Essentia Natural Memory Foam Company, Inc.

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IN THE MATTER OF ESSENTIA NATURAL MEMORY FOAM COMPANY, INC.

CONSENT ORDER, ETC. IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket No. C-4417; File No. 122 3130 Complaint, November 8, 2013 – Decision, November 8, 2013 This consent order addresses false and misleading claims made by respondent Essentia Natural Memory Foam Company (“Essentia”) concerning its memory foam mattresses. Essentia marketed its memory foam mattresses as free of harmful volatile organic compounds (“VOCs”); chemical-free; having no chemical off-gassing or odor; and consisting of 100 percent natural materials. The complaint alleges that each of these claims are false and unsubstantiated by scientific evidence, in violation of Section 5 of the Federal Trade Commission Act. The consent order bars Essentia from making zero-VOC claims unless the VOC emission level is zero micrograms per cubic meter or unless the company possesses and relies upon competent and reliable scientific evidence that its mattresses contain no more than a trace level of VOCs, as prescribed in the Green Guides. The consent order further requires Essentia to keep copies of all advertisements and materials relating to its mattresses and to file periodic compliance reports with the Commission. Participants For the Commission: Thomas Goodhue and Robin Moore. For the Respondent: Leonard L. Gordon, Venable LLP. COMPLAINT The Federal Trade Commission, having reason to believe that Essentia Natural Memory Foam Company, Inc. (“Respondent”) has violated provisions of the Federal Trade Commission Act, and it appearing to the Commission that this proceeding is in the public interest, alleges:

17. Respondent is a Delaware corporation with its principal office or place of business at 2760 Daniel Johnson, Laval, Quebec, Canada H7P5Z7. It is a wholly-owned subsidiary of Verstile, Inc., a Canadian corporation, which has its principal ESSENTIA NATURAL MEMORY FOAM COMPANY, INC. 361 Complaint office at the same location. Respondent does business under the name Essentia.

18. Respondent manufactures, advertises, offers for sale, sells, and distributes “memory foam” mattresses, which are marketed as mattresses that conform to the sleeper’s body shape and weight. Respondent distributes these mattresses through its website and at its own stores in California, Colorado, Illinois, New York, and Washington.

19. The acts and practices of Respondent alleged in this complaint have been in or affecting commerce, as “commerce” is defined in Section 4 of the Federal Trade Commission Act. 20. Respondent has disseminated or has caused the dissemination of promotional materials for its memory foam mattresses, including, but not limited to, print advertisements and website advertisements in the attached exhibits. 21. In many instances, including but not limited to the promotional materials shown in Exhibits 1 through 7, Respondent has represented that:

a. Its mattresses are “VOC [‘Volatile Organic Compound’] free” and “[f]ree of harmful VOC’s.” See, e.g., Exhibit 1.

b. Its mattresses have “[n]o chemical off-gassing or odor.” Exhibit 2.

c. “Memory foam mattresses can emit up to 61 chemicals” but Essentia’s memory foam is “free from all those harmful VOC’s.” Exhibit 3.

d. Respondent’s memory foam mattresses are chemicalfree. See, e.g., Exhibit 4.

e. Respondent’s memory foam mattresses contain no Formaldehyde. See, e.g., Exhibit 5.

VOLUME 156 Complaint f. Respondent’s memory foam does not emit chemical fumes or odors. See, e.g., Exhibit 6.

g. The memory foam in Respondent’s mattresses is “made with 100% natural materials.” Exhibit 6. h. Testing confirms that Respondent’s memory foam is free of VOCs and Formaldehyde. See, e.g., Exhibits 1, 5, 7.

22. A consumer acting reasonably under the circumstances is likely to interpret representations that a mattress has “[n]o chemical off-gassing or odor” or that a mattress “does not emit chemical fumes or odors” to mean that the mattress is free of VOCs.

23. In truth and in fact, Respondent did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraph 5 at the time that the representations were made.

24. In truth and in fact, testing does not confirm that the memory foam used in Respondent’s mattresses is free of VOCs and Formaldehyde.

COUNT I (Unsubstantiated Representations) 25. Through the means described in Paragraphs 4 and 5, Respondent has represented, expressly or by implication, that it possessed and relied upon a reasonable basis that substantiated the representations set forth in Paragraph 5, at the time the representations were made.

