{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nBureau of Competition\\nHealth Care Division\\n\\nSeptember 2, 2021\\nJohn B. Reiss, Esq.\\nVice-President, General Counsel\\nand Chief Compliance Officer\\nDoylestown Health\\n595 West State Street\\nDoylestown, PA 18901\\nRe:\\n\\nDoylestown Health Advisory Opinion\\n\\nDear Mr. Reiss:\\nThis letter responds to your request on behalf of Doylestown Health Foundation d\/b\/a\\nDoylestown Health for an FTC staff advisory opinion. The question you raise is whether VIA\\nAffiliates d\/b\/a Doylestown Health Physicians, a subsidiary of Doylestown Health, qualifies to\\nprovide discounted pharmaceuticals and medical devices to Doylestown Health\\xe2\\x80\\x99s affiliated\\nhospital, Doylestown Hospital, under the Non-Profit Institutions Act (\\xe2\\x80\\x9cNPIA\\xe2\\x80\\x9d). The NPIA\\nexempts from the Robinson-Patman Act \\xe2\\x80\\x9cpurchases of their supplies for their own use by\\nschools, colleges, universities, public libraries, churches, hospitals, and charitable institutions not\\noperated for profit.\\xe2\\x80\\x9d 1 For the reasons explained below, and with the noted caveats, we conclude\\nthat the NPIA exemption applies to Doylestown Health Physicians\\xe2\\x80\\x99 proposed arrangement to sell\\ndiscounted pharmaceuticals and medical devices to Doylestown Hospital.\\nDoylestown Health\\nWe understand from your letter 2 that the Village Improvement Association of Doylestown,\\nPennsylvania (\\xe2\\x80\\x9cAssociation\\xe2\\x80\\x9d), a not-for-profit, 501(c)(3) corporation, established Doylestown\\nHealth to carry out the Association\\xe2\\x80\\x99s purpose of \\xe2\\x80\\x9cencouraging and promoting public health\\nwork,\\xe2\\x80\\x9d \\xe2\\x80\\x9cimproving the health and welfare of the residents of . . . Doylestown and Bucks\\nCounty,\\xe2\\x80\\x9d and \\xe2\\x80\\x9csupporting a community hospital and other health care facilities for the benefit of\\nall persons.\\xe2\\x80\\x9d 3 Doylestown Health is a healthcare system that provides a range of care, including\\ninpatient and outpatient, skilled nursing, urgent care, home health, hospice, and other services.\\nDoylestown Health Physicians and Doylestown Hospital, two not-for-profit, 501(c)(3)\\n\\n1\\n\\n15 U.S.C. \\xc2\\xa7 13c.\\n\\n2\\n\\nLetter from John Reiss, Doylestown Health, to Robert Canterman (April 16, 2021) (\\xe2\\x80\\x9cDoylestown Letter\\xe2\\x80\\x9d).\\n\\nAmended and Restated Articles of Incorporation of Village Improvement Association of Doylestown,\\nPennsylvania at \\xc2\\xa7 3 (Doylestown Letter, Exhibit B.1).\\n\\n3\\n\\n\\x0cDoylestown Health Advisory Opinion\\nSeptember 2, 2021\\nPage 2\\ncorporations, 4 are part of Doylestown Health, and the same executive team manages both\\norganizations. 5\\nDoylestown Health Physicians has approximately 100 primary care and specialist physicians\\npracticing in 23 locations in the Doylestown area. Several of the specialists\\xe2\\x80\\x99 offices are located\\non Doylestown Hospital\\xe2\\x80\\x99s campus and most primary care offices are within 10 miles of the\\nhospital. The physicians treat their patients requiring inpatient or outpatient care at Doylestown\\nHospital. Doylestown Health Physicians\\xe2\\x80\\x99 purpose includes \\xe2\\x80\\x9cconducting exclusively charitable,\\nscientific and educational activities within the meaning of Section 501(c)(3) of the Internal\\nRevenue Code . . . including directly or indirectly managing and supporting the provision of\\nhealth care and related services and making donations and other transfers to or for the benefit of\\nthe Village Improvement Association . . . , Doylestown Health Foundation and Doylestown\\nHospital.\\xe2\\x80\\x9d 6\\nDoylestown Hospital is a community hospital with 271 beds that serves Bucks County and part\\nof Montgomery County in Pennsylvania, and parts of Hunterdon and Mercer Counties in New\\nJersey. Doylestown Hospital\\xe2\\x80\\x99s purpose includes \\xe2\\x80\\x9coperating and maintaining a community\\nhospital . . . for the benefit of all persons\\xe2\\x80\\x9d and \\xe2\\x80\\x9cencouraging and promoting public health in\\ngeneral.\\xe2\\x80\\x9d 7 Doylestown Hospital maintains a pharmacy at its facility for dispensing products for\\nin-hospital use and does not have any affiliated retail pharmacy. 8 While Doylestown Hospital\\nalso participates in a number of joint ventures that are for-profit, or include for-profit\\nparticipants, to provide community health, medical imaging, outpatient surgery, and other\\nservices, you have indicated that the hospital\\xe2\\x80\\x99s participation in these joint ventures does not\\naffect its not-for-profit, tax-exempt status.9\\nDescription of the Proposed Arrangement\\nAs you explain, Doylestown Health Physicians currently purchases discounted pharmaceuticals\\nand medical devices to provide infusion therapy and other treatments administered to patients in\\nits physician offices. Patients do not receive a prescription or have access to these products\\noutside Doylestown Health Physicians\\xe2\\x80\\x99 offices. As we understand from your proposal,\\nDoylestown Health Physicians seeks to purchase similar pharmaceuticals and medical devices\\nfor inpatients and outpatients treated at Doylestown Hospital\\xe2\\x80\\x99s facilities.\\n\\nArticles of Incorporation of VIA Affiliates (\\xe2\\x80\\x9cPhysicians Articles of Incorporation\\xe2\\x80\\x9d) at \\xc2\\xa7 3 (Doylestown Letter,\\nExhibit B.2); Amended and Restated Articles of Incorporation of Doylestown Hospital (\\xe2\\x80\\x9cHospital Articles of\\nIncorporation\\xe2\\x80\\x9d) at \\xc2\\xa7 3 (Doylestown Letter, Exhibit D).\\n\\n4\\n\\n5\\n\\nDoylestown Letter at 3.\\n\\n6\\n\\nPhysicians Articles of Incorporation at \\xc2\\xa7 3.\\n\\n7\\n\\nHospital Articles of Incorporation at \\xc2\\xa7 3.\\n\\n8\\n\\nEmail from John Reiss to Robert Canterman (June 22, 2021) (\\xe2\\x80\\x9cJune 22 Email\\xe2\\x80\\x9d).\\n\\n9\\n\\nDoylestown Letter at 1.\\n\\n\\x0cDoylestown Health Advisory Opinion\\nSeptember 2, 2021\\nPage 3\\nWe understand from your letter that one or more Doylestown Health Physicians\\xe2\\x80\\x99 offices will\\npurchase and arrange for delivery of the discounted pharmaceuticals and medical devices to the\\nDoylestown Hospital pharmacy (and not a retail pharmacy) or other appropriate location at the\\nhospital. 10 A Doylestown Health Physicians office manager will have responsibility for\\nimplementing the proposed arrangement and maintaining the chain of custody of the products.\\nSimilarly, a Doylestown Hospital manager in the pharmacy or other department will have\\nresponsibility for receiving and maintaining the products. These administrators will closely track\\nthe purchases and chain of custody to ensure the discounted products are used only for patients\\nof Doylestown Hospital or Doylestown Health Physicians, whether they are treated in the\\nphysicians\\xe2\\x80\\x99 offices or at the hospital. The executive team that manages both Doylestown Health\\nPhysicians and Doylestown Hospital will ultimately be responsible for overseeing the proposed\\narrangement. 11\\nWe understand that Doylestown Hospital will only dispense the pharmaceuticals and use the\\nmedical devices at hospital inpatient and outpatient facilities. 12 Doylestown Hospital will pay an\\nadministrative fee to Doylestown Health Physicians to cover the costs of the proposed\\narrangement and not for any other purpose. You have represented that Doylestown Hospital\\xe2\\x80\\x99s\\nfor-profit joint ventures will not receive or use any of the discounted products and will not\\nreceive any benefit from the arrangement. 13\\nAnalysis\\nThe NPIA exemption is limited to certain \\xe2\\x80\\x9celigible\\xe2\\x80\\x9d not-for-profit entities\\xe2\\x80\\x99 purchases of\\n\\xe2\\x80\\x9csupplies\\xe2\\x80\\x9d for their \\xe2\\x80\\x9cown use.\\xe2\\x80\\x9d 14 As we understand your proposal, Doylestown Health\\nPhysicians will purchase and offer the discounted pharmaceuticals and medical devices to\\nDoylestown Hospital for treating inpatients and outpatients at Doylestown Hospital\\xe2\\x80\\x99s facilities.\\nTherefore, we analyze below whether (1) Doylestown Health Physicians is an \\xe2\\x80\\x9celigible entity,\\xe2\\x80\\x9d\\nand (2) the discounted pharmaceuticals and medical devices that Doylestown Health Physicians\\nproposes to offer to Doylestown Hospital are properly considered \\xe2\\x80\\x9csupplies\\xe2\\x80\\x9d for Doylestown\\nHealth Physicians\\xe2\\x80\\x99 \\xe2\\x80\\x9cown use.\\xe2\\x80\\x9d\\n1.\\n\\nDoylestown Health Physicians Appears to be Eligible for\\nthe NPIA Exemption\\n\\nAn \\xe2\\x80\\x9celigible entity\\xe2\\x80\\x9d under the NPIA includes, \\xe2\\x80\\x9cschools, colleges, universities, public libraries,\\nchurches, hospitals, and charitable institutions not operated for profit.\\xe2\\x80\\x9d 15 In finding that health\\n10\\n\\nDoylestown Letter at 1.\\n\\n11\\n\\nId. at 3.\\n\\n12\\n\\nJune 22 Email.\\n\\n13\\n\\nId.\\n\\n14\\n\\n15 U.S.C. \\xc2\\xa7 13c.\\n\\n15\\n\\nId.\\n\\n\\x0cDoylestown Health Advisory Opinion\\nSeptember 2, 2021\\nPage 4\\nplans are \\xe2\\x80\\x9ccharitable institutions\\xe2\\x80\\x9d under the NPIA, the court in De Modena v. Kaiser Foundation\\nHealth Plan recognized that \\xe2\\x80\\x9call non-profit organizations which promote health are considered\\ncharitable under the law of charitable trusts.\\xe2\\x80\\x9d 16 We concluded in an earlier FTC staff advisory\\nopinion that a not-for-profit, charitable multispecialty clinic qualified as an eligible entity. 17\\nWhile multispecialty physician group practices like Doylestown Health Physicians are not one of\\nthe types of institutions specifically enumerated in the NPIA, we believe that it qualifies as an\\n\\xe2\\x80\\x9celigible entity\\xe2\\x80\\x9d under the NPIA as a \\xe2\\x80\\x9ccharitable institution not operated for profit.\\xe2\\x80\\x9d In fact,\\nDoylestown Health Physicians currently purchases discounted pharmaceuticals and medical\\ndevices for its physicians to treat their patients in their offices. Based on your letter, Doylestown\\nHospital, a not-for-profit hospital, also appears to be an eligible entity under the NPIA and could\\nitself qualify to purchase NPIA-discounted pharmaceuticals and medical devices in accordance\\nwith the \\xe2\\x80\\x9cown use\\xe2\\x80\\x9d requirement discussed below.\\n2.\\n\\nDoylestown Health Physicians\\xe2\\x80\\x99 Provision of Discounted Pharmaceuticals and\\nMedical Devices to Doylestown Hospital Appears to Be for Doylestown\\nHealth Physicians\\xe2\\x80\\x99 Own Use\\n\\nWe next consider whether the proposal involves the purchase of \\xe2\\x80\\x9csupplies\\xe2\\x80\\x9d for Doylestown\\nHealth Physicians\\xe2\\x80\\x99 \\xe2\\x80\\x9cown use.\\xe2\\x80\\x9d\\na.\\n\\n\\xe2\\x80\\x9cSupplies\\xe2\\x80\\x9d\\n\\nWe determined in previous advisory opinion letters that pharmaceuticals are \\xe2\\x80\\x9csupplies\\xe2\\x80\\x9d within\\nthe meaning of the NPIA in applying the exemption. 18 The same analysis would likely apply to\\nmedical devices and equipment. The Ninth Circuit in Logan Lanes, Inc. v. Brunswick Corp. 19\\ninterpreted the term \\xe2\\x80\\x9csupplies\\xe2\\x80\\x9d broadly to include \\xe2\\x80\\x9canything required to meet the institution\\xe2\\x80\\x99s\\nneeds, whether it is consumed or otherwise disposed of, or whether it constitutes, or becomes\\npart of, a material object utilized to enable the institution to carry on its activities.\\xe2\\x80\\x9d The court\\nnoted that \\xe2\\x80\\x9cthe underlying intent of granting such an exemption was undoubtedly to permit\\ninstitutions which are not in business for a profit to operate as inexpensively as possible.\\xe2\\x80\\x9d And it\\nheld that a not-for-profit university\\xe2\\x80\\x99s bowling alleys were \\xe2\\x80\\x9csupplies\\xe2\\x80\\x9d because the university used\\nthe facilities for students to fulfill physical education requirements and all net income was used\\n\\n16\\n\\n743 F.2d 1388, 1392 (9th Cir. 1984).\\n\\nHarvard Vanguard Medical Associates, Inc. (December 18, 2001) (FTC staff opinion letter) (sale of\\npharmaceuticals by not-for-profit, multispecialty clinic to employees and patients of the clinic).\\n17\\n\\nSee, e.g., Quest Analytics Group (March 7, 2014) (FTC staff opinion letter) (NPIA exemption applied to\\neducational institutions\\xe2\\x80\\x99 purchases of discounted specialty drugs for their own use); Yakima Valley Memorial\\nHospital (August 16, 2010) (FTC staff opinion letter) (not-for-profit hospital\\xe2\\x80\\x99s provision of pharmaceuticals to\\nemployees of its affiliates qualified for NPIA exemption); see also Abbott Labs. v. Portland Retail Druggists Ass\\xe2\\x80\\x99n,\\n425 U.S. 1, 5 (1976) (noting that the district court had ruled that purchases of pharmaceuticals by the hospitals were\\npurchases of \\xe2\\x80\\x9csupplies\\xe2\\x80\\x9d for the hospitals\\xe2\\x80\\x99 \\xe2\\x80\\x9cown use\\xe2\\x80\\x9d).\\n\\n18\\n\\n19\\n\\n378 F.2d 212, 216 (9th Cir.), cert. denied, 389 U.S. 898 (1967).\\n\\n\\x0cDoylestown Health Advisory Opinion\\nSeptember 2, 2021\\nPage 5\\nto finance other student activities and improvements to the university. 20 Because physicians and\\nhospitals use pharmaceuticals and medical devices \\xe2\\x80\\x9cto carry on their activities\\xe2\\x80\\x9d of treating\\npatients, we also find that they are \\xe2\\x80\\x9csupplies\\xe2\\x80\\x9d within the NPIA.\\nb.\\n\\n\\xe2\\x80\\x9cOwn Use\\xe2\\x80\\x9d\\n\\nThe term \\xe2\\x80\\x9cown use\\xe2\\x80\\x9d means an eligible entity\\xe2\\x80\\x99s use that \\xe2\\x80\\x9cis a part of and promotes the [entity\\xe2\\x80\\x99s]\\nintended institutional operation.\\xe2\\x80\\x9d 21 The principal authority on the meaning and scope of the \\xe2\\x80\\x9cown\\nuse\\xe2\\x80\\x9d requirement is the Supreme Court\\xe2\\x80\\x99s decision in Abbott Laboratories v. Portland Retail\\nDruggists Ass\\xe2\\x80\\x99n. 22 In Abbott, not-for-profit hospitals purchased discounted pharmaceuticals from\\nmanufacturers and resold them to hospital patients. Retail pharmacies challenged the discounted\\nsale of pharmaceuticals to the hospitals under the Robinson-Patman Act. The Supreme Court\\nheld that the NPIA exemption is limited and does not give hospitals a \\xe2\\x80\\x9cblank check\\xe2\\x80\\x9d for all\\npurchases of supplies. 23 Rather, the Court held that the exemption applies to purchases for a\\nhospital\\xe2\\x80\\x99s \\xe2\\x80\\x9cown use,\\xe2\\x80\\x9d and that own use means \\xe2\\x80\\x9cwhat reasonably may be regarded as use by the\\nhospital in the sense that such use is a part of and promotes the hospital\\xe2\\x80\\x99s intended institutional\\noperation in the care of persons who are its patients.\\xe2\\x80\\x9d 24 The Supreme Court determined that a\\nnot-for-profit hospital\\xe2\\x80\\x99s purchases of pharmaceuticals are for its own use when dispensed to\\npatients for treatment at the hospital.\\nWhether the exemption applies to Doylestown Health Physicians\\xe2\\x80\\x99 purchases of pharmaceuticals\\nand medical devices for Doylestown Hospital\\xe2\\x80\\x99s inpatients and outpatients depends on whether\\nthis use is part of and promotes Doylestown Health Physicians\\xe2\\x80\\x99 institutional mission.25 Based on\\nDoylestown Health Physicians\\xe2\\x80\\x99 stated purpose in its Articles of Incorporation, Doylestown\\nHealth Physicians\\xe2\\x80\\x99 purchases would appear to promote \\xe2\\x80\\x9cmanaging and supporting the provision\\nof health care and related services\\xe2\\x80\\x9d and \\xe2\\x80\\x9cmaking donations and other transfers to or for the\\nbenefit of . . . Doylestown Hospital.\\xe2\\x80\\x9d As part of an integrated health system, the physicians treat\\ntheir patients requiring inpatient care at Doylestown Hospital. Doylestown Health Physicians\\xe2\\x80\\x99\\npurchase of discounted pharmaceuticals and medical devices for Doylestown Hospital\\xe2\\x80\\x99s patients\\nwill support the provision of health care and related services at Doylestown Hospital. Consistent\\nwith Abbott, we find that the NPIA exemption appears to cover Doylestown Health Physicians\\xe2\\x80\\x99\\nproposal to offer discounted pharmaceuticals and medical devices to Doylestown Hospital.\\nSimilarly, Doylestown Hospital\\xe2\\x80\\x99s purchase of these supplies from Doylestown Health Physicians\\nappears to be for Doylestown Hospital\\xe2\\x80\\x99s \\xe2\\x80\\x9cown use\\xe2\\x80\\x9d because it will use the supplies to further its\\n378 F.2d at 212 (sale of bowling equipment and lanes to a university was exempt from the Robinson-Patman Act\\nunder the NPIA).\\n20\\n\\n21\\n\\nAbbott Labs. v. Portland Retail Druggists Ass\\xe2\\x80\\x99n, 425 U.S. 1, 14 (1976).\\n\\n22\\n\\nId.\\n\\n23\\n\\nId. at 13.\\n\\n24\\n\\nId. at 14.\\n\\n25\\n\\nId.\\n\\n\\x0cDoylestown Health Advisory Opinion\\nSeptember 2, 2021\\nPage 6\\ninstitutional purpose to operate \\xe2\\x80\\x9ca community hospital . . . for the benefit of all persons\\xe2\\x80\\x9d and\\npromote public health.\\nWe emphasize that this opinion is premised on your representation that Doylestown Hospital\\xe2\\x80\\x99s\\nfor-profit joint ventures will not have access to the discounted pharmaceuticals and medical\\ndevices and your assurance that the joint ventures, or any other for-profit entities, will not benefit\\nfinancially from the proposed arrangement in any way.\\nConclusion\\nAs discussed above, and with the noted caveats, it is our opinion that Doylestown Health\\nPhysicians\\xe2\\x80\\x99 proposal to extend the sales of discounted pharmaceuticals and medical devices to its\\naffiliate, Doylestown Hospital, as described in your April 16, 2021 letter, would fall within the\\nNPIA exemption to the Robinson-Patman Act.\\nThis letter sets out the views of the staff of the Bureau of Competition, as authorized by the\\nCommission\\xe2\\x80\\x99s Rules of Practice, based on the facts you have presented to us. Under Commission\\nRule \\xc2\\xa7 1.3(c), 16 C.F.R. \\xc2\\xa7 1.3(c), the Commission is not bound by this staff opinion and reserves\\nthe right to rescind it at a later time. In addition, this office retains the right to reconsider the\\nquestions involved and, with notice to the requesting party, to rescind or revoke the opinion if\\nimplementation of the proposed program results in substantial anticompetitive effects, if the\\nprogram is used for improper purposes, if facts change significantly, or if it would be in the\\npublic interest to do so.\\nSincerely,\\n_________________________\\nMarkus H. Meier\\nAssistant Director\\n\\n\\x0c'","created_timestamp":"September 2, 2021","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/ftc-staff-advisory-opinion-concerning-discounted-pharmaceuticals-medical-devices-under-non-profit\/p213500doylestownadvisoryopinion.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFederal Trade Commission\\nWashington, D.C. 20580\\n\\nBureau of Competition\\nHealth Care Division\\n\\nOctober 20, 2017\\nJennifer R. Bolster, Esq.\\nHancock Estabrook, LLP\\n1500 AXA Tower I\\n100 Madison Street\\nSyracuse, NY 13202\\n\\nRe:\\n\\nCrouse Health Hospital Advisory Opinion\\n\\nDear Ms. Bolster:\\nThis letter responds to your request on behalf of Crouse Health Hospital (\"Crouse Hospital\") for\\nan advisory opinion concerning whether its proposal to sell discounted phannaceutical products\\nto the employees, retirees, and their dependents of its affiliate, Crouse Medical Practice, PLLC\\n(\"Crouse Medical Practice\"), would fall within the scope of the Non-Profit Institutions Act\\n(\"NPIA\"). The NPIA exempts from the Robinson-Patman Act \"purchases of their supplies for\\ntheir own use by schools, colleges, universities, public libraries, churches, hospitals, and\\ncharitable institutions not operated for profit.\" 1 For the reasons explained below, and with the\\nnoted caveats, we conclude that the NPIA exemption applies to Crouse Hospital \\'s proposal.\\n\\nDescription of the Proposal\\nWe understand from your letter that Crouse Hospital is a not-for-profit corporation that is located\\nin Onondaga County, New York, and provides a variety of health-care services to patients living\\nin a 15-county area in central New York. 2 Crouse Hospital \\'s mission is to \"provide the best in\\npatient care,\" \"promote community health,\" and \"provid[ e] physician services designed to\\nimprove the access to and quality ofhealth care.\" 3 As you explain, Crouse Hospital currently\\nprovides a benefits package with a prescription-drug benefit to its employees, retirees, and their\\ndependents. Crouse Hospital also owns and operates an on-site pharmacy that offers NPIA\\xc2\\xad\\ndiscounted pharmaceuticals only to Crouse Hospital employees, retirees, and their dependents.\\nThe employee pharmacy is separate from another pharmacy that serves Crouse Hospital\\n\\nI\\n\\n15 U.S.C. \\xc2\\xa7 13c.\\n\\n2\\n\\nLetter from Jennifer R. Bolster, Hancock Estabrook, LLP, to Office of the Secretary, Federal Trade Commission\\nat 1 (September 29, 2017) (\"Crouse Request Letter\").\\n3\\n\\nId.\\n\\n\\x0cCrouse Health Hospital NPIA Advisory Opinion\\nOctober 20, 201 7\\nPage2\\ninpatients.4 As we understand your proposal, Crous~ Hospital seeks to purchase NPIA\\xc2\\xad\\ndiscounted phannaceuticals to fill prescriptions for employees, retirees, and their dependents of\\nits affiliate, Crouse Medical Practice, at Crouse Hospital\\' s on-site employee phannacy.\\nCrouse Hospital formed Crouse Medical Practice to develop an integrated medical service\\nsystem to encourage both organizations to \"work in conjunction with each other to improve\\naccess to care and to provide better care for patients in the community.\" 5 The approximately 73\\nprimary care and specialist physicians and other health-care professionals employed by Crouse\\nMedical Practice treat patients at Crouse Hospital and at offices close to Crouse Hospital or in\\nnearby communities within Crouse Hospital\\'s service area. Crouse Medical Practice requires its\\nphysicians to hold and maintain good standing on Crouse Hospital\\'s medical staff and requires or\\nencourages its physicians to refer their patients to Crouse Hospital unless the patient prefers\\notherwise or such referral is not in the patient\\'s best medical interest. Crouse Medical Practice\\nphysicians provide call coverage at Crouse Hospital. 6\\nWe understand from your letter that Crouse Hospital formed Crouse Medical Practice as a for\\xc2\\xad\\nprofit, professional limited liability company in compliance with requirements under New York\\nlaw governing the corporate practice of medicine. As you explain in your letter, Crouse Hospital\\ndoes not own Crouse Medical Practice because only a physician can own corporations\\nemploying physicians in an outpatient, non-hospital setting under New York law. 7 Although\\nCrouse Hospital does not own Crouse Medical Practice, Crouse Medical Practice has in place\\n\"various structural and financial components to ensure [Crouse] Hospital has ultimate control\\nover the practice. \" 8 For example, the sole member of Crouse Medical Practice is a Crouse\\nHospital physician employee. Crouse Hos~ital may require the member to transfer all of his or\\nher interest to a Crouse Hospital designee. Crouse Hospital appoints the Practice Administrator,\\nPhysician Administrator, and Executive Director of Crouse Medical Practice. These individuals,\\nalong with Crouse Hospital representatives, manage the day-to-day practice for Crouse Medical\\nPractice and ensure that the practice complies with Crouse Hospital\\'s charitable purpose.\\nThe sole member of Crouse Medical Practice must manage and operate it \"consistent with an\\norganization operated exclusively to promote and support the charitable purposes of [Crouse]\\n\\n4\\n\\nId. at 4.\\n\\n5\\n\\nId. at 2.\\n\\n6\\n\\nId. at 3.\\n\\n7\\n\\nId. at 2.\\n\\n9\\n\\nAmended and Restated Operating Agreement ofCrouse Medical Practice (\" Operating Agreement\") at\\xc2\\xa7 7 .2\\n(Crouse Request Letter, Attachment 2).\\n\\n\\x0cCrouse Health Hospital NPIA Advisory Opinion\\nOctober 20, 2017\\nPage3\\nHospital.\" 10 In furtherance of this requirement, Crouse Medical Practice obtained 50l(c)(3) tax\\xc2\\xad\\nexempt status under the Internal Revenue Code based on its affiliation with and control by\\nCrouse Hospital. 11 Crouse Hospital also must approve various business transactions for Crouse\\nMedical Practice, including admitting new members, selling property, incurring certain debts or\\n12\\nloans, dissolving the medical practice, or merging with or acquiring other physician practices.\\nNo part of the net earnings of Crouse Medical Practice may inure to the benefit of any members,\\nemployees, officers, or private individuals other than reasonable compensation for their\\nservices. 13 The sole member also irrevocably assigns his or her right to any dividends or profits\\n14\\nto Crouse Hospital.\\n\\nAnalysis\\nThe NPIA exemption is limited to certain \"eligible\" non-profit entities\\' purchases of \"supplies\"\\nfor their \"own use.\" 15 As we understand your proposal, Crouse Hospital will purchase and offer\\nthe NPIA-discounted pharmaceuticals to Crouse Medical Practice employees, retirees, and their\\ndependents. Therefore, we analyze below whether (1) Crouse Hospital is an \"eligible entity,\" and\\n(2) the NPIA-discounted pharmaceuticals that Crouse Hospital proposes to offer to Crouse\\nMedical Practice are properly considered \"supplies\" for Crouse Hospital\\' s \"own use.\" 16\\n1.\\n\\nCrouse Hospital\\'s Eligibility for the NPIA Exemption\\n\\nAn \"eligible entity\" under the NPIA includes, among others, \"hospitals .. . not operated for\\nprofit.\" 17 As you state in your letter, Crouse Hospital is a not-for-profit hospital. Therefore, based\\non the language in the NPIA, Crouse Hospital appears to qualify as an eligible entity and, in fact,\\ncurrently uses the exemption to offer NPIA-discounted pharmaceuticals to its own employees,\\nretirees, and their dependents.\\n\\n10\\n\\nId. at\\xc2\\xa7 5.2.\\n\\n11\\n\\nLetter from Internal Revenue Service to Crouse Hospital (Crouse Request Letter, Attachment 1).\\n\\n12\\n\\nCrouse Request Letter at 2.\\n\\n13\\n\\nOperating Agreement at\\xc2\\xa7 2.5(c).\\n\\n14\\n\\nId. at\\xc2\\xa7 4.3.\\n\\n15\\n\\n15 U.S.C. \\xc2\\xa7 13c.\\n\\n16\\nBecause we detennine that Crouse Hospital qualifies as an \" eligible entity\" and that the NPIA-discounted\\nphannaceuticals offered to Crouse Medical Practice are for Crouse Hospital\\'s \"own use,\" we do not need to reach\\nthe question of whether Crouse Medical Practice- a for-profit corporation with 501(c)(3) tax-exempt status\\xc2\\xad\\nqualifies as an \" eligible entity.\"\\n11 Id.\\n\\n\\x0cCrouse Health Hospital NPIA Advisory Opinion\\nOctober 20, 2017\\nPage4\\n\\n2.\\n\\nCrouse Hospital\\'s Provision of NPIA-Discounted Pharmaceuticals to Crouse\\nMedical Practice Appears to Be for Crouse Hospital\\'s Own Use\\n\\nWe next consider whether the proposal involves the purchase of\"supplies\" for Crouse Hospital\\'s\\n\"own use.\" As we have found in prior advisory opinions, the term \"supplies,\" as used in the\\nNPIA, may include an eligible entity\\'s purchases ofpharmaceuticals. 18 The te1m \"own use\"\\nmeans an eligible entity\\'s use that \"is a part of and promotes the [entity\\'s] intended institutional\\noperation.\" 19\\nThe principal authority on the meaning and scope of the \"own use\" requirement is Abbott\\nLaboratories v. Portland Retail Druggists Ass \\'n. 20 In Abbott, not-for-profit hospitals purchased\\ndiscounted pharmaceuticals from manufacturers and resold them to hospital patients. Retail\\npharmacies challenged the discounted sale of pharmaceuticals to the hospitals under the\\nRobinson-Patman Act. The Supreme Court held that the NPIA exemption is limited and does not\\ngive hospitals a \"blank check\" for all purchases of supplies. 2 1 Rather, the Court held that the\\nexemption applies to purchases for the hospital\\'s \"own use,\" and that own use means \"what\\nreasonably may be regarded as use by the hospital in the sense that such use is a part of and\\npromotes the hospital \\'s intended institutional operation in the care of persons who are its\\npatients. \" 22 The Supreme Court determined that pharmaceuticals dispensed to hospital\\nemployees and their dependents, among other individuals, would qualify for the hospital \\'s own\\nuse. In the Court\\' s view, employees enable a hospital to function and providing them with\\n23\\npharmaceuticals \"enhances the hospital function. \" Consistent with Abbott, we determined in\\nprior advisory opinions that offering employees, retirees, and their dependents health-insurance\\nplans with prescription-drug benefits helped hospitals and other eligible entities attract and\\nmaintain a capable and healthy workforce to further their intended institutional missions.24\\n18\\nSee, e.g., Quest Analytics Group (March 7, 2014) (FTC staff opinion letter) (NPIA exemption applied to\\neducational institutions\\' purchases ofdiscounted specialty drugs for their own use); Yakima Valley Memorial\\nHospital (August 16, 2010) (FTC staff opinion letter) (non-profit hospital\\'s provision of pharmaceuticals to\\nemployees of its affiliates qualified for NPIA exemption); see also Abbott Labs. v. Portland Retail Druggists Ass \\'n,\\n425 U.S. 1, at 5 (1976) (noting that the district court had ruled that purchases ofpharmaceuticals by the hospitals\\nwere purchases of \"supplies\" for the hospitals\\' \"own use\").\\n19\\n\\n425 U.S. at 14.\\n\\n20 Id.\\n21\\n\\nId. at 13.\\n\\n22\\n\\nId. at 14.\\n\\n23\\n\\nId. at 16.\\n\\n24\\n\\nSee, e.g., Quest Analytics Group (NPIA exemption applied to educational institutions\\' employees, retirees, and\\ntheir dependents); Yakima Valley Memorial Hospital (NPIA exemption applied to hospital employees of hospital\\naffiliates); University of Michigan (April 9, 2010) (FTC staff opinion letter) (NPIA exemption applied to\\nUniversity\\'s employees, retirees, and their dependents); BJC Health System (November 9, 1999) (FTC staff opinion\\nletter) (NPIA exemption applied to employees of health-care system).\\n\\n\\x0cCrouse Health Hospital NPIA Advisory Opinion\\nOctober 20, 2017\\nPage5\\n\\nWhether the exemption applies to Crouse Hospital\\'s purchases of pharmaceuticals for Crouse\\nMedical Group employees, retirees, and their dependents depends on whether this use of the\\npharmaceuticals is part of and promotes Crouse Hospital\\'s institutional mission. 25 You have\\nexplained that Crouse Hospital\\' s mission includes promoting community health and providing\\nphysician services designed to improve access to quality health care. In furtherance of its\\nmission, Crouse Hospital fonned Crouse Medical Practice to develop an integrated medical\\nservice system to encourage both organizations to work together to improve care and promote\\nthe charitable purposes of Crouse Hospital. Crouse Medical Practice physicians and other\\nemployees provide vital services to Crouse Hospital and its patients necessary to help Crouse\\nHospital fulfill its intended institutional function.\\nCrouse Hospital has ultimate decision-making control and authority for Crouse Medical Practice\\nas described in your letter and Crouse Medical Practice\\' s Operating Agreement. Furthermore, the\\nCrouse Medical Practice member assigns any profits to Crouse Hospital and neither the member\\nnor the employees are entitled to any net earnings. While Crouse Hospital does not have an\\nownership interest in Crouse Medical Practice, we believe that the substance of the relationship\\nbetween Crouse Hospital and Crouse Medical Practice governs our analysis. 26 Based on this\\nrelationship, it is reasonable to conclude that Crouse Medical Practice is an integral part of\\nCrouse Hospital\\'s ability to fulfill its intended institutional function of providing care and\\npromoting community health. And, accordingly, it is reasonable to treat Crouse Hospital and\\nCrouse Medical Practice as one unit in analyzing the applicability of the NPIA exemption. This\\nconclusion is consistent with prior staff opinions. 27 Therefore, consistent with Abbott, we find\\nthat the NPIA exemption covers Crouse Hospital\\'s proposal to offer discounted pharmaceuticals\\nto Crouse Medical Practice.\\nWe emphasize that this opinion is premised on the relationship between Crouse Hospital and\\nCrouse Medical Practice described in your letter and your assurance that any financial benefit\\nfrom the proposal will ultimately accrue to Crouse Hospital pursuant to the relationship between\\nthe two entities.\\n\\n25\\n\\nSee 425 U.S. at 14.\\n\\n26\\n\\nSee, e.g. , Arkansas Children\\' s Hospital (March 13, 2003) (FTC staff opinion letter) (substance ofrelationship\\nbetween two entities not under common ownership in the care of a common patient population supported conclusion\\nthat the exemption applied); Valley Baptist Medical Center (March 13, 2003) (FTC staff opinion letter) (the role\\ncontract workers had in hospital \\'s provision of care to its patients, rather than the fact that the hospital chose not to\\nemploy the workers, was relevant to determining that the exemption applied).\\n\\n27\\n\\nSee, e.g. , Yakima Valley Memorial Hospital (hospital\\'s control over its affiliates effectively made affiliates part of\\nthe hospital to such a degree that could treat as one unit for the purpose of the NPIA exemption).\\n\\n\\x0cCrouse Health Hm1pital NPIA Advisory Opinion\\nOctober 20> 2017\\nPage6\\n\\nConclusion\\n\\nAs discussed above, and with the noted caveats, it is our opinion that Crouse Hospital\\'s proposal\\nto exte11d the sales of discounted phannaceuticals to its affiliate, Crouse Medical Practice, as\\ndescribed in. your September29, 2017 letter, would fall within the.NPfA exemption to the\\nRobinson-Patman Act. This letter sets out the views ofthe staff of the Bureau of Competition, as\\nauthorized by the Commissfon\\'s Rules of Practice, based on the facts you have presented to us.\\nUn:der Commission Rule\\xc2\\xa7 1.3{c), 16 C.F.R. \\xc2\\xa7 1.3(c), the Commission is not bound by this staff\\nopinion and reserves the right to rescind it at ala:ter time. In addition, this office retains the right\\nto reconsider the questions involved and, with notice to the requesting party, to rescind or revoke\\nthe opinion if implementation ofthe proposed program results in substantial anticompetitive\\neffects, if the program is ti.sed for improper purposes, if facts change significantly, or if would be\\nin the public interest to do so.\\nSincerely,\\n\\nMarkus H. Meier\\nAssistant Director\\n\\n\\x0c'","created_timestamp":"October 20, 2017","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-markus-h-meier-assistant-director-bureau-competition-concerning-crouse-health-hospitals\/crouse_finaladvisoryopinionletter_10202017_text_version.pdf"}
{"text":"b'United States of America\\n\\nFEDERAL TRADE COMMISSION\\nWashington, DC 20580\\n\\nDivision of Advertising Practices\\nBureau of Consumer Protection\\n\\nMay 9, 2017\\nMark S. Brown, Esq.\\nKing & Spalding LLP\\n1700 Pennsylvania Ave., NW\\nSuite 200\\nWashington, DC 20006-47078\\nRe:\\n\\nRequest for Informal Staff Guidance Regarding Santa Fe Natural Tobacco\\nCompany\\xe2\\x80\\x99s Consent Order (FTC Dkt. No. C-3952)\\n\\nDear Mr. Brown:\\nThe Division of Advertising Practices has reviewed your letter submitted on behalf of\\nRAI Services Company (\\xe2\\x80\\x9cRAI\\xe2\\x80\\x9d) and Santa Fe Natural Tobacco Company (\\xe2\\x80\\x9cSanta Fe\\xe2\\x80\\x9d), dated\\nMarch 9, 2017, requesting informal staff guidance concerning the Federal Trade Commission\\xe2\\x80\\x99s\\nconsent order with Santa Fe (\\xe2\\x80\\x9cConsent Order\\xe2\\x80\\x9d).1 The consent order requires, among other\\nthings, a disclosure that \\xe2\\x80\\x9cNo additives in our tobacco does NOT mean a safer cigarette\\xe2\\x80\\x9d in any\\ncigarette advertisement that, through the use of phrases such as \\xe2\\x80\\x9cno additives,\\xe2\\x80\\x9d \\xe2\\x80\\x9cno chemicals,\\xe2\\x80\\x9d\\n\\xe2\\x80\\x9cadditive free,\\xe2\\x80\\x9d \\xe2\\x80\\x9cchemical-free,\\xe2\\x80\\x9d \\xe2\\x80\\x9cchemical-additive free,\\xe2\\x80\\x9d \\xe2\\x80\\x9c100% tobacco,\\xe2\\x80\\x9d \\xe2\\x80\\x9cpure tobacco,\\xe2\\x80\\x9d or\\nsubstantially similar terms, represents that a tobacco product has no additives or chemicals\\n(\\xe2\\x80\\x9ccigarette disclosure\\xe2\\x80\\x9d).2\\nThis request for guidance was precipitated by a Memorandum of Understanding that\\nRAI\/Santa Fe entered into with the U.S. Food and Drug Administration\\xe2\\x80\\x99s (\\xe2\\x80\\x9cFDA\\xe2\\x80\\x9d) Center for\\nTobacco Products in January 2017. Under the Memorandum of Understanding, RAI\/Santa Fe,\\nagreed, among other things, to remove the phrase \\xe2\\x80\\x9cAdditive Free\\xe2\\x80\\x9d and the term \\xe2\\x80\\x9cnatural\\xe2\\x80\\x9d from\\n1\\n\\nYour letter attaches the Santa Fe agreement, which was accepted for public comment on\\nApril 27, 2000. On June 16, 2000, the Commission made final that agreement and issued its\\nDecision and Order (FTC Dkt. No. C-3952). See https:\/\/www.ftc.gov\/enforcement\/casesproceedings\/992-3026\/santa-fe-natural-tobacco-company-inc.\\n2\\n\\nThe Consent Order also requires a triggered disclosure in connection with advertising and\\npackaging for herbal smoking products, and other remedies. This letter addresses only the\\nrequirements for the cigarette disclosure and does not provide guidance on other provisions of\\nthe Consent Order.\\n\\n\\x0cMark S. Brown, Esq.\\nPage 2\\nMay 9, 2017\\nall Natural American Spirit cigarette product labels, labeling, advertising, and promotional\\nmaterials, except that Santa Fe may retain the use of the term \\xe2\\x80\\x9cNatural\\xe2\\x80\\x9d in the \\xe2\\x80\\x9cNatural American\\nSpirit\\xe2\\x80\\x9d brand name and trademarks. 3 The Memorandum of Understanding permits Santa Fe to\\nuse the phrases \\xe2\\x80\\x9cTobacco Ingredients: Tobacco & Water\\xe2\\x80\\x9d or \\xe2\\x80\\x9cTobacco Filler Ingredients:\\nTobacco & Water\\xe2\\x80\\x9d if it chooses to do so.\\nRAI and Santa Fe request staff guidance on two issues. First, they seek staff guidance as\\nto whether use of the phrases \\xe2\\x80\\x9cTobacco Ingredients: Tobacco & Water\\xe2\\x80\\x9d or \\xe2\\x80\\x9cTobacco Filler\\nIngredients: Tobacco & Water\\xe2\\x80\\x9d triggers the cigarette disclosure required in the FTC\\xe2\\x80\\x99s Consent\\nOrder. As stated above, the Consent Order\\xe2\\x80\\x99s cigarette disclosure is triggered whenever a covered\\nSanta Fe advertisement uses the specific terms identified in the order or any substantially similar\\nterm that represents, directly or by implication, that a tobacco product has no additives or\\nchemicals. It is well-established that whether a claim is reasonably conveyed in an\\nadvertisement requires an examination of the entire advertisement and an assessment of the\\noverall net impression(s) conveyed. POM Wonderful, LLC v. FTC, 777 F.3d 478, 490 (D.C. Cir.\\n2015. Accord ECM Biofilms, Inc. v. FTC, No. 15-4339, U.S. App. LEXIS 4609, at **14-15 (6th\\nCir. Mar. 16, 2017). Thus, determining whether use of the two referenced phrases would\\nconstitute \\xe2\\x80\\x9csubstantially similar terms\\xe2\\x80\\x9d that trigger the cigarette disclosure in the Consent Order\\nwould require an evaluation of specific advertisements in their entirety, and not simply an\\nevaluation of specific words or phrases. For that reason, we cannot definitively opine whether\\nuse of the phrases \\xe2\\x80\\x9cTobacco Ingredients: Tobacco & Water\\xe2\\x80\\x9d or \\xe2\\x80\\x9cTobacco Filler Ingredients:\\nTobacco & Water\\xe2\\x80\\x9d would trigger the cigarette disclosure required in the FTC\\xe2\\x80\\x99s Consent Order. 4\\nLooking solely at the phrases, however, raises concerns that, depending on the context,\\nconsumers could reasonably interpret advertisements containing the phrases at issue to mean that\\nSanta Fe Natural American Spirit cigarettes contain no additives or chemicals. In particular, the\\nphrases are very similar to \\xe2\\x80\\x9c100% tobacco\\xe2\\x80\\x9d and \\xe2\\x80\\x9cpure tobacco\\xe2\\x80\\x9d \\xe2\\x80\\x93 each of which specifically\\ntriggers the cigarette disclosure. In addition, advertisements permitted under the Memorandum\\nof Understanding would continue to use the term \\xe2\\x80\\x9cNatural\\xe2\\x80\\x9d as part of the \\xe2\\x80\\x9cNatural American\\nSpirit\\xe2\\x80\\x9d brand name, potentially adding to an impression that the advertised cigarette contains no\\nadditives or chemicals.\\n\\n3\\n\\nA copy of the Memorandum of Agreement is attached to your March 9, 2017 letter. In 2009,\\nCongress enacted the Family Smoking Prevention and Tobacco Control Act (\\xe2\\x80\\x9cTobacco Control\\nAct\\xe2\\x80\\x9d), which gives FDA broad authority over cigarettes and other tobacco products. It is under\\nthat authority that RAI\/Santa Fe entered into the Memorandum of Agreement with FDA. We did\\nnot analyze and provide no guidance concerning RAI\/Santa Fe\\xe2\\x80\\x99s compliance with the Tobacco\\nControl Act or any provision therein.\\n\\n4\\n\\nIn accordance with Section 1.1 of the Commission\\xe2\\x80\\x99s Rules of Practice and Procedure, 16\\nC.F.R. \\xc2\\xa7 1.1, we do not ordinarily provide advice if an informed opinion cannot be made or\\ncould be made only after extensive investigation, clinical study, testing or collateral inquiry.\\n\\n\\x0cMark S. Brown, Esq.\\nPage 3\\nMay 9, 2017\\nThe second issue that RAJ\/Santa Fe seek staff guidance on is whether they can replace\\nthe Consent Order\\'s required disclosure with the following disclosure: \"Natural American Spirit\\ncigarettes are not safer than other cigarettes.\" The Memorandum of Understanding states that\\nFDA does not object to this disclosure. Although this disclosure differs from that set out in the\\nConsent Order, both disclosures convey the core message that Santa Fe cigarettes are not safer\\nthan other cigarettes. Thus, FTC staff would not recommend an enforcement action with respect\\nto the mandated language of the cigarette disclosure if RAI\/Santa Fe used the requested\\ndisclosure rather than the specific language set out in the Consent Order as long as the disclosure\\nwas displayed clearly and prominently as set forth in the Consent Order.\\nThe views expressed in this letter are those of FTC staff. They have not been reviewed,\\napproved, or adopted by the Commission or any individual Commissioner. They are not binding\\nupon the Commission, and the views are given without prejudice to the right of the Commission\\nto later rescind the guidance and, when appropriate, to commence an enforcement proceeding.\\nIn addition, the views expressed in this letter are restricted to the facts described above. FTC\\nstaff retains the right to reconsider its advice and, with notice to the requesting parties, rescind or\\nrevoke its guidance if it would be in the public interest to do so.\\nPursuant to Section 1.4 of the Commission\\'s Rules of Practice and Procedure, 16 C.F.R.\\n\\xc2\\xa7 1.4, this response, along with your request for staff guidance, will be placed on the public\\nrecord.\\nVery truly yours,\\n\\n\/Mt,{L ~\\'\\n\\nMaryK.a\\n\\nT\\n\\nAssociate Director for Advertising Practices\\n\\ncc:\\n\\nAnn Simoneau, J.D.\\nDirector, Office of Compliance and Enforcement\\nCenter for Tobacco Products\\nU.S. Food and Drug Administration\\n\\n\\x0cKING\\n\\n&\\n\\nSPALDING\\n\\nKing & Spalding LLP\\n1700 Pennsylvania Ave, NW\\nSuite 200\\nWashington, D.C. 20006-4707\\nTel: + I 202 737 0500\\nFax: + I 202 626 3737\\nwww.kslaw.com\\nMark S. Brown\\nPartner\\nDirect Dial : + I 202 626 5443\\nDirect Fax: + I 202 626 3737\\nmbrown@kslaw.com\\n\\nMarch 9, 2017\\n\\nVia Electronic Mail\\nRosemary Rosso\\nDivision of Advertising Practices\\nFederal Trade Commission\\nConstitution Center\\n5th Floor, Suite 5610 (Annex J)\\n400 ?1h Street, SW\\nWashington, DC 20024\\nRe:\\n\\nRequest for Informal Staff Guidance Regarding 2017 Agreement Between\\nSanta Fe Natural Tobacco Company and U.S. Food & Drug Administration\\n\\nDear Ms. Rosso:\\nAs you know from our letter dated January 31, 201 7, and from our recent discussions, we\\nrepresent RAI Services Company and Santa Fe Natural Tobacco Company (hereinafter \"Santa\\nFe\") in connection with an agreement between Santa Fe and the U.S. Food & Drug\\nAdministration (\"FDA\") concerning the removal of the phrase \"Additive Free\" from all Natural\\nAmerican Spirit cigarette product labels, labeling, advertising, and promotional materials. Santa\\nFe expressly reserved the right, in the agreement with FDA, to include the statement \"Tobacco\\nIngredients: Tobacco & Water\" or \"Tobacco Filler Ingredients: Tobacco & Water.\"\\nUnder the terms of Santa Fe\\'s April 27, 2000 Consent Order with the FTC (File No. 992\\xc2\\xad\\n3026; Attachment A), Santa Fe agreed to include the disclosure \"No additives in our tobacco\\ndoes NOT mean a safer cigarette\" (for cigarettes) or \\'\\'No additives in our tobacco does not mean\\nsafer\" (for tobacco products other than cigarettes) on any advertisement that \"through the use of\\nsuch phrases as \"no additives,\" \"no chemicals,\" \"additive-free,\" \"chemical-free,\" \"chemical\\xc2\\xad\\nadditive-free,\" \"100% tobacco,\" \"pure tobacco,\" or substantially similar terms, represents that a\\ntobacco product has no additives or chemicals.\" (Emphasis supplied).\\nIn the time since Santa Fe entered into the Apri l 2000 Consent Order with the FTC,\\nCongress enacted the Family Smoking Prevention and Tobacco Control Act (\"Tobacco Control\\nAct\"). The Tobacco Control Act gives FDA broad authority over tobacco products, but provides\\n\\n\\x0cRosemary Rosso\\nMarch 9, 2017\\nPage 2\\nfor concurrent, overlapping jurisdiction between FDA and the FTC with regard to regulation of\\nadvertising practices. See 21 U.S.C. \\xc2\\xa7 387n.\\nUnder the Tobacco Control Act, manufacturers must obtain clearance from FDA to\\nmarket tobacco products as \"modified risk tobacco products.\" The term \"modified risk tobacco\\nproduct\" is defined as any tobacco product that is \"sold or distributed for use to reduce harm or\\nthe risk of tobacco-related disease associated with commercially marketed tobacco products.\" 2 1\\nU.S.C. \\xc2\\xa7 387k(b)( l ). Whether a product is \"sold or distributed for use to reduce harm or the risk\\nof tobacco-related disease\" is determined, in part, based on the product\\'s label, labeling, and\\nadvertising. It is under this authority that Santa Fe entered into the January 2017 agreement with\\nFDA.\\nTo assure that Santa Fe continues to meet its obligations under the 2000 Consent Order, it\\nnow seeks an informal, written opinion from the FTC\\'s Division of Advertising Practices on the\\nfollowing two questions:\\n(1) Are the phrases \"Tobacco Ingredients: Tobacco & Water\" or \"Tobacco Filler\\nIngredients: Tobacco & Water\" \"substantially similar terms\" under the 2000 Consent\\nOrder such that their use triggers the disclosure requirement of the 2000 Consent Order!?\\n(2) If \"Tobacco Ingredients: Tobacco & Water\" or \"Tobacco Filler Ingredients: Tobacco\\n& Water\" are deemed substantially similar terms, would the FTC either permit or not\\notherwise object to Santa Fe replacing the disclosures required under the 2000 Santa Fe\\nConsent Order with the following disclosure: \"Natural American Spirit cigarettes are not\\nsafer than other cigarettes.\"\\nWe thank you for your attention to this matter, and look forward to a productive dialogue.\\nIf you require any additional information, please contact me at (202) 626-5443 or\\nmbrown@kslaw.com.\\nSincerely,\\n\\nAttachments:\\nA: April 27, 2000 FTC Consent Decree\\nB: January 23, 2017 FDA Memorandum of Agreement\\ncc:\\n\\nAnn Simoneau (w\/attachments)\\nEle Ibarra-Pratt (w\/attachments)\\nMitch Neuhausuer (w\/attachments)\\n\\n\\x0cMil< hC\\'ll \/\\\\. Nc\\xc2\\xb7uln111sc\\xc2\\xb71\\n\\nJe1viccs\\n\\nVice f\\'1 c~id cnt and\\n\\nl\\\\ssistanl <:ic11e1 al Counsel \\xc2\\xb7 H<:gulatrn y\\n\\'101 N. Main Sl1 <\\'<\\'I\\n\\n(OJ11\/Jt111Y\\n\\nl\\'.O. !lox \\'1Ci\\'1\\nWinston -~al<\\'111,\\n\\nNC 1.\/107\\n\\nk lr.pho1w: :l3G i\\'ll.l-\\'1~00\\nr.1x: :13c, OH !I\\'ll! \/\\n\\n1wuf1i1Ull1(<clrj1 l.rc1111\\n\\nCONFIDENTIAL, NOT l\\xe2\\x80\\xa2\\'OH PUBLIC DISCLOSURE\\n\\nVin UPS O\\\\\\xe2\\x80\\xa2ernight\\n\\nJanuary 23, 2017\\nAnn Simoneau, J.D.\\nOffice of CompI iance and Enforcement\\nFDA Center for Tobacco Products\\nc\/o Document Control Center\\nBuilding 71, Room 0335\\nI0903 New Hampshire Avenue\\nSilver Spring, Maryland 20993 -0002\\nDear Ms. Simoneau:\\nEnclosed please find an executed original Memorandum of Agreement. 1 have also\\ne-mailed a copy to Eli Ibarra-Pratt as you have requested.\\n\\nsub~_\/\\n\/k--b. ?\\n~\\xc2\\xb7\/~\\n\\nRespectfu ll y\\n\\nMitchell A. Neuhauser\\ncc: Eli Ibarra-Pratt\\n\\n\/ \/\\n\/ ; ; :\/\\n\\n\\x0cConfldentlal - Not for Public Disclosure\\nMemorandum of Agreement Between\\nThe United States Food and Drug Administration\\'s (FDA) Center for Tobacco Products (CTP) and RAI\\nServices Company (RAIS)\/Santa Fe Natural Tobacco Company, Inc. (Santa Fe),\\n(Dated: January 19, 2017)\\nThe parties, the FDA\\'s Center for Tobacco Products (CTP) end RAI Services Company (RAIS)\/Santa Fe\\nNatural Tobacco Company, Inc. (Santa Fe), have been engaged In discussions to resolve the Issues raised\\nin CTP\\'s Warning Letter dated August 27, 2015. Per those discussions, CTP and Santa Fe agree to the\\nfollowing steps and conditions:\\n1. Senta Fe will remove the phrase \"Additive Free\\xe2\\x80\\xa2 from all Natural American Spirit cigarette product\\nlabels, labeling, advertising, and promotional materials.\\n2. Santa Fe will remove the term \\xe2\\x80\\xa2natural\" from all Natural American Spirit cigarette product labels,\\nlabeling, advertising, and promotional materials, except as provided In Paragraph Three (3) below.\\nSanta Fe may, if It chooses to do so, use the statement \"Tobacco Ingredients: Tobacco & water\" or\\n\"Tobacco Fiiier Ingredients: Tobacco & Water\" on product labels, labeling, advertising, and\\npromotional materials. The use of the phrases \"Tobacco Ingredients: Tobacco and Water\" and\\n\"Tobacco Flffer Ingredients: Tobacco and Water\" Is not required under this Agreement, but Santa Fe\\nwishes to retain the option of using these statements.\\nIf Santa Fe chooses to use the statement \"Tobacco Ingredients: Tobacco & Water\" or \"Tobacco Filler\\nIngredients: Tobacco & Water\" on product labels, labeling, advertising, and promotional materials,\\nSanta Fe agrees to Initiate discussions with the FTC and FDA within 30 days of signing this\\nAgreement In order to address, and reach a mutually agreeable resolution regarding, whether, under\\nthe Consent Decree entered in 2000 between FTC and Santa Fe regarding Santa Fe\\'s advertising of\\nNatural American Spirit cigarettes, FTC would require a disclosure with use of the statements\\n\"Tobacco Ingredients: Tobacco & Water\" or \"Tobacco Filler Ingredients: Tobacco & Water: CTP\\'s\\nposition is that no disclosure would be needed for either of the tobacco Ingredients statements In the\\npreceding paragraph. .However, CTP would not object to Santa Fe\\'s use of the disclosure \"Natural\\nAmerican Spirit cigarettes are not safer than other cigarettes\" on product packaging, labels, labeling,\\nadvertising and promotional materials. Santa Fe agrees to work dlllgently with FTC and FDA to reach\\nresolution on this issue.\\nCTP recognizes that Santa Fe will need to coordinate with Its vendors to print and Implement new\\nproduct labeling and advertising. However, CTP expects that this process would be completed and\\nthat changes to the labels, labeling, advertising, and promotional materials would be implemented\\nwithin seven (7) months from the date Santa Fe receives In writing the agreement reached between\\nFTC and FDA regarding the necessity, and, if applicable, wording, of a disclosure, and the process\\nfor effectuating It, as a result of the discussions among Santa Fe, FTC, and FDA. Followlng the\\nseven (7) month de~dline, Santa Fe will not utilize the terms \"additive free\" or \\xe2\\x80\\xa2natural\" except as\\nallowed under Paragraph 3 of this Agreement on the labels, labeling, advertising, or promotional\\nmaterials for Natural American Spirit cigarette products. Santa Fe need not, however, remove or\\nrecall products or product labels, labeling, advertising, or promotional materials utilizing the terms\\n\"additive free\" or \\xc2\\xb7natural\" that were Introduced Into the market (e.g., through distribution to\\nwholesalers, dlstrlbuters. retallers, or consumers) prior to the seven (7) month deadline.\\n3. Santa Fe may retain use of the term \"Natural\" In the \"Natural American Splrlr brand name and\\ntrademarks.\\n4. To the extent any premarket authorization requirements of section 905(j) and 910 of the FD&C Act\\napply, CTP wlll not enforce them with respect to the changes specified in Paragraphs 1 and 2 above.\\n5. If Santa Fe seeks labeling review from FTC for the changes described In the Agreement. Santa Fe\\nwill submit a letter to CTP\\'s Office of Compliance and Enforcement to inform CTP of such review\\nonce the FTC has completed its review. In addition, Santa Fe will prompUy notify CTP\\'s Office of\\nCompliance and Enforcement in writing and provide exemplars of Its revised packaging, labels,\\n\\n\\x0cConfidential -\\xc2\\xb7 Not for Public Disclosure\\nlabeling, advertising, and promotional materials that reflect the removal of \"addltivo free\" and\\n\"natural\" claims, and related changes, in accordance with this Agreement. Thereafter, any\\nsubsequent changes to packaging, labels, labeling, advertising, and promotional materials shall be\\ncommunicated In conformance with Section 905(i) of the FD&C Act.\\n6. Within thirty (30) days after CTP receives exemplars of Santa Fe\\'s revised packaging, labeling,\\nadvertising, and promotional materials pursuant to Paragraph 5, CTP shall determine whether the\\nexemplars are in compliance with the applicable requirements of the FD&C Act and notify Santa Fe\\nin writing of its determination.\\n7. By accepting the terms of this Agreement, Santa Fe does not admit any liability or wrongdoing.\\nIf Santa Fe agrees to the conditions outlined above, CTP will commit to not initiating enforcement action\\nagainst Santa Fe related to the August 27, 2015 Warning Letter during the seven (7) month timeframe set\\nforth in Paragraph 2 for Santa Fe to complete and implement changes to the product packaging, labels,\\nlabeling, advertising and promotional materials. The parties may agree to extend these dates by written\\nagreement. CTP\\'s Office of Compliance and Enforcement requests periodic updates as to Santa Fe\\'s\\nprogress towards meeting the terms of this Agreement.\\nThis Agreement applies only to the specific products and claims described in this letter. It is Santa Fe\\'s\\nresponsibility to ensure that Its other tobacco products and all related labeling and\/or advertising comply with\\neach applicable provision of the FD&C Act and FDA\\'s Implementing regulations.\\n\\n-?\\'\\n\\n\/~ &y-\\n\\n\/\/;\\xc2\\xa3~ft;~\\n\\n\/\\n\\n\/\/ , .\\n\\nMITCHELL A NEUHAUSER\\n_....,7\\xc2\\xa3,__o_~-\\xc2\\xb7T--..\\xc2\\xb7E..,\\xc2\\xad\\nVice President\\nAssistant General Counsel-Regulatory\\nRAI Services Company\\n\\nANN SIMONE\\nDirector\\nOffice of Compliance and Enforcement\\nCenter for Tobacco Products\\nFood and Drug Administration\\n\\n\\x0cUNITED STATES OF AMERICA\\nFEDERAL TRA DE COMMISSION\\n\\nIn the Matter of\\nSANTA FE NATURAL TOBACCO COMPANY, INC., a corporation.)\\nFILE NO. 992-3026\\n\\nAGREEMENT CONTAINING CONSENT ORDER\\nThe Federal Trade Commission has conducted an investigation of certain acts and\\npractices o f Santa Fe Natural Tobacco Company, Inc., a corporation (\"proposed\\nrespondent\"). Proposed respondent is willing to enter into an agreement containing a\\nconsent order resolving the allegations contained in the attached draft complaint.\\nTherefore,\\n\\nIT IS HEREBY AGREED by and between Santa Fe Natural Tobacco Company, Inc.,\\nby its duly authorized officer, and counsel for the Federal Trade Commission that:\\n\\nI. Proposed respondent Santa Fe Natural Tobacco Company, Inc. is a New Mexico\\ncorporation with its principal office or place of business at 1368 Cerri llos Road, Santa\\nFe, NM 87505-3507.\\n2. Proposed respondent admits all the jurisdictional facts set forth in the draft complaint.\\nThis agreement is for settlement purposes only and does not constitute an admission by\\nproposed respondent that the law has been violated as alleged in the draft complaint, or\\nthat the facts as a lleged in the draft complaint, other than the jurisdictional facts , are true.\\n3. Proposed respondent waives:\\na. Any fu rther procedural steps;\\nb. The requirement that the Commission\\'s decision contain a statement of findings\\nof fact and conclusions of Jaw; and\\nc. All rights to seek judicia l review or otherwise to challenge or contest the validity\\nof the order entered pursuant to this agreement.\\n4. This agreement shall not become part of the public record of the proceeding unless and\\nunti l it is accepted by the Commission. If this agreement is accepted by the Com mission,\\nit, together with the draft complaint, will be placed on the public record for a period of\\nthirty (30) days and information about it publicly released. The Commission thereafter\\nmay either w ithdraw its acceptance o f this agreement and so notify proposed respondent,\\nin which event it will take such action as it may consider appropriate, or issue and serve\\nits complaint (in such form as the circumstances may require) and decision in disposition\\nof the proceeding.\\n5. This agreement contemplates that, if it is accepted by the Commission, and if such\\nacceptance is not subsequently withdrawn by the Commission pursuant to the provisions\\nof Section 2.34 of the Commission\\'s Rules, the Comm ission may, without further notice\\nto proposed respondent, (I) issue its complaint corresponding in form and substance with\\nthe attached draft complaint and its decision containing the following order in disposition\\nof the proceeding, and (2) make in formation about it public. When so entered, the order\\nshall have the same force and effect and may be a ltered, modified, or set aside in the\\nsame manner and w ith in the same time provided by statute for other orders. The order\\nshall become final upon service. Delivery of the complaint and decision and order to\\n\\n\\x0cproposed respondent\\'s address as stated in the agreement by any means specified in\\nSection 4.4 of the Commission\\'s Rules shall constitute service. Proposed respondent\\nwaives any right it may have to any other manner of service. The compla int may be used\\nin construing the terms of the order. No agreement, understanding, representation, or\\ninterpretation not contained in the order or in the agreement may be used to vary or\\ncontradict the terms of the order.\\n6. Proposed respondent has read the draft complaint and consent order. It understands\\nthat it may be liable fo r civil penalties in the amount provided by law and other\\nappropriate rel ief for each violation of the order after it becomes fina l.\\n\\nORDER\\nDEFINITIONS\\nFor purposes of this order, the following definitions shall apply:\\nI. \"Competent and reliable scientific evidence\" shall mean tests, analyses, research,\\nstudies, or other evidence based on the expertise of professionals in the relevant area, that\\nhas been conducted and evaluated in an obj ective manner by persons qualified to do so,\\nusing procedures generally accepted in the profession to yield accurate and reliable\\nresults.\\n2. Unless otherwise specified, \"respondent\" sha ll mean Santa Fe Natural Tobacco\\nCompany, Inc., a corporation, its successors and assigns and its officers, agents,\\nrepresenta ti ves, and employees.\\n3. \"Commerce\" shall mean as defined in Section 4 of the Federal Trade Comm ission Act,\\n15 u.s.c. \\xc2\\xa7 44.\\n4. \"Advertisement\" shall mean any written or verbal statement, illustration, or depiction\\nthat is designed to effect a sale or create interest in the purchasing of any product,\\nincluding but not limited to a statement, illustration or depiction in or on a brochure,\\nnewspaper, magazine, free standing insert, pamphlet, leaflet, circular, mai ler, book insert,\\nletter, coupon, catalog, poster, chart, billboard, transit advertisement, point of purchase\\ndisplay, specialty or util itarian item, sponsorship material, package insert, film , slide, or\\nthe Internet or other computer network or systt:m.\\n5. \"Tobacco product\" shall mean cigarettes, cigars, cigari llos, little cigars, smokeless\\ntobacco, cigarette tobacco, pipe tobacco, and any other product made or derived fro m\\ntobacco that is intended for human consumption, including any component, part, or\\naccessory of a tobacco product.\\n6. \"Herbal smok ing product\" shall mean c igarettes, cigars, cigarillos, little cigars and any\\nother product made or derived from plant material other than tobacco, that is intended for\\nhuman smoking, inc luding any component, part, or accessory of an herbal smoking\\nproduct.\\n7. \"Clearly and prominently\" shall mean:\\na. With regard to advertisements for tobacco and herbal smoking products, in black\\ntype on a solid white background, or in white type on a solid red background, or in\\nany other color combination that would provide an equivalent or greater degree of\\nprint contrast as objectively dete rmined by densitometer or comparable\\n\\n\\x0cmeasurements of the type and the background color. The color of the ruled\\nrectang le shall be the same color as that of the type; and\\nb. (i) With regard to advertisements for tobacco products, centered, both horizontally\\nand vertically, in a ruled rectangle. The area enclosed by the rectangle shall be no\\nless than 40% of the size of the area enclosed by the ruled rectangle surrounding\\nthe health warnings for tobacco cigarettes mandated by 15 U.S.C. \\xc2\\xa7 1333. The\\nwidth of the rule fonning the rectangle shall be no less than 50% of the width of\\nthe rule required for the health warnings for tobacco cigarettes mandated by 15\\nu.s.c. \\xc2\\xa7 1333.\\n\\nProvided that, if, at any time after this order becomes final, 15 U .S.C. \\xc2\\xa7 1333 is\\namended, modified, or superseded by any other law, the area enclosed by the ruled\\nrectangle shall be no less than 40% of the area required for health warnings for\\ntobacco cigarettes by such amended, modified, or superseding law, and the width\\nof the rule forming the rectangle shall be no less than 50% of the width of any\\nsurrounding rule required for health warnings for tobacco cigarettes by such\\namended, modified, or superseding law; and\\n(ii) With regard to advertisements for herbal smoking products, centered, both\\nhorizontally and vertically, in a ruled rectangle. The area enc losed by the rectangle\\nshall be no less than the size of the area enclosed by the ruled rectangle\\nsurrounding the health warnings for tobacco cigarettes mandated by 15 U.S.C. \\xc2\\xa7\\n1333. The width of the rule forming the rectangle shall be no less than the width of\\nthe rule required for the health warnings for tobacco cigarettes mandated by 15\\nu.s.c. \\xc2\\xa7 1333.\\n\\nProvided that, if, at any time after this order becomes final, 15 U.S.C. \\xc2\\xa7 1333 is\\namended, modified, or superseded by any other law, the area enclosed by the ruled\\nrectangle shall be no less than the area required for health warnings for tobacco\\ncigarettes by such amended, modified, or superseding law, and the width of the\\nrule forming the rectangle shall be no less than the width of any surrounding rule\\nrequired for health warnings for tobacco cigarettes by such amended, modified, or\\nsuperseding law; and\\nc. Jn the same type style and type size as that required for health warnings for\\ntobacco cigarettes pursuant to 15 U.S.C. \\xc2\\xa7 1333.\\n\\nProvided that, if, at any time after this order becomes final, 15 U.S.C. \\xc2\\xa7 1333 is\\namended, modified, or superseded by any other law, the type sty le and type size of\\nthe disclosure shall be the same as the type style and type size required for health\\nwarnings for tobacco cigarettes by such amended, modified, or superseding law;\\nand\\nd. In a clear and prominent location but not immediately next to other written or\\ntextual matter or any rectangular designs, elements, or similar geometric fonns,\\nincluding but not limited to any warning statement required under the Federal\\nCigarette Labeling and Advertising Act, 15 U.S.C . \\xc2\\xa7 1331 et seq., or the\\nComprehensive Smokeless Tobacco Health Education Act, 15 U .S.C. \\xc2\\xa7 440 I et\\nseq. In addition, the disclosure shall not be positioned in the margin of a print\\nadvertisement. A disclosure shall be deemed \"not immediately next to\" other\\ngeometric or textual matter if the distance between the disclosure and the other\\nmatter is as great as the distance between the outside left edge of the rule of the\\nrectangle enclos ing the health warning required by 15 U. S. C. \\xc2\\xa7 1333 and the top\\nleft point of the letter \"S\" in the word \"SURGEON\" in that health warning; and\\n\\n\\x0cc. For audiov isual or audio advertisements, includ ing but not limited to\\nadvertisements on videotapes, cassettes, discs, or the Internet; promotional film s or\\nfilmstrips; and promotional audiotapes or other types of sound recordings, the\\ndisclosure shall appear on the screen at the end of the advertisement in the format\\ndescribed above for a length of time and in such a manner that it is easily legible\\nand shall be announced simultaneously at the end of the advertisement in a manner\\nthat is c learly audible.\\n\\nProvided, however. that in any advertisement that does not contain a visual\\ncomponent, the disclosure need not appear in visual format, and in any\\nadve1tisement that does not contain an audio component, the disclosure need not\\nbe announced in aud io format.\\n\\nI.\\nIT IS ORDERED that respondent, directly or through any corporation, subsidiary,\\ndivision, or other device, in connection with the advertising, promotion, offering for sale,\\nsale, or distribution of Natural American Spirit tobacco cigarettes or a ny other tobacco\\nproduct in or affecting commerce, shall display in advertisements as specified below,\\nclearly and prominently, the following disclosures (including the line breaks,\\npunctuation, bold font and capitalization illustrated):\\nIn cigarette advertisements:\\n\\nNo additives in our tobacco\\ndoes NOT mean a safer cigarette.\\nIn advertisements for any other tobacco product:\\n\\nNo additives in our tobacco\\ndoes NOT mean safer.\\nThese disclosures shall be displayed beginning no later than thirty (30) days after the\\ndate of service of th is order, in any advertisement that, through the use of such phrases as\\n\"no additives;\" \"no chemicals,\" \"additive-free,\" \"chemical-free,\" \"chemical-additive\\xc2\\xad\\nfree,\" \" 100% tobacco,\" \"pure tobacco,\" or substantially similar terms, represents that a\\ntobacco product has no additives or chemicals.\\n\\nProvided, that the above disclosures shall not be required in any cigarette advertisement\\nthat is not required to bear a health warning pursuant to 15 U.S.C. \\xc2\\xa7 1333.\\nProvided further, that the above disclosures shall not be required if respondent possesses\\nand relies upon competent and reliable scientific evidence demonstrating that such\\ncigarette or other tobacco product poses materially lower health risks than other\\ncigarettes or other products of the same type.\\nNothing contrary to, inconsistent with, or in mitigation of any disclosure provided for in\\nthis part shall be used in any advertisement. Provided, however. that this provision shall\\nnot prohibit respondent from truthfully representing, through the use of such phrases as\\n\"no additives,\" \"no chemicals.\" \"additive-free,\" \"chemical-free,\" \"chemical-additive\\xc2\\xad\\nfree,\" \" I 00% tobacco,\" \"pure tobacco,\" or substantially similar terms, that a tobacco\\nproduct has no additives or chemicals, where such representation is accompanied by the\\ndisclosure mandated by this provision.\\n\\n11.\\n\\n\\x0cIT IS FURTHER ORDERED that respondent, directly or through any corporation,\\nsubsidiary, division, or other device, in connection with the advertising, promotion,\\noffering for sa le, sale, or distribution of any herbal smoking product in or affecting\\ncommerce, shall display in advertisements and on packaging as specified below, clearly\\nand prominently, the fo llowing disclosure (including the line breaks, punctuation and\\ncapitalization illustrated):\\nIn advertisements and on packaging for herbal cigarettes:\\n\\nHerbal cigarettes are dangerous to your health.\\nThey produce tar and carbon monoxide.\\nIn advertisements and on packaging for other herbal smoking products:\\n\\nSmoking this product is dangerous to your health.\\nIt produces tar and carbon monoxide.\\nThese disclosures shall be displayed beginning no later than thirty (30) days after the\\ndate of service of this order, in any advertisement and on any package that, through the\\nuse of such phrases as \"no tobacco,\" \"tobacco-free,\" \"herbal,\" or substantially similar\\nterms, represents that an herbal smoking product has no tobacco.\\n\\nProv;ded, that the above disclosures shall not be required if respondent possesses and\\nrelies upon competent and reliable scientific evidence demonstrating that such herbal\\nsmoking products do not pose any material health risks.\\nNothing contrary to, inconsistent with, or in mitigation of any disclosure provided for in\\nthis part shall be used in any advertisement. Provided, however, that this provision shall\\nnot prohibit respondent from truthfully representing, through the use of such phrases as\\n\"no tobacco,\" \"tobacco-free,\" \"herbal,\" or substantially similar terms, that an herbal\\nsmoking product has no tobacco, where such representation is accompanied by the\\ndisclosure mandated by this provision.\\n\\nI I I.\\nIT IS FURTHER ORDERED that respondent shall:\\nA. Provide, within forty-five (45) days after the date of service of this order, an exact\\ncopy of the notice attached hereto as Attachment A to each retailer, distributor, or other\\npurchaser for resale to whom respondent has supplied Natural American Spirit tobacco\\ncigarettes since January I, 1998. Respondent shall send the notice by first class mail. The\\nmailing shall not include any other documents.\\nB. Di scontinue dealing with any retailer, distributor, or other purchaser for resale once\\nrespondent has actual knowledge, or knowledge fairly implied on the basis of objective\\ncircumstances, that such retailer, distributor, or other purchaser for resale has continued\\nto use or disseminate any of respondent\\'s advertisements for any of respondent\\'s tobacco\\nproducts that:\\nI. represents, through the use of such phrases as \"no additives,\" \"no chemicals,\"\\n\"additive-free,\" \"chemical-free,\" \"chemical-additive-free,\" \"I 00% tobacco,\" \"pure\\ntobacco,\" or substantially similar terms, that the tobacco products have no\\nadditives or chemicals; and\\n\\n\\x0c2. does not include the disclosure specified in Part I of this order\\nunless, upon notification by respondent, such retailer, distributor, or other purchaser for\\nresale immediately ceases using or disseminating such advertisements. If, after such\\nnotification, respondent obtains actual knowledge, or knowledge fairly implied on the\\nbasis of objective circumstances, that such retailer, distributor, or other purchaser for\\nresale has not permanently ceased using or dissem inating such advertisements,\\nrespondent must immediately and indefinitely, discontinue dealing with such retailer,\\ndistributor, or other purchaser for resale, until such time as respondent has obtained\\nwritten assurance and verified that such retailer, distributor, or other purchaser for resale\\nhas permanently ceased using or disseminating such advertisements.\\nC . For five (5) years after the date of service of this order, maintain and upon request\\nmake available to the Federal Trade Commission for inspection and copying:\\n(I) copies of all notification letters sent to retailers, distributors, or other\\npurchasers for resale pursuant to subparagraph A of this part; and\\n(2) copies of all communications with retailers, distributors, or other purchasers for\\nresale pursuant to subparagraph B of this part.\\n\\nJV.\\nIT IS FURTHER ORDERED that respondent Santa Fe Natural Tobacco Company, Inc.,\\nand its successors and assigns, shall, for five (5) years after the last date of d issemination\\nof any representation covered by this order, maintain and upon request make available to\\nthe Federal Trade Commission for inspection and copying:\\nA. All advertisements and packaging containing the representation;\\n\\nB. All materials that were relied upon in disseminating the representation; and\\nC. All tests, reports, studies, surveys, demonstrations, or other evidence in their\\npossession or control that contradict, qualify, or call into question the\\nrepresentation, or the basis relied upon for the representation, including complaints\\nand other communications with consumers or with governmental or consumer\\nprotection organizations.\\n\\nv.\\nIT IS FURTHER ORDERED that respondent Santa Fe Natural Tobacco Company, Inc.,\\nand its successors and assigns, sha ll deliver a copy of this order, in either paper or\\nelectronic form , to all current and future principals, officers, and directors, and to all\\ncurrent and future managers, employees, agents, and representatives having\\nresponsibi lities w ith respect to the subject matter of this order. Respondent shall secure\\nfrom each such person either I) a signed and dated statement acknowledging receipt of\\nthe o rder; or 2) a dated , e lectronic acknowledgment indicating that the person has read,\\ndownloaded or printed the order. Respondent shall deliver this order to current personnel\\nw ith in thirty (30) days after the date of service of this order, and to future personnel\\nwithin thirty (30) days after the person assumes such position or responsibilities.\\nRespondent shall maintain and upon request make available to the Federal Trade\\nComm ission fo r inspection and copying a copy of each signed statement acknowledging\\nreceipt of the order or a record, in either electronic or paper form, of each electronic\\nacknowledgment o f receipt of the order.\\n\\n\\x0cVI.\\nIT IS FURTHER ORDERED that respondent Santa Fe Natural Tobacco Company, Inc.,\\nand its successors and assigns shall notify the Commission at least thirty (30) days prior\\nto the sale of any of its tobacco products or herbal smoking products for which the\\ncomposition or formula has been changed in such a manner as may affect compliance\\nobligations arising under this order, including but not lim ited to the addition o f any\\nadditives to any variety of such products. All notices required by this Part shall be sent\\nby certified mail to the Associate Director, Division of Enforcement, Bureau of\\nConsumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue, N. W.,\\nWashington, D.C. 20580.\\n\\nVII.\\nIT IS FURTHER ORDERED that respondent Santa Fe Natural Tobacco Company, Inc.,\\nand its successors and assigns shall notify the Commission at least thirty (30) days prior\\nto any change in the corporation that may affect compliance obligations arising under\\nthis order, including but not limited to a dissolution of a subsidiary, parent or affiliate that\\nengages in any acts or practices subject to this order; the proposed filing of a bankruptcy\\npetition; or a change in the corporate name or address. Provided, however, that, with\\nrespect to any proposed change in the corporation about which respondent learns less\\nthan thirty (30) days prior to the date such action is to take place, respondent shall notify\\nthe Commission as soon as is practicable after obtaining such knowledge. All notices\\nrequired by this Part shall be sent by certified mail to the Associate Director, Division of\\nEnforcement, Bureau of Consumer Protection, Federal Trade Commission, 600\\nPennsylvania Avenue, N.W., Washington, D.C. 20580.\\n\\nVIII.\\nIT IS FURTHER ORDERED that respondent Santa Fe Natural Tobacco Company, Inc.,\\nand its successors and assigns shall, within sixty (60) days after the date of service of this\\norder, and at such other times as the Federal Trade Commission may require, file with the\\nCommission a report, in writing, setting forth in detail the manner and form in which\\nthey have complied with this order.\\n\\nIX.\\nThis order will terminate twenty (20) years from the date of its issuance, or twenty (20)\\nyears from the most recent date that the United States or the Federal Trade Commission\\nfiles a complaint (with or without an accompanying consent decree) in federal court\\nalleging any violation of the order, whichever comes later; provided, however, that the\\nfiling o f such a complaint will not effect the duration of:\\nA. Any Part in this order that terminates in less than twenty (20) years;\\nB. This order\\'s appl ication to any respondent that is not named as a defendant in\\nsuch complaint; and\\nC. This order if such complaint is tiled after the order has terminated pursuant to\\nthis Part.\\n\\nProvided further, that if such complaint is dismissed or a federal court rules that the\\nrespondent did not violate any provision of the order, and the dismissal or ruling is either\\nnot appealed or upheld on appeal, then the order will terminate according to this Part as\\nthough the complaint had never been filed, except that the order will not terminate\\n\\n\\x0cbetween the date such complaint is filed and the later of the deadline for appealing such\\ndismissal or ruling and the date such dismissal or ruling is upheld on appeal.\\nSigned this _ _ _ _ day of_ _ _ _ _ _ _, 2000\\nSANTA FE NATURAL TOBACCO COMPANY, INC.\\nBy:\\nRobin Sommers\\nPresident\\n\\n------ ---\\xc2\\xad\\n\\nC. Randall Nuckolls\\nLong Aldridge & Norman, LLP\\nAttorney for Respondent\\n\\nMichael Ostheimer\\nShira Model!\\nCounsel for the Federal Trade Commission\\nAPPROVED :\\n\\nC. Lee Peeler\\nAssociate Director\\nDivision of Advertising Practices\\n\\nJoan Z. Bernstein\\nDirector\\nBureau of Consumer Protection\\n\\nATTACHMENT A\\n[To be printed on Santa Fe Natural Tobacco Company, Inc. letterhead]\\n[date]\\nDear [retailer, distributor, or other purchaser for resale]:\\nThis letter is to inform you that Santa Fe Natural Tobacco Company, Inc. recently\\nreached a settlement agreement with the Federal Trade Comm ission (\"FTC\") concerning\\ncertain past advertising for Natural American Spirit cigarettes. The FTC has been\\nreviewing \"no additive\" claims for cigarettes and other tobacco products as a result of\\nconcerns that such representations might mislead consumers to believe that tobacco\\nproducts without additives are safer than tobacco products containing additives. As part\\nof this rev iew, the FTC conducted a n investigation of past advertising for Natural\\nAmerican Spirit cigarettes and alleged that certain of our past advertising was\\nmisleading. Although we do not admit the FTC\\'s allegations, we have agreed to notify\\nour distributors, retailers and others who sell our cigarettes to consumers that we will be\\nadding a new disclosure statement to certain advertisements making a \"no additive\"\\nclaim and that they should discontinue the use of certain old advertising materials not\\ncontain ing the new disclosure language.\\nThe FTC Agreement\\n\\n\\x0cThe FTC claimed that because we state that the tobacco used in Natural American Spirit\\ncigarettes contains no additives or chemicals, we made implied, unsubstantiated claims\\nthat smoking our cigarettes is less hazardous to a smoker\\'s health than smoking otherwise\\ncomparable cigarettes that contain additives or chemicals. Beginning in late 1997, we\\nvoluntari ly began placing the statement \\'\\'To our knowledge there is no research\\nindicating cigarettes containing additive-free tobacco are safer than cigarettes with\\ntobacco contain ing additives\" in certain ads for Natural American Spirit tobacco\\ncigarettes. Since early I998, we have also included the statement \"We make no\\nrepresentation expressed or implied that these cigarettes are any less hazardous than any\\nother cigarettes\" on the packaging of Natural American Spirit cigarettes. We have now\\nagreed to revise our disclosure in certain advertisements for Natural American Spirit\\ntobacco cigarettes to stale the following:\\nNo additives in our tobacco\\ndoes NOT mean a safer cigarette.\\n\\nOur Notifi cation Obligations\\nIn addition to agreeing to revise our disclosure statement, we have also agreed to request\\nthat you discontinue using, relying on or distributing certain old Natural American Spirit\\nadvertisements or promotional materials in your possession that do not contain the new\\ndisclosure statement. Certain existing point of sale items may continue to be used\\nwithout the new disclosure statement while other items will need to be discontinued or\\nremoved unless a sticker is applied containing the new disc losure statement. In the near\\nfuture, we will provide instructions for dealing with these existing items and we will be\\nsending you new Natural American Spirit promotional materials. If you are a distributor,\\nwe also ask that you make this information available to your Natural American Spirit\\ndealers who may have existing material s so that they can take similar action. The FTC\\nagreement requires us to cease doing business with even our most loyal customers in the\\nevent they continue using noncompliant materials, so please help us make this transition\\nin an orderly and prompt fashion.\\nIf you have any questions, you may call us at (xxx) xxx-xxxx. We apologize for any\\ninconvenience this may cause you and thank you for your assistance.\\nSincerely,\\nRobin Sommers, President\\nSanta Fe Natural Tobacco Company, Inc.\\n\\n\\x0c'","created_timestamp":"May 9, 2017","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-mary-engle-associate-director-division-advertising-practices-mark-s-brown-esq\/rai-santa_fe_staff_advisory_opinion_and_incoming_request_5-9-17.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFederal Trade Commission\\nWASHINGTON, D.C. 20580\\n\\nLois C. Greisman\\nAssociate Director\\nDivision of Marketing Practices\\n\\nNovember 10, 2016\\n\\nMichael Bills\\n132 S 600 East, Suite 204\\nSalt Lake City, UT 84102\\nRe:\\n\\nSeptember 11, 2009 Staff Opinion Letter on Soundboard Technology\\n\\nDear Mr. Bills:\\nWe are writing to you regarding the informal staff opinion letter we provided to your\\nformer company, Call Assistant, LLC, on September 11, 2009. 1 Our September 2009 letter\\nresponded to Call Assistant\\xe2\\x80\\x99s inquiry regarding whether the Telemarketing Sales Rule\\xe2\\x80\\x99s (\\xe2\\x80\\x9cTSR\\xe2\\x80\\x9d)\\nprovisions governing outbound telemarketing calls that deliver prerecorded messages 2 apply to\\ncalls utilizing soundboard technology, which is technology that allows a live agent to\\ncommunicate with a call recipient by playing recorded audio snippets instead of using his or her\\nown live voice. In the September 2009 letter, staff stated its opinion that the technology, as\\ndescribed by Call Assistant, would not be subject to the prerecorded message provisions of the\\nTSR. Staff\\xe2\\x80\\x99s opinion was based on important features that Call Assistant highlighted about its\\ntechnology \\xe2\\x80\\x93 i.e., that for the entire duration of a call made using the technology, a single live\\nagent stays with the call from beginning to end, listens to every word spoken by the call\\nrecipient, determines what is heard by the call recipient, and has the ability to interrupt\\nrecordings and use his or her own voice to communicate with the call recipient if needed. In our\\nview at that time, these features made the calls \\xe2\\x80\\x9cvirtually indistinguishable\\xe2\\x80\\x9d from normal twoway conversations with live operators and placed them outside the scope of the TSR\\xe2\\x80\\x99s\\nprerecorded message provisions.\\nSince the issuance of our September 2009 letter, staff has received a steadily increasing\\nvolume of formal and informal complaints from consumers about telemarketing calls utilizing\\nsoundboard technology. Consumers complain that during these calls they are not receiving\\nappropriate recorded responses to their questions or comments. Consumers further complain that\\noften no live telemarketer intervenes to provide a human response when requested to do so, the\\nrecorded audio snippets that are played do not adequately address consumer questions, or the call\\n1\\n\\nA copy of the September 11, 2009 staff opinion letter can be found at\\nhttp:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory opinions\/opinion-09-1\/opinion0901 1.pdf. Call\\nAssistant, LLC, filed for Chapter 7 bankruptcy on August 13, 2015. In re Call Assistant LLC, Case No. 15-11708\\n(KJC) (Bankr. D. Del. Aug. 13, 2015).\\n2\\n\\n16 C.F.R. \\xc2\\xa7 310.4(b)(1)(v).\\n\\n\\x0cMichael Bills\\nPage 2 of 6\\nis terminated in response to consumers questions. Indeed, media reports also have taken note of\\nthis phenomenon, which some in the press have dubbed telemarketing \\xe2\\x80\\x9crobot\\xe2\\x80\\x9d calls. 3 Simply\\nput, since we issued the letter in 2009, staff has seen evidence of the widespread use of\\nsoundboard technology in a manner that does not represent a normal, continuous, two-way\\nconversation between the call recipient and a live person. This is inconsistent with the principles\\nwe laid out in our September 2009 letter as well as our understanding of the technology at the\\ntime we issued the letter. 4 Moreover, this type of use does not provide the consumer benefits\\nupon which we based our September 2009 opinion.\\nIn response to rising complaints and concerns, staff reached out to the Professional\\nAssociation for Customer Engagement (\\xe2\\x80\\x9cPACE\\xe2\\x80\\x9d), which is a trade association representing call\\ncenters, and the Soundboard Association, a trade organization representing manufacturers and\\nusers of soundboard technology. During the last few months, we have had multiple productive\\ndiscussions and meetings with PACE and the Soundboard Association to learn more about\\nsoundboard technology and obtain industry input regarding the regulatory status of that\\ntechnology. Both PACE and the Soundboard Association were responsive to requests, provided\\nmeaningful input to assist staff in its review of this technology, and highlighted the potential\\nbenefits of responsible soundboard use. Staff carefully considered the input of PACE and the\\nSoundboard Association.\\nA fundamental premise of our September 2009 letter was that soundboard technology\\nwas a surrogate for the live agent\\xe2\\x80\\x99s actual voice. A human being cannot conduct separate\\nconversations with multiple consumers at the same time using his or her own voice.\\nNonetheless, some companies are routinely using soundboard technology in precisely this\\nmanner, and these companies are improperly using our September 2009 letter to justify their\\nactions in court proceedings 5 and in investigations. Indeed, Call Assistant noted publicly that\\n3\\n\\nSee, e.g.., Sean Gallagher, The New Spam: Interactive Robo-Calls From the Cloud as Cheap as E-Mail, ARS\\nTECHNICA, (Apr. 15, 2015), http:\/\/arstechnica.com\/information-technology\/2015\/04\/the-new-spam-interactive-robocalls-from-the-cloud-as-cheap-as-e-mail; Alexis C. Madrigal, Almost Human: The Surreal, Cyborg Future of\\nTelemarketing, THE ATLANTIC, (Dec. 20, 2013), http:\/\/www.theatlantic.com\/technology\/archive\/2013\/12\/almosthuman-the-surreal-cyborg-future-of-telemarketing\/282537\/; Alexis C. Madrigal, The Only Thing Weirder Than a\\nTelemarketing Robot, THE ATLANTIC, (Dec. 13, 2013), http:\/\/www.theatlantic.com\/technology\/archive\/2013\/12\/theonly-thing-weirder-than-a-telemarketing-robot\/282282\/; Zeke Miller & Denver Nicks, Meet the Robot Telemarketer\\nWho Denies She\\xe2\\x80\\x99s a Robot, TIME, (Dec. 10, 2013), http:\/\/newsfeed.time.com\/2013\/12\/10\/meet-the-robottelemarketer-who-denies-shes-a-robot\/; Kris Hundley, These Telemarketers Never Stray From Script, TAMPA BAY\\nTIMES, (Nov. 14, 2013), http:\/\/www.tampabay.com\/news\/these-telemarketers-never-stray-from-the-script\/2152303.\\n4\\n\\nFor example, Call Assistant highlighted the ability of its agents to use their own voices during calls using its\\nsoundboard technology: \\xe2\\x80\\x9cOur technology merely substitutes sound files for the agent\\xe2\\x80\\x99s voice (although the agent\\ncan interject with his or her voice at any time) . . . .\\xe2\\x80\\x9d (emphasis supplied). See also September 2009 Letter at 1 (\\xe2\\x80\\x9cIn\\nresponse to the greeting, the agent may elect to speak to the call recipient using his or her voice, or may press a\\nbutton to play an appropriate recorded script segment. . . . At all times, even during the playing of a recorded\\nsegment, the agent retains the power to interrupt any recorded message to listen to the consumer and respond\\nappropriately.\\xe2\\x80\\x9d) (emphasis supplied).