ECM BIOFILMS, INC., Petitioner, v. FEDERAL TRADE COMMISSION, Respondent.
No. 15-4339
United States Court of Appeals, Sixth Circuit.
March 16, 2017
851 F.3d 599
Accordingly, we hold that Mattox failed to plead that he suffered from an objectively serious medical condition on August 14, 2011, and that his claim against P.A. Neff was therefore properly dismissed. Because Mattox did not plead an objectively serious medical condition, there is no need to analyze whether he sufficiently pleaded the subjective prong of his deliberate indifference claim.
CONCLUSION
For the foregoing reasons, we AFFIRM the dismissal of Mattox‘s claims against P.A. Neff, and REVERSE the dismissal of his claims against Dr. Pandya, Dr. Jordan and Dr. Borgerding. We REMAND for further proceedings consistent with this opinion.
Before: WHITE and STRANCH, Circuit Judges; MICHELSON, District Judge.*
ARGUED: Jonathan W. Emord, EMORD & ASSOCIATES, P.C., Clifton, Virginia, for Petitioner. Theodore Metzler, FEDERAL TRADE COMMISSION, Washington, D.C., for Respondent. ON
OPINION
JANE B. STRANCH, Circuit Judge.
ECM BioFilms, Inc. manufactures an additive that it claims accelerates the rate at which plastic biodegrades. In October 2013, the Federal Trade Commission (FTC) filed an administrative complaint against ECM, which alleged that several of ECM‘s biodegradability claims were deceptive. The full Commission ultimately found that three of ECM‘s claims were false and misleading under § 5 of the FTC Act (
I. BACKGROUND
More than half of all plastic waste ends up in landfills, where it can take thousands of years to biodegrade. In recent years, some environmentally-conscious consum
A. ECM‘s biodegradability claims
ECM‘s claims regarding the biodegradability of ECM plastic have changed over the years. Before 2009, ECM did not market a specific time frame for biodegradation, but did represent that ECM plastic would biodegrade “in timeframes that would be similar to things like wood or pieces of sticks.” Responding to industry demands for specific time frames, in 2009 or 2010 ECM began advertising that ECM plastic would “fully biodegrade” in a “landfill” within nine months to five years. ECM placed this representation on its marketing materials and website. The administrative law judge (ALJ) overseeing this case concluded this claim was false and unsubstantiated. As the ALJ observed, “All of the experts in this case agreed that ECM Plastics do not fully biodegrade in 9 months to 5 years in a landfill.” The Commission also concluded that “the clear consensus among both parties’ experts” was that “ECM lacks substantiation for its express and implied claims that ECM Plastics fully biodegrade in landfills within 5 years.” ECM no longer contends otherwise.
ECM also provided plastic manufacturers with material to market their products as biodegradable, including a logo marked “ECM Biodegradable” against a tree design. Millions of plastic products were manufactured with this representation or similar representations, including “plastic dinnerware, straws, and ‘clam shell’ carryout containers, restaurant and grocery bags, trash bags, and shampoo and conditioner bottles.” Some of ECM‘s plastic-manufacturer customers also advertised that their plastics would biodegrade in nine months to five years in a landfill.
In 2012, the FTC revised its “Green Guides,” which are intended to “help marketers avoid making environmental marketing claims that are unfair or deceptive under Section 5 of the FTC Act.”
After the FTC issued the 2012 Guides, ECM revised its marketing materials and logo. ECM placed an asterisk next to the word “biodegradable” and clarified that “[p]lastic products manufactured with [the ECM additive] will biodegrade in any biologically-active environment (including most landfills) in some period greater than a year.” However, ECM continued to make the “nine months to five years” claim on its
B. Scientific tests of ECM plastic
Scientists disagree on the precise definition of the term “biodegradable.” Most commonly, scientists define biodegradable material as material that can be broken down by biological agents, such as bacteria or fungi. Biodegradability is a property of a material, similar to color, weight, or density. A material‘s rate of biodegradation depends on the environment in which biodegradation occurs. Because biodegradation occurs at different rates in different environments, in evaluating the biodegradability of a material, scientists focus on its “intrinsic biodegradability.” That is, they do not estimate the time for complete biodegradation, but instead evaluate the material‘s rate of biodegradation in various environments, as well as how this rate compares with other biodegradable materials.