26. In truth and in fact, Respondent did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraph 5 at the time the representations were made. Therefore, the representations set forth in Paragraph 9 are false or misleading.

COUNT II (Establishment Claim) ESSENTIA NATURAL MEMORY FOAM COMPANY, INC. 363 Complaint 27. Through the means described in Paragraphs 4 and 5, and as set forth in paragraph 5(h), Respondent has represented, expressly or by implication, that testing confirms that the memory foam used in Respondent’s mattresses is free of VOCs and Formaldehyde.

28. In truth and in fact, testing does not confirm that the memory foam used in Respondent’s mattresses was free of VOCs and Formaldehyde at the time the representations set forth in Paragraph 5(h) were made. Therefore, the representations set forth in Paragraph 11 are false or misleading. 29. Respondent’s practices, as alleged in this complaint, constitute deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act. THEREFORE, the Federal Trade Commission, this eighth day of November, 2013, has issued this complaint against Respondent.

By the Commission.

VOLUME 156 Complaint EXHIBIT 1

VOLUME 156 Complaint EXHIBIT 1 ESSENTIA NATURAL MEMORY FOAM COMPANY, INC. Complaint EXHIBIT 2 World's Only Natural Memory Foam supremely Comfortable & Healthy -Lunturious and outstanding ccmiart *Bioclegrackatle Dtiralle Go) year warranty) No chemical off-gassing or ecloe Healthy, Mlongytnoe shoes careinimern Biry online / Freo clipping = VOLUME 156 Complaint EXHIBIT 3

VOLUME 156 Complaint EXHIBIT 3 ESSENTIA NATURAL MEMORY FOAM COMPANY, INC. = 371 Complaint EXHIBIT 3 For the price of a Tempur-Pedic you can sleep on an Essentia natural memory foam mattress. We're breathable, certified VOC free and with have all the comfort and pressure relief of TempurPedic mattresses.

Essentia is the only mattress company aside from Tempur-Pedic to manufacture their own memory foam. Other mattress brands purchase foam from conventional foam manufacturers. No-Name Mattress Brand Comparison There are very few memory foam manufacturers in North America. Some include Tempur-Pedic, Carpenter, Foarnex, and Essentia. Some are European and most are Chinese. “Me Too" memory foam mattress retailers may buy from different suppliers but itall derives from the same manufacturers. Since most memory foams are close to identical, retailers distinguish themselves with price, reviews, marketing verbiage allthe-while piggybacking on the Tempurpedic brand. Ask any memory foam mattress company to answer the questions in our grid above and they'll fall short as well. Greenwashing is everywhere, with companies claiming to have eco memory foam mattresses. They'll call them BiOH foams, plant based memory foam mattresses orsoy memory foam mattresses. Strong chemical odors or off-gassing and sleeping hot remain major issues because only 2-20% of the chemicals are replaced with natural ingredients, VOLUME 156 Complaint EXHIBIT 3 ESSENTIA NATURAL MEMORY FOAM COMPANY, INC. = 373 Complaint EXHIBIT 3 http://www, myessentia,com/difference Essentia Difference in short..

1) The world's only Natural Memory Foam. 2) Breathes 80% better than all other memory foam. 3) Outrageously comfortable.

See how Essentia compares to the rest, VOLUME 156 Complaint EXHIBIT 3

VOLUME 156 Complaint EXHIBIT 3 ESSENTIA NATURAL MEMORY FOAM COMPANY, INC. = 377 Complaint EXHIBIT 3 Non-Toxic Mattresses are surprisingly unhealthy. Not ours. Most mattresses are made with toxic foams, glues, chemically treated fabrics and are a breeding ground for dust mites and other allergens.

Essentia mattresses are made from a slew of natural ingredients designed to keep your sleep healthy.

Essentia Natural Memory Foam Breathability is a common and major complaint among memory foam mattress owners. This is because even the best memory foam mattresses on the market are synthetic and made from petrochemicals. Essentia developed a natural memory foam which is 80% more breathable. By replacing the petrochemicals with natural ingredients such as natural latex, essential oils, plant extracts and water we've created a healthy alternative to petraleurn based synthetic memory foam mattresses.

Benefits of our Natural Memory Foam a) 80% better breathability.