\\n5\\n\\nSee, e.g., Fitzhenry v. ADT Corp., No. 9:14-CV-80180 (S.D. Fla.); Barrett v. ADT Corp., No. 12:15-CV-1348\\n(S.D. Ohio).\\n\\n\\x0cMichael Bills\\nPage 3 of 6\\none of the advantages of its technology is that \\xe2\\x80\\x9can agent can conduct multiple calls\\nsimultaneously.\\xe2\\x80\\x9d 6 Staff also has seen evidence that call centers are using soundboard technology\\nto increase the number of outbound calls they can make. In addition, in our discussions and\\nmeetings, industry representatives acknowledged that call centers routinely use soundboard\\ntechnology to allow a single live agent to handle more than one call at the same time.\\nThe plain language of the TSR provision governing prerecorded calls imposes restrictions\\non \\xe2\\x80\\x9cany outbound telephone call that delivers a prerecorded message.\\xe2\\x80\\x9d 7 It is indisputable that\\ncalls made using soundboard technology deliver prerecorded messages. As such, under the plain\\nmeaning of the words in the TSR\\xe2\\x80\\x99s prerecorded call provision, outbound telemarketing calls\\nusing soundboard technology are covered because such calls \\xe2\\x80\\x9cdeliver a prerecorded message.\\xe2\\x80\\x9d 8\\nGiven the actual language used in the TSR, the increasing volume of consumer\\ncomplaints, and all the abuses we have seen since we issued the September 2009 letter, we have\\ndecided to revoke the September 2009 letter. It is now staff\\xe2\\x80\\x99s opinion that outbound\\ntelemarketing calls that utilize soundboard technology are subject to the TSR\\xe2\\x80\\x99s prerecorded call\\nprovisions because such calls do, in fact, \\xe2\\x80\\x9cdeliver a prerecorded message\\xe2\\x80\\x9d as set forth in the plain\\nlanguage of the rule. 9 Accordingly, outbound telemarketing calls made using soundboard\\ntechnology are subject to the provisions of 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(v), and can only be made\\nlegally if they comply with the requirements set forth in Section 310.4(b)(1)(v)(A) (for calls\\nselling goods or services), Section 310.4(b)(1)(v)(B) (for calls seeking charitable contributions\\nfrom members or prior donors), or Section 310.4(b)(1)(v)(D) (healthcare messages by a covered\\nentity or its business associate under HIPAA).\\nIn reaching this conclusion, staff did consider whether an express requirement that live\\nagents using soundboard technology only handle one call at a time would change the analysis.\\nStaff has concluded that it would not. First, even with a 1-to-1 limitation in place, such calls\\nwould still \\xe2\\x80\\x9cdeliver a prerecorded message\\xe2\\x80\\x9d and therefore would fall within the plain language of\\n16 C.F.R. 310.4(b)(1)(v). Moreover, in staff\\xe2\\x80\\x99s view, a 1-to-1 limitation would not stop abusive\\nuse of the technology. Based on preliminary information provided by industry representatives, a\\nsignificant percentage of the total number of call center seats utilizing soundboard technology\\nare used to make telemarketing or lead generation calls. A 1-to-1 limitation would allow a lead\\ngeneration operation to use soundboard technology in which live operators simply press a button\\nto play a prerecorded message offering a good or service that asks the consumer to say \\xe2\\x80\\x9cyes\\xe2\\x80\\x9d or\\npress 1 on their phone if they are interested. If the consumer says yes or presses 1, the live agent\\nwould then transfer the call to the seller who makes a telemarketing pitch. Such calls are\\nindistinguishable from standard lead generation robocalls that are governed by the TSR and are\\nthe subject of a large volume of consumer complaints and significant telemarketing abuse. The\\n6\\n\\nNougar, L.C., et al. v. Revocalize, LLC, et al., No. 2:11-cv-127, DE 41 (D. Utah, Oct. 18, 2011).\\n\\n7\\n\\n16 C.F.R. \\xc2\\xa7 310.4(b)(1)(v).\\n\\n8\\n\\nId.\\n\\n9\\n\\nId. Staff notes that representatives of both PACE and the Soundboard Association disagree with this conclusion.\\n\\n\\x0cMichael Bills\\nPage 4 of 6\\nfact that a live operator, instead of a computer, \\xe2\\x80\\x9cdelivers\\xe2\\x80\\x9d the prerecorded message and transfers\\ninterested consumers to sellers makes little difference from the call recipient\\xe2\\x80\\x99s perspective.\\nThus, even a 1-to-1 limitation would permit soundboard technology to be used to deliver calls\\nthat are indistinguishable from the telemarketing robocalls that consumers consider to be abusive\\nand that are illegal under the TSR.\\nFinally, staff does recognize that when the Commission adopted the TSR\\xe2\\x80\\x99s robocall\\nprovisions TSR in 2008, it foresaw that technology could evolve to allow the use of interactive\\nprerecorded messages in telemarketing calls in a manner \\xe2\\x80\\x9cessentially indistinguishable from\\nconversing with a human being.\\xe2\\x80\\x9d 10 Indeed, soundboard technology, when used properly, may\\none day approach that level of proficiency. If and when such advances occur, the Commission\\nnoted that parties could seek further amendment of the TSR or exemptions from the prerecorded\\nmessage provisions. 11\\nIn order to give industry sufficient time to make any necessary changes to bring\\nthemselves into compliance, the revocation of the September 2009 letter will be effective six\\nmonths from today, on May 12, 2017. As of that date, the September 11, 2009 letter will no\\nlonger represent the opinions of FTC staff and cannot be used, relied upon, or cited for any\\npurpose.\\nIn closing, staff notes that revocation of the September 2009 opinion letter does not mean\\nthat the TSR prohibits all calls made using soundboard technology. To the contrary, call centers\\ncan still use soundboard technology for in-bound calls and to place a wide variety of outbound\\ncalls, such as non-telemarketing calls (e.g., political calls, survey calls, and pure informational\\ncalls), telemarketing calls that fall within the exemptions set forth in Section 310.4(B)(1)(v)(A),\\n(B), or (D), certain types of charitable donation calls, and calls that are expressly exempt from\\nthe TSR under Section 310.6 (e.g., business-to-business calls). In fact, the preliminary data\\nprovided indicates that a significant percentage of call center seats that utilize soundboard\\ntechnology are used for in-bound calls or to place non-telemarketing calls, such as political or\\ncharitable calls. As long as those calls remain outside the scope of the TSR, companies can\\ncontinue to use soundboard technology for those types of calls without violating the TSR. Please\\nnote, however, that we do not opine on whether the use of such technology complies with state\\nor other federal laws, including the Telephone Consumer Protection Act, 47 U.S.C. \\xc2\\xa7 227, or its\\ncorresponding regulations implemented by the Federal Communications Commission, 47 C.F.R.\\n\\xc2\\xa7 64.1200.\\nPlease be advised that the views expressed in this letter are those of the FTC staff, subject\\nto the limitations in 16 C.F.R. \\xc2\\xa7 1.3. They have not been approved or adopted by the\\nCommission, and they are not binding upon the Commission. However, they do reflect the\\nviews of staff members charged with enforcement of the TSR.\\n\\n10\\n11\\n\\nTelemarketing Sales Rule, 73 Fed. Reg. 51,164, 51,1180 (Aug. 29, 2008).\\n\\nId. (\\xe2\\x80\\x9cAccordingly, nothing in this notice should be interpreted to foreclose the possibility of petitions seeking\\nfurther amendment of the TSR or exemptions from the provisions adopted here.\\xe2\\x80\\x9d)\\n\\n\\x0cMichael Bills\\nPage 5 of 6\\n\\nSincerely,\\n\\nLois C. Greisman\\nAssociate Director\\nDivision of Marketing Practices\\nCc:\\n\\nMichele A. Shuster, Esq.\\nGeneral Counsel, PACE\\n6530 W. Campus Oval, Suite 210\\nNew Albany, OH 43054\\nThe Soundboard Association\\nc\/o Peter B. Miller, Esq.\\nCrowell & Moring LLP\\n1001 Pennsylvania Ave., NW\\nWashington, DC 20004\\nCall Assistant, LLC\\n78-00 3rd Street N., Suite 900\\nSt. Paul, MN 55128\\nRonald S. Gellert\\nGellert Scali Busenkell & Brown, LLC\\n1201 N. Orange Street, Suite 300\\nWilmington, DE 19801\\nCounsel for Debtor, Call Assistant, LLC\\nDavid Carickhoff\\nJennifer L. Dering\\nArcher & Greiner, P.C.\\n300 Delaware Ave., Suite 1100\\nWilmington, DE 19801\\nBankruptcy Trustee for Call Assistant, LLC\\nNoguar\\n5286 S 320 West\\nMurray, UT 84107\\nAvatar Technologies, Inc.\\n138 Columbus Ave., 2nd Floor\\nMount Vernon, NY 10553\\n\\n\\x0cMichael Bills\\nPage 6 of 6\\nRobby H. Birnbaum\\nGreenspoon Marder\\nOne Boca Place, 2255 Glades Road, Suite 400-E\\nBoca Raton, FL 33431\\nCounsel for Avatar Technologies, Inc.\\n\\n\\x0c'","created_timestamp":"November 10, 2016","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-lois-greisman-associate-director-division-marketing-practices-michael-bills\/161110staffopsoundboarding.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFederal Trade Commission\\nWASHINGTON, D.C. 20580\\n\\nCraig Tregillus\\nDivision of Marketing Practices\\nPhone: (202) 326-2970\\nEmail: ctregillus@ftc.gov\\n\\nAugust 5, 2016\\nMr. Thurman Higginbotham, President\\nIndependent Funeral Directors Association of DC\\n3145 Lady Banks Lane\\nWaldorf, MD 20603\\nDear Mr. Higginbotham:\\nYour request for a staff opinion states that funeral providers serving the District of Columbia\\nhave encountered a problem when a natural death occurs in a family home. Because they may not\\nlawfully transport the body to the funeral home until death is pronounced,1 and because the D.C.\\nMedical Examiner\\xe2\\x80\\x99s Office does not pronounce most deaths from natural causes,2 it may be\\nnecessary for funeral providers to locate and pay a licensed physician to perform that service. You\\nask whether, and if so how, a charge for that service should be disclosed by a provider on the\\nGeneral Price List (\\xe2\\x80\\x9cGPL\\xe2\\x80\\x9d), and entered on the Statement of Funeral Goods and Services Selected\\n(\\xe2\\x80\\x9cSFGSS\\xe2\\x80\\x9d), in order to comply with the Funeral Rule.3\\nThe Rule specifies that a funeral provider may charge only one non-declinable fee, the basic\\nservices fee, unless another fee is necessitated by any legal, cemetery or crematory requirement that\\nis disclosed in writing on the SFGSS.4 Accordingly, the Rule expressly prohibits funeral providers\\nfrom charging:\\n1\\n\\nA notice dated February 4, 2016, from the D.C. Board of Funeral Directors, states that a funeral\\nprovider \\xe2\\x80\\x9cshould not transport a body to a funeral services establishment for funeral services prior to\\nan official pronouncement of death.\\xe2\\x80\\x9d It cites a directive of the D.C. Department of Health dated\\nDecember 23, 2015, which emphasizes that a death may be pronounced \\xe2\\x80\\x9conly\\xe2\\x80\\x9d by \\xe2\\x80\\x9ca hospital\\nemergency room physician or an authorized official from the District\\xe2\\x80\\x99s Office of the Chief Medical\\nExaminer, unless otherwise permitted by law.\\xe2\\x80\\x9d\\n\\n2\\n\\nD.C. statutes state that the District\\xe2\\x80\\x99s Office of the Chief Medical Examiner must pronounce and\\ninvestigate possible unnatural deaths in enumerated circumstances, DC Code \\xc2\\xa7 5-1405, and that a\\nbody may be removed from the place of death \\xe2\\x80\\x9conly\\xe2\\x80\\x9d with \\xe2\\x80\\x9cthe consent of the medical examiner or\\nthe treating physician who certifies the cause of death,\\xe2\\x80\\x9d DC Code \\xc2\\xa7 7-214(c)(1), or when an\\nexpected death occurs at home, after a registered nurse assisting a treating physician signs the\\npronouncement of death section of the death certificate. DC Code \\xc2\\xa7\\xc2\\xa7 7-211(j); 7-214(c)(2). Thus, if\\nthe treating physician or her assistant registered nurse is unavailable when an anticipated death\\noccurs, or there is no treating physician when an unanticipated death from natural causes occurs, a\\nfuneral provider may find it necessary to locate and pay a physician to pronounce the death.\\n3\\n4\\n\\n16 C.F.R. \\xc2\\xa7 453.\\n16 C.F.R. \\xc2\\xa7\\xc2\\xa7 453.2(b)(4)(iv), 453.3(d)(2).\\n\\n\\x0cMr. Thurman Higginbotham\\nPage 2 of 2\\nany fee as a condition of furnishing any funeral goods or funeral\\nservices to a person arranging a funeral, other than the fees for:\\n(1) Services of funeral director and staff, permitted by\\n\\xc2\\xa7 453.2(b)(4)(iii)(C) [basic services fee]; (2) other funeral services and\\nfuneral goods selected by the purchaser; and (3) other funeral goods or\\nservices required to be purchased [i.e., by legal, cemetery or crematory\\nmandates], as explained on the itemized statement [SFGSS] in\\naccordance with \\xc2\\xa7 453.3(d)(2).5\\nWhile the Rule does not permit a second non-declinable fee, it does permit fees for funeral\\ngoods and services voluntarily \\xe2\\x80\\x9cselected by the purchaser.\\xe2\\x80\\x9d It is therefore staff\\xe2\\x80\\x99s opinion that funeral\\nproviders may offer to locate and pay a physician to pronounce an in-home death from natural\\ncauses for a fee that is optional. No Rule violation occurs if purchasers voluntarily choose such a\\nservice and are free to avoid the cost by, for example, declining it and making arrangements for the\\ndeath pronouncement themselves.6\\nTo allow purchasers to make a voluntary choice about finding and paying a physician to\\npronounce an in-home death from natural causes, the funeral provider must disclose the optional\\nfee on the provider\\xe2\\x80\\x99s GPL. The provider must notify the purchaser about the optional fee orally and\\nby providing a copy of the GPL when removal arrangements are discussed, or promptly upon\\narriving for the removal of the body.7 The disclosure should state whether the provider\\xe2\\x80\\x99s fee\\nincludes or is in addition to the physician\\xe2\\x80\\x99s fee. The provider should also list the fee on the SFGSS,\\nand the physician\\xe2\\x80\\x99s fee, if not included, should be listed as a cash advance item.8\\nPlease be advised that the views expressed in this letter are those of the FTC staff. They\\nhave not been reviewed, approved, or adopted by the Commission, and they are not binding upon the\\nCommission. However, they do reflect the opinions of those staff members charged with\\nenforcement of the Funeral Rule. Staff Funeral Rule opinions are now routinely posted on the\\nFTC website currently located at: https:\/\/www.ftc.gov\/policy\/advisoryopinions?title=&term_node_tid_depth=3507&date_filter[min][date]=&date_filter[max][date].\\nRespectfully yours,\\n\\nCraig Tregillus\\nFuneral Rule Coordinator\\n5\\n\\n16 C.F.R. \\xc2\\xa7 453.4(b)(1)(ii).\\n\\n6\\n\\nStaff Opinion 13-2 (Jan. 3, 2013) at 2, available at https:\/\/www.ftc.gov\/policy\/advisoryopinions\/opinion-13-2.\\n\\n7\\n\\nSuch a fee can be listed on the GPL, for example, as \\xe2\\x80\\x9cOptional service fee for arranging a\\nphysician to pronounce a death from natural causes at a D.C. residence if no treating physician exists\\nor if neither the treating physician nor her assistant registered nurse is available. This fee is in\\naddition to the physician\\xe2\\x80\\x99s fee.\\xe2\\x80\\x9d\\n8\\n\\nSuch a fee can be listed on the SFGSS, for example, as a \\xe2\\x80\\x9cService fee for arranging a physician to\\npronounce death at a D.C. residence. This fee is in addition to the physician\\xe2\\x80\\x99s fee.\\xe2\\x80\\x9d\\n\\n\\x0c'","created_timestamp":"August 5, 2016","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/opinion-16-2\/opinion_16-2.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFederal Trade Commission\\nWASHINGTON, D.C. 20580\\n\\nCraig Tregillus\\nDivision of Marketing Practices\\nPhone: (202) 326-2970\\nEmail: ctregillus@ftc.gov\\n\\nJune 16, 2016\\nT. Scott Gilligan, Esq.\\nGeneral Counsel\\nNational Funeral Directors Association\\n3734 Eastern Avenue\\nCincinnati, OH 45226\\nDear Mr. Gilligan:\\nYou have asked for a \\xe2\\x80\\x9cclarification\\xe2\\x80\\x9d of the applicability of staff opinion 15-1 to\\nsituations where there is \\xe2\\x80\\x9cno claim that the consumer had inquired about the offering of\\ncaskets or containers.\\xe2\\x80\\x9d That opinion stated staff\\xe2\\x80\\x99s view that a funeral provider violates the\\nFuneral Rule if its personnel place a consumer in a casket display room to wait to speak to a\\nfuneral director without first showing the consumer a Casket Price List (\\xe2\\x80\\x9cCPL\\xe2\\x80\\x9d).1\\nThe Funeral Rule requires a funeral provider to show \\xe2\\x80\\x9cpeople who inquire in person\\nabout the offerings or prices of caskets or alternative containers\\xe2\\x80\\x9d a CPL \\xe2\\x80\\x9cupon beginning\\ndiscussion of, but in any event before showing caskets.\\xe2\\x80\\x9d2 As the Funeral Rule Compliance\\nGuide has stated for years, this means that \\xe2\\x80\\x9c[c]onsumers must be able to look at the price list\\nbefore discussing their options or seeing the actual caskets.\\xe2\\x80\\x9d3 This requirement is based on\\nevidence in the rulemaking record that less expensive caskets \\xe2\\x80\\x9coften are not shown\\xe2\\x80\\x9d when\\ncaskets are displayed, and is designed \\xe2\\x80\\x9cto ensure that consumers have a bona fide\\nopportunity to purchase low-cost caskets . . . if they so desire.\\xe2\\x80\\x9d4\\nEven now, casket display rooms do not always include \\xe2\\x80\\x9call caskets and alternative\\ncontainers offered which do not require special ordering.\\xe2\\x80\\x9d5 They may display only a limited\\nselection. To ensure that consumers are aware that low-cost caskets that are not on display\\n\\n1\\n\\nStaff Opinion to T. Scott Gilligan (June 29, 2015) (emphasis added), available at\\nhttps:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/opinion-15-1\/opinion_151.pdf.\\n\\n2\\n\\n16 C.F.R. \\xc2\\xa7 453.2(b)(2)(i). The same requirements also apply to the Outer Burial Container\\nPrice List (\\xe2\\x80\\x9cOBCPL\\xe2\\x80\\x9d). 16 C.F.R. \\xc2\\xa7 453.2(b)(3)(i).\\n\\n3\\n\\nComplying with the Funeral Rule (April 2015) (\\xe2\\x80\\x9cCompliance Guide\\xe2\\x80\\x9d) at 13. The\\nCompliance Guide makes the same statement about the OBCPL. Compliance Guide at 14.\\n\\n4\\n\\nStatement of Basis and Purpose, 47 Fed. Reg. 42260, 42290 & n. 317 (Sept. 24, 1982).\\n\\n5\\n\\n16 C.F.R. \\xc2\\xa7 453.2(b)(2)(i).\\n\\n\\x0cT. Scott Gilligan, Esq.\\nPage 2 of 2\\nare available, the Rule insists that funeral providers show the CPL to consumers \\xe2\\x80\\x9cin any event\\nbefore showing caskets.\\xe2\\x80\\x9d\\nAllowing providers to escort prospective customers to a casket display room to wait\\nfor a funeral director who could respond to an inquiry, without first showing them a CPL,\\nwould be to endorse a simple expedient for evading this core Rule requirement. Thus, we\\ncannot accept your argument that funeral providers have no obligation to show consumers a\\nCPL until the consumer \\xe2\\x80\\x9cinquire[s] in person\\xe2\\x80\\x9d about caskets or their prices.\\nYour request expresses concern about the impact of opinion 15-1 on certain marketing\\nvenues for funeral goods and services, including storefront facilities in strip malls, shopping\\nmall stores, and mall carts and kiosks. In those venues, providers may choose to show\\nselected caskets and vaults, or pictures or models of them, in locations where consumers\\ncannot avoid viewing them immediately upon entering the store or approaching the display.\\nBecause the casket displays in these venues are often limited by space constraints to a small\\nnumber of selected caskets, the rule\\xe2\\x80\\x99s requirement that a CPL be provided to inform\\nconsumers about the availability of lower-cost caskets that are not on display assumes\\nincreasing importance.\\nGiven the unique circumstances of the venues at issue, and in the interest of enhancing\\ncompetition and innovation, staff will exercise its enforcement discretion not to take action\\nagainst providers of funeral goods and services operating out of strip mall storefronts and\\nshopping mall stores, carts, or kiosks, that show caskets or pictures or models of them, if they\\ndisplay and make available copies of their CPL clearly and conspicuously at prominent\\nlocations in such venues. The CPL display must be located immediately inside each store\\nentry, or on all sides of a cart or kiosk display, and must include clear and conspicuous\\nsignage inviting consumers to take a readily available copy.6\\nPlease be advised that the views expressed in this letter are those of the FTC staff.\\nThey have not been reviewed, approved, or adopted by the Commission, and they are not\\nbinding upon the Commission. However, they do reflect the opinions of those staff\\nmembers charged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are\\nnow routinely posted on the FTC website currently located at: Advisory Opinions | Federal\\nTrade Commission.\\nRespectfully yours,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\n6\\n\\nStaff also will exercise its enforcement discretion not to take action where vaults or grave\\nliners, or pictures or models of them, are on display in these facilities, if the same\\nrequirements are met for posting and providing copies of the OBCPL.\\n\\n\\x0c'","created_timestamp":"June 16, 2016","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/opinion-16-1\/opinion_16-1.pdf"}
{"text":"b'UNITED STATES DEPARTMENT OF EDUCATION\\nOFFICE OF THE UNDER SECRETARY\\n\\nJanuary 14,2016\\n\\nStephanie Rosenthal\\nChief of Staff, Division of Financial Practices\\nFederal Trade Commission\\nBureau of Consumer Protection\\n600 Pennsylvania Avenue, NW\\nWashington, DC 20580\\nDear Ms. Rosenthal:\\nThis letter follows up on your phone discussion on December 2, 20 l 5 with the Department of\\nEducation\\'s Office of General Counsel regarding the application of the Federal Trade\\nConunission (FTC)\\'s Holder Rule to claims brought by student and parent bonowers in the\\nFederal Family Education Loan (FFEL) program. Borrower defenses to repayment ofFFEL\\nloans that rest on claims against the school attended with the proceeds of the loan will almost\\nalways be based on the FTC Holder Rule \"preservation of defenses\" clause, 16 CFR \\xc2\\xa7 433,\\nincluded in the FFEL student and parent loan promissory notes. We seek a determination from\\nyour office about the effect of applicable statutes of limitation on claims and defenses that might\\nbe raised by a borrower, relying on the Holder Rule clause in the FFEL loan agreement, as a setoff to a demand for repayment on a FFEL loan.\\nWe understand that the FTC\\'s 1976 Guidelines on the Holder Rule discuss the impact of statutes\\nof limitations on claims and defenses raised by a borrower by stating that: \"[t] he words \"Claims\\nand Defenses\" which must appear in the Notice are not given any special definition by the\\nCommission .. . Appropriate statutes, decisions, and rules in each jurisdiction will control, and the\\npertinent rules of law and equity, including rules of evidence, procedure, and statutes of\\nlimitations. will continue to applx.\" FTC, Guidelines on Trade Regulation Rule Concerning\\nPreservation ofConsumers\\' Claims and Defenses, 41 FR 20022, 20023-20024 (May 14, 1976)\\n(emphasis added). The Guidelines state, as an example, \"Where a local jurisdiction has a twoyear statute of limitations on contract claims, such claims and defenses would be extinguished\\nafter two years.\" Id. at 20024 (emphasis added).\\nOur question arises in the context of claims against a merchant - here, the school - that are timebarred under applicable state law. We ask if it is the Commission\\'s view that where a borrower\\'s\\nclaim against a school would be time-barred under state law, the borrower could assert that timebaiTed claim in an action by a lender seeking repayment of the loan, as a defense that would set\\noff the amount of the claim against the unpaid balance on a loan. If the Commission considers a\\nborrower to be able to assert the time-barred claim as a defense, we also ask whether the\\n400 MARY!.AND AVE. SW, WASHINGTON, DC 20202\\n\\nwww.ed.gov\\n\\nThe Depc1rtment of Education\\'s mh;sion is to promote student nr:hie1\\xe2\\x80\\xa2ement and prepamtionlor global competitiveness\\nby fostering educ,1tiona\/ excellence and ensuri11g equal access.\\n\\n\\x0cCommission views the Rule as enabling the borrower to assert the time-barred claim\\naffirmatively in an action to recover amounts already paid to the lender.\\nThe language of the FTC Guidelines seems to suggest that under the Rule, time-barred claims,\\nfor example, for breach of contract, are \"extinguished\" for all purposes. !d. We understand,\\nhowever, that courts commonly allow a patty to use a time-barred claim defensively if that claim\\narises from the same transaction as the opponent\\'s timely claim, and treat these claims as claims\\nfor common law recoupment. The FTC Guidelines do not use the term recoupment but appear to\\ncontemplate that concept when referring to what the Guidelines describe as a \"set-off:\"\\n\"(t]he Rule does apply to all claims or defenses cormected with the transaction,\\nwhether in tort or contract. .. .It is also possible for a consumer to have a claim or\\ndefense against a seller because of a separate transaction. The provision required by\\nthe Rule would not allow him to assert such a claim or defense against the\\nholder. The holder\\'s obligations arc limited to those m;sing from the transaction\\nwhich he finances. The vast majority of cases, in the staff\\'s opinion. will involve a\\nlimited right of set-off against the unpaid balance.\"\\n(emphasis added).\\nThe key similarity between common law recoupment and the set-off desclibed in the Guidelines\\nappears to be that the Holder Rule clause allows the consumer to assert only those claims\\nconnected to the same transaction as that financed with the loan. We understand that that the\\nterm \"setoff\" is commonly used to describe a counterclaim that arises out of a transaction\\nunrelated to a plaintiffs cause of action against the defendant. Based in these considerations and\\nthe explanation ofthe scope of the Rule provided in the Guidelines, we question the meaning of\\nthe statement in the Guidelines that time-barred claims are \"extinguished.\" We ask for\\nclarification whether.the Commission intends the Rule to enable the consumer to assert either\\naffirmatively or as a defense to the loan only those claims that are within the otherwise\\napplicable statute of limitations, or to assert time-barred claims as viable defenses, regardless of\\nthe applicable statutes of limitations that would bar affirmative recovery on such claims.\\nWe appreciate your consideration of our request. In order to assist us in a current rulemaking in\\nthis area, we ask that you provide your response as expeditiously as practicable. Please do not\\nhesitate to contact us if you have any questions about our request.\\n\\nSin~vW\\ntAppel\\nDeputy Under Secretary\\nU.S. Department of Education\\n\\n\\x0c'","created_timestamp":"May 14, 1976","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-stephanie-rosenthal-chief-staff-division-financial-practices-bureau-consumer-protection-jeff.s.department-education\/160407request_dept_ed.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFederal Trade Commission\\nWASHINGTON, D.C. 20580\\n\\nCraig Tregillus\\nDivision of Marketing Practices\\nPhone: (202) 326-2970\\nEmail: ctregillus@ftc.gov\\n\\nJune 29, 2015\\nT. Scott Gilligan, Esq.\\nGilligan Law Offices\\n3734 Eastern Avenue\\nCincinnati, Ohio 45226\\nDear Mr. Gilligan:\\nYou have questioned whether a funeral provider violates the Funeral Rule by placing a\\nconsumer in its casket display room to wait to speak with a funeral director without first showing\\nthe consumer a casket price list (\\xe2\\x80\\x9cCPL\\xe2\\x80\\x9d).\\nAs you note, Section 453.2(b)(2)(i) of the rule requires a \\xe2\\x80\\x9cfuneral provider\\xe2\\x80\\x9d to show\\nconsumers a CPL \\xe2\\x80\\x9cupon beginning discussion of, but in any event before showing caskets.\\xe2\\x80\\x9d You\\ntake the position that until a funeral director arrives in the casket display room or other\\narrangement room that also contains a display to meet with the consumer, there can be no\\nviolation of this provision. You posit that prior to the funeral director\\xe2\\x80\\x99s appearance, the\\nconsumer cannot inquire about caskets, and there can be no discussion of caskets or their prices\\nto trigger the obligation to show the consumer a CPL. We disagree with your interpretation\\nbecause it ignores the plain and direct requirement that the CPL be shown \\xe2\\x80\\x9cin any event before\\nshowing caskets.\\xe2\\x80\\x9d\\nFirst, we note that the rule places the obligation to show the CPL on the \\xe2\\x80\\x9cfuneral\\nprovider,\\xe2\\x80\\x9d not on an individual funeral director, and it is the funeral provider that is responsible\\nfor training its personnel in rule compliance. Thus, the funeral provider\\xe2\\x80\\x99s obligation to provide\\nthe CPL starts before the arrival of the funeral director in the casket display room.\\nSecond, as is the case with the Commission\\xe2\\x80\\x99s trade regulation rules and other rules that\\nimpose disclosure requirements, the timing of the disclosure is critical.1 In this context, the\\nCommission deliberately sought to ensure that cost disclosure would be made \\xe2\\x80\\x9cbefore showing\\nthe caskets.\\xe2\\x80\\x9d Significantly, the required price disclosure does not apply only to those caskets the\\nprovider chooses to display. It also requires the provider to list the cost of other caskets it\\noffers.2 This enables consumers to identify the least expensive options as they consider the\\n1\\n\\nFor example, the 1984 Used Car Rule requires dealers to display a \\xe2\\x80\\x9cBuyers Guide\\xe2\\x80\\x9d on each vehicle\\xe2\\x80\\x99s window\\nstating, inter alia, whether it comes with or without a warranty and the duration of any warranty offered. 16 C.F.R.\\n\\xc2\\xa7455.2.\\n2\\nThe funeral provider \\xe2\\x80\\x9cneed list only those caskets that it usually offers for sale that do not require special\\nordering. \\xe2\\x80\\x98Special ordering\\xe2\\x80\\x99 means purchasing a casket or container that is not in stock and not part of [the\\n\\n\\x0cfavorable qualities of displayed models.3 The absence of a funeral director from the room is not\\nrelevant to whether the consumer can review her purchase options.\\nAccordingly, it is staff\\xe2\\x80\\x99s opinion that a funeral provider violates the rule when placing a\\nconsumer in its casket display or other arrangement room containing such items to wait for a\\nfuneral director without first showing the consumer a CPL.\\nPlease be advised that the views expressed in this letter are those of the FTC staff. They\\nhave not been reviewed, approved, or adopted by the Commission, and they are not binding upon\\nthe Commission. However, they do reflect the opinions of those staff members charged with\\nenforcement of the Funeral Rule. Staff Funeral Rule opinions are now routinely posted on the\\nFTC website currently located at https:\/\/www.ftc.gov\/tips-advice\/business-center\/legalresources?type=advisory_opinion&field_industry_tid=315.\\nRespectfully yours,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\nprovider\\xe2\\x80\\x99s] regular offerings to [its] customers.\\xe2\\x80\\x9d Complying With the Funeral Rule, 12 (FTC April 2015), available\\nat https:\/\/www ftc.gov\/tips-advice\/business-center\/guidance\/complying-funeral-rule.\\n3\\nIn rejecting a proposal that funeral providers should be required to display their least expensive caskets, the\\nCommission stated that the rule\\xe2\\x80\\x99s advance price list disclosures \\xe2\\x80\\x9cwould let consumers know what merchandise and\\nservices the funeral providers sell, including the three least expensive caskets.\\xe2\\x80\\x9d Statement of Basis and Purpose, 47\\nFed. Reg. 42260, 42290 & n.317 (Sept. 24, 1982).\\n\\n\\x0c'","created_timestamp":"June 29, 2015","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/opinion-15-1\/opinion_15-1.pdf"}
{"text":"b\"UNITED STATES OF AMERICA\\nFederal Trade Commission\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nMonica E. Vaca\\n\\nActing Associate Director\\nDivision of Marketing Practices\\n\\nNovember 5, 2014\\n\\nMs. Karen J. Meyers, Assistant Attorney General\\nDirector, Consumer Protection Division\\n\\nOffice of New Mexico Attorney General\\n\\n111 Lomas Boulevard \\xe2\\x80\\x94 Suite 300\\n\\nAlbuquerque, NM 87102\\n\\nDear Ms. Meyers:\\n\\nYou have requested our opinion on whether the Telemarketing Sales Rule (\\xe2\\x80\\x9cTSR\\xe2\\x80\\x9d)\\napplies to a business model in which a seller mails promotional materials that it labels \\xe2\\x80\\x9ccatalogs\\xe2\\x80\\x9d\\nto solicit inbound calls from consumers to purchase the seller\\xe2\\x80\\x99s debt relief services, The seller\\xe2\\x80\\x99s\\nmaterials, such as the example enclosed with your request, offer several debt relief plans, each of\\nwhich asks consumers to \\xe2\\x80\\x9cCall for Custom Price.\\xe2\\x80\\x9d\\n\\nYour request describes a scenario in which a consumer who calls the number listed in the\\ncatalog (and also in some cases in a cover letter or additional promotional materials!) cannot\\npurchase a debt relief plan during that call, even if the consumer agrees to do so. This is because\\nthe seller provides the consumer with an enrollment packet after the call by postal mail, email,\\nfax or website. The packet includes a welcome kit and enroliment agreement that the consumer\\nmust sign and return to complete a purchase. The packet also provides the first disclosures to the\\nconsumer of all the terms and conditions for using the seller\\xe2\\x80\\x99s debt relief services.\\n\\nAs you know, the definition of \\xe2\\x80\\x9ctelemarketing\\xe2\\x80\\x9d in the Telemarketing and Consumer\\nFraud and Abuse Prevention Act of 1994 (\\xe2\\x80\\x9cTelemarketing Act\\xe2\\x80\\x9d or \\xe2\\x80\\x9cAct\\xe2\\x80\\x9d),? which directed the\\nCommission to issue the TSR,\\xe2\\x80\\x99 expressly excludes catalog sales.4 The Act defines telemarketing\\nas \\xe2\\x80\\x9ca plan, program, or campaign which is conducted to induce purchases of goods or services,\\nor a charitable contribution, donation, or gift of money or any other thing of value, by use of one\\n\\n! You note that a recent court decision, New Mexico ex rel, King v. Credit Arbitrators, LLC, Civ.\\nNo. 12-16 (D. N.M. Mar. 26, 2014). held that the TSR\\xe2\\x80\\x99s debt relief requirements apply to a seller\\nthat mails a debt relief catalog together with a cover letter or other promotional materials that\\nsolicit inbound calls to a specified number. The same reasoning and holding apply with equal\\nforce, in staff's view, to any mailing of promotional materials apart from a catalog that solicit\\ninbound calls from consumers to the seller's telephone number.\\n\\n> 15 U.S.C. \\xc2\\xa7\\xc2\\xa7 6101-1606,\\n\\n> 15 USC. \\xc2\\xa7 6102(a)(1).\\n\\n* 15 US.C. \\xc2\\xa7 6106(4).\\n\\x0cMs. Karen Meyers\\nPage 2 of 3\\n\\nor more telephones and which involves more than one interstate telephone call.\\xe2\\x80\\x9d* The next\\nsentence of the definition then limits the Commission\\xe2\\x80\\x99s authority to apply the TSR to catalog\\nsales as follows:\\n\\nThe term does not include the solicitation of sales through the mailing of a\\ncatalog which: contains a written description or illustration of the goods or\\nservices offered for sale; includes the business address of the seller; includes\\nmultiple pages of written materials or illustrations; and has been issued not less\\nfrequently than once a year, where the person making the solicitation does not\\nsolicit customers by telephone but only receives calls initiated by customers in\\nresponse to the catalog and during those calls takes orders only without\\nSurther solicitation 6\\n\\nThe question you pose is whether this statutory exclusion prevents application of the TSR\\xe2\\x80\\x99s debt\\nrelief requirements to the business model described above.\\xe2\\x80\\x99 In staff's opinion, it does not and the\\nTSR would apply.\\n\\nThe statutory language unquestionably excludes legitimate mail order catalog sellers\\nfrom the requirements of the TSR when a consumer can complete his or her order during the\\ninitial call. For instance, this would occur when the seller takes the order, verifies payment, and\\ncompletes the sale before the consumer hangs up\\xc2\\xa7 In contrast, consumers cannot complete an\\norder for debt relief services during a call responding to a catalog offer under the business model\\nyou describe. The text of the exclusion specifies that it is available to a catalog seller when it\\n\\xe2\\x80\\x9ctakes orders only without further solicitation\\xe2\\x80\\x9d during a consumer\\xe2\\x80\\x99s call. By contrast, if the sales\\ntransaction cannot be completed during the call, the catalog sales exclusion would be\\nunavailable.\\n\\n* 15 U.S.C. 6106(4).\\n\\n\\xc2\\xa9 Id. (emphasis added). The definition of telemarketing in the TSR tracks the statutory\\nexclusion. 16 C.F.R. \\xc2\\xa7310.2(dd).\\n\\n7 Although the TSR generally exempts inbound calls initiated by a consumer in response to a\\ndirect mail solicitation, this exemption does not extend to calls in response to offers of \\xe2\\x80\\x9cdebt\\nrelief services,\\xe2\\x80\\x9d 16 C.F.R. \\xc2\\xa7 310.6(b)(6). The exemption also requires that a qualifying direct\\nmail solicitation disclose. \\xe2\\x80\\x98\\xe2\\x80\\x98all material information listed.in \\xc2\\xa7 310.3(a)(1),\\xe2\\x80\\x9d.rather.than deferring\\nthose disclosures to an enrollment packet sent to a consumer only after the call.\\n\\n\\xc2\\xae While we have been unable to find any discussion of the exclusion in the legislative history of\\nthe Act, there are multiple statements that Congress intended the Act to protect not only\\nconsumers but also legitimate businesses engaged in telemarketing. E.g., S. REP. NO. 103-80, at\\n2 (1993) (\\xe2\\x80\\x9cThe effects of telemarketing fraud are felt throughout the Nation, and both consumers\\nand legitimate telemarketers are impacted.\\xe2\\x80\\x9d); H.R. REP. NO. 103-20, at 2 (1993) (\\xe2\\x80\\x9cThe\\nlegislation strikes an equitable balance between the interest of stopping deceptive (including\\nfraudulent) and abusive telemarketing activities and not unduly burdening legitimate\\nbusinesses.\\xe2\\x80\\x9d\\xe2\\x80\\x9d); 140 CONG, REC. H6158-06 (1994) (statement of Rep. Swift) (\\xe2\\x80\\x9cThe telemarketing\\nbill does not impose further regulations on the legitimate telemarketing industry.\\xe2\\x80\\x9d).\\n\\x0cMs. Karen Meyers\\nPage 3 of 3\\n\\nFurthermore, because the communications between the consumer and seller go beyond\\nmere order taking, and must continue after the initial call to complete an order, the business\\nmodel you describe involves \\xe2\\x80\\x9cfurther solicitation\\xe2\\x80\\x9d and is therefore outside the scope of the\\nexemption. Indeed, the fact that the catalog you describe provides no prices for its debt relief\\nofferings makes it clear that the seller must engage in \\xe2\\x80\\x9cfurther solicitation\\xe2\\x80\\x9d during a consumer\\xe2\\x80\\x99s\\ninitial call. Without being able to determine the price of the seller\\xe2\\x80\\x99s debt relief plans from its\\ncatalog, consumers cannot be prepared to make a purchase when they call, much less decide\\nwhich of the seller\\xe2\\x80\\x99s plans to buy, in the absence of \\xe2\\x80\\x9cfurther solicitation.\\xe2\\x80\\x9d\\n\\nFor the foregoing reasons, it is staff's opinion that neither the statutory exclusion in the\\nTelemarketing Act, nor the parallel definition of \\xe2\\x80\\x9ctelemarketing\\xe2\\x80\\x9d in the TSR, shield a seller using\\nthe debt relief business model you describe from the requirement to comply with the debt relief\\nprovisions of the TSR. Any failure to comply with those provisions, including the prohibition in\\nsection 310.4(a)(5) against collecting any fees for debt relief services until the promised debt\\nrelief services have been provided? may subject the seller to an enforcement action seeking civil\\npenalties of up to $16,000 for each violation.\\xe2\\x80\\x9d\\n\\nPlease be advised that the views expressed in this letter are those of the FTC staff. They\\nhave not been reviewed. approved, or adopted by the Commission, and are not binding on the\\nCommission. However, they reflect the opinion of the staff charged with enforcement of the\\nTSR.\\n\\nRespectfully yours,\\n\\nWye, 2\\nMonica E. Vaca\\nActing Associate Director for Marketing Practices\\n\\n2 16 CFR. \\xc2\\xa7 310.4(a)(5).\\n\\n'\\xc2\\xae Civil penalties for trade regulation rule enforcement actions are authorized by 15 U.S.C.\\n\\n\\xc2\\xa7 5\\xc2\\xa2m)(1)(A). As required by the Federal Civil Penalties Inflation Adjustment Act of 1990\\n(FCPIAA), 28 U.S.C. 2461 note, as amended by the Debt Collection Improvement Act of 1996,\\nPublic Law 104-134, \\xc2\\xa7 31001(s)(1), 110 Stat. 1321-373, the penalty for violations of 15 U.S.C.\\n\\xc2\\xa7 5(m)(1)(A) was most recently adjusted for inflation in 2009. 74 Fed. Reg. 857 (lan. 9, 2009).\\n\\x0c\"","created_timestamp":"November 5, 2014","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/opinion-14-1\/opinion_14-1.pdf"}
{"text":"b'UNITED STATES OF AMERICA_\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nBureau of Consumer Protection\\nDivision of Enforcement\\nHampton Newsome\\nDirect Dial: (202) 326-2889\\nFax: (202) 326-2558\\nEmail: hnewsome@ftc.gov\\n\\nApril28, 2014\\n\\nMatt Sigler\\nTechnical Director\\nPlumbing Manufacturers International\\n1921 Rohlwing Road- Unit G\\nRolling Meadows, IL 60008\\nDear Mr. Sigler:\\nDepartment of Energy (DOE) staff has informed Plumbing Manufacturers International\\'s\\n(PMI\\'s) concerns about water use representations for dual-flush water closets. Specifically, you\\nhave raised questions about whether manufacturers may make dual-flush volume disclosures not\\nspecifically generated by DOE\\'s test procedure. As discussed below, in the FTC staffs view,\\nmanufacturers may provide such information as long as the representations are not deceptive and\\notherwise comply with the provisions of the Energy Policy and Conservation Act (EPCA).\\nBackground\\nDual-flush water closets have two water use settings: a \"full-flush mode\" and a \"reduced\\nflush mode.\" Like other plumbing products, these products must meet DOE\\'s water\\nconservations standards (10 CFR 430.32(q)) (e.g., 1.6 gallons::-per-flush in full-flush mode). To\\ndemonstrate compliance, manufacturers must test their models pursuant to DOE\\'s test\\nprocedures (1 0 CFR Part 430, subpart B, appendix T). For dual-flush water closets, these\\nprocedures provide a method for manufacturers to measure both full-flush and reduced-flush\\nvolumes \"in accordance with the test requirements specified in section 7 .4, Water Consumption\\nTest, of ASME A112.19.2-2008.\"\\nIn the marketplace, manufacturers and other sellers routinely describe the performance of\\ntheir dual-flush models using a weighted average (i.e., one full and two reduced flushes). The\\nDOE test procedure makes no mention of this weighted average disclosure. However, various\\nstate and federal agencies (e.g., the Environmental Protection Agency\\'s Water Sense Program\\nand the State of California) use this formula as the primary tool for demonstrating compliance\\nwith their water efficiency programs. In addition, voluntary consensus standards adopted by the\\nplumbingindustry (see section 7.4 of ASME A112.19.2) use the same formula. For several\\nyears, manufacturers have disclosed the weighted average on specification sheets, packaging,\\ninstallation guides, use and care manuals, packaging, tip sheets, websites, and other media for\\n\\n\\x0cPage 2\\ndual-flush water closets.\\n\\nRepresentations under EPCA\\nUnder EPCA (42 U.S.C. 6293(c)), manufacturers cannot make water use claims for a\\nproduct covered by DOE\\'s standards and test procedures \"unless such pr~duct has been tested in\\naccordance with such test procedure and such representation fairly discloses the results of such\\ntesting.\" A violation of this restriction constitutes an \"unfair or deceptive act or practice\" under\\nthe Federal Trade Commission Act (\"FTC Act\"). 1 In essence, this requirement promotes\\nuniformity in water use claims and helps consumers make meaningful comparisons of competing\\nplumbing products. 2 However, EPCA does not prohibit marketers from disseminating truthful,\\nsubstantiated water information derived from sources other than the DOE tests if that\\ninformation is not otherwise unfair or deceptive.\\n\\nRepresentations for Dual-Flush Water Closets\\nAlthough not established by the DOE test, truthful weighted dual-flush ratings can\\nprovide useful information for consumers and others. Indeed, as noted above, certain state and\\nfederal agencies use this information for their programs. Without evidence that weighted dualflush ratings are categorically unfair or deceptive, FTC staff believes that there is no basis for a\\nblanket prohibition against disclosing these averages.\\nAlthough the use of weighted dual-flush ratings generally is permissible, manufacturers\\nand other marketers should exercise care in how they explain and disseminate these ratings to\\navoid deception. If marketers fail to adequately explain these ratings, they risk blurring the\\ndistinction between the dual-flush average rating (e.g., \"average 1.28 gpf\\') and the maximum\\nflush volume generated by the DOE requirements (e.g., \"1.6 gpf\\'). In addition, in the absence of\\nadequate explanation of the weighted dual-flush rating, consumers may not understand that the\\naverage is weighted toward lower flush volume. Accordingly, FTC staff recommends that, if\\nmarketers choose to disclose weighted average flush volumes, they should consider providing\\nclear and conspicuous disclosures to avoid possible deception. 3 However, without information\\nabout how consumers interpret ave~age flush volume claims, FTC staff cannot provide any more\\nspecific guidance on the content of such disclosures.\\n\\n*\\n1\\n\\n*\\n\\n*\\n\\n*\\n\\n*\\n\\nSee 42 U.S.C. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 6293(c) (EPCA) and 15 U.S.C. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 45(a)(l) (Section 5 ofthe FTC Act). Section\\n5 of the FTC Act generally prohibits false and misleading statements made in advertising and\\nother representations.\\n2\\nThe scope of representations covered by EPCA Section 6293(c) is broad. In the staffs view,\\nthe provision covers not only representations made in conventional advertising but also\\ninformation provided in directories, reports, catalogs, and other publications not necessarily\\nintended for end-use consumers. Because EPCA covers any water-related representations, the\\ncoverage of this section is not dependent on whether representations are made directly to\\n\\'\\'consumers.\\'\\'\\n3\\nFor ratings marked on the products themselves, manufacturers should also consider whether\\nenough space exists to adequately explain average flush volume disclosures.\\n\\n\\x0cPage 3\\n\\nThe views expressed in this letter are those of FTC staff assigned to enforce the\\nCommission\\'s Energy Labeling Rule (16 C.F.R. Part 305). In accordance with Section 1.3(c) of\\nthe Commission\\'s Rules of Practice and Procedure, 16 CFR \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 1.3(c), this is a staff opinion only\\nand has not been reviewed or approved by the Commission or by any individual Commissioner.\\nThe advice provided in this letter is not binding upon the Commission and is given without\\nprejudice to the right of the Commission later to rescind the advice and, when appropriate, to\\ncommence an enforcement proceeding. In conformance with Section 1.4 of the Commission\\'s\\nRules of Practice, 16 CFR \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 1.4, this letter is being placed on the public record. If you have any\\nfurther questions, please contact me at (202) 326-2889.\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-hampton-newsome-staff-attorney-division-enforcement-bureau-consumer-protection\/140428newsomeletter.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nHealth Care Division\\nBureau of Competition\\n\\nMarch 7, 2014\\nJames L. S. Cobb\\nWyrick Robbins Yates & Ponton LLP\\n4101 Lake Boone Trail, Suite 300\\nRaleigh, North Carolina 27607\\n\\nRe: Quest NPIA Advisory Opinion\\nDear Mr. Cobb:\\nThis letter responds to your request for an advisory opinion on whether a group purchasing\\norganization based prescription-drug program that Quest Analytics Group intends to operate for\\nthe benefit of a group of non-profit schools, colleges, and universities would fall within the NonProfit Institutions Act (\"NPIA\"). 1 As we understand it from your letter and from our conversations with you, schools, colleges, and universities have asked Quest to design the program to\\nhelp them address the increasing cost of specialty drugs? Based on the information that you\\nprovided, we conclude that, subject to certain caveats set forth below, the NPIA exemption\\napplies to the purchase of specialty drugs through Quest\\'s proposed program by the educational\\ninstitutions identified below.\\n\\nDescription of the Proposed Program\\nWe understand from your letter that Quest develops and distributes audit, sourcing, group\\npurchasing organization, and technology lease services. It also designs and implements audit and\\npurchasing tools for hospitals, insurance companies, long-term care facilities, and self-funded\\nemployer groups 3\\nThe Independent Colleges and Benefits Association (\"the Association\"), which is a health-care\\ncooperative serving Florida non-profit educational institutions,4 has obtained audit and strategy\\n1\\n\\n15 U.S.C. \\xc2\\xa7 13c. The NPIA exempts from the Robinson-Patman Act \"purchases of ... supplies for their own use\\nby schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions not operated for\\nprofit.\"\\n2\\n\\nSee Letter from James L.S. Cobb, Wyrick Robbins Yates & Ponton LLP, to DonaldS. Clark, Federal Trade\\nCommission, I, 3 (Jan. 10, 2014) (hereinafter \"Quest Request Letter\").\\n3\\n\\nSee Quest Request Letter, at 2.\\n\\n4\\n\\nSee http:\/\/www.icuba.org (viewed Jan. 16, 2014): Quest Request Letter, at 3.\\n\\n\\x0cQuest NPIA Advisory Opinion\\nMarch 7, 2014\\nPage 2\\nconsulting services from Quest since 2010. 5 As you have explained, the Association approached\\nQuest in 2012 to obtain assistance in controlling specialty-drug costs for its member institutions 6\\nIn response to the Association\\'s request, Quest proposes to establish and operate a prescriptiondrug benefit program 7 to enable certain non-profit educational institutions (collectively the\\n\"educational institutions\") to benefit from the NPIA exemption. Those educational institutions\\nare Arthur I. Meyer Jewish Academy, Barry University, Beacon College, The Bolles School,\\nCentral Florida Area Health Education Center, Clearwater Christian College, Corbett Preparatory\\nSchool of IDS, Edward Waters College, Everglades Area Health Education Center, Florida\\nInstitute of Technology, Florida Memorial University, Good Shepard Episcopal School, Nova\\nSoutheastern University, Palm Beach Atlantic University, The Poynter Institute, Rollins College,\\nSaint Edward\\'s School, Saint Leo University, Saint Mark\\'s Episcopal Day School, Saint Paul\\'s\\nSchool, San Jose Episcopal Day School, Tampa Preparatory School and The University of\\nTampa. 8 Only the educational institutions\\' employees, retirees, and their dependents (the\\n\"members\") will be eligible to participate in the program. All of the educational institutions\\ncurrently provide health programs with prescription-drug benefits to their members, but these\\nprograms do not include NPIA-discounted drugs 9 The program\\'s goal is to allow the educational\\ninstitutions to access NPIA pricing when that pricing is the least expensive option. 10\\nUnder the proposed program, Quest will (I) negotiate discounts with specialty-drug\\nmanufacturers for the educational institutions\\' specialty-drug needs, (2) audit claims to\\ndetermine whether any are eligible for NPIA-discount pricing and to monitor compliance with\\npharmacy benefits manager (\"PBM\") contracts, (3) request rebates from specialty\\npharmaceutical manufacturers when the NPIA price is the lowest available price, and (4) provide\\nreports to the educational institutions on claims volumes, rebates received, and other data points.\\nQuest will not be purchasing any specialty drugs itself. 11\\nTo implement the program, Quest will engage the services of pharmacies and PBMs. 12 The\\nprogram\\'s initial pharmacy will be NSU Clinic Pharmacy, a non-profit pharmacy affiliated with\\n5\\n\\nSee Quest Request Letter, at 3, 6.\\n\\n6\\n\\nSee Quest Request Letter, at 3.\\n\\n7\\n\\nWe understand from your letter and from our discussions with you that the program is modeled on, though not\\nidentical to, the program described in our 2010 advisory opinion to the University of Michigan.\\n\\n8\\n\\nSee Quest Request Letter, at 2.\\n\\n9\\n\\nSee Quest Request Letter, at 2.\\n\\n10\\n\\nSee Quest Request Letter, at 3.\\n\\n11\\n\\nSee Quest Request Letter, at 6.\\n\\n12\\n\\nYau state that Quest may add additional educational institutions. pharmacies, and PBMs to the program at a later\\ntime. As explained further below, this opinion only applies to the program as currently structured and described in\\nyour January 10, 2014 letter.\\n\\n\\x0cQuest NPIA Advisory Opinion\\nMarch 7, 2014\\nPage 3\\nNova Southeastern University. Catamaran PBM of Illinois (\"Catamaran\") will be the program\\'s\\ninitial PBM. 13 The program will work as follows:\\n\\xe2\\x80\\xa2\\n\\nThe pharmacy will fill members\\' prescriptions by mail or retail distribution, collect copays, execute best practice customer service, manage the cost of the claims for the\\neducational institution, and submit claims to the PBM for processing and payment.\\n\\n\\xe2\\x80\\xa2\\n\\nUpon receipt of the claims, the PBM will reimburse the pharmacy for the prescriptions\\ndispensed to program members at the pharmacy\\'s billed costs plus a dispensing fee. The\\ndispensing fee will be a flat fee not dependent on the type of claim (NPIA or not)\\nprocessed.\\n\\n\\xe2\\x80\\xa2\\n\\nThe applicable educational institution then will pay the PBM, per its contract, for the cost\\nof the drugs plus the dispensing fee paid to the pharmacy. Any administrative fees\\ncharged by the PBM will also be flat fees not dependent on the type of claim (NPIA or\\nnot) processed.\\n\\n\\xe2\\x80\\xa2\\n\\nThe PBM periodically will provide the educational institutions\\' claims data to Quest, and\\nQuest, using its proprietary algorithms, will compare prices already paid by the\\neducational institutions with the NPIA-discounted rate available through the group\\npurchasing organization from manufacturers with which Quest has negotiated discounts.\\n\\n\\xe2\\x80\\xa2\\n\\nIf Quest determines the NPIA-discounted rate is lower than the rate already paid, Quest\\nwill submit a claim to the manufacturer to rebate the difference in the rates directly to the\\neducational institution or place it in a non-interest bearing escrow account administered\\nby a bank for distribution to the educational institution.\\n\\nThe program\\'s goal, in other words, is to allow the educational institutions to obtain the NPIA\\nprice, where that price is the lowest price available, thereby reducing the cost educational\\ninstitutions incur for health-benefits programs. 14\\n\\nAnalysis\\nThe NPIA exemption is limited to certain eligible non-profit entities\\' purchases of supplies for\\ntheir own use. Thus, our analysis of whether Quest\\'s proposed program is eligible for the NPIA\\nexemption requires us to determine (I) whether those educational institutions for whose benefit\\nthe proposed program will operate are eligible entities under the statute, and (2) whether the\\nNPIA-discounted pharmaceuticals are properly considered \"supplies\" for the educational\\n\\n13\\n\\nSee Quest Request Letter, at 3.\\n\\n14\\n\\nSee Quest Request Letter, at 3-4.\\n\\n\\x0cQuest NPIA Advisory Opinion\\nMarch 7, 2014\\nPage 4\\ninstitutions\\' \"own use.\" 15 Additionally, because the proposed program also involves various forprofit entities, including Quest and Catamaran, we address whether these entities affect eligibility\\nfor the exemption through their involvement in the proposed program.\\n1. The Educational Institutions\\' Eligibility for the NPIA Exemption\\n\\nThe NPIA exempts from the Robinson-Patman Act \"purchases of ... supplies for their own use\\nby schools, colleges, universities, public libraries, churches, hospitals, and charitable institutions\\nnot operated for profit.\" 16 You represent in your letter that the educational institutions are all\\nnon-profit schools, colleges, or universities. 17 Thus, as the types of eligible entities specifically\\nlisted in the language of the statute, the educational institutions appear to be eligible for the\\nNPIA exemption to the Robinson-Patman Act. 18\\n2. The \"Supplies\" and \"Own Use\" Requirements\\n\\nWe next examine whether the proposed program involves the purchase of \"supplies\" for the\\neducational institutions\\' \"own use\" as required by the statute. Courts have construed the term\\n\"supplies,\" as used in the NPIA, broadly to include \"anything\" required to meet the eligible\\ninstitution\\'s needs. 19 The term \"own use\" means use by an eligible entity \"that is part of and\\npromotes the [entity\\'s] intended institutional operation.\"20\\nAs you explain, the educational institutions currently provide health-insurance plans with a\\nprescription-drug benefit to their employees, retirees, and their dependents. Continuing to offer\\nthis program as an employee benefit contributes to their ability to attract and maintain a capable\\nand healthy workforce. We reached similar conclusions in our 20 I 0 University of Michigan and\\n15\\n\\n15 U.S.C. \\xc2\\xa7 l3c.\\n\\n16\\n\\n15 U.S.C. \\xc2\\xa7 l3c.\\n\\n17\\n\\nOur understanding is that they are either specifically incorporated as non-profits or to the extent they are not\\nexplicitly incorporated as non-profits (some because their organization predates such statutory requirements), they\\nhave all the indicia of non-profit entities. For instance, they operate for the advancement of education, do not operate\\nfor the profit of any individual, and maintain 50 l ( c)(3) classifications under the federal tax code. See Quest Request\\nLetter, at 4 (fu. 8). Additionally, we understand that the two Health Education Centers are non-profit 50l(c)(3)\\norganizations affiliated with Nova Southeastern University and established to extend health education and resources\\nto Florida\\'s underserved communities. See Quest Request Letter, at 2 (fn. 4); http:\/\/tlahec.org (visited Jan. 17,\\n2014). It seems to us that these entities, based on their affiliations with local universities and their educational\\nmissions, could qualify as schools under the NPlA and that, in any event, they likely qualify as non-profit\\n\"charitable\" institutions.\\n\"15 U.S.C. \\xc2\\xa7 13c.\\n19\\n\\nSee Logan Lanes v. Brunswick Corp., 378 F.2d 212,216 (91\" Cir. 1967), cert. denied, 389 U.S. 893 (1967); see\\nalso Abbott Lab. v. Portland Retail Druggists Ass \\'n, 425 U.S. I, 5 (1976) (noting that the district court had ruled\\nthat purchases of pharmaceuticals by the hospitals were purchases of\"supplies\" for the hospitals\\' \"own use.\").\\n20\\n\\n425 U.S. l, at 16 (1976).\\n\\n\\x0cQuest NPIA Advisory Opinion\\nMarch 7, 2014\\nPage 5\\n2006 Alpena Public Schools advisory opinions 21 In those opinions, we noted that employees\\nenable schools, colleges, and universities to carry out their educational missions. The availability\\nof health benefits, including a prescription-drug benefit, has become a critical consideration in an\\nindividual\\'s employment decision-making process, and as such, the continued availability of\\nthese plans is essential to the educational institutions\\' ability to attract and retain the employees\\nnecessary to carry out their institutional purposes. Providing a prescription-drug benefit to\\nemployees also promotes an organization\\'s efficient operation by making medicine more\\naffordable and accessible to its employees, thereby improving their health and reducing\\nemployee absences.\\nWe believe that this analysis is consistent with the Supreme Court\\'s decision in Abbott Laboratories v. Portland Retail Druggists Association. 22 In Abbott Laboratories, retail pharmacies\\nsued pharmaceutical manufacturers under the Robinson-Patman Act, challenging the discounted\\nsale of pharmaceuticals to non-profit hospitals. The hospitals resold those discounted phannaceuticals to various types of patients. The Court held that pharmaceuticals purchased for resale to\\nhospital employees and their dependents were covered by the NPIA, because the employees were\\nessential for the hospital to function. In the Court\\'s view, providing them with pharmaceuticals\\nenhanced the hospital\\'s operation. 23 Thus, consistent with Abbott Laboratories and with prior\\nFTC staff advisory opinions, we find that the educational institutions\\' provision of discounted\\npharmaceuticals to their employees and their dependents as part of their programs of providing\\nemployee benefits would be covered by the NPIA exemption. It contributes to their ability to\\nmaintain the workforce necessary to further their educational missions.\\nFurther, we conclude that including retirees in the proposed program does not affect eligibility\\nfor the NPIA exemption. As we explained in our University of Michigan advisory opinion,\\nretiree benefits are an integral part of the compensation package offered to current and\\nprospective employees and may help the educational institutions attract and retain qualified\\nemployees. In this regard, providing a prescription pharmaceutical benefit to retirees furthers the\\neducational institutions\\' missions just as in the case of current employees. Thus, it is our view\\nthat application of the NPIA discount to retirees\\' prescription-drug claims as part of an\\nestablished retirement benefit plan is within the educational institutions\\' \"own use\" in the same\\nway as it is for current employees\\' claims. 24\\nFinally, we do not think the fact that the educational institutions will access the NPIA discount\\nthrough a rebate program, rather than through the actual transfer of NPIA -discounted\\npharmaceuticals, affects the analysis. In fact, a rebate program seems to mitigate the risk that\\n21\\n\\nSee University of Michigan (Apr. 9, 2010) (FTC staff opinion letter); Alpena Public Schools (May 22, 2006)\\n(FTC staff opinion letter). See also Valley Baptist Medical Center (Mar. 31, 2003) (FTC staff opinion letter).\\n22\\n\\n415 U.S. 1 (1976).\\n\\n23\\n\\n!d. at 16.\\n\\n24\\n\\nSee University of Michigan (Apr. 9, 2010) (FTC staff opinion letter).\\n\\n\\x0cQuest NPIA Advisory Opinion\\nMarch 7, 2014\\nPage 6\\nNPIA-discounted pharmaceuticals could be inappropriately diverted for ineligible uses, because\\nthe rebate system will ensure that the NPIA discount is only applied after Quest determines a\\nclaim is NPIA eligible.\\n\\n3. The Involvement of For-Profit Entities\\nThe proposed program will involve a number of for-profit entities, initially including Quest and\\nCatamaran and potentially expanding to include other for-profit PBMs and pharmacies. Although\\nthe involvement offor-profit entities does not automatically disqualify the program for NPIA\\neligibility, it does require caution to ensure that the for-profit entities--which are ineligible for\\nthe NPIA exemption--do not benefit from it in any way. 25\\nFirst, we address Quest\\'s role to develop and implement the proposed program. As we\\nunderstand it, Quest developed the program at the request of the NPIA-eligible educational\\ninstitutions. Those institutions were concerned about the rising cost of continuing to provide a\\nhealth-benefit plan that includes specialty-drug coverage. They asked Quest, which already\\nprovided them with certain services through the Independent Colleges and Benefits Association,\\nfor assistance, and Quest proposed this program. As explained above, Quest\\'s role in the\\nprogram is limited to negotiation of discounts, claims auditing, rebate processing, and data\\nreporting. The educational institutions will pay Quest for these services on a flat-fee-per-claim\\nbasis whether or not Quest determines the claim is NPIA eligible. 26 Quest will not charge any\\nmembership fees for participation in the proposed program nor will it charge the educational\\ninstitutions a percent-of-dollars-spent on group purchasing organization services. Thus, any\\nfinancial benefit Quest receives under the program will be in exchange for its administrative\\nservices only and will not result from the application of the NPIA discount. This is a critical\\nfeature of the program because Quest, as a for-profit entity, is ineligible to benefit in any way\\nfrom the NPIA exemption. The exemption applies only to the eligible educational institutions.\\nFurthermore, we understand that Quest may seek to add additional educational institutions to the\\nprogram or otherwise expand it at some time in the future. This advisory opinion only addresses\\nQuest\\'s proposal in its current form. Any changes or additions to the proposed program would\\nalso need to comply with the NPIA.\\nNext, we examine the role of Catamaran, the for-profit PBM, and the possible eventual inclusion\\nof for-profit pharmacies in the proposed program. Again, we understand that the PBMs and\\npharmacies involved in the program will provide only administrative services to the educational\\ninstitutions. Fees earned by Catamaran and the pharmacies will cover only their costs and a flat\\nfee that does not depend on the NPIA eligibility of the claim. Thus, as we understand the\\nprogram, neither Catamaran nor any for-profit pharmacy that may participate in the program\\nstands to benefit from the NPIA exemption. If, however, over the course of the program\\'s\\n25\\n\\nWe also note that Independent Colleges and Benefits Association, though not a for-profit entity, does not appear\\nto quality as one of the types of entities eligible for the exemption.\\n\\n26\\n\\nSee Quest Request Letter, at 6.\\n\\n\\x0cQuest NPIA Advisory Opinion\\nMarch 7, 2014\\nPage 7\\noperation, it turns out that any ineligible for-profit entity (e.g., Quest, Catamaran, or a pharmacy)\\nis benefitting financially from the NPIA exemption, the reasoning contained in this opinion\\nwould not apply.\\nFinally, we understand that the structure of the proposed program, whereby Quest will confirm\\neach claim\\'s eligibility for the NPIA discount before arranging the rebate, should effectively\\neliminate the risk of the exemption being applied to ineligible claims such as walk-in customers.\\nIn any event, Quest will maintain an auditable record through which it will confirm on an\\nongoing basis that the program is operating within the boundaries of the NPIA. 27\\n\\nConclusion\\nAs discussed above, and with the noted caveats, it is our opinion that the non-profit educational\\ninstitutions\\' purchases of specialty drugs through Quest\\'s proposed program as described in your\\nJanuary 10, 2014 letter would fall within the NPIA exemption to the Robinson-Patman Act. This\\nletter sets out the views of the staff of the Bureau of Competition, as authorized by the Federal\\nTrade Commission\\'s Rules of Practice, and based on the facts as presented by the requesting\\nentity. Under Rule\\xc2\\xa7 !.3(c), 16 C.F.R. \\xc2\\xa7 l.3(c), the Commission is not bound by this staff\\nopinion and reserves the right to rescind it at a later time. In addition, this office retains the right\\nto reconsider the questions involved and, with notice to the requesting party, to rescind or revoke\\nthe opinion if implementation of the proposed program results in substantial anti competitive\\neffects, if the program is used for improper purposes, if facts change significantly, or if it would\\nbe in the public interest to do so.\\nSincerely,\\n\\nMarkus H. Meier\\nAssistant Director\\n\\n27\\n\\nSee Quest Request Letter, at 7.\\n\\n\\x0c'","created_timestamp":"March 7, 2014","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/quest-analytics-group\/140310queststaffadvisoryletter.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFederal Trade Commission\\nWashington, D.C. 20580\\n\\nMichael J. Bloom\\nAssistant Director\\nBureau of Competition\\nOffice of Policy & Coordination\\nPhone: (202) 326-2475\\nEmail: mjbloom@ftc.gov\\n\\nSeptember 4, 2013\\nEzra C. Levine, Esq.\\nMorrison & Foerster LLP\\n2000 Pennsylvania Avenue, NW\\nWashington, D.C. 20006\\nDear Mr. Levine,\\nThis letter responds to your request on behalf of The Money Services Round\\nTable (\"TMSRT\") for an advisory opinion concerning TMSRT\\'s proposal to collect and\\ndisseminate certain information regarding terminated United States money transmitter\\nagents. TMSRT wishes to know whether Federal Trade Commission (\"FTC\" or\\n\"Commission\") staff is likely to recommend an enforcement action, challenging the\\ninformation exchange as an anticompetitive restraint of trade.\\nBased on the information you provided, 1 FTC staff has no present intention of\\nrecommending law enforcement action. As discussed below, the stated purpose of the\\nproposed information exchange is to improve money transmitters\\' ability to evaluate\\nprospective United States agents and to comply with federal and state money laundering\\nand other laws, and there appears to be little or no potential for competitive harm\\nassociated with the information exchange. Our conclusions, however, are entirely\\ndependent on the completeness and accuracy of the information you provided to us, and\\non our understanding ofthe pertinent facts, as described below. Should there be\\ninformation that we are unaware of that qualifies, modifies or contradicts this\\ninformation, or should the proposed information exchange materially change in the\\nfuture, we may change our law enforcement recommendations accordingly.\\n\\n1\\n\\nOur analysis and conclusions rely on your representations to staff, including those made in\\ncorrespondence you provided to us on July 25,2013 (which superseded an earlier June 14,2013 letter), as\\nwell as those made during our telephone conversations with you and your colleague, Sean Ruff. We have\\nnot conducted an independent investigation or otherwise verified the information that you provided.\\n\\n\\x0cEzra C. Levine, Esq.\\nSeptember 4, 2013\\nPage 2 of6\\nStatement of the Pertinent Facts\\nTMSRT is a trade association comprised of six licensed national money\\ntransmitters (hereinafter \"TMSRT Participants\"). 2 Money transmitters are non-bank\\nentities that transfer funds from one individual or institution to another by wire, check,\\ncomputer network, or other means. TMSRT Participants are the largest money\\ntransmitters in the United States by volume and revenue, and offer money transfer\\nservices to consumers through a network of agents located in cities across the United\\nStates and abroad.\\nUnder the money transmitter agent model, money transmitters enter into agent\\nservice agreements with commercial entities, such as neighborhood grocery stores,\\nconvenience stores, liquor stores, and check casher services, which seek to add money\\ntransmission services to their existing inventory of consumer products and services?\\nAgents serve as the point of contact for the money transmitter with the public, and act\\npursuant to express contractual authority and the pertinent state\\'s money transmitter law. 4\\nMoney transmitters pay their agents a commission based on a percentage of their revenue\\n-that is, the transaction fees charged to consumers to transfer funds. The commission\\nmay be split between the sending agent (i.e., the agent that initiated the transaction) and\\nthe receiving agent (the agent that paid the transaction). Agents frequently migrate among\\nmoney transmitters to obtain higher commissions and other benefits. 5\\nA typical money transmission requires four parties: the sender, the money\\ntransmitter\\'s sending agent, the money transmitter\\'s receiving agent, and the recipient. 6 A\\nsender walks in to one of the money transmitter\\'s agent locations and provides the agent\\nthe funds and instructions for delivery to the recipient, as well as the fee established by\\nthe money transmitter for the transmission service. 7 The sending agent takes the funds\\nand instructions, and enters the transaction information into a computer terminal owned\\nby the money transmitter. 8 Upon receiving the instructions, the money transmitter\\ncontacts the appropriate receiving agent for payment to the recipient.\\nRecipients may receive payment within several minutes or several days,\\ndepending on the sender\\'s instructions, the money transmitter\\'s policies, and the\\n\\n2\\n\\nTMSRT members include Western Union Financial Services, Inc.; MoneyGram Payment Systems, Inc.;\\nAmerican Express Travel Related Services Co., Inc.; RIA Financial Services; Sigue Corporation; and\\nIntegrated Payment Systems, Inc. Letter from Ezra C. Levine, Morrison & Foerster LLP, to DonaldS.\\nClark, Secretary, Fed. Trade Comm\\'n (July 25, 2013) (\"July 25 Letter\") at 1.\\n3\\nJuly 25 Letter at 2.\\n4\\n\/d. Nearly every state regulates money transmission services through licensing requirements.\\n5 !d.\\n6\\n!d. at 2-3. All United States money transmitter agents are contractually obligated to send and receive\\ntransmissions.\\n7\\n!d. at 3.\\n8\\n\/d. Transmissions also may occur by telephone, facsimile or other means.\\n\\n\\x0cEzra C. Levine, Esq.\\nSeptember 4, 2013\\nPage 3 of6\\nreceiving agent\\'s location and availability. In certain instances, the money transmitter\\nmay remit payment to the recipient before receiving the funds from the sending agent. 9\\nFor example, the sending agent may not have transferred (deposited) the funds before the\\nappointed transmission time. Alternatively, the sending agent may have fraudulently\\nwithheld the funds from the money transmitter. 10\\nBoth agent fraud and reliability concerns have prompted many money transmitters\\nto vet prospective agents by conducting background checks. 11 In addition, money\\ntransmitters are obligated to perform due diligence on prospective agents under various\\nfederal and state laws designed to prevent money laundering, terrorist financing, and\\nother criminal behavior. 12\\n\\n1. Federal Regulation\\nThe Currency and Foreign Transactions Reporting Act (commonly referred to as\\nthe \"Bank Secrecy Act\" or \"BSA\") 13 requires money transmitters, banks, and other\\nfinancial institutions to maintain certain records and to file certain reports, which are used\\nby law enforcement agencies to prevent and detect money laundering, terrorist financing,\\nand other crimes. 14 In addition, the BSA requires money transmitters to develop and\\nimplement an \"effective anti-money laundering program reasonably designed to prevent\\n[the money transmitter] from being used to facilitate money laundering and the financing\\nof terrorist activities.\" 15 An effective anti-money laundering program includes\\n\"evaluat[ing] the suitability of prospective agents,\" which means that money transmitters\\nthat contract with agents must conduct \"reasonable, risk-based due diligence* * *to help\\nensure that such agents themselves are not complicit in illegal activity.\" 16\\n2. State Regulation\\nNearly every state regulates money transmitters through licensing laws. In\\naddition, several states have enacted statutes or implemented regulations that make\\nviolations of the BSA a state violation. 17 Certain states also require money transmitters to\\n\\n9\\n\\n!d. at 3.\\nSee id.\\n\\n10\\n\\nllld.\\n\\n!d.\\nCurrency and Foreign Transactions Reporting Act, 31 U.S.C. \\xc2\\xa7\\xc2\\xa7 5311-5314, 5316-5322 (2013).\\n14\\nJuly 25 Letter at 3.\\n15\\nJd. (citing Rules for Money Services Businesses, 31 C.F.R. \\xc2\\xa7 1022.210(a) (2013)).\\n16\\nJd. at 4 (citing Financial Crimes Enforcement Network (\"FinCEN\") Interpretive Release 2004-1, AntiMoney Laundering Program Requirements for Money Services Businesses With Respect to Foreign Agents\\nor Foreign Counterparties, 69 Fed. Reg. 74,439, 74,440 (Dec. 14, 2004)). FinCEN, a bureau of the United\\nStates Department of Treasury, is authorized to implement and administer the regulations under the BSA.\\n17\\nJd. at 5 (citing, as an example, Wash. Rev. Code\\xc2\\xa7 19.230.180, which requires \"every licensee and its\\ndelegates [to] file all reports required by federal currency reporting, recordkeeping, and suspicious\\ntransaction reporting requirements * * * and other federal and state laws pertaining to money laundering\").\\n12\\n13\\n\\n\\x0cEzra C. Levine, Esq.\\nSeptember 4, 2013\\nPage 4 of6\\nconduct \"risk-based background investigations\" of prospective agents to determine\\nwhether such agents have \"complied with applicable state and federal law, including laws\\ndealing with fraud and other criminal activities harmful to consumers.\" 18\\n3. The Proposed Information Exchange\\nSpurred, in part, by these federal and state requirements, TMSRT proposes an\\ninformation exchange that will consist of a database developed, maintained, and secured\\nby an independent third-party vendor. 19 The database will contain information regarding\\nformer United States sending and receiving agents whose contractual relationships were\\nterminated due to failure to comply with federal and\/or state law, or money transmitter\\ncontract terms or policies? 0 Exchange membership will be open to all licensed non-bank\\nmoney transmitters, and will include TMSRT Participants. 21 Participation in the\\ninformation exchange will be voluntary, 22 and each member of the information exchange\\n(\"Exchange Member\") will retain the right to decide unilaterally whether to appoint an\\nagent that has been terminated by another Exchange Member (and thus included in the\\ndatabase). 23\\nPer your correspondence and conversations with staff, the following information will\\nbe collected and made available in the Exchange Member database:\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\nthe name of the Exchange Member that supplied the terminated agent\\ninformation;\\nthe agent\\'s name(s), address, telephone number, and business tax identification\\nnumber (including any name under which the agent is doing business);\\nthe name, address, telephone number, and individual or business tax identification\\nnumber of any individual or entity that owns more than ten percent of the agent;\\nthe name, addresses, telephone number, and tax identification number or social\\nsecurity number of any other principal, including executive officers, directors, and\\nmanagers;\\nthe date of termination; and\\nthe reason( s) for termination.\\n\\nOnce an agent has been added to the database, the third-party vendor will notify the agent\\nin writing and provide the agent, upon the agent\\'s request, a copy of its database record? 4\\nExchange Members will be under a continuing obligation to update any information\\nsubmitted to the exchange and to correct any errors? 5\\n18\\n\\nI d.\\nI d.\\n20\\nJd.\\n21\\nJd.\\n22\\nJd.\\n23\\nI d.\\n24\\nI d.\\n25 Jd.\\n19\\n\\n(citing, as examples, Tex. Fin. Code \\xc2\\xa7 151.402(b) and Fla. Stat. \\xc2\\xa7 560.1235).\\nat 6, 8.\\nat 6-7.\\nat 1.\\nat 8.\\nat 6, 8.\\nat 7.\\n\\n\\x0cEzra C. Levine, Esq.\\nSeptember 4, 2013\\nPage 5 of6\\n\\nAnalysis of the Proposed Information Exchange\\nTMSRT\\'s proposal contemplates a type of information exchange among\\ncompetitors? 6 Both the United States Department of Justice and the Commission have\\nrecognized that information exchanges among competitors may be competitively neutral\\nor even procompetitive? 7 However, certain information exchanges among competitors\\nmay violate Section 1 of the Sherman Act, which prohibits a \"contract, combination * * *\\nor conspiracy\" that unreasonably restrains trade. 28 The antitrust concern is that the\\ninformation exchange may facilitate anticompetitive harm by advancing competitors\\'\\nability to collude or tacitly coordinate in a manner that lessens competition.\\nUnder the antitrust laws, information exchanges among competitors generally are\\nexamined under the \"rule of reason. \" 29 The \"rule of reason\" is a method of antitrust\\nanalysis that distinguishes legitimate information exchanges from illegal ones by\\nbalancing the information exchange\\'s anticompetitive effects with its efficiencies and\\nother procompetitive benefits. Various criteria are considered in assessing the legality of\\nan information exchange, including the nature and quantity of the information shared, the\\nparties\\' intent in sharing the information, and how the information exchange is structured\\nand controlled. 30\\nBased on the information you provided, TMSRT\\' s proposed exchange does not\\nappear likely to facilitate collusion or anticompetitive refusals to deal, or to otherwise\\nrestrict competition. To the contrary, the information exchange has the potential to\\ngenerate efficiencies that benefit consumers. Our assessment is based on a number of\\nfactors.\\nFirst, the goals of the information exchange do not appear to be either directly or\\nindirectly anticompetitive, or designed to further coordination among United States\\nmoney transmitters with regard to any significant competitive factor, such as the\\ncommission rates paid to agents for completing money transfer services. Given that the\\ninformation sharing is unlikely to facilitate coordination on a significant competitive\\n26\\n\\nWithout performing a formal market defmition exercise, it is not possible to know whether or to what\\nextent Exchange Members are actual competitors. Nonetheless, for purposes of this analysis, we assume\\nthat Exchange Members are competitors, at least with respect to one or more relevant United States\\nmarkets.\\n27\\nU.S. DEP\\'T OF JUSTICE AND FED. TRADE COMM\\'N, ANTITRUST GUIDELINES FOR COLLABORATIONS\\nAMONG COMPETITORS (2000), available at http:\/\/www.ftc.gov\/os\/2000\/04\/ftcdojguidelines.pdf (hereinafter\\nthe \"Collaboration Guidelines\"). The Collaboration Guidelines provides a general outline of the analytical\\nframework for evaluating collaborations among competitors.\\n28\\n15 U.S.C. \\xc2\\xa7 1.\\n29\\nUnited States v. United States Gypsum Co., 438 U.S. 422,441, n. 16 (1978) (information exchanges\\namong competitors may be procompetitive, and thus such exchanges- when not evidence of actual\\nagreements to limit competition- should be subject to the rule of reason).\\n30\\n!d. See also United States v. Container Corp. ofAmerica, 393 U.S. 333, 335-38 (1969) (finding a direct\\nexchange of pricing information among competitors unlawful, despite finding no agreement on price,\\nlargely because of the nature of the information exchanged, the structure of the market, and the absence of\\na benign justification for the exchange).\\n\\n\\x0cEzra C. Levine, Esq.\\nSeptember 4, 2013\\nPage 6 of6\\nfactor, such as price, cost, or output, efforts by Exchange Members to identify and share\\nterminated agent information is not likely to create a substantial risk of competitive harm.\\nSecond, the proposed information exchange appears to contain several safeguards\\nthat further lessen the risk of competitive harm. For example, the database will be\\nmaintained and secured by a third-party vendor; participation in the exchange will be\\nvoluntary; and each Exchange Member will conduct its own risk assessment and render\\nits own judgment regarding whether to appoint a terminated agent.\\nFinally, the proposed information exchange could generate efficiencies for\\nExchange Members and enhance consumer welfare. For example, to the extent that the\\nsharing of terminated agent information improves Exchange Members\\' ability to conduct\\nthorough background checks on prospective agents, the intormation exchange could\\nprevent the appointment of problematic agents, including agents who may be money\\nlaunderers or other criminal offenders, and thus benefit consumers.\\n\\nConclusion\\nFor the reasons stated above, FTC staff believes that TMSRT\\'s proposed\\ninformation exchange is unlikely to constitute an unreasonable restraint of trade.\\nAccordingly, we have no present intention to recommend a challenge to the program.\\nThis letter sets out the views of the staff of the Bureau of Competition, as\\nauthorized by Rule l.l(b) ofthe Commission\\'s Rules ofPractice, 16 C.F.R. \\xc2\\xa7 l.l(b).\\nUnder Commission Rule 1.3(c), 16 C.F.R. \\xc2\\xa7 1.3(c), the Commission is not bound by this\\nstaff advisory opinion and reserves the right to rescind it at a later time. In addition, FTC\\nstaff retains the right to reconsider this opinion, and, with notice to the requesting party,\\nto rescind or revoke it if implementation of the proposed information exchange appears to\\nresult in significant anticompetitive effects, if the exchange is used for improper\\npurposes, if pertinent facts (or our understanding thereof) change significantly, or if it\\nwould be in the public interest to do so.\\n\\nSincerely,\\n\\nMichael J. Bloom\\nAssistant Director\\nOffice of Policy & Coordination\\n\\n\\x0c'","created_timestamp":"September 4, 2013","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/money-services-round-table\/130904moneyservicesopinion.pdf"}