The most practical and widely-used scientific method for measuring the intrinsic biodegradability of a material is gas evolution testing. Of the available gas evolution tests, the D5511 protocol provides the best approximation of plastic biodegradation in landfill conditions. Landfills are predominantly anaerobic environments, and the D5511 method measures “the degree and rate of anaerobic biodegradation of plastic materials.” The D5511 protocol provides, however, that claims of performance are to be limited to the numerical result obtained in the test and are “not be used for unqualified ‘biodegradable’ claims.” It also provides that results are not to be extrapolated past the actual duration of the test.
A number of different laboratories performed D5511 biodegradation tests on plastics manufactured with ECM‘s additive. ECM points to nineteen laboratory tests that, it claims, demonstrate that ECM plastic biodegrades at a faster rate than traditional plastic. In one test, for instance, ECM plastic biodegraded 49.28% over 900 days, whereas traditional plastic biodegraded just 0.1152% over the same time. The FTC, in turn, points to thirteen tests that, it alleges, indicate that ECM‘s additive does not accelerate biodegradation.
C. Consumer understanding of biodegradability claims
Both ECM and the FTC rely on consumer surveys to establish consumer understanding of biodegradability claims. The FTC‘s survey was conducted by Dr. Shane Frederick, a professor of marketing at Yale University‘s School of Management.1 Using an online survey tool available through Google Consumer Surveys, Dr. Frederick asked respondents one of 60 different questions, collecting nearly 29,000 responses.2 Dr. Frederick found that, at a minimum, adding a “biodegradable” label to a plastic bottle increased the percentage of respondents who believed the bottle would fully decompose within five years from 13% to between 44% and 49%. Similarly adding a “biodegradable” label to a plastic “Tupperware” container increased the percentage of respondents who believed the container would fully decompose within five years from 16% to 44%; and adding a “biodegradable” label caused an
ECM‘s survey was conducted by Dr. David Stewart, a professor of marketing and business law at Loyola Marymount University. Dr. Stewart surveyed 400 respondents by landline telephone asking five questions, some of which contained one or more sub-questions. In one question, respondents were asked, “If something is biodegradable, how long do you think it would take for it to decompose or decay?” Of the respondents who provided an answer to this question with a number and unit of time, 64% said that it would decompose within five years. By Dr. Stewart‘s own calculations, these respondents represented 23% of the survey‘s 400 respondents.4
D. Procedural history
In October 2013, the FTC filed an administrative complaint alleging that ECM‘s biodegradability representations were false and misleading, and thus violated § 5 of the FTC Act. The complaint asserted that ECM‘s express representation that ECM plastic would completely biodegrade within nine months to five years was unsupported by scientific evidence. It also alleged that “[c]onsumers likely interpret unqualified degradable claims to mean that the entire product or package will completely decompose into elements found in nature within a reasonably short period of time after customary disposal.” Because ECM plastic does not fully biodegrade within a reasonably short time, the complaint alleged, this implied claim was misleading.
An ALJ held a three-week trial in August 2014. The ALJ concluded that ECM‘s express claim that ECM plastic would completely biodegrade in a landfill within nine months to five years was false and unsubstantiated. He also determined, however, that the FTC had failed to prove that ECM‘s remaining biodegradability claims were misleading because the FTC failed to prove ECM had made an “implied one year claim.” The ALJ‘s decision was based, in part, on perceived methodological problems with Dr. Frederick‘s survey.