Result: Breathes like cotton, not polyester. No _ trapped heat. You won't get hot and sticky. b) A foam that has no chemical odor and is free of harmful VOC's. (off-gassing) L | en 000016 VOLUME 156 Complaint EXHIBIT 3

VOLUME 156 Complaint EXHIBIT 4 ESSENTIA NATURAL MEMORY FOAM COMPANY, INC. = 381 Complaint EXHIBIT 5 VOLUME 156 Complaint EXHIBIT 6

VOLUME 156 Complaint EXHIBIT 6 ESSENTIA NATURAL MEMORY FOAM COMPANY, INC. — 385 Complaint EXHIBIT 7 (Organic Morr Tosic Matress- Non Tade Latex Foam Mucness~ Chana & L.BB8.764.4116 [fia an) piMycon py . 6 eventio’” BUNGRNRIDAYSALE, <r Worts Chiy Sbrural te mary Raum poora code: BLACKERIBAY Seco Classic 8 The Classic 8 is made with our natural memory foam and offers soothing conwwring support and comfort.

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Among our he Clagsic 8 is mace entirety from cur natural memory foam and 1008 natural latex mibber. This healthy and non =n medium-finm, yar pressum mileving surface which delicamdy contours the body. For added height, the iCtusste 8 ts 2 inches thicker than she Classic Sian my. The added height ix simply for aesthetics and funeSonal purposes and provides the same bevel of comfort.

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Benet itp wa Jy een coy orotuct infapnprcaCe ad hon ce LL 7: a AT VOLUME 156 Complaint EXHIBIT 7 ESSENTIA NATURAL MEMORY FOAM COMPANY, INC. 387 Decision and Order DECISION AND ORDER The Federal Trade Commission, having initiated an investigation of certain acts and practices of the Respondent named in the caption hereof, and the Respondent having been furnished thereafter with a copy of a draft of a Complaint which the Bureau of Consumer Protection proposed to present to the Commission for its consideration and which, if issued, would charge the Respondent with violations of the Federal Trade Commission Act; and The Respondent, its attorney, and counsel for the Commission having thereafter executed an Agreement Containing Consent Order (“Consent Agreement”), which includes: a statement by Respondent that it neither admits nor denies any of the allegations in the draft complaint, except as specifically stated in the Consent Agreement, and, only for purposes of this action, admits the facts necessary to establish jurisdiction; 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 Respondent has violated the Federal Trade Commission 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 thirty (30) days for the receipt and consideration of public comments, and having duly considered the comments received from an interested person pursuant to Commission Rule 2.34, 16 C.F.R. § 2.34, now in further conformity with the procedure prescribed in Commission Rule 2.34, the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the following order:

1. Respondent is a Delaware Corporation with its principal office or place of business at 2760 Daniel Johnson, Laval, Quebec, Canada H7P5Z7. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the VOLUME 156 Decision and Order Respondent, and the proceeding is in the public interest.

ORDER DEFINITIONS For purposes of this order, the following definitions shall apply:

1. Unless otherwise specified, “Respondent” shall mean Essentia Natural Memory Foam Company, Inc., also doing business as Essentia, its successors and assigns, and its officers, agents, representatives, and employees.

2. “Commerce” shall mean as defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. § 44. 3. “Competent and reliable scientific evidence” shall mean tests, analyses, research, or studies that have been conducted and evaluated in an objective manner by qualified persons, that are generally accepted in the profession to yield accurate and reliable results, and that are sufficient in quality and quantity based on standards generally accepted in the relevant scientific fields, when considered in light of the entire body of relevant and reliable scientific evidence, to substantiate that a representation is true.

4. “Covered product” shall mean any mattress or component part.

5. “Trace” level of VOCs or chemicals shall mean: A. VOCs or chemicals have not been intentionally added to the product;

B. The presence of VOCs or chemicals at that level does not cause material harm that consumers typically associate with VOCs or chemicals, ESSENTIA NATURAL MEMORY FOAM COMPANY, INC. 389 Decision and Order including, but not limited to, harm to the environment or human health; and C. The presence of VOCs or chemicals at that level does not result in concentrations higher than would be found at background levels in the ambient air. 6. “Volatile Organic Compound” (“VOC”) shall mean any compound of carbon that participates in atmospheric photochemical reactions, but excludes carbon monoxide, carbon dioxide, carbonic acid, metallic carbides or carbonates, ammonium carbonate, and specific compounds that the EPA has determined are of negligible photochemical reactivity, which are listed at 40 C.F.R. § 51.100(s).