{"text":"b\"UNITED STATES OF AMERICA\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nBureau of Consumer Protection\\nDivision of Enforcement\\nHampton Newsome\\nDirect Dial: (202) 326-2889\\nFax: (202) 326-2558\\nEmail: hnewsome@fte.gov\\n\\nApril 15, 2013\\n\\nVia Email\\n\\nDavid Calabrese\\n\\nGeneral Counsel\\n\\nAir-Conditioning, Heating, and Refrigeration Institute\\n2111 Wilson Boulevard, Suite 500\\n\\nArlington, VA 22201-3001\\n\\nDear Mr. Calabrese:\\n\\nOn April 5, 2013, the Department of Energy (DOE) announced that it will not enforce\\nnew regional efficiency standards for furnaces pending the resolution of ongoing litigation.\\nConsistent with this development, the FTC staff will not recommend enforcement action against\\nmanufacturers that do not use the new label pending resolution of the ongoing litigation.\\n\\nOn June 27, 2011 (76 Fed. Reg. 37408), DOE published new energy conservation\\nstandards for residential furnaces, central air conditioners, and heat pumps, including regional\\nstandards for different product types. The American Public Gas Association (APGA) challenged\\nthese standards for furnaces, and other entities intervened to challenge the standards for air\\nconditioners and heat pumps. On January 11, 2013, the Department of Justice and APGA filed a\\njoint motion asking the court to enter an agreement to settle APGA\\xe2\\x80\\x99s challenge that would,\\namong other things, vacate the DOE standards for non-weatherized gas furnaces. To date, the\\ncourt has not approved the settlement agreement. Currently, the DOE regulations require\\ncompliance with the new furnace standards beginning May 1, 2013. Given the uncertainty raised\\nby the proposed settlement, DOE announced on April 5, 2013 that, during the pendency of the\\nlitigation, it will \\xe2\\x80\\x9cact in a manner consistent with the terms of the settlement agreement with\\nregard to the enforcement of the standards.\\xe2\\x80\\x9d\\n\\nEarlier this year, as directed by the Energy Policy and Conservation Act (EPCA),' the\\n\\nCommission issued new disclosures, including new EnergyGuide labels, to help industry\\nmembers comply with the new DOE regional efficiency standards (78 Fed. Reg. 8362 (Feb. 6,\\n\\n1 42 U.S.C. \\xc2\\xa7\\xc2\\xa7 6291-6309.\\n\\x0cPage 2\\n\\n2013)). Aware of the pending settlement in the DOE litigation, the Commission tied\\nimplementation of the new disclosures to DOE\\xe2\\x80\\x99s compliance date, currently scheduled for May\\n1, 2013 for certain furnaces. The FTC disclosure rules will not go into effect if the DOE\\nstandards are vacated by the settlement. However, if the settlement is not approved by May 1,\\n2013, the DOE standards and associated FTC labeling requirements become effective. The\\ndissemination of the new labels at that time could cause significant confusion for consumers and\\nindustry members as well as wasted resources should a final settlement eventually vacate the\\nDOE standards.\\n\\nTherefore, consistent with DOE\\xe2\\x80\\x99s April 5, 2013 enforcement statement, the FTC staff\\nwill not recommend enforcement action against industry members that do not implement the new\\nFTC disclosure requirements contained in the February 6, 2013 final rule notice pending\\nresolution of the DOE litigation.\\xe2\\x80\\x9d This approach will help coordinate implementation of the\\nDOE standards with the FTC disclosures, which are designed to help consumers and industry\\nmembers understand those standards.\\n\\nThe views expressed in this letter are those of the staff assigned to enforce the\\nCommission\\xe2\\x80\\x99s Energy Labeling Rule. In accordance with Section 1.3(c) of the Commission\\xe2\\x80\\x99s\\nRules of Practice and Procedure, 16 C.F.R. \\xc2\\xa7 1.3(c), this is a staff opinion only and has not been\\nreviewed or approved by the Commission or by an individual Commissioner. It is not binding\\nupon the Commission and is given without prejudice to the right of the Coramission later to\\nrescind the advice and, when appropriate, to commence an enforcement proceeding. In\\nconformance with Section 1.4 of the Commission\\xe2\\x80\\x99s Rules of Practice, 16 C.F.R. \\xc2\\xa7 1.4, this letter\\nis being placed on the public record. If you have any further questions, please contact me at\\n(202) 326-2889.\\n\\nSingef\\xc2\\xa2ly,\\n\\nHampton Newsome\\nAttorney\\n\\n2 The February 6, 2013 notice contained new EnergyGuide label design and content\\nrequirements for all heating and cooling equipment, including a few product types not subject to\\nthe DOE regional standards (e.g., boilers and oil furnaces). To promote consistency in the\\ntiming of these broad label changes and to minimize confusion from inconsistent label designs,\\nthis FTC staff enforcement position applies to all the new requirements in February 6, 2013\\nnotice, whether they apply to products subject to regional standards or not. Once the DOE\\nlitigation is resolved, the staff will provide guidance on updating labels for the various heating\\nand cooling products covered by the Rule.\\n\\x0c\"","created_timestamp":"April 15, 2013","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/letter-hampton-newsome-staff-attorney-division-enforcement-bureau-consumer-protection\/130415calabreseletter.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nBureau of Consumer Protection\\nDivision of Enforcement\\nHampton Newsome\\nDirect Dial: (202)326-2889\\nFax: (202) 326-2558\\nEmail: bnewsome@fte.gov\\n\\nApril 15, 2013\\n\\nVia Email\\n\\nAniruddh Roy\\n\\nRegulatory Engineer\\n\\nAir-Conditioning, Heating, and Refrigeration Institute\\n2111 Wilson Boulevard, Suite 500\\n\\nArlington, VA 22201-3001\\n\\nDear Mr. Roy:\\n\\nIn a March 28, 2013 letter to the Commission, you requested guidance on three issues\\nrelated to the FT\\'C\\xe2\\x80\\x99s recent amendments for online energy disclosures (78 Fed. Reg. 2200 (Jan.\\n10, 2013)).\" Those amendments require manufacturers to make their EnergyGuide labels\\navailable online by July 15,2013. First, according to your letter, AHRI plans to post its\\nmembers\\xe2\\x80\\x99 labels on the AHRI website to facilitate their compliance with this new requirement.\\nSecond, for split-system air conditioners, AHRI plans to include a disclaimer box on the online\\nlabels directing consumers to a copy of the AHRI certification containing the ratings for specific\\ncondenser-evaporator coil combinations. Finally, you have asked whether manufacturers selling\\nproducts from their website may comply with section 305.20 of the Rule by linking to the AHRI\\nwebsite.\\n\\nIn response to your inquiry, the FTC staff has no objection to AHRI\\xe2\\x80\\x99s plan to place its\\nmembers\\xe2\\x80\\x99 EnergyGuide labels on its website. The new rule (16 C.F.R. 305.6) states that\\nmanufacturers \\xe2\\x80\\x9cmust make a copy of the label available on a publicly accessible website in a\\nmanner that allows catalog sellers to hyperlink to the label or download it.\\xe2\\x80\\x9d It does not mandate\\nthat such websites belong to the manufacturer. Second, with regard to your proposal for a split-\\nsystem air conditioner label disclosure, AHRI should not place such disclaimers on the label\\nitself. Although nothing prohibits a disclaimer about split-system unit ratings on your website,\\nthe Rule does not allow the inclusion of additional disclaimers on the label (see, e.g., 16 C.F.R.\\n\\n\\' Your letter also requests changes to the recently announced requirements for the inclusion of\\ncapacity information on heating and cooling equipment labels (78 Fed. Reg. 8362 (Feb. 5,\\n2013)). The FTC staff plans to address those rulemaking issues in a later proceeding.\\n\\x0cPage 2\\n\\n305.12(f)(8)). Because online retailers (i.\\xc2\\xa2., catalog sellers) are likely to post the labels on their\\nown sites to meet Rule\\xe2\\x80\\x99s retailer requirements, a disclaimer about an AHRI certificate may be\\nconfusing to consumers viewing the labels on such retail sites. Accordingly, we urge you to\\ninclude such information in a location other than the label itself. Finally, manufacturers offering\\ntheir products for sale on websites can link to the AHRI website using the EnergyGuide icon\\nrequired by the Rule, as long as the link takes the consumer directly to the label.\\n\\nThe views expressed in this letter are those of the staff assigned to enforce the\\nCommission\\xe2\\x80\\x99s Energy Labeling Rule (16 C.F.R. Part 305). In accordance with Section 1.3(c) of\\nthe Commission\\xe2\\x80\\x99s Rules of Practice and Procedure, 16 C.F.R. \\xc2\\xa7 1.3(c), this is a staff opinion only\\nand has not been reviewed or approved by the Commission or by an individual Commissioner. It\\nis not binding upon the Commission and is given without prejudice to the right of the\\nCommission later to rescind the advice and, when appropriate, to commence an enforcement\\nproceeding. In conformance with Section 1.4 of the Commission\\xe2\\x80\\x99s Rules of Practice, 16 C.F.R.\\n\\n\\xc2\\xa7 1.4, this letter is being placed on the public record. If you have any further questions, please\\n\\ncontact me at (202) 326-2889.\\nSincerely,\\nHampton Newsome\\n\\nAttorney\\n\\x0c'","created_timestamp":"April 15, 2013","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/letter-hampton-newsome-staff-attorney-division-enforcement-bureau-consumer-protection\/130415royletter.pdf"}
{"text":"b'~\\n\\nMICHAEL E. JOSEPH\\n\\nMcAFEE&TAFT\\nA\\n\\nPROFESSIONAL\\n\\n.\\\\:\/~l\"\\n\\nCORPORATION\\n\\nWRITER DIRECT\\n\\n\\\\\\n\\n_ _J\\n\\n(405) 552-2267\\nmike.joseph@mcafeetaft.com\\n\\n10TH FLOOR. TWO LEADERSHIP SQUARE\\n211 NORTH ROBINSON. OKLAHOMA CITY, OK 73102-7103\\n(405) 235-9621 \\xe2\\x80\\xa2 FAX (405) 235-0439\\n\\nwww.mcafeefaft.com\\n\\nORIGINAL\\n\\nMay 26,2011\\n\\n\\\\I-\\\\.. lRADE COMM\/\\nS\\n\\n~<0X-\\\\\\\\REc6gW1t\/~\\nFEDERAL EXPRESS\\n\\nMAY Z 7 2011\\n\\n5SJ.j~q3\\n\\nDonald S. Clark\\nSecretary\\nFederal Trade Commission\\n600 Pennsylvania Avenue, N.W.\\nRoom 135-H\\nWashington, D.C. 20580\\nRe:\\n\\n-\\n\\n\\'uhit~\\n\\nNorman Physician Hospital Organization\\n\\nDear Mr. Clark:\\nEnclosed is a request for an advisory opinion that we are submitting on behalf of Norman\\nPhysician Hospital Organization and its members. The enclosures include:\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\nOne manually executed letter requesting an advisory opinion;\\nTwo paper copies of the letter;\\nOne electronic copy on compact disc; and\\nOne copy of the letter with confidential information redacted.\\n\\nWe appreciate your prompt attention to this request.\\nVery truly yours,\\n\\n~.~-J\\nMichael E.~~p( _.\\n\\nEnclosures\\n\\n6989442JDOC\\n\\nOKLAHOMA CITY\\n\\nTULSA\\n\\n\\x0c-_\\n\\n............\\n\\nPUBLIC\\nMICHAEL E. JOSEPH\\n\\nMcAFEE&TAFT\\nA\\n\\nPROFESSIONAL\\n\\nCORPORATION\\n\\nWRITER DIRECT\\n10TH FLOOR. TWO LEADERSHIP SQUARE\\n\\n(405) 552-2267\\n\\n211 NORTH ROBINSON \\xe2\\x80\\xa2 OKLAHOMA CITY, OK 73102-7103\\n(405) 235-9621 \\xe2\\x80\\xa2 FAX (405) 235-0439\\n\\nmike.joseph@mcafeetaft.com\\n\\nwww.mcafeetaft.com\\n\\nMay 26, 2011\\n\\nORIGINAL\\nFEDERAL EXPRESS\\n\\nMr. Donald S. Clark\\nSecretary\\nFederal Trade Commission\\n600 Pennsylvania Avenue, N.W.\\nRoom 135-H\\nWashington, D.C. 20580\\nRe:\\n\\nNorman Physician Hospital Organization\\n\\nDear Mr. Clark:\\nPursuant to FTC Procedure Rules 1.1 through 1.4, 16 C.F.R. \\xc2\\xa7\\xc2\\xa7 1.1-1.4 (2010), we\\nrequest an advisory opinion regarding proposed, prospective activities of Norman Physician\\nHospital Organization (\"NPHO\") and its members. Specifically, NPHO proposes to restructure\\noperations and further develop a clinically integrated, centrally managed organization that offers\\nmarket efficiencies and facilitates innovation in the efficient delivery of high-quality health care\\nservices to patients. As described below, NPHO will operate in a manner that creates a high\\ndegree of interdependence, interaction, and cooperation among the participating physicians and\\nhealthcare providers in order to improve quality of care and control costs. We ask the FTC to\\nauvise huw the FTC staff wuulu analyze this anallgeIIlellt and the recommendations, if any, that\\nthe FTC staff would be likely to make if NPHO develops contract proposals, negotiates contract\\nterms, and enters into contracts with third-party payers for the provision of the clinically\\nintegrated services described in this letter.\\n\\nPart I of this letter provides background information about NPHO and its two founding\\nmembers, Norman Physicians Association (\"NPA\") and Norman Regional Health System\\n(\"NRHS\"). Part II provides information about market characteristics and demographic\\ninformation, including an overview of location and service area characteristics, NPHO service\\narea hospitals, and physicians in the NPHO service area. Part III addresses NPHO\\'s clinical\\nintegration plan, including purposes and background of clinical integration; future plans for\\nenhanced clinical integration, including participation requirements and costs; organizational\\narrangements necessary for clinical integration; and community benefits of clinical integration.\\nPart IV describes the contracting issues, including the historical approach to contracting, the\\nproposed approach, and an explanation of why joint contracting is essential for meaningful\\nclinical integration. Part V provides a brief legal analysis and commentary.\\n\\n\\x0c-2I.\\n\\nBACKGROUND AND OVERVIEW\\n\\nA.\\n\\nNorman Physician Hospital Organization\\n\\nNPHO is based in Norman, Oklahoma, which is part of the greater Oklahoma City\\nmetropolitan area. It was founded in 1994 by NPA and NRHS as a physician-hospital\\norganization. NPHO\\'s purpose is to provide, arrange for, and coordinate the delivery of high\\nquality, readily accessible, cost-effective health care services to residents of the communities\\nserved by the physicians, hospitals, and other healthcare providers that comprise NPHO. Since\\nits inception, NPHO has helped to link health insurers, health plans, third-party administrators,\\nand employers to an established network of healthcare providers and professionals who share a\\ncommon interest in providing optimal healthcare. NPHO is organized as an Oklahoma limited\\nliability company and is owned equally by its two founding members, NPA and NRHS.\\nAdditional information regarding NPHO can be found on its website: www.normanpho.com.\\nNPA is an Oklahoma limited liability company whose members are physicians that are\\nmembers of the medical staff of affiliated NRHS hospitals. NRHS is operated by Norman\\nRegional Hospital Authority, a public trust, and includes the following hospitals: Norman\\nRegional Hospital in Norman, Oklahoma; Moore Medical Center in Moore, Oklahoma; the\\nHealthPlex campus in Norman, Oklahoma; and Family Medicine Centers in Norman, Moore,\\nNewcastle, and Blanchard, Oklahoma. NRHS has obtained a single hospital license from the\\nOklahoma State Department of Health covering Norman Regional Hospital, Moore Medical\\nCenter, and facilities at the HealthPlex campus, each of which is otherwise a separate facility.\\nPurcell Municipal Hospital, which is a separately licensed hospital located in Purcell, Oklahoma,\\nis a participating hospital in NPHO. For convenience in this letter, we have referred to Norman\\nRegional Hospital, Moore Medical Center, the HealthPlex facilities, and Purcell Municipal\\nHospital as the \"Hospitals.\"\\nNRHS and NPA shared equally in the initial funding of NPHO, and they continue to\\nin the cost of\\n.\\nand\\ncapital needs. The cost of operations_\\nis covered principally through withholds of fees\\npaid to NPHO for services provided in accordance with contracts entered into directly between\\nNPHO and several employers. In addition, individual physicians and medical group practices\\nare required to pay NPHO significant fees for the implementation and maintenance of electronic\\nmedical records and an electronic interface software system. Each participating physician also\\npays membership dues to NPA in the amount of $150 per year. While NPHO maintains a lean\\noperation and expects to continue to do so in the future, the operating costs of NPHO - which\\ncan be expected to increase as the clinical integration plan is implemented - reflect a meaningful\\ninvestment by NPHO\\'s members in the organization. NPHO believes that additional investment,\\nalong with a substantial investment of time by participants in order to accomplish NPHO\\'s\\nobjectives, will result in significant clinical benefits and efficiencies in the organization\\'s goal to\\nprovide cost effective, quality health care services to patients.\\nshare\\n\\nA chart showing the organizational structure and relationships among NPHO members is\\nattached as Exhibit I to this letter. A copy of the NPHO Operating Agreement is provided as\\nExhibit II to this letter.\\n\\n\\x0c-3-\\n\\n1.\\n\\nNPHO Historical Operations\\n\\nNPHO was organized as a non-exclusive association of physicians in partnership with\\nNorman Regional Hospital for the purpose of collectively providing cost-effective, quality health\\ncare services to the residents of the region. Initial physician membership of NPHO was\\ncomprised of approximately 125 physicians. This included multiple groups of Pediatricians,\\nFamily Practitioners, Internal Medicine physicians, and Obstetricians-Gynecologists.\\nMembership also included physicians specializing in Anesthesiology, Cardiology, Dermatology,\\nGeneral Surgery, Gastroenterology, Neurosurgery, Neurology, Oncology, Ophthalmology,\\nOrthopedic Surgery, Otorhinolaryngology, Pathology, Podiatry, Psychiatry, Radiology, and\\nUrology.\\nSince its inception, NPHO has offered specialized benefit plans developed for use by\\nemployers, third-party administrators, commercial health care payers and other purchasers of\\ncare (\"Payers\"). These special benefit plans have created savings for those Payers, which should\\nin turn be passed along to the ultimate health care consumer, the patient. NPHO growth was\\naccomplished through the addition of more direct employer accounts and by entering into\\ncontracts with PPOs, HMOs, and other commercial insurance Payers.\\n\\n2.\\n\\nNPHO Membership Today\\n\\nAs of August 1, 2010, 237 physicians who practice in 38 specialties participate in NPHO.\\nAll of these physicians are members of NPA. Participation in NPHO is open to licensed\\nphysicians who are willing to commit to the goals, objectives, and plans of the organization.\\nNPHO plans to continue to add physicians who practice throughout the service area.\\nEach physician member of NPHO joins through an application process that requires\\nsubmission of a letter requesting membership in NPA and, as a result, membership in NPHO.\\nAn interested physician submits a completed application to the NPA Board of Directors, which\\nreviews the application and votes on acceptance of the applicant as a member. If an applicant is\\naccepted, NPA bills the new member a $350 membership fee and $150 annually for dues. After\\nthe physician pays dues and enters into a contract with NP A, the physician signs all other\\nnecessary documentation relating to NPHO membership. Membership fees and dues represent\\n. for NPA. NPHO\\nrevenue for its\\nthe primary source of\\nactivities\\nexpects withholds to increase slightly in order to provide sufficient working capital to\\naccomplish the clinical integration plan and objectives described in Part III.\\nMost of the physicians in and around Norman have chosen to participate in NPHO.\\nHowever, NPHO members represent less than 10% of all physicians in the NPHO service area\\n(which, as described in Part II, is roughly coextensive with the greater Oklahoma City\\nmetropolitan area), and less than 10% of the total number of physicians in anyone specialty in\\nthe NPHO service area are members of NPHO. In addition, a number of physicians who\\nmaintain medical practices in Norman, Moore, Purcell, and other parts of NPHO\\'s primary\\nservice area do not participate in NPHO. For example, one neurosurgeon who chose not\\nparticipate believed he would not make enough money. Another pediatric specialist chose not to\\n\\n\\x0c-4participate because he was the only pediatrician in the area offering a particular subspecialty and,\\ntherefore, could charge higher rates for his services.\\n\\n3.\\n\\nNPHO Governance and Management\\n\\nNPHO is managed by a Board of Managers comprised of eleven representatives, one of\\nwhom is the president of NRHS, two of whom are appointed by NRHS (with one vacancy at\\npresent), and eight physicians elected annually by the members of the NPA. Physician managers\\nare elected annually by the members of NPA. The physician representatives include four\\nprimary care physicians representing general internal medicine, family practice, pediatrics, and\\nobstetrics-gynecology, and four physicians practicing unduplicated specialties. The chairperson\\nof the NPHO board is always a physician who typically also serves as chairperson of NPA,\\nwhich assists in assuring organizational alignment. Each physician manager serves for a period\\nof three years and may be re-elected for additional terms. A table listing the members of the\\nNPHO Board of Managers is attached as Exhibit III to this letter.\\nNPHO currently maintains a staff of eight, including a full-time Executive Director, parttime Medical Director, full-time Quality Assurance Director, a contracts supervisor, a Director of\\nPhysician Informatics, and three full-time technical personnel who provide information systems\\ntraining and support to participating health care providers and professionals. Additionally,\\nNPHO contracts with a physician who serves as the Medical Informatics Officer. A brief\\noverview of the background of each NPHO staff member is set forth in Exhibit IV to this letter.\\n\\n4.\\n\\nNPHO Contractual Arrangements\\n\\nNPHO is a non-exclusive network. Physicians who are members of NPHO may enter\\ninto contracts directly with Payers and are not required to limit their contracting arrangements\\nthrough NPHO. NPHO does not impose any restrictions or limitations on the ability of NPHO\\nphysicians to become members of other physician networks or other provider networks. Some\\nNPHO physicians are members of other physician networks.\\nNPHO maintains a comprehensive credentialing oversight process for all participating\\nhealth care professionals to ensure quality medical care and services are provided within its\\nnetwork. NPHO\\'s credentialing requirements satisfy the standards of The Joint Commission and\\nguidelines of the National Council of Quality Assurance.\\nTo the extent the services of specialists or other health care professionals are not\\navailable through NPHO physicians, patients and Payers may obtain those services directly from\\nother physicians and health care professionals. In those situations, NPHO physicians will\\ntypically refer patients to other specialists in the greater Oklahoma City area for care. NPHO\\ndoes not enter into contracts for those services. For example, if patients require care or treatment\\nby pediatric gastroenterologists, pediatric oncologists, pediatric cardiologists, pediatric\\npulmonologists, or other pediatric subspecialists who are not members of NPHO, then NPHO\\npediatricians and other NPHO physicians will refer patients to those subspecialists for care.\\n\\n\\x0c-5-\\n\\nB.\\n\\nNorman Physicians Association\\n\\nNPA was fonned as an Oklahoma nonprofit corporation 1987, seven years before the\\ncreation of NPHO. The focus of NPA was to offer and promote high quality, reputable medical\\nand dental care to employers and other consumer groups at the lowest rate commensurate with\\nthe provision of high quality care. NPA also coordinated and administered contracts between its\\nmembers and various Payers, and developed and operated a utilization review program for its\\nmembers.\\nNPA members are licensed physicians, dentists, and podiatrists who:\\n\\n\\xe2\\x80\\xa2 satisfy the current admission criteria for the medical staff of affiliated Hospitals;\\n\\xe2\\x80\\xa2 comply with the credentialing plan of NPA;\\n\\xe2\\x80\\xa2 pay required fees, dues, and assessments;\\n\\n\\xe2\\x80\\xa2 want to supply cost-effective, high quality medical care to qualified individuals;\\n\\xe2\\x80\\xa2 agree to be bound by and maintain the standards of medical care developed by NPA;\\n\\xe2\\x80\\xa2 execute a Participation Agreement with NPA; and\\n\\xe2\\x80\\xa2 are approved by the Board of Directors of NPA.\\nNPA is governed by an eight-member Board of Directors elected by the membership.\\nThe Board of Directors is responsible for managing and conducting the business of NPA. It has\\nthe authority to select and remove officers, agents, and employees; to conduct, manage, and\\ncontrol the affairs and business of NPA; to incur indebtedness on behalf of NPA; to assess and\\ncollect membership fees and dues; and other powers necessary to manage the business affairs of\\nNPA. The election of directors and the approval of any action by the members require the\\naffinnative vote of a majority of the members present in person or by proxy at a meeting. A\\ncopy of the Bylaws of NPA is included as Exhibit V to this letter.\\nAs noted above, NPA members are assessed an initial membership fee and annual dues.\\nof\\nThe Board of Directors may assess additional dues from each member through the\\nwithhold from fees\\nthe\\nMembership may be tenninated, without\\nreimbursement of membership fees, when a physician no longer satisfies any of the membership\\neligibility requirements.\\nC.\\n\\nNorman Regional Hospital Authority and Norman Regional Health System\\n\\nNRHS traces its origin to Nonnan Municipal Hospital, a 61-bed hospital that opened in\\n1946. In 1984, Nonnan Municipal Hospital changed its name to Nonnan Regional Hospital to\\nbetter reflect the expanding geographic boundaries of the communities it serves. The stated\\nobjective of NRHS is to offer easily accessible, cost-efficient health care services that prevent\\ndiseases or lessen their severity, while promoting health and wellness in the communities served.\\n\\n\\x0c-6Currently, NRHS is comprised of:\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\nNorman Regional Hospital, a 337-bed acute care hospital located in Norman,\\nOklahoma, that offers a wide range of inpatient, outpatient, and emergency services;\\nMoore Medical Center, a 46-bed community hospital located in Moore, Oklahoma;\\nand\\nHealthPlex, a new acute care hospital and medical campus in Norman specializing in\\ncardiology and cardiovascular care, orthopedics and spine care, services for women\\nand children, and emergency care.\\n\\nBefore 1969, Norman Regional Hospital was owned and operated by the city of Norman.\\nIn 1969 Norman Regional Hospital Authority was created to operate Norman Regional Hospital.\\nThe hospital is now owned in part by Norman Regional Hospital Authority and in part by the\\ncity of Norman. Under a Lease Agreement dated April 1, 1970, the city leased the hospital\\ncampus to Norman Regional Hospital Authority. In March 2007, Norman Regional Hospital\\nAuthority acquired Moore Medical Center through a bankruptcy auction bid. In 2008 NRHS\\ninitiated construction of the new HealthPlex facility. Norman Regional Hospital, Moore Medical\\nCenter, and HealthP1ex operate under a single hospital license issued by the Oklahoma State\\nDepartment of Health.\\nNRHS is governed by the Board of Trustees. Trustees are appointed for terms of three\\nyears by the Mayor of Norman and confirmed by the Norman City Council.\\nThe Norman Regional Hospital campus is situated on approximately 30 acres. Nursing\\nbeds are located in four towers: a five-story tower constructed in 1968 and expanded in 1972; a\\nfive-story tower constructed in 1981; a three-story tower constructed in 1992; and a three-story\\ntower constructed in 1995. In addition to the inpatient care towers, the main campus also\\nincludes a Cancer Management Center, an Education Center, three support buildings, an\\nambulance facility, and a hospitality house.\\nMoore Medical Center includes the hospital and two medical office buildings. It is\\nlocated approximately 8.6 miles from the principal campus of Norman Regional Hospital.\\nNorman Regional Hospital Authority developed a third inpatient hospital and related\\ncampus - the HealthPlex - on a 95-acre site located four miles west of the original Norman\\nRegional Hospital campus and five miles south of the Moore Medical Center campus. Among\\nother facilities and services, the HealthPlex includes a 36-bed heart hospital, a 36-bed women\\'s\\nand children\\'s hospital, and a 28-bed orthopedic and neurosurgical hospital.\\nPurcell Municipal Hospital is a 39-bed community hospital located in Purcell, Oklahoma.\\nPurcell Municipal Hospital is not owned or operated by Norman Regional Hospital Authority,\\nbut is a participating hospital in NPHO.\\nA table highlighting services provided by the Hospitals is provided in Exhibit VI to this\\nletter.\\n\\n\\x0c-7The medical staff of the Hospitals is comprised of physicians, oral surgeons, and\\npodiatrists who represent a broad range of medical and surgical specialties. Nearly all members\\nof the medical staff of the Hospitals are NPHO participating physicians.\\nNPHO participating physicians are not required to refer or admit patients to NHRS\\nfacilities, Purcell Municipal Hospital, or other health care providers that participate in NPHO.\\nReferral and admission decisions are based on the medical needs of the patient and patient\\npreference. While these guidelines will continue to drive future referral and admission decisions,\\nit is anticipated that enhanced clinical integration of NPHO will increase utilization of NPHO\\nparticipating providers and help to assure that patients, insurers, health plans, employers, and\\nhealth care providers benefit from NPHO\\'s Clinical Integration Plan, as described in Part III.\\nIf participating hospitals do not offer the programs, facilities, or capacity to provide\\nmedically necessary care for patients of NPHO physicians, then NPHO physicians will typically\\nrefer the patients to other hospitals in the Oklahoma City metropolitan area that can provide the\\nneeded services. NPHO does not maintain contractual relationships with other hospitals relating\\nto the provision of care to patients.\\n\\nII.\\n\\nMARKET AND DEMOGRAPIDC INFORMATION\\n\\nThis section and Exhibit VI to this letter contain market and demographic information.\\nAs this information shows, the NPHO service area overlaps almost entirely with the boundaries\\nof the Oklahoma City metropolitan area and the Oklahoma City Combined Statistical Area\\n(\"CSA\"). The NRHS Hospitals make up less than 10% of the hospitals in the CSA, and NPHO\\ndischarges are similarly small percentages of the discharges of the Oklahoma City area hospitals\\nas a whole. Likewise, NPHO physicians make up a small fraction of the physicians in the CSA.\\nAs a practical matter, patients across the NPHO service area and the Payers that NPHO\\nphysicians contract with enjoy numerous adequate substitutes for NPHO services.\\nThe remainder of this section reviews and summarizes certain pertinent information\\nregarding location and service area characteristics; NPHO service area hospitals; and physicians\\nin the service area. Exhibit VI includes additional information about:\\n\\n\\xe2\\x80\\xa2 Service area demographic information (Exhibit VI.A)\\n\\xe2\\x80\\xa2\\n\\n\\xe2\\x80\\xa2\\n\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\nPopulation and density data, and narrative profile, of NPHO Service Area (Exhibit\\nVI.B)\\nPatient Populations and Insurance Coverage Estimates (Exhibit VI.C)\\nEmployers and employees in the service area (Exhibit VI.D)\\nAvailable data regarding Health Insurance Plans, HMOs, Discount Medical Plans,\\nand Third-Party Administrators (Exhibit VI.E)\\nMedical, surgical, diagnostic, and ancillary services provided by participating\\nhospitals (Exhibit VI.F)\\nOther ancillary service providers (Exhibit VI.G)\\nPhysician Shortages in Selected Specialties (Exhibit VI.H)\\n\\n\\x0c-8A.\\n\\nLocation and Service Area Population and Characteristics\\n\\nNPHO Hospitals are located in central Oklahoma, in Cleveland and McClain counties.\\nThe medical clinics and offices of the NPHO physicians and the facilities of other participating\\nhealth care providers are located in Norman, Moore, Blanchard, Newcastle, Purcell and Noble.\\nBased on hospital patient origin data, NPHO serves a six-county area, including patients from\\nCleveland, Garvin, Grady, McClain, Oklahoma, and Pottawatomie counties. As seen in Exhibit\\nVI.A and Exhibit VI.B, according the U.S. Census Bureau, an estimated 1.13 million persons\\nresided in the six-county NPHO service area as of 2008. Almost 85% of these residents reside in\\nOklahoma and Cleveland counties.\\nThe contiguous six-county NPHO service area encompasses a land area of 4,511.8 square\\nmiles with 759.5 residents per square mile. These counties are interconnected through a system\\nof interstate highways, state highways, and major roads, all of which share comparatively low\\ntraffic density and provide easy and unusually efficient access from one area to another. Indeed,\\nOklahoma City (which is in Oklahoma County) is an integral point in the U.S. Interstate\\nHighway system; the area is bisected north and south by 1-35 and west to east by 1-40 and 1-44.\\nThe NPHO service area overlaps significantly (if not entirely) with the boundaries of the\\nOklahoma City metropolitan area and the Oklahoma City CSA. With an estimated 2008\\npopulation of 1.206 million, the metropolitan area is comprised of seven counties: Canadian,\\nCleveland, Grady, Lincoln, Logan, McClain, and Oklahoma. The CSA also includes the microurban area of Shawnee (Pottawatomie County), which brings the region\\'s population to 1.275\\nmillion. Patients can cross the Oklahoma City CSA in nearly any direction in a drive of no\\nlonger than 45 minutes to an hour.\\nDemographic data for NPHO\\'s six-county service area is available in Exhibit VI.A.\\nPopulation data, land area information, and a narrative profile, by county, is available in Exhibit\\nVI.B. Median household income and poverty statistics and insurance coverage estimates for the\\nNPHO service area, also broken down by county, is available at Exhibit VI.C. A summary of\\nNPHO service area employers and employees, and health insurance plans, are available at\\nExhibit VI.D and VI.E, respectively.\\nB.\\n\\nNPHO Service Area Hospitals\\n\\nAccording to the Oklahoma State Department of Health, 35 licensed hospitals are located\\nin the six-county NPHO service area. Hospitals are licensed by the Department of Health as\\nacute care\/long term care hospitals, psychiatric hospitals, and rehabilitation hospitals. Of the\\ntotal licensed hospitals in the six -county area, 24 are acute care hospitals, four are long term care\\nfacilities, two are psychiatric hospitals, and four are rehabilitation hospitals. There are no critical\\naccess hospitals in the NPHO service area.\\nOf the 24 acute care hospitals, 16 are considered to be general acute care hospitals and\\neight are specialty hospitals that limit services primarily to surgery, orthopedic, cardiology, or\\nwomen\\'s services. Nineteen of the acute care hospitals are located in Oklahoma and Canadian\\ncounties, the two service area counties with the greatest concentration of service area residents.\\nBisected by 1-35 and 1-40, and encompassing a 1,246 square mile area with 697 persons per\\nsquare mile, these two counties account for 84% of the estimated 2009 NPHO service area\\n\\n\\x0c-9population and 95% of NPHO service area physicians. Residents of the four surrounding NPHO\\nservice area counties may reach nearly any metropolitan area hospital or physician in less than an\\nhour of travel time.\\nNorman Physician Hospital Association\\nLocation of Acute Care Hospitals\\n\\no\\n\\nMcClain\\n\\nAcute care hospitals in the NPHO service area include a total of 4,429 staffed beds.\\nCollectively, these hospitals admitted about 213,000 patients in 2006. As seen in Tables 1 and 2\\nbelow, as of 2006, Hospitals affiliated with the NPHO represent approximately 9.96% of total\\nbeds operated by acute care hospitals in the NPHO service area and 9.44% of reported hospital\\nadmissions. As shown in Table 3, below, Norman Regional Hospital, Moore Medical Center,\\nand Purcell Municipal Hospital captured a combined market share of 13 % of NPHO service area\\nacute care hospital discharges. Table 3 also provides a breakdown of patients discharged from\\nthe six-county area by county and hospital, which reveals that combined hospital market share\\nranged from a low of 2% of Oklahoma County discharges to a high of 60% of McClain County\\ndischarges.\\n\\n\\x0c-10Table 1\\nService Area Acute Inpatient (Non-Federal) Facilities, 2006\\nAcute Care Facility\\nBeds\\nCounty\\n\\',,\\'.\\' <,:\", .\\' .. ,\\'\" \\'.:\\n\\'\\n,\\n\\'\\n\\'{:\\'~i~{:.:;:c,\\n:\\'s~~l~t;Ar\\xc2\\xa2~M!l~ketk; . ,\\xc2\\xb7}t,\\xc2\\xb7\\'\\n\\'::.\":.,.,,,.\\n>.,\\';\\'\/\\'::\":,c.\" .).;.\\'. . ,\\nGrady Memorial Hospital\\n55\\nGrady\\nPurcell Municipal Hospital\\n30\\nMcClain\\n11\\nBone and Joint Hospital\\nOklahoma\\n49\\nCommunity Hospital\\nOklahoma\\nDeaconess Hospital\\n273\\nOklahoma\\n92\\nEdmond Medical Center\\nOklahoma\\n570\\nINTEGRIS Baptist Medical Center\\nOklahoma\\n358\\nINTEGRIS Southwest Medical Center\\nOklahoma\\n23\\nLakeside Women\\'s Hospital\\nOklahoma\\n78\\nMcBride Clinic Orthopedic Hospital, LLC\\nOklahoma\\nMercy Health Center\\n338\\nOklahoma\\n255\\nMidwest Regional Medical Center\\nOklahoma\\n46\\nMoore Medical Center\\nOklahoma\\nNorthwest Surgical Hospital\\n9\\nOklahoma\\nOk. Center for Orthopedic & Multi-Splty\\n10\\nOklahoma\\n78\\nOklahoma\\nOklahoma Heart Hospital\\n18\\nOklahoma Spine Hospital\\nOklahoma\\nOrthopedic Hospital\\n8\\nOklahoma\\nOU Medical Center\\n587\\nOklahoma\\n499\\nSt. Anthony Hospital\\nOklahoma\\nUnity Health Center\\n160\\nPottawatomie\\nTOTAL Non-NPHO Hospitals\\n3,988\\n,,\\'\\n\\n\\',\".,\\n\\n.\\n\\nAdmission\\n.:\\n.\\n\\'\\n\\n,\\n\\n.,,\"\\n\\n,\\n\\n....\\n\\n2,767\\n1,436\\n786\\n1,412\\n12,686\\n3,903\\n24,230\\n16,128\\n2,677\\n2,820\\n17,910\\n16,919\\n3,533\\n594\\n160\\n7,410\\n1,769\\n190\\n30,203\\n19,212\\n6,464\\n193,375\\n\\nTable 2\\nNPHO Service Area Acute Inpatient (Non-Federal) Facilities, 2006\\nAcute Care Facility\\n\\xc2\\xb7\\xc2\\xb7;~~)T\\xc2\\xb7.\\nS\\xc2\\xa2UJ.;el\\\\rea Mltr~etc:,:\\'~~:\\nNorman Regional Hospital\\nLindsay Municipal Hospital\\nPauls Valley Hospital\\nTotal NPHO Hospitals\\nTotal Non-NPHO and NPHO Combined\\nNPHO Percentage of Total Service Area\\n\\nCounty\\n\\nBeds\\n\\n\\'::\\',\"\\';\\'\\n\\n\\'\\n\\n. \". ,:., ~:\\':: ;:.: .~ .\\n\\nCleveland\\nGarvin\\nGarvin\\n\\nAdmission\\n,,\\':::\\n\\n365\\n26\\n50\\n441\\n4429\\n9.96%\\n\\n17,293\\n1,034\\n1,840\\n20,167\\n213,542\\n9.44%\\n\\n\\x0c-11-\\n\\nTable 3\\nDischarges by Acute Care Hospital and County, 2006\\n(NPHO Hospitals Highlighted)\\nSubtotal\\nHospital\\nCleveland Garvin Grady\\nMcClain Oklahoma Pottawatomie\\n489\\nBone and Joint\\n27\\n17\\n40\\n62\\n9\\n334\\n916\\nCommunity\\n46\\n272\\n88\\n34\\n438\\n38\\nHospital\\n10,515\\nDeaconess\\n47\\n195\\n648\\n65\\n9,423\\n137\\nHospital\\n2,889\\nEdmond Medical\\n40\\n9\\n2,681\\n47\\n102\\n10\\n2,137\\nGrady Memorial\\n2,063\\n43\\n4\\n23\\n1\\n3\\n2\\nHealdton\\n1\\n0\\n0\\n1\\n0\\n0\\nMunicipal\\n16,431\\nIntegris Baptist\\n274\\n636\\n211\\n431\\n1,716\\n13,163\\n14,479\\n84\\nInte~is Southwest\\n574\\n2,638\\n190\\n10,782\\n211\\n1,943\\nLakeside\\n231\\n9\\n89\\n22\\n11\\n1,581\\nLindsay Municipal\\n527\\n96\\n10\\n351\\n1\\n21\\n48\\n1,446\\n56\\nMcBride Clinic\\n92\\n236\\n42\\n904\\n116\\nOrthopedic\\n12,275\\nMercy Health\\n305\\n57\\n87\\n10,914\\n175\\n737\\nCenter\\n167\\nMercy Memorial\\n117\\n4\\n0\\n28\\n12\\n6\\n15,039\\nMidwest Regjonal\\n29\\n60\\n25\\n1,173\\n12,906\\n846\\n29\\nnMqpie M~ajcal~{<:;; . .\\n2,312\\niI9\\n\\'>\/&.,;~3, \\'.\\';}\\';\\' 79~~\\' \/;\\'};; ,;\\\\,~\/ 48 ,,<\\'~:\/.: 3,333\\n~\\'998 ;-;)~~\" gHfs F.>;;,j\/\\':::< .\\xe2\\x80\\xa2\\xe2\\x80\\xa2.... \\'406 )\\\\15,683\\n1,293\\n10;979\\n.1~rdfib.aIi W~gi.onfif:&\\xc2\\xb7< ,.\\n1,~97\\n2\\nNorthwest Surgical\\n369\\n17\\n12\\n45\\n5\\n288\\n110\\nOklahoma Center\\n5\\n8\\n36\\n3\\n51\\n7\\nfor Ortho\\n3,272\\nOklahoma Heart\\n340\\n180\\n60\\n2,059\\n351\\n282\\n846\\n34\\n71\\nOklahoma Spine\\n117\\n19\\n557\\n48\\n124\\n2\\n5\\nOrthopedic\\n26\\n11\\n0\\n80\\nHospital\\n574\\n21,269\\nOUMedical\\n2,072\\n306\\n187\\n17,341\\n789\\nCenter\\n1,651\\nPauls Valley\\n1,598\\n8\\n0\\n9\\n18\\n18\\nGeneral\\n.\\nPlItce,ll Mun!\\xc2\\xa2ipal \\'. ....,., . \\xc2\\xb7\\xc2\\xb7\\xc2\\xb7\\xc2\\xb7\\xc2\\xb7\\xc2\\xb7\\xc2\\xb7\\xc2\\xb7\\xc2\\xb7,.326 .\\xc2\\xb7 . ),6$:. (~\\', \\'25\\', .: . >\\'- . 71fr;.\\xc2\\xb7\\xc2\\xb7\\xc2\\xb7 - ..\\n1,39Z\\n37:\\nSeminole Medical\\n1\\n39\\n31\\n0\\n4\\n3\\n0\\n15,842\\nSt. Anthony\\n155\\n434\\n1,559\\n92\\n12,976\\n626\\n4,421\\nUnity Health\\n1\\n3\\n3\\n4,283\\n63\\n68\\n4,802\\nAll Other\\n113\\n693\\n78\\n2,988\\n571\\n359\\n152,936\\nTOTAL\\n7,677\\n2,893\\n26,591\\n5,300\\n101,276\\n9,199\\n\\xe2\\x80\\xa2.\\xc2\\xb7.s\\\\\\xc2\\xb7\\'aO%\\n17%\\', . .; 60% \\':,\\n\/2%\\n\\'\\xc2\\xb7~$1.% \\',.\\'\\nNPUQ Market\\xc2\\xb7\\n]3%\\n\"\\'~%~\\n-\\'-\"\":\"\\n.\\n\"\\n-::.\/;:: . : ..>:,.- \\'. .\\n~-..:;;:~\/\\n.....\\n. ...: ..... .. : .\\n\",,\\' .\\n......\\nSh\\xc2\\xa3t\\xc2\\xb7\\n:::~.\\n\/\\n\\'.\\n\\n\\'\\n\\n.\\',\\n\\n-, :,,:~. -.:\\'\\n\\n,Ce\\',I \\xe2\\x80\\xa2.\\':.,:;\\n\\n,-;\"\\':~~-\\':-~:\\':\\'\\n\\n\",.J\\'\\n\\n.\\n\\nZ6\\n\\n\"\":\"<\"\\' }\\n\\n;,\\n\\nThe data in the tables show significant competition and suggests a high cross-elasticity of\\ndemand between the hospitals operating in the six-county area. By any of these measures,\\nNPHO Hospital market share is constrained by competitors in the Oklahoma City CSA.\\n\\n\\x0c-12-\\n\\nC.\\n\\nPhysicians in the Service Area\\n\\nAs with hospitals, when evaluating physician data, NPHO (whose physician members are\\nmembers of the medical staff of NRHS or Purcell Municipal Hospital, with clinical privileges at\\none or more of the NPHO Hospitals), make up a small fraction of the greater Oklahoma City\\nCSA physicians. Specifically, as shown in Table 4 below, as of August 1, 2010, 237 physicians\\nparticipated in NPHO. Information obtained from the Oklahoma Board of Medical Examiners\\nand Oklahoma Osteopathic Association indicates that approximately 2,950 active physicians\\nunder the age of 75 are licensed to practice medicine in the NPHO six-county service area.\\nThus, physicians affiliated with NPHO currently comprise about 8% of service area physicians.\\nApproximately 53% of active physicians under the age of 75 practicing in Cleveland and\\nMcClain counties are NPHO providers.\\nMany NPHO participating physicians also hold medical staff appointments at other\\nhospitals in the Oklahoma City metropolitan area, exercise clinical privileges at other area\\nhospitals, admit patients at other area hospitals, and provide patient care services at other area\\nhospitals. For example, NPHO participating physicians hold medical staff appointments,\\nexercise clinical privileges, admit patients and provide patient care services at INTEGRIS\\nSouthwest Medical Center (Oklahoma City); Midwest Regional Medical Center (Midwest City);\\nOU Medical Center (Oklahoma City); St. Anthony Hospital (Oklahoma City); INTEGRIS\\nBaptist Medical Center (Oklahoma City); Mercy Medical Center (Oklahoma City); Deaconess\\nHospital (Oklahoma City); Oklahoma Heart Hospital (Oklahoma City); Pauls Valley General\\nHospital (Pauls Valley); Grady Memorial Hospital (Chickasha); Unity Health Center (Shawnee);\\nand other area hospitals. Additionally, NPHO participating physicians hold medical staff\\nappointments, exercise clinical privileges, admit patients, and provide patient care services at a\\nnumber of ambulatory surgery centers in the Oklahoma City metropolitan area\\nTable 4 below provides a breakdown of the number of participating NPHO physicians by\\nspecialty. It does not include physicians employed or assigned by NorStar (the company\\nresponsible for providing emergency physician coverage at the Hospital) who work on a parttime basis at the Hospitals.\\n\\nTable 4\\nNorman Physician Hospital Organization\\nParticipating Providers by Specialty\\nAugust 1, 2010\\nI Specialty\\n\\n\\xc2\\xb7\\xc2\\xb71!rimary.(3are;\\n\\nProviders\\n.\\'\\n\\n:,.;\\'.\\'\"\\n\\nFamily Medicine\\nInternal Medicine (General)\\nOB\/GYN\\nPediatrics (General)\\n\\nSurgical SpecioJists\\':\\nThoracic Surgery\\nGeneral Surgery\\n\\n\\'\/~.(\\n\\n.......,.\\n\\n.,\\'\\n\\n\\xc2\\xa3:,\\n\\nI Specialty\\nM~dlcalSpt!cialists\\n\\n30 Cardiology\\n18 Dermatology\\n17 Endocrinology\\n11 ENT\\nj\/\\'i Gastroenterology\\n1 Geriatrics (1M)\\n9 Infectious Disease\\n\\nI Providers I\\n.. \\'.\\n\\n\"\\n\\n9\\n3\\n\\n1\\n6\\n6\\n\\n1\\n1\\n\\n\\x0c-13GSNascular Surgery\\nGeneral Surgery!Breast\\nNeurosurgery\\nOphthalmology\\nOrthopedic Surgery\\nPlastic & Reconstructive Surgery\\nUrology\\n\\'iliis.PltaiJ1ise\\'ft\\'~1C\\n,a ... \\' \"!,,,\\n.\\n\\n.\\n\\n.. \\', \\xe2\\x80\\xa2 . ,\\n\\n\\'.\\n\\nr, ..\\n\\n3\\n1\\n2\\n5\\n10\\n\\n1\\n3\\n\\n\\'. .. \\' ;. \\'<!\\\\~,t:\\\\\\xc2\\xb7\\n.\\n.~:h.: :.\"\\';\"\/\\'.\\n\\n... \"\\n......\\n.: ....... c).\"\\n\\nAnesthesiology\\nAnesthesiology (CRNA, MSN)\\nEmergency Medicine\\nHospitalist (1M)\\nPathology\\nRadiology\\n\\nNeonatology\\nNephrology\\nNeurology\\nOncology!Hematology\\nPhysical MedicinelRehabilitation\\nPodiatry (DPM)\\nPsychiatry\\nPulmonology\/Critical Care\/lntensivist\\nRadiation Oncology\\nRheumatology\\nWound Care\\nOther\\n\\n11\\n17\\n12\\n6\\n4\\n8 TJ1J@i~~\/\\\\\\' .\"\\n\\n,,;},\\'f\\'\\n\\n5\\n2\\n4\\n5\\n3\\n3\\n7\\n7\\n4\\n3\\n3\\n0\\n\\n.\\' . . \"~\\':;<\\';?\\'<f\\';;\\'< .\\n\\n\\'.\\';\\';\\n\\n:Z37j,~;\\n\\nTable 5 below sets forth information about all physicians under 75 years of age across the\\nsix-county NPHO Service area, broken down by specialty area.\\nTable 5\\nService Area Physicians by Specialty (Age <75)\\n\\nI Specialty\\npri\",i{~ tJij\/re\\n\\nI Providers I Specialty\\n\\n\\xe2\\x80\\xa2. ,<:, . .\\n\\n:\\xc2\\xa3,.\\'\\nFamily Medicine\\nInternal Medicine (General)\\nOB\/GYN\\nPediatrics (General)\\n\\nSlltgicat$;peciitlists \"~;\\';;\\n\\nMedical S.p1~tillists\\n461\\n342\\n156\\n180\\n\\n\\',:, ,~:%C{~;i:\\'~liF:;:.\\xc2\\xb7r\\n\\nThoracic Surgery\\nGeneral Surgery\\nGSNascular Surgery\\nGeneral Surgery!Breast\\nNeurosurgery\\nOphthalmology\\nOrthopedic Surgery\\nPlastic & Reconstructive Surgery\\nUrology\\nHospital}iJa!$~d\\n\\n..:,.\\n:.\\'.\\'.\\n\\nAnesthesiology\\nAnesthesiology (CRNA, MSN)\\nEmergency Medicine\\nHospitalist (1M)\\nPathology\\nRadiology\\n\\n14\\n116\\n4\\n112\\n36\\n86\\n135\\n27\\n48\\n\\'.\\'::\\'\\n\\n\\':\\n\\n,.\\'.\\n\\n223\\nNA\\n151\\n6\\n81\\n153\\n\\nProviders\\n\\n>l\"r;,:,\\n\\n:\".;(?:~:.;:iDF;;.\\n\\nCardiology\\nDermatology\\nEndocrinology\\nENT\\nGastroenterology\\nGeriatrics (1M)\\nInfectious Disease\\nPediatric - Neonatology\\nNephrology\\nNeurology\\nOncology!Hematology\\nPhysical Medicine\/Rehabilitation\\nPediatric Medical Subspecialty\\nPodiatry (DPM)\\nPsychiatry\\nPulmonology\/Critical Care\/Intensivist\\nRadiation Oncology, Therapeutic Rad\\nRheumatology\\nWound Care (Multiple Specialties)\\nOther\\n.\\n\\xc2\\xb7T()TAL;;.,\\xc2\\xb7~F .... ,,)W~\\' . ...\\n\\'\"\\n\\n~\\n\\n97\\n34\\n16\\n42\\n34\\n9\\n12\\n16\\n17\\n50\\n23\\n17\\n32\\nNA\\n157\\n39\\n20\\n18\\nNA\\n102\\n-_ ..\\n. \"\\'2;950\\'\\n\\n\\x0c-14Further infonnation regarding medical, surgical, diagnostic, and ancillary services\\nprovided by participating Hospitals is available at Exhibit VI.F. Information regarding other\\nancillary service providers is available at Exhibit VI.G. Infonnation reflecting physician\\nshortages in selected specialties as applied to the 2010 estimated population of the NPHO service\\narea is compiled in Exhibit VI.H.\\nIII.\\n\\nCLINICAL INTEGRATION PLAN\\n\\nA.\\n\\nPurposes and Background\\n\\nWhile NPHO has not fully reached its potential for clinical integration, clinical\\nintegration has been a major focus of NPHO almost from its inception. For many years, the high\\ncost and limitations of the resources available to support clinical integration served as barriers to\\nplan development and implementation. During a planning retreat five years ago, the NPHO\\nBoard of Managers initiated a detailed evaluation of the potential benefits of clinical integration\\nand concluded that clinical integration would result in the following benefits to patients,\\nproviders, and purchasers of health care services:\\n\\xe2\\x80\\xa2\\n\\nImproved care through the rapid electronic transfer of patient clinical infonnation\\namong the participating providers responsible for the diagnosis of illnesses, injuries,\\nand diseases, along with collaborative development and implementation of treatment\\nguidelines and plans.\\n\\n\\xe2\\x80\\xa2\\n\\nImproved patient outcomes through the development, implementation, and\\nmonitoring of evidence-based clinical practice guidelines that reflect good practices.\\nGuidelines established and actual perfonnance would be benchmarked against NPHO\\nprovider peers at the regional and national levels.\\n\\n\\xe2\\x80\\xa2\\n\\nImproved utility of data resulting from NPHO\\'s ability to collect, analyze, and\\ncommunicate data compiled from providers and Payers.\\n\\n\\xe2\\x80\\xa2\\n\\nReduced cost of care through sharing of laboratory, imaging, and other tests and\\ncorresponding elimination of the unnecessary duplication of these services.\\n\\n\\xe2\\x80\\xa2\\n\\nImproved patient satisfaction through the elimination of repetitive completion of\\nregistration paperwork, and timely provision of infonnation regarding current\\ntreatments, resulting in more effective care management.\\n\\n\\xe2\\x80\\xa2\\n\\nImproved care and reduced cost of care by reduction in medical errors, better\\ninfection control rates, shorter hospital stays, lower Hospital re-admission rates,\\nearlier disease detection, and better disease control procedures.\\n\\n\\xe2\\x80\\xa2\\n\\nImproved patient access to care through immediate referrals, electronic patient file\\nsharing, and e-prescribing.\\n\\n\\xe2\\x80\\xa2\\n\\nElimination of the need for Payers to complete independent and redundant\\ncredentialing and peer review processes.\\n\\n\\xe2\\x80\\xa2\\n\\nElimination of the need for Payers to create, implement, and monitor independent and\\nredundant quality improvement processes, while improving provider participation.\\n\\n\\x0c-15-\\n\\n\\xe2\\x80\\xa2 Creation of a competitive advantage for Payers and self-insured employers through\\ndocumentation of enhanced outcomes, reduced cost, and increased patient\\nsatisfaction.\\n\\n\\xe2\\x80\\xa2 Position NPHO to participate more fully with Medicare and Accountable Care\\nOrganizations.\\nFurther, as a result of historic working relationships among NPHO Members, the Board\\nrecognized that NPHO was well positioned to rapidly implement and quickly achieve the\\nbenefits of clinical integration. Accordingly, the Board authorized the leadership of NPHO to\\nmove forward with the development of a plan to use the power of clinical integration to deliver\\nbetter health care to patients.\\nDuring the subsequent planning process, NPHO Chairman Stephen Connery, MD and\\nNPHO Executive Director Gary Clinton attended conferences in Las Vegas, Atlanta, and\\nOrlando hosted by the American Association of Integrated Healthcare Delivery System that\\ndetailed the impact of clinical integration through the use of electronic medical records and better\\ncollaboration among physicians. These concepts were also discussed at numerous NPHO Board\\nmeetings and annual NPA meetings. Planning guidance was also requested of NPHO legal\\ncounsel.\\n\\nElectronic Medical Records. Selection of an electronic medical record system has been\\na cornerstone of the NPHO Clinical Integration Plan to date. In 2007, after the NPHO staff\\nevaluated several options for the electronic medical record and related electronic information\\ninterface, NPHO selected the Medicare-approved electronic medical record solution developed\\nby eClinicalWorks, a company based in Westborough, Massachusetts, now serving 40,000\\nproviders in all 50 states.\\nIn addition, the company has developed an electronic information interface, Electronic\\nHealth Exchange (eEHX), which allows for the two-way communication of clinical information\\nbetween a physician\\'s office and hospital information systems. eEHX is the foundation of the\\nOklahoma Physicians Health Exchange (OPHX\\xc2\\xae). eEHX serves as a local \"hub\" for the\\ncoordination of patient data so that NPHO providers can collectively and more effectively\\nmonitor and manage patient care and promote patient safety, while reducing costs due to the\\ncontinuity and coordination across providers. eClinicalWorks includes an electronic prescription\\nsystem that interfaces with local pharmacies. OPHX\\xc2\\xae will allow NPHO providers to\\nappropriately share outpatient information with participating providers across the state.\\n\\n\\x0c-16-\\n\\nIn 2008, NPHO hired a full-time support person to service its network members by assisting with\\nthe installation of the technology, training physicians and staff, and providing ongoing\\nmaintenance and supportto physicians for eClinicalWorks and eEHX. In addition to purchasing\\nthe software licenses for its network providers, including ancillary providers, NPHO pays the\\n18% annual maintenance fee for the electronic data services. NPHO plans to continue offering\\nthis support to its network members at its expense, while participating physicians incur the\\ninstallation costs for their individual offices. NPHO\\'s financial investment in eClinicalWorks\\nand eEHX was approximately\\nNRHS has also committed to facilitating NPHO\\'s utilization of electronic medical\\nrecords. In 2007, NRHS purchased and implemented the Medi-Tech System to transition the\\nNRHS facilities to an electronic medical record system. NRHS, in conjunction with NPHO, has\\nbeen able to provide interfaces between eClinicalWorks and Medi-Tech so physicians have bidirectional reporting on laboratory, radiology, and other hospital reports. NRHS also hosts the\\neEHX\\xc2\\xae (OPHX\\xc2\\xae) software for exchange of information between physicians, the hospitals, and\\nemergency departments. OPHX\\xc2\\xae is also connected to the RHIO (Regional Health Information\\nOrganization) through SMRTNET, providing NRHS with a single source for information about\\npatient care delivered by health care providers that do not participate in NPHO.\\n\\nClinical Practice Guidelines. NPHO is currently utilizing the Healthcare Effectiveness\\nData and Information Set (\"HEDIS\") for clinical practice guidelines.\\nHEDIS is a\\ncomprehensive set of standardized performance measures developed by the National Committee\\nfor Quality Assurance. HEDIS is a tool used by more than 90% of America\\'s health plans to\\nmeasure performance on important dimensions of care and service.\\nThe primary goal of the NPHO Clinical Integration Plan is to improve patient care and\\nresulting clinical outcomes. Secondary goals include increased efficiency of care delivery and\\ncorresponding reductions in the cost of providing care. The electronic medical record system\\nsets the framework for continued and enhanced clinical integration. But the full benefits of\\nclinical integration have not yet been achieved.\\n\\nOrganizational Structure. In support of the clinical integration plan, NPHO has created\\na separate organizational structure for clinical integration that will work under the direction of\\nthe Board of Managers to accomplish identified goals. Key organization steps that NPHO has\\ntaken thus far include:\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\n\\xe2\\x80\\xa2\\n\\nAppointed Jim Love, MD, to serve as Medical Director;\\nContracted with Brian Yeaman, MD to serve as the Medical Informatics Officer;\\nHired a registered nurse to serve as the Quality Assurance Director;\\nEstablished a \"Mentor\\'s Committee\" to oversee global quality improvement planning\\nincluding approval of protocols, monitoring of implementation and enforcement of\\nadherence to guidelines; and\\nCreated \"Specialty Advisory Groups,\" which include all members of NPHO, to\\nestablish specialty specific clinical practice guidelines and consult on tracking,\\ncollection, and analysis of data to identify improvement opportunities.\\n\\n\\x0c-17-\\n\\nB.\\n\\nPlans for Continued and Enhanced Clinical Integration Going Forward.\\n\\nAttached as Exhibit VII to this letter is a copy of the proposed, new Participation\\nAgreement that NPHO plans to distribute to its members. The NPHO board has approved the\\nnew form of Participation Agreement, but NPHO has not yet entered into the new Participation\\nAgreement with any member. Under the proposed, new Participation Agreement, each\\nparticipating physician must agree to actively participate in, and fully comply with, NPHO\\'s\\nclinical integration plan, policies and procedures, including:\\n\\n\\xe2\\x80\\xa2 participate in NPHO\\'s electronic medical record and electronic information interface\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\nor an acceptable data equivalent;\\nparticipate in quality assurance and utilization management programs;\\ncomply with clinical practice protocols and guidelines;\\nparticipate in peer review; and\\nutilize NPHO physicians and practitioners, as well as NPHO hospitals and health care\\nfacilities, for the care and treatment of patients, subject to the patients\\' medical needs\\nand preference.\\n\\nThe NPHO Board of Managers and Members believe that continued and enhanced\\nclinical integration will allow NPHO to reduce waste and improve communication among\\npractitioners, with resulting improvements in patient care, reduction in health care costs, and\\nenhanced competition with other area health care providers. It will also provide NPHO with a\\nbuilt-in mechanism to achieve a community electronic medical record system at low cost and\\nwith local technical support. As the AMA has recognized, clinical integration may offer the\\nmost efficiency in multi-specialty settings (like NPHO) \"in which primary care physicians\\ncoordinate patient care with specialists and the various specialists coordinate care among\\nthemselves.\"l\\nWhile clinical integration is a somewhat imprecisely defined concept within the health\\ncare industry, NPHO believes that its goals for clinical integration can best be achieved if certain\\ncore elements are included:\\n\\nI\\n\\nSee American Medical Association, \"Competing in the Marketplace: How Physicians can Improve Ouality and\\n\\nIncrease their Value in the Health Care Market through Medical Practice Tntegration,\" al 10 (2nd Rd.) 2010,\\navailable at http:\/\/www.ama-assn.orglamal\/pub\/upluad\/mm\/368lcumpeling-in-markeLpdf.\\n\\n\\x0c-18-\\n\\n\\xe2\\x80\\xa2 a unified electronic medical record links each participating physician and provider,\\n\\n\\xe2\\x80\\xa2\\n\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\noffering the potential for improved patient care, reduction in waste, reduction in\\nmedical errors, better assessment of care, and enhanced communication among\\npractitioners;\\nall participating physicians and providers participate in meaningful and ongoing\\nimprovement activities, including developing and utilizing clinical practice\\nguidelines, monitoring patient care outcomes, and sharing data with other\\nparticipating physicians;\\nthe organizations hold physicians and other providers accountable for achieving\\nefficiencies in providing care, continuously assessing care in an effort to improve care\\nprocesses and reduce waste;\\nall participating physicians and providers demonstrate a significant commitment of\\ntime and financial resources; and\\nall participating physicians and providers are required to participate in all agreements\\nwith Payers.\\n\\nThe following sections address how NPHO plans and proposes to achieve these objectives.\\n\\n1.\\n\\nRealizing the Full Potential of an Electronic Medical Record System\\n\\nA robust electronic medical records system will allow physicians to share clinical\\ninformation concerning patients and enable physicians to collaborate in and coordinate patient\\ncare by providing immediate access to medical data. Going forward, NPHO\\'s electronic medical\\nrecord system will be a critical component of NPHO\\'s infrastructure to facilitate implementation\\nof NPHO\\'s clinical integration plan. It will facilitate data collection, outcomes measurement,\\nutilization management, and performance reporting required by Medicare and other Payers.\\nAs of this time, NPHO has invested in 130 licenses for its participating physicians to\\ninstall and use eClinicalWorks and eEHX on their office systems. To date, 130 physicians and\\nother health care professionals have purchased those licenses. Upon implementation of the\\nproposed, new clinical integration plan, all physician members will be required to install and use\\neClinicalWorks and eEHX (or an acceptable data equivalent). As explained below, to do so\\nPhysicians will be required to make a significant financial investment to update their existing\\nhardware and office computer systems, and then install the technology for use. They will also be\\nrequired to invest significant \"sweat equity\" and staff time in terms of training, implementation,\\nand use in order to take full advantage of the benefits of the electronic medical records system.\\nWhile in its early stages of use, when fully implemented the electronic medical record\\nsystem developed by eClinicalWorks will enable health care providers and professionals to\\nmanage patient flow, immediately access patient records in-house or remotely, electronically\\ncommunicate with referring and consulting physicians, and securely send clinical data. Unified\\nwith its practice management solution, the electronic medical record system will allow users to\\neasily review and complete patient histories, past visits, current medications, allergies, laboratory\\ntests, and diagnostic tests. Its registry reporting and clinical decision support features elevate the\\nrole of the system from passively collecting information to actively helping physicians provide\\noptimal medical care.\\n\\n\\x0c-19-\\n\\nWith increased use of eClinicalWorks, physicians should be better able to monitor and\\nmanage care for patients, promote patient safety, reduce costs, and improve overall patient health\\nbecause of better continuity and coordination in patient care. NPHO will have mechanisms in\\nplace to monitor individual physician use of electronic medical records, and eClinicalWorks will\\nallow performance reports based in part on practice patterns. Data on NPHO physicians\\n(including utilization, outcomes, etc.) will be made available to the NPHO board, the Quality\\nAssurance Committee, and the entire panel of participating physicians. NPHO staff, at the\\ndirection of the NPHO board, will track and identify the data, and share the aggregate data\\namong the appropriate parties. Key components of the electronic medical record system include:\\n\\nThe Oklahoma Physicians Health Exchange (OPHX\\xc2\\xae) will allow NPHO to extend the\\nbenefits of the electronic medical records beyond the participating physicians to include hospitals\\nand potentially other providers. The interface creates the ability for health care providers to\\nsecurely share facets of patient care, including electronic referrals, patient record summary, lab\\nresults and registry reporting. Using the OPHX\\xc2\\xaeencourages community-wide reporting and\\nregistry that facilitate outcomes analysis and increases compliance by measuring actual time and\\ncost performance and care improvements, creating efficiencies that benefit purchasers of health\\ncare and their recipients.\\nUse of eClinicalWorks as a common platform for a community-wide health record\\nefficiencies.\\neClinicalWorks has built-in\\n\\nwill facilitate referrals among participating physicians, minimize errors in\\n\\n\\x0c-20sharing medical history and demographic data, and minimize duplication of laboratory and\\nradiology testing. This capability will enhance care with every patient referral.\\nFurther use of OPHX@ will allow NPHO to\\n\\nAdditionally, OPHX@ plans to participate in SMRTNET, a statewide network that is\\nbeing developed in Oklahoma. SMRTNET affiliation will allow further savings by allowing\\naccess to some patient medical information that is generated or maintained by health care\\nproviders who do not participate in NPHO. Because many NPHO patients receive care outside\\nof the NPHO network, inevitably important medical events (such as surgeries, allergic reactions,\\nimmunizations, ER visits, and other events) occur without the knowledge of NPHO network\\nproviders. SMRTNET will provide an additional opportunity for NPHO physicians to access\\nthat information and, thus, to improve care for patients. OPHX\\xc2\\xae allows the Nurse Director of\\nQuality Assurance to examine patient files and make sure that physicians are following HEDIS\\nprotocols, which is performance evaluation based on applicable evidence-based clinical\\nperformance measures and benchmarks.\\nBy joining the SMRTNET network, NPHO anticipates realizing even greater efficiencies\\narising from expanded use of electronic records management. For example, participation in\\nSMRTNET will improve the coordination of patient care among patients in the Oklahoma City\\nmetropolitan area, reducing the likelihood of unnecessary laboratory testing, improving\\nmedication reconciliation, reducing hospital readmissions, decreasing some practice\\nadministrative costs, and improving patient satisfaction, while lowering the cost of health care in\\nthe region overall.\\nContinued investment from and participation of NRHS and other ancillary service\\nproviders will also help to ensure that improvement initiatives cross the entire continuum of care,\\nimproving access to all services, while better managing their utilization.\\n\\n2.\\n\\nSelectivity of Physician Members\\n\\nNPHO recognizes that the ongoing selectivity of only those physicians who are\\ncommitted to NPHO\\'s goals and requirements is essential to the Clinical Integration Plan\\'s\\nsuccess. The proposed, new Participation Agreement will require participation in the Clinical\\nIntegration Plan as a condition of membership in NPHO. Once implemented, the new\\nParticipation Agreement will obligate physicians to participate in all NPHO agreements, care\\nimprovement activities, and electronic medical record initiatives described in this letter. NPHO\\nwill also require that physicians agree to implement and be subject to performance evaluation\\nbased on applicable clinical performance measures and benchmarks.\\nPhysicians will initially be allowed to participate in or continue to participate in NPHO if\\nthey satisfy the c.redentialing criteria, but their membership will be denied if they do not enter\\n\\n\\x0c-21into the new Participation Agreement, and expelled if they sign the Participation Agreement but\\nultimately and chronically fail to comply with that Agreement. While NPHO is not being\\nespecially \"selective\" per se in the first instance - by excluding in a significant way local\\nphysicians from participation in the proposed program - NPHO\\'s new, proposed program will\\nimpose a number of requirements that are likely to discourage some physicians who are not fully\\ncommitted to the program from continuing participation and, thus, assure that those who do\\nchoose to participate will be fully committed to its goals and requirements.\\nNPHO physicians will at first be largely self-selected by those physicians who recognize\\nthe efficiency, value, and clinical benefits of an integrated practice and, therefore, agree to the\\nproposed, new Participation Agreement. Then, going forward, NPHO anticipates that some\\nNPHO physicians will \"opt-out\" on their own accord, as some physicians may not want to be\\nsubject to the participation obligations. Importantly, in addition to this form of self-selection,\\nNPHO will implement comprehensive review processes to ensure physician commitment to\\nNPHO\\'s objectives. These measures will largely take place under the auspices of the Quality\\nAssurance Committee, which will endeavor to be a fair arbiter of the Quality Assurance Plan.\\n\\n3.\\n\\nDevelopment of Clinical Performance Measures - Quality Assurance\\nCommittee\\n\\nNPHO plans to expand current quality improvement initiatives to accelerate\\nimprovements in the delivery of health care services that could not be achieved if physicians\\nworked independently. NPHO will obtain input, advice, direction, and recommendations from\\nall NPHO participating physicians to ensure that the measures tracked are appropriate and\\nmeaningful. To this end, NPHO has already formed a Quality Assurance Committee and has\\nrecently hired a full-time nurse to help design and implement the program. Going forward,\\nNPHO expects that the Quality Assurance Plan will include incentives and mandate corrective\\naction, potentially including education, counseling, financial withholds or penalties, and, in some\\ncases, expUlsion from NPHO for physicians whose practices are incompatible with NPHO\\'s\\nobjective of offering high-quality, clinically integrated care in an efficient manner.\\n\\nClinical Practice Guidelines and Disease Management. As noted above, NPHO is\\ncurrently utilizing HEDIS clinical practice guidelines. While the details remain to be specified,\\nNPHO is in the process of developing clinical practice guidelines and believes that the utilization\\nof the electronic medical record system by the Quality Assurance Committee and NPHO staff\\nwill allow it to supplement nationally-recognized performance measures with additional\\nevidence-based practice guidelines across a number of specialties.\\nFor example, NPHO is beginning the process of implementing disease management\\nprocesses for reducing health care costs, improving quality of life for individuals, and preventing\\nor minimizing the effects of a disease (usually a chronic condition) through integrative care. To\\ndate, NPHO staff, through its recently hired quality assurance nurse, has acted primarily in a\\ndata-collecting mode. Going forward, NPHO initially will consider monitoring some of the\\nchronic disease processes that most affect its patients: coronary heart disease, chronic\\nobstructive pulmonary disease, kidney failure, hypertension, heart failure, obesity, diabetes\\nmellitus, asthma, cancer, arthritis, and other common ailments. NPHO envisions health care\\ncosts decreasing and quality of care improving as a result of this effort. NPHO also believes that\\n\\n\\x0c-22the collaboration required for implementing the benchmarks and disease management processes\\nwill be an excellent means of fostering interdependence between NPHO physicians. 2\\n\\nQuality Assurance Committee. As previously noted, a Quality Assurance Committee\\nwill manage and oversee quality improvement activities. At least one full-time quality assurance\\nnurse will review patient charts and records for adherence to the HEDIS disease-state, evidencebased medicine guidelines adopted by NPHO and the Quality Assurance Committee. The\\nQuality Assurance Committee will seek to identify instances of both overutilization and\\nunderutilization of services, and work with physicians to address these issues. For its disease\\nmanagement program, NPHO will begin with nine disease states, with an expectation of\\nincreasing to as many as 50 disease states over time.\\nThe NPHO will develop clinical guidelines with the goal of reducing morbidity and\\nmortality and minimizing unnecessary costs. NPHO will initially focus on disease states that\\naffect the largest number of patients (such as hypertension) and on diseases that carry the highest\\nmorbidity (such as diabetes). The selection of specific disease states will be made at the\\nphysician specialty level. For example, the primary care specialists may choose to focus on\\ndiabetes care, while the surgeons may decide to focus on post-operative infection issues, and\\nobstetricians may choose to focus on C-section rates. This will ensure broad participation by\\nparticipating physicians and will ensure that guidelines are developed by those with the expertise\\nto implement them. The Quality Improvement Committee will provide input and oversight, but\\nthe initial oversight will be placed on the specialists. NPHO expects that over time new\\nguidelines will be established as old ones become incorporated into standard practice, thus\\nensuring ongoing improvement.\\nThe Quality Assurance Committee will provide the general management and oversight of\\nthe clinical practice guidelines and disease management processes. The Quality Assurance\\nCommittee, with the use of ad hoc sub-committees as necessary, will:\\n(a) set the measures for individual and group performance;\\n(b) monitor individual physicians\\' compliance with the network\\'s standards;\\n(c) counsel physicians to improve their performance, as necessary; and\\n(d) evaluate aggregate network performance against stated goals and, as necessary, reevaluate and modify the stated goals and processes.\\nIn the process of establishing the performance goals and standards, specialists will have\\nthe opportunity to participate in the Quality Assurance Committee\\'s (and any sub-committees\\')\\n\\n\\x0c-23-\\n\\ndevelopment and implementation of the measures. Committee participation will be mandatory,\\nwhich should assure broad participation in the development of clinical practice guidelines.\\nTo facilitate monitoring, NPHO staff, at the direction of the Quality Assurance\\nCommittee, will perform medical records audits remotely via the Electronic Health Exchange\\nsoftware (eEHX\/OPHX\\xc2\\xae). NPHO will generate regular reports on individual and aggregate\\nphysician compliance rates. NPHO anticipates that the reports will include the following\\ninformation: (a) individual physicians\\' compliance rates under applicable measures; (b)\\ncomparison of the physicians\\' compliance rate with their previous performance (i.e., an\\nindividual baseline comparison) and with their peers; and (c) calculation of a cumulative\\ncompliance rate for each clinical measure for all physicians for whom the measure is applicable.\\nTo ensure compliance, reports will be shared with NPHO physicians as a group. Internal\\npublication of this data should not only make individual physicians and NPHO as a whole\\naccountable for their performance, but will also highlight the benefits of NPHO\\'s practices to the\\nmarketplace and facilitate physician interdependence. Moreover, in recognition of the fact that\\nan inability to consistently enforce the Clinical Integration Plan would frustrate the NPHO\\'s\\nstated goals, NPHO will require, as a condition of participation, that physicians agree to be\\nsubject to performance evaluations based on compliance with appropriate and applicable clinical\\nperformance guidelines.\\nWhile NPHO is in the earliest stages of determining the precise metrics that will be\\nmeasured, it expects to identify physicians who appear to be high-cost providers or inappropriate\\nusers of resources, to measure physicians\\' compliance with clinical practice guidelines, and to\\ntrack intra-network referral rates. Mter the precise metrics are determined, NPHO anticipates\\nthat physicians will receive regular performance evaluations from NPHO staff, and those who do\\nnot adhere to guidelines will be formally subject to a series of progressive corrective steps,\\nbeginning with education, counseling, and corrective action plans, and, as necessary, moving on\\nto reprimands and financial penalties, with removal from NPHO as the ultimate action.\\nHistorically, NPHO has not had to deal with physicians who perform at unacceptable levels.\\nHowever, NPHO will implement an active and ongoing program to evaluate participating\\nphysicians and create a high degree of interdependence, interaction, and cooperation among the\\nphysicians to control costs and ensure high standards of care. Non-compliance may also be\\nmanaged using financial withholds or penalties.\\nTo further encourage compliance with the Clinical Integration Plan, NPHO anticipates\\nthe use of appropriate incentives. For example, based on data collected, NPHO may seek to\\nnegotiate with Payers for fee increases based on its efficiency and quality initiatives, for sharing\\nin cost savings, or other financial incentives. Moreover, if the Clinical Integration Plan is\\nsuccessful, NPHO as a whole expects to be able to receive higher physician reimbursement rates\\nfrom Payers because of the demonstrated benefits to patients and Payers. To be clear, NPHO\\'s\\nanticipated higher fee levels or shared cost savings are part of a program that seeks, and has the\\nreal potential to achieve, overall greater efficiency and improved care, resulting in ultimately\\nlower costs of medical care for Payers. Increased reimbursement rates, as part of a clinical\\nintegration plan, should not raise a concern for competition if it is part of an overall goal of\\nproviding improved patient outcomes and lower total costs. Cost savings and quality\\nimprovement require a significantly higher lise or physician resources to (lchieve. Tncre()sefl\\n\\n\\x0c-24reimbursement will be justified in part because of the increased use of resources, including\\nincreased physician and staff time commitments and technology costs.\\nThe comparison and evaluation of aggregate network performance data will be an\\nessential component of NPHO\\'s Clinical Integration Plan. The Quality Assurance Committee\\nwill review regular reports on the Plan\\'s progress, and will periodically re-evaluate whether the\\nstandards of care and efficiency goals are being achieved. The Committee will retrospectively\\nreview whether particular measures were effective in modifying physician behavior, and whether\\nsuch measures and processes helped NPHO reach its goals of improved and more efficient\\npatient care.\\n\\n3.\\n\\nThe Costs of Clinical Integration\\n\\nAlthough NPHO physicians will not operate under common ownership, some level of\\nfinancial integration and interdependence will occur by virtue of required investment in the\\nelectronic medical records system, withholds (which will likely increase depending on the\\nrevenues generated as a result of the new plan), membership dues, and time commitment.\\nFinancial integration will likely be increased to some degree, as the percentage of revenues\\ngenerated by NPHO increases and is specifically linked to quality through clinical integration.\\nWhile the Clinical Integration Plan is still in many respects in the early stages of\\ndevelopment, NPHO believes that full implementation of the Clinical Integration Plan will\\nrequire that NPHO retain at least two specified full-time-equivalent employees - one quality\\nassurance nurse and one eClinicalWorks trainer - dedicated to the implementation and execution\\nof the Plan. This will come at an estimated annual cost of\\n.\\n$150 000 for salaries\\n\\nEach physician who plans to become or continue as a member of NPHO going forward\\nwill be encouraged to obtain a license for the electronic medical record and electronic interface\\nsoftware\\nas further described below will also be\\nto make\\nand\\n\\nvU,,,\"V\"U,,\"\\n\\nOne-Time Costs for Electronic Medical Records System\\n\\n\\x0c-25-\\n\\nAnnual Costs\\n\\nIn addition, each physician that obtains a license for the eClinicalWorks software will\\nalso have to obtain extensive training for the physician, office manager, nurse, receptionist, and\\nbilling person. The time commitment and allocation of staff resources for implementation is\\nsubstantial. NPHO estimates that the dollar value of lost patient revenue due to time spent on\\ntraining of physicians and their staff in the utilization of the electronic medical records system\\nwill exceed $3,000 per physician.\\nFinally, physicians will be required to commit substantial time in developing,\\nimplementing, and monitoring compliance with clinical practice guidelines. As noted above,\\nNPHO will initially take volunteers to participate in the Quality Assurance Committee and assist\\nthe Committee on an ad hoc basis with such tasks as providing medical education and\\ninformation about clinical practice guidelines and disease management protocols; conducting\\nmedical records audits and making recommendations for improvement; assisting with risk\\nNPHO expects that virtually all of\\nmanagement; and mentoring other NPHO physicians.\\nNPHO\\'s members will actively participate in the implementation of some component of the\\nQuality Assurance Plan. It would require speculation in advance of the implementation of the\\nQuality Assurance Plan to estimate the time commitment required. NPHO believes that, on\\naverage, this commitment will be equal to or greater than the requirements for implementing the\\nelectronic medical records system.\\nC.\\n\\nOrganizational Arrangements for Clinical Integration\\n\\nNPHO leadership, designated members of NPHO committees, and mentors, along with\\nNPHO staff (including the additional staff members that NPHO proposes to be hired), will be\\nresponsible for implementation of the Clinical Integration Plan. Their duties will be as follows:\\n\\xe2\\x80\\xa2\\n\\nThe Medical Director will provide medical leadership for the Clinical Integration\\nPlan working with NPHO participating providers, committees, and staff to direct\\ntimel y and consistent implementation.\\n\\n\\xe2\\x80\\xa2\\n\\nChaired by the Medical Director, the Mentor\\'s Committee will oversee global quality\\nimprovement planning. Membership of the committee will be comprised of physician\\nleaders elected by their respective clinical departments within NRHS.\\no The members will include one General Internist, one Family Practitioner, one\\nGeneral Surgeon, one Obstetrician\/Gynecologist, one Pediatrician, one specialty\\n\\n\\x0c-26Surgeon (representing, but not limited to, one of the following surgical\\nspecialties: Cardiovascular Surgery, Otorhinolaryngology, Neurosurgery, and\\nOrthopedic Surgery), one specialty Internist (representing, but not limited to, one\\nof the following medical specialties: Cardiology, Nephrology, Neurology,\\nEndocrinology, Gastroenterology, and Pulmonology) and one Emergency\\nMedicine specialist.\\no The Mentor\\'s Committee will be responsible for establishing and approving\\nevidence-based medicine clinical guidelines that may cross specialty lines,\\napproving performance targets and enforcing adherence to approved guidelines\\nthrough mandated educational activities, increased monitoring, financial\\nwithholds and, if necessary, removal from participation in NPHO.\\no The Mentor\\'s Committee will continue to approve additional clinical practice\\nguidelines. The Mentor\\'s Committee may also develop a patient satisfaction\\nsurvey. The results of this survey may be used as one measure of quality of care\\nfor NPHO providers.\\n\\n\\xe2\\x80\\xa2 Specialty Advisory Groups (SAGs) will be established for each medical department\\nof NRHS and will be chaired by the chief of each department. All of the NPHO\\nphysicians will be members of the appropriate SAG and will be required to actively\\nparticipate in the SAG. The groups will meet at least once annually to establish or\\nreview clinical practice guidelines and performance targets applicable to their\\nrespective specialties and report their decisions and performance targets to the\\nMentor\\'s Committee. Meetings will also serve as a forum for monitoring peer\\nperformance and working with peer\\'s to address significant deviations.\\n\\n\\xe2\\x80\\xa2 The Medical Informatics Officer has specialized in the management and processing\\nof data, information, and knowledge in the health care arena and will help to\\ntransition the NPHO participating physicians who invest in electronic medical records\\nand electronic interface from their current data and record-keeping environment. The\\ncurrent Medical Informatics Officer also serves in a similar capacity for the\\nOklahoma Hospital Association and will ultimately assist NPHO to network with the\\nlocal RHIO and other RHIOs across the country.\\n\\n\\xe2\\x80\\xa2 The Director of Quality Assurance will assist the Mentor\\'s Committee and support\\nthe activities of each SAG. The Director of Quality Assurance will participate as a\\nnon-voting member of each SAG.\\no\\n\\no\\no\\n\\nShe has begun supervising the collection of performance data, and will report\\nsummary results to the Mentor\\'s Committee and individual data to individual\\nproviders.\\nAs clinical practice guidelines are developed, she will also perform chart audits to\\nassess compliance with guidelines.\\nIn addition, she will assist with the promotion of the benefits of clinical\\nintegration by engaging in discussions with Payers to maximize understanding\\nand use of clinical integration.\\n\\n\\x0c-27-\\n\\no The Director of Quality Assurance will also work with the NRHS Utilization\\nReview\/Quality Assurance Department to facilitate improvements in care and\\nutilization where appropriate.\\no Additionally, she may work to develop programs to promote the mission of\\nNPHO, including direct patient education, a disease registry to target high risk\\npopulations of patients for special intervention, disease management programs,\\nreadmission prevention protocols, and physician education.\\n\\n\\xe2\\x80\\xa2 The Executive Office of NPHO will be responsible for the administrative functions of\\nthe Clinical Integration Plan, including the coordination of personnel managing the\\nclinical integration process, maintaining membership rosters and status, administering\\nannual payouts of earnings to successful providers based on pre-determined criteria\\nand formulas established by the quality improvement team members, cataloging of all\\nprotocols, preparing minutes of meetings of the SAGs and Mentor\\'s Committee,\\nconducting contract negotiations, arranging withholds to create a reimbursement pool,\\nand recruiting and supervising additional support staff as needed. The Executive\\nOffice will also work with purchasers of health care to elicit feedback on the utility of\\ncurrent efforts and to guide future efforts at improvement in care. At the discretion\\nof the Board, NPHO may pursue public relations and advertising activities designed\\nto bring quality initiatives to public attention.\\nNPHO Organizational Chart\\n\\n\\x0c-28An extensive time commitment will be required on the part of physicians serving in\\nleadership positions and as members of the various committees identified. NPHO pays Board\\nmembers a nominal fee for attendance at Board meetings. With the exception of the PHO Board\\nChair and the Director for Medical Informatics, NPHO does not compensate physicians for their\\nadministrative services.\\n\\nClinical integration is a complex endeavor. It requires planning, expenditures and\\nimplementation at multiple levels of medical practice. NPHO has hired four full-time staff\\nmembers for electronic medical records management and training, rewritten its Physician\\nParticipation Agreement to increase physician involvement and facilitate contracting on behalf of\\nmember physicians, developed the OPHX\\xc2\\xae system, affiliated with SMRTNET, developed\\noutlines for organization of contracting specialty and quality improvement committees, and\\nbegun \"dry run\" data extraction in anticipation of monitoring clinical quality data.\\nNPHO has yet to complete a number of important activities, such as:\\n\\n\\xe2\\x80\\xa2 Establishing the Mentor\\'s Committee and recruiting physicians to serve on the\\n\\xe2\\x80\\xa2\\n\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\n\\xe2\\x80\\xa2\\nD.\\n\\ncommittee.\\nDeveloping the final details on clinical practice guidelines.\\nEstablishing the Specialty Advisory Groups (SAGs) and coordinating an annual\\nmeeting.\\nDetermining membership for the Quality Improvement Committee.\\nDeciding the details relating to reimbursement for practitioners comply with clinical\\npractice guidelines and other aspects of the Clinical Integration Plan.\\nMarketing the Clinical Integration Plan to physicians and other providers.\\nExecuting the new Physician Participation Agreement.\\nCommunity Impact of Clinical Integration\\n\\nClinical integration should have a favorable impact on NPHO participating providers,\\nPayers who contract with NPHO and patients in the community served by NPHO providers.\\n\\n\\xe2\\x80\\xa2 Participating health care providers should experience increased practice efficiency\\n\\n\\xe2\\x80\\xa2\\n\\n\\xe2\\x80\\xa2\\n\\nthrough consolidated NPHO contracting efforts, reduction of paperwork, greater ease\\nof scheduling, improved patient diagnosis and treatment plans through timely receipt\\nof diagnostic information and availability of patient care guidelines, seamless\\nreferrals to specialists and admission to ancillary and hospital providers, reduction of\\nstaff time required to duplicate medical records, and timely scheduling of patient care\\nservices.\\nPayers should experience an immediate benefit from centralized NPHO credentialing\\nand contracting, as well as increased satisfaction among beneficiaries. In addition,\\nover time, NPHO\\'s improvement initiatives should help to eliminate unnecessary\\nduplication of services, avoid preventable hospitalizations, reduce medical errors,\\nimprove infection control rates, decrease hospital length of stay, lower re-admittance\\nrates, and provide for earlier disease detection, resulting in lower cost of care.\\nPatients should benefit from all of the above with the over arching benefit of improved\\nlevels of care and better patient outcomes. Patients should also experience more\\n\\n\\x0c-29-\\n\\ntimely scheduling of primary and specialty care appointments, reduction of repetitive\\ncompletion of registration paperwork, and improved access to medications through eprescribing. Patients should also see improved adherence to preventive service, such\\nas mammograms and colonoscopies. The community should also benefit from\\nclinical integration efforts through an overall improvement in community health\\nstatus. In addition, enhanced control over health care costs and the potential for cost\\nreductions will serve as economic development tool for the recruitment of new\\nbusinesses and jobs.\\nBy way of example of the community benefits to be achieved as a result of NPHO\\'s\\nclinical integration, NPHO is currently participating with the University of Oklahoma in a\\n$500,000 Agency for Health Care Quality grant to assess the impact of the use of an electronic\\nmedical record on quality improvement and cost reduction. This should help to demonstrate the\\nfavorable impact for the benefit of Payers and patients alike. A copy of the research study\\nsummary is provided as Exhibit VIII to this letter.\\nNHRS has also been awarded a Beacon Community Grant to demonstrate the impact of\\nelectronic medical record and electronic health information exchange on the quality and cost of\\nhealthcare. The Health-E Pyramid Project builds on current adoption of electronic medical\\nrecord by NHRS and NPHO to integrate a Personal Health Record (PHR) interface with unique,\\npatient-interactive features into SMRTNET. The PHR will provide patients with one centralized\\nlocation to digitally access their health care information and services, increasing patient\\neducation, awareness, accountability and compliance with treatment plans. A detailed narrative\\nfor the Beacon Community Grant and Health-E Pyramid Project is provided as Exhibit IX.\\nIV.\\n\\nCONTRACTING ISSUES\\n\\nNPHO currently contemplates that it will establish a contracting committee with primary\\ncare and specialty representation. NPHO believes that the benefits of clinical integration will be\\nenhanced by allowing a contracting committee to commit all members of NPHO to those\\ncontracts that the committee believes serve the best interests of NPHO members, with\\nreimbursement levels reflecting these improvements in cost and quality. The contracting\\ncommittee will be charged with evaluating each proposed agreement to determine whether\\nNPHO goals can be achieved within the framework of each specific plan.\\nThe plan for future Payer contracting through NPHO encompasses the following steps.\\nFirst, a Payer would contact NPHO with respect to a contract. The NPHO Executive Director\\nwill obtain information about contract terms from the Payer and will inform the Payer that\\nNPHO is contracting as a single integrated network of providers. If NPHO is able to reach\\nagreement with the Payer following negotiations, then NPHO would enter into the contract,\\nrequiring all NPHO participating physicians, Hospitals, and ancillary providers to participate.