The Commission‘s order prohibits ECM from making biodegradability claims “unless such 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,” and
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- the entire item will completely decompose into elements found in nature within five (5) years after customary disposal; or
- the representation is clearly and prominently and in close proximity qualified by:
- Either (1) the time to complete decomposition into elements found in nature; or (2) the rate and extent of decomposition into elements found in nature, provided that such qualification must disclose that the stated rate and extent of decomposition does not mean that the product or package will continue to decompose; and
- If the product will not decompose in a customary disposal facility or by a customary method of disposal, both (1) the type of non-customary disposal facility or method and (2) the availability of such disposal facility or method to consumers where the product or package is marketed or sold. (App. at 4-5, 403-04)
The Commission‘s order specifies the “competent and reliable scientific evidence” needed to substantiate a biodegradability claim, setting different standards for unqualified claims (that is, claims that simply use the term “biodegradable“), and qualified claims (claims that cabin the meaning of the word, such as by referring to the rate of degradation and the circumstances of disposal). To make an unqualified biodegradability claim, “any scientific technical protocol (or combination of protocols) substantiating such claims must assure complete decomposition and simulate the physical conditions found in landfills, where most trash is disposed.” (
- assure the entire product will (1) completely decompose into elements found in nature in any stated timeframe ...; or (2) decompose into elements found in nature at the rate and to the extent stated in the representation; and
- simulate the physical conditions found in the type of disposal facility or method stated in the representation or, if not qualified by disposal facility or method, the conditions found in landfills, where most trash is disposed.
(Id.) The order does not bar ECM from using results of D5511 tests to substantiate a qualified biodegradability claim.
II. ANALYSIS
On appeal, ECM contends that the Commission‘s order was not supported by substantial evidence--and, therefore, that the Commission should not have found ECM liable for violating § 5 of the FTC Act--and that the Commission‘s order violated the First Amendment, the APA, and the Due Process Clause of the Fifth Amendment. We address each of ECM‘s challenges in turn.
A. Section 5 of the FTC Act
We begin by reviewing the Commission‘s holding that ECM‘s marketing materials violated § 5 of the FTC Act.5 In conducting this review, “[t]he findings of the Commission as to the facts, if supported by evidence, shall be conclusive.”
Section 5 of the FTC Act prohibits the use of deceptive advertising in commerce and empowers and directs the Commission to prevent such advertising. See
ECM appeals the Commission‘s findings with respect to only one of its claims: its representation that ECM plastic is “biodegradable” without reference to any time frame--that is, its “unqualified biodegradability claim.”6 The Commission rejected ECM‘s argument that the term “biodegradable” conveys only that a product is “intrinsically” biodegradable, and concluded that the preponderance of the evidence showed that ECM‘s unqualified biodegradability claim implied that ECM plastics “will completely break down in landfills within a reasonably short period of time, i.e., within five years.”
ECM does not dispute that this implied claim, if made, was false. Nor does it dispute that this implied claim would be material to its customers. Accordingly, we limit our analysis to whether substantial evidence supports the Commission‘s finding that ECM‘s unqualified biodegradability claim did, in fact, convey the implied claim that ECM plastic completely biodegrades within five years. See POM Wonderful, 777 F.3d at 491; see also Removatron Int‘l Corp. v. F.T.C., 884 F.2d 1489, 1496 (1st Cir. 1989) (“The Commission‘s findings with respect to what representations are made in advertisements are factual.“).
The Commission “will deem an advertisement to convey a claim if consumers acting reasonably under the circumstances would interpret the advertisement to contain that message.” POM Wonderful, 777 F.3d at 490 (citation omitted). In making this determination, the Commission “examines the overall net impression of an ad,” and may rely on both its own viewing of the ad and extrinsic evidence. See Kraft, Inc. v. F.T.C., 970 F.2d 311, 314, 318 (7th Cir. 1992). “An interpretation may be reasonable even though it is not shared by a majority of consumers in the relevant class, or by particularly sophisticated consumers.” FTC Policy Statement on Deception, 103 F.T.C. 174, 177 n.20 (1984). The Commission thus “considers whether at least a significant minority of reasonable consumers would likely interpret the ad to assert the claim.” POM Wonderful, 777 F.3d at 490 (internal quotation marks omitted); see also Fanning v. F.T.C., 821 F.3d 164, 171 (1st Cir. 2016) (“Liability may be imposed if at least a significant minority of reasonable consumers [would
Here, the Commission relied on two consumer surveys--a valid form of extrinsic evidence. Telebrands Corp., 140 F.T.C. at 291. It relied on Dr. Frederick‘s survey, which found that, at a minimum, adding a “biodegradable” label caused an additional 31% to 36% of respondents to believe that a plastic water bottle would fully decompose within five years; an additional 28% to believe that a plastic “Tupperware” container would fully decompose within five years; and an additional 20% to believe that a plastic bag would fully decompose within five years. The Commission also relied on the survey of ECM‘s own expert, Dr. Stewart, which found that 23% of respondents expected something biodegradable to fully decompose within five years. Thus, both consumer surveys would appear to support the Commission‘s finding that ECM‘s unqualified biodegradability claim conveyed the implied claim to a significant minority of consumers.