I.

IT IS ORDERED that Respondent, directly or through any corporation, subsidiary, division, trade name, or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any covered product in or affecting commerce, shall not make any representation, in any manner, expressly or by implication, that: A. The covered product is VOC-free or free of harmful VOCs, unless the VOC emission level is zero micrograms per meter cubed (µg/m3), or Respondent possesses and relies upon competent and reliable scientific evidence that the covered product contains no more than a trace level of VOCs; or B. The covered product is free of chemicals. II.

IT IS FURTHER ORDERED that Respondent, directly or through any corporation, subsidiary, division, trade name, or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any covered product in or affecting commerce, shall not make any VOLUME 156 Decision and Order representation, in any manner, expressly or by implication, regarding:

A. The VOC level of such product;

B. The fact that such product is odorless, or the odor or smell of any such product in comparison to another mattress(es) or its component part(s); C. Any other environmental benefit or environmental attribute of such product;

D. Any other health benefit or health attribute related to the VOC or chemical content of such product or exposure to such product;

E. Whether the product is non-toxic; or F. Whether the product is made from natural materials; unless the representation is true, not misleading, and, at the time it is made, Respondent possesses and relies upon competent and reliable scientific evidence that substantiates the representation. III.

IT IS FURTHER ORDERED that Respondent, directly or through any corporation, subsidiary, division, trade name, or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any covered product in or affecting commerce, is hereby permanently restrained and enjoined from misrepresenting, in any manner, expressly or by implication, including through the use of any product name or endorsement, the existence, contents, validity, results, conclusions, or interpretations of any test, study, or research.

IV.

IT IS FURTHER ORDERED that Respondent and its successors and assigns, shall, for five (5) years after the last date of dissemination of any representation covered by this order, ESSENTIA NATURAL MEMORY FOAM COMPANY, INC. 391 Decision and Order maintain and upon request make available to the Federal Trade Commission for inspection and copying: A. All advertisements and promotional materials containing the representation;

B. All materials that were relied upon in disseminating the representation; and C. All tests, reports, studies, surveys, demonstrations, or other evidence in its possession or control that contradict, qualify, or call into question the representation, or the basis relied upon for the representation, including complaints and other communications with consumers or with governmental or consumer protection organizations.

V.

IT IS FURTHER ORDERED that Respondent and its successors and assigns, shall deliver a copy of this order to all current and future principals, officers, directors, and managers, and to all current and future employees, agents, and representatives having responsibilities with respect to the subject matter of this order, and shall secure from each such person a signed and dated statement acknowledging receipt of the order. Respondent shall deliver this order to current personnel within thirty (30) days after the date of service of this order, and to future personnel within thirty (30) days after the person assumes such position or responsibilities. Respondent shall maintain and upon request make available to the Federal Trade Commission for inspection and copying all acknowledgments of receipt of this order obtained pursuant to this Part.

VI.

IT IS FURTHER ORDERED that Respondent and its successors and assigns, shall notify the Commission at least thirty (30) days prior to any change in the corporation that may affect compliance obligations arising under this order, including but not limited to a dissolution, assignment, sale, merger, or other action VOLUME 156 Decision and Order that would result in the emergence of a successor; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this order; the proposed filing of a bankruptcy petition; or a change in the corporate name or address. Provided, however, that, with respect to any proposed change in the corporation about which Respondent learns less than thirty (30) days prior to the date such action is to take place, Respondent shall notify the Commission as soon as is practicable after obtaining such knowledge. Unless otherwise directed by a representative of the Commission in writing, all notices required by this Part shall be emailed to [email protected] or sent by overnight courier (not the U.S. Postal Service) to: Associate Director for Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. The subject line must begin: “Essentia Natural Memory Foam Company, Inc., File No. 122 3130.” VII.

IT IS FURTHER ORDERED that Respondent and its successors and assigns, within sixty (60) days after the date of service of this order, shall file with the Commission a true and accurate report, in writing, setting forth in detail the manner and form of its own compliance with this order. Within ten (10) days of receipt of written notice from a representative of the Commission, it shall submit additional true and accurate written reports.

VIII.

