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Federal Trade Commission v. XXL Impressions LLC

United States District Court, D. Maine

March 10, 2017

FEDERAL TRADE COMMISSION and STATE OF MAINE, Plaintiffs,
v.
XXL IMPRESSIONS LLC, a limited liability company, also d/b/a BETTER HEALTH NUTRITIONALS, JEFFREY R. POWLOWSKY, individually and as an owner and officer of XXL IMPRESSIONS LLC, J2 RESPONSE L.L.P., a limited liability partnership, also d/b/a J2 RESPONSE, JUSTIN BUMANN, individually and as a partner of J2 RESPONSE L.L.P., JUSTIN STEINLE, individually and as a partner of J2 RESPONSE L.L.P., SYNERGIXX, LLC, a limited liability company, also d/b/a CTF MEDIA, CHARLIE R. FUSCO, individually and as an owner and officer of SYNERGIXX, LLC, RONALD JAHNER, and BRAZOS MINSHEW a/k/a SAMUEL BRANT, Defendants.

          DAVID C. SHONKA Acting General Counsel James A. Prunty David P. Frankel Federal Trade Commission Attorneys for Plaintiff FEDERAL TRADE COMMISSION

          JANET T. MILLS Attorney General, State of Maine Brendan F.X. O'Neil Assistant Attorney General Office of the Attorney General of Maine Jeffrey R. Powlowsky Jeffrey R. Powlowsky, on behalf of Defendants XXL Impressions LLC ATTORNEYS FOR DEFENDANTS XXL IMPRESSIONS LLC and JEFFREY R. POWLOWSKY William C. Halls, Esq. Pro Hac Vice forthcoming Halls Law Office Alfred C. Frawley Senior Counsel Eaton Peabody

          STIPULATED FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF AS TO DEFENDANTS XXL IMPRESSIONS LLC, also d/b/a BETTER HEALTH NUTRITIONALS, and JEFFREY R. POWLOWSKY

          Nancy Torresen United States Chief District Judge

         Plaintiffs, the Federal Trade Commission (“FTC” or “Commission”) and the State of Maine, as represented in this matter by the Office of the Attorney General of Maine (“Maine AG”) (“Plaintiffs”), filed a Complaint for Permanent Injunction and Other Equitable Relief against Defendants pursuant to Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b), pursuant to Section 4(a) of the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. § 6103(a), and pursuant to Section 209 of the Maine Unfair Trade Practices Act (“Maine UTPA”), Me. Rev. Stat. tit. 5, § 209, to obtain permanent injunctive relief, rescission or reformation of contracts, restitution, the refund of monies paid, disgorgement of ill-gotten monies, and other equitable relief for Defendants' acts or practices in violation of Sections 5(a) and 12 of the FTC Act, 15 U.S.C. §§ 45(a) and 52, the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. §§ 6101-6108, the FTC's Trade Regulation Rule entitled “Telemarketing Sales Rule” (“TSR”), 16 C.F.R. Part 310, the Electronic Fund Transfer Act (“EFTA”), 15 U.S.C. §§ 1693-1693r, and its implementing Regulation E, 12 C.F.R. § 1005.10, and Section 207 of the Maine UTPA, Me. Rev. Stat. tit. 5, § 207, in connection with the labeling, advertising, marketing, distribution, and sale of products purported to provide relief from joint and back pain and to prevent or mitigate cognitive decline.

         The Commission, the State of Maine, XXL Impressions LLC, d/b/a Better Health Nutritionals, and Jeffrey R. Powlowsky stipulate to the entry of this Final Judgment and Order for Permanent Injunction and Other Equitable Relief as to Defendants XXL Impressions LLC, d/b/a Better Health Nutritionals, and Jeffrey R. Powlowsky (hereafter collectively, “Defendants”).

         FINDINGS

         1. This Court has jurisdiction over this matter.

         2. The Complaint charges that Defendants participated in deceptive acts or practices in violation of Sections 5(a) and 12 of the FTC Act, 15 U.S.C. §§ 45(a) and 52, the Telemarketing and Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”), 15 U.S.C. §§ 6101-6108, the FTC's Trade Regulation Rule entitled “Telemarketing Sales Rule” (“TSR”), 16 C.F.R. Part 310, the Electronic Fund Transfer Act (“EFTA”), 15 U.S.C. §§ 1693-1693r, and its implementing Regulation E, 12 C.F.R. § 1005.10, and Section 207 of the Maine UTPA, Me. Rev. Stat. tit. 5, § 207, in connection with the labeling, advertising, marketing, distribution, and sale of products purported to provide pain relief and to prevent or mitigate cognitive decline.