ECM argues that the Commission‘s finding was not supported by substantial evidence for two reasons. ECM first argues that Dr. Frederick‘s survey is unreliable. However, the Commission convincingly rebutted each of ECM‘s criticisms, in detail and with extensive citation to the record. Evaluation of consumer survey evidence is within the Commission‘s expertise, and we accord its judgment “great weight.” See Colgate-Palmolive, 380 U.S. at 385, 85 S.Ct. 1035. Thus, Dr. Frederick‘s survey constitutes substantial evidence in support of the Commission‘s finding. Furthermore, ECM does not contest Dr. Stewart‘s survey results, which also support the Commission‘s finding. Throughout its brief, ECM extols Dr. Stewart‘s expertise and survey methodology. Because Dr. Stewart‘s survey constitutes substantial evidence on its own, the alleged deficiencies in Dr. Frederick‘s survey are immaterial.
ECM also argues that these consumers, even if a significant minority, were not “acting reasonably under the circumstances.” POM Wonderful, 777 F.3d at 490. ECM contends that these consumers are not acting reasonably because “nothing biodegrades within five years” and their understanding of biodegradability is unscientific. But the scientific validity of a consumer‘s belief is not the standard for reasonableness. Rather, “[i]n considering charges of false and deceptive advertising, the public‘s impression is the only true measure of deceptiveness.” F.T.C. v. Brown & Williamson Tobacco Corp., 778 F.2d 35, 39-40 (D.C. Cir. 1985); see id. at 41 (noting that in Zauderer v. Office of Disciplinary Counsel of Sup. Ct. of Ohio, 471 U.S. 626, 652, 105 S.Ct. 2265, 85 L.Ed.2d 652 (1985), the Supreme Court implied that “in situations involving ‘technical ... terms,’ it may become reasonable to assume that members of the public may be ‘unaware of the ... meanings of such terms’ and that ‘substantial numbers’ might be misled“); see also In re Thompson Med. Co., Inc., 104 F.T.C. 648, 839 & n.33 (1984) (concluding that scientific understandings are not the measure of reasonableness because “scientific and popular understandings are known to vary on occasion” and “average consumers” might not understand the representation “as
We thus conclude that the Commission‘s finding that ECM violated § 5 of the FTC Act was supported by substantial evidence.
B. APA challenges
The APA “requires us to uphold agency action unless it is ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.‘” Nat‘l Truck Equip. Ass‘n v. Nat‘l Highway Traffic Safety Admin., 711 F.3d 662, 667 (6th Cir. 2013) (quoting
the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.
Id. (quoting Motor Vehicle Mfrs. Ass‘n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983)). In conducting this analysis, “our role is limited to reviewing the administrative record to determine whether there exists a rational connection between the facts found and the choice made.” Nat‘l Truck Equip. Ass‘n, 711 F.3d at 667 (internal quotation marks omitted).
We “appl[y] a harmless-error rule to APA cases, such that a mistake that has no bearing on the ultimate decision or causes no prejudice shall not be the basis for reversing an agency‘s determination.” Sierra Club v. Slater, 120 F.3d 623, 637 (6th Cir. 1997); see also Rabbers v. Comm‘r Soc. Sec. Admin., 582 F.3d 647, 654-55 (6th Cir. 2009).