\\nNPHO believes that this should create efficiencies for the Payers in terms of contract\\nnegotiations, provider credentialing, and network development. In addition, for reasons\\naddressed above, Payers and their beneficiaries should benefit from better and more efficient\\nclinical care.\\n\\n\\x0c-30-\\n\\nA.\\n\\nHistorical Approach to Contracting\\n\\nFrom inception, NPHO used a messenger model to facilitate contracting between\\nparticipating providers and professionals, on the one hand, and area insurers, health plans, thirdparty administrators, and employers, on the other.\\nThe NPHO Executive Director has served as the messenger. The Executive Director\\nmeets with the individual Payers and discusses economic and non-economic terms of the\\ncontract. If specific provisions raise a concern to of the Executive Director, a change or\\nclarification may be requested. Mter this process is complete, the Executive Director sends a\\nletter to NPHO physicians summarizing the terms of the contract and the fee schedule that the\\nPayer has offered. An Accept\/Reject form with the name of the participating physician is\\nincluded with the summary, giving the physician the opportunity to either accept or reject\\nparticipation in the offering. The physician is not considered to have accepted until the form has\\nbeen returned. The Executive Director does not participate in price negotiations or make any\\nrecommendations regarding fees and charges.\\nNPHO has signed agreements with a variety of Payers, including PPOs, HMOs, and\\nMedicare Advantage plans, and directly with employers that are large enough to be partially selfinsured and utilizing third-party administrators. These are fee-for-service arrangements. As of\\nAugust 1, 2010, NPHO has 24 separate agreements with various Payers. Exhibit X includes a\\ntable showing the number NPHO physicians participating in the various networks, which ranges\\nfrom 107 to 237.\\nB.\\n\\nProposed Approach to Contracting\\n\\nGoing forward, physicians will continue to join NPA and NPHO through the NPA\\napplication process described above. NPHO proposes that it will manage and direct the\\ncontracting process with Payers, including negotiation of all contract terms.\\nPhysicians, hospitals, and other health care providers and professionals who are\\ninterested in participating (or continuing their participation) in NPHO will be required to enter\\ninto a new Participation Agreement with NPHO. Under the proposed, new Participation\\nAgreement, health care providers and professionals will be required to actively participate in\\nquality assurance programs and activities of NPHO. Historically, NPHO has not required\\nparticipating health care providers and professionals to participate in any specific provider\\nnetwork. Instead, NPHO health care providers and professionals have historically decided\\nindependently whether or not they wish to participate in any specific network or networks.\\nThe proposed, new NPHO Participation Agreement provides that participation in NPHO\\nis non-exclusive so that each health care provider and professional may contract directly with\\nhealth insurers, health plans, third-party administrators, and employers to participate in their\\nrespective networks. NPHO will not require any participating physician to negotiate and\\ncontract exclusively through NPHO. As a result, NPHO health care providers and professionals\\nmay continue to provide care to patients outside the provider networks established by NPHO.\\n\\n\\x0c-31-\\n\\nAs noted in Part IILB above, the NPHO board has approved the new form of\\nParticipation Agreement (see Exhibit VII), but NPHO has not yet entered into the new\\nParticipation Agreement with any member yet. If a physician who is a member of NPHO plans\\nto continue as a member of NPHO, the physician will be required to enter into the new form of\\nParticipation Agreement.\\nUnder the proposed, new Participation Agreement, in addition to the electronic medical\\nrecord and clinical commitments noted in Part IILB above, each participating physician must\\nagree that if NPHO has entered into an agreement with a Payer, the physician will provide\\ncovered services under NPHO\\'s agreement with the Payer and will not separately contract with\\nthat Payer for the provision of covered services. Additionally, the participating physician must\\naccept the terms and conditions of each Payer agreement, including terms relating to prices, fees,\\ncharges, reimbursement, withholds, and risk pools, where applicable. The Participation\\nAgreement further provides that a participating physician may otherwise participate in any other\\nhealth network and provide medical services independently of NPHO, as long as such\\nparticipation does not preclude the physician from complying with the terms of the NPHO\\nParticipation Agreement.\\nThe proposed, new Participation Agreement will permit NPHO to market products to\\nPayers that are approved by its Board of Directors; use its best efforts to enter into Payer\\nagreements with financial incentives for use of participating physicians; and use its best efforts to\\nsecure agreements that require Payers to provide members a greater level of coverage of\\nservices, if such services are obtained from participating health care providers.\\nC.\\n\\n.loint Contracting is Subordinate, Ancillary, and Reasonably Related to the\\nClinical Integration Plan\\n\\nNPHO believes that this proposed joint contracting with Payers on behalf of its\\ncompeting physician members is subordinate, ancillary, and reasonably related to its plan to\\nclinically integrate its members\\' provision of services and to deliver coordinated care by a group\\nof health care providers committed to the Plan because it will provide a stable and identifiable\\nroster of physicians and facilitate in-network referrals, thus increasing patient volume and\\nharnessing network effects and economies of scale, while providing efficiencies and reducing\\ntransaction costs to both physicians and Payers. Finally, NPHO will take steps to limit any\\nanticompetitive \"spillover\" effects from the proposed joint contracting.\\nProviding a Stable and Identifiable Roster of Physicians. All NPHO physicians will be\\nrequired to participate in all Payer contracts negotiated by NPHO, and NPHO believes that\\nclinical integration will be facilitated by this requirement. Specifically, NPHO believes that this\\nrequirement will help to assure that the panel of physicians providing services under the program\\nis clear, identifiable, and consistent and unlikely to vary from contract to contract.\\n\\nEnsuring a consistent panel of physicians will necessarily be complicated by periodic\\nphysician attrition, as well as the periodic addition of new physicians and perhaps dismissal of\\nnon-compliant physicians, but the fundamental goal of having a stable, clearly identified, and\\nconsistent panel of physicians will not change. In any event, joint contracting would be better in\\nthis regard than the nearest alternative - the messenger model.\\n\\n\\x0c-32-\\n\\nFacilitating In-Network Referrals. Mter the new Participation Agreement is in place,\\nNPHO will operate as a single integrated network with all participating providers working\\ntogether to achieve clinical integration. Accordingly, NPHO physicians will be required to refer\\npatients to other NPHO physicians when it is medically appropriate to do so and the patient is\\namenable to the referrals. NPHO believes that joint contracting will reinforce the in-network\\nreferral requirement because, if different physician panels represented a subset of NPHO\\'s\\nmembership for each Payer contract, physicians are more likely to have to refer to physicians\\noutside the NPHO network.\\nIncreasing Patient Volume and Harnessing Efficiencies of Scale. Related to the topic\\nof in-network referrals, to best integrate the program\\'s quality improvement initiatives into the\\nphysicians\\' practices and to reap the full benefit of the network effects of the electronic medical\\nrecords system, NPHO believes is desirable to maximize the number of patients in each\\nphysician\\'s practice. In this regard, the more patients that each NPHO physician sees, the more\\ninterdependent they become with other participating physicians, because all physicians indirectly\\nbenefit from the network effects of additional data points and experience gained from treatment\\nof each patient. With increased patient volume, joint contracting will necessarily encourage\\nincreased information (and improved clinical practice). Each additional data point provides\\nbroader benefits to all network physicians, patients, and Payers. Without joint contracting,\\nNPHO\\'s ability to obtain information on both patients and physicians would be more difficult,\\nthe results of its data collection less robust, and its evaluation of that data and implementation of\\npractice protocols - key components all - would be undermined and rendered less effective.\\nAbsent joint contracting, the physicians may lack the patient volume that would provide\\nsufficient incentives for their substantial investment in the success of the integrated program.\\nNPHO believes that the more patients a physician sees in the proposed program, the more likely\\nthe physician will be willing to invest the necessary time and effort in the various aspects of the\\nprogram\\'s operation.\\n\\nProviding Efficiencies and Reducing Transaction Costs to Payers and Physicians.\\nJoint contracting as part of a broader suite of clinically integrated services should be attractive to\\nPayers not only because it helps to control costs and minimizes transaction costs, but also\\nof\\nbecause it provides going-forward\\nto health\\ncontact. As evidence of these\\xc2\\xb7 benefits\\n\\nJoint contracting will likewise provide an incentive to physicians to join the network, as\\nphysicians will not only benefit from the clinical network effects, but will also be able to\\ndelegate this function to a central organization and avoid the negotiation process, which is often\\ndisruptive to their practice as it requires them to get up to speed on various contractual matters.\\nOn the whole, this allows doctors to focus their time and energies on patient care, rather than\\ncontracting matters, which should ultimately benefit both patients and their physicians.\\n\\n\\x0c-33-\\n\\nLimiting Anticompetitive \"Spillover\" Effects. The FfC has noted that it would have\\nserious concerns if a proposed clinical integration would facilitate physicians\\' agreements to sell\\ntheir services outside of the joint venture network. 3 To be clear, NPHO physicians will not\\ncollectively set the prices they will charge to any patients who are not covered by the health\\nplans with which NPHO bargains. NPHO will take steps to ensure this, including limiting its\\nphysician members\\' access to competitively sensitive information (such that only non-physician\\nstaff will see actual physician prices). Additionally, NPHO will inform physicians of restrictions\\nto ensure that harm to competition does not occur from the possibility of coordinated interaction.\\nFinally, NPHO hospitals and physicians do not have a large market share in the NPHO service\\narea, and NPHO is a non-exclusive network. It would make little sense for a non-exclusive\\nnetwork with very limited, if any, ability to exercise market power to go to the expense of\\nimplementing a clinically integrated collective negotiation arrangement in order to reduce output\\nor increase prices if, as here, Payers could simply avoid contracting with NPHO.\\nIn sum, the success of NPHO\\'s program depends significantly on all of its physician\\nmembers participating in all of its contracts. Achieving NPHO\\'s goals - collecting and\\nharvesting robust and meaningful data, providing practical and effective clinical guidelines and\\ndisease management protocols, and ensuring efficient care - would be far more difficult if\\ndifferent physicians were participating in different Payer contracts, referral patterns had to be\\nadjusted accordingly to keep patients within the applicable network, patient volume was lower,\\nand information on patient treatments and health care provider behavior were less robust and\\nuniformly available. Absent the joint contracting, the planned benefits, while theoretically\\npossible, are not practical given business realities.\\n\\nv.\\n\\nLEGAL STANDARD AND CONCLUSION\\n\\nThe FTC and DOl\\'s 1996 Statements of Antitrust Enforcement Policy in Health Care\\n(\"1996 Health Care Statements\") explain that clinical integration may be demonstrated, by way\\nof example:\\nby the network implementing an active and ongoing program to evaluate and\\nmodify practice patterns by the network\\'s physician participants and create a\\nhigh degree of interdependence and cooperation among the physicians to control\\ncosts and ensure quality. This program may include:\\n(1) establishing\\nmechanisms to monitor and control utilization of health care services that are\\ndesigned to control costs and assure quality of care; (2) selectively choosing\\nnetwork physicians who are likely to further these efficiency objectives; and (3)\\nthe significant investment of capital, both monetary and human, in the necessary\\ninfrastructure and capability to realize the claimed efficiencies. 4\\n\\n3\\n\\nSee, for example, the FrC\/DOJ 1996 Statements of Antitrust Enforcement Policy in Health Care, Statement 8, \\xc2\\xa7\\nB, available at http:\/\/www.ftc.gov!bc!healthcare\/industryguide\/policy\/statement8.htm.\\n\\n4\\n\\nJoint 1996 Health Care Statements 8, \\xc2\\xa7 B.l. The Joint 1996 Health Care Statements emphasize that these are\\nonly examples, rather than \"the only types of arrangements that can evidence sufficient integration to warrant rule\\nof reason analysis.\"\\n\\n\\x0c-34-\\n\\nNPHO submits that, with implementation of its Clinical Integration Plan, it will be a fully\\nclinically integrated, centrally managed joint venture offering substantial market efficiencies and\\nfacilitating innovation in the delivery of health care services to patients as described in\\nStatements 8 and 9 of the Health Care Statements. Its proposed joint contracting system is not\\ninherently anticompetitive and should be analyzed under a truncated rule of reason analysis,\\nrather than per se prohibited.\\nSpecifically, and by way of review, through its electronic medical records system,\\nproposed clinical guidelines, disease management program, Quality Assurance Committee,\\nmonitoring and enforcement mechanisms, and substantial financial and \"sweat equity\"\\ncommitments, NPHO will operate in a manner that creates a high degree of interdependence,\\ninteraction, and cooperation among participating physicians and health care providers in order\\nimprove access to care, enhance quality of care, and control costs. NPHO has created an\\ninfrastructure of pooled resources; has approved and is beginning to monitor and establish\\nprotocols and evidence-based clinical practice guidelines; and has formulated a plan that should\\nresult in delivery of improved quality of care in a more efficient manner that the participating\\nproviders and professionals could not otherwise achieve independently.\\nNPHO is implementing an active, dynamic, and ongoing Clinical Integration Plan.\\nComponents of the Plan include outcomes reporting, managing the care continuum, reducing\\ncosts, information sharing, creating clinical practice guidelines, monitoring utilization,\\ncontrolling compliance with clinical practice guidelines and related protocols in an effort to\\nprovide better patient care and treatment, and taking corrective action when necessary. The\\nanticipated results include improving access to care, enhancing quality and efficiency of care,\\nand ultimately improving the health of the communities served. Participation requires a\\nsignificant investment of time and capital in the necessary infrastructure and capability to realize\\nthe anticipated benefits and effectiveness. The use of the eClinicalWorks electronic medical\\nrecord is critical to clinical performance and organizational viability. It positions the\\nparticipating providers and professionals to better manage patients, successfully control costs,\\nlimit practice variations, and achieve significant differentiation in the market. Also, the\\nelectronic medical record will enable the participating providers and professionals to adopt and\\neffectively execute clinical practice guidelines and new concepts anticipated from comparative\\neffectiveness research initiatives.\\nThe attributes of NPHO under the Clinical Integration Plan will transform from a\\ntraditional physician-hospital organization into one with:\\n\\n\\xe2\\x80\\xa2 Information continuity\\n\\n\\xe2\\x80\\xa2 Care coordination and transition\\n\\xe2\\x80\\xa2 Peer review and teamwork for high-value care\\n\\xe2\\x80\\xa2 Easy access to appropriate care\\n\\n\\xe2\\x80\\xa2 System accountability\\n\\xe2\\x80\\xa2 Continuous innovation\\nThe Plan allows the participants to re-position their services to align with market trends,\\nas well as transparency in quality and cost in order to demonstrate better outcomes and\\nsuccessfully compete in a value-based purchasing environment. It facilitates meaningful use by\\n\\n\\x0c-35participating hospitals, physicians, and others of a fully integrated and coordinated electronic\\nmedical record. It bears the commitment from medical leadership to share outcomes data - peer\\nto peer - and evaluate the findings in a coordinated and quality-focused manner. It presents an\\nopportunity for medical leadership to intervene and make improvements where outcomes data\\nreveal that quality is not at targeted or required levels. And it ensures that medical leadership\\nwill receive continuing and useful training, education, and support to successfully manage high\\nintegration and top quality challenges.\\nThe proposed collective negotiations with Payers, including price negotiatIOns, are\\nsubordinate and reasonably necessary to achieve substantial efficiencies arising from clinical\\nintegration. Joint negotiation through NPHO will ensure that a sufficient, stable, and identifiable\\nnumber of physicians across multiple specialties will continue to participate in NPHO. It will\\nfacilitate in-network referrals and ensure adequate patient volume to benefit from economies of\\nscale and incentivize physician involvement. It will allow participating physicians the\\nopportunity to reduce transaction costs, including costs of legal review, that are incidental to the\\ncontracting process, in part offsetting the substantial time and financial investment made in\\nconnection with NPHO participation. Additionally, collective negotiations will allow NPHO to\\noffer a single, comprehensive, integrated network, allowing for pricing in the aggregate, instead\\nof separate contracts. Finally, NPHO will take steps to limit any anticompetitive \"spillover\"\\neffects from the joint contracting, such as coordinated physician agreements with regard to nonnetwork Payers.\\nNPHO\\'s proposed, new Clinical Integration Plan involves a powerful platform for\\nhospitals, physicians, other health care professionals, and other health care facilities and\\ninstitutions to build relations and foster integration. NPHO believes that its proposed joint\\ncontacting should be considered ancillary and subordinate to the joint venture, reasonably\\nnecessary to the Clinical Integration Plan\\'s success and the efficiencies it will make possible, and\\nthus analyzed under the rule of reason.\\nREQUEST FOR ADVISORY OPINION\\n\\nOn behalf of NPHO, we request an advisory opinion as to how the FTC would analyze\\nNPHO\\'s activities if, based on the foregoing information and proposed clinical information plan,\\nNPHO develops contract proposals, negotiates contract terms (including price terms), arranges\\ncontract participation, and enters into contracts on behalf of NPHO participating health care\\nprofessionals and providers.\\nIf you have any questions, please\\n(dan.loeffler@mcafeetafLcom, (405) 301-7406).\\n\\ncontact\\n\\neither\\n\\nVery truly yours,\\n\\nMichael E. Joseph\\n\\nme\\n\\nor\\n\\nDan\\n\\nLoeffler\\n\\n\\x0c-36-\\n\\ncc:\\n\\nMr. Markus H. Meier\\nMr. David Narrow\\nMr. Daniel A. Loeffler\\n\\n\\x0cExhibit I\\nOrganizational Structure\\n\\nThe following chart shows the organizational structure and relationships among NPHO\\nmembers:\\n\\n\\x0cExhibit II\\n\\n\\x0cExhibit III\\nNPHO Board of Managers\\n\\nThe following table lists the members of the NPHO Board of Managers.\\nNorman Physician Hospital Organization\\n2009 Board of Managers\\n\",;\"\\n\\n,\\n\\n\\xc2\\xb7. . )\\'\\'\\';~:z,t,{{< .\\n\\nN~m~\\xc2\\xb7\\xc2\\xb7\\xc2\\xb7\\n\\n....!,(y<\\',.\\n\\nStephen Connery, M.D., Family Practice (Chairman)\\nRobert Holbrook, M.D., Gastroenterologist\\nTadgy Stacy, M.D., Pediatrician\\nJoe Voto, M.D., Anesthesiologist\\nCarol Anderson, D.O., Ob-Gyn\\nTom Connally, M.D., General Surgeon\\nJames Love, M.D., Internal Medicine\\nChris Paskowski, M.D., Otorhinolaryngologist\\nMeegan Carter, VP Revenue Cycle\\nDavid Whitaker, President & CEO\\n\\n,\\n.\\'\\n\\nI\\'iit;\\n\\n:..\\n<\\'2\".: Teriif.~*pit~s ... ;\" . ?\".\\n2011\\n2011\\n2011\\n2011\\n2012\\n2012\\n2012\\n2013\\nNRHS Board Representative\\nNRHS Board Representative\\n\\'\\n\\n\\'\\n\\n\\'\"\\';.\\n\\n~\\n\\n\\x0cExhibit IV\\nNorman Physicians Hospital Organization Staff\\nA brief overview of the background of each NPHO staff member appears below.\\nGary P. Clinton, D.Ph. has served as the Executive Director of NPHO since 1995,\\nhelping to guide and manage the organization through various stages of evolution and\\ngrowth. Beginning his healthcare career as a pharmacist, he has owned or managed\\nseveral healthcare organizations including a pharmacy, durable medical equipment\\nprovider, and home health agency providing him with the clinical and business\\nbackgrounds necessary to function as an effective leader of NPHO. He is a graduate of\\nthe University of Oklahoma.\\nStephen E. Connery, MD has chaired the NPA and NPHO since 2004. Board certified\\nin family practice, Dr. Connery has operated a private practice in Norman since 1989 and\\nmaintains medical staff privileges at Norman Regional Hospital, and Seminole Hospital\\nin Seminole, Oklahoma. He also serves as chairperson of the medical staff evaluation\\ncommittee at Norman Regional Hospital. Dr. Connery received his graduate medical\\neducation and family practice residency training at the University of Oklahoma College\\nof Medicine. Professional memberships include the American Medical Association,\\nOklahoma State Medical Association, and American Association of Family Practice.\\nKathryn Roberts, R.N. has served as the Director of Quality Assurance for NPHO since\\nIn this role, she is responsible for the design, development,\\nFebruary, 2009.\\nimplementation, maintenance, and evaluation of all quality improvement programs and\\ninitiatives for NPHO. She develops all policies, procedures, protocols, and guidelines,\\nutilizing national standards of evidence-based medicine. Additionally, she assists the\\nNPHO Board regarding performance improvement. As the Director of Quality\\nAssurance, she also plays a primary role in all clinical integration efforts.\\nAudene Eubanks is the Supervisor, Contracts and Accounts Payable for NPHO. She\\nalso coordinates special NPHO projects and serves as a liaison with the physician\\nmembers. In addition, she is responsible for the NPHO website encompassing: links to\\nthe NPHO participating providers; a health resources guide for patients and family\\nmembers; and secured physician access to NPHO information. Before joining NPHO,\\nMs. Eubanks worked for 11 years as a medical assistant with responsibility for patient\\nevaluation and treatment, billing office management, and employee training.\\nLynnette Chafin brings over 20 years of clinical and physician practice management\\nShe is certified as an\\nexperience to her position as eClinicalWorks Trainer.\\neClinicalWorks trainer and provides physician practices with the support necessary to\\nevaluate, tailor, implement, and operate the eClinicalWorks electronic medical record\\nsystem.\\nLeigh Anne McGregor brings over 20 years of clinical and physician practice\\nmanagement experience to her position as eClinicalWorks Trainer. She is certified as an\\neClinicalWorks trainer and provides physician practices with the support necessary to\\n\\n\\x0c-2-\\n\\nevaluate, tailor, implement, and operate the eClinicalWorks electronic medical record\\nsystem.\\nRhonda LeMay is a trained eClinicalWorks \"super user\" who assists with the initial\\nimplementation of the electronic medical record in physician practices and provides\\nongoing staff and physician support. She has 16 years of experience in the medical field\\nand uses her knowledge of front office, back office, and clinical functions to ensure\\nsmooth physician office transition to electronic medical record.\\nBrian Yeaman, MD is the director of physician informatics for NPHO and installation of\\neClinicalWorks in Norman. He is leading the effort in Norman to create the local\\nnetwork through NRHS and NPHO and has played a key role in the quality improvement\\nand quality assurance processes of the clinical integration model. The local network\\ndesign and governance has been facilitated by SMRTNET and NPHO. Dr. Yeaman is also\\nthe chief medical information office at the NRHS and is the Medical Director for the\\nGOCHC SMRTNET effort. Dr Yeaman trained at Tufts University in Boston and\\ncontinues to operate a family practice at the Norman Clinic.\\n\\n\\x0cExhibit V\\n\\n\\x0cExhibit VI\\nMarket and Demographic Information\\n\\n\\x0cExhibit VI.A\\nNorman Physician Hospital Organization\\nService Area Profile\\n\\nCharacteristic\\nPopulation, 2000\\nPopulation, 2008\\nLand area, 2000\\n(square miles)\\nPersons\/square mile\\nPersons 65+, 2007\\nWhite persons, 2007\\nBlack persons, 2007\\nAmerican Indian &\\nAlaska Native persons,\\n2007\\nPersons of Hispanic or\\nLatino origin, 2007\\nForeign born persons,\\n2000\\nHigh school graduates\\n(age 25+), 2000\\nBachelor\\'s degree or\\nhigher (age 25+), 2007\\nMean travel time to\\nwork (min., workers\\nage 16+), 2000\\nHomeownership, 2000\\nMedian household\\nincome, 2007\\nPersons below poverty,\\npercent 2007\\n\\nOklahoma\\n\\nCleveland\\n\\n660,450\\n706,617\\n709.9\\n\\n208,016\\n239,760\\n536.1\\n\\n65,519\\n69,616\\n787.7\\n\\n45,513\\n51,066\\n1101\\n\\n27,210\\n27,247\\n807.5\\n\\n27,742\\n32,365\\n569.7\\n\\n931.5\\n12.4%\\n74.5%\\n15.5%\\n3.3%\\n\\n388.1\\n9.1%\\n83.1%\\n4.9%\\n7.9%\\n\\n83.1\\n13.9%\\n79.6%\\n3.3%\\n11.4%\\n\\n46.4\\n12.4%\\n88.2%\\n3.0%\\n5.2%\\n\\n33.7\\n17.6%\\n85.9%\\n3.0%\\n7.7%\\n\\n48.7\\n13.0%\\n89.7%\\n0.9%\\n5.6%\\n\\n12.3%\\n\\n7.2%\\n\\n3.1%\\n\\n4.3%\\n\\n4.3%\\n\\n5.7%\\n\\n7.2%\\n\\n4.4%\\n\\n1.1%\\n\\n1.1%\\n\\n1.6%\\n\\n2.6%\\n\\n82.5%\\n\\n88.1%\\n\\n79.3%\\n\\n79.5%\\n\\n73.0%\\n\\n79.3%\\n\\n25.4%\\n\\n28.0%\\n\\n15.5%\\n\\n14.4%\\n\\n12.0%\\n\\n15.7%\\n\\n20.9\\n\\n22.3\\n\\n25.0\\n\\n26.9\\n\\n23.4\\n\\n27.3\\n\\n60.4%\\n$41,598\\n\\n67.0%\\n$51,052\\n\\n72.1%\\n$38,614\\n\\n75.7%\\n$43,341\\n\\n73.8%\\n$38,360\\n\\n81.4%\\n$48,654\\n\\n15.9%\\n\\n10.0%\\n\\n18.8%\\n\\n14.1%\\n\\n16.6%\\n\\n10.0%\\n\\n\\x0cExhibit VI.B\\nNorman Physician Hospital Organization\\nProfile of the Oklahoma City Metropolitan Area and NPHO Service Area\\n\\nCounty\\n\\n2000\\nPopulation\\n\\n\\xc2\\xb7~j,Q,$~~i\\'~e~Are~:t~{ni\\\\\\xc2\\xb7P\"~}\\xc2\\xb7.\\xc2\\xb7.\\xc2\\xb7.\\xc2\\xb7,\\xc2\\xb7\\xc2\\xb7\\' .\\n\\nCleveland\\nMcClain\\nGarvin\\nGrady\\nOklahoma\\nPottawatomie\\nSA Total\\n\\n208,016\\n27,742\\n27,210\\n45,513\\n660,450\\n65,519\\n1,034,450\\n\\n2008\\nPopulation\\n\\':;?,~~;}\\\\\\n\\n. . . \\'.\\'\\n\\n239,760\\n32,365\\n27,247\\n51.066\\n706,617\\n69,616\\n1,126,671\\n\\n\\':Pl(J.M~tropolititij;,;Are~\\xc2\\xb7\\'!;\\'\\xc2\\xb7:;\\xc2\\xb7::f;;c;>L?;\\xc2\\xb7\\xc2\\xb7\\xc2\\xb7\\xc2\\xb7\\xc2\\xb7\\xc2\\xb7\\xc2\\xb7:\\n\\n2000-2008\\nPopulation\\nchange\\n\\nLand Area\\n(square miles)\\n\\nF~:f };\\' ~)2~h> .~\\\\\\n447.2\\n536.1\\n56.8\\n569.7\\n33.7\\n807.5\\n46.4\\n1,101.0\\n995.4\\n709.9\\n88.4\\n787.7\\n249.7\\n4,511.8\\n.\\'~\\\\);. \\'S. ?~,.\\' . . ~\\n\\xc2\\xb7l~~;.\\xc2\\xb7.H~~\\\\\\n117.9\\n899.71\\n447.2\\n536.1\\n46.4\\n1101.0\\n33.6\\n957.7\\n51.2\\n744.5\\n56.8\\n569.7\\n995.4\\n709.9\\n218.\\n5,519\\n\\n\\'~\\n\\n15.3%\\n16.7%\\n0.1%\\n12.2%\\n7.0%\\n6.3%\\n8.9%\\n\\n:\";-:i,\\xc2\\xb7t:\\'~;i\\\\.\",\\n\\n\\'.\\n\\n2008 Persons\\nper Square\\nMile\\n.\\'\\n\\n87,697\\n106,079\\n21.0%\\nCanadian\\n208,016\\n239,760\\n15.3%\\nCleveland\\n45,513\\n12.2%\\n51,066\\nGrady\\n32,080\\n32,153\\n0.2%\\nLincoln\\n33,924\\n38,102\\n12.3%\\nLogan\\n27,742\\n32,365\\n16.7%\\nMcClain\\n660,450\\n706,617\\n7.0%\\nOklahoma\\n1,095,422\\n1,206,142\\n10.1%\\nOKC MA Greater\\nOKC\\n;iOJ(C Cc)mJ>ine~le$t~tisti,~Ji~~i;ZAddit\\'QI).of ShawneeMicroUrban;Ar\\xc2\\xa2fllPoJtaw~t6Ihi~~G:6\\'unty\":\\n88.4\\n787.7\\n65,519\\n69,616\\n6.3%\\nPottawatomie\\n202.3\\n6,306.2\\n1,160,941\\n1,275,758\\n9.9%\\nOKC CSA Total\\n\\n\\x0cExhibit VI.B (Cont\\'d)\\nNorman Physician Hospital Organization\\nProfile of the Oklahoma City Metropolitan Area and NPHO Service Area\\nOklahoma City\\n\\nOklahoma City is the capital and largest city in Oklahoma, with city limits extending\\nbeyond Oklahoma County into urban, rural, or suburban areas in Canadian, Cleveland, and\\nPottawatomie counties. The city\\'s estimated 2008 population was 551,789. Of the city\\'s land\\narea of 607.0 square miles, 322.3 square miles are urban, resulting in 871.5 residents per square\\nmile. Oklahoma City is one of the most important livestock markets in the U.S. and receives\\neconomic and employment support from several prominent energy companies, varied light and\\nheavy industries, Tinker Air Force Base, and the federal government. Oil, natural gas, and\\npetroleum products are major components of the economy.\\nMoore\\n\\nMoore is a suburb with estimated 52,361 residents in the south Oklahoma City\\nmetropolitan area with city limits extending into southwestern Oklahoma County and northern\\nCleveland County. The city surrounds 1-35 between Oklahoma City and Norman. Moore\\'s\\npopulation density has grown from 1,892.8 residents per square mile to an estimated 2,412.9 in\\n2009 reflecting a 27% population increase since the 2000 census. Moore is centrally located\\nbetween the state\\'s capital to the north and the University of Oklahoma to the south. The city\\nhas experienced recent growth in residential additions and commercial developments.\\nNorman\\n\\nNorman is located in Cleveland County, approximately 20 miles south of downtown\\nOklahoma City and immediately south of Moore. Norman is a well-established \"college town\"\\nwith approximately 30,000 students. It is also the state\\'s third largest city with a growing fulltime population of over 106,000 residents. The city\\'s 2006 estimated population density was\\n540.6 residents per square mile.\\nNorman is the home of the National Storm Prediction Center, National Severe Storms\\nLaboratory, the National Weather Center, and many weather-related private businesses. In\\naddition to several research companies, the city has a variety of major employers and industries,\\nincluding SouthWest NanoTechnologies, York International\/Johnson Controls, Hitachi, Astellas\\nPharma, Albon Engineering, Xyant Technology and Office Max\\'s National Sales Center.\\nPurcell\\n\\nPurcell is south of Norman along the 1-35 and US-77 corridors. The city is a retail hub of\\n45,600 residents, including residents of neighboring communities and unincorporated rural areas\\nof McClain and southern Cleveland counties. The area\\'s commerce benefits from several multimillion dollar horse farms.\\n\\n\\x0cExhibit VI.C\\nPatient Populations and Insurance Coverage Estimates\\n\\nAs illustrated in the table below, U.S. Census data indicate that median household\\nincomes in the service area range from a low of $38,360 in Garvin County to a high of $51,052\\nin Cleveland County. Consistent with median household income data, almost 40% of Garvin\\nCounty households earn less than $25,000 per year as compared with about 25% of Cleveland\\nCounty households. Pottawatomie County has the highest percentage of persons living in\\npoverty.\\nNorman Physician Hospital Organization\\nMedian Household Income & Poverty\\n\\n% Households\\nMedianHH\\n\\nPottawatomie\\nState Average\\n\\n34.4%\\n$41,551\\n\\n16.6%\\n14.1%\\n10.0%\\n15.9%\\n18.8%\\n15.8%\\n\\nResident age distribution and household incomes drive the percentage of county residents\\ncovered by Medicare and Medicaid. According to the Oklahoma Health Care Authority, almost\\n220,000 NPHO service area residents were covered by Medicaid in 2007, with another 134,000\\ncovered by Medicare. The estimated percentage of residents who are uninsured approximates\\n200,000, ranging from a low of 15.8% of McClain County residents to a high of 19.6% of\\nPottawatomie County residents. The economic downturn in the last two years has likely\\nincreased the percentage of uninsured in all NPHO service area counties.\\n\\n\\x0c-2-\\n\\nNorman Physician Hospital Organization\\nInsurance Coverage Estimates\\n\\nCleveland\\nGarvin\\nGrady\\nMcClain\\nOklahoma\\nPottawatomie\\n\\n16.4%\\n17.3%\\n16.0%\\n15.8%\\n18.2%\\n19.6%\\n\\n14.3%\\n24.6%\\n19.6%\\n14.2%\\n21.6%\\n25.0%\\n\\n9.7%\\n17.5%\\n13.6%\\n12.9%\\n12.2%\\n14.1%\\n\\n75.8%\\n57.7%\\n66.6%\\n72.7%\\n66.0%\\n60.7%\\n\\nNPHO serves the entire population of the NPHO service area, including the underinsured, uninsured, indigent, and self-insured through many forms of medical care. Among the\\nmost frequently used facilities are the Emergency Departments of NRHS and Moore Medical\\nCenter. Indigent patients and self-insured with limited resources can also utilize the Health for\\nFriends Clinic across the street from Norman Regional Hospital.\\nMost, if not all, NPHO participating physicians participate in Medicare and serve the\\nMedicare population, but the Medicaid population is not as well served. This is primarily due to\\nthe fact that Medicaid is difficult to work with and hard to obtain reimbursement for services.\\nMost physicians would prefer to see a patient on Medicaid without compensation in their offices,\\nrather than work through the process of securing payment from Oklahoma\\'s Medicaid program.\\nNorman Physician Hospital Organization\\n2008 Market Discharges by County and Payer Class\\nVN\\n\\n2\\nredact3.doc\\n\\nWorkers\\n\\nOther\\n\\n\\x0cExhibit VI.D\\nService Area Employers and Employees\\nNearly 525,000 individuals in the NPHO service area were employed as of February\\n2008, with the unemployment averaging 3.5%. In Oklahoma County, Tinker Air Force Base, the\\nU.S. Postal Service, INTEGRIS Health, City of Oklahoma City, Oklahoma City School District,\\nW.H. Braum & Company, OU Medical Center, Federal Aviation Administration, AT&T, OGE\\nEnergy, SSM Health Care of Oklahoma, Putnam City Independent School District, Edmond\\nPublic Schools, Mercy Health Center, Moore Public Schools, Homeland Stores, and United\\nParcel Service each employ 2,000 or more individuals and collectively represent 29% of total\\ncounty employment.\\nIn Cleveland County, the University of Oklahoma is the largest employer in the area,\\nfollowed by Norman Regional Hospital. Other major employers in Cleveland County include\\nNorman Public Schools, Chickasaw Nation Industries (Riverwind Casino), York International,\\nand the City of Norman. The top 23 employers in Cleveland County collectively employ only\\n14.5% of county employees. A large percentage of employers in Cleveland County employ\\nfewer than 50 employees. Chickasaw Nation Enterprises is one of the largest employers in\\nMcClain County, along with Purcell Municipal Hospital.\\nAlthough a few manufacturing companies are located in the service area, the largest\\nemployers typically include local government, small community hospitals, small businesses, and\\nfarms.\\nBased on the experience of NPHO, an increasing percentage of area employers, both\\nlarge and small, obtain insurance coverage for their employees through health plans and\\nnetworks established by third-party administrators, with a decreasing percentage of employers\\nmaintaining self-funded plans.\\nNPHO currently serves as the primary healthcare provider network for the PPOs of three\\nemployers in the service area, including NRHS, Oklahoma Electric Coop, and the student\\npopulation of the University of Oklahoma\\'s Norman campus. NPHO also serves as the\\nsecondary healthcare provider network for several employers with employees in the service area.\\n\\n\\x0cExhibit VI.E\\nHealth Insurance Plans, HMOs, Discount Medical Plans, Third-Party Administrators\\nInformation regarding employee enrollment by health insurer is generally viewed as\\nproprietary and not readily available. However, health insurance plans, HMOs, Discount\\nMedical Plans, and third-party administrators are regulated by the Oklahoma State Department\\nof Insurance. While the data obtained from the Department of Insurance and provided below\\nreflect the state as a whole, the information is illustrative of the market served by NPHO.\\nAccording to the 2009 Annual Report and Directory issued by the Department of\\nInsurance, the following top 10 accident and health insurance companies have a combined\\nmarket share of over 70% of the $1 billion in premiums written in Oklahoma for group accident\\nand health insurance policies.\\nNorman Physician Hospital Organization\\nTop Oklahoma Accident and Health Insurance Companies\\n;ePIDpany\\')J\\\\~:,\/{1;:~>,:\\\\. \\':\\'!~J;~,: .... \\'. 1,.\\'i\\':(Direc,t\\'\\xc2\\xb7~remilinrs\\':\\' \\'~;:~ark~t\"Share;\\'~: \\xc2\\xb7!.j,\\'CmnUlative% ,~\\n\\nUnited Healthcare Insurance\\nAetna Life Insurance\\nPrincipal Life Insurance\\n\\n249,245,727\\n169,289,023\\n169,112,491\\n\\n23%\\n16%\\n16%\\n\\n23%\\n39%\\n55%\\n\\nTime Insurance\\nMetropolitan Life Insurance\\nAmerican Fidelity Assurance\\n\\n31,295,034\\n29,279,597\\n28,403,124\\n\\n3%\\n3%\\n3%\\n\\n58%\\n61%\\n64%\\n\\nHartford Life & Accident\\nInsurance\\nConnecticut General Life\\nGolden Rule Insurance\\nUnum Insurance of America\\nAll Other\\nTotal\\n\\n26,882,047\\n\\n3%\\n\\n66%\\n\\n22,749,114\\n22,285,619\\n22,212,976\\n292,844,420\\n1,03.599.172\\n\\n2%\\n2%\\n2%\\n28%\\n100%\\n\\n68%\\n70%\\n72%\\n100%\\n\\nHMOs in Oklahoma wrote about $2.9 billion in health benefit premiums in 2009 including:\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\n$1.4 billion in premiums for group and individual coverage\\n$.59 billion in premiums for federal employees health benefits\\n$.7 billion in premiums for Medicare beneficiaries\\n\\n\\x0cExhibit VI.E (Cont\\'d)\\nNorman Physician Hospital Organization\\nTop Oklahoma HMOs\\n\\n.\\'\\xc2\\xb7,;U;1,j\\'2:h;<:u~.:<:.\\' :;.\\'?\\' Qi~.~~rfreniillms \\'. ,,:. \\xc2\\xb7\\xc2\\xb7::M;~tket Shai~,;r .\\xe2\\x80\\xa2. CupIlUatjve %\\n\\xc2\\xb7CgmpanY..Mt::\\xc2\\xb7\\xc2\\xb7\\xc2\\xb7\\n47%\\nHealthcare Service Corporation\\n1,366,531,365\\n47%\\nCommunityCare\\n69%\\n626,017,668\\n22%\\nPacifiCare\\n81%\\n12%\\n340,528,140\\nAetna Health, Inc.\\n86%\\n137,163,761\\n5%\\n89%\\nGlobalHealth, Inc.\\n100,553,538\\n3%\\nHCHC\\n91%\\n67,207,526\\n2%\\nInsurance\\nServices\\nCompany\\n94%\\n65,828,369\\n2%\\nDelta Dental Plan of Oklahoma\\nSterling Life Insurance Company\\n96%\\n55,958,412\\n2%\\n97%\\nCoventry Health and Life Insurance\\n51,478,375\\n2%\\nBlueLincs Inc.\\n98%\\n22,717,209\\n1%\\nAll Other\\n100%\\n54,040,248\\n2%\\nTotal\\n2,888,024,611\\n100%\\nThe Department of Insurance also regulates discount medical plan organizations that\\ncontract on behalf of plan members, in exchange for fees, with a healthcare provider or provider\\nnetwork for access to medical services at a discounted rate and third-party administrators that\\ncollect premiums and settle claims for health or life insurance coverage. The Department of\\nInsurance 2009 report lists 26 discount medical plans and 288 third-party administrators. NPHO\\nhas helped to facilitate agreements between NPHO members to participate in the provider\\nnetworks established by CommunityCare, Aetna, BlueLincs, and PacifiCare, as well as other\\nsmaller insurance plans.\\nInformation regarding enrollment by specific insurance plan is considered proprietary by\\nmost plans and is not readily available. However, based on data obtained from the Oklahoma\\nState Department of Health, residents of the service area generated about 154,000 hospital\\ndischarges in 2008. Of these, about 40% were covered by Medicare, 2% by Commercial carriers\\nincluding managed care plans, and 22% by Medicaid. About 6% were classified as\\nuninsured\/self-pay.\\n\\n\\x0cExhibit VI.F\\nNorman Physician Hospital Organization\\nMedical and Surgical Services Provided by Participating Hospitals\\n\\nHospital Service\\niY:~dical!SurfdffitJ$J{rYices\\n\\nNorman\\nRegional\\nHealth System\\n(NRH&MMC)\\n...\\n\\n~esthesiology\\n\\nBariatricIWeight Control Services\\nCardiovascular Services\\nCardiology\\nCardiac Catheterization Laboratory\\nThoracic Surgery\\nCardiac Rehabilitation\\nChemotherapy\\nMedical\/Surgical Critical Care\\nCardiac Intensive Care\\nNeonatal Intensive Care\\nGeriatric Services\\nHemodialysis\\nEndoscopic Department\\nObstetrics\/Gynecology\\nBirthing Room\/LDRP\\nGeneral Medicine\\nGeneral Surgery\\nAmbulatory Surgery Center\\nOncology\\nOutpatient Surgery\\nOrthopedic Services\\nComputer Assisted Orthopedic Surgery\\nOrthopedics\\nPediatrics\\nPediatric Medical Surgical Care\\nBehavioral Health Psych Consultation\\nPsychiatric Emergency Services\\nPsychiatric Geriatric Services\\nTobacco Treatment\/Cessation Program\\nNeurological Services\\nNuclear Medicine\\nPain Management\\nPulmonary Medicine\\nShaped Beam Radiation System\\nTissue Transplant\\nTrauma Center (Certified)\\nUrology\\n\\n\\'.1~i,};i\\xe2\\x82\\xac!):::\\n\\n\"<..\\n\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\n\\n.:\\n\\nMoore\\nMedical\\nCenter\\n(NRHS)\\n\\nNorman\\nRegional\\nHospital\\n(NRHS)\\n.\\xe2\\x80\\xa2\\n\\n.\\n\\n.. . \\';;0:,:\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\n\\n,~:\\n\\n.~ ....\\n\\nX\\n\\nPurcell\\nMunicipal\\nHospital\\n\\n., .,\\n\\n.\\'i~;lb \\'S(;1;S~:\\'\\n\"j.\\\\\"\"\\n\\nX\\n\\nX\\n\\nX\\n\\nX\\n\\nX\\nX\\n\\nX\\nX\\n\\nX\\nX\\n\\nX\\nX\\n\\nX\\nX\\nX\\nX\\n\\nX\\n\\nX\\nX\\n\\nX\\nX\\n\\nX\\nX\\n\\nX\\nX\\n\\nX\\nX\\nX\\nX\\n\\nX\\nX\\n\\nX\\n\\nX\\n\\n\\x0c-2-\\n\\nExhibit VI.F (Cont\\'d)\\nNorman Physician Hospital Organization\\nDiagnostic and Ancillary Services Provided by Participating Hospitals\\nNorman\\nRegional\\nHealth System\\n(NRH& MMC)\\n\\nHospital Service\\n~fJjuignostilS~iifl~:es\\n\\n\\',,::,C\\';\\',i; \\',\\'\\n\\n\" \/\\'>;:{\"r:~:Eit,\\n\\n\\'\/\\'~;\/\\'\\n>->,\"\\n\\nDiagnostic Imaging\\nDiagnostic Radioisotope Facility\\nBreastlMammography\\nFull Field Digital Mammography\\nCT Scanner\\nMRI\\nUltrasound\\nPathology\\n~-n,c:{[lary $ubp6tt&\\n\\nOtbet\\'Seff{ttii(!;\\'\\n\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\n\\n\\'.\"-\\';-:;\\n\\n,-,-\",-,\\n\\n\\',:,;,:,\\n\\n\\'::\",,:\"\\'.:-\\'.::\":\/\\n\\nOccupational Health\\nOccupational Therapy\\nPhysical Therapy\\nPhysical Rehabilitation Outpatient\\nServices\\nRespiratory Therapy\\nRenal Dialysis\\nIntermediate Nursing Care\\nSwing Bed Services\\nSleep Disorder Center\\nSpeech Therapy\\nAmbulance Services\\nAmbulatory Surgery Center\\nHospital-Based Outpatient Care\\nServices\\nFreestanding Outpatient Care Center\\nImmunization Program\\n\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\nX\\n\\n2\\nredact3.doc\\n\\nNorman\\nRegional\\nHospital\\n(NRHS)\\n\\nMoore\\nMedical\\nCenter\\n(NRHS)\\n\\n\\\\~\\';\\':jX~t ?~iiF~~f~(~;~]l\\'{~:\\' ,\\' ,\"\\n\\nX\\n\\n\\',\\'\\n\\nPurcell\\nMunicipal\\nHospital\\n~\"~,Ii,:;\\\\,\\n\\nX\\n\\n\",>;\\'{)\\';f\\nX\\n\\nX\\nX\\nX\\nX\\n\\nX\\nX\\n\\'\/?\\'~;;F;\\';\\';L,<\\n\\nX\\n\\n\\' \">:\\n\\n\"\\'\/;;\\';:\"\\',\"\\n\\n<:-\\'.,;,\\';:\\': -\\',\\n\\nX\\nX\\nX\\nX\\nX\\nX\\n\\nX\\n\\nX\\nX\\n\\nX\\n\\nX\\n\\nX\\nX\\nX\\n\\nX\\n\\nX\\n\\n\\x0cExhibit VI.G\\nAncillary Service Providers\\nAs noted in the table below, other healthcare providers affiliated with NPHO include a wide\\narray of outpatient diagnostic, treatment, and rehabilitation services providing Payers and\\npatients with increased access to care.\\nNorman Physician Hospital Organization\\nAncillary Service Providers\\n\\nMedical Plaza Endoscopy Unit\\nPhysicians Surgical Center\\nWest Norman Endoscopy Center\\nNorman Endoscopy Center\\n\\nMaysville Rural Health Clinic\\nImmediate Care of Oklahoma (3 locations)\\nPulmonary Clinic\\n\\nNorman Behavioral Health\\nApple Medical\\nNorman Regional DME\\n\\n.\\n\\nLifecare Oklahoma, Inc.\\nHome Health Care\\nLifecare Oklahoma Hospice, Inc.\\n\\n.....\\n\\nBrookhaven Diagnostic Imaging Center\\nMoore Medical Center Diagnostic Imaging\\nNorman Open MRI\\nNorman Regional HealthPlex\\n),: Norman Radiology Services, Inc .\\nNorman Regional Hospital Diagnostic Services\\nNorman Regional Radiology Services\\n<~~ Norman Regional PET\/CT Center\\nOrthopedic & Sports Medicine Center\\n\\nMoore Medical Center\\nNorman Regional Hospital Diagnostic\\nServices\\nNorman Regional HealthPlex\\nNorman Regional Lab Service (3 locations)\\nNorman Regional Hospital\\nPurcell Municipal Hospital Laboratory\\n\\nPurcell Municipal Hospital Radiology\\n\\nNorman Regional Cardiac Rehabilitation\\nNorman Regional Occupational Medicine\\nNorman Regional Physical Performance Center\\n\\n\\x0cExhibit VI.H\\nPhysician Shortages in Selected Specialties\\nApplication of physician demand models based on the current utilization and distribution\\nof physicians across the U.S. to the NPHO service area population suggests that there are\\ncurrently shortages of selected physician specialties. Shortages have been exacerbated by the\\ngrowth of specialty hospitals and ambulatory surgery centers in the market, making it difficult to\\nmaintain specialty coverage for the general, acute care hospitals. In addition, about 20% of\\nNPHO service area physicians are age 60 and over, and they are likely to retire in the next five to\\nten years when demand for healthcare services by the Baby Boom generation will reach its peak.\\nPhysician supply and demand reports published by the Health Resources and Services\\nAdministration (HRSA) of the U.S. Department of Health and Human Services in October 2006\\nand December 2008 indicate that the supply of Total Patient Care Physicians (including\\nresidents) in the U.S. will increase by 13% from 2005 to 2020, falling short of the projected\\nrequired growth rate of 22%. Given changing physician practice patterns and the potential for\\nearly retirement, these estimates may be conservative.\\nThe table below applies HRSA current supply requirements to the 2010 estimated\\npopulation of the NPHO service area and indicates that the market may already be experiencing\\nshortages in internal medicine, pediatrics, general surgery, and obstetrics\/gynecology before\\nconsideration of the broader service area population that relies on the Oklahoma City\\nMetropolitan Area for healthcare services. Continued population growth, combined with\\nphysician retirement and aging of the population, will extend physician shortages across many\\nother specialties.\\nNorman Physician Hospital Organization\\nNPHO Service Area Physician\\n\\nActive Physicians by Specialty (Age<75)\\nTotal\\nTotal Non-Patient Care\\nTotal Patient Care\\nPrimary Care\\nGeneral Family Practice\\nGeneral Internal Medicine\\nPediatrics\\nMedical Specialties\\nCardiology\\nOther Internal Medicine\\nSurgical\\xc2\\xb7 Specialties\\nGeneral Surgery\\nOB\/GYN\\nOphthalmology\\nOrthopedic Surgery\\nOther Surgery\\nOtolaryngology\\nUrology\\n\\nCurrent\\nSupply\\n\\n461\\n342\\n180\\n97\\n\\n120\\n156\\n86\\n135\\n42\\n48\\n\\nNote: Numbers in red indicate current shortage areas.\\n\\n2010 SA Requirements\\nHigh Economic\\nGrowth\\nBaseline\\n3,304\\n3,177\\n179\\n178\\n3,125\\n3,000\\n1,140\\n1,108\\n462\\n449\\n473\\n460\\n205\\n199\\n391\\n375\\n93\\n90\\n298\\n285\\n704\\n670\\n175\\n167\\n171\\n167\\n86\\n79\\n108\\n102\\n74\\n70\\n45\\n41\\n45\\n45\\n\\n\\x0cExhibit VII\\n\\n\/\\nI\\n\\n\\x0cExhibit VIII\\n\\n\\x0cExhibit IX\\n\\n\\x0cExhibit X\\n\\n\\x0c'","created_timestamp":"May 26, 2011","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/norman-physician-hospital-organization\/130213normanphoincomingadvltr.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Marketing Practices\\nCraig Tregillus\\nctregillus@ftc.gov\\n\\nDirect Dial: (202) 326-2970\\nFacsimile: (202) 326-3395\\n\\nJanuary 3, 2013\\nMr. Harvey I. Lapin, Esq.\\nHarvey I. Lapin, PC\\nP.O. Box 1327\\nNorthbrook, IL 60065-1327\\nMr. Justin E. Huie, Instructor\\nFuneral Service Education\\nNorthampton Community College\\n3835 Green Pond Road\\nBethlehem, PA 18020\\nGentlemen:\\nYou have inquired whether the Funeral Rule permits a funeral provider to charge clients\\na mark-up above the price stated on its General Price List (\\xe2\\x80\\x9cGPL\\xe2\\x80\\x9d) where there are special\\ncircumstances that impose additional costs on the provider. In particular, you ask whether\\nfuneral homes and crematories may charge extra for handling obese bodies requiring additional\\npersonnel or equipment, or for very large funeral services necessitating additional personnel.\\nYou also request advice on how any such additional charges should appear on the Statement of\\nFuneral Goods and Services Selected (\\xe2\\x80\\x9cSFGSS\\xe2\\x80\\x9d).\\nIt is staff\\xe2\\x80\\x99s view, for the reasons stated below, that the Rule allows a funeral provider to\\ncharge only the prices that are listed on its GPL or other price lists required by the Rule, and\\ndoes not permit additional charges that have not been disclosed on the price lists. Funeral\\nproviders are free, however, to place reasonable limitations on the availability of any listed GPL\\nitem at a particular price, provided they also disclose sufficient information for a consumer to\\ndetermine the additional cost if the stated limitation is exceeded.\\nIt is not uncommon, for example, for a GPL to include a mileage limitation within which\\nthe provider will transfer remains to the funeral home for the flat fee stated, and to disclose an\\nadditional cost per mile for removals from beyond the mileage limit. This is expressly permitted\\nby Section 453.2(b)(4)(ii) of the Rule which states that a GPL may include \\xe2\\x80\\x9cretail prices\\n(expressed either as the flat fee, or as the price per hour, mile or other unit of computation). . . .\\xe2\\x80\\x9d1\\n\\n1\\n\\n16 C.F.R. \\xc2\\xa7 453.2(b)(4)(ii).\\n\\n\\x0cMr. Harvey I. Lapin and Mr. Justin E. Huie\\nPage 2 of 3\\nThus, nothing in the Rule prevents a funeral provider from including in its GPL an\\nexpress weight limit for its flat fee for transferring remains to the funeral home, so long as the\\nprovider also discloses the additional cost for removals that exceed the weight limitation.2\\nSimilarly, a crematory covered by the Rule may include an express weight limit for the flat fee\\nfor cremation in its GPL if it also discloses the additional cost for cremations that exceed that\\nweight limit.\\nBy the same token, a funeral provider may limit its stated GPL price for funeral\\nceremonies or memorial services to a specified maximum number of people in attendance. In\\nthat case, the GPL must also make clear the additional cost for services exceeding the specified\\nmaximum.\\nWhere any such limitations have been disclosed in the GPL, together with the additional\\ncost if those limitations are exceeded, preparation of the SFGSS should present no difficulties for\\nthe provider nor unwelcome surprises for the client. The basic fee for each service with an\\nexpress limitation in the GPL should be listed, followed by a separate entry showing the number\\nof units by which the limitation has been exceeded, the price of each unit as listed on the GPL,\\nand the total cost for the number of units exceeding the basic fee.\\nStaff\\xe2\\x80\\x99s opinion that a funeral provider may charge its clients only the prices listed on its\\nGPL follows from the Rule\\xe2\\x80\\x99s fundamental stated goals of enhancing consumer choice and price\\ncompetition by requiring itemized pre-sale price disclosure for funeral goods and services.3\\nSection 453.2(a) of the Rule therefore expressly prohibits any failure to furnish \\xe2\\x80\\x9caccurate price\\ninformation disclosing the cost to the purchaser for each of the specific funeral goods and funeral\\nservices used in connection with the disposition of deceased human bodies. . . .\\xe2\\x80\\x9d4 Allowing\\nadditional charges not disclosed on the price lists required by the Rule would jeopardize the\\naccuracy of itemized price information and stymie pre-need and at need comparison shopping.\\nStaff cannot condone undisclosed charges for those reasons.\\nPlease be advised that the views expressed in this letter are those of the FTC staff. They\\nhave not been reviewed, approved, or adopted by the Commission, and they are not binding upon\\nthe Commission. However, they do reflect the opinions of those staff members charged with\\n2\\n\\nSince Section 453.2(b)(4)(ii) permits any \\xe2\\x80\\x9cother unit of computation,\\xe2\\x80\\x9d the additional\\ncost can be priced in various weight increments, such as, for example, \\xe2\\x80\\x9c$ ___ for each additional\\n100 lbs.\\xe2\\x80\\x9d\\n3\\n\\nSee, e.g., Statement of Basis and Purpose, 53 Fed. Reg.1592, 1594 (Jan. 11, 1994)\\n(reviewing consumer choice benefits from price competition), available at\\nhttp:\/\/www.ftc.gov\/bcp\/rulemaking\/funeral\/funrlprac2.pdf; Statement of Basis and Purpose,\\n47 Fed. Reg.42260, 42270 (Sept. 24, 1982) (citing consumer injury from lack of itemized price\\ndisclosures and forced purchases of unwanted items), available at\\nhttp:\/\/www.ftc.gov\/bcp\/rulemaking\/funeral\/funrlprac.pdf.\\n4\\n\\n16 C.F.R. \\xc2\\xa7 453.2(a).\\n\\n\\x0cMr. Harvey I. Lapin and Mr. Justin E. Huie\\nPage 3 of 3\\nenforcement of the Funeral Rule. Staff Funeral Rule opinions are now routinely posted on the\\nFTC website at http:\/\/business.ftc.gov\/content\/funeral-rule-opinions.\\nSincerely,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\n\\x0c\\x0c'","created_timestamp":"January 3, 2013","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-13-1\/opinion13-1.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Marketing Practices\\n~\\nCraig Tregillus\\nctregillus@ftc.gov\\n\\nDirect Dial: (202) 326-2970\\nFacsimile: (202) 326-3395\\n\\nJanuary 3, 2013\\nMs. Kathleen K. Ryan, General Counsel\\nPennsylvania Funeral Directors Association\\n7441 Allentown Blvd.\\nHarrisburg, PA 17112-9982\\nMr. O. C. Robbins, Executive Director\\nTexas Funeral Service Commission\\nP. O. Box 12217\\nCapitol Station\\nAustin, TX 78711\\nDear Ms. Ryan and Mr. Robbins:\\nThis staff opinion responds to your requests for guidance on whether the Funeral Rule\\npermits funeral providers to charge consumers for the cost of collecting insurance or trust\\nproceeds for the funeral goods and services a consumer purchases. You ask, in particular, about\\nfees charged: (1) by providers for processing the paperwork needed to collect insurance\\nassignments or pre-paid arrangements funded by insurance or trust vehicles; and (2) by thirdparty funding companies that advance payments from insurance policies or trusts to funeral\\nproviders before the funding company collects the proceeds, deducts its fees, and remits any\\nremaining balance to the consumer.\\nAs you know, the Rule specifies that a funeral provider may charge only one nondeclinable fee, the basic services fee,1 unless another fee is necessitated by any legal, cemetery\\nor crematory requirement that is disclosed in writing on the Statement of Funeral Goods and\\nServices Selected (\\xe2\\x80\\x9cSFGSS\\xe2\\x80\\x9d).2 Accordingly, the Rule expressly prohibits funeral providers from\\ncharging:\\nany fee as a condition to furnishing any funeral goods or funeral services to a\\nperson arranging a funeral, other than the fees for: (1) Services of funeral director\\nand staff, permitted by \\xc2\\xa7 453.2(b)(4)(iii)(C) [basic services fee]; (2) other funeral\\nservices and funeral goods selected by the purchaser; and (3) other funeral goods\\nor services required to be purchased [i.e., by legal, cemetery or crematory\\n1\\n\\n2\\n\\n16 C.F.R. \\xc2\\xa7 453.2(b)(4)(iv).\\n\\n16 C.F.R. \\xc2\\xa7 453.3(d)(2). Staff is not aware of any such external requirement mandating\\nthat funeral providers charge consumers for collecting insurance or trust proceeds.\\n\\n\\x0cMs. Kathleen K. Ryan and Mr. O. C. Robbins\\nPage 2 of 2\\nmandates], as explained on the itemized statement [SFGSS] in accordance with\\n\\xc2\\xa7 453.3(d)(2).3\\nWhile the Rule does not permit a second non-declinable fee, it expressly permits fees for\\nfuneral goods and services voluntarily \\xe2\\x80\\x9cselected by the purchaser.\\xe2\\x80\\x9d It is therefore staff\\xe2\\x80\\x99s opinion\\nthat funeral providers may offer to collect insurance or trust proceeds for a fee that is optional.\\nNo Rule violation occurs if a purchaser voluntarily chooses such a service and is free to avoid\\nthe cost by declining it.4\\nAs a corollary, a purchaser would not be able to make a voluntary choice, as a practical\\nmatter, unless the service and fee are disclosed in advance on the funeral provider\\xe2\\x80\\x99s GPL at the\\ntime of a pre-need or at-need purchase. Toward this end, a funeral provider may list as an\\noptional charge on its GPL its own collection fees, or the fees for a third party used by the\\nprovider to collect trust or insurance proceeds. If a purchaser voluntarily selects the collection\\nservice, its cost must appear on the SFGSS. This is required by the Rule, and in the case of a\\npre-need purchase, assures that the purchaser\\xe2\\x80\\x99s personal representative will know that collection\\ncosts have been prepaid.\\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are now routinely\\nposted on the FTC website at http:\/\/business.ftc.gov\/content\/funeral-rule-opinions.\\nSincerely,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\n3\\n\\n16 C.F.R. \\xc2\\xa7 453.4(b)(1)(ii). Although the Rule provides an additional exception to the\\nprohibition \\xe2\\x80\\x9cfor a combination of goods or services which would be impossible, impractical, or\\nexcessively burdensome to provide,\\xe2\\x80\\x9d 16 C.F.R. \\xc2\\xa7 453.4(b)(2)(ii), it can hardly be applicable to\\nthe costs of collecting payment that many funeral providers have undertaken routinely for years\\nwithout charge. Collection costs may be recovered in the basic services fee only if this service is\\n\\xe2\\x80\\x9ccommon to virtually all forms of dispositions.\\xe2\\x80\\x9d FTC, Complying with the Funeral Rule (June\\n2004), p. 10.\\n4\\n\\nSome consumers may choose to avoid any such fee by paying the provider up-front and\\nlater undertaking the work of collecting the insurance or trust proceeds themselves. Others may\\ndecide that they need or prefer to have this service performed on their behalf and agree that the\\ncost is worthwhile.\\n\\n\\x0c'","created_timestamp":"January 3, 2013","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-13-2\/opinion13-2.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Marketing Practices\\nCraig Tregillus\\nctregillus@ftc.gov\\n\\nDirect Dial: (202) 326-2970\\nFacsimile: (202) 326-3395\\n\\nDecember 13, 2012\\nMr. Stephen Dirksen, General Counsel\\nNorth Carolina Board of Funeral Service\\n1033 Wade Ave. - Suite 108\\nRaleigh, North Carolina, 27605-1158\\nDear Mr. Dirksen:\\nThis letter responds to your request for clarification of the circumstances under which a\\ncasket offered by a funeral provider must be listed in the provider\\xe2\\x80\\x99s Casket Price List (\\xe2\\x80\\x9cCPL\\xe2\\x80\\x9d).\\nThe question comes from a provider in your state that wishes to test market a casket to select\\nclients. The provider will store the casket on its premises, but not in public view in its selection\\nroom, and will show the casket only to clients it believes might wish to purchase it.\\nAs you know, the Funeral Rule compliance guide states that funeral providers \\xe2\\x80\\x9cneed list\\nonly those caskets that you usually offer for sale that do not require special ordering.\\xe2\\x80\\x9d1 The\\nquestion you raise relates to how best to read this phrase. In staff\\xe2\\x80\\x99s view, the meaning is clear:\\nany casket that does not require special ordering is \\xe2\\x80\\x9cusually offered\\xe2\\x80\\x9d for sale. Any contrary\\ninterpretation would defeat the purposes of the CPL requirement; namely, ensuring that all\\nconsumers receive information about every pricing alternative and casket choice a provider can\\nreadily provide, and at the same time preventing a provider from concealing the availability of\\nless expensive caskets and offering them only to clients unable to afford a more expensive\\nalternative.\\nAccordingly, because the provider that prompted your inquiry will store the caskets it\\nwishes to test market, and will not need to special order them, they must be listed on its CPL for\\nas long as the provider offers them to any of its clients. The fact that the provider may intend to\\noffer the casket only to a select group of customers does not mean that it does not \\xe2\\x80\\x9cusually offer\\xe2\\x80\\x9d\\nthe casket for sale.\\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\\n\\n1\\n\\nFTC, Complying With the Funeral Rule (2004), p. 14 (emphasis in original).\\n\\n\\x0cMr. Stephen Dirksen\\nPage 2 of 2\\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are now routinely\\nposted on the FTC website at http:\/\/www.ftc.gov\/bcp\/edu\/microsites\/funerals\/staffopinions.shtm.\\nSincerely,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\n\\x0c'","created_timestamp":"December 13, 2012","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-12-1\/opinion12-1.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHTNGTON, D.C. 20580\\n\\nBureau of Competition\\nHealth Care Division\\n\\nNovember 30, 2012\\nDionne C. Lomax\\nVinson & Elkins LLP\\n2200 Pennsylvania Avenue NW\\nSuite 500 West\\nWashington, DC 20037\\nRe:\\n\\nThe Methodist Hospital System Advisory Opinion\\n\\nDear Ms. Lomax:\\nThis letter responds to your request on behalf of The Methodist Hospital System (\"Methodist\")\\nfor an advisory opinion concerning Methodist\\'s proposal to sell certain critical shortage drugs to\\nBaytown EMS, a division of the Baytown, Texas, city government, during the pendency of the\\nshortage. Baytown EMS serves as the exclusive 9-1-1 emergency transport service for Baytown\\nresidents. You requested our view on the permissibility of these proposed sales under the\\nRobinson-Patman Act.\\' Specifically, you requested that we opine on the applicability of the\\nNon-Profit Institutions Act (\"NPIA\") to the proposal. The NPIA provides an exemption from\\nliability under the Robinson-Patman Act for purchases of supplies by certain non-profit\\norganizations for their own use. 2\\nWe need not reach the NPIA question, however, because Methodist\\'s proposal, as presented,\\nappears to be a pennissible emergency humanitarian gesture. As explained below, Methodist\\nproposes to sell pharmaceuticals to Baytown EMS for the sole purpose of assisting Baytown\\nEMS in the care of patients during a time of nationwide shortages of certain critical drugs. Given\\nthese facts, it is our view that, pursuant to the Supreme Court\\'s discussion ofa hospital\\'s role in\\nan emergency in Abbott Labs. v. Portland Retail Druggists Ass \\'n, Inc., 425 U.S. I (1976) and the\\nCommission\\'s similar discussion in its St. Peter\\'s Hospital of the City ofAlbani advisory\\n\\n, 15 U.S.C. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 13.\\n2 15 U.S.C. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 13c (exempting from the Robinson-Patman Act \"purchases of supplies for their own use by\\nschools, colleges, universities) public libraries, churches, hospitals, and charitable institutions not operated for\\nprofit\").\\n3\\n\\nSt. Peter\\'s Hospital of the City ofAlbany, 92 F.T.C. 1037 (1978) (Commission advisory opinion).\\n\\n\\x0cThe Methodist Hospital System Advisory Opinion\\nNovember 30, 2012\\nPage 2\\nopinion, Methodist may resell the needed pharmaceuticals to Baytown EMS as a humanitarian\\ngesture during the shortages. 4\\nFactual Background\\nAs we understand the facts based on information you provided, Methodist is a non-profit\\nhospital system that provides comprehensive care to its patients. It is based in Houston, Texas,\\nand purchases its pharmaceuticals through a group purchasing organization at an NPIAdiscounted price. 5 Methodist is comprised of inpatient facilities, outpatient surgery centers,\\nimaging centers, and emergency care centers. CUlTently, its facilities include five hospitals. One\\nof Methodist\\'s hospitals is San Jacinto Methodist Hospital, which is a 392-bed general acute care\\ninpatient facility located about 30 miles east of downtown Houston, in Baytown, Texas. 6 San\\nJacinto Methodist is the only hospital within Baytown\\'s city limits.\\' Further, it is the only\\nhospital in the Baytown area that provides the full range of acute care inpatient health services. s\\nBaytown EMS is the exclusive transport provider for the City of Baytown\\'s 9-1-1 service. It is a\\ndivision of the city of Baytown and was created under the Emergency Healthcare Act for the sole\\npurpose of providing critical medical care and emergency medical transportation services to the\\ncitizens of Baytown. By city ordinance, Baytown EMS is the only emergency medical service\\ntransport allowed to respond within the city limits. It employs 21 paramedics and has four frontline ambulances. 9 The vast majority of Baytown EMS\\'s emergency transports go to San Jacinto\\n\\n4 This advisory opinion should not be construed as taking the position that the Robinson-Patman Act\\nnecessarily applies to these facts, or that Methodist\\'s proposed sale to Baytown EMS would violate the RobinsonPatman Act absent the shortage situation or other applicable exemption. We provide this opinion, under these unique\\ncircumstances of critical drug shortages~ in an effort to provide reassurances that may be helpful to entities in their\\nefforts to cope with the current drug shortages.\\n\\n5 Letter from Dionne C. Lomax, Vinson & Elkins LLP, to Markus H. Meier, FTC (July 25, 2012)\\n[hereinafter \"July Letter\"]; Letter from Dionne C. Lomax, Vinson & Elkins LLP, to Robert S. Canterman, FTC\\n(Sept. 6, 2012) [hereinafter \"September Letter\"]\\'\\n\\n6\\n\\nSee http:\/\/www.methodisthealth.com (viewed September 17,2012); July Letter.\\n\\n, September Letter.\\n8\\n\\nJuly Letter.\\n\\n9\\n\\nJuly Letter; September Letter.\\n\\n\\x0cThe Methodist Hospital System Advisory Opinion\\nNovember 30,2012\\nPage 3\\nMethodist. 10 Though it can collect fees for its services, Baytown EMS does not generate a\\nprofit.\"\\nAs you have explained, during transport of patients to hospitals for care, it may be necessary for\\nBaytown EMS to administer certain phannaceuticals prior to arrival at the hospital. Indeed, the\\nadministration of certain phannaceuticals at the first point of care can be critical to a patient\\'s\\nclinical outcome. Recently, however, owing to well-publicized nationwide shortages of certain\\ncritical drugs, Baytown EMS has been unable to keep its ambulances stocked with safe inventory\\nlevels of certain of these clitical pharmaceuticals. Efforts to secure supply from other vendors\\nhave not succeeded, and the problem appears to be prevalent throughout the region.\\'2\\nTo assist Baytown EMS in dealing with the drug shortages and to ensure that its patients, which\\ncomprise tlte vast majority of Baytown EMS\\'s transports, receive the necessary clinical care en\\nroute to the hospital, Methodist proposes to sell, at cost, critical shortage drugs to Baytown EMS.\\nAs you explained to us, Methodist would continue this arrangement only for so long as the drugs\\nare in shortage.\\'3\\nAnalysis\\n\\nThe Supreme Court\\'s opinion in Abbott Labs. v. Portland Retail Druggists Ass \\'n, Inc., 425 U.S.\\n1 (1976) guides our analysis of permissible uses of NPIA-discounted phannaceuticals. There,\\nin addition to clarifying the applicability of the NPIA exemption to the Robinson-Patman Act,\\nthe Supreme Court addressed the appropriate role of a hospital in an emergency situation. It\\nstated:\\nWe recognize, however, that there may be an occasion when the hospital\\npham1acy is the only one available in the community to meet a particular\\nemergency situation.... So long as the hospital phannacy holds the emergency\\nsituation within bounds, and entertains it only as a humanitarian gesture, we shall\\nnot condemn the hospital and its suppliers to a Robinson-Patman violation\\nbecause of the presence of the occasional walk-in dispensation of that type. \\'4\\n\\n10\\n\\nSee id.\\n\\n\" September Letter.\\n\\'2\\n\\nJuly Letter; September Letter.\\n\\n13\\n\\nSee id.\\n\\n\\'4 See Abbott at 18. The Court further noted that the occasional emergency would likely be de minimis in\\n\\nany event.\\n\\n\\x0cThe Methodist Hospital System Advisory Opinion\\nNovember 30,2012\\nPage 4\\nApplying the Supreme Court\\'s reasoning in Abbott, the Commission previously has determined\\nthat a hospital could resell pharmaceutieals it purchased pursuant to the NPIA diseount to the\\ngeneral public during an emergency caused by a Medicaid strike. In its St. Peter\\'s opinion, the\\nCommission concluded that \"if needed pharmaceuticals are not available or difficult to obtain,\\n[the hospital) may resell the needed pharmaceuticals to the general public as a humanitarian\\ngesture during the emergency caused by the [Medicaid) strike.,,15\\nMethodist\\'s proposal appears consistent with both the Supreme Court\\'s reasoning in Abbott and\\nthe Commission\\'s reasoning in St. Peter\\'s. As we understand the facts you have presented,\\nMethodist runs the only hospital within Baytown\\'s city limits. To assist Baytown EMS during a\\ntime of well-publicized nationwide shortages of clitical drugs, Methodist seeks to sell certain\\nshortage drugs that it obtains at the NPIA-disconnted price to Baytown EMS. These shortage\\ndrugs are necessary to the care of Baytown EMS\\'s emergency transport patients, most of whom\\nare transported to Methodist and ultimately become patients of Methodist. Despite its efforts to\\ndo so, Baytown EMS has been nnable to secure adequate supply of these drugs from other\\nsources. Methodist only proposes to assist Baytown EMS during the pendency of the shortages.\\nThus, applying Abbott and St. Peter\\'s, it is our opinion that Methodist may resell the needed\\nshortage drugs to Baytown EMS to assist Baytown EMS in its efforts to maintain safe inventory\\nlevels of those products for use in the treatment of its emergency transport patients.\\nConclusion\\n\\nAs diseussed above, we conclude that Methodist\\'s proposal to resell pharmaceuticals to Baytown\\nEMS to assist Baytown EMS in its efforts to cope with shortages of certain critical drugs would\\nbe a permissible humanitarian gesture and that Methodist may resell the needed pharmaceuticals\\nto Baytown EMS during the shortages.\\nThis letter sets out the views of the staff of the Bureau of Competition, as authorized by the\\nCommission\\'s Rules of Practice. Under Commission Rule \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 1.3(c), 16 C.P.R. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 1.3(c), the\\nCommission is not bound by this staff opinion and reserves the right to rescind it at a later time.\\nIn addition, this office retains the right to reconsider the questions involved and, with notice to\\nthe requesting party, to rescind or revoke the opinion if implementation of the proposed program\\nresults in substantial anticompetitive effects, if the program is used for improper purposes, if\\nfacts change significantly, or ifit otherwise would be in the public interest to do so.\\nSincerely,\\n\\nMPI.L~\\n\\nMarkus H. Meier\\nAssistant Director\\n\\nIS\\n\\nSt. Peter\\'s H05pitai of the City of Albany, 92 F.T.C. 1037 (1978) (Commission advisory opinion).\\n\\n\\x0c'","created_timestamp":"November 30, 2012","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/methodist-hospital-system\/121130advopinionltrmethodist.pdf"}
{"text":"b'Vinson &Elkins\\nDionne C. Lomax dlomax@velaw.com\\nTel +1 .202.639.6610 Fax +1 .202 .879.8843\\n\\nJuly 25, 2012\\nMarkus H. Meier\\nAssistant Director\\nFederal Trade Commission\\nBureau of Competition\\nHealth Care Services and Products\\n601 New Jersey Avenue\\nWashington, D.C. 20001\\n\\nRe:\\n\\nRequestfor Staff Advisory Opinion Relating to the Non-Profit Institutions Act\\n\\nDear Mr. Meier,\\nOn behalf of The Methodist Hospital System (\"Methodist\"), I am submitting a request for a\\nstaff advisory opinion pursuant to 16 C.F.R. \\xc2\\xa7l.l regarding the applicability of the NonProfit Institutions Act (\"NPIA\") to the sale of pharmaceuticals by Methodist to Baytown\\nEMS.\\nFactual Background\\nMethodist is a non-profit hospital system based in Houston, Texas, that purchases its\\npharmaceuticals through a distributor at a GPO discount. Methodist is comprised of five\\ninpatient facilities as well as numerous outpatient surgery centers, imaging centers and\\nemergency care centers. The discounted pharmaceuticals purchased by Methodist are used\\nfor its hospitalized patients for inpatient needs, emergency room patients, in-clinic treatment,\\nas well as periodic discharge prescriptions.\\nBaytown EMS is a division of the City of Baytown, Texas. It employs 21 paramedics and\\nprovides critical medical care and emergency medical transportation services to the citizens\\nof Baytown. As the exclusive transport providers for 9-1 -1 service for the City of Baytown,\\nBaytown EMS responds to approximately 8,200 calls for service each year, resulting in\\napproximately 5,300 transports. l Baytown EMS patients are typically transported to\\nMethodist\\'s Baytown facility, San Jacinto Methodist Hospital, a 392-bed general acute care\\ninpatient facility located approximately 30 miles from Houston. It is the only facility in the\\nBaytown area that offers a full range of acute care inpatient health services.\\n\\n1\\n\\nhttp:\/\/www.baytown.orglsafetyhealthlems\\n\\nVinson & Elkins LLP Attorneys at Law\\n\\n2200 Pennsylvania Avenue NW. Suite 500 West\\n\\nAbu Dhabi A ustin Beijing Dallas Dubai Hong Kong Houston l ondon Moscow\\n\\nWashington, DC 20037-1701\\n\\nNew York Palo Alto Riyadh San Francisco Shang hai Tokyo Washi ngton\\n\\nTel +1 .202.639.6500 Fax +1 .202.639.6604 www.velaw.com\\n\\n\\x0cV&E\\n\\nMarkus H. Meier\\n\\nJuly 25, 2012 Page 2\\n\\nAs you may know, drug shortages in the United States have been increasing in frequency and\\nseverity in recent years and adversely affecting patient care. As a result of these shortages,\\nBaytown EMS has experienced difficulties keeping its ambulances stocked with certain\\nprescription drugs that are critical to ensure quality patient care. In an effort to resolve the\\nproblem, Baytown EMS seeks to purchase certain drugs from Methodist that are in short\\nsupply.\\nMethodist\\'s central institutional function is to deliver comprehensive acute health care\\nservices, including pharmaceuticals, to all of its patients. Its patients include Baytown area\\nresidents who rely on Baytown EMS \\' s emergency transport services. Methodist is dedicated\\nto quality patient care, and thus, would prefer that certain drugs be administered to patients\\nwhile in transport to its Baytown facility rather than once the patient has arrived at the\\nhospital. The administration of critical drugs at the first point of care rather than after\\ntransport can be critical to a patient\\'s clinical outcome. Methodist, therefore, seeks to sell\\npharmaceuticals to Baytown EMS to ensure that the patients it serves receive critical care in\\na timely manner. Methodist proposes to sell pharmaceuticals to Baytown EMS at a price that\\ndoes not exceed its direct costs in purchasing and transporting the drugs. In most cases the\\ndrugs are likely to be picked up by paramedics employed by Baytown EMS when making\\nnormal transport runs to Methodist\\'s Baytown facility.\\nFor the reasons explained below, we believe that the NPIA should apply to pharmaceuticals\\ntransferred by Methodist to Baytown EMS, but are writing to request an opinion from the\\nFTC staff regarding the extension of the NPIA to this government agency.\\nAnalysis\\n\\nThe Robinson-Patman Act (\"the Act\") prohibits price discrimination between different\\npurchasers to whom contemporaneous sales of like goods are made, where the effect of such\\ndiscrimination may be to adversely affect competition. The Non-Profit Institutions Act\\n(\"NPIA\") exempts from the Robinson-Patman Act \"purchases of . .. supplies for their own\\nuse by schools, colleges, universities, public libraries, churches, hospitals, and charitable\\ninstitutions not operated for profit.,,2 To fall within the NPIA exemption to the RobinsonPatman Act, an organization must be an \"eligible entity\" and must use the exemption to\\npurchase supplies for its \"own use.,,3\\n\\n\\' IS U. S.c. \\xc2\\xa7 13c(emphasis added).\\n3 Abbott Laboratories v. Portland Retail Druggists Ass \\'n\" 425 U.S. 1 (1976).\\n\\n\\x0cV&E\\n\\nMarkus H. Meie r\\n\\nJuly 25, 20 12 Page 3\\n\\nAccording to the Commission\\'s holding in St. Peter\\'s Hospital, the Act covers the transfer of\\nsupplies, at cost, from a non-profit hospital to another charitable organization that is entitled\\nto NPIA protection for its own purchases, so long as those supplies are for the receiving\\ninstitution\\'s \"own use\" within the meaning ofthe NPIA. 4\\nI.\\n\\nEligibility of Baytown EMS for Exemption from the Robinson-Patman Act\\nUnder the NPIA\\n\\nThe basic purpose of the Robinson-Patman Act is to eliminate unfair competition among\\nthose engaged in private enterprise where such practices might result in restraint of trade or\\ninjury to competition. The law seeks to cover within its scope every person engaged in\\nbusiness whose activities might restrain or monopolize commerce. Courts have held the\\nfederal government immune from liability under the Act, and in the NPIA, Congress\\nspecifically excluded non-profit organizations and certain other entities that are not otherwise\\nengaged in competition in the private market.\\nAs a division of the City of Baytown, Baytown EMS is a government instrumentality entitled\\nto coverage under the NPIA. The rationale underlying the exclusion of public libraries,\\nhospitals, and other non-profit institutions from the proscriptions of the Robinson-Patman\\nAct are easily extended to Baytown EMS. Baytown EMS is engaged in a traditional\\ngovernment function of ensuring the health, safety and welfare of area residents. It does not\\ncompete with private parties within the meaning of the Act (e.g., it is the exclusive EMS\\nservice in Baytown), and its activities are not affected by a profit-making motivation. To the\\ncontrary, the services provided by Baytown EMS are undertaken on behalf of the City of\\nBaytown to ensure the health Of its citizens. In that sense the central institutional function of\\nBaytown EMS is to provide a traditional government function, not to gain competitive\\nadvantage in the pri vate market. Thus, Baytown EMS\\'s eligibility under the NPIA appears\\nentirely consistent with the intent of the NPIA to make the Act\\'s exemption available to\\nhospitals, public libraries and other charitable organizations.\\n2.\\n\\nPharmaceuticals for Bavtown EMS \\'s \"Own Use\"\\n\\nThe sole purpose of Baytown EMS is to transport patients in need of emergency medical\\nservices to an area inpatient facility for acute care medical treatment. To alleviate the\\ninstances in which Baytown EMS lacks the appropriate drugs (as a result ofthe national drug\\nshortage) to treat patients at the point of care, it seeks to purchase drugs from Methodist. The\\npharmaceuticals will be used by Baytown solely for the treatment of patients under its care\\n\\n4\\n\\nSt. Peter\\xc2\\xb7s Hospital of the City of Albany. 92 F.T.C. 1037 (1978).\\n\\n\\x0cV&E\\n\\nMar1<.us H. Meier\\n\\nJuly 25, 2012 Page 4\\n\\nprior to or while en route to an acute care medical facility. The immediate administration of\\nsuch drugs will enhance Baytown\\'s ability to provide quality care to patients prior to their\\narrival at an acute care medical facility and enhance its ability to have good patient outcomes.\\nSince the sole purpose of Baytown\\' s use of the pharmaceuticals will enable it to carry out its\\nactivities as an emergency medical service provider to provide quality health care to area\\nresidents, we believe that the provision of discounted pharmaceuticals to Baytown EMS as\\npart of its provision of emergency medical services to patients would be for its \"own use,\"\\nand thus would be covered by the NPIA exemption.\\nConclusion\\n\\nAs discussed above, we believe that the sale of pharmaceuticals by Methodist to Baytown\\nEMS should receive coverage under the NPIA. Given its institutional purpose and function,\\nBaytown EMS should be characterized as an NPIA-eligible institution. The pharmaceuticals\\nwill be sold to Baytown EMS at cost and will be used solely by Baytown EMS to care for\\npatients prior to or while transporting patients to Methodist\\'s Baytown facility or other acute\\ncare facilities. In many ways, the services provided by Baytown EMS are essentially an\\nextension of Methodist\\'s basic services to area residents and contributes directly to\\nMethodist\\'s ability to fulfill its central institutional function to deliver high-quality\\ncomprehensive acute health care services to its patients.\\nShould you have any questions or comments, please do not hesitate to contact me at 202-6396610.\\nSincerely,\\n\\n~ 4~\\n\\nDionne C. Lomax\\n?\"\\nCounsel for The Methodist Hospital System\\n\\nUS 1498924v.1\\n\\n\\x0c'","created_timestamp":"July 25, 2012","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/methodist-hospital-system\/121130advopinionincomingltrmethodist.pdf"}
{"text":"b'United States of America\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Enforcement\\nof Consumer Protection\\n\\nBur~au\\n\\nAugust 7, 2012\\nVIA FEDERAL EXPRESS\\nC.J. Erickson\\nCowan, Liebowitz & Latman, P.C.\\n1133 Avenue of the Americas\\nNew York, NY 10036\\nRe:\\n\\nAdvisory Opinion Request ofMJ] Brilliant Jewelers, Inc.\\n\\nDear Mr. Erickson:\\nThis letter responds to MJJ Brilliant Jewelers, Inc. (\"MIJ\" or \"Company\")\\' s request for a\\nstaff opinion concerning MIJ\\'s proposed marking and advertising ofjewelry constructed of an\\nalloy comprising gold, silver, palladium, and non-precious metals.!\\n.\\nYou state that MIJ has developed a proprietary alloy fOmlulation composed of.\\n%\\ngold (periodic element Au), 21 % silvcr (periodic eloment Ag), .\\' % palladium (periodic element\\nPa), and. % base metals, which MJJ will use in jewelry merchandise (\"Jewelry Alloy,,).2\\nAcknowledging the provisions in the Jewelry Guides3 that address misrepresentations regarding\\nthe content of gold or gold alloy in an industry prodUct, you ask whether your client\\'s anticipated\\nuse of the term \"gold\" in its advertising and marketing materials to identifY the specific\\ncomposition of the Jewelry Alloy would be \"propel\\'\\'\\' under Section 5 of the Federal Trade\\nConunissionAct (\"FTC Act;\\'), 15 U.S.C. \\xc2\\xa745(a). Specifically, you request guidance on the\\nacceptability of each of the following: (1) using the phrase: \"consisting of a proprietary alloy of\\ngold, silver, and platinum;\" (2) proViding a link to a third-party assay report that identifies the\\nprecious metal content of the finished article; (3) identifying the specific percentage content of\\n.all precious metals in the finished article; (4) stamping merchandise with the Company\\'s\\n\",\\n(\" trademark. You did not provide any specific advertising or marketing materials for\\n\\nI\\nYour letter requests \"that the Commission of [sic] FTC Staff issue an advisory opinion,\"\\nwhich could be interpreted as a request for a Commission advisory opinion. You also indicate,\\n.however, that yourrequest is jn accordance with Section 1.3 (c) of the Commission Rules of\\nPractice, by which FTC staff may render an opinion without prejudice to\\'the right of the\\nCommission to rescind the advice at a later date and, as appropriate, to commence an\\nenforcement action. 16 C.FR. \\xc2\\xa71.3(c).\\n2\\n\\nYour letter also states that the MIJ alloy.is \"identified as\\n\\n\\xe2\\x80\\xa2\\nThe Federal Trade Commission\\'s Guides for the Jewelry, Precious Metals, and Pewter\\nIndustries (\"Jewelry Guides\" or \"Guides\"), 16 C.F.R. Part 23.\\n\\n\\x0cMr. C.J. Erickson\\nAugust 7, 2012\\nPage 2\\nour consideration, nor did you make clear whether MJJ intends to use any of the proposed\\nmarketing claims in combination.\\nAs you are aware, the Jewelry Guides Ill\\'e administrative interpretations of Section 5 of\\nthe FTC Act, which prohibits unfair or deceptive acts or practices. The Guides state, in pertinent\\npart, that \"[iJt is unfair or deceptive to misrepresent the presence of gold or gold alloy in an\\nindustry product, or the quantity or karat fineness of gold or gold alloy contained in the\\nproduct. ...\" 16C.F.R. \\xc2\\xa723.4(a). The Guides also provide that it may be misleading to use the\\nword \"gold\" or any abbreviation, or a quality mark implying gold content (e.g., 9 karat), \"to\\ndescribe all or part of an industry product that is composed throughout of an alloy of gold of less\\nthan 10 karat fineness.\" 16 C.F.R. \\xc2\\xa723.4(b)(9). In addition, the Jewelry Guides provide that \"[i)t\\nis unfair or deceptive to mark, describe, or otherwise represent all or part of an industry product\\nas silver, ... un.less it is at least 925\/1000ths pure silver.\" 16 C.F.R. \\xc2\\xa723.6(b). Additionally, the\\nJewelry Guides provide that \"[i)t is unfair or deceptive to use the words \\'platinum, ...\\n\\'palladium,\\' ... or any abbreviation to mark or describe all or part of an industry product if such\\nmarking or description misrepresents the product\\'s true composition,\" and further provide that it\\nmay be misleading to use the word \"platinum\" or any abbreviation \\'\\'to mark or describe any\\nproduct that is not composed throughout of at least 500 parts per thousand pure Platinum.\"\\n16 C.F.R. \\xc2\\xa7\\xc2\\xa723.7(a), 23.7(b)(3).\\nYou concede that MJJ \"cannot stamp or market its gold alloy jewelry with the traditional\\nkarat nmrking[, ...J as the alloy is admittedly less than 10 karat fineness.\" Indeed, given your\\nrepresentation that the Jewelry Alloy is comprised of \\'% gold by weight, the gold content of\\nthe product more closely approximates 6 karats, which falls short of the 10 karat minimum\\nfineness set forth in the Guides. Likewise, your description of the Jewelry Alloy indicates that it\\ncontains, , % silver, which is below the 92.5% level stated in the Guides. The Jewelry Alloy\\nalso includes % palladium, but does not contain any pure platinum.\\nAs part of the 1996 review, the Commission considered whether to amend the Guides to\\npermit gold alloys containing less than 10 karats of gold (i.e., less than 41.6% gold) to be\\nmarketed as containing gold. 61 Fed. Register 27185-86 (May 30, 1996). In addressing this\\nissue, the Commission noted that it had previously sought comments in 1977 regarding a\\nproposal to lower the 10 karat minimum threshold to permit sellers to market gold of less than 10\\nkarats If the quality was accurately disclosed. and also to lower the 92.5% level for silver. Based\\non the record and comments it received in response to the 1977 proposal, the Commission\\nretained the 10 karat minimum fineness which appears in Section 23.4 of the Jewelry Guides,\\nand the Commission also retained the 92.5% level for silver which appears in Section 23.6. ld\\nat 27185 0.99.\\nThe Commission included the minimum of 500 parts per thousand pure platinum for\\nplatinum markings pursuant to its 1997 revisions to the Guides. 62 Fed. Register 16673 (Apr. 8,\\n1997). In developing the 1997 guidance, the Commission indicated that referring to an article\\ncontaining less than 500 parts per thousand pure platinum as \"platinum,\" without qualification,\\nmay be deceptive. 61 Fed. Register 27225 (May 30, 1996). When revising the platinum section\\nagaln in 2010, the Commission noted that it had previously found that deception would likely\\n\\n\\x0cMr. C.J. Erickson\\nAugust 7, 2012\\nPage 3\\nresult if marketers were to describe platinurnlbase metal alloys as \"platinum\" without disclosing\\ninformation regarding their composition and attributes. 75 Fed. Register 8 I 449 (Dec. 28,2010).\\nIn light of the foregoing, it is our opinion that MJJ\\'s proposed use of the phrase\\n\"consisting of a proprietary alloy of gold, silver, and platinum\" would contravene the plain\\nlanguage of the current Jewelry Guides. As discussed above, the Guides advise against using the\\nword \"gold\" or any quality mark implying gold content on any product oflesa thim 10 karat\\nfineness. 16 C.P.R. \\xc2\\xa723.4(b)(9). The Guides also advise against using the word \"silver\" to\\ndescribe all or part of an industry product unless it meets the 92.5% threshold, 16 C.P.R.\\n\\xc2\\xa723.6(b), and advise against using the word \"platinum\" to describe all or part of any product that\\nis not composed throughout of at least 500 parts per thousand pure platinum. 16 C.F.R.\\n\\xc2\\xa723. 7(b)(3). Furthermore, using the phrase \"consisting of a proprietary alloy of gold, silver, and\\nplatinum\" may misleadingly imply that the Jewelry Alloy is comprised solely of those three\\nprecious metals (gold, silver, platinum). Therefore, this claim would likely run afoul of\\nSection 5 of the FTC Act, which prohibits deceptive acts or practices.\\nThe Jewelry Guides do not explicitly address the use of marketing claims that identify the\\ntotal precious metal content of a jewelry product. Thus, in our opinion, the Guides would not\\nprohibit MIJ from stamping the Jewelry Alloy merchandise with its .\\'\"\\n\" trademark.\\nYouxletter does not indicate whether MJJ\\'s proposed \"identification of the specific\\npercentage content of all precious metals\" would specifically describe the Jewelry Alloy as\\ncontaining gold, silver, or platinum, not did you attach a copy of the \"representative\" assay\\nreport that MJJ anticipates using to market the product.4 On that basis, we cannot provide an\\nopinion regarding those proposed practices.\\nMarketing of the Jewelry Alloy would nevertheless be guided by the provisions cited\\nabove that prohibit misrepresentations regarding gold, silver, and platinum content, as well as the\\ngeneral prohibition against deception contained in Section 23.1 of the Jewelry Guides. MJJ\\'s\\nmarketing would also be SU\"Qject to Section 5 of the FTC Act. Your letter does not make clear\\nwhether the Company\\'s marketing and advertising materials would adequately disclose the .\\nJewelry Alloy\\'s full composition and attributes, such as by giving consunters complete\\ninformation regarding all components of the product (including disclosure of the fact that \\'10 of\\nthe alloy consists of non-precious base metals). Moreover, to the extent MJJ anticipates\\nproviding qualifications or disclosures regarding the content of its Jewelry Alloy, any such\\ndisclosures or qualifications must be sufficiently clear and prominent, and proximate to the\\nclaim, to prevent deception. In evaluating whether a representation is misleading, the\\nCommission examines not only the claim itself, but the net impression of the entire\\nadvertisement. Finally, to the extent MJJ provides disclosures through a hyperlink reference to a\\nthird-party assay report, the information in such report must be truthful and non-misleading.\\n\\n4\\n\\nWe understand that an assay usually reflects a test made to determine the quantity of\\nprecious metal in a product compared to the weight of the whol\" product.\\n\\n\\x0cMr. C.J. Erickson\\nAugust 7, 2012\\nPage 4\\nIn our opinion, a literal reading of the provisions in the Guides that discuss misuse of the\\nwords \"gold,\" \"silver,\" and \"platinum\" does not address how to describe the content of an alloy\\nthat contains those precious metals in amounts below the minimum thresholds. Pursuant to the\\nCommission\\'s systematic review process for all of its mles and industry guides, the Commission\\nrecently published a Federal Register notice soliciting comment on all aspects of the Jewelry\\nGuides, including disclosures that relate to the content of precious metal alloys. 77 Fed. Register\\n39201 (July 2,2012). We encourage MJJ to submit comments and supporting consumer\\nperception evidence on this and any other issue relating to the Guides before the deadline of\\nAugust 27, 2012.\\n\\'\\nThis letter sets out the views of the staff of the Bureau of Consumer Protection, as\\nauthorized by the Commission\\'S Rules of Practice. Those views are based on information you\\nprovided to Commission staff. Staff has not engaged in independent factual investigation\\nregarding the proposed marketing and product stamping. In accordance with Section 1.3(c) of\\nthe Commission Rules of Practice, 16 C.F.R. \\xc2\\xa7 1.3(c), this is a staff opinion only and has not\\nbeen reviewed or approved by the Commission or by any individual Commissioner, and is given\\nwithout prejudice to the right of the Commission to rescind the advice at a later date and, as\\nappropriate, to commence an enforcement action. In accordance with Section 1.4 of the\\nCommission\\'s Rules of Practice, 16 C.F.R. \\xc2\\xa7 1.4, your request for advice and this response will\\nbe placed on the public record.\\nThank you for contacting the Federal Trade Commission. If you have any questions,\\nplease do not hesitate to contact me at 202\\xc2\\xb7326\\xc2\\xb72272.\\n\\nSincerely.\\n\\n,;. \\':. f .\\n.\\n\\n,\\n\\n,\\n\\n, .\\n\\n\\x0c'","created_timestamp":"August 7, 2012","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/letter-reenah-l.kim-staff-attorney-division-enforcement-bureau-consumer-protection\/120807mjjbrilliantjewelersletter.pdf"}
