North American Plastics Corporation

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IN THE MATTER OF NORTH AMERICAN PLASTICS CORPORATION, ET AL. CONSENT ORDER, ETe., IN REGARD TO ALLEGED VIOLA non OF SEe. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket 3526. Complaint, Sept. 1994-- Decision, Sept. , 1994 This consent order prohibits, among other things, an Ilinois corporation and its officer from making unsubstantiated degradability or environmental benefit representations about their plastic bags in the future. Appearances For the Commission: Brinley H. Williams, Phillip Broyles and Christian White.

For the respondents: Jeannie Lamar, Peterson Ross, Chicago IL.

COMPLAINT The Federal Trade Commission, having reason to believe that North American Plastics Corporation, a corporation, and Harold V. Engh, Jr., individually and as an officer of said corporation, hereinafter sometimes referred to as 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 1. Respondent North American Plastics Corporation is a Delaware corporation with its office and principal place of business at 921 Industrial Drive, Aurora, Ilinois. Respondent Harold V. Engh, Jr, is an officer of said corporation. In his capacity as an officer, he formulates, directs and controls the acts and practices of said corporation, and his business address is the same as that of the corporation.

PAR. 2. Respondents have advertised, offered for sale, sold and distributed plastic trash bags to the public under such trade names as "EnviroGard.

NORTH AMERICAN PLASTICS CORPORATION, ET AL. 633 632 Complaint PAR. 3. The acts or practices of respondents alleged in this complaint have been in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act. PAR. 4. Respondents have disseminated or caused to be disseminated advertisements and promotional materials for EnviroGard bags, including, but not necessarily limited to, the package label attached hereto as Exhibit A and the promotional materials attached hereto as Exhibits Band C.

The package labeling and promotional materials for EnviroGard plastic bags, attached hereto as Exhibits A, Band C, include one or al1 of the following statements on the package: BIODEGRADABLE (Exhibits A, Band CI Other degradable-type trash bags don t break down in landfills because they depend on harsh chemical additives that work only in sunlight. (Exhibit AJ Works when other degradables don t' (Exhibit BJ Naturally Biodegradable lExhibit BJ SAFE & NATURAL: EnviroGard Biodegradable trash bags are formulated with cornstarch. They degrade naturally upon contact with soil micro-organisms. Unlike our so called "Degradable" competition, EnviroGard degrades without sunlight. (Exhibit CJ PAR. 5. Through the statements referred to in paragraph four and others in package labeling not specifically set forth herein respondents have represenled, directly or by implication, that: (I) Compared to other plastic bags, EnviroGard bags offer a significant environmental benefit when consumers dispose of them as trash that is buried in a landfill; and (2) EnviroGard bags will completely break down, decompose and return to nature in a reasonably short period of time after consumers dispose of them as trash that is buried in a landfill. PAR. 6. Through the statements and representations referred to in paragraphs four and five, and others not specifically set forth herein, respondents have represented, directly or by implication, that at the time they made such representations, respondents possessed and relied upon a reasonable basis for such representations. PAR. 7. In truth and in fact, at the time respondents made such representations, respondents did not possess and rely upon a reason- Complain! 118 P.T.c. able basis for such representations. Therefore, the representation set forth in paragraph six was, and is, false and misleading. PAR. 8. 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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I. Respondent North American Plastics Corporation is a Delaware corporation with its office and principal place of business at 921 Industrial Drive, Aurora, Ilinois.

Respondent Harold V. Engh, Jr., is an offcer of said corporation. In his capacity as an officer, he formulates, directs and controls the acts and practices of said corporation, and his business address is the same as that of the corporation.

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.

NORTH AMERICAN PLAsncs CORPORATION, ET AL. 639 632 Decision and Order ORDER DEFINITION For purposes of this order, the following definition shall apply: Plastic bag means any plastic grocery sack, or any plastic disposer" bag, including, but not limited to, trash bags, lawn bags and kitchen bags, that is offered for sale, sold or distributed to the public by respondents, their successors and assigns, under the "North American Plastics " or "EnviroGard" brand name, or any other brand name of respondents, their successors and assigns; and also means any plastic bag sold or distributed to the public by third parties under private labeling agreements with respondents, their successors and assigns.

It is ordered That respondent North American Plastics Corporation, a corporation, its successors and assigns, and its offcers, and Harold V. Engh, Jr, individually and as an 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 plastic bag, in or affecting commerce, as commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, directly or by implication, by words, depictions or symbols:

(A) That any such plastic bag is "degradable biodegradable or "photodegradable " or (B) Through the use of "degradable biodegradable " or "photodegradable " or any other substantially similar term or expression that the degradability of any such plastic bag offers any environmental benefit when consumers dispose of them as trash that is buried in a sanitary landfill or incinerated unless at the time of making such representation, respondents possess and rely upon a reasonable basis for such representation, consisting of competent and reliable scientific evidence that substantiates such Decision and Order lib P.T, representation, For purposes of this order, 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. II.

It is further ordered That respondents North American Plastics Corporation, a corporation, its successors and assigns, and its offcers, and Harold V. Engh, Jr, individually and as an offcer 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 North American Plastics Corporation product, including, but not limited to, any plastic bags and their packaging, in or affecting commerce as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, directly or by implication. that any such product 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. Nothing in this order shall prevent respondents from using any of the terms cited in Part I, or similar terms or expressions, if necessary to comply with any federal rule, regulation, or law governing the use of such terms in advertising or labeling, IV.

It is further ordered That, for three (3) years from the date that the representations to which they pertain are last disseminated respondents shall maintain and upon request make available to the Federal Trade Commission for inspection and copying: NORTH AMERICAN PLASTICS CORPORATION, ET AL. 641 632 Decision and Order (A) All materials relied upon to substantiate any representation covered by this order; and (B) All tests, reports, studies, surveys or other materials in its possession or control that contradict, qualify or call into question such representation or the basis upon which respondent relied for such representation.

It is further ordered, That respondent North American Plastics 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.

VI.

It is further ordered That respondent North American Plastics Corporation shall notify the Commission at least thirty (30) days prior to any proposed change in the corporation, such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries, or any other change in the corporation which may affect compliance obligations arising out of this order.

VII.

It is further ordered That respondent Harold V. Engh, Jr, shall promptly notify the Commission of the discontinuance of his present business or employment and of his affliation with a new business or employment. In addition, for a period of five (5) years from the service date of this order, he shall promptly notify the Commission of each affiliation with a new business or employment whose activities relate to the manufacture, sale or distribution of plastic products or of his affiiation with a new business or employment in which his own duties and responsibilities relate to the manufacture, sale or distribution of plastic products. When so required under this paragraph, each such notice shall include the individual respondent's new Decision and Order 118 P.Tc. business address and a statement of the nature of the business or employment in which respondent is newly engaged, as well as a description of 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, within sixty (60) days after service of this order upon them, and at such other times as the Commission may require, fie with the Commission a report, in writing, setting forth in detail the manner in which they have complied with this order.

By the Commission, Prior to leaving the Commi sion former Commissioner Owen registered her vote in the affnnative for the Complaint and Decision and Order in this matter. MACY'S NORTHEAST. INe.. ET AL. 643 643 Complaint