ECM raises several APA challenges.7 First, ECM argues that the Commission ignored dispositive scientific evidence and erroneously concluded that thirteen tests undermined ECM‘s biodegradability claims. But the Commission did not rely on this finding to hold that the unqualified biodegradability claim was misleading; it relied on the finding that ECM plastic cannot fully biodegrade in a landfill within five years, which is undisputed. Accordingly, even if ECM is correct, the Commission‘s error was harmless.
Second, ECM argues that the Commission erroneously failed to explain significant departures from the ALJ‘s factual findings, including the credibility findings regarding the experts and the ALJ‘s related conclusions regarding the survey evidence. However, “under both the Administrative Procedure Act and [the FTC‘s] regulations, the Commission may exercise, on appeal from an initial decision by an administrative law judge, all powers which it would possess if it made the initial decision itself.” Chrysler Corp. v. F.T.C., 561 F.2d 357, 362 (D.C. Cir. 1977); see
Third, ECM contends that the Commission misapplied the factors from In re Pfizer Inc., 81 F.T.C. 23 (1972). The Pfizer factors are used to examine the substantiation needed for a claim. See POM Wonderful, 777 F.3d at 490-91. But the parties agreed at trial that the appropriate level of substantiation was “competent and reliable scientific evidence“--the standard the Commission applied on appeal. ECM has thus waived this argument. And, in any event, any error was harmless. It is now undisputed that no evidence supported the claim that ECM plastic would fully biodegrade within five years, so ECM would be liable under any level of required substantiation.
Fourth, ECM makes a passing reference to the Commission‘s fencing-in relief, arguing that it was unnecessary because “there was no evidence of any actual purchase by an end-use consumer” of plastic manufactured with the ECM additive. But the record showed that the reason plastic manufacturers want to produce biodegradable plastic is to satisfy end-use consumer demand, which stems from environmental concerns. For instance, a representative from one plastic manufacturer testified that plastic manufacturers “were looking for a product they could mark as degradable to say that they were being, you know, environmentally sensitive.” Another testified that “[p]eople ... don‘t want to pollute the environment and this [biodegradable plastic] is what they choose to buy.” Accordingly, there was a rational connection between the facts in the record and the fencing-in relief.
Finally, ECM argues that the Commission‘s order should not be enforced because it impinges on the Environmental Protection Agency‘s (the EPA) authority to manage solid waste disposal. See
This far-fetched scenario is unworthy of serious consideration. No evidence in the record supports ECM‘s speculation about the possible effects of the Commission‘s order. More importantly, Congress “empowered and directed” the Commission to prevent deceptive acts and practices in the marketplace, FTC Act § 5,
C. First Amendment
We now turn to ECM‘s First Amendment challenge to the Commission‘s order. ECM contends that the Commission‘s order is an unconstitutional restriction on biodegradability claims, specifically ECM‘s right to disseminate truthful scientific information. It also argues, in the alternative, that its proposed disclaimer would have cured any deception and that the Commission‘s required disclaimers are unduly burdensome.
1. Standard of review for the Commission‘s factual findings
Before reaching the merits of ECM‘s First Amendment challenge, we must first decide the appropriate standard of review for the Commission‘s factual findings. ECM argues that in the First Amendment context, we must review the Commission‘s factual findings de novo, pointing to Bose Corp. v. Consumers Union of U.S., Inc., 466 U.S. 485, 104 S.Ct. 1949, 80 L.Ed.2d 502 (1984), and Peel v. Attorney Registration & Disciplinary Commission of Illinois, 496 U.S. 91, 110 S.Ct. 2281, 110 L.Ed.2d 83 (1990). ECM is fighting an uphill battle: Both the D.C. and Seventh Circuits considered the same argument and rejected ECM‘s reading of Bose and Peel, see, e.g., POM Wonderful, 777 F.3d at 499 (citing Novartis Corp. v. FTC, 223 F.3d 783, 787 n.4 (D.C. Cir. 2000)); Kraft, Inc. v. F.T.C., 970 F.2d 311, 317 (7th Cir. 1992), and no circuit has adopted ECM‘s reading.