{"text":"b'UN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nM ichael Bloom\\nAssistant Director for Policy & Coordination\\nD irect D ial\\n(202) 326-2475\\n\\nJuly 2, 2012\\n\\nEugene A. Guilford, Jr.\\nPresident\\nIndependent Connecticut Petroleum Ass\\xe2\\x80\\x99n\\n10 Alcap Ridge\\nCromwell, Connecticut 06416\\nRe: FTC Staff Advisory Opinion\\nDear Mr. Guilford:\\nThis letter responds to your request, on behalf of the Independent Connecticut Petroleum\\nAssociation (\\xe2\\x80\\x9cICPA\\xe2\\x80\\x9d), for an FTC staff advisory opinion. You seek the staff\\xe2\\x80\\x99s assessment of the\\nICPA\\xe2\\x80\\x99s contemplated system for collecting a voluntary per-gallon assessment from heating oil\\nretailers to fund a variety of educational and training programs.\\nThree issues are of potential concern here. Do the structure and purposes of the program suggest\\nthat it \\xe2\\x80\\x9cwould always or almost always tend to restrict competition and decrease output,\\xe2\\x80\\x9d1 such\\nthat it might be deemed unlawful per se, that is, without further analysis?2 Might increased retail\\ndealer costs result in anticompetitive price increases? And is it possible that firms may use the\\nreporting features of this system to gain competitively sensitive information about the pricing\\nand behavior of others?\\nWe understand, however, that the ICPA\\xe2\\x80\\x99s plan incorporates features intended to minimize these\\nconcerns: (1) wholesaler and retailer participation in the program will be voluntary, with\\nparticipants remaining free to withdraw from the program at any time; (2) given the noncoercive structure of the program, potential effects on retailer prices likely will be tempered by\\ncompetition and offset by efficiencies; and (3) information about purchase volumes will be\\naggregated into combined numbers at each step of the reporting process, with the ICPA reporting\\nto its members only the total combined numbers for all participating wholesalers. This level of\\naggregation likely will prevent firms from obtaining competitively useful information about\\nindividual rivals. In view of these facts, the FTC staff has no present intention of recommending\\nto the Commission that it challenge the implementation of this program.\\n\\n1\\n\\nBroadcast Music, Inc. v. CBS, 441 U.S. 1, 19-20 (1979).\\n\\n2\\n\\nSee id.\\n\\n\\x0cIn forming this intention, we have relied entirely on a review of the written materials and other\\nrepresentations that you have given to the FTC staff. Should there be information that we are\\nunaware of that qualifies, modifies, or contradicts any of these materials or representations or\\nthat calls in to question the conclusions we have drawn from them, or should the proposed\\nactivities materially change in the future, then we may change our recommendation accordingly.\\n\\nThe background facts\\nThe Independent Connecticut Petroleum Association is a voluntary association organized under\\nSection 501(c)(3) of the Internal Revenue Code. It is made up primarily of retail heating oil\\ndealers operating in the state of Connecticut, plus their associated businesses. There are\\napproximately six hundred such heating oil retailers registered with the state\\xe2\\x80\\x99s Department of\\nConsumer Protection. They are supplied by thirteen wholesalers.\\nSome consumer industries benefit from congressionally-sanctioned programs under which the\\nindustry assesses a fee on each unit produced or sold, with the proceeds going to an industry\\nassociation for use in improving, or increasing consumer familiarity with, its products. Well\\nknown programs financed in this way include \\xe2\\x80\\x9cCotton, the Fabric of Your Life,\\xe2\\x80\\x9d and \\xe2\\x80\\x9cPork, the\\nOther White Meat.\\xe2\\x80\\x9d At present there are about 24 such programs authorized by statute in the\\nUnited States.\\nFor several years the home heating oil industry operated such a congressionally-sanctioned\\nprogram, which was implemented through the National Oilheat Research Alliance.3 The statute\\nauthorized collection of a fee of one-fifth of a cent per gallon, assessed at the wholesale level.\\nAfter the fee was collected by the wholesalers, the revenue was sent to the Alliance\\xe2\\x80\\x99s national\\noffice, and then 75 percent of the revenue collected from each state was sent back to the\\nauthorized state association for consumer education, technology research, and training subsidies\\nfor people working in the industry. In the case of Connecticut, that association was the ICPA.\\nThe statutory authorization for collecting the mandatory fees has since lapsed. The original\\nstatute was passed and signed by President Clinton in 2000, and was reauthorized in 2005. It\\nwas then scheduled to terminate in 2010, unless further extended. Congress did not make such\\nan extension. There are two bills presently pending in Congress to revive the program, which\\nthe ICPA supports.\\nIn the meantime, the ICPA is considering a voluntary program that will replicate many features\\nof the lapsed statute. This will permit financing of some of the former program activities while\\nCongress considers reauthorization. The planned activities will include consumer education and\\ntechnical training for retailers. Presumably the ICPA program will provide some measure of\\nbenefit to consumers and the industry even if Congress does not renew the statutory program.\\n\\nThe proposed ICPA program\\nThe ICPA proposes to implement its program through a series of contracts. Willing retailers\\nwould authorize participating wholesalers to add the fees to their bills, and the wholesalers\\nwould commit to sending the collected sums to the ICPA. The amount of the fee would be\\ntwelve points (twelve hundredths of a cent) per gallon, somewhat less than the fee had been\\n\\n3\\n\\nSee Public Law 106-469, sections 701 et seq.\\n2\\n\\n\\x0cunder the statutory program. The contractual program would automatically terminate when and\\nif the original Oilheat Alliance legislation is renewed.\\nIt is this program that has prompted your request for an advisory opinion.\\n\\nThe issues presented\\nThe program presents three issues for consideration: (1) Do the structure and purposes of the\\nprogram, which is the product of agreement among industry participants,4 suggest that it should\\nbe judged on a per se basis or according to the rule of reason? (2) Does the program threaten to\\ncause consumer prices to rise in a way attributable to a lessening of competition? (3) Will the\\nprocesses for collecting, reporting, and conveying the fees result in some firms learning sensitive\\ninformation about other market participants?\\n\\nStructure and purposes of the agreement\\nThe threshold question involves the structure and purposes of the program. This is important\\nbecause it will affect whether the competitive import of the plan here should be reviewed under a\\nper se standard or according to the rule of reason.\\nNaked agreements among competitors on price are condemned on a per se basis, without\\nelaborate inquiry. Some agreements on association assessments have been characterized as per\\nse violations in this way. For example, an agreement among competitors to coerce universal\\nparticipation in an industrywide program that raised firms\\xe2\\x80\\x99 costs was condemned as unlawful per\\nse in Premier Electrical Construction Co. v. National Electrical Contractors Ass\\xe2\\x80\\x99n.5 Such a\\nconclusion might be reached if the coercion were applied directly to holdout rivals, or applied\\nindirectly through the assistance of another entity that was in a position to influence the rivals.6\\nHere, however, it appears that any agreement among industry participants7 is voluntary. Your\\nletter explains that non-participating companies will not suffer adverse consequences as a result\\nof any decisions to not participate or to withdraw from participation. Participation is to occur\\n\\xe2\\x80\\x9con an entirely voluntary basis without any coercion whatsoever . . . . Those who choose not to\\n\\n4\\n\\nSection 1 of the Sherman Act condemns only contracts, combinations, and\\nconspiracies\\xe2\\x80\\x93i.e., agreements\\xe2\\x80\\x93that unreasonably restrain trade. See 15 U.S.C. 1. It does not\\ncondemn independent single-firm conduct, irrespective of its purpose or effect. See Monsanto\\nCo. v. Spray-Rite Serv. Corp., 465 U.S. 752, 761 (1984).\\n5\\n\\n814 F.2d 358 (7th Cir. 1987).\\n\\n6\\n\\nSee id. at 368.\\n\\n7\\n\\nWithout first performing a formal market definition exercise it is not possible to know\\nwhether or to what extent the ICPA members are actual competitors in one or more of the\\nConnecticut markets. For purposes of this analysis we assume that the members are competitors,\\nat least respecting some relevant markets for heating oil.\\n3\\n\\n\\x0cparticipate would face no significant economic consequences as a result of that decision.\\xe2\\x80\\x9d8 An\\nagreement to form a voluntary group for educational purposes, without coercing firms outside of\\nthe agreement, will be judged under the rule of reason.9\\n\\nPrice effects under the rule of reason\\nOnce it is determined that rule of reason analysis is applicable to an agreement, a variety of\\neffects and benefits can be considered. Industry-wide trade associations are not intrinsically\\nsuspect under the antitrust laws. To be sure, they involve agreements among firms that may be\\ncompetitors in other respects, but the collaborative activities of an association do not necessarily\\nreduce competition \\xe2\\x80\\x93 they may instead increase output and enhance consumer welfare.\\nAcceptable collaborative activities of this sort can include consumer awareness campaigns,10\\ndevelopment of industry technical standards,11 and professional training programs.12 These are\\nthe kinds of activities that the new ICPA program is reportedly intended to pursue.\\nA rule of reason analysis need not always go so far as to require a full scale assessment of all\\npotentially relevant considerations; rather, \\xe2\\x80\\x9cwhat is required . . . is an enquiry meet for the case,\\nlooking to the circumstances, details, and logic of a restraint.\\xe2\\x80\\x9d13 As the Commission\\xe2\\x80\\x99s Polygram\\nopinion establishes, under some circumstances it is appropriate to perform a \\xe2\\x80\\x9ctruncated rule of\\nreason\\xe2\\x80\\x9d or \\xe2\\x80\\x9cquick look\\xe2\\x80\\x9d in which the Commission considers the capacity of the conduct at issue\\nto facilitate competitive harm against its tendency or ability to further plausible and cognizable\\nprocompetitive ends.14\\nOne element in a rule of reason assessment is an examination of likely price effects. As a\\nthreshold matter, it appears that the assessments that are made will increase the expenses of\\nparticipating retail dealers, however modestly. It is therefore possible that some of those\\n\\n8\\n\\nLetter from Eugene A. Guilford, Jr., President, ICPA to Donald Clark, Secretary of the\\nFederal Trade Commission, at p.3 (Feb. 17, 2012).\\n9\\n\\nSee nn.10-12, infra. See also Premier Electrical Construction, supra, at 371 n.3.\\n\\n10\\n\\nSee Johanns v. Livestock Marketing Ass\\xe2\\x80\\x99n, 544 U.S. 550, 554 (2005); Michigan Pork\\nProducers Ass\\xe2\\x80\\x99n v. Veneman, 348 F.3d 157, 160 (6th Cir. 2003), vacated and remanded on other\\ngrounds, 544 U.S. 1058 (2005). In these cases there were issues as to whether the fee\\nassessment programs involved improperly compelled speech, but the collective conduct of the\\nprograms was not challenged on antitrust grounds.\\n11\\n\\nSee American Society of Mechanical Engineers v. Hydrolevel Corp., 456 U.S. 556,\\n559, 576 (1982).\\n12\\n\\nSee California Dental Ass\\xe2\\x80\\x99n v. FTC, 526 U.S. 756, 765 (1999).\\n\\n13\\n\\nId. at 781.\\n\\n14\\n\\nSee Polygram Holdings, 136 F.T.C. 310 (2003) (applying principles from the Supreme\\nCourt\\xe2\\x80\\x99s decision in California Dental Ass\\xe2\\x80\\x99n, supra). If a quick look indicates that there is a\\nplausible and cognizable efficiency underlying a restraint, a more searching rule of reason\\nanalysis may be warranted.\\n4\\n\\n\\x0cincreased costs would be passed on to consumers.15 For two reasons, however, it appears that\\nany such possibility here would not call the ICPA proposal into question.\\nFirst, it is not clear that prices will increase as a result of the proposed program. If retailers find\\nthat the incremental expenses imposed by the fees are offset by the increased efficiency that\\nparticipation in the program brings, then the retailers\\xe2\\x80\\x99 true net costs will not have been increased,\\nand we would not expect the program to have an adverse effect on consumer prices. Moreover,\\neven if stated transaction prices do go up by as much as the entire fee assessment amount, twelve\\nhundredths of one cent per gallon, it is possible that any such price increases will reflect\\nincreased value to consumers, resulting directly or indirectly from the fee-funded programs of\\ntraining and information.\\nSecond, it does not appear that any price increase, in either of these respects, would have been\\nthe product of a lessening of competition. The voluntary context of the program is central in\\nreaching this conclusion. If any retailer believes that the assessed fees are causing a measurable\\nand unwarranted rise in consumer prices \\xe2\\x80\\x93 in either stated prices or quality-adjusted ones \\xe2\\x80\\x93 it\\ncan, and seemingly would have an incentive to, withdraw from the program, secure a modest\\ncost advantage over its rivals who continue to participate, and reduce its prices to that extent so\\nas to compete more effectively for consumers\\xe2\\x80\\x99 business. The continuing possibility of such a\\nshift by competitors will limit the price risks that the ICPA program poses to consumers, such\\nthat any price effects likely would not be attributable to a reduction in competition.\\n\\nInformation exchanges\\nA final question presented by the proposed program involves the possibility of anticompetitive\\ninformation exchanges. The program might raise concerns if it were intended to facilitate\\ncollusion, or if there were some feature in it that would give businesses competitively sensitive\\ndata about the prices paid or charged by their rivals.\\nUnder the antitrust laws, the legality of information exchanges among competitors is also\\nanalyzed under the rule of reason. Here the rule of reason balances the potential for competitive\\nharm against efficiencies or other procompetitive effects, if any, that the information exchange\\ngenerates.16 Among other factors, a rule of reason analysis may inquire into market structure and\\nthe nature of the exchanged information to assess whether the exchange is likely to reduce the\\nvigor of competition.17\\nApplying this methodology, it does not appear that the information sharing contemplated here is\\nlikely to result in competitive harm.\\n\\n15\\n\\nThese costs would not exceed 85 cents per year for a household using the statewide\\naverage of 708 gallons of heating oil.\\n16\\n\\nSee United States v. United States Gypsum Co., 438 U.S. 422, 441 n.16 (1978)\\n(information exchanges among competitors should be judged by the rule of reason, at least when\\nno evidence of actual agreement to limit competition, because they do not always produce\\nanticompetitive effects, but can also have procompetitive consequences by increasing\\nefficiency).\\n17\\n\\nId. See United States v. Container Corp., 393 U.S. 333 (1969) (condemning price\\nexchange agreement, without detailed proof of market effects, largely because of the nature of\\nthe information exchanged, structure of the market, and absence of a benign justification).\\n5\\n\\n\\x0cThe flow of data will largely follow the procedures that had been established under the nowexpired Research Alliance program. Wholesalers will collect the per-gallon contribution on an\\nongoing basis as they bill their retail dealer customers. The wholesalers will then aggregate\\nthese collections and send a single payment to the ICPA each quarter. Because the per-gallon\\nrate is known, the ICPA could deduce from the size of the payment how many total gallons a\\nwholesaler had sold to participating retailers in the previous quarter. But the actual transaction\\nprices could not be deduced from the payments, nor could an observer identify the division of\\nsales among particular retailer customers.\\nData will be further aggregated at the association level. The ICPA has committed itself to a\\npolicy of keeping the contributions from individual wholesalers confidential. It will\\ncommunicate to its members only the total combined sum received from all wholesalers during\\nthe previous quarter. From this it would not appear possible to deduce even overall retailer\\nparticipation rates in any particular market. The ICPA reports will be issued in the ordinary\\ncourse of business, as part of an accounting of the revenues received and the research and\\npromotional activities that are financed.\\nInformation aggregated in these ways is unlikely to lead to anticompetitive results. In reaching\\nthis conclusion we have been guided by the Commission\\xe2\\x80\\x99s statements on information exchanges\\nin the context of the health care industry. One of these addresses \\xe2\\x80\\x9cProvider Participation in\\nExchanges of Price and Cost Information.\\xe2\\x80\\x9d18 Those guidelines were originally drafted for a\\ndifferent industry, but their analytical principles have wider relevance. Moreover, the guidelines\\nwere drafted to assess a more sensitive kind of information exchange than is involved here,\\nbecause they address exchanges of data on prices, wages, costs, and salaries, and not just\\ninformation on quantities of product sold.19\\nThe Price Exchange guidelines provide a safety zone for aggregated data that is: (1) managed by\\na third party such as a trade association; (2) made up of information from at least five\\nparticipants; (3) not reliant on any one firm for more than 25 percent of the weight of a particular\\nstatistic; and (4) using data more than three months old.\\nThe proposed ICPA program appears to be reasonable in light of these tests. The data here\\nwould be collected by a trade association, and not circulated. Because there are about six\\nhundred heating oil retailers in the state, and thirteen wholesalers, it is likely that there will be\\ndata from at least five firms behind each statistic.20 For similar reasons, it is unlikely that any\\none firm will account for more than 25 percent of the weight of any one statistic. On the fourth\\npoint \\xe2\\x80\\x93 the age of the data \\xe2\\x80\\x93 the proposed plan does not meet the guidelines\\xe2\\x80\\x99 safe-harbor test of\\nusing information more than three months old. However, the guidelines recognize that conduct\\n\\n18\\n\\nSee \\xe2\\x80\\x9cStatements of Health Care Antitrust Policy,\\xe2\\x80\\x9d Statement 6, available at\\nhttp:\/\/www.ftc.gov\/bc\/healthcare\/industryguide\/policy\/statement6.htm .\\n19\\n\\nWe note, however, that in other contexts the exchange of information as to quantities\\nsold could be anticompetitive. For example, the exchange of such information among members\\nof an oligopoly could enable the oligopolists to better observe changes in market share, which in\\nturn could facilitate or be part of an agreement to avoid the type of aggressive pricing that can\\nundermine a pricing consensus.\\n20\\n\\nYou point out that the participation rate in the program cannot be known with certainty\\nuntil the program is actually offered to the industry. You believe that a high participation rate is\\nlikely. If the facts develop in ways that we have not anticipated, however, and if competitive\\nproblems appear as a result, then the agency retains the right to withdraw this opinion, as\\ndescribed in the concluding section of the letter.\\n6\\n\\n\\x0cfalling outside the safety zone nevertheless may be unlikely to harm competition, and should be\\nassessed on a case by case basis. The quantity-sold data to be exchanged under the ICPA\\nprogram is, in the context of this industry, unlikely to be competitively sensitive. Accordingly,\\nits exchange among competitors is unlikely to facilitate anticompetitive outcomes.\\n\\nConclusion\\nOn the basis of these features, FTC staff concludes that the proposed ICPA program would be\\nunlikely to harm competition. Staff believes that the particular data being shared here is not\\nespecially sensitive in light of the workings of this industry, and, in any event, that it will be\\nsufficiently aggregated to substantially eliminate any risk that it will facilitate anticompetitive\\neffects at either the wholesale or the retail level. The program appears, moreover, to be\\nvoluntary rather than coercive, and to have the goal of financing potentially output-enhancing\\nand safety-enhancing features.\\nFor these reasons, the Bureau of Competition staff has no present intention to recommend that\\nthe Commission undertake an enforcement action against the program upon its implementation.\\nThis opinion of the FTC staff is predicated on the accuracy of the information you have provided\\nto us. In accordance with normal practice, the Bureau of Competition reserves the right to\\nreconsider the questions involved and, with notice to the requesting party, to rescind the opinion\\nif actual conduct respecting the ICPA program proves to be anticompetitive in any purpose or\\neffect, or if facts change significantly in the future such that it would be in the public interest to\\nbring an enforcement action.\\nThe views of FTC staff contained herein are provided as authorized by Rule 1.1(b) of the\\nCommission\\xe2\\x80\\x99s Rules of Practice, 16 C.F.R. 1.1(b). Under Commission Rule 1.3( c), 16 C.F.R.\\n1.3( c), the Commission is not bound by this staff opinion.\\nSincerely,\\n\\nMichael Bloom\\nAssistant Director for Policy & Coordination\\nBureau of Competition\\nFederal Trade Commission\\n600 Pennsylvania Avenue, N.W.\\nWashington, D.C. 20580\\n\\n7\\n\\n\\x0c'","created_timestamp":"July 2, 2012","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/independent-connecticut-petroleum-association\/120702petroleumstaffletter.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Enforcement\\nBureau of Consumer Protection\\n\\nJune 26, 2012\\n\\nBrett Ian Hanis, Esq.\\nPisani & Roll LLP\\n1629 K StreetNW, Suite 300\\nWashington, DC 20006\\nDear Mr. Hanis:\\nThis is in reply to your letter requesting a Staff Advisory Opinion on behalf of your\\nclient, Naturally Advanced Technologies US Inc. (\"NAT\"). NAT seeks approval for use of the\\ngeneric term \"flax\" for textile products manufactured from CRAiLAR\\xc2\\xae flax fibers and yarns.\\nYour letter states that the CRAiLAR\\xc2\\xae process uses a decidedly different process to remove flax\\nfibers from the flax plant than the process used to produce linen, resulting in a product with\\ndistinct and different characteristics than traditional linen. Specifically, rather than extracting\\nflax fibers from the bast primarily through the physical methods described in your letter (j.e.,\\nthrough breaking, scutching, and heckling following a retting process), you state the\\nCRAiLAR\\xc2\\xae process involves the use of an enzymatic treatment to obtain a much finer, shorter\\nfiber with performance characteristics more akin to cotton than linen. Because products made\\nwith CRAiLAR\\xc2\\xae fibers differ significantly from linen, you assert that describing products made\\nfrom CRAiLAR\\xc2\\xae fibers as linen rather than flax would mislead and deceive consumers.\\nIn particular, you state that products made from CRAiLAR\\xc2\\xae fibers differ from linen\\nfabric, which is \"smooth yet contains slubs (due to the length and lack of uniformity of the\\nfibers), wrinkles easily, requires significaut ironing, and typically must be air-dried after washing\\nor dry-cleaned.\" You also state that textile products manufactured from CRAiLAR\\xc2\\xae fibers are\\nsoft and wear and wash like cotton, i.e., they do not need significant ironing and can be washed\\nand dried with other laundry.\\nIn addition, you argue that, while the CRAiLAR\\xc2\\xae process produces flax fibers with\\nattributes that differ significantly from those of linen, the chemical composition of the\\nCRAiLAR flax fibers remains readily identifiable as flax. You explain that the CRAiLAR\\xc2\\xae\\nprocess does not chemically change the flax but instead involves the further separation of the\\nindividual fibers to a degree not achievable through traditional linen manufacturing methods.\\nBecause the CRAiLAR\\xc2\\xae process does not result in chemically \"regenerated fibers,\" you contend\\n\\n\\x0cthe fibers are not \"manufactured fibers\" addressed in Section 303.7 of the Rules and Regnlations\\nUnder the Textile Fiber Products Identification Act (\"Rules\"), 16 C.F.R. \\xc2\\xa7 303.7, and that none\\nof the fiber names established in this section (or the fiber names in ISO 2076: 1999(E) which\\nSection 303.7 incorporates) describe CRAiLAR\\xc2\\xae fibers accurately.\\nFinally, you note that describing CRAiLAR\\xc2\\xae fibers as flax rather than linen wonld be\\nconsistent with international standards and practice. You explain that ISO 6938: 1984,\\n\"Textiles-Natural fibers-Generic names and Definitions,\" defines the term \"natural fibers\" as\\n\"fibers which occur in nature; they can be categorized according to their origin into animal,\\nvegetable and mineral fibers.\" You add that, according to \\xc2\\xa7 3.2.2.6 of this ISO standard, the\\nfiber name \"flax\" is recognized as a standard name for certain bast fibers - specifically, \"[f]iber\\nfrom the stems of flax Linum usitatissimum.,,1\\nSection 303.l6(a)(I) of the Rules, 16 C.F.R. \\xc2\\xa7 303 .16(a)(I), requires that textile fiber\\nproducts have labels disclosing the generic names and percentages by weight ofthe constituent\\nfibers present in the product. Section 303.7 of the Rules, 16 C.F.R. \\xc2\\xa7 303.7, sets forth the\\nofficial list of generic names for manufactured fibers, such as polyester, nylon, and rayon. The\\nRnles do not provide a comprehensive list of natural fiber names, although 16 C.F.R. \\xc2\\xa7 303.6(a)\\nidentifies cotton, silk, and linen as acceptable fiber names.\\nBased on the information abont the CRAiLAR\\xc2\\xae process and the attributes of the fibers\\nyou provide in your letter, we conclude that describing these fibers as flax on labels attached to\\ntextile fiber products made from the fibers would comply with the Rnles. We also conclude that\\ndescribing these fibers as linen rather than flax conld mislead or deceive consumers. We base\\nthese conC!usions on your assertions that the CRAiLAR\\xc2\\xae process involves a manner of\\nobtaining flax fibers that does not chemically alter them, that the attributes ofthe fibers differ\\nfrom those of linen, and that international standards and practice as well as the U.S. government\\nrecognize the use of the term \"flax\" to describe flax fibers that have not been chemically\\nchanged.\\nIn accordance with Section 1.3(c) of the Commission\\'s Rules of Practice and Procedure,\\n16 C.F.R. \\xc2\\xa7 1.3(c), this is a staff opinion only and has not been reviewed or approved by the\\nCommission or by any individual Commissioner, and is given without prejudice to the right of\\nthe Commission later to rescind the advice and, where appropriate, to commence an enforcement\\naction. In accordance with Section 1.4 of the Commission\\'s Rules of Practice and Procedure, 16\\n\\n1 You also note that the U.S. government uses \"flax fiber\" as the generic name for flax\\nfibers. E.g., Chapter 62 and Section 53 of the 2010 Harmonized Tariff Schedule of the United\\nStates, www.usitc.gov\/publications\/docs\/tata\/hts\/bychapter\/l 000c62.pdf and\\nwww.usitc.gov\/publications\/docs\/tata\/bts\/bychapterIl000C53.pdf. In addition, the United States\\nDepartment of Agriculture, Agricultural Research Service (\"USDA-ARS\") established a flax\\nfiber research facility named the \"USDA Flax Fiber Pilot Plant\" and in 2005 published an article\\nin its monthly magazine, Agricultural Research, that was called, \"Flax Fiber Offers Cotton Cool\\nComfort.\" A copy of the USDA-ARS\\'s 2005 Agricultural Research article can be found here:\\nwww.ars.usda.gov\/is\/ARIarchive\/nov05\/fiber1105.htm.\\n\\n-2-\\n\\n\\x0cC.F.R. \\xc2\\xa7 1.4, your request for advice, along with this response, will be placed on the public\\nrecord.\\n\\nJa esA.Kohm\\nAssociate Director\\n\\n-3-\\n\\n\\x0cPISANI & ROLL LLP\\nRobert J. Pisani*\\nMichael E. Roll **\\nBrett Harris***\\n*Admitted in DC\\n**Admitted in CA\\n***Admitted in DC & NY\\n\\nAttorneys at Law\\n\\n1629 K Street NW, Suite 300\\nWashington, DC 20006\\n202.466.0960 (t)\\n877.674.5789 (f)\\nwww.worldtradelawyers.com\\n\\n1875 Century Park East, Suite 600\\nLos Angeles, CA 90067\\n310.826.4410 (t)\\n877.674.5789 (f)\\n\\nBrett Ian Harris\\nDirect Dial: (845) 255-1850\\nbharris@worldtradelawyers.com\\n\\nMay 10, 2012\\nBY E-MAIL AND FEDERAL EXPRESS\\nFederal Trade Commission\\n600 Pennsylvania Avenue, NW\\nWashington, DC 20580\\nAttention:\\nRe:\\n\\nSecretary of the Commission\\nUse of the Generic Term \\xe2\\x80\\x9cFlax\\xe2\\x80\\x9d For\\nTextile Products Manufactured From\\nCRAiLAR\\xc2\\xae Flax Fibers and Yarns\\n\\nTo Whom It May Concern:\\nOn behalf of our client, Naturally Advanced Technologies US Inc. (\\xe2\\x80\\x9cNAT\\xe2\\x80\\x9d),\\n696 McVey Avenue, Suite 202 Lake Oswego, OR 97034, we hereby request a Staff\\nAdvisory Opinion pursuant to 16 CFR Part 1 concerning the use of the generic\\nterm \\xe2\\x80\\x9cflax\\xe2\\x80\\x9d for textile products manufactured from CRAiLAR\\xc2\\xae flax fibers and\\nyarns. We believe that this matter involves a substantial question of law and\\nthere is no clear Commission or court precedent to guide decision of this issue,\\nwhich is of significant public interest. Moreover, this is not a hypothetical\\nquestion, as such products will soon be entering the U.S. marketplace (see, for\\nexample, http:\/\/tinyurl.com\/dymmezc). Therefore, a Staff Advisory Opinion in\\nthis matter is warranted under the regulations.\\nWe note that in an e-mail dated November 9, 2011, Mr. Steve Ecklund,\\nInvestigator with the Division of Enforcement of the Federal Trade Commission,\\ninformally agreed that the use of the generic term \\xe2\\x80\\x9cflax\\xe2\\x80\\x9d for textile products\\nmanufactured from CRAiLAR\\xc2\\xae flax fibers and yarns was proper and consistent\\nthe Textile Fiber Products Identification Act (\\xe2\\x80\\x9cTFPIA\\xe2\\x80\\x9d), 15 USC \\xc2\\xa7\\xc2\\xa770-70k. A copy\\nof this e-mail correspondence is attached for your reference as Exhibit A.\\n\\n\\x0cUse of the Generic Term \\xe2\\x80\\x9cFlax\\xe2\\x80\\x9d For\\nTextile Products Manufactured From\\nCRAiLAR\\xc2\\xae Flax Fibers and Yarns\\nMay 10, 2012\\nPage 2 of 7\\nBACKGROUND\\nI.\\n\\nNaturally Advanced Technologies US Inc.\\n\\nNAT develops renewable and environmentally sustainable biomass\\nresources from flax, hemp and other bast fibers. The company, through its\\nwholly owned subsidiary, CRAiLAR\\xc2\\xae Fiber Technologies Inc., has developed\\nproprietary technologies for production of bast fibers, cellulose pulp, and their\\nresulting by-products in collaboration with Canada\\'s National Research Council.\\nCRAiLAR\\xc2\\xae technology offers cost-effective and environmentally sustainable\\nprocessing and production of natural, bast fibers resulting in increased\\nperformance characteristics for use in textile, industrial, energy, medical and\\ncomposite material applications.\\nII.\\n\\nTraditional Flax Fiber Processing\\n\\nFlax fibers are collected from the phloem (the \\xe2\\x80\\x9cinner bark\\xe2\\x80\\x9d or the skin) or\\nbast surrounding the stem of the flax plant. In the photograph below, bundles of\\nthese fibers are represented by the green ovals, which are grouped together in the\\nbast:\\n\\n\\x0cUse of the Generic Term \\xe2\\x80\\x9cFlax\\xe2\\x80\\x9d For\\nTextile Products Manufactured From\\nCRAiLAR\\xc2\\xae Flax Fibers and Yarns\\nMay 10, 2012\\nPage 3 of 7\\nTraditionally, the bundles of flax fibers used in the production of linen\\n(represented by the green ovals above) are extracted from the bast using the\\nfollowing procedures1:\\n\\xef\\x82\\xb7\\n\\nRetting \\xe2\\x80\\x93 Retting is the process of rotting away the inner stalk of the\\nflax plant, leaving the outer fibers in the bast intact. After this process,\\nthe straw supported by long, coarse groupings of fiber bundles\\n(represented by the red hexagons in the photograph above) remains.\\n\\n\\xef\\x82\\xb7\\n\\nBreaking \\xe2\\x80\\x93 Next, the straw is broken into short segments in order to\\nhelp ease the removal of the outer straw from the stalk.\\n\\n\\xef\\x82\\xb7\\n\\nScutching \\xe2\\x80\\x93 The scutching process is the first attempt to remove the\\nstraw and woody part of the stem from the flax fibers. Scutching can\\nbe done either by hand or by machine in a scutching mill. Hand\\nscutching is done with a wooden scutching knife and a small iron\\nscraper. Machine scutching, on the other hand, usually involves\\ncrushing the stalks between two metal rollers, which break the stalks so\\nthat parts of the stalk can be separated from the fibers. The fiber is\\nextracted from aligned straw by beaters and combs in the scutching\\nmachine which removes shive and fiber which is not long enough for\\nspinning on the linen system (known as \\xe2\\x80\\x9ctow\\xe2\\x80\\x99 fiber).\\n\\n\\xef\\x82\\xb7\\n\\nHeckling \\xe2\\x80\\x93 In this process, the fiber is pulled through various\\ndifferent sized heckling combs or \\xe2\\x80\\x9checkles.\\xe2\\x80\\x9d A heckle is a bed of \\xe2\\x80\\x9cnails\\xe2\\x80\\x9d\\n\\xe2\\x80\\x93 sharp, long-tapered, tempered, polished steel pins driven into\\nwooden blocks at regular spacing. The first few rows of heckles will\\nremove the straw as the fiber is pulled through, while the last rows will\\nsplit and polish the fibers.\\n\\nThe end result of this traditional flax extraction process is flax fibers that\\nare relatively long (ranging from about 25 to 150 cm in length) and average 12-16\\nmicrometers in diameter. These fibers have a relatively coarse texture due to\\ntheir irregular polygonal shapes and the fact that the fiber bundles remain bound\\ntogether with lignin. When spun into yarns for textile manufacture, flax fibers\\nextracted using this process yield fabrics with the characteristic properties of\\nlinen easily recognized by the public: linen fabric is smooth yet contains slubs\\n(due to the length and lack of uniformity of the fibers), wrinkles easily, requires\\nsignificant ironing, and typically must be air-dried after washing or dry-cleaned.\\n\\n1\\n\\nSee, generally, http:\/\/en.wikipedia.org\/wiki\/Flax.\\n\\n\\x0cUse of the Generic Term \\xe2\\x80\\x9cFlax\\xe2\\x80\\x9d For\\nTextile Products Manufactured From\\nCRAiLAR\\xc2\\xae Flax Fibers and Yarns\\nMay 10, 2012\\nPage 4 of 7\\nIII.\\n\\nCRAiLAR\\xc2\\xae Flax Fiber Processing\\n\\nThe CRAiLAR\\xc2\\xae process uses a decidedly different approach to removing\\nflax fibers from the flax plant, resulting in an end product with distinct and\\ndifferent characteristics than traditional linen. Rather than extracting flax fibers\\nfrom the bast primarily through the physical methods described above (i.e.,\\nthrough breaking, scutching and heckling following a retting process), the\\nCRAiLAR\\xc2\\xae process involves enzymatic treatment of the bast to obtain a much\\nfiner, shorter-length fiber with performance characteristics more akin to cotton\\nthan linen.\\nSpecifically, the CRAiLAR\\xc2\\xae process extracts flax fibers from decorticated\\nflax bast skin by pre-treating the decorticated bast skin with an aqueous solution\\ncontaining di-sodium citrate, tri-sodium citrate or a mixture thereof having a pH\\nof from about 6-13 at temperature of about 90\\xc2\\xb0C or less. The recovered fiber is\\nsubsequently treated with an enzyme. By removing the lignin binding the fibers\\ntogether, this process permits the extraction of individual flax fibers (represented\\nby the light-blue dots in the photograph below), rather than the bundles of such\\nfibers that are the product of the traditional linen-making process described\\nabove.\\n\\n\\x0cUse of the Generic Term \\xe2\\x80\\x9cFlax\\xe2\\x80\\x9d For\\nTextile Products Manufactured From\\nCRAiLAR\\xc2\\xae Flax Fibers and Yarns\\nMay 10, 2012\\nPage 5 of 7\\nImportantly, the chemical structure of the flax plant is not altered through\\nthe CRAiLAR\\xc2\\xae process, and these flax fibers are not \\xe2\\x80\\x9cregenerated fibers\\xe2\\x80\\x9d as that\\nterm is technically defined.2 The CRAiLAR\\xc2\\xae process, in other words, does not\\ninvolve a chemical transformation of natural organic polymers (such as that\\ninvolved in the manufacture of rayon), but rather a physical transformation of the\\nflax plant \\xe2\\x80\\x93 specifically, a physical separation of the individual flax fibers in the\\nplant to a degree unattainable through traditional means.\\nDISCUSSION\\nI.\\n\\nTextile Fiber Products Identification Act Requirements\\n\\nThe Textile Fiber Products Identification Act (\\xe2\\x80\\x9cTFPIA\\xe2\\x80\\x9d), 15 USC \\xc2\\xa7\\xc2\\xa770-70k,\\nrequires marketers to attach a label to each covered textile product disclosing: (1)\\nthe generic names and percentages by weight of the constituent fibers in the\\nproduct; (2) the name under which the manufacturer or other responsible\\ncompany does business or, in lieu thereof, the registered identification number\\n(\\xe2\\x80\\x9cRN number\\xe2\\x80\\x9d) of such company; and (3) the name of the country where the\\nproduct was processed or manufactured.\\nThe TFPIA regulations at 16 CFR \\xc2\\xa7303.6(a) provide that \\xe2\\x80\\x9c[e]xcept where\\nanother name is permitted under the Act and regulations, the respective generic\\nnames of all fibers present in the amount of 5 per centum or more of the total\\nfiber weight of the textile fiber product shall be used when naming fibers in the\\nrequired information; as for example: \\xe2\\x80\\x98cotton,\\xe2\\x80\\x99 \\xe2\\x80\\x98rayon,\\xe2\\x80\\x99 \\xe2\\x80\\x98silk,\\xe2\\x80\\x99 \\xe2\\x80\\x98linen,\\xe2\\x80\\x99 \\xe2\\x80\\x98nylon,\\xe2\\x80\\x99 etc.\\xe2\\x80\\x9d\\nMoreover, while 16 CFR \\xc2\\xa7303.7 establishes generic names for certain\\nmanufactured fibers, and recognizes as acceptable the generic names for\\nmanufactured fibers, together with their respective definitions, set forth in\\nInternational Organization for Standardization ISO 2076: 1999(E), \\xe2\\x80\\x9cTextiles\\xe2\\x80\\x94\\nMan-made fibers\\xe2\\x80\\x94Generic names,\\xe2\\x80\\x9d there is no similar regulatory list or reference\\nof acceptable natural fibers under the TFPIA.\\nII.\\n\\nCRAiLAR\\xc2\\xae Flax Fibers Are Not Accurately Described\\nBy The Generic Term \\xe2\\x80\\x9cLinen\\xe2\\x80\\x9d\\n\\nAs noted earlier, the performance characteristics of flax fibers extracted\\nusing the CRAiLAR\\xc2\\xae process are different than those of flax fibers extracted with\\n2 \\xe2\\x80\\x9cA regenerated fiber is one formed when a natural polymer, or its chemical derivative, is dissolved\\nand extruded as a continuous filament, and the chemical nature of the natural polymer is either\\nretained or regenerated after the fiber formation process.\\xe2\\x80\\x9d Kirk-Othmer Encyclopedia of Chemical\\nTechnology, Volume 10, Fourth Edition (1994), p. 696.\\n\\n\\x0cUse of the Generic Term \\xe2\\x80\\x9cFlax\\xe2\\x80\\x9d For\\nTextile Products Manufactured From\\nCRAiLAR\\xc2\\xae Flax Fibers and Yarns\\nMay 10, 2012\\nPage 6 of 7\\ntraditional methods and used in the manufacture of linen. CRAiLAR\\xc2\\xae flax fibers\\nhave the look and feel of cotton. Unlike linen, due to the finer, shorter-length\\nfibers obtainable from the CRAiLAR\\xc2\\xae process, textile products manufactured\\nfrom CRAiLAR\\xc2\\xae flax fibers are soft, and wear and wash like cotton3 \\xe2\\x80\\x93 in other\\nwords, CRAiLAR\\xc2\\xae flax fabrics do not need significant ironing and can be washed\\nand dried with other regular laundry.\\nThus, we believe that requiring textiles and textile products manufactured\\nfrom CRAiLAR\\xc2\\xae flax to be labeled as \\xe2\\x80\\x9clinen\\xe2\\x80\\x9d under the TFPIA would be\\nmisleading and deceptive to consumers. As recognized by consumers in the\\nmarketplace, linen products are smooth but wrinkle easily and require significant\\nironing; moreover, linen products must typically be air-dried after washing or\\ndry-cleaned. Textile products manufactured from CRAiLAR\\xc2\\xae flax do not share\\nthese performance characteristics, and thus it would be inaccurate to label such\\nproducts as \\xe2\\x80\\x9clinen\\xe2\\x80\\x9d; indeed, to do so would surely constitute the very deceptive\\nand unfair business practices that the FTC is charged to prevent.\\nIII.\\n\\nCRAiLAR\\xc2\\xae Flax Fibers Are Accurately Described\\nBy The Generic Term \\xe2\\x80\\x9cFlax\\xe2\\x80\\x9d\\n\\nAs explained above, while the performance characteristics of flax fibers\\nextracted using the CRAiLAR\\xc2\\xae process are different than those of flax fibers used\\nin the manufacture of linen, the chemical composition of CRAiLAR\\xc2\\xae flax fibers\\nremains readily identifiable as that of flax. The CRAiLAR\\xc2\\xae manufacturing\\nprocess does not involve a chemical change to the underlying flax fibers, but\\nrather a physical change to the fiber groupings in the bast permitting further\\nseparation of the individual fibers to a degree not achievable through traditional\\nflax manufacturing methods. CRAiLAR\\xc2\\xae flax fiber manufacturing, in other\\nwords, does not result in chemically \\xe2\\x80\\x9cregenerated fibers,\\xe2\\x80\\x9d and does not involve a\\nchemical transformation of natural organic polymers.\\nThus, CRAiLAR\\xc2\\xae flax fibers are not \\xe2\\x80\\x9cmanufactured fibers\\xe2\\x80\\x9d under the\\nTFPIA, and none of the generic names set forth in 16 CFR \\xc2\\xa7303.7 or ISO 2076:\\n1999(E) accurately describe them. In contrast, the generic term \\xe2\\x80\\x9cflax\\xe2\\x80\\x9d accurately\\nand completely describes the fibers manufactured using the CRAiLAR\\xc2\\xae process.\\nInternational Organization for Standardization ISO 6938: 1984, \\xe2\\x80\\x9cTextiles\\xe2\\x80\\x94\\nNatural fibers\\xe2\\x80\\x94Generic names and Definitions,\\xe2\\x80\\x9d defines the term \\xe2\\x80\\x9cnatural fibers\\xe2\\x80\\x9d\\nas \\xe2\\x80\\x9cfibers which occur in nature; they can be categorized according to their origin\\n3 In fact, CRAiLAR\\xc2\\xae flax\\xe2\\x80\\x99s performance attributes exceed those of cotton. CRAiLAR\\xc2\\xae flax fiber\\nshrinks less than cotton, absorbs moisture better (wicking), and has increased dye uptake, which\\nmeans it requires fewer chemicals to achieve the same depth of color as cotton.\\n\\n\\x0cUse of the Generic Term \\xe2\\x80\\x9cFlax\\xe2\\x80\\x9d For\\nTextile Products Manufactured From\\nCRAiLAR\\xc2\\xae Flax Fibers and Yarns\\nMay 10, 2012\\nPage 7 of 7\\ninto animal, vegetable and mineral fibers.\\xe2\\x80\\x9d According to \\xc2\\xa73.2.2.6 of this\\nstandard, the fiber name \\xe2\\x80\\x9cflax\\xe2\\x80\\x9d is recognized as a standard name for certain bast\\nfibers \\xe2\\x80\\x93 specifically, \\xe2\\x80\\x9c[f]iber from the stems of flax Linum usitatissimum.\\xe2\\x80\\x9d\\nCRAiLAR\\xc2\\xae flax fibers are fibers from the flax plant (Linum usitatissimum) that\\nhave been physically isolated \\xe2\\x80\\x93 but not chemically regenerated \\xe2\\x80\\x93 using an\\nenzymatic process. Thus, they are properly and accurately described as \\xe2\\x80\\x9cflax\\xe2\\x80\\x9d\\nunder the accepted meaning of this generic term.\\nIV.\\n\\nCONCLUSION\\n\\nCRAiLAR\\xc2\\xae flax fibers are \\xe2\\x80\\x9cfibers from the stems of flax (Linum\\nusitatissimum).\\xe2\\x80\\x9d They are fibers from the flax plant that have been physically\\nisolated and refined to a greater degree than previously possible. While there has\\nbeen no chemical restructuring of the original flax fibers, the fine and short fiber\\nresulting from CRAiLAR\\xc2\\xae process yields a product with performance and\\nhandling characteristics distinctly different than traditional linen products \\xe2\\x80\\x93 so\\nmuch so that requiring textile products manufactured from CRAiLAR\\xc2\\xae flax fibers\\nto be labeled as \\xe2\\x80\\x9clinen\\xe2\\x80\\x9d would be misleading and confusing to consumers of these\\nproducts in the marketplace. Therefore, we believe that the generic term \\xe2\\x80\\x9cflax\\xe2\\x80\\x9d is\\nthe most accurate description for textile products manufactured from CRAiLAR\\xc2\\xae\\nflax fibers and yarns under the TFPIA. We ask that the Commission staff kindly\\nconfirm this conclusion.\\nIf the Commission staff disagrees with this conclusion, we respectfully\\nrequest the opportunity to meet with the official(s) responsible for making this\\ndecision before a final determination is rendered.\\nPlease do not hesitate to contact Brett Harris at (845) 255-1850 if you have\\nany questions or require additional information.\\n\\nSincerely,\\n\\nBrett Ian Harris\\n\\n\\x0cEXHIBIT A\\n\\n\\x0cBrett Harris\\nSubject:\\n\\nRE: Response to Your Request for More Information Regarding \"Flax Fiber\"\\n\\nFrom: Ecklund, Stephen C. [mailto:SECKLUND@ftc.gov]\\nSent: Wednesday, November 09, 2011 5:09 AM\\nTo: Mike Heilbronner\\nSubject: RE: Response to Your Request for More Information Regarding \"Flax Fiber\"\\nDear Mr. Heilbronner:\\nThank you for the information about Crailer\\xc2\\xae flax fiber.\\nBased on the information you provided, it appears that the term \\xe2\\x80\\x9cflax fiber\\xe2\\x80\\x9d is an appropriate designation for NAT\\xe2\\x80\\x99s\\nCrailer\\xc2\\xae flax fiber. It is also staff\\xe2\\x80\\x99s opinion that it would be inappropriate to refer to Crailar\\xc2\\xae flax fiber as \\xe2\\x80\\x9clinen.\\xe2\\x80\\x9d\\nAs always, the views expressed in this email represent my views only and are not considered binding on the\\nCommission. I cannot issue a ruling on this because I am not a Judge in Court and I am not the Commission in an official\\nlaw enforcement action. The company remains responsible for compliance with the law regardless of anything stated or\\nnot stated by Commission staff. My statements and views are not legal advice. The company may wish to discuss the\\nmatter with a private law firm familiar with FTC labeling laws. Commission staff reserves the right to review this matter at\\na later time.\\nSincerely,\\n\\nSteve Ecklund, Investigator\\nDivision of Enforcement\\nFederal Trade Commission\\n600 Pennsylvania Ave., NW\\nWashington, DC 20580\\nPhone: 202-326-2841\\nFax: 202-326-2558\\nEmail: secklund@ftc.gov\\nFrom: Mike Heilbronner [mailto:mheilbronner@idealegal.com]\\nSent: Monday, October 03, 2011 7:44 PM\\nTo: Ecklund, Stephen C.\\nSubject: Response to Your Request for More Information Regarding \"Flax Fiber\"\\n\\nDear Mr. Ecklund:\\nThis email is in response to your request of September 26 for additional information regarding the use of \\xe2\\x80\\x9cflax fiber\\xe2\\x80\\x9d on\\ncontent labels for NAT\\xe2\\x80\\x99s Crailar flax fiber.\\nIn your email of September 26, you asked for two types of additional information, namely, (1) information relating to\\nflax as a natural fiber and the use of \\xe2\\x80\\x9cflax fiber\\xe2\\x80\\x9d as the appropriate generic designation; and (2) information about the\\ndifferences between NAT\\xe2\\x80\\x99s Crailar flax fiber and linen. Independently, you alerted me to the FTC\\xe2\\x80\\x99s rulings and guidance\\nregarding improper labeling of \\xe2\\x80\\x9cbamboo\\xe2\\x80\\x9d fiber.\\nThe numbered items below respond in turn to these three subjects.\\n1.\\nInformation Relating to Flax as a Natural Fiber and the Use of \\xe2\\x80\\x9cFlax Fiber\\xe2\\x80\\x9d as the Appropriate Generic\\nDesignation\\n1\\n\\n\\x0cAs demonstrated in my email of September 22, 2011, the ISO has determined that flax is a natural fiber with the generic\\nname, \\xe2\\x80\\x9cflax fiber.\\xe2\\x80\\x9d While the FTC is not bound by the ISO\\xe2\\x80\\x99s determination, the ISO is obviously a trusted, independent\\nsource.\\nMore importantly, the U.S. government itself uses \\xe2\\x80\\x9cflax fiber\\xe2\\x80\\x9d as the generic name for fibers derived from flax. By way of\\nexample, Chapter 62 of the 2010 Harmonized Tariff Schedule of the United States uses the phrase \\xe2\\x80\\x9cflax fibers\\xe2\\x80\\x9d to\\ndistinguish five separate tariff rates. See http:\/\/www.usitc.gov\/publications\/docs\/tata\/hts\/bychapter\/1000c62.pdf.\\nIndependently Heading 5303 of Section 53 of the U.S. 2010 Harmonized Tariff Schedule clearly acknowledges that flax is\\na \\xe2\\x80\\x9ctextile based fiber.\\xe2\\x80\\x9d See http:\/\/www.usitc.gov\/publications\/docs\/tata\/hts\/bychapter\/1000C53.pdf\\nThe USDA Agricultural Research Service (\\xe2\\x80\\x9cUSDA\\xe2\\x80\\x90ARS\\xe2\\x80\\x9d) also uses \\xe2\\x80\\x9cflax fiber\\xe2\\x80\\x9d as the generic name for flax. Most notably, in\\n2004, the USDA\\xe2\\x80\\x90ARS established a flax fiber research facility in Clemson, SC that was named the \\xe2\\x80\\x9cUSDA Flax Fiber Pilot\\nPlant.\\xe2\\x80\\x9d Reporting on its own research at the \\xe2\\x80\\x9cUSDA Flax Fiber Pilot Plant\\xe2\\x80\\x9d in 2005, the USDA\\xe2\\x80\\x90ARS published an article in\\nits monthly magazine, Agricultural Research, that was called, \\xe2\\x80\\x9cFlax Fiber Offers Cotton Cool Comfort.\\xe2\\x80\\x9d A copy of the\\nUSDA\\xe2\\x80\\x90ARS\\xe2\\x80\\x99s 2005 Agricultural Research article can be found here:\\nhttp:\/\/www.ars.usda.gov\/is\/AR\/archive\/nov05\/fiber1105.htm. Notably, in addition to the title of the article, the article\\nis replete with other references to \\xe2\\x80\\x9cflax fibers.\\xe2\\x80\\x9d\\nThe 2005 Agricultural Research article is about the USDA\\xe2\\x80\\x90ARS\\xe2\\x80\\x99s research into the use of flax fibers for flax\\xe2\\x80\\x90based denim\\nfabrics that could compete with cotton\\xe2\\x80\\x90based blends. As detailed in discussion below under heading number 2, this goal\\nis exactly what NAT has achieved with Crailar.\\nNext, a 2008 article in the journal, BioResources (published by N.C. State University) discussed the USDA\\xe2\\x80\\x90ARS\\xe2\\x80\\x99s flax fiber\\nresearch at the \\xe2\\x80\\x9cUSDA Flax Fiber Pilot Plant\\xe2\\x80\\x9d and specifically distinguished the USDA\\xe2\\x80\\x90ARS\\xe2\\x80\\x99s goals for flax from the typical\\nuse of flax for linen, stating:\\nThe objective of this work was, therefore, not long line fiber for traditional linen, but instead short staple fibers\\nfor blending with cotton and other fibers. The requirements to maintain long fiber length and other restrictions\\nnecessary for traditional linen could be avoided, and new methods could be explored to produce a total fiber\\nproduct from diverse sources of flax.\\nA copy of the 2008 BioResources article can be found here:\\nhttp:\/\/www.ncsu.edu\/bioresources\/BioRes_03\/BioRes_03_1_0155_Foulk_AD_PectinolyticEnzymes_Retting.pdf. The\\nflax fiber research conducted by the USDA\\xe2\\x80\\x90ARS at the USDA Flax Fiber Pilot Plant was also discussed in a research article\\ncalled \\xe2\\x80\\x9cPilot plant for processing flax fiber\\xe2\\x80\\x9d that was published in the journal, International Crops and Products. A copy of\\nthat article can be found here: http:\/\/ddr.nal.usda.gov\/bitstream\/10113\/4310\/1\/IND43702115.pdf.\\nAs detailed below in section 2, the \\xe2\\x80\\x9cshort staple fibers\\xe2\\x80\\x9d contemplated in the 2008 BioResources article (as distinguished\\nfrom the long fibers used for linen) are precisely the raw materials NAT uses for its Crailar flax fiber.\\nNotably, in January 2011, NAT and Hanesbrands (the well\\xe2\\x80\\x90known global apparel leader) announced a joint research\\npartnership with the USDA\\xe2\\x80\\x90ARS to cultivate and evaluate the viability of various flax strains for producing Crailar. The\\nproject is being carried out in South Carolina and has an initial term of one year, with a renewal option of two additional\\nyears. You can read about the joint research of NAT, Hanesbrands, and the USDA\\xe2\\x80\\x90ARS here:\\nhttp:\/\/www.textileworld.com\/Articles\/2011\/January\/NAT_Hanesbrands_USDA_Team_To_Conduct_Flax_Growing_Trials\\n.html\\nThe U.S. government\\xe2\\x80\\x99s regular use and reference to \\xe2\\x80\\x9cflax fiber\\xe2\\x80\\x9d as the generic name for a natural fiber is obviously\\ncompelling, but perhaps the most interesting evidence that \\xe2\\x80\\x9cflax fiber\\xe2\\x80\\x9d is the generic name for a natural fiber comes\\nfrom the website for the United Nations\\xe2\\x80\\x99 \\xe2\\x80\\x9cInternational Year of Natural Fibers\\xe2\\x80\\x9d:\\nhttp:\/\/www.naturalfibres2009.org\/en\/index.html. As shown by that website, the United Nations proactively proposed\\nand developed the \\xe2\\x80\\x9cInternational Year of Natural Fibers,\\xe2\\x80\\x9d which was held in 2009. More information about the history of\\n2\\n\\n\\x0cthe \\xe2\\x80\\x9cInternational Year of Natural Fibers\\xe2\\x80\\x9d including its origins with the United Nations is discussed here:\\nhttp:\/\/www.naturalfibres2009.org\/en\/iynf\/background.html.\\nThe website for the \\xe2\\x80\\x9cInternational Year of Natural Fibers\\xe2\\x80\\x9d has a dedicated page for flax as a natural fiber, and \\xe2\\x80\\x9cflax fiber\\xe2\\x80\\x9d\\nappears several times on the page to generically designate the fiber from flax. Here is that dedicated flax page:\\nhttp:\/\/www.naturalfibres2009.org\/en\/fibres\/flax.html. As you can see from that page, not all flax textiles are linen. On\\nthe contrary, the flax page notes that some flax is used for linen (specifically, \\xe2\\x80\\x9cfine and long flax fibres\\xe2\\x80\\x9d), but that page\\nalso notes that \\xe2\\x80\\x9cshorter flax fibers\\xe2\\x80\\x9d are used for other textiles, including consumer products like towels, tents, canvas,\\nfurniture fabric, and sails.\\nAgain, NAT\\xe2\\x80\\x99s Crailar flax fiber is comprised of these \\xe2\\x80\\x9cshorter flax fibres\\xe2\\x80\\x9d that are not used for linen. This important\\ndistinction is one of the subjects of the next section.\\n\\n2.\\n\\nInformation about the Differences Between NAT\\xe2\\x80\\x99s Crailar Flax Fiber and Linen\\n\\nThere are two ways to discuss the differences between NAT\\xe2\\x80\\x99s Crailar flax fiber and linen.\\nFirst, there are critical technical distinctions between the two materials. Rather than explain these differences in this\\nemail, NAT has prepared the attached document, \\xe2\\x80\\x9cNAT \\xe2\\x80\\x93 Explanation of Linen v. Crailar Flax Fiber,\\xe2\\x80\\x9d which consists of (i)\\na text discussion of pertinent technical distinctions; and (ii) a chart with a point\\xe2\\x80\\x90by\\xe2\\x80\\x90point comparison of some of the\\ndistinctions. Among others, the discussion and chart explain that NAT\\xe2\\x80\\x99s Crailar flax fiber is comprised of short bast flax\\nfibers washed in a natural, enzymatic bath. The basic properties of the original short flax fibers are not altered, and they\\nare readily distinct from linen derived from long flax fibers.\\nThe second way to discuss the differences between NAT\\xe2\\x80\\x99s Crailar flax fiber and linen are the performance, market\\xe2\\x80\\x90based\\ndifferences. Here, the focus is on the differences consumers experience with the two materials. If you\\xe2\\x80\\x99ve ever worn a\\nlinen garment, then you will readily understand these differences.\\nLinen has a relatively coarse texture. Linen wrinkles easily and requires significant ironing. Linen typically must be\\ncarefully washed and then air\\xe2\\x80\\x90dried, or it must be dry\\xe2\\x80\\x90cleaned.\\nIn stark contrast and in the simplest terms, NAT\\xe2\\x80\\x99s Crailar flax fiber has the look, feel, and performance attributes of\\ncotton. NAT\\xe2\\x80\\x99s Crailar is soft and naturally white, and it wears and washes like cotton. In other words, it is comfortable,\\ndoes not need significant ironing, and can be washed and dried with other regular laundry.\\nIn short, calling Crailar flax fiber \\xe2\\x80\\x9clinen\\xe2\\x80\\x9d would mislead and deceive consumers in the same way that labeling a linen\\ngarment as \\xe2\\x80\\x9ccotton\\xe2\\x80\\x9d would mislead and deceive consumers. By way of example, imagine that you bought a typical\\nundershirt labeled \\xe2\\x80\\x9ccotton\\xe2\\x80\\x9d but, when you put on the undershirt, it had the look, feel, and performance traits of linen.\\nYour expectation of a soft, user\\xe2\\x80\\x90friendly garment would differ greatly from the uncomfortable and user\\xe2\\x80\\x90unfriendly\\nreality. Interestingly, Crailar\\xe2\\x80\\x99s performance attributes actually exceed those of cotton. Crailar flax fiber shrinks less than\\ncotton, absorbs moisture better (wicking), and has increased dye uptake, which means it more efficiently achieves the\\nsame depth of color as cotton.\\nThe cotton\\xe2\\x80\\x90like performance attributes of Crailar flax fiber have not gone unnoticed in the marketplace, and NAT has\\nsignificant purchase, development, and production agreements for Crailar flax fiber with some of the world\\xe2\\x80\\x99s largest and\\nmost well known apparel and textile manufacturers.\\nBy way of example, the online magazine Smart Planet (owned by CBS Interactive), recently wrote about NAT\\xe2\\x80\\x99s\\nagreement with Levi Strauss & Co. (owner of the Levi\\xe2\\x80\\x99s and Dockers brands) for the development of Crailar\\xe2\\x80\\x90based\\ndenim. Notably, the title of the article is, \\xe2\\x80\\x9cLevi\\xe2\\x80\\x99s eyes flax fiber for sustainable denim\\xe2\\x80\\x9d (i.e., the title uses the generic \\xe2\\x80\\x9cflax\\n3\\n\\n\\x0cfiber\\xe2\\x80\\x9d to designate Crailar). A copy of the Smart Planet article can be found here:\\nhttp:\/\/www.smartplanet.com\/blog\/smart\\xe2\\x80\\x90takes\/levis\\xe2\\x80\\x90eyes\\xe2\\x80\\x90flax\\xe2\\x80\\x90fiber\\xe2\\x80\\x90for\\xe2\\x80\\x90sustainable\\xe2\\x80\\x90denim\/15522\\nLikewise, earlier this year, Hanesbrands and NAT signed a 10\\xe2\\x80\\x90year purchasing agreement for NAT\\xe2\\x80\\x99s flax fiber. This\\nagreement is different than the NAT\/Hanes\/USDA\\xe2\\x80\\x90ARS research agreement discussed above in section 1. This\\npurchasing deal was widely reported throughout the apparel industry. Here are just two examples: \\xe2\\x80\\x9cHanes Replaces\\nCostly Cotton\\xe2\\x80\\x9d http:\/\/www.zacks.com\/stock\/news\/51218\/Hanes+Replaces+Costly+Cotton; and \\xe2\\x80\\x9cFlax Fiber Goes\\nMainstream through Major American Clothing Brand\\xe2\\x80\\x9d http:\/\/www.wendmag.com\/greenery\/2011\/03\/flax\\xe2\\x80\\x90fiber\\xe2\\x80\\x90goes\\xe2\\x80\\x90\\nmainstream\\xe2\\x80\\x90through\\xe2\\x80\\x90major\\xe2\\x80\\x90american\\xe2\\x80\\x90clothing\\xe2\\x80\\x90brand\/. Please note the use of \\xe2\\x80\\x9cflax fiber\\xe2\\x80\\x9d in the title of the second\\narticle.\\nMost recently, NAT and Georgia\\xe2\\x80\\x90Pacific Consumer Products entered into a 3\\xe2\\x80\\x90year Crailar flax fiber supply agreement.\\nThis agreement and a previous agreement with Georgia\\xe2\\x80\\x90Pacific were also widely reported. Finally, NAT has also signed\\nagreements involving Crailar flax fiber with several other global companies, including, Cintas Corporation, Ashland Inc.,\\nWestex Inc., Carhartt, and Hong Kong\\xe2\\x80\\x90based, Brilliant Global LTD. Details of these agreements can be found here:\\nhttp:\/\/www.naturallyadvanced.com\/s\/PressReleases.asp\\n3.\\nWhether Designating NAT\\xe2\\x80\\x99s Crailar as \\xe2\\x80\\x9cFlax Fiber\\xe2\\x80\\x9d Would Raise Issues Similar to the Problems with \\xe2\\x80\\x9cBamboo\\xe2\\x80\\x9d\\nLabeling\\nI have reviewed the FTC\\xe2\\x80\\x99s ruling and guidance about the improper use of \\xe2\\x80\\x9cbamboo\\xe2\\x80\\x9d on labels for Rayon. That situation\\ninvolved Rayon produced from reconstituted, pulped bamboo. As I am sure you are aware, Rayon can be produced from\\na variety of raw materials, but the comprehensive chemical processing of the raw materials leaves no trace of them in\\nthe final Rayon product. When Rayon is produced from bamboo, the basic properties of bamboo are destroyed, and the\\nresulting fiber bears no resemblance to bamboo. For that reason, the \\xe2\\x80\\x9cbamboo\\xe2\\x80\\x9d label for Rayon was misleading.\\nNAT\\xe2\\x80\\x99s situation with Crailar has nothing in common with the reasons the \\xe2\\x80\\x9cbamboo\\xe2\\x80\\x9d label for Rayon was improper. The\\nfinal Crailar product is fundamentally no different than the source raw materials, namely, short flax fiber raw materials.\\nIn short, Crailar is made from flax fiber, and Crailar is flax fiber that has been washed in a natural enzymatic bath.\\n\\nIn conclusion, the FTC\\xe2\\x80\\x99s rules require only that NAT use the generic name for a natural fibers. The FTC does not maintain\\nan exclusive list of generic names for natural fibers. NAT\\xe2\\x80\\x99s Crailar fibers are nothing more than processed short flax\\nfibers, and flax is obviously a natural crop. Accordingly, NAT is unaware of any FTC rule or regulation indicating that\\nNAT\\xe2\\x80\\x99s Crailar product should be called anything other than \\xe2\\x80\\x9cflax fiber,\\xe2\\x80\\x9d and calling it \\xe2\\x80\\x9clinen\\xe2\\x80\\x9d would mislead and deceive\\nconsumers.\\nI would be happy to discuss this with you and\/or other FTC personnel.\\nI realize this is a long email, and I greatly appreciate your consideration.\\nMike Heilbronner\\nIdeaLegal, P.C.\\nwww.IdeaLegal.com\\nMHeilbronner@IdeaLegal.com\\nPhone: (503) 449\\xe2\\x80\\x909084\\nFax: (503) 914\\xe2\\x80\\x900301\\n1631 NE Broadway, No. 443\\nPortland, OR 97232\\n\\n4\\n\\n\\x0c*** This email and any files transmitted with it are only for the intended recipient(s) and may be confidential and legally\\nprivileged. If you have received this email in error, please notify IdeaLegal, P.C. immediately and delete this e\\xe2\\x80\\x90mail\\nwithout disclosing, copying, distributing or taking any action in reliance on the contents. ***\\n\\n5\\n\\n\\x0chttps:\/\/www.fedex.com\/shipping\/html\/en\/PrintIFrame.html\\n\\nAfter printing this label:\\n1. Use the \\'Print\\' button on this page to print your label to your laser or inkjet printer.\\n2. Fold the printed page along the horizontal line.\\n3. Place label in shipping pouch and affix it to your shipment so that the barcode portion of the label can be read and scanned.\\nWarning: Use only the printed original label for shipping. Using a photocopy of this label for shipping purposes is fraudulent and could result in\\nadditional billing charges, along with the cancellation of your FedEx account number.\\nUse of this system constitutes your agreement to the service conditions in the current FedEx Service Guide, available on fedex.com.FedEx will not be responsible\\nfor any claim in excess of $100 per package, whether the result of loss, damage, delay, non-delivery,misdelivery,or misinformation, unless you declare a higher\\nvalue, pay an additional charge, document your actual loss and file a timely claim.Limitations found in the current FedEx Service Guide apply. Your right to recover\\nfrom FedEx for any loss, including intrinsic value of the package, loss of sales, income interest, profit, attorney\\'s fees, costs, and other forms of damage whether\\ndirect, incidental,consequential, or special is limited to the greater of $100 or the authorized declared value. Recovery cannot exceed actual documented\\nloss.Maximum for items of extraordinary value is $500, e.g. jewelry, precious metals, negotiable instruments and other items listed in our ServiceGuide. Written\\nclaims must be filed within strict time limits, see current FedEx Service Guide.\\n\\n1 of 1\\n\\n5\/10\/2012 10:59 AM\\n\\n\\x0c'","created_timestamp":"June 26, 2012","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/letter-james.kohm-associate-director-division-enforcement-bureau-consumer-protection\/120626crailar.pdf"}
{"text":"b'UN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nO ffice of the Secretary\\n\\nMay 3, 2012\\nJonathan Sheldon\\nCarolyn Carter\\nNational Consumer Law Center\\n7 Winthrop Square\\nBoston, Massachusetts 02110\\nDear Mr. Sheldon and Ms. Carter:\\nThis letter is in response to the National Consumer Law Center\\xe2\\x80\\x99s request for a\\nCommission advisory opinion regarding the Federal Trade Commission\\xe2\\x80\\x99s Trade Regulation Rule\\nConcerning Preservation of Consumers\\xe2\\x80\\x99 Claims and Defenses, 16 C.F.R. \\xc2\\xa7 433, commonly\\nknown as the Holder Rule.1 Specifically, you ask the Commission to affirm that the Holder Rule\\ndoes not limit a consumer\\xe2\\x80\\x99s right to an affirmative recovery to circumstances where the\\nconsumer can legally rescind the transaction or where the goods or services sold to the consumer\\nare worthless. Your letter states that even though the plain language of the Rule is clear\\xe2\\x80\\x94which\\nFTC staff confirmed in a 1999 opinion letter2\\xe2\\x80\\x94some courts continue to bar consumers from\\naffirmative recoveries unless rescission is warranted.3\\n\\n1\\n\\nYour letter requesting an advisory opinion is co-signed by representatives from Public\\nCitizen, U.S. PIRG, the Center for Responsible Lending, and the National Association of\\nConsumer Advocates.\\n2\\n\\n3\\n\\nSee Attachment, FTC Staff Letter (Sept. 25, 1999).\\n\\nYour letter lists six cases that have been decided since the issuance of the 1999 FTC\\nstaff opinion letter that have held that a consumer may only obtain an affirmative recovery\\nagainst a creditor under the Holder Rule when the seller\\xe2\\x80\\x99s breach is so substantial that rescission\\nand restitution are justified or where the goods or services sold to the consumer are worthless:\\nRollins v. Drive-1 of Norfolk, Inc., No. 2:06cv375, 2007 WL 602089 (E.D. Va. Feb. 21, 2007);\\nPhillips v. Lithia Motors, Inc., No. 03-3109-HO, 2006 WL 1113608 (D. Or. Apr. 27, 2006);\\nCosta v. Mauro Chevrolet, Inc., 390 F. Supp. 2d 720 (N.D. Ill. 2005); Comer v. Person Auto\\nSales, Inc., 368 F. Supp. 2d 478 (M.D.N.C. 2005); Herrara v. North & Kimball Group, Inc., No.\\n01C7349, 2002 U.S. Dist. LEXIS 2640 (N.D. Ill. Feb. 15, 2002); Bellik v. Bank of America, 869\\nN.E.2d 1179 (Ill. App. Ct. 2007). You cite Comer as pointedly rejecting the FTC staff opinion\\nletter. Comer notes that the staff letter is \\xe2\\x80\\x9cnot binding on the Commission.\\xe2\\x80\\x9d 368 F. Supp. 2d at\\n490.\\n\\n\\x0cJonathan Sheldon and Carolyn Carter -- Page 2\\nThe Holder Rule protects consumers who enter into credit contracts with a seller of goods\\nor services by preserving their right to assert claims and defenses against any holder of the\\ncontract, even if the original seller subsequently assigns the contract to a third-party creditor. In\\nparticular, the Holder Rule requires sellers that arrange for or offer credit to finance consumers\\xe2\\x80\\x99\\npurchases to include in their credit contracts the following Notice:\\nANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS\\nSUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE\\nDEBTOR COULD ASSERT AGAINST THE SELLER OF\\nGOODS OR SERVICES OBTAINED [PURSUANT HERETO\\nOR] WITH THE PROCEEDS HEREOF. RECOVERY\\nHEREUNDER BY THE DEBTOR SHALL NOT EXCEED\\nAMOUNTS PAID BY THE DEBTOR HEREUNDER.\\n16 C.F.R. \\xc2\\xa7 433.2.\\nA creditor or assignee of the contract is thus subject to all claims or defenses that the\\nconsumer could assert against the seller. The Holder Rule does not create any new claims or\\ndefenses for the consumer; it simply protects the consumer\\xe2\\x80\\x99s existing claims and defenses. The\\nonly limitation included in the Rule is that a consumer\\xe2\\x80\\x99s recovery \\xe2\\x80\\x9cshall not exceed amounts\\npaid\\xe2\\x80\\x9d by the consumer under the contract.\\nThus, the plain language of the Rule permits a consumer to assert a seller\\xe2\\x80\\x99s misconduct\\n(1) to defend against a creditor\\xe2\\x80\\x99s lawsuit for amounts owed under the contract and\/or (2) to\\nmaintain a claim against the creditor for a refund of money the consumer has already paid under\\nthe contract (i.e., an affirmative recovery). Despite the Rule\\xe2\\x80\\x99s plain language, however, some\\ncourts have imposed additional limitations on a consumer\\xe2\\x80\\x99s right to affirmative recovery.\\nBeginning with Ford Motor Credit Co. v. Morgan, 536 N.E.2d 587 (Mass. 1989),4 these courts\\nhave allowed affirmative recovery only if the consumer is entitled to rescission or similar relief\\nunder state law.5 Courts following the Morgan approach have not imposed any similar\\nlimitation on a consumer\\xe2\\x80\\x99s right to raise the seller\\xe2\\x80\\x99s misconduct as a defense in a lawsuit.\\n\\n4\\n\\nIn Morgan, the court faced extensive consumer misconduct in connection with the\\nfinancing of a car purchase. After experiencing problems with the car, the consumer concealed\\nthe automobile, removed the battery, removed or deflated the tires, and surrendered the\\nautomobile only after being found in contempt by the trial judge. He also delayed the sale of the\\nautomobile, during which time it was extensively vandalized, resulting in a total loss that was\\nnot recoverable due to the consumer\\xe2\\x80\\x99s failure to obtain insurance. The creditor sued the\\nconsumer for the balance due under the contract, and the consumer filed a counterclaim based on\\nthe dealer\\xe2\\x80\\x99s misrepresentations. Notably, in contravention of the one express limitation in the\\nHolder Rule, the consumer sought recovery of an amount in excess of what the consumer had\\npaid under the contract. The court ultimately held that the consumer was not entitled to any\\naffirmative recovery, but he did not have to pay the remaining balance due. 536 N.E.2d at 588.\\n5\\n\\nSee, e.g., n.3, supra.\\n\\n\\x0cJonathan Sheldon and Carolyn Carter -- Page 3\\nThe Commission affirms that the Rule is unambiguous, and its plain language should be\\napplied.6 No additional limitations on a consumer\\xe2\\x80\\x99s right to an affirmative recovery should be\\nread into the Rule, especially since a consumer would not have notice of those limitations\\nbecause they are not included in the credit contract. Had the Commission meant to limit\\nrecovery to claims subject to rescission or similar remedy, it would have said so in the text of the\\nRule and drafted the contractual provision accordingly. It remains the Commission\\xe2\\x80\\x99s intent that\\nthe plain language of the Rule be applied, which many courts have done.7\\nThe purpose of the Holder Rule, as stated in the Rule\\xe2\\x80\\x99s Statement of Basis and Purpose\\n(\\xe2\\x80\\x9cSBP\\xe2\\x80\\x9d), supports this plain reading. The Commission adopted the Rule to provide recourse to\\nconsumers who otherwise would be legally obligated to make full payment to a creditor despite\\nbreach of warranty, misrepresentation, or even fraud on the part of the seller.8 The Commission\\nfound that \\xe2\\x80\\x9cthe creditor is always in a better position than the buyer to return seller misconduct\\ncosts to sellers, the guilty party,\\xe2\\x80\\x9d9 and therefore concluded that \\xe2\\x80\\x9c[s]ellers and creditors will be\\nresponsible for seller misconduct.\\xe2\\x80\\x9d10 Moreover, the Commission considered, but firmly rejected,\\na suggestion by industry representatives that the Rule be amended so that a consumer \\xe2\\x80\\x9cmay\\nassert his rights only as a matter of defense or setoff against a claim by the assignee or holder,\\xe2\\x80\\x9d\\n\\n6\\n\\nSee Qwest Corp. v. Colorado Public Utilities Comm\\xe2\\x80\\x99n, 656 F.3d 1093, 1099 (10th Cir.\\n2011) (\\xe2\\x80\\x9cWe begin with the plain language of the regulation. . . . If the regulation\\xe2\\x80\\x99s language is\\nclear, our analysis ends and we must apply its plain meaning.\\xe2\\x80\\x9d) (internal citations and quotations\\nomitted); Lozada v. Dale Baker Oldsmobile, Inc., 91 F. Supp. 2d 1087, 1095 (W.D. Mich. 2000)\\n(\\xe2\\x80\\x9cNo basis exists for referring to the commentary to understand the meaning of language that is\\nunambiguous on its face.\\xe2\\x80\\x9d).\\n7\\n\\nSee, e.g., Lozada, 91 F. Supp. 2d at 1094-95; Simpson v. Anthony Auto Sales, Inc., 32\\nF. Supp. 2d 405, 409 n.10 (W.D. La. 1998); Riggs v. Anthony Auto Sales, 32 F. Supp. 2d 411,\\n416 n.13 (W.D. La. 1998); Beemus v. Interstate Nat\\xe2\\x80\\x99l Dealer Servs., Inc., 823 A.2d 979, 984-85\\n(Pa. Super. Ct. 2003); Jaramillo v. Gonzalez, 50 P.3d 554, 561 (N.M. Ct. App. 2002); Scott v.\\nMayflower Home Improvement Corp., 831 A.2d 564, 573-74 (N.J. Super. Ct. Law Div. 2001).\\n8\\n\\nSee 40 Fed. Reg. 53506, 53507 (Nov. 18, 1975) (\\xe2\\x80\\x9cThe rule is directed at what the\\nCommission believes to be an anomaly. . . . The creditor may assert his right to be paid by the\\nconsumer despite misrepresentation, breach of warranty or contract, or even fraud on the part of\\nthe seller, and despite the fact that the consumer\\xe2\\x80\\x99s debt was generated by the sale.\\xe2\\x80\\x9d)\\n9\\n\\nId. at 53523 (emphasis added); see also id. at 53509 (\\xe2\\x80\\x9cBetween an innocent consumer,\\nwhose dealings with an unreliable seller are, at most, episodic, and a finance institution\\nqualifying as \\xe2\\x80\\x98a holder in due course,\\xe2\\x80\\x99 the financer is in a better position both to protect itself and\\nto assume the risk of a seller\\xe2\\x80\\x99s reliability.\\xe2\\x80\\x9d); id. at 53523 (\\xe2\\x80\\x9cWe believe that a rule which compels\\ncreditors to either absorb seller misconduct costs or return them to sellers, by denying sellers\\naccess to cut-off devices, will discourage many of the predatory practices and schemes. . . . The\\nmarket will be policed in this fashion and all parties will benefit accordingly.\\xe2\\x80\\x9d).\\n10\\n\\nId. at 53524.\\n\\n\\x0cJonathan Sheldon and Carolyn Carter -- Page 4\\nfinding instead that \\xe2\\x80\\x9c[t]he practical and policy considerations which militate against such a\\nlimitation on affirmative actions by consumers are far more persuasive.\\xe2\\x80\\x9d11 For example, the\\nCommission noted that some consumers may feel compelled to continue payments because of\\nthe threat of negative credit reporting and that \\xe2\\x80\\x9ca stronger potential consumer remedy will\\nencourage greater policing of merchants by finance institutions.\\xe2\\x80\\x9d12\\nThus, to give full effect to the Commission\\xe2\\x80\\x99s original intent to shift seller misconduct\\ncosts away from consumers, consumers must have the right to recover funds already paid under\\nthe contract if such recovery is necessary to fully compensate the consumer for the\\nmisconduct\\xe2\\x80\\x94even if rescission of the transaction is not warranted. Otherwise, whether a\\nconsumer is able to be fully compensated would depend on how much the consumer paid under\\nthe contract at the time of the dispute. For example, consider a consumer who finances the\\npurchase of an automobile, later discovered to be defective, for $10,000 and is entitled to\\ncompensation of $3,000 based on the seller\\xe2\\x80\\x99s misrepresentations regarding the condition of the\\nautomobile. If the consumer has paid $4,000 under the financing contract and still owes $6,000,\\nthe consumer could withhold $3,000 of the balance due and be fully compensated\\xe2\\x80\\x94a defensive\\nposture sanctioned by Morgan. If, however, the consumer has paid $8,000 and owes $2,000, the\\nMorgan approach would permit the consumer to withhold the remaining $2,000 payment, but\\nnot affirmatively recover the additional $1,000 that would be necessary to make the consumer\\nwhole.13 There is no basis under the plain language and the intent of the Rule for such an\\nanomalous result.\\nCourts that have followed the Morgan approach have misinterpreted two isolated\\ncomments in the SBP that accompanies the Rule. In part, the SBP states that affirmative\\nrecovery by the consumer \\xe2\\x80\\x9cwill only be available where a seller\\xe2\\x80\\x99s breach is so substantial that a\\ncourt is persuaded that rescission and restitution are justified\\xe2\\x80\\x9d14 and that consumers \\xe2\\x80\\x9cwill not be\\nin a position to obtain an affirmative recovery from a creditor, unless they have actually\\ncommenced payments and received little or nothing of value from the seller.\\xe2\\x80\\x9d15 However, when\\nread in context of the entire SBP, including the SBP language highlighted above, the two SBP\\ncomments cited by Morgan and its progeny do not undermine the plain language of the Rule. As\\nexplained by one court that rejected the Morgan approach, \\xe2\\x80\\x9c[w]here one or more parts of the\\n[SBP] fully comport with the text of the rule while another, read in a particular way, is at odds\\nwith the plain language of the regulation, there exists no basis for giving controlling weight to an\\n\\n11\\n\\nId. at 53526.\\n\\n12\\n\\nId. at 53527.\\n\\n13\\n\\nThis example is drawn from Michael Greenfield & Nina Ross, Limits on a Consumer\\xe2\\x80\\x99s\\nAbility to Assert Claims and Defenses Under the FTC\\xe2\\x80\\x99s Holder in Due Course Rule, 46 Bus.\\nLaw. 1135, 1140 (1991).\\n14\\n\\n40 Fed. Reg. at 53524.\\n\\n15\\n\\nId. at 53527.\\n\\n\\x0cJonathan Sheldon and Carolyn Carter -- Page 5\\ninterpretation which narrows the language of the rule itself.\\xe2\\x80\\x9d16 These statements should be read\\nas practical observations or predictions, instead of as contradicting the Rule. In most instances\\nwhere there is significant consumer injury associated with seller misconduct but rescission is not\\nwarranted, the consumer is likely to find out about the injury shortly after the transaction is\\nconsummated, and thus is likely to stop payments before the claim amount is larger than the\\nbalance due. In other words, affirmative recoveries will be rare in cases where rescission is not\\njustified because such recoveries occur only if the consumer\\xe2\\x80\\x99s claim is larger than what the\\nconsumer still owes on the loan.17 When read in this context, the two SBP comments do not\\nconflict with the rest of the SBP and the plain language of the Rule.\\nThus, the Commission affirms the plain language of the Holder Rule and the intent of the\\nRule as discussed in the entire SBP. Specifically, the Rule places no limits on a consumer\\xe2\\x80\\x99s\\nright to an affirmative recovery other than limiting recovery to a refund of monies paid under the\\ncontract. Further, the Rule does not limit affirmative recovery only to those circumstances\\nwhere rescission is warranted or where the goods or services sold to the consumer are worthless.\\nBy direction of the Commission.\\n\\nDonald S. Clark\\nSecretary\\n\\n16\\n\\n17\\n\\nLozada, 91 F. Supp. 2d at 1096.\\n\\nSee id. at 1095 (noting that the SBP \\xe2\\x80\\x9cis susceptible of being understood as a statement\\nof agency prediction that affirmative recoveries will occur only when courts are persuaded that\\nthe equities so require and when damages exceed the amount due on the account\\xe2\\x80\\x9d); accord\\nJaramillo, 50 P.3d at 561.\\n\\n\\x0c'","created_timestamp":"May 3, 2012","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/16-c.f.r.part-433-federal-trade-commission-trade-regulation-rule-concerning-preservation-consumers-claims\/120510advisoryopinionholderrule.pdf"}
