Ajm Packaging Corporation

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IN THE MATTER OF AJM PACKAGING CORPORATION, ET AL.

CONSENT ORDER, ETe. , IN REGARD TO ALLEGED VIOLATION OF SEe. OF THE FEDERAL TRADE COMMISSION ACT Docket C-3508. Complaint. July 1994--Decisioll, July 19, 1994 This consent order prohibits, among other things, a Michigan seller of disposable paper plates and its president from representing that any product it sells offers any environmental benefit unless it can substantiate the claim, or from misrepresenting that any paper product or package is capable of being recycled, or the extent to which recycling collection programs for it is available.

Appearances For the Commission: Mary Koelbel Engle and Dean C. Forbes. For the respondents: Jeffrey G. Heuer, Jaffe, Raitt, Heuer & Weiss Detroit, MI.

COMPLAINT The Federal Trade Commission, having reason to believe that AJM Packaging Corporation, a corporation, and Abram Epstein individually and as oftcer of said corporation ("respondents ), have violated 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 I. Respondent AJM Packaging Corporation is a Michigan corporation with its office and principal place of business located at 6910 Dix A venue, Detroit, Michigan. Respondent Abram Epstein is president of the corporate respondent named herein. He formulates, directs, and controls the acts and practices of the corporate respondent. His business address is the same as that of the corporation.

The aforementioned respondents cooperatc and act together in carrying out the acts and practices hereinafter set forth. AJM PACKAGING CORPORATION, ET AL.

Complaint PAR. 2. Respondents have advertised, offered for sale, sold and distributed paper plates to the public under such trade names as Nature s Own Green Label.

PAR. 3. The acts or practices of respondents alleged in this complaint have been in or affecting commerce, as "commerce " is defined in Section 4 of the Federal Trade Commission Act. PAR. 4. Respondents have disseminated or have caused to be disseminated advertisements for Nature s Own Green Label paper plates, including, but not necessarily Jimited to, package labeling attached as Exhibit A. These advertisements contain the following statement:

MADE FROM 100% RECYCLABLE A"'D BIODEGRADABLE PAPER PAR. 5. Through the use of the statement contained in the advertiscments referred to in paragraph four, including but not necessarily Jimited to the advertisement attached as Exhibit A respondents have represented, directly or by implication, that respondents ' paper plates are recyclable after ordinary use. PAR. 6. In truth and in fact, while respondents' paper plates are capable of being recycled, the vast majority of consumers cannot recycle them because there are virtually no collection facilities that accept used paper plates for recycling. Therefore, the representation set forth in paragraph five was, and is, false and misleading. PAR. 7. Through the use of the statement contained in the advertisements referred to in paragraph four, including but not necessarily limited to the advertisement attached as Exhibit A respondents have represented, directly or by implication, that: 1. Respondents' paper plates will completely brcak down and return to nature -- decompose into clements found in nature within a reasonably short period of time after customary disposal; 2. Respondents ' paper plates offer a significant environmental benefit after customary disposal.

PAR. 8. Through the use of the statement contained in the advertisements referred to in paragraph four, including but not necessarily limited to the advertisement attached as Exhibit A respondents have represented, directly or by implication, that at the time they made the representations set forth in paragraphs five and Complaint 118 FTC seven, respondents possessed and relied upon a reasonable basis that substantiated such representations.

PAR. 9. In truth and in fact, at the time they made the representations set forth in paragraphs five and seven, respondents did not possess and rely upon a reasonable basis that substantiated such representations. Therefore, the representation set forth in paragraph eight was, and is, false and misleading. PAR. 10. 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 5(a) of the Federal Trade Commission Act.

3 INCH PAPER PLATES i MADE FROM 100%:RECYCLABLE & BIODEGRADABLE PAPER " Will SAFE a 76955"69102 MADE IN U.S.A.

Decision and Order I IR FTC. 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, their attorneys, 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 thc signing of said 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, or that the facts as alleged in such complaint, other than the jurisdictional facts, are true, 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 a complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such 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 makes the following jurisdictional findings and enters the following order:

1. Respondent AJM Packaging Corporation is a Michigan corporation with its office and principal place of business at 6910 Dix Avenue, Detroit, Michigan. Respondent Abram Epstein is the president of said corporation. He formulates, directs, and controls the acts and practices of said corporation, and his principal office and place of business is located at the above stated address. 2. The Federal Trade Commssion has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

AJM PACKAGI:'G CORPORA TION , ET At.