We decline to apply de novo review for the reasons identified by the D.C. and Seventh Circuits. First, the Supreme Court provided no indication that it intended Bose or Peel to overrule the substantial-evidence standard for the Commission‘s factual findings. See Ind. Fed‘n of Dentists, 476 U.S. at 454, 106 S.Ct. 2009; United States v. O‘Brien, 560 U.S. 218, 224, 130 S.Ct. 2169, 176 L.Ed.2d 979 (2010) (“If a precedent of this Court has direct application in a case, yet appears to rest on reasons rejected in some other line of decisions, the Court of Appeals should follow the case which directly controls, leaving to this Court the prerogative of overruling its own decisions.“) (citation omitted). To the contrary: as both the Seventh Circuit and the D.C. Circuit observed, Bose was a libel case, and the Bose Court “itself suggests that commercial speech might not warrant the higher standard of review established for libel cases.” Kraft, 970 F.2d at 317 (citing Bose, 466 U.S. at 504 n.22, 104 S.Ct. 1949); see also Brown & Williamson Tobacco Corp., 778 F.2d at 41 n.3 (same). Moreover, Bose and Peel “involved review of court decisions, and courts generally lack the Commission‘s expertise in the field of deceptive advertising.” Kraft, 970 F.2d at 317. Thus, while there was little reason to defer to the factual findings of the lower courts in Bose and Peel, “Commission findings are well-suited to deferential review because they may require resolution of ‘exceedingly complex and technical factual issues.‘” Id. (quoting Zauderer, 471 U.S. at 645, 105 S.Ct. 2265). Given that this complexity is present in “virtually any field of commerce,” Zauderer, 471 U.S. at 645, 105 S.Ct. 2265, ECM‘s argument that the Commission lacks expertise in biodegradation science is not persuasive. Finally, unlike the “prophylactic regulation” in Peel
We thus review “the Commission‘s factual finding of a deceptive claim under the ordinary (and deferential) substantial-evidence standard.” POM Wonderful, 777 F.3d at 499. That is to say, the same standard under which we reviewed the Commission‘s finding that ECM violated § 5 of the FTC Act.
2. Restrictions on biodegradability claims
We review prohibitions on commercial speech under the four-part test set forth in Central Hudson Gas & Elec. Corp. v. Public Serv. Comm‘n of N.Y., 447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980), and disclaimer requirements under Zauderer. See Int‘l Dairy Foods Ass‘n v. Boggs, 622 F.3d 628, 635-36, 640-42 (6th Cir. 2010).
The Commission‘s order prohibits ECM from representing that ECM plastic is biodegradable “unless such 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,” and
-
- the entire item will completely decompose into elements found in nature within five (5) years after customary disposal; or
- the representation is clearly and prominently and in close proximity qualified by:
- Either (1) the time to complete decomposition into elements found in nature; or (2) the rate and extent of decomposition into elements found in nature, provided that such qualification must disclose that the stated rate and extent of decomposition does not mean that the product or package will continue to decompose; and
- If the product will not decompose in a customary disposal facility or by a customary method of disposal, both (1) the type of non-customary disposal facility or method and (2) the availability of such disposal facility or method to consumers where the product or package is marketed or sold.
(App. at 4-5, 403-04) Thus, the Commission‘s order imposes two levels of restriction based on the results of “competent and reliable” scientific testing. First, if ECM possesses scientific evidence that ECM plastic will completely decompose within five years, then it may use the word “biodegradable” in its advertisements without any restriction whatsoever. Second, if ECM does not possess scientific evidence that ECM plastic will completely decompose within five years, but does possess scientific evidence that ECM plastic will decompose at some other rate, then it may use the word “biodegradable” only if it also includes certain disclaimers.