{"text":"b'\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/sandler-travis-rosenberg\/sandler.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\n600 PENNSYLVANIA AVENUE, NW\\nWASHINGTON, D.C. 20580\\n\\nDivision of Enforcement\\nBureau of Consumer Protection\\nHampton Newsome\\nAttorney\\nDirect Dial:\\n\\n(202)326-2889\\nFax:\\n\\n(202)326-2558\\nNovember 28,2011\\n\\nRobert Babik, Director\\nEnvironment, Energy & Safety Policy\\nGeneral Motors Company\\n300 Renaissance Center\\nDetroit, Michigan 48265-3000\\nDear Mr. Babik:\\nThis staff opinion letter responds to your October 28, 2011, request on behalf of General\\nMotors Company (GM). GM seeks to label its 2013 and later model dual-fueled vehicles with\\nthe Environmental Protection Agency\\'s (EPA\\'s) new fuel economy label and to forego using the\\nFTC\\'s alternative fueled vehicle (AFV) label on those vehicles. As explained below, the FTC\\nstaff will not recommend enforcement action if GM uses the EPA label, including the vehicle\\'s\\ndriving range, in lieu ofthe FTC label for these vehicles.\\nCurrently, the FTC and EPA both require a label for dual-fueled vehicles which operate\\non both conventional gasoline and alternative fuel (e.g., E85).I Though both labels inform\\nconsumers about vehicle fuel performance, the recently-revised EPA label contains more\\nvehicle-specific information than the FTC\\'s. For example, the EPA label displays fuel economy\\nin both miles per gallon (city and highway) and gallons per 100 miles, estimated yearly fuel cost,\\nfuel savings or costs compared to an average vehicle, greenhouse gas iuformation, and smog\\nratings. In addition, the EPA label allows, but does not require, the vehicle\\'s driving range (i.e.,\\nmiles traveled on a full tank) for gasoline and alternative fuel operation. Finally, the EPA label\\ndirects consumers to wwwfueleconomy.gov which contains details about alternative fuels and\\nAFVs. By comparison, the FTC label, required by the Alternative Fuels Rule CRule\"), displays\\na vehicle\\'s cruising (i.e., driving) range but does not provide any other vehicle-specific\\ninformation? Instead, it contains general consumer information about fuel type, operating cost,\\n\\nISee 16 C.F.R. Part 309 (FTC label) and 40 C.F.R. Part 600 (EPA label). Last summer,\\nEPA issued new labeling requirements for these vehicles. 76 Fed. Reg. 39478 (July 6, 2011).\\n216 C.F.R. Part 309. The Rule\\'s full title is \"Labeling Requirements for Alternative\\nFuels and Alternative Fneled Vehicles.\"\\n\\n\\x0cPage 2\\nvehicle performance, energy security, and emissions. It also provides telephone numbers and\\nwebsite addresses for additional information.\\nTo avoid potential consumer confusion and reduce compliance costs, GM seeks to use\\nonly the EPA label on its dual-fueled vehicles. It asks that the Commission, or the FTC staff,\\nforbear enforcement ofthe FTC label as long as GM uses the EPA label including tbe vehicle\\'s\\ndriving range. In GM\\'s view, use of both labels could cause confusion because tbe EPA and\\nFTC labels present driving range information in different ways. The FTC requires two range\\nnumbers: a lower number based on city fuel economy and an upper number based on highway\\nfuel economy (e.g., 246-378 miles on one tank). Conversely, tbe EPA rule requires a single\\nrange number (e.g., 300 miles on one tank) based on tbe combined city-highway fuel economy\\nrating. Although the resulting numbers are similar and based on the same test procedures, GM is\\nconcerned that the differences could confuse consumers. GM also explains that a single label\\nwill save several hundred thousand dollars each model year in labeling-related costs.\\nGM argues tbat its request is consistent with the Commission\\'s recent policy to forbear\\nenforcement of current FTC labeling requirements for electric vehicles given inconsistencies\\nbetween tbe driving range on EPA and FTC labels for those vehicles. 3 Because a similar\\ninconsistency exists between the EPA and FTC labels for 2013 dual-fueled models, GM requests\\na similar approach.\\nIn rcsponsc to your request, thc FTC staff will not recommend enforcement action ifGM\\n(or another manufacturer) uses the EPA fuel economy label, with driving range information, in\\nlieu of tbe FTC AFV label on dual-fueled vehicles. As your request explains, a single label will\\navoid potential consumer confusion. The approach is also consistent with tbe Commission\\'s\\nrecent enforcement policy for electric vehicles. The Commission will provide final direction on\\nthese issues when it completes its review of the Alternative Fuel Rule.\\nThe views expressed in this letter are those of the staff assigned to enforce the\\nCommission\\'s Alternative Fuels Rule. In accordance with Section 1.3(c) of the Commission\\'s\\nRules of Practice and Procedure, 16 C.F.R. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 1.3(c), this is a staff opinion only and has not been\\nreviewed or approved by the Commission or by an individual Commissioner. It is not binding\\nupon the Commission and is given without prejudice to the right of the Commission later to\\nrescind the advice and, when appropriate, to commence an enforcement proceeding. In\\nconformance with Section 1.4 of the Commission\\'s Rules of Practice, 16 C.F.R. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 1.4, this letter\\nand GM\\'s request, are being placed on the public record. If you have any further questions,\\nplease contact me at (202) 326-2889.\\n\\nc\"t?).\\nSin erely,\\n.~\\n\\n\/\\n\\nHampton Newsome\\nAttorney\\n\\n3See http:\/\/www.jic.gov\/opa\/20JJ\/05\/aJr.shtm; and 76 Fed. Reg. 31467 (June 1,2011).\\n\\n\\x0c'","created_timestamp":"October 28, 2011","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/general-motors-company\/111128gmstaffop.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nBureau of Consumer Protection\\nDivision of Enforcement\\n\\nNovember 17,2011\\n\\nVia Email and Overnight Mail\\nL. Jean Noonan\\nHudson Cook, LLP\\n1020 19th Street, N. W., 7th Floor\\nWashington, DC 20036\\n\\nDear Ms. Noonan,\\nThis staff advisory opinion responds to your August 19,2011, letter seeking an\\ninformal staff opinion regarding the application of the Restore Online Shoppers\\'\\nConfidence Act (\"ROSCA\"), 15 USC \\xc2\\xa7 840 I, et. seq., to the proposed online husiness\\npractices of your client, the National Railroad Passenger Corporation (Amtrak). The\\nviews expressed in this letter are those of the staff assigned to enforce ROSCA. In\\naccordance with Section 1.3(c) of the Commission\\'s Rules of Practice and Procedure, 16\\nC.F.R. \\xc2\\xa7 1.3(c), this is a staff opinion only and has not been reviewed or approved by the\\nCommission or by an individual Commissioner. It is not binding upon the Commission\\nand is given without prejudice to the right of the Commission later to rescind the advice\\nana, when appropriate, to commence an enforcement proceeding. In conformance with\\nSection 1.4 of the Commission\\'s Rules of Practice, 16 C.F.R. \\xc2\\xa7 1.4, this letter and\\nAmtrak\\'s request, are being placed on the public record. The opinions expressed in this\\nletter are based on the factual scenario you described in your letter.\\nAs described in your letter, Amtrak allows its customers to purchase train tickets\\non its website. Prior to the enactment of ROSCA, Amtrak also offered travel-related\\nproducts and services from trusted third party partners. When ROSCA went into effect,\\nAmtrak ceased offering consumers the opportunity to purchase third party products and\\nservices on Amtrak\\'s website. The central issue raised in your letter is whether Amtrak\\'s\\nprior practice of offering third party products and services, with certain modifications,\\nwould violate ROSCA. As described below, we conclude that under the specific factual\\nscenario presented in your letter, staff would not recommend an enforcement action\\nagainst Amtrak for violations ofROSCA.\\n\\n\\x0cMs. Jean Noonan\\nHudson Cook, LLP\\nNovember l7,2011-Page2\\n\\nROSCA PROVISIONS\\nSection 3(b) ofROSCA provides that \"[i]t shall be unlawful for an initial\\nmerchant to disclose a credit card, debit card, bank account, or other financial account\\nnumber, or to disclose other billing information that is used to charge a customer of the\\ninitial merchant, to any post-transaction third party seller for use in an Internet-based sale\\nof any goods or services from that post-transaction third party seller.\" ROSCA \\xc2\\xa7 3(d)(I)\\ndefines initial merchant as \"a person that has obtained a consumer\\'s billing information\\ndirectly from the consumer through an Internet transaction initiated by the consumer.\" A\\npost-transaction third party seller is \"a person that (A) sells, or offers for sale, any good\\nor service on the Internet; (B) solicits the purchase of such goods or services on the\\nInternet through an initial merchant after the consumer has initiated a transaction with the\\ninitial merchant; and (C) is not (i) the initial merchant; (ii) a subsidiary or corporate\\naffiliate of the initial merchant; or (iii) a successor of an entity described in clause (i) or\\n(ii).\" ROSCA \\xc2\\xa7 3(d)(2).\\n\\nDISCUSSION\\nAccording to your letter, when a consumer seeks to purchase a train ticket on\\nAmtrak\\'s website, the consumer must enter itinerary details, including the city to which\\nthe consumer seeks to travel, the class of service desired, and the date(s) and time(s) of\\ntravel. The consumer is then provided with ticket options. Once a ticket is selected, the\\nconsumer must add the ticket to a \"cart\" that is clearly displayed on the side of the\\nconsumer\\'s computer screen as an itinerary. Prior to ROSCA, Amtrak would next offer\\nconsumers travel-related products such as rental cars, hotels, and activities provided by\\nthird party partners. The consumer could then decide whether to add third party products\\nto their Amtrak shopping cart. The consumer could also proceed with the booking\\nprocess without reviewing any other products by clicking the \"Enter Passenger\\nInformation\" box located above the third party products. Only after the consumer\\nfinished shopping for tickets and other travel-related products and services, was the\\nconsumer sent to a passenger information page that asked the consumer to log in to\\nAmtrak\\'s website or enter passenger contact information. The consumer was then\\ndirected to a payment information page where they could enter financial account\\ninformation and finalize the purchase. Finally, consumers were sent to a purchase\\nconfirmation page. Amtrak ultimately passed consumers\\' financial data to the third party\\npartners from whom a product or service was purchased.\\nFor ROSCA to apply in these circumstances, Amtrak must be an \"initial\\nmerchant\" under Section 3(d)(l) and Amtrak\\'s third party partners must be \"posttransaction third party seller[s]\" under Section 3(d)(2). Because Amtrak obtains billing\\ninformation directly from customers that initiate an Internet transaction on its website, it\\nis an initial merchant. ROSCA \\xc2\\xa7 3(d)(I). If Amtrak\\'s proposed third party partners meet\\nthe three criteria set forth in Sections 3(d)(2)(A)-(C), they would be \"post-transaction\\nthird party seller[s].\" Per your letter they clearly meet two of the criteria: the third party\\n\\n\\x0cMs. Jean Noonan\\nHudson Cook, LLP\\nNovember 17, 2011 - Page 3\\npartners sell goods or services over the Internet, Section 3(d)(2)(A), and are not the initial\\nmerchant, Section \\xc2\\xa7 3(d)(2)(C).\\nTherefore, the key issue is whether Amtrak\\'s third party partners would solicit the\\npurchase of goods or services after consumers have initiated a transaction with Amtrak\\nunder Section 3(d)(2)(B). ROSCA does not define \"initiate a transaction\" and no courts\\nhave addressed this issue. One interpretation of Section 3 is that a transaction is initiated\\nafter a consumer proceeds to a website\\'s checkout page. Under this interpretation,\\nROSCA would not apply because the solicitation for third party products occurs before\\nconsumers go to Amtrak\\'s checkout or payment submission page. Another interpretation\\nis that a transaction is initiated when a consumer places products or services in a\\nwebsite\\'s shopping cart. Under this interpretation, Amtrak\\'s third party partners would\\nbe \"post-transaction third party seller[s]\" and ROSCA would apply.\\nEven if the second interpretation is correct, staff would not recommend an\\nenforcement action because the business practices you describe are unlikely to result in\\nconsumer confusion or injury and, therefore, staff would not recommend an enforcement\\naction. There are four aspects of Amtrak\\'s proposed marketing that should prevent any\\nconsumer injury were Amtrak to resume offering third party products and services by\\nway ofthe clear and conspicuous marketing described in your letter.\\nFirst, consumers will be required to affirmatively select and add desired third\\nparty products and services to their shopping cart. In stark contrast to the aggressive,\\nmisleading tactics described in ROSCA \\xc2\\xa7 2 (4) that caused consumers to be charged for\\nproducts that they do not want, Amtrak\\'s proposed practices enable consumers to select\\nonly the specific products and services they want. Likewise, Amtrak\\'s proposed\\npractices are designed to make consumers aware of what they are purchasing. Contra\\nROSCA \\xc2\\xa7 2 (6) (millions of consumers were unaware that they had been enrolled in\\nmembership clubs).\\nSecond, when offering third party products, Amtrak will prominently display the\\nnames and logos of its third party partners, including rental car companies and hotels.\\nSuch clear and conspicuous disclosures make it unlikely that consumers will erroneously\\nconclude that products are being offered by Amtrak itself or that the third party partners\\nare affiliated with Amtrak. Contra ROSCA \\xc2\\xa7 2 (4) and (5).\\nThird, Amtrak will clearly and conspicuously disclose the total cost of each third\\nparty product. Thus, consumers will know exactly what products or services they are\\npurchasing as well as how much they will be charged and by whom. Because Amtrak\\'s\\nproposed business practices do not obfuscate the existence or financial obligations ofthe\\nthird party transactions, the concerns identified in ROSCA \\xc2\\xa7\\xc2\\xa7 2 (5) and (7) (that offers\\nwere designed to make consumers think they were part of the initial purchase, rather than\\na new transaction with a new seller, and that consumers do not expect to be charged when\\nthey have not submitted their billing information) are minimized.\\n\\n\\x0cMs. Jean Noonan\\nHudson Cook, LLP\\nNovember 17, 2011 - Page 4\\n\\nFinally, Amtrak will constantly display a shopping cart, which details the\\nconsumer\\'s entire itinerary and itemizes both train tickets and ancillary products. The\\nwebsite will allow consumers to remove ancillary products from the shopping cart\\nthrough a simple one-click mechanism, enabling consumers to reconsider whether to do\\nbusiness with Amtrak\\'s third party partners before completing the initial transaction. In\\ncontrast to the findings ofROSCA \\xc2\\xa7 2 (8), Amtrak provides consumers with multiple\\nopportunities to reject the third party transactions.\\nAs discussed above, Amtrak\\'s proposed marketing does not rely on the\\nproblematic marketing tactics addressed in the ROSCA findings. Moreover, Amtrak\\'s\\nintended marketing will enable consumers to make informed purchasing decisions and\\nminimize the risk of consumer harm. Accordingly, given your factual description of\\nAmtrak\\'s proposed marketing, we would not recommend an enforcement action under\\nROSCA.\\n\\nIJ\\nAssociate Director\\nDivision of Enforcement\\n\\n\\x0c'","created_timestamp":"November 17, 2011","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/letter-james.kohm-associate-director-division-enforcement-bureau-consumer-protection\/111117amtrakltr.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nBureau of Competition\\nMichael Bloom\\nAssistant Director for Policy & Coordination\\nDirect Dial\\n(202) 326-2475\\n\\nAugust 15,2011\\nMr. Alan L. Cohen\\nVice President and General Counsel\\nCouncil of Better Business Bureaus, Inc.\\n4200 Wilson Boulevard, Suite 800\\nArlington, VA 22203-1838\\nDear Mr. Cohen:\\nThis letter responds to the Council of Better Business Bureaus\\' request for a Federal\\nTrade Commission staff advisory opinion concerning the Council \\' s proposed \"accountability\\nprogram.\" Under this program, the Council of Better Business Bureaus (the \"CBBB\") will hold\\ncompanies engaged in online behavioral advertising (\"OBA\") accountable for compliance with\\nthe \"Self-Regulatory Principles for Online Behavioral Advertising\" (the \"Principles\"), released\\nin July 2009 by a coalition of industry associations and administered by the Digital Advertising\\nAlliance (\"DAA\\',).l The CBBB wishes to know whether Federal Trade Commission (\"FTC\" or\\n\"Commission\") staff is likely to recommend that the Commission bring an enforcement action\\nchallenging as an anti competitive restraint of trade \"any element of the proposed accountability\\nprogram,\" if the CBBB proceeds to implement it.\\nBased on the information provided in your letter of April 19, 2011 and in subsequent\\ntelephone conversations between FTC staff and CBBB representatives and DAA representatives,\\nFTC staff has no present intention of recommending that the Commission bring any such\\nenforcement action. 2 In brief, the proposed accountability program is intended to increase\\n\\nLetter from Alan L. Cohen to Donald S. Clark, Secretary, Fed. Trade Comm\\'n\\n(April 19,2011) (\"April 19 Letter\"). The DAA is a \"business league\" established to govern an\\nindustry self-regulatory program based on the Principles. The DAA was formed through funding\\nand the cooperation of the American Association of Advertising Agencies, the American\\nAdvertising Federation, the Association of National Advertisers, the Direct Marketing\\nAssociation, and the Interactive Advertising Bureau. These associations and the DAA are\\ndescribed in footnote one of the April 19 Letter. Representatives of these organizations, or some\\nof them, are referred to herein as \"Trade Association Representatives.\"\\n2\\nWe have determined that issuance of an FTC staff advisory opinion letter in this\\nmatter is appropriate under Rule 1. 1(b) of the Commission\\' s Rules of Practice, 16 C.F.R.\\n\\xc2\\xa7 1.1 (b). FTC Staff has issued advisory opinions under similar circumstances, including\\n\\n\\x0ctransparency and consumer control of OBA, which has the potential to increase consumer\\nwelfare, and there appears to be little or no potential for competitive harm associated with the\\nproposed accountability program.\\nSignificantly, our conclusions are entirely dependent on the completeness and accuracy\\nof the information provided to us concerning the proposed accountability program and its likely\\neffects, and on our understanding of the pertinent facts, as described below. 3\\nStatement of the Pertinent Facts\\nThe CBBB is the national headquarters of the Better Business Bureau (\"BBB\") system.\\nIn your April 19 Letter, you explained that the BBB system seeks to promote ethical business\\nand advertising practices. Among its operations, the CBBB, in partnership with the National\\nAdvertising Review Council, administers advertising industry self-regulation programs,\\nincluding the National Advertising Division and the Children\\'s Advertising Review Unit.\\nIn February 2009, the Commission issued a Staff Report discussing principles for the\\nregulation of OBA and calling on the advertising industry to adopt an appropriate self regulatory\\nprogram. 4 Your April 19 letter states that in response to that call, a coalition of advertising\\nindustry associations adopted the Principles described in \"Self-Regulatory Principles for Online\\nBehavioral Advertising\"S in July 2009. The Principles are administered by the DAA, and their\\nimplementation is ongoing.\\nUnder the Principles, online behavioral advertising is defined as the practice of collecting\\n\"data from a particular computer or device regarding web viewing behaviors over time and\\nacross non-affiliate Web sites for the purpose of using such data to predict user preferences or\\n\\nregarding proposed programs of the CBBB and the Direct Marketing Association, also a\\nparticipant in the DAA. See Letter from Michael D. McNeely to Robert L. Sherman (Sept. 9,\\n2011) (regarding Direct Marketing Association proposal pertaining to its Mail and Telephone\\nPreference Services and related matters); Letter from Alden F. Abbott to Steven M. Mister (Dec.\\n19, 2006) (regarding Council for Responsible Nutrition\/CBBB proposal pertaining to monitoring\\nand review of dietary supplement advertisements for truthfulness).\\nStaffs opinion in this matter is limited to the competition law analysis requested\\nby the CBBB. FTC staff did not review the Principles or their administration in any other\\nrespect. Nothing contained herein should be construed as stating or implying any FTC staff\\nopinion on the extent to which the Principles and their administration are adequate or\\nappropriate.\\n3\\n\\n4\\nFTC Staff Report: Self-Regulatory Principles for Online Behavioral Advertising\\n(Feb. 2009) (\"2009 FTC Staff Report\"), available at\\nhttp:\/\/www.ftc.gov\/os\/2009\/02\/P085400behavadreport.pdf.\\n5\\n\\nA copy of the Principles was appended to your April 19 Letter.\\n\\n2\\n\\n\\x0cinterests to deliver advertising to that computer or device based on the preferences or interests\\ninferred from such Web viewing behaviors.,,6\\nAs described in your April 19 Letter, the Principles require companies engaging in OBA\\nto provide:\\n\\xe2\\x80\\xa2\\n\\n\\xe2\\x80\\xa2\\n\\n\\xe2\\x80\\xa2\\n\\xe2\\x80\\xa2\\n\\n\\xe2\\x80\\xa2\\n\\nTransparency about data collection and use practices associated with\\nOBA, providing consumers with clear, meaningful and prominent notice\\nthrough multiple mechanisms.\\nConsumer Control over whether data is collected and used or transferred\\nfor OBA purposes, provided through easy-to-use consumer choice\\nmechanisms.\\nAppropriate Data Security for, and limited retention of, data collected and\\nused for OBA purposes.\\nConsent to Material Changes in an entity\\'s OBA data collection and use\\npolicies for previously collected OBA information unless that change will\\nresult in less collection or use of the consumer\\'s data.\\nLimitations on the collection of specified categories of Sensitive Data for\\nOBA purposes. 7\\n\\nThe Principles also provide for the education of consumers and businesses about OBA\\nand how consumer choice and control may be exercised. Finally, the Principles provide for the\\nestablishment of accountability programs to monitor and seek compliance with the Principles by\\nall companies engaged in OBA. The CBBB\\'s April 19 Letter requesting an FTC staff advisory\\nopinion relates to an accountability program that the CBBB proposes to implement.\\nAccording to the April 19 Letter, the Principles require all \"third party\" OBA data\\ncollectors and advertising networks to use the DAA\\'s Advertising Option icon to indicate\\ncompliance with the Principles and to timely inform consumers of and link them to a required\\nweb site notice and mechanism by which consumers can exercise choice concerning receipt of\\nOBA. 8 Third party collectors and advertising networks are encouraged to use the consumer\\nchoice mechanism operated by the DAA, but may use an equally accessible alternative choice\\nmechanism. If a third party does not provide the required notice and choice on a web site, the\\nweb site operator must do so.\\n\\n6\\n\\nApril 19 Letter at 3.\\n\\nAs defined in the Principles, \"Sensitive Data\" includes personal information\\ngathered from people known to be under the age of 13, and certain financial and health data.\\n7\\n\\nA third party is defined under the Principles as \"an entity ... to the extent that it\\nengages in Online Behavioral Advertising on a non-affiliate\\'s web site.\" It is distinguished from\\na \"first party,\" which owns or controls the web site with which the consumer interacts.\\n\\n3\\n\\n\\x0cAs explained in the April 19 Letter, the DAA licenses use of the Advertising Option\\nicon\/link to assist companies in providing greater transparency to consumers for a fee of$5,000\\nper year, or free of charge to publishers whose revenues from online advertising are less than $2\\nmillion per year. In addition, for a fee of $1 0,000 per year, third party OBA data collectors and\\nadvertising networks can be listed in the consumer choice system on the DAA web site\\nAboutAds.info, http:\/\/www.aboutads.info. thereby providing a consumer choice mechanism as\\nrequired by the Principles; or they can adopt an alternative consumer choice mechanism. Trade\\nAssociation Representatives informed FTC staff that other costs of implementation of the\\nPrinciples are expected to be modest and a function of the size of a given third party collector or\\nadvertising network. In their view implementation costs should not affect the ability of\\ncompanies to compete effectively in their markets.\\nThe eBBB program will focus primarily on compliance with the Principles\\' provisions\\nseeking to ensure transparency and consumer control. Through a contracted vendor, the eBBB\\nwill monitor companies reasonably believed to be engaged in OBA. When appropriate based on\\nthat monitoring and other sources of information, the eBBB will make confidential inquiries\\ninto a company\\'s possible areas of non-compliance with the Principles. 9\\nWhen initiating an inquiry, the eBBB will notify the company whose practices are under\\nreview and seek its response, including information demonstrating its compliance with the\\nPrinciples. If the eBBB finds that a company is not in compliance, the eBBB will recommend\\nsteps to bring it into compliance, and will ask the company to agree to implement those steps.\\nThe eBBB will publicly report incidents of non-compliance only if they go\\nuncorrected,1O and these incidents \"will be referred to the appropriate regulatory authorities.\"11\\nFailure of a company to participate in a eBBB compliance inquiry or to provide the eBBB with\\nrequested information similarly may result in public reporting and referral to regulatory\\nauthorities. A finding of uncorrected non-compliance also may result in the company\\'s loss of\\nmembership in one or more of the trade associations that cooperated through the DAA to\\nestablish and implement the Principles.\\nTrade Association Representatives indicated in conversation with FTC staffthat public\\ndisclosure that a company has declined to comply with the Principles could injure that\\n\\n9\\nAccording to the April 19 Letter, other sources of information may include\\nconsumer complaints and information from competitors, government agencies, and academic\\nstudies.\\n\\n10\\nPublic disclosure will be made through periodic reports published by the eBBB\\nand on web sites of some participating trade associations.\\n\\nThe April 19 Letter specifies that instances of non-compliance \"will\" be referred\\nto \"the appropriate regulatory authorities,\" but does not specify the authorities in question. We\\nnote that non-compliance with the Principles will not necessarily equate to a violation of a law or\\nrule enforced by a regulatory authority or result in any regulatory agency action.\\nII\\n\\n4\\n\\n\\x0ccompany\\'s business reputation - and perhaps its business - to the extent that other companies\\nand consumers believe that non-compliance with the Principles reflects a failing of note.\\nNeither public disclosure of non-compliance nor expulsion from a trade association would\\notherwise impair that company\\'s ability to compete effectively. In important part, the benefits of\\ntrade association membership - such as access to training and networking opportunities - would\\nremain available, though perhaps at somewhat greater non-member prices.\\nCBBB representatives have indicated in conversation with FTC staff that neither the\\nPrinciples nor the CBBB\\' s proposed accountability program would impair the ability of\\ncompanies to use alternative systems, including for example browser-based systems with \"do not\\ntrack\" features,12 to provide consumer protections with respect to OBA, provided that the\\ncompanies also satisfY the notice and choice provisions of the Principles. For example,\\naccording to the CBBB, some companies have begun to provide consumers with more detailed\\n\"preference\" choices than are required under the Principles.\\nAnalysis of the Proposed OBA Accountability Pro~ram\\nThe proposed CBBB accountability program appears similar to industry self-regulation\\nto establish and seek industry-member compliance with an ethical code. The antitrust laws do\\nnot prohibit professional or trade associations from adopting reasonable ethical codes to protect\\nconsumers. As the Commission has stated, \"[s]uch self-regulatory activity serves legitimate\\npurposes, and in most cases can be expected to benefit, rather than to injure, competition and\\nconsumer welfare.,,13 In some instances, however, particular ethical restrictions or compliance\\nmechanisms can unreasonably restrain competition and harm consumers, thereby violating the\\nantitrust laws. Accordingly, we consider the purpose and effects of the proposed accountability\\nprogram.\\nThe CBBB has explained that the purpose of the proposed accountability program is to\\nenhance consumer understanding of OBA and to provide consumers with meaningful notice and\\ncontrolofOBA. We rely on that representation, which finds support in the structure of the\\nprogram itself, and tum to consideration of the program\\'s likely competitive effects.\\nAs a general matter, industry self-regulation to provide consumers with more useful\\ninformation and increased choice promotes consumer welfare with little or no risk of\\ndiminishing competition among complying businesses. But industry self-regulatory programs\\ncan be designed or misused by competitors to limit competition among them, resulting in\\n\\n12\\nSome browsers currently have \"do not track\" settings, by which the browser can\\nalert web sites visited that the consumer does not want his or her browsing monitored by\\ncompanies engaged in OBA.\\n13\\nAm. Academy of Ophthalmology, 101 F.T.C 1018 (1983) (advisory opinion); see\\nalso Am. Med. Ass\\'n, 117 F.T.C. 1091 (1994) (advisory opinion); Am. Med. Ass\\'n, 94 F.T.C.\\n701,1029 (1979), affd as modified, 638 F.2d 443 (2d Cir. 1980), affd by an equally divided\\nCourt, 455 U.S. 676 (1982).\\n\\n5\\n\\n\\x0cincreased prices, reduced consumer choice, lesser innovation, and other consumer harms. 14 In\\naddition, industry self-regulatory programs can operate as agreements to exclude non-compliant\\nproducts or companies from the market. 15 Thus, an agreement among competitors to impose on\\nnon-complying companies sanctions that limit their ability to compete effectively would be of\\nconcern to antitrust enforcement authorities. 16 In the context of OBA, for example, an agreement\\namong competitors to deny advertising space to companies that do not comply with the\\nPrinciples would be troubling.\\nBecause industry self-regulation to increase transparency and consumer control has the\\npotential to enhance consumer welfare, staff would analyze these and other potential concerns\\nusing the \"rule ofreason.,,17 Under the rule of reason, FTC staff weighs the potential for\\ncompetitive harm arising from an agreement among competitors against any procompetitive\\nbenefits arising from that agreement. If FTC staff concludes that the procompetitive benefits\\nmore than offset the potential for competitive harm, staff will not recommend an enforcement\\naction.\\nGiven the pertinent facts relating to the CBBB\\' s proposed accountability program as we\\nunderstand them, FTC staff concludes that the program has little potential for competitive harm.\\nWe base this conclusion on five points.\\nFirst, the accountability program is intended to enhance consumers\\' understanding and\\ncontrol of OBA. All other things being equal, the enhancement of consumer understanding and\\ncontrol has the potential to increase consumer welfare.\\nSecond, information provided by the CBBB and Trade Association Representatives\\n\\n14\\nE.g., Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 501 (1988)\\n(manufacturers of steel electrical conduit that attempted to influence association\\'s promulgation\\nof electrical systems product standards to exclude plastic conduit by agreeing to \"pack\"\\nstandard-setting meeting and vote as a bloc held not immune from federal antitrust liability);\\nAccrediting Comm \\'n on Career Schs. and Calls. a\/Tech., 119 F.T.C. 977 (1995) (advisory\\nopinion) (Commission declined to approve proposed accreditation standard that would define\\nacceptable tuition levels, reasoning that adoption of standard would in effect be an agreement\\namong members of accrediting body to charge no more than standard would permit).\\n\\n15\\n\\nId.\\n\\nSee, e.g., Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U.S. 656\\n(1961); Am. Soc\\'y a\/Sanitary Eng\\'rs, 106 F.T.C. 324 (1985) (consent order).\\n16\\n\\n17\\nSee the analytical framework set out in the Federal Trade Commission!\\nDepartment of Justice Guidelines for Collaborations Among Competitors, available at\\nhttp:\/\/www.fic.gov\/os\/2000104\/ficdojguidelines.pdf. See also the Commission\\'s recent\\napplication of the rule of reason in In the Matter 0\/ Realcomp II Ltd., Docket No. 9320 (Oct. 30,\\n2009), available at http:\/\/www.fic.gov\/os\/adjpro\/d9320\/091102realcompopinion.pdf.\\n\\n6\\n\\n\\x0cindicates that the accountability program will impose only relatively minor burdens on\\ncompanies participating in OBA. These consist principally of use of the Advertising Option\\nicon\/link to signal compliance with the Principles and provide consumers with a notice about\\nOBA that will, in turn, link to and explain a consumer choice mechanism. Compliance does not\\nimpose significant technical burdens or costs that would advantage some companies over others.\\nA license to use the Advertising Option icon\/link and the DAA\\'s choice mechanism is available\\nat a modest cost - one that it appears will not limit consumer choice of goods and services or\\nexclude companies or prevent them from competing effectively.\\nThird, the sanctions for non-compliance with the Principles contemplated under and in\\nconjunction with the accountability program do not appear unreasonable. Those sanctions\\ninclude public disclosure of non-compliance, referral of non-compliance to government\\nregulatory authorities, and suspension of non-compliant companies from certain trade\\nassociations. Based on the information available to us at this time, it does not appear likely that\\nimposition of these sanctions would limit the ability of companies to compete effectively.\\nCompanies may compete based on reputation, including reputation for ethical dealing.\\nWe cannot assess the extent to which some companies or consumers may decide to limit or\\navoid business dealings with companies that choose not to comply with the Principles. But if\\nsome companies and consumers were to make unilateral decisions to limit or avoid business\\ndealings with companies that do not comply with the Principles, the resulting effects would not\\nflow from anticompetitive conduct, but from competition itself - competition based on\\nreputation for protecting consumer privacy. 18 Such unilateral conduct is entirely consistent with\\nthe antitrust laws. Further, referral of matters to governmental authorities may, in some\\ninstances, aid those authorities in carrying out their responsibilities, and may, as well, be a lawful\\nexercise of the right to petition the government for redress. 19\\nThe last sanction contemplated by the CBBB for non-compliance with the Principles,\\nexpulsion from certain trade associations, might be characterized as a group boycott of some\\nkind. However, expulsion from a trade association does not always result in predominantly\\nanticompetitive effects.20 Here, loss of trade association membership would result in the\\n\\nThat would contrast markedly with any agreement among companies to refuse to\\ndeal with non-compliant companies, which would raise substantial antitrust concerns. See, e.g.,\\nFashion Originators\\' Guildv. FTC, 312 U.S. 668 (1941).\\n18\\n\\nSee, e.g., United Mine Workers v. Pennington, 381 U.S. 657 (1965) (exempting\\nfrom antitrust challenge concerted effort to influence administrative processes); Cal. Motor\\nTransport Co. v. Trucking Unlimited, 404 U.S. 508 (1972) (exempting from antitrust challenge\\nconcerted effort to influence adjudicatory processes).\\n19\\n\\n20\\nSee, e.g., NW Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co.,\\n472 U.S. 284, 286 (1985) (expUlsion of retailer from purchasing cooperative by vote of\\nmembership held not unlawful absent a showing that the cooperative had market power or\\nunique access to an element of business necessary for effective competition).\\n\\n7\\n\\n\\x0climitation or loss of certain trade association benefits such as access to certain training and\\nnetworking opportunities at association member prices. Information provided to us by the\\nCBBB and the Trade Association Representatives indicates that the loss of these benefits is not\\nlikely to impair companies\\' ability to compete effectively.\\nAccordingly, we conclude based on the information provided to us by the CBBB and the\\nTrade Association Representatives that the contemplated sanctions for non-compliance with the\\nPrinciples are unlikely to adversely affect competition.\\nThe fourth basis for our conclusion that the accountability program has little potential for\\ncompetitive harm is this: the self-regulatory system envisioned by the Principles and the\\naccountability program is broadly applicable across product categories, advertisers, and web site\\noperators. Accordingly, its impacts are not focused on any specific market for goods or services.\\nAs a result, the potential for adverse competitive impact in any specific market for goods or\\nservices is further attenuated.\\nFinally, adoption of the CBBB\\'s proposed accountability program to foster compliance\\nwith the Principles does not preclude adoption of, and poses little risk of \"crowding out,\" other\\nsystems for protecting consumers with respect to OBA. According to the CBBB and Trade\\nAssociation Representatives, neither the Principles nor the accountability program preclude\\ncompanies\\' use of other systems, including browser-based \"do not track\" systems, for providing\\nconsumers with transparency and control. Should it later appear, however, that collective\\nadoption and enforcement of the Principles operates as an impediment to adoption of\\ncomplementary or superior consumer protections, we might then reconsider this opinion.\\nConclusion\\nFor the reasons stated above, FTC staff believes that the CBBB\\'s proposed OBA\\naccountability program is unlikely unreasonably to restrain trade. Accordingly, we have no\\npresent intention to recommend a challenge to the program.\\nThis letter sets out the views of the staff of the Bureau of Competition, as authorized by\\nRule 1. 1(b) of the Commission\\'s Rules of Practice, 16 C.F.R. \\xc2\\xa7 1.1(b). Under Commission Rule\\n1.3(c), 16 C.F.R. \\xc2\\xa7 1.3(c), the Commission is not bound by this staff advisory opinion and\\nreserves the right to rescind it at a later time. In addition, FTC staff retains the right to\\nreconsider this opinion, and, with notice to the requesting party, to rescind or revoke it if\\nimplementation of the proposed accountability program appears to result in significant\\nanticompetitive effects, if the program is used for improper purposes, if pertinent facts (or our\\nunderstanding thereof) change significantly, or if it would be in the public interest to do so.\\n\\n\/\/p!~yours\\n\\n!~~ael\\n\\nm\\n\\nAssistant Director for Policy & Coordination\\n\\n8\\n\\n\\x0c'","created_timestamp":"April 19, 2011","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/council-better-business-bureaus-inc.\/100815cbbbletter.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nBureau of Consumer Protection\\nDivision of Marketing Practices\\n\\nDecember 21, 2010\\nAaron M. Lowe\\nVice President, Government Affairs\\nAutomotive Aftermarket Industry Association\\n7101 Wisconsin Ave., Suite 1300\\nBethesda, MD 20814\\nPatricia Wirth\\nPresident\\nAutomotive Oil Change Association\\n1701 N Greenville Ave., Suite 404\\nRichardson, TX 75081\\nPaul Fiore\\nExecutive Vice President\\nTire Industry Association\\nService Station Dealers of America\\n1532 Pinter Ridge Place Suite G\\nBowie, Maryland 20716\\nDear Mr. Lowe, Ms. Wirth, and Mr. Fiore:\\nI am responding to concerns your organizations have raised regarding position statements\\nissued by American Honda addressing warranties on parts that are not purchased from an\\n\\xe2\\x80\\x9cauthorized\\xe2\\x80\\x9d Honda or Acura dealer and subsequent repair costs associated with failures due to\\nthe use of such parts.1 As we mentioned, we take very seriously the concerns you raised and\\nappreciate you bringing these issues to our attention. We are addressing your concerns as an\\ninformal request for a staff advisory opinion. The opinions and conclusions expressed in the\\nfollowing discussion are those of Commission staff only and are not attributable to, nor binding\\non, the Commission itself or any individual Commissioner.\\n\\n1\\n\\nSpecifically, I am responding to the August 25 letter on behalf of the Automotive\\nAftermarket Industry Association (\\xe2\\x80\\x9cAAIA\\xe2\\x80\\x9d), the letters of September 8 and October 26 on behalf\\nof the Automotive Oil Change Association (\\xe2\\x80\\x9cAOCA\\xe2\\x80\\x9d), our meeting on October 26, and your\\nmost recent letter on December 9 on behalf of AAIA, AOCA, and the Tire Industry\\nAssociation\/Service Station Dealers of America, collectively. Copies of American Honda\\xe2\\x80\\x99s\\nposition statements provided as part of these letters are attached hereto.\\nPage 1 of 4\\n\\n\\x0cThe Honda Position Statements and Alleged Tying Violations\\nYour interpretation of American Honda\\xe2\\x80\\x99s position statements is that these statements\\nviolate the Magnuson-Moss Warranty Act\\xe2\\x80\\x99s (\\xe2\\x80\\x9cMagnuson-Moss\\xe2\\x80\\x9d or \\xe2\\x80\\x9cAct\\xe2\\x80\\x9d) prohibition on tie-in\\nsales. As you know, Section 102(c) of the Act prohibits warrantors from conditioning warranty\\ncoverage on the consumer\\xe2\\x80\\x99s using, in connection with the warranted product, an article or\\nservice identified by brand, trade, or corporate name, unless the warrantor provides that article or\\nservice without charge. In other words, warrantors may not claim that a warranty is void simply\\nbecause a consumer has used an unauthorized or aftermarket part. In the same vein, no\\nwarrantor may condition continued warranty coverage on a consumer using only a named or\\nauthorized service station or dealership for their automobile maintenance. Simply stated, \\xe2\\x80\\x9c[a]\\nwarrantor cannot, as a matter of law, avoid liability under a written warranty where a defect is\\nunrelated to the use by a consumer of \\xe2\\x80\\x98unauthorized\\xe2\\x80\\x99 articles or service.\\xe2\\x80\\x9d2\\nHowever, warrantors are permitted to exclude liability for damage or defects caused by\\nthe use of unauthorized parts. The FTC\\xe2\\x80\\x99s Interpretations under Magnuson-Moss explain:\\nAlthough \\xe2\\x80\\x9c[n]o warrantor may condition the continued validity of a warranty on the use of only\\nauthorized repair service and\/or authorized replacement parts for non-warranty service and\\nmaintenance . . .[t]his does not preclude a warrantor from expressly excluding liability for\\ndefects or damage caused by such \\xe2\\x80\\x9cunauthorized\\xe2\\x80\\x9d articles or service; nor does it preclude the\\nwarrantor from denying liability where the warrantor can demonstrate that the defect or damage\\nwas so caused.\\xe2\\x80\\x9d3\\nWhile we appreciate your view to the contrary, we interpret the American Honda position\\nstatements to state that American Honda will not deny warranty coverage for the mere use of an\\nunauthorized part, but rather for damage or defects caused by those parts. Indeed, in the position\\nstatements, American Honda states that it \\xe2\\x80\\x9cwill not be responsible for any subsequent repair\\ncosts associated with vehicle or part failures caused by the use of parts other than [Honda\/Acura]\\nGenuine parts purchased from an authorized US [Honda\/Acura] dealer.\\xe2\\x80\\x9d4 The terms of the\\nunderlying warranty contain similar provisions.5 In addition, we note that Honda\\xe2\\x80\\x99s warranty\\nterms specifically provide that \\xe2\\x80\\x9cservice at the dealer is not mandatory for continued warranty\\ncoverage.\\xe2\\x80\\x9d6\\nTherefore, based solely on Commission staff\\xe2\\x80\\x99s review of the position statements and the\\nunderlying warranty terms, American Honda does not appear to be in violation of the Act\\xe2\\x80\\x99s tying\\n\\n2\\n\\n16 C.F.R. 700.10(c).\\n\\n3\\n\\nId. (emphasis added).\\n\\n4\\n\\nAmerican Honda Position Statement Issued August 20, 2010 (emphasis added).\\n\\n5\\n\\nHonda 2010 Warranty Booklet (Provided to FTC Staff), at 8 (stating that warranty does\\nnot cover failures caused by installing accessories not authorized by Honda) (emphasis added).\\n6\\n\\nId. at 36.\\nPage 2 of 4\\n\\n\\x0cprohibition. We would welcome any information that American Honda operates inconsistent\\nwith its position statements or warranty terms and represents to consumers that their warranty is\\nvoid simply because of the use of unauthorized parts or services. Moreover, should American\\nHonda, or any other warrantor, attempt to deny warranty coverage by claiming that an\\nunauthorized part caused the damage or defect for which the consumer seeks warranty service,\\nthe burden will be on the warrantor to demonstrate that it was the unauthorized part that caused\\nthat damage or defect.7\\nThe Honda Position Statements and Perceived Misconceptions\\nYou also raised concerns that Honda\\xe2\\x80\\x99s position statements could be perceived as\\nmisleading, and that there is a common misunderstanding by consumers regarding their warranty\\nrights. Specifically, you contend that consumers are often misinformed about whether they can\\nuse aftermarket parts or independent service stations without impacting their warranty coverage.\\nTo address perceived confusion in this area and better inform consumers of their\\nwarranty rights under the law, the FTC has issued new consumer education that specifically\\naddresses this issue. This new consumer alert, entitled \\xe2\\x80\\x9cAuto Warranties, Routine Maintenance,\\nand Repairs: Is Using the Dealer a Must?,\\xe2\\x80\\x9d explains in plain terms that it is \\xe2\\x80\\x9cillegal for\\nmanufacturers or dealers to claim that your warranty is void or to deny coverage under your\\nwarranty simply because someone other than the dealer did the work.\\xe2\\x80\\x9d8 The education piece also\\naddresses the use of aftermarket parts, and sends a similar message: that it is \\xe2\\x80\\x9cillegal for\\ncompanies to void your warranty or deny coverage under the warranty simply because you used\\nan aftermarket part.\\xe2\\x80\\x9d Additionally, the new education piece encourages consumers to file a\\ncomplaint with the FTC should they feel that a dealer denied their warranty claim unfairly. We\\nencourage your organizations to link to this consumer education and to promote it broadly.\\nFinally, we want to inform you that, in 2011, the FTC will engage in a regulatory review\\nof the rules and guides issued under Magnuson-Moss.9 Of the rules to be reviewed is 16 C.F.R.\\nPart 700, the FTC\\xe2\\x80\\x99s Interpretations of certain provisions of Magnuson-Moss, including the tie-in\\nsales prohibition. Periodic review of the agency\\xe2\\x80\\x99s regulations is an important opportunity to\\nassess the effectiveness, costs, and benefits of the rules and guides that the agency issues, and to\\nprovide the public and associations such as yours with an opportunity to comment on them. We\\nhope you will weigh in on the upcoming rule review proceedings, as may be appropriate.\\nThe opinions and conclusions expressed in the foregoing discussion are those of\\nCommission staff only and are not attributable to, nor binding on, the Commission itself\\nor any individual Commissioner. The Commission reserves the right to take such further action\\nas the public interest may require. Further, the staff will not be precluded from recommending\\n7\\n\\nSee 16 C.F.R. 700.10(c) (warrantor is not precluded from denying liability where \\xe2\\x80\\x9cthe\\nwarrantor can demonstrate\\xe2\\x80\\x9d the cause of damage or defect) (emphasis added).\\n8\\n\\nSee http:\/\/www.ftc.gov\/bcp\/edu\/pubs\/consumer\/alerts\/alt192.shtm.\\n\\n9\\n\\nSee 75 Fed. Reg. 12,715 (Mar. 17, 2010).\\nPage 3 of 4\\n\\n\\x0cto the Commission an appropriate action should other facts subsequently come to our attention.\\nWe hope this discussion is helpful to you. Please continue to contact the Commission\\nwhenever we may be of service.\\n\\nVery truly yours,\\n\\nLois C. Greisman\\nAssociate Director\\n\\nPage 4 of 4\\n\\n\\x0c'","created_timestamp":"December 21, 2010","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-09-3\/opinion0903_0.pdf"}
{"text":"b'UN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nBureau of Competition\\nHealth Care Division\\n\\nAugust 16, 2010\\nRobert J. Walerius\\n4400 Two Union Square\\n601 Union Street\\nSeattle, Washington 98101\\nRe:\\n\\nYakima Valley Memorial Hospital Advisory Opinion\\n\\nDear Mr. Walerius:\\nThis letter responds to your request on behalf of Yakima Valley Memorial Hospital\\n(\\xe2\\x80\\x9cMemorial\\xe2\\x80\\x9d) for an advisory opinion concerning whether its proposal to sell discounted\\npharmaceutical products to employees of two affiliates, Memorial Physicians, PLLC (\\xe2\\x80\\x9cMP\\xe2\\x80\\x9d) and\\nValley Imaging (\\xe2\\x80\\x9cValley\\xe2\\x80\\x9d) would fall within the scope of the Non-Profit Institutions Act\\n(NPIA). The NPIA exempts from the Robinson-Patman Act \\xe2\\x80\\x9cpurchases of their supplies for\\ntheir own use by schools, colleges, universities, public libraries, churches, hospitals, and\\ncharitable institutions not operated for profit.\\xe2\\x80\\x9d1 For the reasons explained below, and with the\\nnoted caveats, we have concluded that Memorial\\xe2\\x80\\x99s proposal would fall within the scope of the\\nNPIA.\\nFactual Background\\nAs we understand the facts based on information you provided, Memorial is a Washington nonprofit corporation.2 It began as an acute care hospital, and, over time, to better meet the needs of\\nthe population it serves, expanded the range of services it offers to include clinical care services.3\\nIt currently operates an on-site pharmacy and offers NPIA-discounted pharmaceuticals to its\\nemployees through the pharmacy. It now wants to extend the availability of the NPIA-\\n\\n1\\n\\n15 U.S.C. \\xc2\\xa7 13c.\\n\\n2\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 1\\n(Oct. 8, 2009).\\n3\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\\n(June 4, 2010) (citing a desire to protect against potential physician shortages in its service area\\nand a general trend among hospitals to function more as multipurpose health systems).\\n\\n\\x0cYakima Valley Memorial Hospital Advisory Opinion\\nAugust 16, 2010\\nPage 2\\ndiscounted pharmaceuticals to employees of two other affiliated entities: MP and Valley.\\nSpecifically, Memorial proposes to use NPIA-discounted pharmaceuticals in connection with\\nprescriptions filled for MP and Valley employees at Memorial\\xe2\\x80\\x99s on-site pharmacy.4\\nMP is a member-managed Washington professional limited liability company.5 It operates a\\ngroup of Memorial-owned outpatient medical clinics, providing services such as human\\nresources, billing, and information systems for those clinics.6 Memorial is MP\\xe2\\x80\\x99s sole member.\\nAs MP\\xe2\\x80\\x99s sole member, Memorial owns 100 percent of MP and \\xe2\\x80\\x9chas total control over all of\\nMP\\xe2\\x80\\x99s operations, officers, and employees.\\xe2\\x80\\x9d7 For instance, Memorial manages and controls MP\\xe2\\x80\\x99s\\nbusiness affairs, appoints and removes MP officers, and makes decisions regarding MP\\xe2\\x80\\x99s\\nfinances.8 Furthermore, according to MP\\xe2\\x80\\x99s Operating Agreement, MP at all times must \\xe2\\x80\\x9c\\xe2\\x80\\x98be\\noperated in a manner consistent with and so as to preserve Memorial\\xe2\\x80\\x99s 501(c)(3) tax exempt\\nstatus under the Internal Revenue Code.\\xe2\\x80\\x99\\xe2\\x80\\x9d9\\nValley is a Washington State corporation that has elected to be treated as a non-profit\\ncorporation under Washington State law.10 In 2008, it received an Internal Revenue Service\\n\\n4\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 1\\n(Oct. 8, 2009).\\n5\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\\n(Jan. 29, 2010).\\n6\\n\\nMemorial is in the process of merging these clinics into MP to reduce Washington\\nState tax liability and to streamline their operations. The mergers will have no effect on the\\nclinics\\xe2\\x80\\x99 ownership or relationship to Memorial. See Letter from Robert J. Walerius, Miller Nash\\nLLP, to Ellen Connelly, FTC, at 5 (Mar. 30, 2010).\\n7\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 4\\n(Mar. 30, 2010). Despite the ownership relationship between MP and Memorial, MP\\xe2\\x80\\x99s\\nemployees are not covered by Memorial\\xe2\\x80\\x99s health plan, because, after acquiring MP, Memorial\\ndecided to allow the MP employees to retain their plans for their convenience. See id, at 4-5.\\n8\\n\\nSee id, at 3 - 4.\\n\\n9\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\\n(Jan. 29, 2010).\\n10\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 1\\n(Oct. 8, 2009).\\n\\n\\x0cYakima Valley Memorial Hospital Advisory Opinion\\nAugust 16, 2010\\nPage 3\\ndetermination letter confirming its status as a 501(c)(3) tax-exempt entity.11 It is a free-standing\\noutpatient diagnostic imaging center that provides imaging services for Memorial\\xe2\\x80\\x99s patients, and\\nis geographically separate from Memorial. Valley does not operate under Memorial\\xe2\\x80\\x99s hospital\\nlicense or provider number, but Memorial is Valley\\xe2\\x80\\x99s sole member.12 As Valley\\xe2\\x80\\x99s sole member,\\nMemorial has \\xe2\\x80\\x9cthe exclusive right to control Valley by electing directors, authorizing the sale,\\nlease, exchange of all or substantially all the property and assets of Valley, amending Valley\\xe2\\x80\\x99s\\nArticles of Incorporation and Bylaws, and voting on a merger or dissolution of the\\ncorporation.\\xe2\\x80\\x9d13 You have represented that Valley is operated \\xe2\\x80\\x9cexclusively for the benefit of, to\\nperform the functions of, and to carry out the purposes of Memorial.\\xe2\\x80\\x9d14\\nAnalysis\\n1.\\n\\nMemorial\\xe2\\x80\\x99s, MP\\xe2\\x80\\x99s and Valley\\xe2\\x80\\x99s Eligibility for the NPIA Exemption to the\\nRobinson-Patman Act\\n\\nTo fall within the NPIA exemption to the Robinson-Patman Act, an organization must be an\\n\\xe2\\x80\\x9celigible entity\\xe2\\x80\\x9d and must use the exemption to purchase supplies for its \\xe2\\x80\\x9cown use.\\xe2\\x80\\x9d15 Because\\nthe NPIA is limited in its application to certain types of \\xe2\\x80\\x9celigible entities,\\xe2\\x80\\x9d we begin our analysis\\nwith a discussion of Memorial\\xe2\\x80\\x99s, Valley\\xe2\\x80\\x99s, and MP\\xe2\\x80\\x99s eligibility for the exemption. Among other\\n\\xe2\\x80\\x9celigible entities,\\xe2\\x80\\x9d the NPIA exempts from the Robinson-Patman Act \\xe2\\x80\\x9chospitals, and charitable\\n\\n11\\n\\nSee id.\\n\\n12\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 3\\n(Jan. 29, 2010). See also Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly,\\nFTC, at 2 (Mar. 30, 2010). In your June 4, 2010 letter you clarified that apparent discrepancies\\nbetween your representations relating to Memorial\\xe2\\x80\\x99s membership in Valley and Valley\\xe2\\x80\\x99s Articles\\nof Incorporation were the result of Valley\\xe2\\x80\\x99s change from a corporation to a non-profit. See\\nLetter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 3 (June 4, 2010).\\n13\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 4\\n(June 4, 2010). Only some of Valley\\xe2\\x80\\x99s employees are covered by Memorial\\xe2\\x80\\x99s health plan. As\\nwith MP, this is the result of Valley\\xe2\\x80\\x99s acquisition history. Prior to 2004, Valley was owned by\\nMemorial and another hospital. In 2004, Memorial obtained complete ownership of Valley and\\nfor their convenience, allowed Valley employees to keep their existing plan. See Letter from\\nRobert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 5 (Mar. 30, 2010).\\n14\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\\n(Oct. 8, 2009).\\n15\\n\\n425 U.S. 1 (1976).\\n\\n\\x0cYakima Valley Memorial Hospital Advisory Opinion\\nAugust 16, 2010\\nPage 4\\ninstitutions not operated for profit.\\xe2\\x80\\x9d16 As you state in your letter, Memorial is a non-profit\\nhospital.17 Thus, by the language of the statute, Memorial appears to be an entity eligible for the\\nexemption, and indeed already uses the exemption with regard to its hospital employees.18\\nSimilarly, Valley has elected to be treated as a non-profit corporation as permitted under\\nWashington State law. As we understand from the materials you have provided, the Washington\\nState Nonprofit Corporations Act (RCW 24.03) allows Washington corporations to elect nonprofit status without having to go through the expense and logistical complications of dissolving\\nand reincorporating.19 We further understand from the information that you have provided that a\\ncorporation making a non-profit election under Washington State law may only do so if it would\\notherwise qualify for non-profit treatment. That is, Valley was able to make the election for\\nnon-profit treatment because it would have met all of the requirements for incorporation as a\\nnon-profit in the first instance.20 Furthermore, you have provided an Internal Revenue Service\\ndetermination letter confirming Valley\\xe2\\x80\\x99s classification as a public charity.21 Thus, Valley, as a\\nnon-profit, charitable organization appears also to be an eligible entity under the NPIA and could\\nitself qualify to use NPIA-discounted pharmaceuticals in accordance with the \\xe2\\x80\\x9cown use\\xe2\\x80\\x9d\\nrequirement discussed below.\\nMP, on the other hand, is not a non-profit corporation. It is a professional limited liability\\ncompany (\\xe2\\x80\\x9cPLLC\\xe2\\x80\\x9d).22 You explain that MP must operate \\xe2\\x80\\x9cin a manner consistent with and so as\\n16\\n\\n15 U.S.C. \\xc2\\xa7 13c.\\n\\n17\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 1\\n(Oct. 8, 2009).\\n18\\n\\nSee id.\\n\\n19\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\\n(Mar. 30, 2010).\\n20\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\\n(Jan. 29, 2010). See also RCW 24.04.017 (\\xe2\\x80\\x9cAny corporation organized under any act of the state\\nof Washington for any one or more of the purposes for which a corporation may be organized\\nunder this chapter and for no purpose other than those permitted by this chapter, and to which\\nthis chapter does not otherwise apply, may elect to have this chapter and the provisions thereof\\napply to such corporation\\xe2\\x80\\x9d).\\n21\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at Tab\\nC (Mar. 30, 2010).\\n22\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\\n(continued...)\\n\\n\\x0cYakima Valley Memorial Hospital Advisory Opinion\\nAugust 16, 2010\\nPage 5\\nto preserve Memorial\\xe2\\x80\\x99s 501(c)(3) status,\\xe2\\x80\\x9d23 but, in our view, that requirement alone is not\\nsufficient to allow us to conclude that MP is itself a non-profit eligible for the NPIA exemption.\\nMP\\xe2\\x80\\x99s eligibility must depend on its association with, and relationship to, an eligible entity \\xe2\\x80\\x93 in\\nthis case Memorial.\\n2.\\n\\nMemorial\\xe2\\x80\\x99s Provision of NPIA-Discounted Pharmaceuticals to MP and Valley\\nEmployees and the \\xe2\\x80\\x9cOwn Use\\xe2\\x80\\x9d Requirement\\n\\nAs we explained above, we conclude that both Memorial and Valley (but not MP) appear to be\\neligible entities under the NPIA and thus each could use NPIA-discounted pharmaceuticals for\\nits \\xe2\\x80\\x9cown use.\\xe2\\x80\\x9d As we understand the proposal, however, it is Memorial, through its on-site\\npharmacy, that will provide the NPIA-discounted pharmaceuticals to the Valley and MP\\nemployees.24 Thus, we base the rest of our analysis on whether this use by Memorial (as the\\neligible entity) can properly be considered for Memorial\\xe2\\x80\\x99s \\xe2\\x80\\x9cown use.\\xe2\\x80\\x9d\\nThe principal authority on the meaning and scope of the \\xe2\\x80\\x9cown use\\xe2\\x80\\x9d test is Abbott Laboratories\\nv. Portland Retail Druggists Association (Abbott Labs).25 In that case, retail pharmacies sued\\npharmaceutical manufacturers under the Robinson-Patman Act, challenging the discounted sale\\nof drugs to non-profit hospitals. The hospitals resold those drugs to patients in a number of\\ndifferent situations. The Supreme Court held that the NPIA exemption is a limited one, and does\\nnot give hospitals \\xe2\\x80\\x9ca blank check\\xe2\\x80\\x9d that applies to \\xe2\\x80\\x9cwhatever new venture the hospital finds\\nattractive.\\xe2\\x80\\x9d26 Rather, the Court interpreted the \\xe2\\x80\\x9cown use\\xe2\\x80\\x9d test to shield only purchases that\\n\\xe2\\x80\\x9creasonably may be regarded as use by the hospital in the sense that such use is a part of and\\npromotes the hospital\\xe2\\x80\\x99s intended institutional operation in the care of persons who are its\\n\\n22\\n\\n(...continued)\\n(Jan. 29, 2010).\\n23\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 1\\n(Oct. 8, 2009).\\n24\\n\\nWe note that there may be a variety of ways for Valley, which itself appears to be an\\neligible entity under the NPIA, to obtain the NPIA-discounted pharmaceuticals for its \\xe2\\x80\\x9cown use.\\xe2\\x80\\x9d\\nFor instance, it would appear that as an eligible entity, Valley itself, independent of its affiliation\\nwith Memorial, could purchase and distribute the NPIA-discounted pharmaceuticals to its\\nemployees, or that Memorial could transfer NPIA-discounted pharmaceuticals to Valley for\\nValley\\xe2\\x80\\x99s \\xe2\\x80\\x9cown use.\\xe2\\x80\\x9d With this opinion, however, we only address the current proposal \\xe2\\x80\\x93 to have\\nMemorial extend the use of its NPIA-discounted pharmaceuticals to Valley\\xe2\\x80\\x99s employees.\\n25\\n\\n425 U.S. 1 (1976).\\n\\n26\\n\\nId., at 13.\\n\\n\\x0cYakima Valley Memorial Hospital Advisory Opinion\\nAugust 16, 2010\\nPage 6\\npatients.\\xe2\\x80\\x9d27 The Court went on to determine that pharmaceuticals dispensed to certain categories\\nof individuals, including hospital employees, would qualify for the hospital\\xe2\\x80\\x99s own use. Hospital\\nemployees were considered necessary for the hospital to carry out its intended institutional\\nmission.28\\nAs you explain, Memorial\\xe2\\x80\\x99s mission is to improve the health of those it serves.29 It has operated\\nas an acute care hospital. More recently, to continue to meet the changing needs of the\\ncommunity it serves, and in response to changes in the health care industry, it has expanded the\\nrange of health care services it offers to include clinical care.30 To this end, you explain that it\\nhas acquired or formed entities such as MP and Valley,31 and depends on the services provided\\nby MP and Valley to meet its goal of improving the health of its patients.32\\nAs we understand from your letters, both MP and Valley operate for the express purpose of\\nsupporting Memorial\\xe2\\x80\\x99s aim of fully meeting the health care needs of the people it serves. Both\\nMP and Valley are controlled by Memorial and operated exclusively for Memorial\\xe2\\x80\\x99s benefit.\\nAny profits earned by MP will be used to advance Memorial\\xe2\\x80\\x99s charitable mission.33 Valley\\xe2\\x80\\x99s\\nsole purpose is to offer its imaging technology in support of Memorial.34\\nWe conclude, based on the facts you have provided, that Memorial\\xe2\\x80\\x99s central institutional\\nfunction, within the meaning of Abbott Labs, is to deliver comprehensive health care services to\\n\\n27\\n\\nId., at 14 (emphasis in original).\\n\\n28\\n\\nId., at 16.\\n\\n29\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 3\\n(June 4, 2010).\\n30\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 3\\n(Mar. 30, 2010).\\n31\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\\n(Jun. 4, 2010).\\n32\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 3\\n(Jan. 29, 2010).\\n33\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2- 3\\n(Mar. 30, 2010).\\n34\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\\n(Oct. 8, 2009).\\n\\n\\x0cYakima Valley Memorial Hospital Advisory Opinion\\nAugust 16, 2010\\nPage 7\\nits patients.35 In furtherance of this mission, it acquired and operates MP and Valley. By virtue\\nof its 100 percent ownership interest in MP and its status as sole member of Valley, Memorial\\neffectively has ultimate control and decision-making authority over those entities.36 It is our\\nview that Memorial\\xe2\\x80\\x99s control over both MP and Valley effectively makes those entities part of\\nMemorial to such a degree that one could treat Memorial, MP, and Valley as one unit. This\\nconclusion is consistent with a number of prior staff advisory opinions.37 The employees of MP\\nand Valley provide critical services to Memorial\\xe2\\x80\\x99s patients, and these services are key to\\nMemorial\\xe2\\x80\\x99s ability to fulfill its intended institutional function of improving the health care of\\nthose it serves.38 It thus appears to us to be consistent with both Abbott and prior advisory\\nopinions to find that Memorial\\xe2\\x80\\x99s provision of NPIA-discounted pharmaceuticals to employees of\\nMP and Valley falls within the exemption.39\\n\\n35\\n\\nSee De Modena v. Kaiser Foundation Health Plan, Inc., 743 F.2d 1388, 1392-93 (9th\\nCir. 1984) (discussing the changing nature of the health care industry and accepting a broad\\ninstitutional function of providing \\xe2\\x80\\x9ca complete panoply of health care\\xe2\\x80\\x9d services).\\n36\\n\\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 3- 4\\n(Mar. 30, 2010).\\n37\\n\\nSee e.g. St. John\\xe2\\x80\\x99s Health System (Sept. 2006) (staff opinion) (proper to treat the St.\\nJohn\\xe2\\x80\\x99s organization as a whole) (available at http:\/\/www.ftc.gov\/bc\/advisoryopinions\/060913\\nstjohnsadvisoryopinion.pdf); Valley Baptist Medical Center (Sept. 1996) (staff opinion) (\\xe2\\x80\\x9cValley\\nBaptist\\xe2\\x80\\x99s provision of medical services through its [affiliated] family practice clinic would be\\nconsidered simply an extension of the hospital\\xe2\\x80\\x99s basic services beyond its four walls and into a\\nsetting more accessible to the community and that therefore pharmaceuticals and other goods\\npurchased for distribution as part of treatment provided by the Clinic would be purchased for\\nValley Baptist\\xe2\\x80\\x99s own use\\xe2\\x80\\x9d) (available at http:\/\/www.ftc.gov\/bc\/adops\/valleyba.shtm); William\\nW. Backus Hospital (June 1996) (staff opinion) (treating the Backus organization as a whole)\\n(available at http:\/\/www.ftc.gov\/bc\/adops\/backusfn.shtm); Presentation Health System (Dec.\\n1993) (Commission opinion) (proper to treat hospitals and long-term care facilities that are\\nseparate corporate non-profit entities, but controlled by a single religious order, as a unit)\\n(available at http:\/\/www.ftc.gov\/bc\/adops\/010.shtm).\\n38\\n\\nWe do not believe that, given the circumstances of Memorial\\xe2\\x80\\x99s acquisition of MP and\\nValley, and its desire to allow the employees of those entities to maintain continuity of care, the\\nparticular health plan (Memorial or non-Memorial) to which the employees belong is\\ndeterminative. The important points are that they appear to be properly considered employees of\\nthe Memorial system and that they enable Memorial to carry out its intended institutional\\nfunction.\\n39\\n\\nSee 425 U.S. 1, 16 (1976); Connecticut Hospital Association (Dec. 2001) (staff\\n(continued...)\\n\\n\\x0cYakima Valley Memorial Hospital Advisory Opinion\\nAugust 16, 2010\\nPage 8\\nWe emphasize, however, that the NPIA exemption is dependent on Memorial ensuring that no\\nineligible entity benefits from the exemption. MP itself does not appear to be independently\\neligible for the exemption, and our opinion is based on your assurance that any financial benefit\\nfrom the proposal ultimately will accrue to Memorial by virtue of Memorial\\xe2\\x80\\x99s relationship with\\nMP.\\nConclusion\\nAs discussed above, and with the noted caveats, we conclude that Memorial\\xe2\\x80\\x99s proposal to extend\\nthe sales of discounted pharmaceuticals to employees of two affiliated entities \\xe2\\x80\\x93 MP and Valley\\n\\xe2\\x80\\x93 appears to fall within the NPIA exemption to the Robinson-Patman Act.\\nThis letter sets out the views of the staff of the Bureau of Competition, as authorized by the\\nCommission\\xe2\\x80\\x99s Rules of Practice. Under Commission Rule \\xc2\\xa7 1.3(c), 16 C.F.R. \\xc2\\xa7 1.3(c), the\\nCommission is not bound by this staff opinion and reserves the right to rescind it at a later time.\\nIn addition, this office retains the right to reconsider the questions involved and, with notice to\\nthe requesting party, to rescind or revoke the opinion if implementation of the proposed program\\nresults in substantial anticompetitive effects, if the program is used for improper purposes, if\\nfacts change significantly, or if it otherwise would be in the public interest to do so.\\nSincerely,\\n\\nMarkus H. Meier\\nAssistant Director\\n\\n39\\n\\n(...continued)\\nopinion) (available at http:\/\/www.ftc.gov\/opa\/2001\/12\/chaadvisopinionletter.shtm); BJC Health\\nSystem (Nov. 1999) (staff opinion) (treating BJCHS and its affiliates as part of one unit and\\nfinding that \\xe2\\x80\\x9cBJCHS\\xe2\\x80\\x99 employees, as a group, like the hospital employees in Abbott Labs, are\\ndirectly related to the accomplishment of their employer\\xe2\\x80\\x99s core functions\\xe2\\x80\\x9d) (available at\\nhttp:\/\/www.ftc.gov\/bc\/adops\/bjclet.shtm).\\n\\n\\x0c'","created_timestamp":"August 16, 2010","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/yakima-valley-memorial-hospital\/100819yakimavalleyletter.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Marketing Practices\\nCraig Tregillus\\nctregillus@ftc.gov\\n\\nDirect Dial: (202) 326-2970\\nFacsimile: (202) 326-3395\\n\\nMay 14, 2010\\n\\nMr. Carlos E. Rodriguez, President\\nCelestium Crematory\\nP.O. Box 9086\\nPlaza Carolina Station\\nCarolina, Puerto Rico 00988-9086\\nDear Mr. Rodriguez:\\nYou have asked for confirmation of your understanding that the Commission\\xe2\\x80\\x99s Funeral\\nRule applies to funeral providers in Puerto Rico. Your request was prompted by a recent hearing\\nexamining funeral home practices in the Commonwealth House of Representatives where some\\nlegislators expressed their belief that the Rule is inapplicable in Puerto Rico, giving funeral\\nproviders there the impression they need not comply. You are correct, of course, that the Rule\\ndoes apply to funeral providers in Puerto Rico, as a brief review of the history of the relationship\\nbetween the United States and Puerto Rico shows.\\nA Presidential task force has recounted that history,1 but it is useful to summarize it here.\\nPuerto Rico was ceded to the United States by Spain in 1898 pursuant to the Treaty of Paris,\\nwhich ended the Spanish-American war.2 After two years under a military governor, Congress\\nin 1900 established a civilian government for Puerto Rico.3 In 1917, Congress established the\\nisland as an \\xe2\\x80\\x9corganized but unincorporated\\xe2\\x80\\x9d territory and granted U.S. citizenship to Puerto\\nRicans.4 In 1952, pursuant to the Puerto Rican Federal Relations Act,5 a referendum vote by the\\npeople of Puerto Rico approved a new constitution, also approved by Congress later that year,\\n\\n1\\n\\nREPORT BY THE PRESIDENT\\xe2\\x80\\x99S TASK FORCE ON PUERTO RICO\\xe2\\x80\\x99S STATUS (Dec. 2007)(\\xe2\\x80\\x9cTask\\nForce Report\\xe2\\x80\\x9d), available at http:\/\/www.justice.gov\/opa\/documents\/2007-report-by-thepresident-task-force-on-puerto-rico-status.pdf.\\n2\\n\\nId. at 3.\\n\\n3\\n\\nId.\\n\\n4\\n\\nId.\\n\\n5\\n\\nPub. L. 600.\\n\\n\\x0cMr. Carlos E. Rodriguez\\nPage 2 of 3\\nwhich established the present-day Commonwealth of Puerto Rico.6 In four subsequent\\nplebiscites, Puerto Ricans have declined to alter that status in favor of becoming a state or an\\nindependent sovereign nation.7\\nThe U.S. Constitution provides that \\xe2\\x80\\x9c[t]he Congress shall have power to dispose of and\\nmake all needful rules and regulations respecting the territory or other property belonging to the\\nUnited States.\\xe2\\x80\\x9d8 The Department of Justice accordingly affirmed Puerto Rico\\xe2\\x80\\x99s territorial status\\nin 1959, several years after the creation of the Commonwealth,9 as has the Supreme Court.10\\nThus, Puerto Rico is a \\xe2\\x80\\x9cterritory\\xe2\\x80\\x9d of the United States.\\nSection 5 of the Federal Trade Commission Act (\\xe2\\x80\\x9cFTC Act\\xe2\\x80\\x9d) prohibits \\xe2\\x80\\x9cunfair or\\ndeceptive acts or practices in or affecting commerce.\\xe2\\x80\\x9d11 Section 4 of the FTC Act defines\\n\\xe2\\x80\\x9ccommerce\\xe2\\x80\\x9d as follows:\\nCommerce means commerce among the several states or with foreign\\nnations, or in any territory of the United States or in the District of Columbia, or\\nbetween any such territory and another, or between any such territory and any\\nstate or foreign nation, or between the District of Columbia and any state or\\nterritory or foreign nation.12\\nThe Commission\\xe2\\x80\\x99s Funeral Rule was issued in 1982 pursuant to Section 18(a)(1) of the\\nFTC Act,13 which mandates, in pertinent part, that any such rule \\xe2\\x80\\x9cdefine with specificity acts or\\npractices which are unfair or deceptive acts or practices in or affecting commerce (within the\\nmeaning of such section 5(a)(1)).\\xe2\\x80\\x9d14 Consequently, the Funeral Rule has the same jurisdictional\\nreach over unfair or deceptive acts or practices as Section 5 of the FTC Act, which reaches\\ncommerce \\xe2\\x80\\x9cin any territory of the United States.\\xe2\\x80\\x9d Because Puerto Rico remains a U.S.\\n\\xe2\\x80\\x9cterritory,\\xe2\\x80\\x9d the Funeral Rule applies to funeral providers in Puerto Rico.\\n\\n6\\n\\nTask Force Report at 3.\\n\\n7\\n\\nId. at 3-4.\\n\\n8\\n\\nArt. IV, \\xc2\\xa7 3, cl. 2.\\n\\n9\\n\\nTask Force Report at 5; see note 4 supra, and accompanying text.\\n\\n10\\n\\nSee, e.g., Harris v. Rosario, 446 U.S. 651 (1980).\\n\\n11\\n\\n15 U.S.C. \\xc2\\xa7 45(a)(1).\\n\\n12\\n\\n15 U.S.C. \\xc2\\xa7 44 (emphasis added).\\n\\n13\\n\\n47 Fed. Reg. 42260, 42263 (Sept. 24, 1982)\\n\\n14\\n\\n15 U.S.C. \\xc2\\xa7 57a(a)(1)(B) (emphasis added).\\n\\n\\x0cMr. Carlos E. Rodriguez\\nPage 3 of 3\\nI am enclosing copies in English and Spanish of the Compliance Guide to the Funeral\\nRule. The Guide is also available on the FTC\\xe2\\x80\\x99s website in English at http:\/\/www.ftc.gov\/bcp\/\\nedu\/pubs\/business\/adv\/bus05.pdf and in Spanish at http:\/\/www.ftc.gov\/bcp\/edu\/pubs\/business\/\\nadv\/sbus05.pdf.\\nPlease be advised that the views expressed in this letter are those of the FTC staff. They\\nhave not been reviewed, approved, or adopted by the Commission, and they are not binding upon\\nthe Commission. However, they do reflect the opinions of those staff members charged with\\nenforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted on the FTC\\nwebsite at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/staffopinions.shtm.\\nSincerely,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\n\\x0c'","created_timestamp":"May 14, 2010","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-10-2\/opinion10-2.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Marketing Practices\\n~\\nCraig Tregillus\\nctregillus@ftc.gov\\n\\nTel\\xc3\\xa9fono Directo: (202) 326-2970\\nFacs\\xc3\\xadmile: (202) 326-3395\\n\\n14 de mayo de 2010\\n\\nSr. Carlos E. Rodr\\xc3\\xadguez\\nPresidente de Celestium Crematory\\nP.O. Box 9086\\nPlaza Carolina Station\\nCarolina, Puerto Rico 00988-9086\\nEstimado Sr. Rodr\\xc3\\xadguez:\\nUsted a solicitado confirmaci\\xc3\\xb3n respecto de su opini\\xc3\\xb3n que sostiene que la Regla de\\nFunerales de la Comisi\\xc3\\xb3n Federal de Comercio (FTC) se aplica a los proveedores de bienes y\\nservicios f\\xc3\\xbanebres de Puerto Rico. Su consulta fue motivada por una audiencia que se llev\\xc3\\xb3 a\\ncabo recientemente en la C\\xc3\\xa1mara de Representantes del Estado Libre Asociado de Puerto Rico\\ncon el fin de examinar las pr\\xc3\\xa1cticas de las funerarias. Durante dicha audiencia, algunos\\nlegisladores expresaron su opini\\xc3\\xb3n manifestando que la Regla de Funerales es inaplicable en\\nPuerto Rico, lo cual les dio la impresi\\xc3\\xb3n a los proveedores locales de este sector que no es\\nnecesario que cumplan con sus disposiciones. Por supuesto que usted tiene raz\\xc3\\xb3n, y tal como se\\ndesprende de una breve revisi\\xc3\\xb3n de la historia de la relaci\\xc3\\xb3n entre Estados Unidos y Puerto Rico,\\nefectivamente, la Regla se aplica a los proveedores de bienes y servicios f\\xc3\\xbanebres establecidos\\nen Puerto Rico.\\nUn grupo de trabajo encomendado por el Presidente ha recopilado esa historia,1 pero\\ncreemos que es oportuno resumirla en la presente carta. En 1898, conforme a los t\\xc3\\xa9rminos del\\nTratado de Par\\xc3\\xads que dio por finalizada la guerra entre Espa\\xc3\\xb1a y Estados Unidos2, Puerto Rico\\nfue cedido a Estados Unidos por Espa\\xc3\\xb1a. En 1900, despu\\xc3\\xa9s de dos a\\xc3\\xb1os de administraci\\xc3\\xb3n de un\\ngobernador militar, el Congreso estableci\\xc3\\xb3 un gobierno civil para Puerto Rico.3 En 1917, el\\nCongreso estableci\\xc3\\xb3 el estatus de la isla defini\\xc3\\xa9ndolo como un territorio \\xe2\\x80\\x9corganizado pero\\nincorporado\\xe2\\x80\\x9d y les otorg\\xc3\\xb3 la ciudadan\\xc3\\xada estadounidense a los puertorrique\\xc3\\xb1os.4 En 1952, de\\nconformidad a la Ley de Relaciones Federales de Puerto Rico,5 se llev\\xc3\\xb3 a cabo un refer\\xc3\\xa9ndum y\\nel pueblo de Puerto Rico vot\\xc3\\xb3 la aprobaci\\xc3\\xb3n de una nueva constituci\\xc3\\xb3n, que fue aprobada ese\\nmismo a\\xc3\\xb1o por el Congreso y que constituy\\xc3\\xb3 el Estado Libre Asociado de Puerto Rico actual.6\\n1\\n\\nINFORME DEL GRUPO DE TRABAJO DEL PRESIDENTE SOBRE EL ESTATUS DE PUERTO RICO\\n(Diciembre de 2007)(\\xe2\\x80\\x9cTask Force Report\\xe2\\x80\\x9d), disponible en http:\/\/www.justice.gov\/opa\/documents\/2007-report-bythe-president-task-force-on-puerto-rico-status.pdf.\\n2\\n\\xc3\\x8ddem, 3.\\n3\\n\\xc3\\x8ddem.\\n4\\n\\xc3\\x8ddem.\\n5\\nPub. L. 600.\\n6\\nInforme del Grupo de Trabajo, 3.\\n\\n\\x0cSr. Carlos E. Rodr\\xc3\\xadguez\\n\\nP\\xc3\\xa1gina 2 de 3\\n\\nEn cuatro plebiscitos subsiguientes, los puertorrique\\xc3\\xb1os manifestaron por medio de su voto que\\nno deseaban alterar ese estatus para convertirse en un estado o en una naci\\xc3\\xb3n soberana\\nindependiente.7\\nLa Constituci\\xc3\\xb3n de los Estados Unidos de Am\\xc3\\xa9rica dispone que \\xe2\\x80\\x9c[e]l Congreso tendr\\xc3\\xa1 la\\nfacultad de disponer y efectuar todas las reglas y regulaciones necesarias en lo que respecta al\\nterritorio u otra propiedad perteneciente a Estados Unidos.\\xe2\\x80\\x9d8 En el mismo sentido, en 1959,\\nvarios a\\xc3\\xb1os despu\\xc3\\xa9s de la creaci\\xc3\\xb3n del Estado Libre Asociado,9 el Departamento de Justicia\\nafirm\\xc3\\xb3 el estatus territorial de Puerto Rico, que tambi\\xc3\\xa9n fue ratificado por la Corte Suprema.10\\nPor lo tanto, Puerto Rico es un \\xe2\\x80\\x9cterritorio\\xe2\\x80\\x9d de Estados Unidos.\\nLa Secci\\xc3\\xb3n 5 de la Ley de la Comisi\\xc3\\xb3n Federal de Comercio Federal (\\xe2\\x80\\x9cFTC Act\\xe2\\x80\\x9d) proh\\xc3\\xadbe\\n\\xe2\\x80\\x9clas pr\\xc3\\xa1cticas o actos desleales o enga\\xc3\\xb1osos en el comercio o en aquello que afecte al\\ncomercio.\\xe2\\x80\\x9d11 La Secci\\xc3\\xb3n 4 de la Ley de la FTC define el t\\xc3\\xa9rmino \\xe2\\x80\\x9ccomercio\\xe2\\x80\\x9d de la siguiente\\nmanera:\\nComercio significa el comercio entre varios estados o con pa\\xc3\\xadses extranjeros, o en\\ncualquier territorio de Estados Unidos o en el Distrito de Columbia, o entre cualquiera\\nde estos territorios y otro, o entre cualquiera de estos territorios y cualquier estado o\\npa\\xc3\\xads extranjero, o entre el Distrito de Columbia y cualquier estado o territorio o pa\\xc3\\xads\\nextranjero.12\\nLa Regla de Funerales de la Comisi\\xc3\\xb3n Federal de Comercio fue dictada en 1982 conforme a\\nlo dispuesto en la Secci\\xc3\\xb3n 18(a)(1) de la Ley de la FTC,13 la cual ordena en la parte pertinente,\\nque tal regla \\xe2\\x80\\x9cdefine con especificidad las pr\\xc3\\xa1cticas o actos considerados pr\\xc3\\xa1cticas o actos\\ndesleales o enga\\xc3\\xb1osos en el comercio o en aquello que afecte al comercio (dentro del\\nsignificado de dicha secci\\xc3\\xb3n 5(a)(1)).\\xe2\\x80\\x9d14 En consecuencia, la Regla de Funerales posee el mismo\\nalcance jurisdiccional sobre las pr\\xc3\\xa1cticas o actos desleales o enga\\xc3\\xb1osos que la Secci\\xc3\\xb3n 5 de la\\nLey de la FTC cuya aplicabilidad tiene alcance sobre el comercio ejercido \\xe2\\x80\\x9cen cualquier\\nterritorio de Estados Unidos.\\xe2\\x80\\x9d Debido a que Puerto Rico contin\\xc3\\xbaa siendo un \\xe2\\x80\\x9cterritorio\\xe2\\x80\\x9d de\\nEstados Unidos, la Regla de Funerales se aplica a los proveedores de bienes y servicios f\\xc3\\xbanebres\\nde Puerto Rico.\\nSe adjuntan copias en ingl\\xc3\\xa9s y en espa\\xc3\\xb1ol de la gu\\xc3\\xada C\\xc3\\xb3mo Cumplir con la Regla de\\nFunerales. Esta gu\\xc3\\xada tambi\\xc3\\xa9n est\\xc3\\xa1 disponible en el sitio Web de la FTC en ingl\\xc3\\xa9s en\\nhttp:\/\/www.ftc.gov\/bcp\/ edu\/pubs\/business\/adv\/bus05.pdf y en espa\\xc3\\xb1ol en http:\/\/www.ftc.gov\\n\/bcp\/edu\/pubs\/business\/ adv\/sbus05.pdf.\\n\\n7\\n8\\n9\\n10\\n11\\n12\\n13\\n14\\n\\n\\xc3\\x8ddem, 3-4.\\nArt. IV, \\xc2\\xa7 3, cl. 2.\\nInforme del Grupo de Trabajo 5; v\\xc3\\xa9ase nota 4 supra y texto que acompa\\xc3\\xb1a a la nota.\\nV\\xc3\\xa9ase, vg., Harris vs. Rosario, 446 U.S. 651 (1980).\\n15 U.S.C. \\xc2\\xa7 45(a)(1).\\n15 U.S.C. \\xc2\\xa7 44 (destacado).\\n47 Fed. Reg. 42260, 42263 (24 de septiembre de 1982)\\n15 U.S.C. \\xc2\\xa7 57a(a)(1)(B) (destacado).\\n\\n\\x0cSr. Carlos E. Rodr\\xc3\\xadguez\\n\\nP\\xc3\\xa1gina 3 de 3\\n\\nPor favor, tenga presente que los puntos de vista expresados en la presente carta pertenecen\\nal personal de la FTC. Estas opiniones no han sido revisadas, aprobadas ni adoptadas por la\\nComisi\\xc3\\xb3n, y no son de car\\xc3\\xa1cter vinculante para la FTC. Sin embargo, el contenido de la presente\\ncarta refleja las opiniones de los miembros del personal de la FTC que est\\xc3\\xa1 a cargo de la\\naplicaci\\xc3\\xb3n de la Regla de Funerales. Las opiniones del personal a cargo de la Regla de Funerales\\nse publican rutinariamente en el sitio Web de la FTC en http:\/\/www.ftc.gov\/bcp\/conline\/edcams\\n\/funerals\/staffopinions.shtm.\\n\\nAtentamente,\\n\/s\/\\nCraig Tregillus\\nCoordinador de la Regla de Funerales\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-10-2\/opinion10-2_es.pdf"}
{"text":"b'UN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nD ivision of M arketing Practices\\nCraig Tregillus\\nctregillus@ ftc.gov\\n\\nD irect D ial: (202) 326-2970\\nFacsim ile: (202) 326-3395\\n\\nApril 19, 2010\\n\\nMs. Margie Heckman\\nUniversal Casket Co.\\nP.O. Box 107\\nBellbrook, OH 45305\\nDear Ms. Heckman:\\nYou have requested staff\\xe2\\x80\\x99s views on whether the Funeral Rule prohibits a number of\\npractices by funeral providers that you allege Universal Casket has encountered when attempting\\ndeliveries of third-party caskets purchased by consumers from Costco.\\nAs you know, section 453.4(b)(1) prohibits a funeral provider from \\xe2\\x80\\x9ctying\\xe2\\x80\\x9d or\\nconditioning the purchase of any funeral good or service to the purchase of another funeral good\\nor service from the provider.1 Prior staff opinion letters have stated staff\\xe2\\x80\\x99s opinion that practices\\nby funeral providers \\xe2\\x80\\x9c\\xe2\\x80\\x98unreasonably\\xe2\\x80\\x99 burdening a consumer\\xe2\\x80\\x99s choice to purchase an item from a\\nthird party\\xe2\\x80\\x9d violate \\xc2\\xa7 453.4(b)(1) of the Rule.2 Thus, we have previously stated that it is a\\nviolation of \\xc2\\xa7 453.4(b)(1) for a funeral provider to:\\n!\\n\\nRequire a consumer\\xe2\\x80\\x99s presence at a funeral home at the time of delivery of a third-party\\ncasket;3\\n\\n!\\n\\nRefuse to sign an acknowledgment of delivery of a third-party casket in the consumer\\xe2\\x80\\x99s\\nabsence;4\\n1\\n\\n16 C.F.R. \\xc2\\xa7 453.4(b)(1).\\n\\n2\\n\\nStaff Opinion 07-3 (Mar. 21, 2007) at p. 1-2, available at http:\/\/www.ftc.gov\/\\nbcp\/conline\/ edcams\/funerals\/opinions\/opinion07-3.pdf; see also, Staff Opinion 04-1 (May 12,\\n2004), available at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/opinions\/opinion04-1.pdf\\n3\\n\\n4\\n\\nStaff Opinion 07-3; Staff Opinion 04-1.\\n\\nStaff Opinion 07-3; Staff Opinion 04-2 (June 22, 2004) available at\\nhttp:\/\/www.ftc.gov\/ bcp \/conline\/edcams\/funerals\/opinions\/opinion04-2.pdf.\\n\\n\\x0cMs. Margie Heckman\\nPage 2 of 3\\n!\\n\\nCharge a fee for storage of a third-party casket delivered in advance of an at-need\\ndisposition;5 and\\n\\n!\\n\\nCharge a fee for disposal of the container or packaging in which a third-party casket is\\nshipped.6\\n\\nIt continues to be staff\\xe2\\x80\\x99s opinion that practices that \\xe2\\x80\\x9cunreasonably burden a consumer\\xe2\\x80\\x99s\\nchoice to purchase an item from a third party\\xe2\\x80\\x9d violate \\xc2\\xa7 453.4(b)(1) of the Rule. Restrictions by\\na funeral provider that unreasonably impede the delivery of a third-party casket create an\\nunreasonable burden on a consumer\\xe2\\x80\\x99s right to use such a casket, in violation of \\xc2\\xa7 453.4(b)(1).\\nAs a general rule, a funeral provider should avoid acts or practices that treat third-party casket\\nretailers differently from the provider\\xe2\\x80\\x99s regular casket supplier. It is staff\\xe2\\x80\\x99s opinion that the\\nfollowing acts or practices would violate \\xc2\\xa7 453.4(b)(1), if applied exclusively to third-party\\ncasket retailers that contact a funeral provider in advance to arrange delivery:\\n!\\n\\nRefusal to accept delivery of a third-party casket more than a specified number of days in\\nadvance of its use;\\n\\n!\\n\\nRefusal to accept delivery of a third-party casket less than a specified number of days in\\nadvance of its use;\\n\\n!\\n\\nRefusal to accept delivery of a third-party casket during regular business hours except by\\nprior appointment;7 and\\n\\n!\\n\\nRefusal to accept delivery of a third-party casket during regular business hours at a\\nparticular date and time, unless the provider is unable to receive caskets from any\\nsupplier at that date and time (e.g., because the provider will be conducting a funeral).\\n\\nYou also ask whether funeral providers \\xe2\\x80\\x9cunreasonably burden a consumer\\xe2\\x80\\x99s choice\\xe2\\x80\\x9d if\\nthey decline to assist in the delivery of a third-party casket by helping the delivery person unload\\nand unpackage the casket, and by withholding standard equipment for wheeling the casket from\\n5\\n\\nStaff Opinion 07-4 (July 12, 2007), available at http:\/\/www.ftc.gov\/bcp\/\\nconline\/edcams\/funerals\/opinions\/opinion07-4.pdf; Staff Opinion 07-8 (Aug. 21, 2007),\\navailable at http:\/\/www.ftc.gov\/bcp\/conline \/edcams\/funerals\/opinions\/opinion07-8.pdf.\\n6\\n\\nStaff Opinion 07-4. Although funeral providers may not charge consumers a fee\\nfor disposal of the packaging, nothing in the Rule prevents a funeral provider from requiring, on\\na non-discriminatory basis, that all of its casket suppliers take any casket packaging with them\\nand dispose of it themselves after a delivery.\\n7\\n\\nAs your inquiry notes, there are some small funeral homes that are not open\\nduring regular business hours of 8:00 a.m. to 5:00 p.m. (e.g., because the sole proprietor is\\nemployed elsewhere), and thus may not be able to receive caskets from any supplier during some\\nof those hours except by prior appointment.\\n\\n\\x0cMs. Margie Heckman\\nPage 3 of 3\\nthe delivery truck into the building. While a funeral provider cannot impose restrictions that\\nunreasonably impede a third-party provider\\xe2\\x80\\x99s ability to deliver a casket to the funeral home, staff\\nis not prepared to say that the Rule affirmatively requires a funeral provider to pay the labor cost\\nassociated with unloading a third-party casket and removing its packaging, particularly when\\nsmall funeral providers may not have personnel who are physically capable of assisting in\\nunloading a heavy and cumbersome casket.\\nOn the other hand, withholding the use of a funeral provider\\xe2\\x80\\x99s standard equipment, such\\nas a utility \\xe2\\x80\\x9cchurch truck\\xe2\\x80\\x9d to assist in bringing the casket into the funeral home would impose an\\nunreasonable impediment to the delivery of a third-party casket. Indeed, such equipment is part\\nof the funeral provider\\xe2\\x80\\x99s overhead costs, which are charged to and paid by consumers in the form\\nof the funeral provider\\xe2\\x80\\x99s non-declinable basic services fee. It is an unreasonable burden to deny\\nconsumers the benefits of equipment for which they must pay simply because they have\\nexercised their right to purchase a casket from a third party.\\nFinally, your inquiry asks whether it is a violation of the Rule for a funeral provider to\\ndisparage the quality of third-party caskets or mislead consumers about the savings available\\nfrom package pricing discounts. A primary purpose of the Rule, and of the price disclosures it\\nrequires, is to prevent price and savings misrepresentations by assuring that consumers receive\\naccurate price information. Although disparagement of a competitor\\xe2\\x80\\x99s products is not prohibited\\nby the Funeral Rule, material representations that are false, misleading or deceptive may violate\\nSection 5 of the Federal Trade Commission Act,8 and expose a funeral provider to an FTC law\\nenforcement action.\\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted\\non the FTC website at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/staffopinions.shtm.\\nSincerely,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\n8\\n\\n15 U.S.C. \\xc2\\xa7 45 .\\n\\n\\x0c'","created_timestamp":"April 19, 2010","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-10-1\/opinion10-1.pdf"}
{"text":"b'\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/proposed-expansion-american-institute-certified-public-accounts-independence-rule\/100409aicpaletter.pdf"}
