Stuck in the Middle with the FTC

by Mintz Levin - Consumer Product Matters
Contact

“…Clowns to the right of me, jokers to the left, here I am…”

-Stealers Wheel (1972)


Legal actions regarding “Made in the USA” claims, whether prosecuted by the Federal Trade Commission (FTC) or through various state unfair trade practices acts, often settle early in the proceedings.  For example, in 2014, the FTC issued 16 “closing letters” wherein the target company agreed to revise its “Made in the USA”  claim to clarify that its products, even those assembled in the United States, included imported components. In 2015, the FTC issued 28 such “closing letters”; and in 2016, to date, the FTC has issued 18.

Earlier this month, Chemence, Inc., the Ohio maker of Kwikfix, Hammer-Tite and Flash Glue, entered into a settlement with the FTC.  Chemence was the third glue company that has resolved its claims issues with the FTC since 2015.   Toagosei America, Inc., makers of the Crazy Glue brand, and Gorilla Glue both previously reached agreement with the FTC, with FTC issuing closing letters after both companies agreed to make clear that their products included some imported materials.

Chemence’s path to resolution with the FTC was different.  Chemence’s refusal to resolve the matter through the “closing letter” process resulted in the FTC bringing an action in the Northern District of Ohio federal court back in February.  Chemence advertised its superglue as “Proudly Made in the USA” or “Made in the USA” – but the FTC asserted that about 55% of the ingredients in Chemence’s product was imported.  The FTC thus alleged that the company’s advertising was deceptive, in part because many of the imported chemicals were essential to the function of the superglue product.  Chemence argued that the starting materials, including imported chemicals, go through a “substantial transformation” at the company’s facility in Alpharetta, Georgia.  Through that manufacturing process, the company created a new chemical with only trace amounts of foreign chemicals (less than 1%), which it described as being de minimis.

The litigation included Chemence’s request for documents about the FTC’s investigation into the glue industry that had commenced in 2014 and had led up to various actions involving superglue companies.  Chemence’s competitors, including Gorilla Glue and Toagosei America, Inc., sought protective orders to limit Chemence’s access to documents that had been filed with the FTC by those companies during the 2014 investigation.  Gorilla Glue asserted that Chemence’s demand for the documents was being done so for its own competitive reasons unrelated to the litigation.  Chemence countered that its discovery request would show that the FTC was holding companies to different standards for “Made in the USA” claims.  Chemence also asserted that the FTC has never promulgated rules or issued clear standards about when and how “Made in the USA” claims can be made.  (As we’ve blogged about in the past, the FTC has an enforcement policy related to such claims, which it issued back in 1997.)

Chemence alleged that the FTC “joined forces with Chemence’s competitors to hide the very documents that establish that Chemence is the only company manufacturing super adhesives in the USA.”  Chemence also argued that the FTC gave the other glue companies a “complete pass” by allowing them to make USA-origin claims with certain disclosures.  For example, in the closing letter to Gorilla Glue, the FTC said the company could state that its products were “made in the USA with domestic and imported materials” or “Made in Germany.  Bottled in the USA.”

So where did these arguments get Chemence?  In the end, Chemence agreed to pay a settlement of $220,000 to the FTC and to only advertise its products as “Made in the USA” if the final assembly and all significant processing of its products “occurs in the United States.”  The settlement document that was filed with the court also requires that in order to make that claim, the company must source “all or virtually all ingredients” in the United States.

We are not privy to why Chemence, after fighting the fight, agreed to settle with the FTC on the terms set forth in the proposed settlement agreement that was recently filed with the court.  As Stealers Wheel pointed out in that famous song, being stuck in the middle may not work to one’s advantage.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Mintz Levin - Consumer Product Matters | Attorney Advertising

Written by:

Mintz Levin - Consumer Product Matters
Contact
more
less

Mintz Levin - Consumer Product Matters on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.