ECM contends that the first level of restriction--which permits ECM to represent that ECM plastic is biodegradable without disclaimers if ECM possesses scientific evidence that ECM plastic will completely decompose within five years--actually amounts to a prohibition because “nothing biodegrades within five years in a landfill.” As ECM points out, the record shows that all of the experts in this case thought that most, if not all, waste will not
We agree with ECM‘s description of the expert testimony, but disagree with ECM‘s characterization of the ensuing restriction. Because ECM has not provided--and in all likelihood cannot provide--scientific evidence that ECM plastic will completely decompose within five years after customary disposal (i.e. in a landfill), the Commission‘s order effectively requires that any use of the word “biodegradable” be accompanied with disclaimers. This restriction is not a prohibition on speech; it does not ban ECM from using the word “biodegradable” (or any other word) in its advertisements. Nor are the disclaimer requirements so onerous that they effectively preclude ECM from making qualified biodegradability claims. The Commission‘s order permits ECM to use results from gas evolution testing--including the D5511 protocol--to substantiate qualified biodegradability claims. ECM may need to specify the disposal conditions simulated by the test; and, if the tests are not run until complete biodegradation, ECM may need to specify the rate and extent of decomposition supported by the test. But such requirements do not effect a prohibition.
It is true that the Commission‘s order prohibits ECM from speaking in a certain manner: it prohibits ECM from representing that ECM plastic is biodegradable without explanatory disclaimers. But disclaimer requirements always restrict speech in this way. Adopting ECM‘s characterization of the Commission‘s restrictions would render any disclaimer requirement a prohibition on speech. We decline to collapse the distinction the Supreme Court has made between these two types of restrictions. See Zauderer, 471 U.S. at 651, 105 S.Ct. 2265 (“[I]n virtually all our commercial speech decisions to date, we have emphasized that because disclosure requirements trench much more narrowly on an advertiser‘s interests than do flat prohibitions on speech, ‘warning[s] or disclaimer[s] might be appropriately required ... in order to dissipate the possibility of consumer confusion or deception.‘“) (citation omitted).
The Commission‘s disclaimer requirements are evaluated under the more lenient standard set forth in Zauderer. See Int‘l Dairy Foods, 622 F.3d at 640-42. Disclaimer requirements must be “reasonably related to the [Commission‘s] interest in preventing deception of consumers” and cannot be “unjustified or unduly burdensome.” Zauderer, 471 U.S. at 651, 105 S.Ct. 2265. We have already concluded that substantial evidence supports the Commission‘s finding that ECM‘s unqualified biodegradability claim was misleading. In conducting this analysis, then, we are mindful that the FTC Act grants the Commission “wide discretion in determining the type of order that is necessary to cope with the unfair practices found.” Colgate-Palmolive, 380 U.S. at 392, 85 S.Ct. 1035. Having violated the FTC Act, ECM “must expect some fencing in,” and the Commission may “frame its order broadly enough to prevent respondents from engaging in similarly illegal practices in future advertisements.” Id. at 395, 85 S.Ct. 1035.
The Commission‘s order permits ECM to represent that ECM plastic is biodegradable if accompanied by certain disclaimers. ECM‘s unqualified biodegrada
ECM argues that the deception also would be cured by the disclaimer it proposed: “There is no scientific test that establishes the rate within which this product will achieve complete biodegradation.” Because this disclaimer is less restrictive, ECM contends, the Commission‘s required disclaimers are unduly burdensome.
We disagree for two reasons. First, as the Commission observed, ECM‘s proposed disclaimer “offers only a vague allusion to variations in conditions and/or the imprecision of available substantiation techniques,” and “addresses neither the rate nor extent of biodegradation that consumers perceive in ECM‘s representations.” It is thus inadequate to neutralize the deception. Second, the Commission was not required to adopt the least restrictive disclaimer. See Zauderer, 471 U.S. at 651 n.14, 105 S.Ct. 2265 (rejecting the argument that courts “should subject disclosure requirements to a strict ‘least restrictive means’ analysis under which they must be struck down if there are other means by which the State‘s purposes may be served“). Because the Commission‘s disclaimers are reasonably related to preventing the deception, they are constitutional under Zauderer--even if a less-restrictive disclaimer is up to the task.