         3. Defendants neither admit nor deny any of the allegations in the Complaint, except as specifically stated in this Order. Defendants admit the facts necessary to establish jurisdiction only for purposes of this action.

         4. Defendants represent that they have ceased all sales of the products at issue in this Complaint, and all continuity orders of such products.

         5. Defendants waive any claim that they may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action through the date of this Order, and agree to bear their own costs and attorney fees.

         6. Defendants and Plaintiffs waive all rights to appeal or otherwise challenge or contest the validity of this Order.

         DEFINITIONS

         For the purpose of this Order, the following definitions apply:

         1. “Clear(ly) and conspicuous(ly)” means that a required disclosure is difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers, including in all of the following ways:

A. In any communication that is solely visual or solely audible, the disclosure must be made through the same means through which the communication is presented. In any communication made through both visual and audible means, such as a television advertisement, the disclosure must be presented simultaneously in both the visual and audible portions of the communication even if the representation requiring the disclosure is made in only one means;
B. A visual disclosure, by its size, contrast, location, the length of time it appears, and other characteristics, must stand out from any accompanying text or other visual elements so that it is easily noticed, read, and understood;
C. An audible disclosure, including by telephone or streaming video, must be delivered in a volume, speed, and cadence sufficient for ordinary consumers to easily hear and understand it;
D. In any communication using an interactive electronic medium, such as the Internet or software, the disclosure must be unavoidable;
E. The disclosure must use diction and syntax understandable to ordinary consumers and must appear in each language in which the representation that requires the disclosure appears;
F. The disclosure must comply with these requirements in each medium through which it is received, including all electronic devices and face-to-face communications;
G. The disclosure must not be contradicted or mitigated by, or inconsistent with, anything else in the communication; and
H. When the representation or sales practice targets a specific audience, such as children, the elderly, or the terminally ill, “ordinary consumers” includes reasonable members of that group.

         2. “Close proximity” means that the disclosure is very near the triggering representation. For example, a disclosure made through a hyperlink, pop-up, interstitial, or other similar technique is not in close proximity to the triggering representation.

         3. “Corporate Defendant” means XXL Impressions LLC and its successors and assigns.

         4. “Covered Product” means any Dietary Supplement, Food, or Drug, including but not limited to FlexiPrin and CogniPrin.

         5. “Defendants” means Individual Defendant and Corporate Defendant, individually, collectively, or in any combination.

         6. “Dietary supplement” means:

A. any product labeled as a dietary supplement or otherwise represented as a dietary supplement; or
B. any pill, tablet, capsule, powder, softgel, gelcap, liquid, or other similar form containing one or more ingredients that are a vitamin, mineral, herb or other botanical, amino acid, probiotic, or other dietary substance for use by humans to supplement the diet by increasing the total dietary intake, or a concentrate, metabolite, constituent, extract, or combination of any ingredient described above, that is intended to be ingested, and is not represented to be used as a conventional food or as a sole item of a meal or the diet.

         7. “Drug” means: (1) articles recognized in the official United States Pharmacopoeia, official Homeopathic Pharmacopoeia of the United States, or official National Formulary, or any supplement to any of them; (2) articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in humans or other animals; (3) articles (other than food) intended to affect the structure or any function of the body of humans or other animals; (4) articles intended for use as a component of any article specified in (1), (2), or (3); but does not include devices or their components, parts, or accessories.

         8. “Essentially Equivalent Product” means a product that contains the identical ingredients, except for inactive ingredients (e.g., binders, colors, fillers, excipients), in the same form and dosage, and with the same route of administration (e.g., orally, sublingually), as the Covered Product; provided that the Covered Product may contain additional ingredients if reliable scientific evidence generally accepted by experts in the field indicates that the amount and combination of additional ingredients is unlikely to impede or inhibit the effectiveness of the ingredients in the Essentially Equivalent Product.

         9. “Food” means: (1) any article used for food or drink for humans or other animals; (2) chewing gum; and (3) any article used for components of any such article.

         10. “Including” means including but not limited to.

         11. “Individual Defendant” means Jeffrey R. Powlowsky.