{"text":"b'UN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nD ivision of M arketing Practices\\n\\nFebruary 4, 2010\\nJean L. Kiddoo\\nBingham McCutchen LLP\\n2020 K Street, N.W.\\nWashington, DC 20006-1806\\nRequest for Advisory Opinion:\\nPrerecorded Message to Customers Regarding\\nAvailability of Free Services for a Limited Time Period\\nDear Ms. Kiddoo:\\nYou have requested an informal staff opinion that telephone calls which deliver\\nprerecorded messages to existing customers of your client, RCN, a cable and open video services\\nprovider, do not meet the definition of \\xe2\\x80\\x9ctelemarketing\\xe2\\x80\\x9d in the Telemarketing Sales Rule, 16\\nC.F.R. \\xc2\\xa7 310.2(cc). The telephone calls at issue deliver prerecorded messages that notify RCN\\ncustomers of the existence and availability of a specific programming channel, and the fact that\\nthe channel will be available for free for a certain time period.\\nRCN provides cable and open video services in Boston, Chicago, Lehigh Valley and\\nsuburban Philadelphia, Pennsylvania, New York City, and Washington, D.C. RCN expanded its\\nforeign language offerings in 2008, and now offers channels that provide programming in 15\\ndifferent languages. RCN has used telephone calls delivering prerecorded messages\\n(\\xe2\\x80\\x9crobocalls\\xe2\\x80\\x9d) to notify its customers about the existence of programming offerings or changes to\\nchannel line-ups. RCN has found that the use of foreign language speakers to conduct live-calls\\nto subscribers to inform them of RCN\\xe2\\x80\\x99s offerings is \\xe2\\x80\\x9ccost prohibitive\\xe2\\x80\\x9d because of the large\\nnumber of different language channels offered by RCN and the relatively few international\\ncustomers in each language.\\nRCN would like to place telephone calls delivering prerecorded messages to notify\\ncurrent subscribers about its expanded foreign-language channels. The messages would notify\\nthe subscribers that a specific foreign-language network that is not available on the subscribers\\xe2\\x80\\x99\\ncurrent tiers of service is available for viewing temporarily at no additional charge. As an\\nexample, your letter describes the following proposed telephone calls:\\n[A] robocall in Japanese would be sent to RCN\\xe2\\x80\\x99s Chicago customers to inform\\nthem that the TV Japan network is available on Channel 504 without cost for the\\nnext 30 days. This type of robocall does not provide any information about how\\nto subscribe to the channel after the 30-day period or the price of the channel, or\\n\\n\\x0cJean L. Kiddoo\\nBingham McCutchen LLP\\nRequest for Advisory Opinion\\n\\nFebruary 4, 2010\\nPage 2\\n\\nin any way \\xe2\\x80\\x9cinduce them to purchase any goods or services,\\xe2\\x80\\x9d but instead simply\\ninforms and educates the existing customer about the current availability of a\\nprogramming service and the time period during which the customer may freely\\naccess the channel. The customer is then able to enjoy the free programming\\nwithout obligation, payment or any further requirements whatsoever. Information\\nabout how to continue receiving the channel after the free preview ends would not\\nbe provided in the robocall message and would only be available when the\\nprogramming is watched by the subscriber.\\nThe staff of the Federal Trade Commission has concluded that the telephone calls\\ndescribed in your letter are calls made in connection with \\xe2\\x80\\x9ctelemarketing\\xe2\\x80\\x9d within the meaning of\\nthe TSR because the calls are part of a campaign to induce the sale of services to the recipients\\nof the calls. Consequently, 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(v)(A) prohibits outbound telephone calls to\\ndeliver such messages unless the seller has obtained from the recipient of the call an express\\nagreement, in writing, that evidences the willingness of the recipient of the call to receive calls\\nthat deliver prerecorded messages by or on behalf of that seller and includes such person\\xe2\\x80\\x99s\\ntelephone number and signature.\\nThe Telemarketing and Consumer Fraud and Abuse Prevention Act defines\\n\\xe2\\x80\\x9ctelemarketing,\\xe2\\x80\\x9d in relevant part, as \\xe2\\x80\\x9ca plan, program, or campaign which is conducted to induce\\npurchases of goods or services . . . by use of one or more telephones and which involves more\\nthan one interstate telephone call.\\xe2\\x80\\x9d 15 U.S.C. \\xc2\\xa7 6106(4). The Commission has adopted a\\nvirtually identical definition in the TSR. Id. \\xc2\\xa7 310.2(cc); Prohibition of Deceptive and Abusive\\nTelemarketing Acts, Final Rule, 60 Fed. Reg. 43,842, 43,844 (1995). Consequently,\\n\\xe2\\x80\\x9ctelemarketing\\xe2\\x80\\x9d under the statute and its implementing regulations is not limited to activities in\\nwhich a sale or offer for sale is communicated during a telephone call. In rejecting an argument\\nthat \\xe2\\x80\\x9ctelemarketing\\xe2\\x80\\x9d does not include telephone calls designed to setup a meeting at which sales\\nmay take place, the Commission observed:\\n[T]he definition of \\xe2\\x80\\x9ctelemarketing\\xe2\\x80\\x9d does not require that the purchase be made\\nduring the telephone conversation. The definition simply states that the call be\\n\\xe2\\x80\\x9cconducted to induce the purchase of goods or services.\\xe2\\x80\\x9d The inducement could\\nbe made during the telephone call, or it could be in the form of setting up a\\nsubsequent face-to-face meeting at which an additional sales presentation could\\ntake place.\\n\\n\\x0cJean L. Kiddoo\\nBingham McCutchen LLP\\nRequest for Advisory Opinion\\n\\nFebruary 4, 2010\\nPage 3\\n\\nTelemarketing Sales Rule, Final Rule, 68 Fed. Reg. 4579, 4655-56 (2003).1 Consistent with this\\ninterpretation of the term \\xe2\\x80\\x9ctelemarketing,\\xe2\\x80\\x9d the Commission has brought enforcement actions\\nagainst telemarketers who delivered prerecorded messages that are not designed to make sales\\nover the telephone, but to induce consumers to purchase goods or services by other means, such\\nas sales events at retail stores.2\\nAlthough the Commission has observed that \\xe2\\x80\\x9ctelemarketing\\xe2\\x80\\x9d does not include\\n\\xe2\\x80\\x9cinformational messages,\\xe2\\x80\\x9d it has stressed that the TSR does cover messages that combine an\\ninformational message with direct or indirect solicitation. See Telemarketing Sales Rule, Final\\nRule Amendments, 73 Fed. Reg. at 51173 (2008); Telemarketing Sales Rule, 71 Fed. Reg. 58725,\\nn.107 (2006). Examples of messages that provide information but are also part of a campaign to\\ninduce sales include invitations to special retail sales and events, ticket offers for musical events,\\nand announcements of local promotions. 73 Fed. Reg. at 51,173 n.113.\\nWe conclude that the proposed prerecorded messages announcing temporary access to\\nRCN channels, followed by subsequent communications concerning how RCN subscribers may\\npurchase continued access to these channels, are part of a plan, program or campaign to induce\\nsales and are not purely informational. Therefore, even though details regarding price and how\\nRCN subscribers can purchase access to the channels described in the messages are conveyed\\nthrough the programming, rather than through the prerecorded messages, the telephone calls fall\\nwithin the statutory and regulatory language defining \\xe2\\x80\\x9ctelemarketing.\\xe2\\x80\\x9d A person who initiates\\nsuch calls is doing so \\xe2\\x80\\x9cin connection with telemarketing,\\xe2\\x80\\x9d 16 C.F.R. \\xc2\\xa7 310.2(bb), and, therefore,\\nis a \\xe2\\x80\\x9ctelemarketer\\xe2\\x80\\x9d subject to the restrictions on the delivery of prerecorded messages in 16\\nC.F.R. \\xc2\\xa7 310.4(b)(1)(v)(A). The TSR also prohibits a seller from causing a telemarketer to\\nengage in initiating telephone calls to deliver such messages.\\nAs noted above, 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(v)(A) permits telemarketers and sellers to make\\noutbound telephone calls to deliver prerecorded messages if the seller has obtained from the\\nrecipient of the call an express agreement that evidences the willingness of the recipient to\\nreceive calls that deliver prerecorded messages by or on behalf of a specific seller. Such an\\nauthorization is not valid if the seller requires, directly or indirectly, that the agreement be\\n1\\n\\nSee also 68 Fed. Reg. at 4587 (2003) (\\xe2\\x80\\x9cThus, a sales call using a prerecorded message\\nmay be \\xe2\\x80\\x98telemarketing\\xe2\\x80\\x99 if it is part of a plan, program, or campaign for the purpose of inducing\\nthe purchase of goods or services or inducing a donation to a charitable organization, is\\nconducted by use of one or more telephones, and involves more than one interstate call.\\xe2\\x80\\x9d)\\n2\\n\\nSee, e.g., United States v. Voice-Mail Broadcasting Corp., Civ. No. 2:08-cv-00521\\n(C.D. Cal., filed Jan. 15, 2004) (prerecorded messages promoting retail sales); United States v.\\nThe Broadcast Team, Civ. No. 6:05-cv-01920 (M.D. Fla., filed Dec. 29, 2005) (prerecorded\\nmessages promoting attendance at conferences).\\n\\n\\x0cJean L. Kiddoo\\nBingham McCutchen LLP\\nRequest for Advisory Opinion\\n\\nFebruary 4,2010\\nPage 4\\n\\nexecuted as a condition of purchasing any good or service, including services such as those that\\nRCN provides to subscribers. !d. \\xc2\\xa7 31O.4(b)(I)(v)(A)(ii).\\nPlease be advised that this opinion is based exclusively on the information furnished in\\nyour letter. In addition, please be advised that the views expressed in this letter are those of the\\nFTC staff. They have not been reviewed, approved, or adopted by the Commission, and they are\\nnot binding upon the Commission. However, they do reflect the opinions of the staff members\\ncharged with enforcement of the TSR. Staff opinions concerning the TSR are routinely posted\\non the FTC website at http:\/\/www.ftc.govlbcp\/telemarketing\/staffopinions.shtm.\\n\\nV~0:A\\n.\\nLOIS Greism!n~\\nAssociate Director\\nDivision of Marketing Practices\\n\\n\\x0c'","created_timestamp":"February 4, 2010","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-10-1\/opinion1001_0.pdf"}
{"text":"b'UN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nD ivision of M arketing Practices\\nCraig Tregillus\\nctregillus@ ftc.gov\\n\\nD irect D ial: (202) 326-2970\\nFacsim ile: (202) 326-3395\\n\\nNovember 24, 2009\\nMs. Lisa Carlson, Executive Director\\nFuneral Ethics Organization\\n87 Upper Access Road\\nHinesburg, VT 05461-4431\\nMs. Holly Stevens\\n5918 Pepper Road\\nOak Ridge, N.C. 27310-9631\\nT. Scott Gilligan, Esq.\\nGilligan Law Offices\\n3734 Eastern Avenue\\nCincinnati, OH 45226\\nDear Ms. Carlson, Ms. Stevens, and Mr. Gilligan:\\nThis staff opinion addresses the question of whether there are any circumstances under\\nwhich a funeral provider may charge a fee for its basic services and overhead that is less than the\\nnon-declinable basic services fee listed in its General Price List (\\xe2\\x80\\x9cGPL\\xe2\\x80\\x9d).1 The Funeral Ethics\\nOrganization (\\xe2\\x80\\x9cFEO\\xe2\\x80\\x9d) questions whether the Funeral Rule permits a lower fee, the National\\nFuneral Directors Association (\\xe2\\x80\\x9cNFDA\\xe2\\x80\\x9d) argues that the Rule has always permitted a reduced\\nfee for certain services, and a group advocating home funerals contends that the Funeral Rule\\nshould allow consumers to make limited use of the services of a cooperating funeral home\\nwithout being required to pay the full non-declinable basic services fee listed on its GPL.2\\n\\n1\\n\\nThe Rule permits a funeral provider to charge a basic services fee to recover its\\ncosts \\xe2\\x80\\x9cin arranging any funeral\\xe2\\x80\\x9d for its overhead and the services of the funeral director and staff.\\n16 CFR \\xc2\\xa7\\xc2\\xa7 453.1(p); 453.2(b)(4)(iii)(C). If this fee is non-declinable, the provider must disclose\\neither that the fee will be added to the cost of the funeral goods and services selected, or that it is\\nincluded in the price of the provider\\xe2\\x80\\x99s caskets, and that clients who provide their own caskets\\nwill be charged the same fee. 16 CFR \\xc2\\xa7\\xc2\\xa7 462.2(b)(4)(iii)(C)(l)-(2).\\n2\\n\\nThis group has prepared a manual for consumers who wish to care for the dead at\\nhome. Home Funeral Committee Manual Publishing Group, Undertaken With Love: A Home\\nFuneral Guide for Congregations and Communities (2007), available at http:\/\/www.\\nhomefuneralmanual.org\/homefuneralfinalfinal.pdf. Their request notes that a number of state\\nstatutes require that a licensed funeral director be involved, however minimally, thus forcing\\n\\n\\x0cMs. Lisa Carlson et al.\\nPage 2 of 4\\nThe FEO questions whether, if the basic services fee listed on a GPL is non-declinable,\\nthe funeral provider may charge less than the full amount of that fee for four services that must\\nbe itemized in the GPL: forwarding remains, receiving remains, direct cremation, and\\nimmediate burial. The NFDA counters that because these four specialized services require fewer\\n\\xe2\\x80\\x9cservices of funeral director and staff\\xe2\\x80\\x9d and entail less use of facilities and overhead than\\ntraditional funeral arrangements, requiring a funeral provider to charge its full basic services fee\\nwould be unjustified. The NFDA adds that the Commission never previously indicated that the\\nRule requires a funeral provider to charge its full non-declinable basic services fee for these four\\nservices, and that it has been the long-standing practice of many funeral providers to charge a\\nreduced basic services fee for each of these four services.\\nThe FEO\\xe2\\x80\\x99s question arises from the wording of a disclosure required by the Rule when\\nthe basic services fee is non-declinable. Section 453.2(b)(4)(iii)(C)(1) of the Rule mandates that\\nthe following prescribed statement appear in the GPL under the price and description of the\\nservices provided if the basic services fee is non-declinable:\\nThis fee for our basic services will be added to the total cost of the\\nfuneral arrangements you select. (This fee is already included in\\nour charges for direct cremation, immediate burials, and\\nforwarding or receiving remains.)3\\nThe FEO asks whether the two parallel references to \\xe2\\x80\\x9cthis fee\\xe2\\x80\\x9d mean that a nondeclinable basic services fee must be the same for all funeral arrangements, including the four\\nservices at issue that are specifically mentioned in the second sentence of the statement. We\\nthink not, for three reasons.\\nFirst, the Rule uses the term \\xe2\\x80\\x9cthis same fee\\xe2\\x80\\x9d when that is what it means. Section\\n453.2(b)(4)(iii)(C)(2) of the Rule specifies that when a funeral provider elects to include its\\nnon-declinable basic services fee in the price of its caskets, it must be the very same fee it\\ncharges to consumers who do not purchase a casket: \\xe2\\x80\\x9cThis same fee shall be added to the total\\ncost of your funeral arrangements if you provide the casket.\\xe2\\x80\\x9d4 The use of two distinct terms,\\n\\xe2\\x80\\x9cthis fee\\xe2\\x80\\x9d and \\xe2\\x80\\x9cthis same fee,\\xe2\\x80\\x9d therefore, suggests that the two are not necessarily synonymous.\\nSecond, reading the Rule to prohibit a reduced basic services fee for forwarding remains,\\nreceiving remains, direct cremations and immediate burials, would be inconsistent with a core\\nconsumers who want home funerals to pay the funeral provider\\xe2\\x80\\x99s non-declinable basic services\\nfee. Some states require the funeral director to do little more than sign the death certificate,\\nwhile other states simply mandate that a funeral director either \\xe2\\x80\\x9cbe present\\xe2\\x80\\x9d at the final\\ndisposition, or that the final disposition be conducted \\xe2\\x80\\x9cunder the supervision of\\xe2\\x80\\x9d a licensed\\nfuneral director.\\n3\\n\\n16 CFR \\xc2\\xa7 453.2(b)((4)(iii)(C)(1) (emphasis added).\\n\\n4\\n\\n16 CFR \\xc2\\xa7 453.2(b)(4)(iii)(C)(2) (emphasis added).\\n\\n\\x0cMs. Lisa Carlson et al.\\nPage 3 of 4\\npurpose of the Rule, which is to enable consumers to purchase only the funeral goods and\\nservices they want by requiring funeral providers to \"unbundle\" their offerings. During the era\\nof industry-wide package pricing that was prevalent before the Rule took effect, consumers who\\nwanted only direct cremations or immediate burials often had no choice but to pay the same\\npackage price as consumers who wanted a traditional funeral. Requiring funeral providers to\\ncharge the same non-declinable basic services fee for a full traditional funeral as for these four\\nmore limited services similarly would require consumers to pay for facilities and services that\\nthey would not necessarily use or receive.\\nFinally, we note that this interpretation is entirely consistent with prior staff views on the\\nissue. The Final Staff Compliance Guidelines for the original Rule make it clear that funeral\\nproviders may include \\xe2\\x80\\x9cany charges\\xe2\\x80\\x9d for their professional services in their prices for forwarding\\nremains, receiving remains, direct cremation and immediate burial:\\nb. Forwarding and Receiving Remains, Direct Cremations and Immediate\\nBurials: Sections 453.2(b)(4) (ii) (A)-(D). The Rule requires funeral providers to\\ndisclose their prices for forwarding and receiving remains, direct cremations and\\nimmediate burials. Unlike the remainder of the goods and services which must be\\ndisclosed on the General Price List, any charges for the professional services of\\nthe funeral provider should be included in the total price of these four types of\\nservices.5\\nFor these reasons, it is staff\\'s view that the Rule permits funeral providers to reduce their\\nbasic services fees for forwarding remains, receiving remains, direct cremations,6 and immediate\\nburials,7 in order to reflect the proportionate reduction in facilities overhead and services of the\\nfuneral director and staff required to provide them.\\nPrior staff opinions have stated, and we re-emphasize here, that a funeral provider may\\nnot include a reduced or discounted non-declinable basic services fee in any discount package of\\n\\n5\\n\\n50 Fed. Reg. 28062, 28068 (July 9, 1985) (emphasis added). The accompanying\\nAnalysis of Public Comments Received on Staff Compliance Guidelines notes that the original\\nRule modified the proposed definition of \\xe2\\x80\\x9cservices of funeral director and staff,\\xe2\\x80\\x9d and the final\\nGuidelines added this clarification, in response to a concern of the Continental Association of\\nFuneral and Memorial Societies (\\xe2\\x80\\x9cCAFMS\\xe2\\x80\\x9d) that services associated with forwarding or\\nreceiving remains, cremation, and immediate burial would be \\xe2\\x80\\x9cpackaged\\xe2\\x80\\x9d into the basic services\\nfee. 50 Fed. Reg. 28081, 28087 (July 9, 1985). The clarification barred any such \\xe2\\x80\\x9cpackaging\\xe2\\x80\\x9d\\nby specifying that a funeral provider should include \\xe2\\x80\\x9cany charges\\xe2\\x80\\x9d for its professional services in\\nthe price listed on its GPL for these four services.\\n6\\n\\n\\xe2\\x80\\x9cA \\xe2\\x80\\x98direct cremation\\xe2\\x80\\x99 is a disposition of human remains by cremation, without\\nformal viewing, visitation, or ceremony with the body present.\\xe2\\x80\\x9d 16 C.F.R. \\xc2\\xa7 563.1(g).\\n7\\n\\n\\xe2\\x80\\x9cAn \\xe2\\x80\\x98immediate burial\\xe2\\x80\\x99 is a disposition of human remains by burial, without\\nformal viewing, visitation, or ceremony with the body present, except for a graveside service.\\xe2\\x80\\x9d\\n16 C.F.R. \\xc2\\xa7 453.1(k).\\n\\n\\x0cMs. Lisa Carlson et al.\\nPage 4 of 4\\ngoods and services it offers, but must include in the price of the discount package the full nondeclinable basic services fee listed in its GPL.8 As another staff opinion has stated, however,\\nthat forwarding remains, receiving remains, direct cremation and immediate burial are not\\n\\xe2\\x80\\x9cpackages,\\xe2\\x80\\x9d and thus are not subject to this prohibition.9\\nThe Rule does not address home funerals because they were not considered at the time of\\nthe initial rulemaking proceeding or the subsequent amendment proceeding. Home funerals are\\nanalogous to the four basic services, however, because they likewise involve reduced or minimal\\nuse of a funeral provider\\xe2\\x80\\x99s facilities and staff. As a matter of enforcement policy, therefore, and\\nconsonant with the fundamental goals of the Rule, staff will not object to a reduction in the basic\\nservices fee for home funerals if it is commensurate with the limited use of the provider\\xe2\\x80\\x99s\\nfacilities and services.\\nThe views expressed in this letter are those of the FTC staff. They have not been\\nreviewed, approved, or adopted by the Commission, and they are not binding on the Commission\\nor any individual Commissioner. However, they do reflect the views of FTC staff charged with\\nenforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted on the FTC\\nwebsite at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/staffopinions.shtm.\\nSincerely,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\n8\\n\\nStaff Opinion 09-1 (Feb. 17, 2009), available at http:\/\/www.ftc.gov\/bcp\/conline\/\\nedcams\/funerals\/opinions\/opinion09-1.pdf; Staff Opinion 97-3 (Apr. 16, 1997), available at\\nhttp:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/opinions\/opinion97-3.pdf.\\n9\\n\\nStaff Opinion 07-6 (Aug. 21, 2007), available at http:\/\/www.ftc.gov\/bcp\/conline\/\\nedcams\/funerals\/opinions\/opinion07-6.pdf.\\n\\n\\x0c'","created_timestamp":"November 24, 2009","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-09-6\/opinion09-6.pdf"}
{"text":"b'UN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nFederal Trade Com m ission\\nD ivision of M arketing Practices\\n\\nSeptember 11, 2009\\nMr. Michael Bills, CEO\\nCall Assistant, LLC\\n1925 West Indiana Avenue\\nSalt Lake City, Utah 84104\\nDear Mr. Bills:\\nYou have requested an informal staff opinion as to the applicability to 2008 amendments\\nto the Telemarketing Sales Rule (\\xe2\\x80\\x9cTSR\\xe2\\x80\\x9d) to a particular technology used by CallAssistant, L.C.\\n(\\xe2\\x80\\x9cCallAssistant\\xe2\\x80\\x9d). The amendments at issue impose new restrictions on the use of prerecorded\\nmessages in telemarketing. 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(v); 73 Fed. Reg. 15204 (Aug. 29, 2008).\\nSpecifically, these amendments require, as of December 1, 2008, that any outbound\\ntelemarketing call that delivers a prerecorded message include: (1) if the call could be answered\\nin person by a consumer, an automated interactive voice and\/or keypress-activated opt-out\\nmechanism that the call recipient can use at any time during the message to assert a Do Not Call\\nrequest pursuant to \\xc2\\xa7 310.4(b)(1)(iii)(A); and (2) if the call could be answered by an answering\\nmachine or voicemail service, a toll-free telephone number that the call recipient can use to\\nassert a Do Not Call request pursuant to \\xc2\\xa7 310.4(b)(1)(iii)(A). Additionally, as of September 1,\\n2009, the amendments prohibit any outbound telemarketing call that delivers a prerecorded\\nmessage unless the seller has obtained from the recipient of the call an express agreement, in\\nwriting, that evidences the willingness of the recipient of the call to receive calls that deliver\\nprerecorded messages by or on behalf of that seller and includes such person\\xe2\\x80\\x99s telephone number\\nand signature.\\nAs described in your letter, CallAssistant uses technology that enables its calling agents\\nto interact with the recipient of a call using his or her own voice or by substituting appropriate\\naudio recording of a response. According to your letter, when used to place outbound\\ntelemarketing calls, this technology works as follows:\\nA live agent using the System places a call to a consumer and hears the consumer\\ngreeting. In response to the greeting, the agent may elect to speak to the call\\nrecipient using his or her voice, or may press a button to play an appropriate\\nrecorded script segment. After the agent\\xe2\\x80\\x99s response, the agent listens to the\\nconsumer customer\\xe2\\x80\\x99s reply. After listening to the consumer\\xe2\\x80\\x99s reply, the live\\nagent again chooses whether to speak to the call recipient in his or her own voice,\\nor another recording. At all times, even during the playing of any recorded\\nsegment, the agent retains the power to interrupt any recorded message to listen to\\nthe consumer and respond appropriately.\\n\\n\\x0cMr. Michael Bills\\nPage 2 of 3 Pages\\nFurthermore, according to your description, \\xe2\\x80\\x9clive agents hear every word spoken by the call\\nrecipient, and determine what is said\\xe2\\x80\\x9d in response. A single agent always stays with a call from\\nbeginning to end.\\nYou seek an opinion as to whether the amended TSR provisions on the use of\\nprerecorded messages in telemarketing apply to CallAssistant\\xe2\\x80\\x99s calls that employ the technology\\nsummarized above. Based on the description of the technology included in your letter, the staff\\nof the Federal Trade Commission has concluded that the 2008 TSR amendments cited above do\\nnot prohibit telemarketing calls using this technology if the calls that otherwise comply with the\\nTSR and other applicable law. The 2008 amendments at 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(v) prohibit\\ncalls that deliver a prerecorded message and do not allow interaction with call recipients in a\\nmanner virtually indistinguishable from calls conducted by live operators. Unlike the\\ntechnology that you describe, the delivery of prerecorded messages in such calls does not\\ninvolve a live agent who controls the content and continuity of what is said to respond to\\nconcerns, questions, comments \\xe2\\x80\\x93 or demands \\xe2\\x80\\x93 of the call recipient.\\nIn adopting the 2008 TSR amendments, the Commission noted that the intrusion of a\\ntelemarketing call on a consumer\\xe2\\x80\\x99s right to privacy \\xe2\\x80\\x9cmay be exacerbated immeasurably when\\nthere is no human being on the other end of the line.\\xe2\\x80\\x9d 73 Fed. Reg. at 51180. The Commission\\nobserved that special restrictions on prerecorded telemarketing messages were warranted\\nbecause they \\xe2\\x80\\x9cconvert the telephone from an instrument for two-way conversations into a oneway device for transmitting advertisements.\\xe2\\x80\\x9d Id.1 Consequently, in Staff\\xe2\\x80\\x99s view, the concerns\\nabout prerecorded messages addressed in the 2008 TSR amendments do not apply to the calls\\ndescribed above, in which a live human being continuously interacts with the recipient of a call\\nin a two-way conversation, but is permitted to respond by selecting recorded statements.\\nNevertheless, the use of such technology in a campaign to induce the sales of goods or\\nservices, or charitable donations is \\xe2\\x80\\x9ctelemarketing\\xe2\\x80\\x9d under the Telemarketing and Consumer\\nFraud and Abuse Prevention Act, 15 U.S.C. \\xc2\\xa7 6106(4), and therefore must comply with the\\nRule\\xe2\\x80\\x99s other requirements and prohibitions. In particular, the technology must connect an\\noutbound telephone call to a live agent within two seconds of the call recipient\\xe2\\x80\\x99s completed\\ngreeting. 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(iv). The agents making calls using this technology must\\n\\n1\\n\\nIn adopting the 2008 amendments, the Commission recognized that in the future prerecorded\\nmessage might eliminate the objections that prompted the adoption of the these rules and justify\\nexemptions permitting interactive prerecorded messages:\\n[T]he Commission notes that it is aware that the technology used in making prerecorded\\nmessages interactive is rapidly evolving, and that affordable technological advances may\\neventually permit the widespread use of interactive messages that are essentially\\nindistinguishable from conversing with a human being. Accordingly, nothing in this\\nnotice should be interpreted to foreclose the possibility of petitions seeking further\\namendment of the TSR or exemption from the provisions adopted here.\\n73 Fed. Reg. 51180 (Aug. 29, 2008).\\n\\n\\x0cMr. Michael Bills\\nPage 3 of 3 Pages\\ndisclose the purpose of the call, the identity of the seller, make other required disclosures, and\\ncomply with other TSR provisions preventing deceptive and abusive conduct. Id. \\xc2\\xa7\\xc2\\xa7 310.3 and\\n310.4.\\nPlease be advised that this opinion is based exclusively on all the information furnished\\nin your request. This opinion applies only to the extent that actual company practices conform to\\nthe material submitted for review. Please be advised further that the views expressed in this\\nletter are those of the FTC staff. They have not been reviewed, approved, or adopted by the\\nCommission, and they are not binding upon the Commission. However, they do reflect the\\nopinions of the staff members charged with enforcement of the TSR.\\n\\nS:C\/:lY\\n,\\n\\n\\\\\\n\\n~~{:Lois Greisman\\nAssociate Director\\nDivision of Marketing Practices\\n\\n\\x0c'","created_timestamp":"September 11, 2009","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-09-1\/opinion0901_1.pdf"}
{"text":"b'PLEASE NOTE:\\nAs of July 21, 2011, only the Consumer\\nFinancial Protection Bureau (\\xe2\\x80\\x9cCFPB\\xe2\\x80\\x9d) can\\nissue advisory opinions relating to the\\nFDCPA.\\n\\n\\x0cUN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nO ffice of the Secretary\\n\\nJune 23, 2009\\nRozanne M. Anderson, Esq.\\nACA International\\n4040 W. 70th Street\\nMinneapolis, MN 55345\\n\\nAndrew M. Beato, Esq.\\nStein, Mitchell & Mezines, LLP\\n1100 Connecticut Avenue, N.W., Suite 1100\\nWashington, DC 20036\\n\\nDear Ms. Anderson and Mr. Beato:\\nThis responds to an issue raised in your comment filed on February 11, 2008, on behalf\\nof American Collectors Association International, with the Federal Trade Commission (\\xe2\\x80\\x9cCommission\\xe2\\x80\\x9d) and other agencies charged by Congress in Section 312 of the FACT Act with writing\\nregulations relating to certain duties of furnishers of information to consumer reporting agencies\\n(\\xe2\\x80\\x9cCRAs\\xe2\\x80\\x9d). On pages 7-8 of your comment, you urged the following action:\\nTo avoid a statutory conflict between the FDCPA and FACT Act, the\\nregulation should clarify that the act of responding to a consumer dispute is not an\\nattempt to collect a debt under the FDCPA. Further the regulation should clarify\\nthat a consumer that sends a written dispute to a furnisher after having invoked\\nhis or her cease communication rights under the FDCPA has revoked his or [her]\\ncease communication instruction for purposes of communicating with the\\nfurnisher to process the dispute. (Emphasis yours)\\nThe Commission is treating this portion of your comment as a request for an advisory\\nopinion interpreting the Fair Debt Collection Practices Act (FDCPA) pursuant to Sections 1.11.4 of its Rules of Practice. 16 C.F.R. \\xc2\\xa7\\xc2\\xa7 1.1-1.4. The subject matter of the request and\\nconsequent publication of this Commission advice is in the public interest. 16 C.F.R. \\xc2\\xa7 1.1(a)(2).\\nSpecifically, it is in the public interest for the Commission to clarify the intersection of the\\nFDCPA and this new rule implementing the FACT Act, thus encouraging debt collector\\ncompliance with both laws.\\nThe applicable provisions of the FDCPA and the furnisher disputes rule (Rule) are:\\n\\xe2\\x80\\xa2\\n\\nSection 805(c) of the FDCPA provides that if a consumer has notified a debt collector in\\nwriting that \\xe2\\x80\\x9cthe consumer wishes the debt collector to cease further communication with\\nthe consumer, the debt collector shall not communicate with the consumer with respect to\\nsuch debt\\xe2\\x80\\x9d (with some exceptions not applicable here).\\n\\n\\xe2\\x80\\xa2\\n\\nThe Rule requires furnishers of information to CRAs to report the results of a direct\\ndispute to the consumer, 16 CFR \\xc2\\xa7 660.4(e)(3), or notify the consumer if the furnisher\\ndetermines the dispute is frivolous or irrelevant. 16 CFR \\xc2\\xa7 660.4(f)(2).\\n\\n\\x0cThe potential conflict arises when a consumer orders a debt collector in writing to cease\\ncommunication, but at some future time submits a direct dispute about information the debt\\ncollector has provided to a CRA. The Rule requires the collector to notify the consumer either\\nof the results of the investigation or of its determination that the dispute is frivolous or irrelevant.\\nSection 805(c) of the FDCPA, however, prohibits the collector from communicating with that\\nconsumer with respect to the debt, which could be interpreted to include providing the notice\\nthat the Rule requires.\\nThe Commission does not believe that providing the notice the Rule requires undermines\\nthe purpose of Section 805(c) of the FDCPA. Section 805(c) empowers consumers to direct\\ncollectors to cease contacting them to collect a debt so that consumers can be free of the burden\\nof being subject to unwanted communications. In contrast, communications from debt collectors\\nwhich do nothing more than respond to disputes consumers themselves have raised do not\\nimpose such a burden. Rather, such communications benefit consumers through providing them\\nwith information demonstrating that collectors have been responsive to their disputes.\\nAfter reviewing the language of the FDCPA and the Rule, and considering the goals of\\nthe statute and the regulation, the Commission concludes that a debt collector does not violate\\nSection 805(c) of the FDCPA if the consumer directly disputes information after sending a\\nwritten \\xe2\\x80\\x9ccease communication\\xe2\\x80\\x9d to the collector, and the collector complies with the Rule by\\nmeans of a communication that has no purpose other than complying with the Rule by stating\\n(1) the results of the investigation or (2) the collector\\xe2\\x80\\x99s belief that the communication is\\nfrivolous or irrelevant.\\nBy direction of the Commission.\\n\\nDonald S. Clark\\nSecretary\\n\\n\\x0c'","created_timestamp":"July 21, 2011","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/federal-trade-commission-advisory-opinion-clarifying-intersection-fair-debt-collection-practices-act\/p064803facta-adop-1.pdf"}
{"text":"b'UN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nD ivision of M arketing Practices\\nCraig Tregillus\\nctregillus@ ftc.gov\\n\\nD irect D ial: (202) 326-2970\\nFacsim ile: (202) 326-3395\\n\\nApril 16, 2009\\nMr. David Nixon, President\\nNixon Consulting, Inc.\\nP.O. Box 440\\nChatham, IL 62629-0440\\nDear Mr. Nixon:\\nYou have requested clarification of the portion of Staff Opinion 07-2 that addressed the\\nuse of a vehicle to obtain death certificates.1 That opinion stated staff\\xe2\\x80\\x99s view that if the use of an\\nautomobile to obtain necessary permits and death certificates is \\xe2\\x80\\x9ccommon to virtually all forms\\nof disposition or arrangements\\xe2\\x80\\x9d of a funeral provider, the cost should be included in the\\nprovider\\xe2\\x80\\x99s basic services fee. The opinion added that a separate charge for the use of a vehicle\\ncould be included in the provider\\xe2\\x80\\x99s General Price List (\\xe2\\x80\\x9cGPL\\xe2\\x80\\x9d) only if the use of a vehicle for\\nthat purpose is not \\xe2\\x80\\x9ccommon to virtually all forms of disposition or arrangements.\\xe2\\x80\\x9d\\nAs an initial matter, the test of whether a service is \\xe2\\x80\\x9ccommon to virtually all forms of\\ndisposition or arrangements\\xe2\\x80\\x9d does not apply to the 13 specific services the Rule requires a\\nprovider who offers those services to itemize in its GPL.2 That is because the definition of the\\nbasic service fee in Section 453.1(p) of the Rule,3 expressly excludes fees for those services.\\nThe Rule states that the basic services covered by the fee are \\xe2\\x80\\x9cnot to be included in other\\ncategories [of the mandatory GPL disclosures] in \\xc2\\xa7 453.2(b)(4)\\xe2\\x80\\x9d of the Rule.4\\nConversely, none of the fees for the specific services that the Rule requires a provider to\\nitemize in the GPL may be included in the basic services fee. These fees must be separately\\ndisclosed as mandated by the Rule, regardless of whether or not they are common to \\xe2\\x80\\x9cvirtually\\nall forms of disposition or arrangements.\\xe2\\x80\\x9d Accordingly, the costs of \\xe2\\x80\\x9cOther Preparation of the\\nBody,\\xe2\\x80\\x9d \\xe2\\x80\\x9cTransfer of Remains,\\xe2\\x80\\x9d and the use of a \\xe2\\x80\\x9cHearse\\xe2\\x80\\x9d should not be included in the basic\\n\\n1\\n\\nStaff Opinion 07-2 (Mar. 21, 2007), available at http:\/\/www.ftc.gov\/bcp\/conline\\n\/edcams\/funerals\/opinions\/opinion07-2.pdf.\\n2\\n\\n16 C.F.R. \\xc2\\xa7 453.2(b)(4)(A)-(M).\\n\\n3\\n\\n16 C.F.R. \\xc2\\xa7 453.1(p).\\n\\n4\\n\\n16 C.F.R. \\xc2\\xa7 453.2(b)(4).\\n\\n\\x0cMr. David Nixon\\nPage 2 of 3\\nservices fee because the Rule requires funeral providers to itemize the prices of each of these\\nthree services separately in the GPL.\\nYou question why a separate charge for the use of a vehicle to obtain permits is not\\npermitted when the use of a vehicle for \\xe2\\x80\\x9cTransfer of Remains\\xe2\\x80\\x9d is no less \\xe2\\x80\\x9ccommon to virtually\\nall dispositions or arrangements.\\xe2\\x80\\x9d The answer is that Section 453.2(b)(4) of the Rule requires an\\nitemized price for \\xe2\\x80\\x9cTransfer of Remains,\\xe2\\x80\\x9d but does not require an itemized price for the use of a\\nvehicle to obtain permits or death certificates. If the use of a vehicle to obtain permits or death\\ncertificates is \\xe2\\x80\\x9ccommon to virtually all dispositions or arrangements,\\xe2\\x80\\x9d this cost is basically an\\noverhead cost that should be included in the basic services fee.\\nYou also ask whether it would still be the case that the use of a vehicle to obtain death\\ncertificates, although \\xe2\\x80\\x9ccommon to virtually all dispositions or arrangements\\xe2\\x80\\x9d of a funeral\\nprovider, may not be listed separately in the provider\\xe2\\x80\\x99s GPL if the provider receives remains\\nfrom other funeral homes that have obtained death certificates already. The answer depends, of\\ncourse, on the relative proportion of the funeral provider\\xe2\\x80\\x99s arrangements involving receipt of\\nremains from other funeral homes that have obtained the death certificates compared to its\\nregular funeral arrangements, and cannot be answered definitively in the abstract. If the receipt\\nof such remains is infrequent or occasional at best, amounting to a de minimis portion of a\\nfuneral provider\\xe2\\x80\\x99s business, the provider would have no basis for listing a separate fee in its GPL\\nfor the use of a vehicle to obtain death certificates.5\\nFinally, you inquire whether a funeral provider can include a separate charge in its GPL\\nfor the use of a vehicle to obtain permits simply by deleting any reference to \\xe2\\x80\\x9cobtaining\\nnecessary permits\\xe2\\x80\\x9d from its description of the services included in the basic services fee. If\\nobtaining permits is not \\xe2\\x80\\x9ccommon to virtually all form of disposition or arrangements,\\xe2\\x80\\x9d a funeral\\nprovider should not include that cost in its basic services fee, and may list a separate fee in its\\nGPL for obtaining the permits, including the use of a vehicle to do so. On the other hand, if\\nobtaining permits is, in fact, \\xe2\\x80\\x9ccommon to virtually all forms of disposition or arrangements,\\xe2\\x80\\x9d the\\nfuneral provider should include all the costs of obtaining them, including the use of a vehicle, in\\nits basic services fee.\\nIn view of your questions, it is worth emphasizing that funeral providers may include the\\ncost not only of the services of the funeral director and staff in the basic services fee, but also\\nsuch overhead costs as the cost of operating a vehicle used to obtain permits or death certificates,\\nas noted above. In addition, there is nothing in the Rule to prevent a funeral provider from\\nplacing reasonable limits on the time it will spend and\/or the distance it will travel to obtain\\n\\n5\\n\\nNothing in the Rule, however, prevents a funeral provider from limiting the\\nquantity of death certificates it will obtain as part of its basic services to the number of copies\\nthat is \\xe2\\x80\\x9ccommon to virtually all forms of dispositions or arrangements,\\xe2\\x80\\x9d provided that this\\nlimitation is spelled out in the description of the \\xe2\\x80\\x9cprincipal basic services provided\\xe2\\x80\\x9d in return for\\nthe basic services fee as required by \\xc2\\xa7 453.2(b)(4)(iii)(C)(1) of the Rule, 16 CFR\\n\\xc2\\xa7 453.2(b)(4)(iii)(C)(1), and separately listing a fee in its GPL for additional copies.\\n\\n\\x0cMr. David Nixon\\nPage 3 of 3\\npermits or death certificates as part of its basic services fee, and listing a separate fee on its GPL\\nfor any additional time and\/or distance that may be required in unusual circumstances. A funeral\\nprovider will, of course, have the burden of demonstrating that any such limits are reasonable,\\nand broad enough to encompass \\xe2\\x80\\x9cvirtually all dispositions or arrangements.\\xe2\\x80\\x9d\\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted\\non the FTC website at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/staffopinions.shtm.\\nSincerely,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\n\\x0c'","created_timestamp":"April 16, 2009","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-09-4\/opinion09-4.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Marketing Practices\\nCraig Tregillus\\nctregillus@ftc.gov\\n\\nDirect Dial: (202) 326-2970\\nFacsimile: (202) 326-3395\\n\\nFebruary 17, 2009\\n\\nPamela D. Griebel\\nAssistant Attorney General\\nIowa Department of Justice\\nHoover Bldg.\\nDes Moines, IA 50319\\nDear Ms. Griebel:\\nYou have requested our views on funeral providers offering discounts only to clients who\\npurchase a package of funeral goods and services that includes a casket. You specifically ask\\nwhether such packages may discount the basic services fee that covers the services of the funeral\\ndirector and staff, and may include the funeral provider\\xe2\\x80\\x99s overhead.\\nAs your inquiry notes, staff stated its view in Opinion 97-3 that the basic services fee\\nmay not be discounted.1 We have considered the arguments of the National Funeral Directors\\nAssociation (\\xe2\\x80\\x9cNFDA\\xe2\\x80\\x9d) challenging this staff opinion, and find no reason to alter this longstanding interpretation of the Funeral Rule (\\xe2\\x80\\x9cRule\\xe2\\x80\\x9d) for the reasons which follow.\\nFirst, contrary to the NFDA\\xe2\\x80\\x99s contention, the Commission\\xe2\\x80\\x99s confirmation last year at the\\nconclusion of its rule review that the Rule should be retained without proposing any of the\\namendments sought by interested parties does not compel a different result.2 In particular, the\\nCommission\\xe2\\x80\\x99s decision not to propose an amendment to the Rule that would regulate the offer of\\ndiscount funeral packages was based in large part on \\xe2\\x80\\x9cinsufficient evidence to show a prevalent\\npractice of funeral providers offering discount packages in a manner that unfairly interferes with\\nconsumers\\xe2\\x80\\x99 ability to provide their own caskets.\\xe2\\x80\\x9d3 In retaining the Rule, the Commission simply\\npreserved the status quo, and did nothing to alter prior Rule interpretations. In fact, the\\nCommission not only cited, but expressly approved Opinion 97-3, noting that \\xe2\\x80\\x9cfuneral homes\\n\\n1\\n\\nStaff Opinion 97-3 (Apr. 16, 1997), available at http:\/\/www.ftc.gov\/bcp\/conline\\n\/edcams\/funerals\/opinions\/opinion97-3.pdf (concluding that only funeral goods and services that\\nmust be itemized on a funeral provider\\xe2\\x80\\x99s General Price List (\\xe2\\x80\\x9cGPL\\xe2\\x80\\x9d) may be discounted).\\n2\\n\\n73 Fed. Reg. 13740 (Mar. 14, 2008).\\n\\n3\\n\\nId. at 13748.\\n\\n\\x0cPamela D. Griebel\\nPage 2 of 4\\nmay encourage consumers to purchase a casket from their organization by offering discounts on\\nservices or items except for a non-declinable Basic Services Fee.\\xe2\\x80\\x99\\xe2\\x80\\x994\\nSecond, a close reading of the precedent on which NFDA relies does not support a\\ndifferent conclusion. In its report recommending the 1994 Rule amendments,5 staff did not state\\nor imply that the Rule permits funeral providers to discount the basic services fee in addition to\\nother fees for goods and services that the Rule requires or permits to be itemized in the GPL, as\\nNFDA contends. On the contrary, the report contemplated that funeral providers could discount\\nonly fees for \\xe2\\x80\\x9cthe itemized charges required by the Rule.\\xe2\\x80\\x9d6 Similarly, the Third Circuit\\xe2\\x80\\x99s\\ndecision upholding the 1994 Rule amendment banning casket handling fees presumes that the\\nbasic services fee will be the same for all of a funeral provider\\xe2\\x80\\x99s clients, and that only the fees\\nfor products and services itemized on the GPL may be discounted.7\\nThird, although not contesting the conclusion in Opinion 97-3 that funeral providers may\\nnot discount only the basic service fee, NFDA contends that the opinion does not cite any basis\\nfor its determination that when the basic services fee is combined with the fees for other funeral\\ngoods and services in a discount package, it also may not be discounted. While we think that\\nOpinion 97-3 provided a clear basis for that conclusion, some elaboration may be helpful.\\nThe basic services fee provisions of the Rule make it clear that this fee is to be the same\\nfor each of a funeral provider\\xe2\\x80\\x99s clients. Each client must receive a GPL, and unless the basic\\nservices fee is included in the price of the funeral provider\\xe2\\x80\\x99s caskets or is declinable, the GPL\\nmust include the following statement: \\xe2\\x80\\x9cThis fee for our basic services will be added to the total\\ncost of the funeral arrangements you select. (This fee is already included in our charges for\\ndirect cremations, immediate burials, and forwarding and receiving remains.)\\xe2\\x80\\x9d8 Likewise, if the\\nbasic services fee is included in the price of a funeral provider\\xe2\\x80\\x99s caskets, the GPL must include a\\nsimilar statement indicating that all of the provider\\xe2\\x80\\x99s clients must pay the same fee: \\xe2\\x80\\x9cPlease note\\nthat a fee of (specify dollar amount) for the use of our basic services is included in the price of\\nour caskets. This same fee shall be added to the total cost of your funeral arrangements if you\\n\\n4\\n\\nId. at n.93 (emphasis added).\\n\\n5\\n\\nFinal Staff Recommendations on the Mandatory Review (May 28, 1991).\\n\\n6\\n\\nId. at 39 (emphasis added).\\n\\n7\\n\\nSee Pa. Funeral Dir.s Ass\\xe2\\x80\\x99n v. FTC, 41 F.3d 81, 89 (3d. Cir. 1994) (noting that\\nfuneral providers can assure that consumers who buy third party caskets pay their fair share of\\nthe provider\\xe2\\x80\\x99s overhead costs by recouping those costs in the basic services fee that \\xe2\\x80\\x9cthey are\\npermitted to charge everyone,\\xe2\\x80\\x9d rather than in a casket handling fee).\\n8\\n\\n16 C.F.R. \\xc2\\xa7 453.2(b)(4)(iii)(C)(1). If the basic services fee is non-declinable, the\\nrule also requires a disclosure at the beginning of the GPL that \\xe2\\x80\\x9cany funeral arrangement you\\nselect will include a charge for our basic services.\\xe2\\x80\\x9d 16 C.F.R. \\xc2\\xa7 453.4(b)(2)(i)(A).\\n\\n\\x0cPamela D. Griebel\\nPage 3 of 4\\nprovide the casket.\\xe2\\x80\\x9d9 Thus, the Rule requires that all of a funeral provider\\xe2\\x80\\x99s clients pay the same\\nbasic services fee that is disclosed in its GPL.\\nBecause the basic services fee disclosed in a funeral provider\\xe2\\x80\\x99s GPL must be the same for\\nall its clients, this fee may not be discounted.10 The Rule\\xe2\\x80\\x99s definition of \\xe2\\x80\\x9cservices of funeral\\ndirector and staff,\\xe2\\x80\\x9d or basic services fee, provides additional support for this conclusion. As we\\nhave noted in a prior opinion,11 the definition limits the services that may be included in this fee\\nto those \\xe2\\x80\\x9cthat are furnished by a funeral provider in arranging any funeral,\\xe2\\x80\\x9d and may not include\\nservices \\xe2\\x80\\x9cincluded in prices of other categories in \\xc2\\xa7 453.2(b)(4) [i.e., itemized services required\\nor permitted to be disclosed in the GPL].\\xe2\\x80\\x9d12 Likewise, it is only \\xe2\\x80\\x9cunallocated funeral provider\\noverhead\\xe2\\x80\\x9d \\xe2\\x80\\x93 i.e., overhead not attributable to the itemized services required or permitted to be\\ndisclosed in the GPL \\xe2\\x80\\x93 that the Rule permits funeral providers to include in the basic services\\nfee.13\\nThus, if the basic services fee could be discounted as part of a discount funeral package, a\\nfuneral provider\\xe2\\x80\\x99s clients would not bear an equal share of the costs common to \\xe2\\x80\\x9cany\\xe2\\x80\\x9d funeral, as\\nthe Rule plainly requires. Moreover, if such a discount package were made available only to\\nclients who purchase a casket from the funeral provider, clients who elect to purchase a casket\\nfrom a third party and are not eligible to receive the discount package would pay a higher basic\\nservices fee than everyone else. The difference between such a discounted basic services fee\\npaid by clients who purchase a casket from the funeral provider, when subtracted from the full\\nbasic services fee paid by those who purchase a casket from a third party, can only be regarded\\nas an indirect casket handling fee. Casket handling fees, whether direct or indirect, are expressly\\nprohibited by the Rule.14\\nFourth, contrary to NFDA\\xe2\\x80\\x99s apparent impression, Opinion 97-3 is not inconsistent with\\nthe Commission\\xe2\\x80\\x99s position, when it adopted the amendment banning casket handling fees, that\\nthe Rule permits a funeral provider to offer discount funeral packages that are available only to\\nclients who purchase one of its caskets. As the Third Circuit noted, \\xe2\\x80\\x9cthe FTC distinguishes\\n\\n9\\n\\n16 C.F.R. \\xc2\\xa7 453.2(b)(4)(iii)(C)(2) (emphasis added).\\n\\n10\\n\\nThe rule does permit a funeral provider, in limited situations, to provide to\\nmembers of specified groups (e.g., children and infants, memorial society members) a separate,\\ncomplete GPL that may contain fees that are less than those listed in the GPL it provides to\\nconsumers who are not members of such a group. Complying with the Funeral Rule, FTC (June\\n2004) p. 13, available at http:\/\/www.ftc.gov\/bcp\/edu\/pubs\/business\/adv\/bus05.pdf.\\n11\\n\\nStaff Opinion 07-2 (March 21, 2007), p. 2.\\n\\n12\\n\\n16 C.F.R. \\xc2\\xa7 453.2(p) (emphasis added).\\n\\n13\\n\\n16 C.F.R. \\xc2\\xa7 453.2(b)(4)(iii)(C)(1) and (C)(2),\\n\\n14\\n\\n16 C.F.R. \\xc2\\xa7 453.4(b)(1)(ii).\\n\\n\\x0cPamela D. Griebel\\nPage 4 of 4\\ndirect casket handling fees from offering discounts to people who buy caskets from the funeral\\nhome,\\xe2\\x80\\x9d because \\xe2\\x80\\x9c[t]he former is an anti-competitive penalty (the fee) and the latter is . . . .a\\n[pro-competitive] way to encourage consumers to buy their caskets from funeral homes.\\xe2\\x80\\x9d15\\nSince that time, the Commission has stated consistently that the Rule permits discount packages\\nconditioned on the purchase of a casket from the funeral provider, provided that the basic\\nservices fee is not discounted, because of the pro-competitive benefits such packages provide.16\\nTo comply with the Funeral Rule, a funeral provider must include its full basic services\\nfee in the price of any discount funeral package offered, and discount only the prices itemized in\\nits GPL for the goods or services that are included in the package. Although nothing in the\\nrecord retention provision of the Rule requires funeral providers to create or retain a record of\\nwhat is discounted in their discount packages,17 neither does the Rule prevent providers from\\nmaintaining such records, if they wish, in order to protect themselves from any suggestion that\\nthey are improperly discounting the basic services fee. Funeral providers could also discourage\\nany such claim by including in the description of their discount funeral packages a truthful\\nstatement that the price of their packages includes the full basic services fee.\\nThe views expressed in this letter are those of the FTC staff. They have not been\\nreviewed, approved, or adopted by the Commission, and they are not binding on the Commission\\nor any individual Commissioner. However, they do reflect the views of FTC staff charged with\\nenforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted on the FTC\\nwebsite at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/staffopinions.shtm.\\nSincerely,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\n15\\n\\n41 F.3d at 90 (emphasis in original).\\n\\n16\\n\\n73 Fed. Reg. at 13748 & n.93 (noting that \\xe2\\x80\\x9c[t]o the extent consumers wish to\\npurchase a combination of the goods and services a funeral provider offers, bundling of discount\\npackages likely confers benefits,\\xe2\\x80\\x9d and citing staff opinion 97-3 with approval for its statement\\nthat \\xe2\\x80\\x98\\xe2\\x80\\x98funeral homes may encourage consumers to purchase a casket from their organization by\\noffering discounts on services or items except for a non-declinable Basic Services Fee.\\xe2\\x80\\x99\\xe2\\x80\\x99).\\n17\\n\\nSee 16 C.F.R. \\xc2\\xa7 453.6.\\n\\n\\x0c'","created_timestamp":"February 17, 2009","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-09-1\/opinion09-1.pdf"}
{"text":"b'UN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nDivision of Marketing Practices\\n\\nFebruary 17, 2009\\nThomas M. Hughes\\nHunton & Williams LLP\\n1900 K Street NW\\nWashington, DC 20006\\nDear Mr. Hughes:\\nThis letter responds to your request for a staff advisory opinion regarding compliance\\nwith the Magnuson-Moss Warranty Act (\\xe2\\x80\\x9cAct\\xe2\\x80\\x9d), 15 U.S.C. \\xc2\\xa7\\xc2\\xa7 2301-2312, and the Commission\\xe2\\x80\\x99s\\nRules promulgated under that Act. You seek guidance on whether providing consumer product\\nwarranties via electronic media, rather than in paper form, would comply with the Act and the\\nDisclosure Rule. Based on the information you provide in your letter, and after considering the\\npurposes of the Act, it is the staff\\xe2\\x80\\x99s opinion that warranties provided in electronic formats could\\ncomply with the Act and the Disclosure Rule.\\nIn your letter you indicate that your client manufactures a variety of consumer\\nelectronics, such as desktop, notebook, and handheld computers, printers, televisions, and digital\\ncameras, and provides written warranties on those products. Your client\\xe2\\x80\\x99s past practice has been\\nto include the product\\xe2\\x80\\x99s warranty in paper form within the product\\xe2\\x80\\x99s package (\\xe2\\x80\\x9cin-package\\xe2\\x80\\x9d\\nwarranty).1 You indicate that these in-package warranties can range in size from three to\\neighteen pages, which requires printing millions of copies of warranties each year on tons of\\npaper.\\nYour Client\\xe2\\x80\\x99s Proposal\\nYour client proposes to \\xe2\\x80\\x9creplace \\xe2\\x80\\x98in-package\\xe2\\x80\\x99 paper warranties with electronic written\\nwarranties. Depending upon the product, the electronic warranty would be preloaded on an\\ninternal fixed drive, or portable media such as a CD or DVD. The product \\xe2\\x80\\x98set-up guide\\xe2\\x80\\x99 will\\ninform consumers that the warranty terms are provided electronically.\\xe2\\x80\\x9d2\\nYour client would continue to provide its warranties to retailers so that retailers can make\\nthem available to consumers pre-sale. In addition, your client \\xe2\\x80\\x9cwill continue to make warranties\\n\\n1\\n\\nYour letter also states that your client provides copies of its written warranties in paper\\nform to retailers, in compliance with the Pre-Sale Availability Rule, 16 C.F.R. \\xc2\\xa7 702.3(b)(1)(i).\\n2\\n\\nFTC staff agrees with the assertion in your letter that such an advisory would not be\\nconsidered part of the written consumer product warranty, and therefore, would not implicate the\\nsingle document requirement of the Warranty Disclosure Rule.\\n\\n\\x0cMr. Thomas M. Hughes\\nFebruary 17, 2009\\nPage 2\\navailable at its web site.\\xe2\\x80\\x9d Thus, under your client\\xe2\\x80\\x99s proposed course of action, consumers would\\n\\xe2\\x80\\x9cbe able to compare warranties presale and have post-sale access to their warranty terms and\\nconditions so that they can obtain support as needed.\\xe2\\x80\\x9d Your client estimates that \\xe2\\x80\\x9creplacing\\nmillions of paper in-package warranties with electronic versions would result in significant\\nbenefits related to reduced paper, printing, transportation, and storage.\\xe2\\x80\\x9d\\nThe Warranty Act and Rules\\nAs acknowledged in your letter, your client\\xe2\\x80\\x99s proposed course of action implicates\\nseveral provisions of the Act or the Commission\\xe2\\x80\\x99s Rules under the Act. Specifically, the Act\\nrequires that \\xe2\\x80\\x9cany warrantor warranting a consumer product to a consumer by means of a written\\nwarranty shall, to the extent required by rules of the Commission, fully and conspicuously\\ndisclose in simple and readily understood language the terms and conditions of such warranty.\\xe2\\x80\\x9d\\n15 U.S.C. \\xc2\\xa7 2302(a). Following the mandate of the Act, the Commission\\xe2\\x80\\x99s Rule on Disclosure\\nof Written Consumer Product Warranty Terms and Conditions (the \\xe2\\x80\\x9cWarranty Disclosure\\nRule\\xe2\\x80\\x9d), further specifies that \\xe2\\x80\\x9cany warrantor warranting to a consumer by means of a written\\nwarranty a consumer product actually costing the consumer more than $15.00 shall clearly and\\nconspicuously disclose in a single document in simple and readily understood language\\xe2\\x80\\x9d certain\\nspecified items of information regarding the warranty terms and conditions. Moreover, the\\nCommission\\xe2\\x80\\x99s Rule on Pre-Sale Availability of Written Warranty Terms (the \\xe2\\x80\\x9cPre-Sale\\nAvailability Rule\\xe2\\x80\\x9d) requires a \\xe2\\x80\\x9cwarrantor who gives a written warranty warranting to a consumer\\na consumer product actually costing the consumer more than $15.00\\xe2\\x80\\x9d to \\xe2\\x80\\x9cprovide sellers with\\nwarranty materials necessary for such sellers to comply with the requirements\\xe2\\x80\\x9d of the Rule so\\nthat consumers can read a covered consumer product\\xe2\\x80\\x99s warranty before buying it. 16 C.F.R.\\n\\xc2\\xa7 702.3(b). The Pre-Sale Availability Rule also requires that warrantors provide \\xe2\\x80\\x9ca copy of the\\nwritten warranty with every warranted consumer product.\\xe2\\x80\\x9d3\\nDiscussion\\nThe language of the Act, quoted above, does not specify the medium, form, or format by\\nwhich disclosure of the terms and conditions of a written consumer product warranty must be\\nmade, as long as the disclosure is made \\xe2\\x80\\x9cfully and conspicuously . . . [and] in simple and readily\\nunderstood language.\\xe2\\x80\\x9d The Act, however, authorizes the Commission by Rule to make the\\ndisclosure requirement more specific, and the Commission, in the Warranty Disclosure Rule,\\n\\n3\\n\\nThe Pre-Sale Availability Rule allows four methods for warrantors to provide sellers\\nwith warranty materials necessary to make warranties available to consumers at point of sale.\\nThree of these methods entail providing \\xe2\\x80\\x9ca copy of the written warranty\\xe2\\x80\\x9d with every covered\\nconsumer product warranted, in addition to other action. The fourth method consists of\\nproviding \\xe2\\x80\\x9ca tag, sign, sticker, label, decal or other attachment to the product, which contains the\\nfull text of the written warranty.\\xe2\\x80\\x9d Thus, regardless of the method chosen, the text of the\\nwarranty must accompany the warranted product. 16 C.F.R. \\xc2\\xa7 702.3(b)(1)(i)(A)-(D).\\n\\n\\x0cMr. Thomas M. Hughes\\nFebruary 17, 2009\\nPage 3\\nadded to the Act\\xe2\\x80\\x99s requirements the specification that the disclosure be made \\xe2\\x80\\x9cin a single\\ndocument,\\xe2\\x80\\x9d while reiterating the Act\\xe2\\x80\\x99s requirement for \\xe2\\x80\\x9csimple and readily understood\\nlanguage.\\xe2\\x80\\x9d Like the Act, the Warranty Disclosure Rule does not specify permissible media,\\nforms, or formats. Similarly, the Pre-Sale Availability Rule specifies that \\xe2\\x80\\x9ca copy of the written\\nwarranty\\xe2\\x80\\x9d be provided, but also does not specify permissible media, forms, or formats.\\nAs your letter notes, in the context of warranties provided pursuant to online transactions,\\nthe FTC staff has stated that \\xe2\\x80\\x9c[w]arranties communicated through visual text on Web sites are no\\ndifferent than paper versions and the same rules apply.\\xe2\\x80\\x9d4 In addition, advisory opinions have\\nbeen issued stating that a retailer may make a warranty available to consumers using certain nonpaper formats \\xe2\\x80\\x93 such as on microfiche and ultrafiche readers \\xe2\\x80\\x93 as a means of complying with the\\nPre-Sale Availability Rule.5\\nConclusion\\nBased on the broad language used in the Pre-Sale Availability Rule, FTC staff\\xe2\\x80\\x99s opinion is\\nthat an electronic version of a consumer product warranty would constitute a \\xe2\\x80\\x9ccopy\\xe2\\x80\\x9d of the\\nwritten warranty for purposes of compliance with the Warranty Act and Rules. Moreover, it is\\nstaff\\xe2\\x80\\x99s opinion that a written consumer product warranty that is included on a CD, DVD, or on the\\ninternal drive of the warranted product would qualify as being \\xe2\\x80\\x9cprovided with\\xe2\\x80\\x9d or as\\n\\xe2\\x80\\x9caccompanying\\xe2\\x80\\x9d the product.\\nIn passing the Act, Congress\\xe2\\x80\\x99s intent was to ensure that consumers receive clear and\\ncomplete information about warranty coverage pre-sale, and that consumers be able to retain a\\ncopy of the warranty post-sale for reference in case of product failure. In the opinion of FTC\\nstaff, those purposes are sufficiently accomplished by providing, in electronic form, a copy of a\\n\\n4\\n\\nDot Com Disclosures: Information About Online Advertising, available at\\nhttp:\/\/www.ftc.gov\/bcp\/edu\/pubs\/business\/ecommerce\/bus41.pdf.\\n5\\n\\nSee 42 Fed. Reg. 39,381 (Aug. 4, 1977) (microfiche); 42 Fed. Reg. 15,679 (Mar. 23,\\n1977) (ultrafiche); 41 Fed. Reg. 53,472 (Dec. 7, 1976) (microfiche). In those opinions, approval\\nof microfiche and ultrafiche technologies for pre-sale availability purposes is predicated upon\\nthe seller providing simple, complete instructions for using the microfiche and ultrafiche readers\\nand ensuring that retail personnel were familiar with operating the readers to assist consumers if\\nneeded. Similarly, here, if your client wishes to provide only electronic warranties to retailers\\ninstead of paper copies, the retailers would need either to print out the warranties in paper form,\\nor to have the capability to display the electronic warranty and personnel available to assist\\nconsumers in viewing the warranty information, so that these retailers are \\xe2\\x80\\x9cmak[ing] a text of the\\nwarranty readily available for examination by the prospective buyer by: (1) displaying it in\\nclose proximity to the warranted product, or (2) furnishing it upon request prior to sale . . .\\xe2\\x80\\x9d\\n16 C.F.R. \\xc2\\xa7 702.3(a). (Emphasis added.)\\n\\n\\x0cMr. Thomas M. Hughes\\nFebruary 17, 2009\\nPage 4\\nwritten consumer product warranty that otherwise complies with the requirements and\\nprohibitions of the Warranty Act and Rules \\xe2\\x80\\x93 provided the warranted consumer products include\\nclear, conspicuous, and easy-to-follow instructions on how to access the warranty information\\nprovided on the consumer product\\xe2\\x80\\x99s internal drive or on an accompanying CD or DVD and that a\\nconsumer can print out a paper copy of the warranty if needed. Further, consumers who receive\\nyour client\\xe2\\x80\\x99s warranties electronically may end up dependent on the copy of the warranty\\navailable on your client\\xe2\\x80\\x99s website if product failure occurs, because they may not be able to\\naccess the internal drive or portable media. Therefore, if your client changes its warranty, it\\nshould keep on its website a posting of printable earlier warranties and the dates they were in\\neffect.\\nThe opinions and conclusions expressed in the foregoing discussion are those of\\nCommission staff only and are not attributable to, nor binding on, the Commission itself\\nor any individual Commissioner. I hope this discussion is helpful to you. If you have any further\\nquestions, please do not hesitate to contact me at (202) 326-2505.\\n\\nSincerely,\\n\\nAllyson Himelfarb\\nInvestigator\/Magnuson-Moss\\nProgram Coordinator\\n\\n\\x0c'","created_timestamp":"February 17, 2009","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-09-1\/opinion0901_0.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nPEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Enforcement\\nBureau of Consumer Protection\\n\\nDecember 8, 2008\\n\\nMichael H. Bai, Esq.\\nLittleton Joyce Ughetta Park & Kelly LLP\\n39 Broadway, 34th Ploor\\nNew York, NY 10006\\nDear Mr. Bai:\\nThank you for your letter to the Commission, dated October 10, 2008, requesting our\\nadvice and interpretation concerning use of the term \"Lyocell\" on tires pursuant to 16 C.F.R. \\xc2\\xa7\\n303. As you requested during a telephone conversation with my staff on December 3,2008, we\\nare treating your letter as a request for a staff advisory opinion. This letter is a formal response\\nto your request, memorializing the email response provided by Steve Ecklund on November 12,\\n2008.\\nTires are not subject to the Textile Fiber Products Identification Act and, therefore, the\\nFTC list of generic fiber nan1es set forth at 16 C.P.R. \\xc2\\xa7 303.7 does not apply. However, any\\nmarketing is stilI subject to Section 5 of the FTC Act, 15 U.S.C. \\xc2\\xa7 45, which forbids deceptive\\nand tmfair practices in or affecting commerce. I suggest that you carefully review the following\\ntwo Policy Statements in tIus regard:\\nhttp:\/\/\\\\V\\\\vw.ftc.govlbcp\/policvstmt\/ad-decept.htm\\nhttp:\/\/www.ftc.govlbcp\/gllides\/ad3subst.htm\\nIf a company makes a claim about its product (such as that it contains LyoceIl), the claim\\nshould not be \"deceptive\" and the company should have reasonable \"substantiation\" for that\\nclaim. We are not textile chemists and we do not test products for their fiber content unless we\\ndo so as part of an official law enforcement action - and then we would contract with a private\\nlab to conduct the actual testing.! Therefore, we decline to render an opinion regarding whether\\na representation that your tires contain Lyocell would comply witI1 Section 5 ofthe FTC Act.\\nIn accordance with Section 1.3(c) of the Commission\\'s Rules of Practice and Procedure,\\n16 C.F.R. \\xc2\\xa7 1.3(c), this informal staff opinion has not been reviewed or approved by the\\n\\nIn accordance with Section 1.1 oftl1e Commission\\'s Rules of Practice and Procedure,\\n16 C.F.R. \\xc2\\xa7 1.1, we do not ordinarily provide an opinion if an infoDned opinion Call110t be made\\nor could be made only after extensive investigation, clilucal study, testing, or collateral inquiry.\\nI\\n\\n\\x0cCommission or by an individual Commissioner, and is given without prejudice to the right of the\\n. Commission later to rescind the advice and, where appropriate, to commence a law enforcement\\naction. In addition, this office retains the right to reconsider its advice, and with notice to the\\nrequesting patiy, rescind or revoke its opinion if the response is used for improper purposes, or if\\nit would be in the public interest to do so.\\nPursuant to Section 1.4 of the Commission\\'s Rules of Practice and Procedure, 16 C.F.R.\\n\\xc2\\xa7 1.4, this response along with your request for advice will be placed on the public record,\\nsubject to any limitations on public disclosure arising from statutory restrictions, the\\nCommission\\'s rules, atld the public interest. Hopefully, the preceding has been helpful.\\n\\nKOlA\\n\\nlvi.-\/\\n\\nJatn A.\\nAssociate Director\\nDivision ofEnfocement\\n\\n2\\n\\n\\x0c39 Broadway\\n\\nLITTLETON JOYCE\\nUGHETTA PARK\\nNEW YORK CITY\\n\\n& KELLY LLP\\n\\nI PURCHASE,\\n\\nNY\\n\\nI\\n\\nR\\'ED BANK. NJ\\n\\n34th Floor\\nNew York. NYroo06\\nTel (212) 404-5777\\nFax (212) 232-0088\\n\\nwww.litllelonjt?J1ce.com\\nDirect Dial: (212)404-5775\\n\\nE-Mail:\"michael.bai@littletolljoyce.com\\n\\nOctober 10, 2008\\nVIA FEDERAL EXPRESS\\nFederal Trade Commission\\n600 Pennsylvania Avenue, NW\\nWashington, DC 20580\\nAttention:\\n\\nRe:\\n\\nSecretary of the Commission\\n\\nUse of the Term \"Lyocell\" on Tires Pursuant to 16 CFR \\xc2\\xa7303.7(d)\\n\\nDear Secretary ofthe Commission:\\nThe undersigned has been retaioed by Hyosung Corporation (\\'\\'Hyosung\\'\\') to obtain the\\nFederal Trade Commission\\'s (\"FTC\") advice\/interpretation concerning whether, pursuant to 16\\nCFR \\xc2\\xa7303.7(d), Hyosung and its customers, specifically Kurnho Tire Co., Inc. (\"Kurnho Tire\"),\\nmay use the term \"Lyocell\" on the tire\\'s sidewall to describe the fibers in the tire\\'s cord\\nmaterials.\\nWe have received the attached letter (Exhibit \"A\") from the Chief Counsel for the\\nNational Highway Traffic Safety Administration (\"NHTSA\") in response to our request for\\ninterpretation on behalf of Kurnho Tire Co., Inc. (Exhibit \"B\"). NHTSA\\'s Chief Counsel states\\nthat pursuant to 49 CFR \\xc2\\xa7 571.139 paragraph S5.5(e), Kurnho Tire may use the FTC-established\\ngeneric tenn \"Lyocell\" on the tire\\'s sidewall to describe the fibers in the tire\\'s cord materials.\\nHowever, NHTSA\\'s Chief Counsel informed us that its answer was conditioned upon FTC\\nconcurrence that the generic name \"Lyocell\" is properly applicable to Kurnho Tire\\'s tire fiber\\ncord material.\\nWe have attached Hyosung\\'s formula fur the \"Lyocell\" material that is in the tire\\'s cord\\nmaterial (Exhibit \"C\"). Since the formula meets the definition for \"Lyocell\" pursuant to 16 CFR\\n\\xc2\\xa7303.7(d), please confirm that Hyosung\\'s customers, namely Kurnho Tire, may use the term\\n\"Lyocell\" on the tire\\'s sidewall in tires that use \"Lyocell\" cord material.\\n\\n\\x0cUse ofthe Tenn \\'\\'Lyocell\\'\\' on Tires Pursuant to 16 CFR \\xc2\\xa7303.7(d)\\nPage 2\\n\\nIf you have any questions, please do not hesitate to contact me at 212-404-5775. Ifany\\nadditional information is necessary, please advise me. Thank you for your attention to this\\nmatter.\\nVery truly yours,\\nLITTLETON JOYCE UGHET A PARK & KELLY LLP\\n\\n. Bai\\n\\nEnclosures:\\n\\nExhibit \"A\"\\nExhibit \"B\"\\nExhibit \"c\"\\n\\nAugust 25, 2008 Letter from NHTSA\\nApril 2, 2008 Letter to NHTSA\\nHyosuog Corporation\\'s Lyocell FonnuIa\\n\\nLITTLETON JOYCE UGHETTA PARK\\n\\n& KELLY LLP\\n\\n\\x0cAUG 2 5\\nU.S. Department\\nofTransportatlon\\nNational Highway\\nTraffic Salety\\nAdministration\\n\\n>~U\\n\\n1200 New Jersey Avenue SE.\\nWashIngton, DC 20590\\n\\nMr. Michael H. Bai\\nLittleton Joyce Ughetta Park & Kelly LLP\\n39 Broadway\\n34th Floor\\nNew York, NY 10006\\nDear Mr. Bai:\\nThis responds to your letter requesting an interpretation of one ofthe labeling\\nrequirements of Federal Motor Vehicle Safety Standard (FMVSS) No: 139, New\\npneumatic radial tires for light vehicles. You ask whether, if your client Kumho Tires\\nincorporates \"lyocell\" fibers in the cord materials for the tire\\'s plies, it would be\\npermissible under S5.5(e) ofFMVSS No. 139 to label the tire sidewall with either\\n\"lyocell\" or \"rayon.\"\\nOur answer is a qualified yes, We have made a few assumptions\\'i\\'!J answering yoUr letter.\\nFirst, we assume that the cord material in question is in fact lyocell and that you simply\\nask if reference to \"Iyocell\" or \"rayon\" may be used to describe the material. Second,\\nyou state that under Federal Trade Commission (FTC) regulations, \"Iyocell\" and \"rayon\"\\nare generic names for lyacell; for the purposes of this letter, we assume your\\nunderstanding is correct. However, for a complete answer to your question, you should\\ncontact the FTC to obtain its concurrence that you have correctly understood the FTC\\nregulation.\\nBy way of background, the National Highway Traffic Safety Administration (NHTSA) is\\nauthorized to issue FMVSSs that set performance requirements for new motor vehicles\\nand items of motor vehicle equipment (see 49 U.S .C, Chapter 301). NHTSA does not\\nprovide approvals of motor vehicles or motor vehicle equipment. Instead, manufacturers\\nare required to self-certify that their products conform to all applicable safety standards\\nthat are in effect on the date of manufacture. NHTSA selects a sampling of new vehicles\\nand equipment each year to detennine their compliance with applicable FMVSSs. If our\\ntesting or examination reveals an apparent noncompliance, we may require the\\nmanufacturer to reniedy the noncompliance, and may initiate an enforcement proceeding\\nifnecessary to ensure that tile manufacturer takes appropriate action.\\n\\n*****\\nNHTSA\\n\\n\\x0c2\\n\\nParagraph S5.5 of FMVSS No. 139 specifies tire markings for new pneumatic radial tires\\nfor use on motor vehicles (other than motorcycles and low speed vehicles) that have a\\ngross vehicle weight rating (OVWR) of 10,000 pounds or less. Among the information\\nrequired by S5.5 to be marked on the tire sidewall, S5.5(e) requires \"The generic name of\\neach cord material used in the plies (both sidewall and tread area) of the tire.\" NHTSA\\nrequires this information to help tire purchasers select the characteristics they want in a\\ngiven tire, because the many different cord materials that exist and their many different\\ncharacteristics enable a tire to be specially geared to its anticipated use.\\nYour letter states that FTC regulations (16 CFR \\xc2\\xa7 303.7(d)) permit the use ofthe generic\\nname \"lyocell\" or \"rayon\" where the fabric used is \"Iyocell.\" NHTSA has previously\\nfavorably cited FTC-established generic names for cord materials. In a January 20, 1976\\nletter of interpretation, NHTSA advised that if Kevlar was used as a cord material in a\\ntire; it must be identified by its generic name, which, NHTSA stated, the FTC established\\nas \"Aramid\" pursuant to the Textile Fiber Product Identification Act.\\nAssuming you are correct that the FTC has established that lyoceJl fibers may be\\nidentified by either the generic name \"Iyocell\" or the generic name \"rayon,\" and because\\nwe have previously accepted FTC-established generic names for tire cord material\\nlabeling required by the FMVSSs, in our opinion using either \"lyocell\" or \"rayon\" as the\\ngeneric name for lyocell tire cords would be acceptable under FMVSS No. 139.\\nHowever, our answer is conditional on FTC concurrence that the genetic names \"lyoceJl\"\\nand \"rayon\" are properly applicable to your client\\'s tire cord material. We suggest that\\nyou follow up with the FTC on this matter.\\nI hope this information is helpful. If you have any further questions, please do not\\nhesitate to contact Rebecca Schade of my staff at (202) 366-2992.\\nSincerely yours,\\n\\n~\\n\\\\(--Anthony M. Cooke\\nChiefCounsel\\n\\n\\x0cLITTLETON J OyeE\\nUGHETTA PARK\\nNEW YORK CITY\\n\\n& KELLY LLP\\n\\nI PURCHASE,\\n\\nNY\\n\\nI RED\\n\\nBANK, NJ\\n\\n39 Broadway\\n34th floor\\nNew York. NY 10006\\nTel (212) 404-5777\\nFax (212) 232-0088\\n\\nwww.littletonjl2Jce.com\\nDirect Dial: (212) 404\\xc2\\xb75775\\nE-Mail: michael.hai@littletonjoyce.com\\n\\nApril 2, 2008\\nVIA FACSIMILE AND REGULAR MAIL\\nThe Chief Counsel\\nNational Highway Traffic Safety Administration, NCC-Ol\\n400 7th Street, SW\\nWashington, D.C. 20590\\nRe:\\n\\nRequest for Interpretation of 49 CFR \\xc2\\xa7571.139 Concerning the Use of the\\nGeneric Name \"Lyocell\" or \"Rayon\"\\n\\nDear Chief Counsel:\\nThe undersigned serves as counsel for Kumho Tire Co., Inc. (\"Kumho Tires\"). Pursuant\\nto 49 CFR \\xc2\\xa7 571.139 paragraph S5.5(e), ifKumho Tires incorporates \"lyocell\" fibers in the cord\\nmaterials for the tire\\'s plies, may Kumho Tires place either the generic name \"lyocell\" or\\n\"rayon\" on the tire\\'s sidewall?\\nUnder 49 CFR \\xc2\\xa7 571.139 paragraph S5.5(e), Kumho Tires must identify the generic name\\nof each cord material used in the tire\\'s plies on the tire\\'s sidewall. I Pursuant to 16 CFR\\n\\xc2\\xa7303.7(d), the Federal Trade Commission (\"FTC\") allows for a manufacturer to use the term\\n\"lyocelJ\" or \"rayon\" as a generic name for manufactured lyocelJ fibers. 2\\n\\n1\\n\\n49 CFR \\xc2\\xa7 571.139; New pneumatic tires for light vehicles.\\n\\n35.5 Tire markings. Except as specified in paragraphs Ca) through Ci) of S5.5. each tire must be marked on each sidewall\\nwith the information specified in S5.5(.) through (d) and on one sidewall with the information specified in S5.5(0) through (i)\\naccording to the phase~in schedule specified in 87 of this standard. The markings must be placed between the maximum section\\nwidth and the bead on at least one sidewall. unless the maximum section width of the tire is located in an area that is not more\\nthan one-fourth of the distance from the bead to the shoulder of the tire. If the maximum section width tails within that area,\\nthose markings must appear between the bead and a point one-half the distance from the bead to the shoulder of the tire. on at\\nleast one sidewall. The markings must be in letters and numerals not less than 0.078 inches high and raised above or sunk below\\nthe tire surface not less than 0.015 inches.\\n\\n(c) The generic name oreach cord materia) used in the plies (both sidewall and tread area) of the tire;\\n1\\n\\n16 CFR \\xc2\\xa7 303.7 Generic names and definitions for manufactured fibers.\\n\\n\\x0cLetter to NHTSA re: Request for Interpretation of 49 CFR \\xc2\\xa7571.139 Concerning the Use of the\\nGeneric Name \"Lyocell\" or \"Rayon\"\\nApril 2, 2008\\nPage 2\\n\\nAccording to the above-referenced regulations, the FTC permits the use of the genetic\\nname \"lyocell\" or \"rayon\" where the fabric used is \"lyocell\". However, NHTSA regulations\\nconcerning tire labeling are silent on the \"generic name of each cord material\" tlJat may be used.\\nTherefore, we request clarification and confmnation that Kumho Tires may label its tires as\\neither \"lyocell\" or \"rayon\" as long as the tire cord matetials are manufactured using \"lyocell.\"\\n\\nIf NHTSA respond by requiring Kumho Tires to label the tires as \"lyocell\", we would\\nappreciate it ifNHTSA could provide us with the regulation suppOliing NHTSA\\'s conclusion.\\nThank you for your attention and assistance in this matter. Your earliest reply would be\\ngreatly appreciated. Please do not hesitate to contact the undersigned if you have questions.\\nVery truly yours,\\nLITTLETON JOYCE UGHETTA PARK & KELLY LLP\\n\\n\\xe2\\x80\\xa2\\nMichael H. Bai\\n\\nPursuant to the provisions of section 7(c) of the Act, the Commission hereby establishes the generic names for manufactured\\nfibers, together with their respective definitions, set forth in this section, and the generic names for manufactured fibers, together\\nwith their respective definitions, set forth in international Organization for Standardization ISO 2076: 1999(E), \"Textiles-Man-\\n\\nmade\\n\\nfibres~~Generic\\n\\nnames. tl This incorporation by reference was approved by the Director of the Federal Register in\\n\\naccordance with 5 U.S.C. 552(a) and I CFR part 51. Copies may he ohtained from ti,e American National Standards Institute, II\\nWest 42nd St., 13th floor, New York, NY 10036. Copies may be inspected at the Federal Trade Commission, Room 130,600\\n\\nPennsylvania Avenue, NW., Washington, DC 20580, or at the National Archives and Records Administration (NARA). For\\ninformation on the availability of this material at NARA, cail 202-741-6030, or go to: http:\/\/www.archives.gov\/federal-\\n\\nregistcr\/code--of--federal-regulations\/ibr-Iocations.html.\\n(d) Rayon-A manufactured fiber composed of regenerated cellulose, as well as manufactured fibers composed of regenerated\\ncellulose in which substituents have replaced not more than 15% of the hydrogens of the hydroxyl groups. Where the fiber is\\ncomposed ofceltulose precipitated from an organic solution in which no substitution orihe hydroxyl groups takes place\\nand no chemical intermediatesnre formed. the term Ivocell may be used as a generic description of the fiber.\\n\\nLITTLETON JOYCE UCHETTA PARK & KELLY LLP\\n\\n\\x0c\\xe2\\x80\\xa2I\\n\\nI\\n\\n0\\n\\nI\\n\\n0\\n\\nI\\n\\n\"iii\\n\\n0\\n\\n0\\n\\n~\\n\\n0\\n\\n>.\\n\\n0\\n\\n..J\\nI\\n\\n0\\n\\nI\\n\\n0\\n0\\n\\nI\\n\\n0\\n\\nI\\nfa\\n.-\\n\\n:::s\\n\\n:;::;-\\n\\nE\\nl0\\n\\nu.\\n\\n--\\n\\nCIJ\\nU\\n\\n0\\n\\n\"\\n\\nI\\n\\n(.)\\n\\n0\\n\\n\"\\n\\nU)\\n\\n0\\n\\n0\\n\\n\"\"\\n\\nc\\n\\n;-\"\\\\\/\\n\\no\\n\\n\"\\n\\nell\\n~\\n\\n:l\\n\\n<Il\\n\\nz\\n\\n\"\\'-----I \\\\ 0\\n\\n>-\\n\\n\"0\\nIII\\n\\nE\\'\\n\\ne-\\n\\nIII\\n\\nis\\n\\n0\\n\\n:E\\n:E\\n\\nz\\n\\n....I\\n\\nI\\n\\n\\xe2\\x80\\xa2I\\n\\n0\\n\\nI\\n\\n0\\n\\nI\\n\\n0\\n0\\n\\nI\\n\\n0\\nJ:\\n\\n0\\n\\nJ:\\n\\n0\\n\\n0\\n\\nJ:\\n\\n0\\n\\nI\\n\\n\\':2\\'\"\"\\n0\\n\\n\"iii\\n()\\n\\n\\x0c'","created_timestamp":"December 8, 2008","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/letter-james.kohm-associate-director-division-enforcement-bureau-consumer-protection\/081208jameskohmletter.pdf"}
{"text":"b'UN ITED STATES OF AM ERICA\\n\\nFEDERAL TRADE COMMISSION\\nW ASH IN GTO N , D .C. 20580\\n\\nD ivision of M arketing Practices\\nCraig Tregillus\\nctregillus@ ftc.gov\\n\\nD irect D ial: (202) 326-2970\\nFacsim ile: (202) 326-3395\\n\\nOctober 2, 2008\\nStephen Dirksen, General Counsel\\nNorth Carolina Board of Funeral Service\\n1033 Wade Ave. - Suite 108\\nRaleigh, NC 27605\\nDear Mr. Dirksen:\\nYou have asked under what circumstances a crematory is required to comply with the\\nfuneral rule. It is staff\\xe2\\x80\\x99s view that a crematory must comply with all of the requirements of the\\nrule if it offers or sells cremation services and any funeral goods, such as caskets, alternative\\ncontainers, or urns.\\nAs defined in section 453.1(f) of the rule \\xe2\\x80\\x9c[a] \\xe2\\x80\\x98crematory\\xe2\\x80\\x99 is any person, partnership or\\ncorporation that performs cremation and sells funeral goods.\\xe2\\x80\\x9d This definition includes each of\\nthe two elements \\xe2\\x80\\x93 the offer or sale of both \\xe2\\x80\\x9cfuneral goods\\xe2\\x80\\x9d and \\xe2\\x80\\x9cfuneral services\\xe2\\x80\\x9d \\xe2\\x80\\x93 that is\\ncentral to the definition of \\xe2\\x80\\x9cfuneral provider\\xe2\\x80\\x9d in section 453.1(i), which states that \\xe2\\x80\\x9c[a] \\xe2\\x80\\x98funeral\\nprovider\\xe2\\x80\\x99 is any person, partnership or corporation that sells or offers to sell funeral goods and\\nfuneral services.\\xe2\\x80\\x9d\\nNotwithstanding the fact that cremation would normally be regarded as a service, your\\ninquiry questions whether the term \\xe2\\x80\\x9cfuneral services\\xe2\\x80\\x9d can encompass cremation, under a strict\\nreading of the definition of that term in section 453.1(j):\\n\\xe2\\x80\\x98Funeral services\\xe2\\x80\\x99 are any services which may be used to:\\n(1)\\n\\nCare for and prepare deceased human bodies for burial, cremation\\nor other final disposition; and\\n\\n(2)\\n\\narrange, supervise or conduct the funeral ceremony or the final\\ndisposition of deceased human remains.\\n\\nIt is clear from the reference to \\xe2\\x80\\x9ccremation or other final disposition\\xe2\\x80\\x9d in the first subparagraph of\\nthe definition that cremation is a \\xe2\\x80\\x9cfinal disposition.\\xe2\\x80\\x9d Accordingly, the requirement in the second\\nsubparagraph is met, because a crematory \\xe2\\x80\\x9csupervises\\xe2\\x80\\x9d and \\xe2\\x80\\x9cconducts\\xe2\\x80\\x9d the final disposition.\\nYour inquiry appears to question, however, whether the test in the first subparagraph can be met,\\nperhaps because \\xe2\\x80\\x9ccare and preparation of the body\\xe2\\x80\\x9d is such a common description of a service\\ntraditionally offered by funeral homes. You therefore may assume that a crematory cannot also\\n\\xe2\\x80\\x9ccare for and prepare\\xe2\\x80\\x9d bodies for cremation.\\n\\n\\x0cMr. Stephen Dirksen\\nPage 2 of 2\\n\\nSuch an assumption is unjustified, and overlooks the history of the rule. Crematories\\n\\xe2\\x80\\x9ccare for\\xe2\\x80\\x9d a body from the moment they receive it, because it has been remitted to their care, and\\nmay need to be held or refrigerated for a period of time as required by state law or the\\navailability of the crematory\\xe2\\x80\\x99s retort. Crematories must also take any necessary steps to\\n\\xe2\\x80\\x9cprepare\\xe2\\x80\\x9d the body for cremation, which may include, for example, removing the body from a\\nshell container or rental casket, as well as removal of pacemakers, metal implants and jewelry.1\\nThe original Statement of Basis and Purpose for the rule confirms this interpretation,\\nmaking it clear that the definition of \\xe2\\x80\\x9ccrematory,\\xe2\\x80\\x9d which has not changed notwithstanding the\\nsubsequent renumbering of the definition, includes both \\xe2\\x80\\x9cfuneral goods\\xe2\\x80\\x9d and \\xe2\\x80\\x9cfuneral services:\\xe2\\x80\\x9d2\\nThe definition of crematory\" in Section 453. 1(g) includes only those persons,\\npartnerships and corporations that both perform cremations and sell funeral\\ngoods. The Commission is aware that some crematories do not sell funeral\\ngoods, and therefore would not fall within this definition. However, the\\nCommission believes that \\xc2\\xa7 453. 1(g) is consistent with Section 19 of the 1980\\nImprovements Act which limits the rule s coverage to persons who sell both\\nfuneral goods and funeral services.\\nConsequently, any crematory that offers or sells funeral goods must comply with the\\nsame rule requirements as all other \\xe2\\x80\\x9cfuneral providers.\\xe2\\x80\\x9d This includes the requirement to\\nprovide price information by telephone upon request, give consumers a General Price List\\n(\\xe2\\x80\\x9cGPL\\xe2\\x80\\x9d) describing the goods and services the crematory offers for sale, and the requirement\\nthat they show consumers a Casket Price List if caskets are offered but not listed in the GPL. It\\nalso includes all applicable prohibitions and affirmative requirements of the rule, such as the\\nprohibition in section 453.4(a)(1) against requiring the purchase of a casket for direct cremation,\\nand the affirmative requirement in section 453.4(a)(2) to make an alternative casket available for\\ndirect cremations.\\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted\\non the FTC website at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/staffopinions.shtm.\\nSincerely,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\n1\\n\\nSee, e.g., http:\/\/www.funeralplan.com\/funeralplan\/cremation\/beforecremation.html.\\n\\n2\\n\\n47 Fed. Reg. 42260, 42285 (Sept. 24, 1982).\\n\\n\\x0c'","created_timestamp":"October 2, 2008","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-08-1\/opinion08-1.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Marketing Practices\\n\\nMay 5, 2008\\nMatthew K. Cordis, Esq.\\nClarke Silvergate & Campbell, P.A.\\n799 Brickell Plaza, Suite 900\\nMiami, FL 33131\\nDear Mr. Cordis:\\nThis letter responds to your request of March 3, 2008 seeking an advisory opinion from\\nstaff of the Federal Trade Commission (the \\xe2\\x80\\x9cCommission\\xe2\\x80\\x9d or \\xe2\\x80\\x9cFTC\\xe2\\x80\\x9d) regarding the application\\nof the Magnuson-Moss Warranty Act (\\xe2\\x80\\x9cthe Act\\xe2\\x80\\x9d), 15 U.S.C. \\xc2\\xa7 2301, et seq., to a 1300\\nhorsepower diesel engine that your client imports and distributes. Your client also coordinates\\nservices of those engines in the United States.\\nYou request guidance on whether this engine would be a \\xe2\\x80\\x9cconsumer product\\xe2\\x80\\x9d under the\\nAct. 15 U.S.C. \\xc2\\xa7 2301(1). Based on your letter\\xe2\\x80\\x99s description of the engine and relevant sales\\nand industry data included in your letter, FTC staff\\xe2\\x80\\x99s opinion is that the engine in question would\\nnot be a \\xe2\\x80\\x9cconsumer product\\xe2\\x80\\x9d for purposes of the Act.\\nThe Act requires companies that offer written warranties on the consumer products they\\nmanufacture or sell to provide consumers with detailed information about warranty coverage.\\nFor example, the Act and the regulations the FTC adopted under the Act require that the key\\nterms of warranty coverage be disclosed in a single document, 16 C.F.R. Part 701, and that the\\ndocument be available at the point of purchase for consumers to review before purchasing a\\nwarranted consumer product, 16 C.F.R. Part 702.\\nThe Act defines a \\xe2\\x80\\x9cconsumer product\\xe2\\x80\\x9d as \\xe2\\x80\\x9cany tangible personal property which is\\ndistributed in commerce and which is normally used for personal, family, or household purposes\\n(including any such property intended to be attached to or installed in any real property without\\nregard to whether it is so attached or installed).\\xe2\\x80\\x9d 15 U.S.C. \\xc2\\xa7 2301(1). The Commission has\\npromulgated an interpretive rule that clarifies that \\xe2\\x80\\x9ca product is a \\xe2\\x80\\x98consumer product\\xe2\\x80\\x99 if the use\\nof that type of product [for personal, family, or household purposes] is not uncommon.\\xe2\\x80\\x9d 16\\nC.F.R \\xc2\\xa7 700.1(a).\\nThe product you describe in your letter is a 1300 horsepower diesel engine commonly\\nincorporated into industrial or commercial products such as cranes, buses, farm equipment,\\nlocomotives, mining equipment, and commercial vessels. According to the sales data you\\nprovide, the engine\\xe2\\x80\\x99s manufacturer sold just 2% of these engines to manufacturers for\\nincorporation into marine pleasure craft, and less than .01% directly to individuals for similar\\nuse. Although the FTC\\xe2\\x80\\x99s interpretative rule states that \\xe2\\x80\\x9c[t]he percentage of sales . . . is not\\ndeterminative,\\xe2\\x80\\x9d 16 C.F.R. \\xc2\\xa7 700.1(a), sales information is relevant in determining a product\\xe2\\x80\\x99s\\n\\n\\x0cMr. Matthew K. Cordis\\nMay 5, 2008\\nPage 2\\nnormal use, and whether that use is for personal, family, or household purposes such that it falls\\nwithin the Act\\xe2\\x80\\x99s coverage. The sales data you provide suggests that this engine is not one for\\nwhich the normal use is for personal, family, or household purposes. Therefore, based on the\\npurposes of the Act and the data you provided, we agree that this engine is not a \\xe2\\x80\\x9cconsumer\\nproduct\\xe2\\x80\\x9d under the Act.1\\nThe opinions expressed in the foregoing discussion and the basis for this conclusion are\\nthose of Commission staff only and are not attributable to, nor binding on, the Commission itself\\nor any individual Commissioner. I hope this discussion is helpful to you. If you have any\\nfurther questions, please do not hesitate to contact me at (202) 326-2505.\\n\\nSincerely,\\n\\nAllyson Himelfarb\\nInvestigator\/Magnuson-Moss\\nProgram Coordinator\\n\\n1\\n\\nThe industry data you provide also supports this conclusion. You indicate that in 2003,\\nover 88% of all diesel engines with horsepower greater than 500 were incorporated into\\nindustrial vessels, equipment and machinery, as compared to approximately 12% that were\\nincorporated into large motor yachts. As you note, it is likely that a significant percentage of\\nthese motor yachts are used solely for commercial purposes. Therefore, it appears uncommon\\nfor a 1300 horsepower diesel engine to be used for \\xe2\\x80\\x9cpersonal, family, or household purposes.\\xe2\\x80\\x9d\\n\\n\\x0c'","created_timestamp":"May 5, 2008","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-08-1\/opinion0801_0.pdf"}
