ECM BioFilms, Inc. v. Federal Trade Commission
851 F.3d 599
| 6th Cir. | 2017Background
- ECM BioFilms sold a plastic additive advertised to make plastics “biodegradable;” some marketing expressly claimed full biodegradation in 9 months–5 years in landfills.
- FTC issued an administrative complaint (2013) alleging those biodegradability claims were false or deceptive under § 5 of the FTC Act; an ALJ held the 9 months–5 years claim unsubstantiated but rejected other implied-claim theories.
- The full Commission found three claims deceptive, including that an unqualified “biodegradable” claim implied complete decomposition within a "reasonably short" period (the Commission treated five years as the relevant benchmark) and issued an order requiring substantiation or qualifying disclaimers.
- Scientific dispute: D5511 anaerobic gas-evolution tests (and other lab tests) produced mixed results; no reliable evidence supported full biodegradation in landfills within five years.
- Consumer-survey evidence (FTC’s Dr. Frederick and ECM’s Dr. Stewart) showed a significant minority of reasonable consumers interpret an unqualified “biodegradable” label to mean full decomposition within five years.
- ECM appealed, arguing lack of substantial evidence for the implied five-year interpretation, and raised APA, First Amendment, and Due Process (fair-notice) challenges; the Sixth Circuit denied review.
Issues
| Issue | ECM's Argument | FTC's Argument | Held |
|---|---|---|---|
| Whether substantial evidence supports that an unqualified “biodegradable” claim conveys an implied promise of full decomposition within a reasonably short period (five years) | ECM: surveys and science don’t show consumers reasonably infer a five-year full-decomposition claim; surveys flawed | FTC: two consumer surveys show a significant minority infer ≤5 years; no competent evidence supports full biodegradation in landfills within five years | Held: substantial evidence supports the Commission’s finding that reasonable consumers infer a ≤5-year full-decomposition claim; ECM liable under §5 |
| Whether Commission’s action was arbitrary or capricious under the APA | ECM: Commission ignored/erroneously weighed scientific tests and departed from ALJ findings without adequate explanation | FTC: Commission explained departures, relied on record and expertise; any alleged errors were harmless given undisputed lack of five-year substantiation | Held: Commission’s decision not arbitrary or capricious; substantial-evidence standard satisfied |
| Whether the order violates the First Amendment (commercial speech / disclaimers) | ECM: order effectively prohibits unqualified scientific speech; proposed minimal disclaimer would cure deception; required disclaimers are unduly burdensome | FTC: order permits truthful unqualified claims if substantiated; otherwise reasonable disclaimer requirements (Zauderer) are tailored to prevent deception | Held: restrictions are disclosure-based and constitutional under Zauderer; not a speech ban and disclaimers are reasonable and not unduly burdensome |
| Whether ECM lacked fair notice / due process because FTC’s Green Guides suggested a one-year benchmark | ECM: relied on Guides and ALJ statements; five-year benchmark was unforeseeable | FTC: complaint and proceedings sufficiently apprised ECM that “reasonably short” could be pursued as close to one year or up to five years; ECM had full opportunity to litigate | Held: no due process violation; ECM received adequate notice and opportunity to defend |
Key Cases Cited
- F.T.C. v. Colgate-Palmolive Co., 380 U.S. 374 (1965) (FTC expertise and deference in deception cases)
- POM Wonderful, LLC v. F.T.C., 777 F.3d 478 (D.C. Cir. 2015) (three-step deception inquiry; consumer interpretation standard)
- Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626 (1985) (disclaimer/disclosure standard for commercial speech)
- Central Hudson Gas & Electric Corp. v. Public Service Comm’n of N.Y., 447 U.S. 557 (1980) (commercial-speech intermediate scrutiny test)
- Bose Corp. v. Consumers Union of U.S., Inc., 466 U.S. 485 (1984) (argument on appellate review standard in First Amendment contexts)
- Motor Vehicle Manufacturers Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (arbitrary and capricious/APA review standard)
- F.T.C. v. Mandel, 359 U.S. 385 (1959) (authority to impose fencing-in relief)
- In re Indiana Federation of Dentists, 476 U.S. 447 (1986) (substantial-evidence standard for agency factfinding)