assigns, under the Oak Hill brand name or any other brand name of respondents, their successors and lssigns; and also means any product or package sold or distributed to the public by third parties under private labeling agreements with respondents, their successors and assigns. 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 has 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.

A. It is ordered That respondents, Oak Hill Industries Corp. , a corporation, its successors and assigns, and its offcers, and Malcolm Foster, individually and as an officer of said corporation, and respondents ' agents, representatives, and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the labeling, advertising, promotion, offering for sale, sale, or distribution of any product or package in or affecting commerce, as "commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from misrepresenting, in any manner, directly or by implication, the extent to which: (1) Any such product or package is capable of being recycled; or (2) Recycling collection programs for such product or package are available.

B. Provided, however, respondents will not be in violation of Part I(A)(2) of this order, in connection with the advertising, labeling, offering for sale, sale, or distribution of any non-foam polystyrene OAK HILL INDUSTRIES CORP.. ET At.

Dcci,ion and Order polypropylene film, or low- density polyethylene film product or package, if they truthfully represent that such product or package is recyclable, provided that:

(I) Respondents disclose clearly, prominently, and in close proximity to such representation:

(a) In regard to any non-foam polystyrene product or package that such product or package is recyclable in the few communities with recycling collection programs for non-foam polystyrene: in regard to any polypropylene film product or package, that such product or package is recyclable in the few communities with recycling collection programs for polypropylene film; and in regard to any low-density polyethylene film product or package, that such product or package is recyclable in the few communities with recycling collection programs for low-density polyethylene film; or (b) The approximate number of U. S. communities with rccycling collection programs for such product or package; or (c) The approximate percentage of U. S. communities or the U. population to which recycling collection programs for such product or package are available; and (2) In addition, such product or package itself bears a clear identification of the specific plastic resin(s) from which it is made. For purposes of this provision, a disclosurc elsewhcre on the product package shall be deemed to be "in close proximity" to such representation if there is a clear and conspicuous cross-reference to the disclosure. The use of an asterisk or other symbol shall not constitute a clear and conspicuous cross reference. A cross-reference shall be deemed clear and conspicuous if it is of sufficient prominence to be readily noticeable and readable by the prospective purchaser when examining the part of the package on which the representation appears.

II.

It isfurther ordered, That respondents, Oak Hill Industries Corp. a corporation, its successors and assigns, and its officers, and Malcolm Foster, individually and as an officcr of said corporation FEDERAL TRADE COMMISSIO!\ DECISIONS Decision and Order J 18 F. and respondents' agents, representatives, and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the labeling, advertising, promotion, offering for sale, sale, or distribution of any product or package in or affecting commerce, as "commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, in any manner, directly or by implication, that any such product or package offers any environmental benefit, unless at the time of making such representation, respondents possess and rely upon competent and reliable evidence, which when appropriate must be competent and reliable scientific evidence, that substantiates such representation.

It is further ordered That for five (5) years after the last date of dissemination of any representation covered by this order respondents, or their successors and assigns, shall maintain and upon request make available to the Federal Trade Commission for inspection and copying:

A. All materials that were relied upon in disseminating such rcprcscntation; and B. All tests, reports, studies, surveys, demonstrations, or other evidence in their posscssion or control that 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 the corporate respondent shall distribute a copy of this order to each of its operating divisions and to each of its officers, agents, representatives, or employees engaged in the preparation and placcment of advertiscments, promotional materials, product labels or other such sales materials covered by this order.

OAK HILLINDUSTRIES CORP. , ET At.

Decision and Order It is further ordered That thc individual respondent shall notify the Commission in the event of the discontinuance of his present business or employment and of each affiliation with a new business or employment. In addition, for a period of five (5) years from the date of service of this order, he shall promptly notify the Commission of each affiliation with a new business or employment whose activities include the sale, distribution, and/or manufacturing of any plastic product or package or of his affiliation with a new business or employment in which his own duties and responsibilities involve the sale, distribution, and/or manufacturing of any plastic product or package. Each such notice shall include the individual respondent new business address and a statement of the nature of the business or employment in which such respondent is newly engaged, as well as a description of such respondent s duties and responsibilities in connection with the business or employment. The expiration of the notice provision of this paragraph shall not affect any other obligation arising under this order.

VI.

It is further ordered That respondents shall notify the Commission at least thirty (30) days prior to any proposed change in the corporation such as a dissolution, assignment, or sale resulting in the cmergence of a successor corporation, the creation or dissolution of subsidiaries, or any other change in the corporation which may affect compliance obligations under this order. VII.

It is further ordered That respondents shall, within sixty (60) days after service of this order upon them, and at such other times as the Commission may require, file with the Commission a report, in writing, setting forth in detail the manner and form in which they have complied with this order.

FEDERAL TRADE COMMISSIO:' DECISIONS Complaint J 18 FTC.