Finally, ECM objects to the order‘s disclaimer requirement related to extrapolating test results beyond the duration of the test. This restriction, however, is reasonably related to the directives of ECM‘s testing protocol (D5511), which expressly instructs that “results shall not be extrapolated past the actual duration of the test.” It is therefore constitutional under Zauderer.
D. Due Process
ECM argues that the Commission‘s order violated its due process rights. ECM contends that in its Green Guides,
“The purpose of the administrative complaint is to give the responding party notice of the charges against him.” L. G. Balfour Co. v. F. T. C., 442 F.2d 1, 19 (7th Cir. 1971) (citation omitted). A complaint is adequate in this regard if the responding party is “reasonably apprised of the issues in controversy, and any such notice is adequate in the absence of a showing that a party was misled.” Id. (citations omitted). Additionally, an issue need not be raised in the administrative complaint if the responding party receives fair notice and a full opportunity to litigate the issue. See N.L.R.B. v. Mackay Radio & Tel. Co., 304 U.S. 333, 349-50, 58 S.Ct. 904, 82 L.Ed. 1381 (1938) (rejecting the argument that the agency‘s “findings do not follow the pleadings” because “[w]hile the respondent was entitled to know the basis
The complaint here provided ECM with adequate notice to prepare a defense. It alleged that ECM‘s various biodegradability claims were false and misleading, and it identified specific marketing materials containing these claims. It also informed ECM of the main issues in dispute: the scientific validity of the claims; the rate of biodegradation of ECM plastics after customary disposal; and whether consumers “interpret unqualified degradable claims to mean that the entire product or package will completely decompose into elements found in nature within a reasonably short period of time after customary disposal.” Although the complaint does not define “reasonably short period of time” as a specific time period, that level of detail was unnecessary to “reasonably apprise” ECM of the issues in controversy. See L. G. Balfour Co., 442 F.2d at 19.
Moreover, ECM did, in fact, have ample notice of complaint counsel‘s intent to use “within five years” as a benchmark for “reasonably short period of time.” Before, during, and after trial, complaint counsel defined “reasonably short period of time” as “a period close to one year, or at least within 5 years.” We have previously held such elaboration over the course of the proceedings sufficient to provide notice. See J. B. Williams Co. v. F. T. C., 381 F.2d 884, 888 (6th Cir. 1967) (holding that petitioner had sufficient notice of an issue even though the “specific issue was not charged in the complaint, and Government counsel stated early in the proceeding that this issue was not present“); see also L. G. Balfour Co., 442 F.2d at 19 (concluding that petitioner had adequate notice because “[a]s the Commission case against petitioners unfolded, there was a reasonable opportunity to know the claims of the opposing party and to meet them” (internal quotation marks omitted)). ECM‘s due process claim is thus without merit.
The D.C. Circuit‘s “fair notice” doctrine, relied upon by ECM, is not to the contrary. This doctrine restricts the penalties agencies may impose when their regulatory interpretations have not been announced with sufficient clarity. See Gen. Elec. Co. v. U.S.E.P.A., 53 F.3d 1324, 1329 (D.C. Cir. 1995); see also Gates & Fox Co. v. Occupational Safety & Health Review Comm‘n, 790 F.2d 154, 156-57 (D.C. Cir. 1986). However, this heightened notice standard only applies when agencies seek to impose “sufficiently grave” or “drastic” sanctions. See United States v. Chrysler Corp., 158 F.3d 1350, 1355 (D.C. Cir. 1998) (citation omitted); Gen. Elec. Co., 53 F.3d at 1329. Examples of grave or drastic sanctions include denying the renewal of an operating license, Trinity Broad. of Fla., Inc. v. F.C.C., 211 F.3d 618, 628-32 (D.C. Cir. 2000), compelling a product recall, Chrysler Corp., 158 F.3d at 1354-55, and imposing a $25,000 fine, Gen. Elec. Co., 53 F.3d at 1329-30. Here, by contrast, the Commission merely ordered ECM to cease making certain representations that violate its interpretation of the FTC Act. This is not a “grave” or “drastic” sanction. See
III. CONCLUSION
For the foregoing reasons, we DENY the petition for review.