         12. “Material connection” means any relationship that materially affects the weight or credibility of any Endorsement and that would not reasonably be expected by consumers.

         13. “Negative Option Feature” means, in an offer or agreement to sell or provide any good, program, or service, a provision under which the consumer's silence or failure to make an affirmative action to reject goods or services, or to cancel the agreement, is interpreted by the seller or provider as acceptance of the offer.

         14. “Person” means a natural person, an organization, or other legal entity, including a corporation, partnership, sole proprietorship, limited liability company, association, cooperative, or any other group or combination acting as an entity.

         15. “Preauthorized Electronic Fund Transfer” as defined by the Electronic Fund Transfer Act, 15 U.S.C. § 1693a(10), means an electronic fund transfer authorized in advance to recur at substantially regular intervals.

         I.

         TWENTY YEAR BAN ON DIRECT RESPONSE MARKETING OF FOOD, DIETARY SUPPLEMENTS, OR DRUGS FOR WHICH A HEALTH BENEFIT IS CLAIMED

         IT IS HEREBY ORDERED that Defendants, whether acting directly or indirectly, are hereby restrained and enjoined, for 20 years from the date of this Order, from advertising, marketing, promoting, offering for sale, or distributing through Direct Response Marketing, or assisting in the advertising, marketing, promoting, offering for sale, or distributing through Direct Response Marketing, any Covered Product for which a health benefit is claimed expressly or by implication. Provided, however, subject to the Sections of this Order entitled Prohibited Representations: Pain Relief, Cartilage Rebuilding, Cognitive Decline, Memory Improvement, and Disease Claims; Prohibited Representations: Other Health-Related Claims; and Prohibited Representations Regarding Tests, Studies, or Ingredients, nothing in this Section shall prohibit Defendants from Brokering the Manufacture of Covered Products, provided that Defendants or Defendants' family members have no direct or indirect ownership or financial interest in the companies that are advertising, marketing, promoting, selling or distributing the Covered Products, and provided that Defendants only receive payment for their brokerage services from the product manufacturer and do not receive any payment or royalties from companies that advertise, market, promote, sell, or distribute the Covered Products.

         “Direct Response Marketing” means any type of marketing, including through television, radio, the Internet, or mail, where a prospective customer is urged to respond directly to the seller to purchase a product.

         “Brokering the Manufacture” means assisting a seller or prospective seller in finding a manufacturer to make products to specifications required by the seller or prospective seller.

         II.

         PROHIBITED REPRESENTATIONS: PAIN RELIEF, CARTILAGE REBUILDING, COGNITIVE DECLINE, MEMORY IMPROVEMENT, AND DISEASE CLAIMS

         IT IS HEREBY ORDERED that Defendants, Defendants' officers, agents, and employees, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any Covered Product, are hereby permanently restrained and enjoined from making, or assisting others in making, expressly or by implication, including through the use of a product name, endorsement, depiction, or illustration, any representation that, in humans, such Covered Product:

A. Reduces joint pain, inflammation, or stiffness, including in as little as two hours;
B. Provides relief from back pain;
C. Reduces the need for medication;
D. Helps rebuild damaged joints or cartilage;
E. Reverses, mitigates, or prevents cognitive or mental decline;
F. Improves memory;
G. Restores lost memory capacity; or
H. Cures, mitigates, or treats any disease;

         unless the representation is non-misleading and, at the time of making such representation, they possess and rely upon competent and reliable scientific evidence substantiating that the representation is true. For purposes of this Section, competent and reliable scientific evidence shall consist of human clinical testing of the Covered Product, or of an Essentially Equivalent Product, that is sufficient in quality and quantity based on standards generally accepted by experts in the relevant disease, condition, or function to which the representation relates, when considered in light of the entire body of relevant and reliable scientific evidence, to substantiate that the representation is true. Such testing shall be: (1) randomized, double-blind, and placebo-controlled; and (2) conducted by researchers qualified by training and experience to conduct such testing. In addition, all underlying or supporting data and documents generally accepted by experts in the field as relevant to an assessment of such testing as described in the Section entitled Preservation of Records Relating to Competent and Reliable Human Clinical Tests or Studies must be available for inspection and production to Plaintiffs. Persons covered by this Section shall have the burden of proving that a product satisfies the definition of Essentially Equivalent Product.

         III. PROHIBITED REPRESENTATIONS: OTHER ...


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