Decision and Order ORDER DEFINITIO:- For purposes of this order, the following definition shall apply: Product or package means any product or package, including but not limited to bags and plates, that is offered for sale, sold, or distributed to the public by respondents, their successors and assigns under the "Nature s Own Green Label" brand name or any other brand name of respondents, their successors and assigns; and also means any such product or package sold or distributed to the public by third parties under private labeling agreements with respondents their successors and assigns.

It is ordered That respondents AJM Packaging Corporation, a corporation, its successors and assigns, and its officers, and Abram Epstein, individually and as officer of said corporation, and respondents, representatives, agents, and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, labeling, offering for sale, sale, or distribution of any paper product or package, in or affecting commerce, as "commerce is defined in thc Federal Trade Commission Act, do forthwith cease and desist from representing, in any manner, directly or by implication:

product or package is degradable, biode- (I) That any such gradable, or photodegradable; or (2) Through the use of such terms as degradable, biodegradable, photodegradable, or any other substantially similar term or expression, that the degradability of any such product or package offers any environmental benefit when disposed of as trash that is ordinarily buried in a sanitary landfill unless, at the time of making such representation, respondents possess and rely upon competent and reliable scientific evidence that substantiates the representation. For purposes of this order competent and reliable scientific evidence shall mean tests, analyses, FEDERAL TRADE COM:vISSION DECISIONS Decision and Order 118 FTC. 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.

II.

It is further ordered That respondents AJM Packaging Corporation, a corporation, its successors and assigns, and its officers, and Abram Epstein, individually and as officer of said corporation, and respondents ' representatives, agents, and employees directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, labeling, promotion offering for sale, sale, or distribution of any paper 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 any such paper product or package is capable of being recycled or the extent to which recycling collection programs for such product or package are avajJable.

It is fitrther ordered That respondents AJM Packaging Corporation, a corporation, its successors and assigns, and its officers, and Abram Epstein, individually and as officer of said corporation, and respondents' representatives, agents, and employees directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, labeling, 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 suhstantiates such representation.

AJM PACKAGING CORPORATION, ET At.

Decision and Order IV.

It is jltrher ordered That respondents may continue to dcplete their existing inventory of "Penthouse" brand paper plates product packaging in the normal course of business without violating this order until October 31 , 1993.

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. Al1 materials that were relied upon in disseminating such representation; and B. Al1 test reports, studies, surveys, demonstrations or other evidence in their possession or control that contradict, qualify, or call into question such representation or the basis relied upon for such representation, including complaints from consumers. VI.

It is further ordered That respondent AJM Packaging Corporation shall distribute a copy of this order within sixty (60) days after service of this order upon it to each of its operating divisions and to each of its officers, agents, representatives, or employees engaged in the preparation of labeling and advertising and placement of newspaper, periodical, broadcast, and cable advertisements covered by this order.

VII.

It isfurtherordered That the individual respondent named hcrcin promptly notify the Commission of the discontinuance of his present business or employment and of his affiliation with a new business or employment. In addition, for a period of five (5) years from the service date of this order, the respondent shall promptly notify the Commission of each affiliation with a new business or employment Decision and Order \ 18 FTC. whose activities relate to the manufacture, sale, or distribution of paper products, or of his affiliation with a new business or employment in which his own duties and responsibilities relate to the manufacture, sale, or distribution of paper uroducts. When so required under this paragraph, each such notice shall include the individual respondent s 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. VII It is further ordered That respondents shall notify the Commission at least thirty (30) days prior to any proposed change in the corporate respondent such as a dissolution, assignment, or sale resuJring in the emergence of a successor corporation, the creation or dissolution of subsidiaries, or any other change in the corporation which may affcct compliance obligations under this order. It is j'irther ordered That respondents shall, within sixty (60) days after service of this order upon them, and at such other times as thc 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.

, MIA ROSE PRODUCTS, INe., ET At.

Complaint