This order will terminate on November 8, 2033, or twenty (20) years from the most recent date that the United States or the Federal Trade Commission files a complaint (with or without an accompanying consent decree) in federal court alleging any violation of the order, whichever comes later; provided, however, that the filing of such a complaint will not affect the duration of: A. Any Part in this order that terminates in less than twenty (20) years;

B. This order’s application to any Respondent that is not named as a defendant in such complaint; and ESSENTIA NATURAL MEMORY FOAM COMPANY, INC. 393 Analysis to Aid Public Comment C. This order if such complaint is filed after the order has terminated pursuant to this Part.

Provided, further, that if such complaint is dismissed or a federal court rules that the Respondent did not violate any provision of the order, and the dismissal or ruling is either not appealed or upheld on appeal, then the order will terminate according to this Part as though the complaint had never been filed, except that the order will not terminate between the date such complaint is filed and the later of the deadline for appealing such dismissal or ruling and the date such dismissal or ruling is upheld on appeal. By the Commission.

ANALYSIS OF CONSENT ORDER TO AID PUBLIC COMMENT The Federal Trade Commission (“FTC” or “Commission”) has accepted, subject to final approval, an agreement containing a consent order from Essentia Natural Memory Foam Company, Inc., a corporation (“respondent”).

The proposed consent order has been placed on the public record for thirty (30) days for receipt of comments by interested persons. Comments received during this period will become part of the public record. After thirty (30) days, the Commission will again review the agreement and the comments received, and will decide whether it should withdraw from the agreement or make final the agreement’s proposed order.

This matter involves respondent’s marketing and sale of memory foam mattresses. According to the FTC’s complaint, respondent represented that its mattresses do not contain volatile organic compounds (“VOCs”), are chemical-free, have no VOC off-gassing, lack the odors commonly associated with memory VOLUME 156 Analysis to Aid Public Comment foam, and are made with 100% natural materials. The complaint alleges that respondent did not possess and rely upon a reasonable basis substantiating these representations when it made them. Moreover, the complaint alleges that respondent claims that tests show that the memory foam used in respondent’s mattresses is free of VOCs and Formaldehyde. The complaint alleges that tests do not support these claims. Thus, the complaint alleges that respondent engaged in deceptive acts or practices in violation of Section 5(a) of the FTC Act. Thus, the complaint alleges that respondent engaged in deceptive practices in violation of Section 5(a) of the FTC Act. The Commission does not typically challenge subjective claims, such as smell.1 However, a consumer acting reasonably under the circumstances is likely to interpret representations that a memory foam mattress lacks the common smell associated with memory foam to mean that the mattress is free of VOCs.

The proposed consent order contains three provisions designed to prevent respondent from engaging in similar acts and practices in the future. Part I addresses the marketing of VOCfree mattresses. It prohibits respondent from making zero-VOC claims unless the VOC emission level is zero micrograms per meter cubed or the company possesses and relies upon competent and reliable scientific evidence that their mattresses contain no more than a trace level of VOCs based on the Green Guides’ guidance on making free-of claims.2 It also prohibits respondent from making chemical-free claims.

Part II addresses VOC claims, odor-free claims and comparative odor claims, environmental benefit or attribute claims, certain health claims made about mattresses, and natural claims. It prohibits such representations unless the representation is true, not misleading, and substantiated by competent and reliable scientific evidence.

1 See FTC, FTC POLICY STATEMENT ON DECEPTION, appended to Cliffdale Assocs., Inc., 103 F.T.C. 110, 174 (1984). 2 See Guides for the Use of Environmental Marketing Claims, 77 Fed. Reg. 62, 122, 62,123 (Oct. 11, 2012).

ESSENTIA NATURAL MEMORY FOAM COMPANY, INC. 395 Analysis to Aid Public Comment Part III addresses claims that testing supports respondents’ advertising claims for its mattresses. It prohibits any misrepresentations about the existence, contents, validity, results, conclusion, or interpretations of any test, study, or research. Parts IV though VII require Essentia to: keep copies of advertisements and materials relied upon in disseminating any representation covered by the order; provide copies of the order to certain personnel, agents, and representatives having supervisory responsibilities with respect to the subject matter of the order; notify the Commission of changes in its structure that might affect compliance obligations under the order; and file a compliance report with the Commission and respond to other requests from FTC staff. Part VIII provides that the order will terminate after twenty (20) years, with certain exceptions. The purpose of this analysis is to facilitate public comment on the proposed order. It is not intended to constitute an official interpretation of the complaint or the proposed order, or to modify the proposed order’s terms in any way. VOLUME 156 Complaint