{"text":"b\"U N ITED STA T ES O F A M ER IC A\\n\\nFEDERAL TRADE COMMISSION\\nW A SH IN G TO N , D .C . 20580\\n\\nD ivision of M arketing Practices\\n\\nApril 15, 2008\\nMs. Kristen Marshall\\nCopilevitz & Canter, LLC\\n310 W. 20th Street, Ste. 300\\nKansas City, Mo. 64108\\nDear Ms. Marshall:\\nThis letter responds to your request, dated January 31, 2008, for a staff advisory opinion\\nregarding the interplay between the recordkeeping requirements of \\xc2\\xa7 310.5 of the Telemarketing\\nSales Rule (\\xe2\\x80\\x9cTSR\\xe2\\x80\\x9d) and the Do Not Call and Call Abandonment \\xe2\\x80\\x9csafe harbor\\xe2\\x80\\x9d provisions of\\n\\xc2\\xa7\\xc2\\xa7 310.4(b)(3) and (4). Specifically, you note that \\xc2\\xa7 310.5(a) requires that a seller or\\ntelemarketer retain certain records \\xe2\\x80\\x9cfor a period of 24 months from the date the record is\\nproduced,\\xe2\\x80\\x9d while \\xc2\\xa7 310.4(b)(3) provides, in relevant part, that:\\nA seller or telemarketer will not be liable for violating \\xc2\\xa7 310.4(b)(1)(ii) and (iii) if\\nit can demonstrate that, as part of the seller\\xe2\\x80\\x99s or telemarketer\\xe2\\x80\\x99s routine business\\npractice:\\n(i)\\n\\nIt has established and implemented written procedures to comply with\\n\\xc2\\xa7 310.4(b)(1)(ii) and (iii); . . .\\n\\n(iii)\\n\\nThe seller, or a telemarketer or another person acting on behalf of the seller or\\ncharitable organization, has maintained and recorded a list of telephone\\nnumbers the seller or charitable organization may not contact, in\\ncompliance with \\xc2\\xa7 310.4(b)(1)(iii)(A);\\n\\n(iv)\\n\\nThe seller or a telemarketer uses a process to prevent telemarketing to any\\ntelephone number on any list established pursuant to \\xc2\\xa7 310.4(b)(3)(iii) or\\n\\xc2\\xa7 310.4(b)(1)(iii)(B), employing a version of the \\xe2\\x80\\x9cdo-not-call\\xe2\\x80\\x9d registry obtained\\nfrom the Commission no more than thirty-one (31) days prior to the date any\\ncall is made, and maintains records documenting this process . . . . [Emphasis\\nadded.]\\n\\nSimilarly, \\xc2\\xa7 310.4(b)(4) provides, in relevant part, that:\\nA seller or telemarketer will not be liable for violating \\xc2\\xa7 310.4(b)(1)(iv) if:\\n\\n\\x0cMs. Kristen Marshall\\nCopilevitz & Canter, LLC\\nApril 15, 2008\\n\\nPage 2 of 3\\n\\n(i)\\n\\nthe seller or telemarketer employs technology that ensures abandonment\\nof no more than three (3) percent of all calls answered by a person,\\nmeasured per day per calling campaign;\\n\\n(ii)\\n\\nthe seller or telemarketer, for each telemarketing call placed, allows the\\ntelephone to ring for at least fifteen (15) seconds or four (4) rings before\\ndisconnecting an unanswered call;\\n\\n(iii)\\n\\nwhenever a sales representative is not available to speak with the person\\nanswering the call within two (2) seconds after the person's completed\\ngreeting, the seller or telemarketer promptly plays a recorded message that\\nstates the name and telephone number of the seller on whose behalf the\\ncall was placed; and\\n\\n(i)\\n\\nthe seller or telemarketer, in accordance with \\xc2\\xa7310.5(b)-(d), retains\\nrecords establishing compliance with \\xc2\\xa7310.4(b)(4)(i)-(iii).\\n\\n[Emphasis added.]\\nYou ask whether the \\xe2\\x80\\x9cduration of time for which the records [mentioned in \\xc2\\xa7 310.4(b)(3)\\nand \\xc2\\xa7 310.4(b)(4), highlighted in boldface italic above] must be maintained . . . [is] the same [24\\nmonths] as that found in \\xc2\\xa7 310.5.\\xe2\\x80\\x9d\\nOur conclusion is that the 24-month limitation on the recordkeeping requirements in\\n\\xc2\\xa7 310.5 does not pertain to the safe harbor elements in \\xc2\\xa7 310.4(b)(3) and \\xc2\\xa7 310.4(b)(4). The\\nreasons for this conclusion are set out below. Please be advised that this conclusion and the\\nopinions expressed in the following discussion are those of Commission staff only and are not\\nattributable to, nor binding on, the Commission itself or any individual Commissioner.\\nDiscussion\\nSection 310.5 sets forth affirmative recordkeeping requirements. If an entity subject to\\nthe rule were to fail comply with these requirements for the specified 24 months, that failure\\ncould, standing alone, constitute a law violation carrying a maximum civil penalty of $11,000 for\\neach instance. An entity subject to the TSR must create and maintain the specified records and\\nretain them for 24 months after creation.\\nBy contrast, the elements of the \\xc2\\xa7\\xc2\\xa7 310.4(b)(3) and (4) safe harbors highlighted above are\\nnot recordkeeping requirements, but rather provide an entity subject to the TSR with a means of\\nexculpation in situations where the FTC has reason to believe that the entity is or has been in\\nviolation of the Do Not Call provisions of \\xc2\\xa7 310.4(b)(1)(iii) or the Call Abandonment provisions\\nof \\xc2\\xa7 310.4(b)(1)(iv). Put another way, the documentation that comprises the highlighted\\nelements of the two safe harbors is in the nature of evidence necessary to support an affirmative\\n\\n\\x0cMs. Kristen Marshall\\nCopilevitz & Canter, LLC\\nApril 15, 2008\\n\\nPage 3 of 3\\n\\ndefense. Such exculpatory evidence would be produced to rebut potential allegations of Do Not\\nCall or Call Abandonment violations. On the other hand, failure of an entity to produce such\\nevidence when faced with allegations of \\xc2\\xa7 310.4(b)(1)(iii) Do Not Call violations or of\\n\\xc2\\xa7 310.4(b)(1)(iii) Call Abandonment violations could result in the entity being held liable to pay\\na civil penalty for such violations.1\\nEntities subject to the TSR may choose to retain the documentation that comprises\\nelements of the two safe harbors for as long as they might be subject to enforcement action for\\nnon-compliance with the Do Not Call or Call Abandonment requirements. The statute of\\nlimitations for FTC enforcement actions for civil penalties for violation of the TSR and other\\ntrade regulation rules is five years. 28 U.S.C. \\xc2\\xa7 2462.\\nI hope this information is helpful.\\nSincerely,\\n\\nAllen W. Hile, Jr.\\nAssistant Director\\n\\n1\\n\\nUnder the FTC Act, the Commission may also seek restitution for consumers injured by\\nviolations of the TSR, or disgorgement of ill-gotten gains attributable to violations of the TSR.\\n15 U.S.C. \\xc2\\xa7 53(b).\\n\\n\\x0c\"","created_timestamp":"April 15, 2008","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-08-1\/opinion0801_1.pdf"}
{"text":"b\"ADVISORY OPINION\\n___________________\\nIN THE MATTER OF\\n\\nU.S. FORECLOSURE NETWORK\\nFTC File No. P084801\\n\\nOpinion, March 19, 2008\\n\\nRe:\\nWhether the Fair Debt Collection Practices Act\\n(\\xe2\\x80\\x9cFDCPA\\xe2\\x80\\x9d) prohibits a debt collector from notifying a\\nconsumer of settlement options that may be available to\\navoid foreclosure.\\nDear Ms. Sinsley and Mr. Newburger:\\nThis is in response to the request from the USFN, formerly\\nknown as the U.S. Foreclosure Network, for a Commission advisory\\nopinion (\\xe2\\x80\\x9cRequest\\xe2\\x80\\x9d) regarding whether the Fair Debt Collection\\nPractices Act (\\xe2\\x80\\x9cFDCPA\\xe2\\x80\\x9d)1 prohibits a debt collector in the\\nforeclosure context from discussing settlement options in the\\ncollector\\xe2\\x80\\x99s initial or subsequent communications with the consumer.\\nThe Request asserts that the receipt of information about settlement\\noptions could enable the consumer to save his or her home from\\nforeclosure. As explained more fully below, the Commission\\nconcludes that debt collectors do not commit a per se violation of the\\nFDCPA when they provide such information to consumers.\\nMoreover, the Commission believes that it is in the public interest\\nfor consumers who may be subject to foreclosure to receive truthful,\\nnon-misleading information about settlement options, especially in\\nlight of the recent prevalence of mortgage borrowers who are\\ndelinquent or in foreclosure.2\\n1\\n\\n2\\n\\n15 U.S.C. \\xc2\\xa7\\xc2\\xa7 1692- 1692p.\\n\\nAccording to press reports, in 2007, there were an estimated 2.2 million\\nforeclosure filings in the United States, a 75% increase from 2006. The number of\\nforeclosure filings increased late in 2007- in December there were 215,749\\nforeclosure filings, a 97% increase from the number of filings in December 2006.\\nDecember was the fifth consecutive month in which foreclosure filings topped\\n200,000. Associated Press, Home Foreclosure Rate Soars in 2007, N.Y.TIMES,\\n\\n\\x0cU.S. FORECLOSURE NETWORK\\n\\n407\\n\\nOpinion of the Commission\\n\\nUSFN submitted the Request pursuant to Sections 1.1-1.4 of the\\nCommission\\xe2\\x80\\x99s Rules of Practice, 16 C.P.R. \\xc2\\xa7\\xc2\\xa7 1.1-1.4. The Request\\nfocuses on two sections of the FDCPA, Sections 807 and 809, 15\\nU.S.C. \\xc2\\xa7\\xc2\\xa7 1692e, 1692g,3 and presents three specific questions for\\nconsideration:\\n(1) Does a debt collector violate the FDCPA\\nwhen he, in conjunction with the sending of a\\n\\xe2\\x80\\x9cvalidation notice\\xe2\\x80\\x9d pursuant to Section 809(a) of the\\nFDCPA, notifies a consumer of settlement options\\nthat may be available to avoid foreclosure?\\n(2) Does a debt collector violate the FDCPA\\nwhen he, subsequent to sending the validation notice\\npursuant to Section 809(a) of the FDCPA, notifies a\\nconsumer of settlement options that might be\\navailable to avoid foreclosure?\\n(3) Does a debt collector commit a false,\\nmisleading or deceptive act or practice in violation of\\nSection 807 of the FDCPA when he presents to a\\nconsumer settlement options that are available to the\\nconsumer to avoid foreclosure?\\n\\nJan. 29, 2008, available at www.nytimes.com\/aponline\/us\/AP-Foreclosure\\n-Rates.html. Mortgage delinquency is also escalating. The number of borrowers\\nfalling behind on first-lien mortgage payments for residences during 2007 was the\\nhighest it has been since 1986-2.64 million borrowers fell behind on payments.\\nMichael M. Phillips, Serena Ng & John D. McKinnon, Battle Lines Form Over\\nMortgage Plan, WALL ST. J., Dec. 7, 2007, at Al.\\n3\\n\\nThe Commission has considered only these sections in rendering this\\nopinion and it should not be construed to pertain to any other section of the\\nFDCPA, to any other law, or to any issue of legal ethics.\\n\\n\\x0cFEDERAL TRADE COMMISSION DECISIONS\\nVOLUME 145\\n\\n408\\n\\nOpinion of the Commission\\n\\nThe Request states that there is no case law addressing these specific\\nquestions. We address the questions seriatim.\\nUSFN\\xe2\\x80\\x99s first two questions specifically reference Section 809(a)\\nof the FDCPA, 15 U.S.C. \\xc2\\xa7 1692g(a). Section 809(a) provides, in\\npertinent part, that a debt collector must, within the first five days\\nafter the initial communication with the debtor, provide a written\\nnotice containing specific information including the amount of the\\ndebt, the debtor\\xe2\\x80\\x99s right to dispute the validity of the debt in writing\\nwithin 30 days, and the collector\\xe2\\x80\\x99s obligation to obtain verification\\nof the debt in response to the consumer\\xe2\\x80\\x99s dispute document.\\nCongress enacted Section 809 to \\xe2\\x80\\x9celiminate the recurring problem of\\ndebt collectors dunning the wrong person or attempting to collect\\ndebts which the consumer has already paid.\\xe2\\x80\\x9d4\\nSection 809(a) does not expressly prohibit debt collectors from\\nadding language to the written validation notice with the mandatory\\ndisclosures. The statute also does not expressly prohibit debt\\ncollectors from presenting information to consumers about\\nsettlement options in subsequent communications. The Commission\\ntherefore concludes that there is no per se violation of Section\\n809(a) of the FDCPA if a debt collector includes information\\nregarding foreclosure settlement options along with a validation\\nnotice or in subsequent communications after that notice is\\ndelivered.\\nNevertheless, collectors must take care that communicating\\ninformation about settlement options does not undermine the\\nconsumer protections in Section 809(a). The touchstones of Section\\n809(a) are the consumer\\xe2\\x80\\x99s rights to dispute his or her debt in writing\\nwithin 30 days and to obtain verification of that debt from the\\ncollector. To protect these rights, in 2006 Congress amended\\nSection 809(b) to expressly state that \\xe2\\x80\\x9c[a]ny collection activities and\\n4\\n\\n1698.\\n\\nS. Rep. No. 95-382, at 4 (1977), reprinted in 1977 U.S.C.C.A.N. 1695,\\n\\n\\x0cU.S. FORECLOSURE NETWORK\\n\\n409\\n\\nOpinion of the Commission\\n\\ncommunication during the 30-day period may not overshadow or be\\ninconsistent with the disclosure of the consumer\\xe2\\x80\\x99s right to dispute\\nthe debt. ...\\xe2\\x80\\x9d5 This statutory amendment ratified court decisions\\nholding that debt collectors that provide consumers with information\\nin addition to the mandatory disclosures violate Section 809(a) if the\\nadditional information effectively obscures the consumer\\xe2\\x80\\x99s right to\\ndispute his or her debt and obtain verification from the collector.6\\nSpecifically, these cases concluded that providing additional\\ninformation is unlawful if it overshadows or contradicts required\\ndisclosures or creates confusion regarding the basic right to dispute\\nthe debt and obtain verification from the collector.7 In making these\\ndeterminations, courts considered the communication from the\\nperspective of an unsophisticated consumer.8\\nIn sum, with respect to USFN\\xe2\\x80\\x99s first two questions presented in\\nits Request, the Commission concludes that there is no per se\\nviolation of Section 809(a) if a debt collector in the foreclosure\\ncontext discusses settlement options in the collector\\xe2\\x80\\x99s initial or\\nsubsequent communications with the consumer. This conclusion,\\nhowever, does not prevent a fact-based finding that a specific\\ncommunication violates the Act if it overshadows or is inconsistent\\nwith the disclosures of the consumer\\xe2\\x80\\x99s right to dispute the debt\\nwithin 30 days.\\n\\n5\\n\\n15 U.S.C. \\xc2\\xa7 1692g(b).\\n\\n6\\n\\nSee, e.g., Swanson v. Oregon Credit Servs., 869 F.2d 1222 (9th Cir. 1988).\\n\\n7\\n\\nId.; See, e.g., Durkin v. Equifax Check Servs., 406 F.3d 410 (7th Cir. 2005);\\nShapiro v. Riddle & Assocs., 351 F.3d 63 (2d Cir. 2003); Renick v. Dun &\\nBradstreet Receivable Mgmt. Servs., 290 F.3d 1055 (9th Cir. 2002).\\n8\\n\\nSee, e.g., Sims v. G.C. Servs., 445 F.3d 959 (7th Cir. 2006) (\\xe2\\x80\\x9cunsophisticated\\nconsumer\\xe2\\x80\\x9d); Smith v. Transworld Sys., 953 F.2d 1025 (6th Cir. 1992) (\\xe2\\x80\\x9cleast\\nsophisticated consumer\\xe2\\x80\\x9d).\\n\\n\\x0cFEDERAL TRADE COMMISSION DECISIONS\\nVOLUME 145\\n\\n410\\n\\nOpinion of the Commission\\n\\nUSFN\\xe2\\x80\\x99s third question asks whether a debt collector commits a\\nfalse, misleading or deceptive act or practice in violation of Section\\n807 of the FDCPA when he presents to a consumer settlement\\noptions that are available to the consumer to avoid foreclosure.\\nSection 807\\xc2\\xb7of the FDCPA establishes a general prohibition against\\nthe use of any \\xe2\\x80\\x9cfalse, deceptive or misleading representation or\\nmeans in connection with the collection of any debt\\xe2\\x80\\x9d and provides a\\nlist of 16 specific practices that are per se false, deceptive or\\nmisleading under the Act. In enacting Section 807, Congress noted\\nthat this general prohibition on deceptive collection practices would\\n\\xe2\\x80\\x9cenable the courts, where appropriate, to proscribe other improper\\nconduct which is not specifically addressed.\\xe2\\x80\\x9d9\\nAs a general matter, the Commission concludes that a debt\\ncollector\\xe2\\x80\\x99s communication with a consumer regarding his or her\\noptions to resolve mortgage debts and to potentially avoid\\nforeclosure would not necessarily violate either the general or\\nspecific prohibitions of Section 807. However, we also stress that a\\nparticular communication with settlement option information could\\nbe deceptive in violation of Section 807 if it contains a false or\\nmisleading representation or omission of material fact. Determining\\nwhether a specific communication is false or misleading is a factbased inquiry that considers all the facts and circumstances\\nsurrounding the particular communication at issue.10\\nAfter reviewing the language of the FDCPA, its legislative\\nhistory, and relevant case law, as well as the information contained\\nin the Request, the Commission concludes that a debt collector in\\nthe foreclosure context does not commit a per se violation of\\n9\\n\\nS. Rep. No. 95-382, at 4 (1977), reprinted in 1977 U.S.C.C.A.N. 1695, 1698.\\n\\n10\\n\\nSee Jeter v. Credit Bureau, Inc., 760 F.2d 1168 (11th Cir. 1985) (noting that\\nFDCPA expands pre-existing FTC deception authority); see also FTC Policy\\nStatement on Deception, appended to In re Cliffdale Associates, Inc., 103 F.T.C.\\n110, 174-84 (1984) (setting forth deception test).\\n\\n\\x0cU.S. FORECLOSURE NETWORK\\n\\n411\\n\\nOpinion of the Commission\\n\\nSections 807 or 809 of the FDCPA when he or she addresses\\nsettlement options in the collector's initial or subsequent\\ncommunications with the consumer.\\nBy direction of the Commission.\\n\\n\\x0c\"","created_timestamp":"March 19, 2008","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/advisory-opinion-whether-fair-debt-collection-practices-act-prohibits-debt-collector-notifying\/in_re_us_foreclosure_network_-_ftc_file_no_p084801_3-19-08.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Enforcement\\n\\nBureau of Consumer Protection\\nRobert M. Frisby\\n\\nAssistant Director\\n\\nFebruary 19, 2008\\n\\nMr. Bill Gouldd\\n20625 Cooke Drive\\nReno, NY 89521\\nDear Mr. Gouldd:\\nThe Division of Enforcement has reviewed your letters of April 27, 2007, and January\\n25, 2008, requesting a staff advisory opinion regarding whether your proposed direct sales\\nprogram \"is in compliance with your organization and does not lend itself to being defined as\\nmulti-level marketing, pyramid scheme or endless-chain scheme.\" I apologize for the delay in\\nresponding to your inquiry.\\nWe have analyzed your proposed direct sales program to determine whether it would\\nviolate Section 5 of the Federal Trade Commission Act as it applies to the marketing of multilevel marketing programs and pyramid schemes, as well as the \"Order Preliminarily Approving\\nStipulated Final Judgment and Class Action Settlement and Setting Fairness Hearing\" entered by\\nthe Court in FTC v. Equinox lilt\\'! Corp., No CV-S-99-0969 (D. Nev. Apr. 20, 2000). As you\\nknow, you are a defendant in this action and subject to the Order entered therein. Part ill of the\\nOrder prohibits you from, among other things, engaging or participating in any multi-level\\nmarketing program or pyramid scheme as the Order defines those terms.\\nBased on our review of your proposed direct sales program, we cannot at this time reach\\na definitive conclusion regarding whether the program would constitute either a multi-level\\nmarketing program or a pyramid scheme as defined in the above Order. For that reason, we\\ncannot opine whether the program would comply with the above Order. Nor can we opine that\\nthe program would not violate Section 5 of the FTC Act as the FTC has applied it to the\\nmarketing of such programs and schemes. This is so because whether the program constitutes a\\nmulti-level marketing program would depend in large measure on how it is actually\\nimplemented. Similarly, whether the program would constitute a pyramid scheme in actual\\npractice would depend on a multitude of factors.\\nSeveral features of your proposed program raise concerns regarding whether, as actually\\nimplemented, it would constitute a multi-level marketing program or a pyramid scheme as\\ndefined in the Order. Such features include the potential de facto cost of participation in the\\nprogram, and incentives to recruit other participants into a downline. In addition, certain parts of\\n\\n\\x0cBill Gouldd\\nFebruary 19, 2008\\n\\nPage 2\\n\\nyour description of your proposed program seem contradictory, which makes us unsure of how\\nyou will implement your program.\\nAs you know, one feature of a multi-level marketing program or pyramid scheme as\\ndefined in the Order is that participants must pay the promoter to participate in the program.\\nAlthough your program states that there are no sign up fees to be involved, it also notes that\\nparticipants can incur expenses for sales tools like business cards, training materials, and\\npresentation aids. Presumably participants would obtain such items by purchasing them from\\nthe promoter or someone affiliated with the promoter. It is also unclear whether participants\\nwould incur any training fees or expenses. Depending on how the program is actually\\nimplemented, such expenses for training or for items purchased from the promoter or someone\\naffiliated with the promoter could become de facto requirements to participate in the program.\\nIn addition, several features of the program as actually implemented could induce\\nparticipants to focus on recruitment rather than retail sales. You state, for example, that\\nsupervisory personnel must \"document their ability to properly train and develop other sales\\npeople by training a nainimum of two trainees.\" It appears that, for these trainees to become\\nsupervisory personnel, they will each have to recruit and train two more trainees, and so on,\\ncreating an incentive for endless recruitment.\\nYour letter of January 25, 2008, states that \"[t]here are only two positions under the\\ncompany,\" qualified supervisors and trainees, that \"[o]nce a trainee qualifies as a supervisor,\\nthey move away from their supervisor and connect directly with the company,\" and that \"[t]here\\nis no third position or level.\" These statements do not appear to leave room in the organizational\\nstructure for a \"sales team\" as described in your description under Profit Sharing that \"additional\\nprofit sharing equal to 5% of the total monthly sales generated by those they have trained\\ndirectly and their sales team.\" This reference to a sales team appears to indicate that a\\nparticipant has an incentive to recruit and train another participant who then acquires a sales\\nteam, i.e., a downline, so that the original participant can then profit from the sales of the sales\\nteamJdownline. This concern is heightened by the program\\'s description of a variety of classes\\nbeyond qualified supervisors and trainees, including \"certified supervisor,\" \"supervisory\\npersonnel,\" \"direct sales personnel,\" \"sales personnel,\" \"certified sales people,\" \"sales team,\"\\nand \"end users\" without defining the classes or indicating clearly how they relate to each other.\\nThe staff does not represent you personally and cannot offer legal advice. Determining\\nwhether a direct sales program constitutes a multi-level marketing program or a pyramid scheme\\noften requires a factual inquiry into the program itself, the way it is implemented, and the\\ncontext sUITounding it. Therefore, as stated earlier, we cannot opine that your program would\\n\\n-2-\\n\\n\\x0cPage 3\\n\\nBill Gouldd\\nFebruary 19, 2008\\n\\ncomply with the above Order or the FTC Act. I We suggest that you seek legal advice regarding\\nthe legality ofthe direct sales program you have proposed before beginning the program.\\nIn accordance with Section 1.3(c) of the Commission\\'s Rules of Practice and Procedure,\\n16 C.F.R. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 l.3(c) (1997), this informal staff opinion has not been reviewed or approved by the\\nCommission or by an individual Commissioner, and is given without prejudice to the right of the\\nCommission later to rescind the advice and, where appropriate, to commence a law enforcement\\naction. In addition, the views expressed in this letter are restricted to the facts described above.\\nFinally, this office retains the right to reconsider its advice, and with notice to the requesting\\nparty, rescind or revoke its opinion if the response is used for improper purposes, or if it would be\\nin the public interest to do so.\\n\\nPursuant to Section 1.4 of the Commission\\'s Rules of Practice and Procedure, 16 C.F.R.\\n\\xe0\\xb8\\xa2\\xe0\\xb8\\x87 lA, this response along with your request for advice will be placed on the public record, subject\\nto any limitations on public disclosure arising from statutory restrictions, the Commission\\'s rules,\\nand the public interest. Ifyou wish to request confidential treatment of any of the information\\nyou submitted in connection with your request for an advisory opinion, please submit a separate\\nrequest stating the reasons why you believe such information is entitled to confidential treatment.\\n\\nSincerely,\\n\\nRobert M. Frisby\\nAssistant Director\\n\\nWe did not analyze whether your program would comply with statutes other than the\\nFTC Act or any of the regulations enforced by the FTC.\\nI\\n\\n\\x0cBill Gouldd\\n20625 Cooke Drive\\nReno, NV 89521\\nJanuary 25,2008\\nMr. Peter J. Vander Nat\\nFederal Trade Commission\\n600 Pennsylvania Avenue, N.W.\\nWashington, D.C. 20580\\nRe: Request for an advisory opinion relating to a direct sales program as it relates to the\\nFederal Trade Commission definitions regarding multi-level marketing.\\nDear Mr. Vander Nat;\\nHopefully you will remember me, I owned Equinox International, which you testified for as an\\nexpert witness in case #CV-S-99-0969-JBR-RLH. Prior to this case I had spent hundreds of\\nthousands of dollars in attorney\\'s fees and even employed in-house council to ensure we were\\ncompliant with all laws, regulations and requirements, both state and federal. I was stunned\\nand traumatized when the F.T.C. charged my company with wrongdoing, as council had\\ncontinually assured me that everything we were doing was in complete compliance with all\\nagency regulations.\\nI have spent several years researching and developing a new business. This new business\\nwill be invaluable to millions of businesses across America. Due to the current and near future\\neconomic outlook, now would be a perfect time to launch this program. I have been waiting\\nmore than nine months now, as I sent my original correspondence to the attention of Donald\\nClark on April 27, 2007. While he assured me several months ago this issue had been\\nforwarded to the proper department, I have been unable to receive any further information from\\nhim despite repeated unanswered e-mails and phone messages. I was looking through the\\ncourt documents and remembered you now work with the F.T.C. and certainly would be one of\\nthose whose expertise would be involved in the determination that my new business concept\\nwas not MLM. I believe there is absolutely no way this could be misconstrued as an MLM, but\\nI was also assured Equinox was in compliance in the past, only to discover the F.T.C. had a\\ndifferent opinion.\\nI am writing to you as I never again want to go through another devastating incident like the\\none I experienced as a result of believing and being assured by council that I was working\\n\\n\\x0cwithin the parameters of your agency, only to discover the opinion of the F.T.C. differed from\\nthe opinion of those whom I relied upon for their expertise.\\nTherefore, I would like to receive confirmation, directly from your organization, that my\\nproposed business venture in direct sales is in compliance with your organization and does not\\nlend itself to being defined as a multi-level marketing, pyramid scheme or endless-chain\\nscheme.\\nI will describe my business model, marketing strategy and compensation plan, as well as why\\nI, and my attorneys, feel this concept does not constitute a multi-level marketing, pyramid or\\nendless-chain scheme. I understand that I am solely responsible for the facts and content of\\nthis correspondence as you will be relying on the accuracy of the information I am providing as\\nthe basis for the rendering of your decision. I would however, like to reserve the right to\\npossibly change the titles used to describe the level sales people achieve and the commission\\namounts they can earn at those levels, as these things may need to be adjusted in order to\\nachieve maximum market potential. I will be happy to notify you in writing of any changes that\\nI find become necessary. Rest assured, with these small exceptions, the facts contained\\nwithin regarding my request and business plan will remain unchanged.\\nBUSINESS MODEL\\nSeveral years ago my wife started working in the credit card industry. From time to time she\\nhas come to me with issues and problems merchants she had contacted were forced to deal\\nwith. It became readily apparent that many independent business owners are now facing\\nalmost insurmountable obstacles in today\\'s business environment. The number of large\\ncorporations and their fierce competitiveness is unprecedented in the history of American\\nbusiness. Companies like Wal-Mart, Home Depot, Lowe\\'s and Sports Authority, as well as\\nmajor restaurant chains such as Friday\\'s, Olive Garden and Outback Steak House, just to\\nname a few, have sent countless independent business owners into bankruptcy. Their\\nmassive buying power allows these companies to buy and sell products for less and advertise\\nmore, while earning more profits than the small independent business owners. Additionally,\\ntheir outstanding profitability affords these large companies the ability to hire experts in the\\nfields of advertising, accounting, banking, insurance, computers, software, promotions, sales\\ntraining and marketing. As a result, they usually have superior business plans and support\\nsystems in place and actually pay less for them, than their independently owned competitors.\\nIndependent business owners, while understanding many specific aspects of their particular\\nbusinesses, often times have little knowledge or experience regarding advertising, marketing,\\nwholesale product purchasing, banking, credit card processing, check services, gift and loyalty\\ncard programs, professional sales techniques, website development, web hosting, employee\\nretention and benefit programs, security and alarm monitoring, tool re-imbursement programs,\\netc. Business owners are frequently unaware of the many alternatives available to them and\\nwhat are competitive rates for these products and services. As a result, large companies can\\noffer their customers more effective advertising and pricing while offering their employees\\nhigher pay and benefits, putting thousands of independent businesses out of business every\\nyear.\\n\\n\\x0cMany small business owners are also unaware of the many products and services available to\\nthem that are designed to increase their sales while also decreasing their expenses and costs.\\nThere are millions of independent businesses across America that could benefit from working\\nwith a company, which I am currently designing, that will offer more competitive alternatives to\\nthe products, services and methods they are currently using. Offering a wide variety of\\nbusiness support products and services to businesses nationwide will give us the opportunity\\nto offer better group pricing, saving the owners money, as well as saving them valuable time,\\nsince their needs will be met through one entity rather than dealing with many separate\\ncompanies.\\nI have found that millions of independently owned businesses across America now face the\\nreality that they must work cooperatively with one another if they are to remain competitive with\\nthe major conglomerates. Cooperative advertising, marketing, purchasing and expert advice in\\nother areas are becoming a necessity if the independently owned small businesses across the\\ncountry are to survive and thrive, yet no one has developed an organization designed to fulfill\\nthese needs and capitalize on this market. The opportunity now exists for the creation of a\\ncentral organization, a merchant alliance if you will, to coordinate these efforts and market\\nthese products and services to independent business owners. I intend to create this alliance.\\nPREPARATION\\nI have spent limitless hours over the last seven years trying to figure out what went wrong in\\nmy last company and how I could have prevented the debacle from occurring. I now\\nunderstand a large sales company must have checks and balances in place designed to\\ncontrol rogue sales personnel. The business model I have developed and the details\\ndescribed below have taken countless hours of thought. Every detail was designed to\\naccomplish three main objectives:\\n1. All persons who achieve a minimum amount of success will be promoted to work\\ndirectly with the company. The company will then be responsible for establishing a\\ndirect relationship and accountability with each person prior to their being able to train\\nand supervise others. This system is designed to ensure control and compliance of all\\nsales personnel.\\n2. We can offer a true equal opportunity, one that allows each person who chooses to get\\ninvolved with the company to be immediately assigned to, and begin working directly\\nwith someone who has already proven their ability to be successful in this business.\\nThe immediate assistance and training that can be provided by an experienced person\\nwill increase the chances for the success of the new person by dramatically reducing\\nthe amount of wasted effort, improper conduct and confusion.\\n3. Sales personnel will receive just compensation for their efforts. This program does not\\nallow someone to earn income as a result of merely enrolling others. Those who are\\nresponsible for establishing and managing the most business and earning the highest\\nprofits for the company will receive equivalent earnings based on their results.\\n\\n\\x0cMARKETING STRATEGY\\nDirect sales personnel will market these products and services directly to business owners by\\napproaching them in person, or by phone, and presenting the products and services either\\npersonally or with the aid of video presentations. The wide variety of products will allow our\\nsales people to present the most obvious products or services that a particular business will\\nbenefit from initially and then add on other products and services as the business owners\\nbegin to realize the benefits of our affiliation. A company that specializes in a particular area,\\nsuch as employee benefit programs, will supply each product and service we represent.\\nShould there be an apparent need for a business solution which does not yet exist, we will\\nwork to design and develop the necessary products and programs. Our company will continue\\nto develop and offer more innovative products and services, each designed to help the\\nindependent business owners be more successful and profitable. Our strategy will be for the\\nsales people to develop long-term relationships with the business owners through education,\\ncommunication and marketing support.\\nOur goal is to establish an independent business owner\\'s network, or alliance, which will\\ncoordinate mutual support for all members. By nationalizing the membership, all independent\\nbusiness owners will have the opportunity to mutually support and promote each other\\'s\\nbusinesses, while contributing and benefiting from the massive advertising and buying power\\nall members mutually can achieve. Obviously it will take many years to develop some of these\\nprograms, products and services. I have already arranged to launch this program, pending\\nyour response, with products that are currently available in the marketplace and plan to add\\nadditional programs as the business network grows.\\nCOMPENSATION PLAN\\nAll sales personnel will be paid commission only. They will be eligible for increased\\ncommissions and profit sharing based on the number and size of accounts that they are\\npersonally responsible for establishing and maintaining. The pay structure will be a stair-step\\ncommission program, allowing the sales people to earn a higher commission percentage as\\ntheir total sales volume increases. They will also have the opportunity to earn residual\\ncommissions, paid monthly, for ongoing contracted products and services which are billed\\nmonthly such as website hosting, alarm monitoring and the like, provided the individual\\nresponsible for establishing the account remains actively involved with the company.\\nMy experience during the trial with my last company revealed that the vast majority of\\nindividuals who failed with the Equinox opportunity failed to comply with our company policies.\\nThey either never understood the program and hurt themselves by purchasing more products\\nthan they could sell, or did not completely understand what they were doing and passed their\\nIt became apparent that many of the\\nignorance on to others who did the same.\\nrepresentatives violated their signed contract with the company by purchasing more products\\nthan they were allowed to have in their possession under our agreement. They did this in a\\nfutile effort to earn checks on the production of others in their sales organization, while they\\nwere unable to successfully sell the products themselves. I now realize this was a result of the\\n\\n\\x0cfact that there was no system in place to insure direct communication from the company to the\\nsales person in order to establish accountability.\\nMy new concept assures these same short comings simply cannot occur. First and foremost,\\nthe complexity of performing a business analysis, examining account statements, mastering\\nsuccessful negotiation skills and the proper completion of contracts can be complicated and\\nwill automatically eliminate the unskilled and intellectually challenged. Notwithstanding, it\\nremains imperative that the company establishes checks and balances to ensure that all sales\\npeople understand and comply with, not only our policies, but also state and federal\\nregulations.\\nFor these reasons, I have designed a three step \"Certification\" program that all supervisory\\npersonnel must complete. In order to qualify, an individual must first demonstrate their\\nunderstanding and competence of the program, establishing accounts and selling equipment\\nthemselves and achieving a predetermined number of personal sales. Secondly, they will be\\nrequired to pass a \"Certification Test\" demonstrating their comprehension of the company\\'s\\npolicies, qualifications and requirements, along with state and federal regulations and\\nknowledge of the various products, services and techniques necessary to achieve successful\\nresults dealing with independent business owners. Finally, they will be required to document\\ntheir ability to properly train and develop other sales people by training a minimum of two\\ntrainees, while working under the watchful eye of their certified supervisor, who has also\\nestablished their ability to successfully sell the products and services to business owners.\\nThese two trainees will then remain under the direction of the supervisor, subsequent to the\\npromotion of the newly certified individual to the same supervisory level, who will now begin\\nworking directly with the company. Both of these systems are designed to uncover any bad\\nhabits, misconceptions or rogue attitudes.\\nAs the company will obviously benefit from the expansion of the sales force by the efforts of\\nthe certified supervisory personnel whom elect to recruit and train other successful sales\\npeople, those who contribute to the growth of the company will be fairly compensated for their\\nefforts. Certified supervisors will be paid the difference between the commissions and\\nresiduals the sales trainees they assist are eligible to earn and the commissions and residuals\\nthey are qualified to receive themselves. For example, if a sales trainee is qualified to earn\\n50% commission on a sale and the supervisor who works with them is qualified to earn 70%,\\nthe supervisor will be eligible to receive the difference of 20%. The same will hold true for the\\nresidual earnings. These commission spreads would be permanent, provided the account\\nstays active and the sales personnel remain productive. The certified supervisory personnel\\nwill have the opportunity to earn commission splits on the sales, leases and residual incomes\\nmade by the new sales person, as well as on any accounts that they inherit from others\\nresulting from inactivity or termination.\\nThere are only two positions under the company, qualified supervisors, who are responsible for\\ntheir own accounts, as well as assisting trainees establish accounts themselves. Once a\\ntrainee qualifies as a supervisor, they move away from their supervisor and connect directly\\nwith the company, as outlined in the diagram below. There is no third position or level. This is\\n\\n\\x0cessentially the same relationship between a sales manager and sales person working at a car\\ndealership or broker and agent in the real estate or insurance business.\\n\\nTRAINING BONUS\\nThe most productive certified sales people will also earn the opportunity to participate in two\\nincentive programs. The training bonus will reward certified sales people who recruit and\\nsuccessfully train other certified sales people. Since they will essentially be working as sales\\nmanagers, training, supervising and assisting sales people, they will be rewarded for their\\neffort and results by receiving a portion of the profits the company is earning in the form of a\\n5% commission, based on the profits of the sales produced by those they personally are\\nresponsible for training and assisting, provided they are qualified by producing a\\npredetermined number of personal account either on a monthly or yearly basis.\\nPROFIT SHARING\\nThe most successful members of the sales organization will also have the opportunity to\\nparticipate in a profit sharing program and receive profit sharing equivalent to the total sales\\nthey are personally responsible for developing. Those who train and develop others who\\nachieve the best results will be eligible to receive additional profit sharing equal to 5% of the\\ntotal monthly sales generated by those they have trained directly and their sales team.\\nDIRECT SALES PROGRAM\\nI, as well as my attorneys, believe this is a straightforward direct sales program, not to be\\nmisconstrued as a multi-level marketing, pyramid or endless-chain scheme. Below I have\\nlisted several reasons why this direct sales program does not contain aspects defining multilevel marketing, pyramid or endless-chain schemes.\\n1. There are no sign-up fees to get involved with this company. The only expenses which\\ncan be incurred would be for sales tools like business cards, training materials and\\npresentation aids, all of which are not required to participate in the program. Aside from\\nthe business cards which are personalized, any sales tools which are current and in\\nresalable condition can be returned for a full refund within 30 days, should anyone\\n\\n\\x0cinvolved change their mind. Reasonable exceptions to the 30 day limitation certainly\\nwill be granted.\\n\\n2. There is no benefit or income earned for enrolling others. The mere act of enrolling\\nothers into the sales program offers no incentive and will produce no income. The only\\nmethod of earning income in this sales company is to sell products and services directly\\nto the end user; business owners.\\n3. The only commissions paid to anyone will be as the result of products or services being\\nsold directly to end-users. There are no products or services which can be purchased\\nby, or sold to, any sales people involved in this company. This will be true with the\\nexception of someone who happens to own their own business outside of the\\nopportunity and decides to become end users of the services for the sole benefit of their\\nother business.\\n4. All sales volume needed for promotions must be personal sales. Sales personnel will\\nnot be promoted based on the sales of those they enroll. They can however, earn\\nresidual income if they inherit the responsibility of managing accounts which were\\nestablished by someone else, but were later transferred to them because the original\\nsales person was either terminated for cause or chose to no longer take responsibility\\nfor managing that account. As an example; if I was a trainee and you were my certified\\nsupervisor and I established two business accounts before deciding to quit and pursue\\na different career, my accounts would then be assigned to you and you would begin\\nreceiving the monthly residual earnings in exchange for your efforts in managing the\\naccounts and maintaining the relationship with those particular businesses.\\n5. There is no endless-chain pay plan. Those who decide to enroll other sales people into\\nthe business receive no monetary compensation or benefit from the enrollment. All new\\nsales personnel will be assigned to work with an experienced and successful certified\\nsupervisor. All supervisory personnel are on the same level, working directly with the\\ncompany, and are not stacked, chained, pyramided or part of any down-line. All sales\\npersons will work with the experienced certified supervisor until they achieve the same\\nlevel of success, at which time they are also transferred to work directly with the\\ncompany and are not stacked, chained, pyramided or part of any down-line. This will\\ncreate a direct relationship between the company and all those individuals who have\\nproven their ability to succeed in the business, allOWing the company to ensure proper\\nconduct of the certified supervisory personnel and their influences on new trainees.\\nThis is the same manner in which real estate agents can, through sales and\\nperformance, earn the right to become brokers and work directly with the parent\\ncompany while utilizing the efforts of new agents to help the company grow. In\\nessence, the company works directly with all certified supervisory personnel who, in\\nturn, work directly with all sales trainees in the same way a national retail sales\\ncompany would have district managers overseeing store managers.\\n6. The only products a sales trainee or certified supervisor will be able to purchase from\\nthe company will be a company sales manual and possibly pertinent video\\n\\n\\x0cpresentations. There are no commissions paid to anyone for the purchase of these\\nsales tools. The sales tools are solely designed and made available to sales personnel\\nin order to help them be more successful in their efforts of selling products and services\\nto businesses, the purchase of which is not a requirement to work with the company\\nand is strictly voluntary. These sales tools will be sold with a 30-day money back\\nguarantee provided they are returned in resalable condition. Certified supervisors must\\nsign a contract stating they understand they are not permitted to have or possess more\\nthan ten training manuals, designed for immediate availability to new trainees, at any\\ntime without having a documented reason and only after receiving written permission\\nfrom the company. Any violation of this policy could result in termination.\\n7. There will be no products, services or licenses purchased or inventoried by sales\\npersonnel. There will be no other products or services that can be resold to other sales\\npersonnel. There are no sales of equipment or services made to sales personnel either\\nfrom the company or from one another. No products can be stored or inventoried by\\nsales personnel other than a limited amount of sales tools with a refund policy in place\\nas defined above.\\n8. All products and services are sold, contracted and shipped directly to end users.\\n9. Any opportunity to attend sales training programs will be offered on a voluntary basis\\nand will not be a requirement to work with the company. All participants will be notified\\nof this policy and will be required to sign an agreement stating these facts prior to\\nadmittance to any such events.\\n10. All persons involved will be required to provide documentation before making any\\nincome claims. Any false, misleading or undocumented income claims will result in\\ntermination of the individuals responsible and all participants involved with the company\\nwill be notified of such violations and terminations.\\nSUMMARY\\nI have spent the last several years meeting with business owners and discussing the problems\\nthey are encountering. I have been exploring alternatives and solutions while completing the\\nmarket research necessary to create this company. Most of the business owners I have\\nspoken with are very excited about the benefits they will gain as a result of becoming part of\\nthis merchant alliance program. No aspects of this business plan have been initiated as I\\nunderstand that your agency will not comment regarding ongoing business entities. I am\\nprepared to begin this business venture after I receive a response from your office and will\\ncontinue to prepare for the initial launch as I await your reply.\\nI feel it is necessary to know that your agency agrees this is simply a direct sales program\\nbefore moving forward. Alternatively, I would also appreciate being notified if there are any\\naspects of this program you feel may be defined otherwise, so that I can make any necessary\\nchanges to ensure complete compliance prior to the launch of the company.\\n\\n\\x0cAs unfortunate as it may be, I have learned the hard way that agencies like the Federal Trade\\nCommission, on occasion, have a different perspective regarding these issues than even\\nhighly respected law firms. This is why I am most interested in understanding your\\nperspective, as the opinion of your agency is certainly of utmost importance. I am willing to do\\nanything in my power to assure you my intentions are honorable. My past experience with\\nyour agency was far too costly; both emotionally and financially, to ever want to encounter a\\nsimilar experience. I am willing to do whatever it takes to work within your requirements, I am\\nsimply asking for an advisory opinion so I know I am in complete compliance. I do not want to\\nbe involved in anything that could be misconstrued as multi-level marketing or a pyramid\\nscheme and will continue to make every attempt to ensure I comply with all federal, state and\\nlocal laws.\\nI realize you and your offices are extremely busy and I certainly respect and appreciate your\\ntime and response in this matter. If I can be of any assistance to answer any questions or\\nprovide more information I can be reached by phone at (775) 786-2455, or bye-mail at\\nBG1 RHINO@AOL.COM. You can rest assured I will work relentlessly to make certain all\\nthose who choose to work with this company will have a realistic opportunity to be successful\\nin this business-to-business enterprise; confirming every aspect of this endeavor is in\\ncompliance with your agency is an important part of this objective.\\nThank you for your time and consideration in these matters.\\n\\ns~\\n\\nBil~\\'UI~I\"\"\"\\'-\\n\\n\\x0cORIGINAL\\n\\nBILL GOULDD\\n20625 Cooke Drive\\nReno, NV 89521\\nApril 27, 2007\\nMr. Donald S. Clark\\nOffice of the Secretary\\nFederal Trade Commission\\n600 Pennsylvania Avenue, N.W.\\nWashington, D.C. 20580\\nRe: Request for an advisory opinion relating to a direct sales program as it relates to the\\nFederal Trade Commission definitions regarding multi-level marketing.\\nDear Mr. Clark;\\nI owned and operated Equinox International and, as a result, was the defendant in case #CVS-99-0969-JBR-RLH. Prior to this case I had spent hundreds of thousands of dollars in\\nattorney\\'s fees and even employed in house council to ensure we were compliant with all laws,\\nregulations and requirements, both state and federal. I was stunned and traumatized when\\nyour agency charged my company with wrongdoing, as council had continually assured me\\nthat everything we were doing was in complete compliance with all agency regulations.\\nI am writing to you as I never again want to go through another devastating incident like the\\none I experienced as a result of believing and being assured by council that I was working\\nwithin the parameters of your agency, only to discover the opinion of your organization differed\\nfrom the opinion of those whom I relied upon for their expertise.\\nTherefore, I would like to receive confirmation, directly from your organization, that my\\nproposed business venture in direct sales is in compliance with your organization and does not\\nlend itself to being defined as a multi-level marketing, pyramid scheme or endless-chain\\nscheme.\\nI will describe my business model, marketing strategy and compensation plan, as well as why\\nI, and my attorneys, feel this concept does not constitute a multi-level marketing, pyramid or\\nendless-chain scheme. I understand that I am solely responsible for the facts and content of\\n\\n\\x0cthis correspondence as you will be relying on the accuracy of the information I am providing as\\nthe basis for the rendering of your decision. I would however, like to reserve the right to\\npossibly change the titles used to describe the level sales people achieve and the commission\\namounts they can earn at those levels, as these things may need to be adjusted in order to\\nachieve maximum market potential. I will be happy to notify you in writing of any changes that\\nI find become necessary. Rest assured, with these small exceptions, the facts contained\\nwithin regarding my request and business plan will remain unchanged.\\nBUSINESS MODEL\\nSeveral years ago my wife started working in the credit card industry. From time to time she\\nhas come to me with issues and problems merchants she had contacted were forced to deal\\nwith. It became readily apparent that many independent business owners are now facing\\nalmost insurmountable obstacles in today\\'s business environment. The number of large\\ncorporations and their fierce competitiveness is unprecedented in the history of American\\nbusiness. Companies like Wal-Mart, Home Depot, Lowe\\'s and Sports Authority, as well as\\nmajor restaurant chains such as Friday\\'s, Olive Garden and Outback Steak House, just to\\nname a few, have sent countless independent business owners into bankruptcy. Their\\nmassive buying power allows these companies to buy and sell products for less and advertise\\nmore, while earning more profits than the small independent business owners. Additionally,\\ntheir outstanding profitability affords these large companies the ability to hire experts in the\\nfields of advertising, accounting, banking, insurance, computers, software, promotions, sales\\ntraining and marketing. As a result, they usually have superior business plans and support\\nsystems in place and actually pay less for them, than their independently owned competitors.\\nIndependent business owners, while understanding many specific aspects of their particular\\nbusinesses, often times have little knowledge or experience regarding advertising, marketing,\\nwholesale product purchasing, banking, credit card processing, check services, gift and loyalty\\ncard programs, professional sales techniques, website development, web hosting, employee\\nretention and benefit programs, security and alarm monitoring, tool re-imbursement programs,\\netc. Business owners are frequently unaware of the many alternatives available to them and\\nwhat are competitive rates for these products and services. As a result, large companies can\\noffer their customers more effective advertising and pricing while offering their employees\\nhigher pay and benefits, putting thousands of independent businesses out of business every\\nyear.\\nMany small business owners are also unaware of the many products and services available to\\nthem that are designed to increase their sales while also decreasing their expenses and costs.\\nThere are millions of independent businesses across America that could benefit from working\\nwith a company, which I am currently designing, that will offer more competitive alternatives to\\nthe products, services and methods they are currently using. Offering a wide variety of\\nbusiness support products and services to businesses nationwide will give us the opportunity\\nto offer better group pricing, saving the owners money, as well as saving them valuable time,\\nsince their needs will be met through one entity rather than dealing with many separate\\ncompanies.\\n\\n\\x0cI have found that millions of independently owned businesses across America now face the\\nreality that they must work cooperatively with one another if they are to remain competitive with\\nthe major conglomerates. Cooperative advertising, marketing, purchasing and expert advice in\\nother areas are becoming a necessity if the independently owned small businesses across the\\ncountry are to survive and thrive, yet no one has developed an organization designed to fulfill\\nthese needs and capitalize on this market. The opportunity now exists for the creation of a\\ncentral organization, a merchant alliance if you will, to coordinate these efforts and market\\nthese products and services to independent business owners. I intend to create this alliance.\\nPREPARATION\\nI have spent limitless hours over the last five years trying to figure out what went wrong in my\\nlast company and how I could have prevented the debacle from occurring. I now understand a\\nlarge sales company must have checks and balances in place designed to control rogue sales\\npersonnel. The business model I have developed and the details described below have taken\\ncountless hours of thought. Every detail was designed to accomplish three main objectives:\\n1. All persons who achieve a minimum amount of success will be promoted to work\\ndirectly with the company. The company will then be responsible for establishing a\\ndirect relationship and accountability with each person prior to their being able to train\\nand supervise others. This system is designed to ensure control and compliance of all\\nsales personnel.\\n2. We can offer a true equal opportunity, one that allows each person who chooses to get\\ninvolved with the company to be immediately assigned to, and begin working directly\\nwith, someone who has already proven their ability to be successful in this business.\\nThe immediate assistance and training that can be provided by an experience person\\nwill increase the chances for the success of the new person by dramatically reducing\\nthe amount of wasted effort, improper conduct and confusion.\\n3. Sales personnel will receive just compensation for their efforts. This program does not\\nallow someone to eam income as a result of merely enrolling others. Those who are\\nresponsible for establishing and managing the most business and eaming the highest\\nprofits for the company will receive equivalent eamings based on their results.\\nMARKETING STRATEGY\\nDirect sales personnel will market these products and services to business owners by\\napproaching them in person, or by phone, and presenting the products and services either\\npersonally or with the aid of on-line video presentations. The wide variety of products will allow\\nour sales people to present the most obvious products or services that a particular business\\nwill benefd: from initially and then add on other products and services as the business owners\\nbegin to realize the benefits of our affiliation. A company that specializes in a particular area,\\nsuch as employee benefit programs, will supply each product and service we represent.\\nShould there be an apparent need for a business solution which does not yet exist, we will\\nwork to design and develop the necessary products and programs. Our company will continue\\n\\n\\x0cto develop and offer more innovative products and services, each designed to help the\\nindependent business owners be more successful and profitable. Our strategy will be for the\\nsales people to develop long-term relationships with the business owners through education,\\ncommunication and marketing support.\\nOur goal is to establish an independent business owner\\'s network, or alliance, which will\\ncoordinate mutual support for all members. By nationalizing the membership, all independent\\nbusiness owners will have the opportunity to mutually support and promote each other\\'s\\nbusinesses, while contributing and benefiting from the massive advertising and buying power\\nall members mutually can achieve. Obviously it will take many years to develop some of these\\nprograms, products and services. I have already arranged to launch this program, pending\\nyour response, with products that are currently available in the marketplace and plan to add\\nadditional programs as the business network grows.\\nCOMPENSATION PLAN\\nAll sales personnel will be paid commission only. They will be eligible for increased\\ncommissions and profit sharing based on the number and size of accounts that they are\\npersonally responsible for establishing and maintaining. The pay structure will be a stair-step\\ncommission program, allowing the sales people to eam a higher commission percentage as\\ntheir total sales volume increases. They will also have the opportunity to eam residual\\ncommissions, paid monthly, for ongoing contracted products and services which are billed\\nmonthly such as website hosting, alarm monitoring and the like, provided the individual\\nresponsible for establishing the account remains actively involved with the company.\\nMy experience during the trial revealed that the vast majority of individuals who failed with the\\nEquinox opportunity failed to comply with our company policies. They either never understood\\nthe program and hurt themselves through ignorance, or did not completely understand what\\nthey were doing and passed their ignorance on to others who did the same. It became\\napparent that many of the representatives violated their signed contract with the company by\\npurchasing more products than they were allowed to have in their possession under our\\nagreement. They did this in a futile effort to eam checks on the production of others in their\\nsales organization, while they were unable to successfully sell the products themselves. This\\nwas a result of the fact that there was no system in place to insure direct communication from\\nthe company to the sales person in order to establish direct accountability.\\nMy new concept assures these same short comings simply cannot occur. First and foremost,\\nthe complexity of performing a business analysis, examining account statements, mastering\\nsuccessful negotiation skills and the proper completion of contracts can be complicated and\\nwill automatically eliminate the unskilled and intellectually challenged. Not with standing, it\\nremains imperative that the company establishes checks and balances to ensure that all sales\\npeople understand and comply with not only our policies, but also state and federal\\nregulations.\\nFor these reasons, I have designed a three step \"Certification\" program that all supervisory\\npersonnel must complete. In order to qualify, an individual must first demonstrate their\\n\\n\\x0cunderstanding of the program and their ability to establish accounts and sell equipment\\nthemselves by achieving a predetermined number of personal sales. Secondly, they will be\\nrequired to pass a \"Certification Tesf\\' demonstrating their comprehension of the company\\'s\\npolicies, qualifications and requirements, along with state and federal regulations and\\nknowledge of the various products, services and techniques necessary to achieve successful\\nresults dealing with independent business owners. Finally, they will be required to document\\ntheir ability to properly train and develop other sales people by training a minimum of two\\ntrainees, while working under the watchful eye of their certified supervisor, who is also\\nsuccessful at selling the products and services to business owners. These two trainees will\\nthen remain under the direction of the supervisor, subsequent to the promotion of the newly\\ncertified individual to the same supervisory level, who will now begin working directly with the\\ncompany. Both of these systems are designed to uncover any bad habits, misconceptions or\\nrogue attitudes.\\nAs the company will obviously benefit from the expansion of the sales force by the efforts of\\nthe certified supervisory personnel whom elect to recruit and train other successful sales\\npeople, those who contribute to the growth of the company will be fairly compensated for their\\nefforts. Certified supervisors will be paid the difference between the commissions and\\nresiduals the sales trainees they assist are eligible to eam and the commissions and residuals\\nthey are qualified to receive themselves. For example, if a sales trainee is qualified to eam\\n50% commission on a sale and the supervisor who works with them is qualified to eam 70%,\\nthe supervisor will be eligible to receive the difference of 20%. The same will hold true for the\\nresidual eamings. These commission spreads would be permanent, provided the account\\nstays active and the sales personnel remain productive. The certified supervisory personnel\\nwill have the opportunity to eam commission splits on the sales, leases and residual incomes\\nmade by the new sales person, as well as on any accounts that they inherit from others\\nresulting from inactivity or termination. This is essentially the same relationship between a\\nsales manager and sales person working at a car dealership or broker and agent in the real\\nestate or insurance business.\\nTRAINING BONUS\\nThe most productive certified sales people will also eam the opportunity to participate in two\\nincentive programs. The training bonus will reward certified sales people who recruit and\\nsuccessfully train other certified sales people. Since they will essentially be working as sales\\nmanagers, training, supervising and assisting sales people, they will be rewarded for their\\neffort and results by receiving a portion of the profits the company is eaming in the form of a\\n5% commission, based on the profits of the sales produced by those they personally are\\nresponsible for training and assisting.\\nPROFIT SHARING\\nThe most successful members of the sales organization will also have the opportunity to\\nparticipate in a profit sharing program and receive profit sharing equivalent to the total sales\\nthey are personally responsible for developing. Those who train and develop others who\\n\\n\\x0cachieve the best results will be eligible to receive additional profit sharing equal to 5% of the\\ntotal monthly sales generated by those they have trained directly and their sales team.\\nDIRECT SALES PROGRAM\\nI, as well as my attorneys, believe this is a straight forward direct sales program, not to be\\nmisconstrued as a multi-level marketing, pyramid or endless-chain scheme. Below I have\\nlisted several reasons why this direct sales program does not contain aspects defining multilevel marketing, pyramid or endless-chain schemes.\\n1. There are no sign up fees to get involved with this company. The only expenses which\\ncan be incurred would be for sales tools like business cards, training materials and\\npresentation aids, all of which are not required to participate in the program. Aside from\\nthe business cards which are personalized, any sales tools which are in current and in\\nresalable condition can be returned for a full refund within 30 days, should anyone\\ninvolved change their mind. Reasonable exceptions to the 30 day limitation certainly\\nwill be granted.\\n2. There is no benefll: or income earned for enrolling others. The mere act of recruiting\\nothers into the sales program offers no incentive and will produce no income. The only\\nmethod of earning income in this sales company is to sell products and services directly\\nto end user business owners.\\n3. The only commissions paid to anyone will be as the result of products or services being\\nsold to retail, end-user accounts. There are no products or services which can be\\npurchased by, or sold to, any sales people involved in this company. This will be true\\nwith the exception of someone who happens to own their own business outside of the\\nopportunity and they decide to become end users of the services for the sole benefit of\\ntheir other business.\\n4. All sales volume needed for promotions must be personal sales. Sales personnel will\\nnot be promoted based on the sales of those they enroll. They can however, earn\\nresidual income if they inherit the responsibility of managing accounts which were\\nestablished by someone else, but was later transferred to them because the original\\nsales person was either terminated for cause or chose to no longer take responsibility\\nfor managing that account. As an example; if I was a trainee and you were my certified\\nsupervisor and I established two business accounts before deciding to quit and pursue\\na different career, my accounts would then be assigned to you and you would begin\\nreceiving the monthly residual earnings in exchange for your efforts in managing the\\naccounts and maintaining the relationship with those particular businesses.\\n5. There is no endless-chain pay plan. Those who decide to enroll other sales people into\\nthe business receive no monetary compensation or benefIT from the enrollment. All new\\nsales personnel will be assigned to work with an experienced and successful certified\\nsupervisor. All supervisory personnel are on the same level, working directly with the\\ncompany, and are not stacked, chained, pyramided or part of any down-line. All sales\\n\\n\\x0cpersons will work with the experienced certified supervisor until they achieve the same\\nlevel of success, at which time they are also transferred to work directly with the\\ncompany and are not stacked, chained, pyramided or part of any down-line. This will\\ncreate a direct relationship between the company and all those individuals who have\\nproven their ability to succeed in the business, allowing the company to ensure proper\\nconduct of the certified supervisory personnel and their influences on new trainees.\\nThis is the same manner in which real estate agents can, through sales and\\nperformance, eam the right to become brokers and work directly with the parent\\ncompany while utilizing the efforts of new agents to help their company grow. In\\nessence, the company works directly with all certified supervisory personnel who, in\\ntum, work directly with all sales trainees in the same way a national retail sales\\ncompany would have district managers overseeing store managers.\\n6. The only products a sales trainee or certified supervisor will be able to purchase from\\nthe company will be a company sales manual and possibly pertinent video\\npresentations. There are no commissions paid to anyone for the purchase of these\\nsales tools. The sales tools are solely designed and made available to sales personnel\\nin order to help them be more successful in their efforts of selling products and services\\nto businesses, the purchase of which are not a requirement to work with the company\\nand are strictly voluntary. These sales tools will be sold with a 30-day money back\\nguarantee provided they are retumed in resalable and current condition. We will\\nobviously make announcements prior to, and make exceptions immediately following,\\nany changes in the sales materials. Certified supervisors must sign a contract stating\\nthey understand they are not permitted to have or possess more than ten training\\nmanuals, designed for immediate availability to new trainees, at any time without having\\na documented reason and only after receiving written permission from the company.\\nAny violation of this policy could result in termination.\\n7. There will be no products, services or licenses purchased or inventoried by sales\\npersonnel. There will be no other products or services that can be resold to other sales\\npersonnel. There are no sales of equipment or services made to sales personnel either\\nfrom the company or from one another. No products can be stored or inventoried by\\nsales personnel other than a limited amount of sales tools with a refund policy in place\\nas defined above.\\n8. All products and services are sold, contracted and shipped directly to end users.\\n9. Any opportunity to attend sales training programs will be offered on a voluntary basis\\nand will not be a requirement to work with the company. All participants will be notified\\nof this policy and will be required to sign an agreement stating these facts prior to\\nadmittance to any such events.\\n10.AII persons involved will be required to provide documentation before making any\\nincome claims. Any false, misleading or undocumented income claims will result in\\ntermination of the individuals responsible and all participants involved with the company\\nwill be notified of such violations and terminations.\\n\\n\\x0cSUMMARY\\nI have spent the last several years meeting with business owners and discussing the problems\\nthey are encountering. I have been exploring alternatives and solutions while completing the\\nmarket research necessary to create this company. Most of the business owners I have\\nspoken with are very excited about the benefits they will gain as a result of becoming part of\\nthis merchant alliance program. No aspects of this business plan have been initiated as I\\nunderstand that your agency will not comment regarding ongoing business entities. I am\\nprepared to begin this business venture after I receive a response from your office and will\\ncontinue to prepare for the initial launch as I await your reply.\\nI feel it is necessary to know that your agency agrees this is simply a direct sales program\\nbefore moving forward. Alternatively, I would also appreciate being notified if there are any\\naspects of this program you feel may be defined otherwise, so that I can make any necessary\\nchanges to ensure complete compliance prior to the launch of the company.\\nAs unfortunate as it may be, I have learned the hard way that agencies like the Federal Trade\\nCommission, on occasion, have a different perspective regarding these issues than even\\nhighly respected law firms. This is why I am most interested in understanding your\\nperspective, as the opinion of your agency is certainly of utmost importance. I am willing to do\\nanything in my power to assure you my intentions are honorable. My past experience with\\nyour agency was far too costly; both emotionally and financially, to ever want to encounter\\nanother one. I am willing to do whatever it takes to work within your requirements, I am simply\\nasking for an advisory opinion so I know we are in compliance. I do not want to be involved in\\nanything that could be misconstrued as multi-level marketing or a pyramid scheme and will\\ncontinue to make every attempt to ensure we comply with all federal, state and local laws.\\nI realize you and your offices are extremely busy and I certainly respect and appreciate your\\ntime and response in this matter. If I can be of any assistance to answer any questions or\\nprovide more information I can be reached by phone at (561) 702~1321, or bye-mail at\\nBG1RHINO@AOL.COM. You can rest assured I will work relentlessly to make certain all\\nthose who choose to work with this company will have a realistic opportunity to be successful\\nin this business-to-business enterprise. Confirming that every aspect of this endeavor is in\\ncomplete compliance with your agency is an important aspect of this objective.\\nThank you for your time and consideration in these matters.\\n\\nCc: Phil Sechler\\nWilliams & Connolly\\n\\n\\x0c'","created_timestamp":"February 19, 2008","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/letter-robert-m.frisby-assistant-director-division-enforcement-bureau-consumer-protection\/080219robertfrisby.pdf"}
{"text":"b'\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-responding-complaint-campaign-commercial-free-childhood-concerning-advertising-promotion-pg\/080108ccfc.pdf"}
{"text":"b'UNITFJ) STATES OF AMER!CI\\\\\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nBurc~u of Compc1i1ion\\n\\nDecember 10, 2C07\\n\\nAlden f\\'. J\\\\bholt\\nJ\\\\ssnciute DircclOr\\n\\nDirect I)ial\\n(202) 326\\xc2\\xb7288 l\\n\\nMr. Alan L. Cohen\\nVice President & General Counsel\\nCom1cil of Better Business Bureaus, Inc.\\n4200 Wilson Boulevard, Suite 800\\nArlington, VA 22203-1838\\n\\nDear Mr. Cohen:\\nThis Jetter responds to your request on be.half of the Council of Better Business Bureaus\\n(\"CBBB\") for an advisory opinion regarding a proposed program to encourage increased\\nadvertising of healthier choices and healthy lifestyles to children under 12. \\' You have asked\\nwhether, based on the facts submitted, the proposed program has any potential antitrnst\\nimplications and is likely to result in an enforcement action by the Federal Trade Commission.\\nWe have detennined that this matter is appropriate for a Bureau of Competition staff (..BC\\nstaff\\'\\') opinion letter pursuant to Rule l.l(b) of the Commission\\'s Rules ofPractice, 16 C.F.R. \\xc2\\xa7\\n1. J(b). On the basis of infonnation that you provided in your letter of January 19, 2007, BC staff\\nhave no present intention to recommend a challenge to implementation of the CBBB program as\\nproposed. This conclusion is entirely dependent on the accuracy of our.understandiug of\\npertinent facts concerning the advertising program. Our understanding of those facts, in tum, is\\nentirely dependent on the infonnation that you provided. Our present enforcement inten1.io11s\\nmight be different should the CBBB advertising program not be as described in your letwr and\\nother materials.\\n\\nBackground\\nWe understand that the CBBB is the national organization for the Better Businefs\\nBureau (\"BBB\") syslem whose goal is to foster tiust between businesses and consumers. The\\nCBBB administers the advertisiug industry\\'s voluntary self-regulation program, which includes.\\nthe National Adver1ising Division (\"NAD\") and the Children\\'s Adve1tising Review Unil\\n(\"CARU\"). We understand that NAD resolves complaints involving the truth or accuracy of\\n\\nLetter of January 19, 2007 from Alan L. Cohen to Donald Clark, Secretaiy of th\\xe2\\x80\\xa2~\\nFederal Trade Commission (hereafter cited as \"Cohen Letter\").\\n1\\n\\n\\x0cnational advertising and CARU is a self~regulatory program that seeks to insure that advertising\\nintended for children is not deceptive, unfair or inappropriate.\\nYou indicate that in recent years regulatory authorities and advocacy groups have\\nexpressed concern about the growth of childhood obesity in the U.S. and tha.t these groups have\\nurged the food and beverage industry to change the mix of messages in their advertising directed\\nto children. We understand that these same groups have also expressed concerns about related\\nindustry practices, such as the use of games that include advertising, licensed characters t:>\\npromote their products, product placement, and the marketing of food and beverage products in\\nschools. You indicate that the CBBB and the National Advertising Review Council conducted a\\nreview of CARU standards and that the proposed Children\\'s Food and Beverage Adverti.-ing\\n!nitiative2 (\"Initiative\") was designed to address the concerns that had been expressed.\\nWe understand that the goal of the Initiative is to encourage children to make hea:\\xc2\\xb7thier\\ndietary choices and pursue healthy lifestyles by changing the mix of advertising directed lo them.\\nYou indicate that the program will be staffed by the CBBB and wilJ be open to any food 1>r\\nbeverage advertiser. To participate in the Initiative an advertiser must agree to take the following\\nactions with respect to advertising primarily directed to children under 12:\\n\"Devote at least half their advertising on television, radio, print and Internet to pmmote\\nhealthier dietary choices andfor to messages that encourage good nutrition or healthy\\nlifestyles.\\nLimit products shown in interactive games to healthier dietary choices, or incorpc\\xc2\\xb7rate\\nhealthy lifestyle messages into the games.\\nNot advertise food or beverage products in elementaiy schools.\\n\\nNot engage in food and beverage product placement in editorial and entertainment\\ncontent primarily directed to children under 12.\\nReduce the use of third-party licensed characters in advertising that does not mee\\xc2\\xb7.: the\\nInitiative\\'s product or messaging cdtcria.\\'\\'3\\nYou indicate that as of January 19, 2007 a number of companies have already agreed to\\nparticipate in the lnitiative.4\\n\\nWe understand that each participant will draft a \"Pledge\" that will commit the co:npany\\nto devote more tban 50% of its advertising to children under 12 to:\\n\\n2\\n\\nAn \"Overview,\\'\\' entitled \"Children\\'s Food and Beverage Advertising Initiative,\" was\\nattached to the Cohen letter and sets out in some detail the elements of the Initiative.\\n3\\n\\nCohen letter, p. 2.\\n\\n4\\n\\nCadbury Schweppes USA; Campbell Soup Company; The Coca-Cola Company:\\nGeneral Mills, Inc.; The Hershey Company_; Kellogg Company; Kraft Foods Inc.; McDonald\\'s;\\n\\nPepsiCo, Inc.; and Unilever.\\n\\n\\x0ca) products that represent healthy dietary choices in accordance with standards consistent\\nwith established scientific\/government standards5 , and\/or\\nb) advertising that prominently includes healthy lifestyle messages designed to appeal to\\nthe intended audience. 6\\nYou ir;dicate that the Pledge will be developed by each participant in consultation with Initiative\\nstaff, who will also monitor compliance with each company\\'s Pledge. The staff will revfow\\nadvertising materials, product infonnation, and media impression information submitted by each\\nparticipant. We understand that information submitted by participants on a confidential basis will\\nnot be shared with other participants or outside groups. You indicate that the Initiative will\\npublicly disclose the results of its monitoring, will develop procedures for expulsion of a\\nparticipant that does not comply with its Pledge, and will publicly disclose any expulsion:;, with\\na refen\\xc2\\xb7al made to regulatory authorities.\\n\\nAnalysis of CBBB\\'s Proposed Initiative\\nThe value of trnthful, non-deceptive advertising has been recognized by the Commission\\nand the courts, as has the ham1 that may be suffered by consumers when such tmthful\\nadvertising is limited by agreement among firms in an industry. 7 However, the antitmst hws do\\n\\n5\\n\\nExamples of govemment standards provided in the Overview are:\\n\\n- FDA defined \"healthy\" foods [ CFR 10l.65(d)(2)];\\n-Products that qualify for an FDA authorized health claim [CFR 101.70-101.83]\\n--- Products meeting FDA\/USDA criteria for claims of \"free,\" \"low,\" or \"reduced\" calorie:>, total\\nfat, saturated fat, sodium or sugar\\n- Products that qualify for the USDA Healthier School Challenge Program criteria for\\nSales\/Service of A La Carte and\/or Vended Items\\n- Principles addressing recommended consumption by children tmder 12 under USDA Dietary\\nGuidelines and My Pyramid\\n-- Products rnpresenting a portion control option, such as products advertised and sold in .1\\npackage size of 100 calories or less_\\n\\n6\\n\\nExamples given in the Overview include:\\n\\n- messaging that encourages physical activity\\n\\xc2\\xb7--messaging that encourages good dietary habits, consistent with established scientific and\/or\\ngovernment standards such as USDA Dietary Guidelines and My Pyramid\\n\\nTruthful, non-deceptive advertising promotes competition by providing consumr~rs with\\nimportant infonnation about product prices, quality, and availability, among other facton. that\\nconsumers consider in their purchasing decisions. See, e.g., Virginia State Board ofPlw:wacy v.\\nVirginia Citizens Consumer Council, Inc_, 425 U.S. 748, 765 ( 1976). Agreements on standards\\namong competitors that restrict truthful, nondeceptivc adver6sing, therefore, have the pO\\'.\\':ential\\n7\\n\\n\\x0cnot forbid legitimate self-regulation that benet1ts consumers. As the Commission has stat~,\\n\"[s]uch self-regulatory activity serves legitimate purposes, and in most cases can be expe1;ted to\\nbenefit, rather than to injure, competition and consumer welfare.\"8\\nBC staff typically analyze agreements among firms that may lead to restrictions on some\\nfonns of advertising under the \"rule of reason\" test rather than the per se test. 9 Under a mle of\\nreason test, BC staff weighs the potential for competitive harm arising from an agreement among\\ncompetitors against any procompeti tive or efficiency benefits produced by the agreement. If BC\\nstaff concludes that the procompetive benefits more than offset the likely competitive harm, BC\\nstaff will not pursue an enforcement action. Given the facts as we tmderstand them in this\\ninstance, it is unlikely that BC staff would conclude that potential anticompetitive effects arising\\nfrom the implementation of the CBBB Initiative would outweigh procompetitive benefits. We\\nfind therefore that the CBBB Initiative does not warrant a staff recommendation to the\\nCommission for enforcement action at this time . We reach this conclusion for a number :>f\\nreasons.\\nFirst, CBBB\\'s adoption of the proposed Initiative would not create an agreement :uuong\\nfim1s to restrict advertising. Based on the information supplied, it appears that any agreement\\nwould be voluntruy, would be between an individual finn and the CBBB Initiative, and would\\nalter the mix of advertising but not limit its amount in any way. The Initiative would enc<>urage\\nindividual self-restraint by firms but would not establish a regime of self-regulation among firms\\nin an industry. Limitations on output and advertising, and increased prices to consrnners ure the\\ntraditional concerns of antitrust; it docs not appear that the Initiative has the potential to cause\\nharm to consumers in either respect.\\nSecond, the CBBB Initiative appears to have a significant pro-consumer rational<: by\\nby encouraging adve11ising that may encourage children under 12 to select foods or or beverages\\nthat may be the healthiest available. According to the Cohen letter and the accompanying\\ndocument outlining the Initiative, the oveniding goal of the proposed program is to change the\\nmix of messages i11 food and beverage adve:1ising and other promotional efforts directed to\\nchildren in order to confront a national health issue. If successful, it appears that the lniti<itive\\nmay make a contribution to that goal without creating any hann to consumers that might flow\\nfrom a reduction in competition.\\n\\nto restrict competition and harm consumers. See, e.g., American Medical Association, 96. F.T.C.\\nat 1005.\\n8\\n\\nAmerica11 Academy of Ophthalmology, 101F.T.C1018 (1983) (advisory opinion); see\\n\\nalso American Medical Association, 117 F.T.C. 1091 (1994) (advisory opinion); Ameriw11\\n\\nMedical Association, 94 F.T.C . 701, 1029 (1979), ajf\\'d as modified, 638 F .2d 443 (2d Cir. 1980),\\naffd by an equaf~v divided Court, 455 U.S. 676 (1982).\\n9\\n\\nSpecifically, BC staff\\'s analysis follows the framework set out in the Federal Trade\\nCommission\/Depar1ment of Justice Guidelines for Collaborations Among Competitors, <Jvailable\\nat http:\/\/www.ftc.gov\/os\/2000\/04\/ftcclojguidclines.pdf, and in the Commission\\'s decision in In re\\nPo~vgram Holding. Inc., Dkt. No. 9298 (2003), 2003 WL 2170765 (F.T.C.), aff\\'d, Po(l-7~ram\\nHolding, Inc. v. FTC, 416 F.3d 29 (D.C. Cir. 2005).\\n\\n\\x0cConclusion\\nFor the reasons stated above, we believe that. on balance, the likely benefits ofCBBB\\'s\\nproposed Initiative more than offset any potential for competitive hann. On this basis, BC staff\\nhave no present intention to recommend a challenge to CBBB \\'s Initiative.\\nThis letter sets out the views of the staff of the Bureau of Competition, as authorized by\\nRule l.l(b) of the Commission\\'s Rules of Practice, 16 C.F.R. \\xc2\\xa7 1. l(b). Under Commission Rule\\nl .3(c), 16 C.F.R. \\xc2\\xa7 l .3(c), the Commission is not bound by this staff opinion and reserves the\\nright to rescind it at a later time. In addition, this Office retains the right to reconsider the\\nquestions involved and, with notice to the requesting party, to rescind or revoke the opinion if\\nimplementation of the proposed program results in substantial anticompetiutive effects, if the\\nprogram is used for improper purposes, if facts change significantly, or if it would be in ti1e\\npublic interest to do so.\\nSincerely yours,\\n\\nAlden F. Abbott\\n\\nAssociate .Director\\n\\n\\x0c'","created_timestamp":"January 19, 2007","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-alden-f-abbott-associate-director-bureau-competition-alan-l-cohen-vice-president-general\/170309_advisory_opinion_letter.pdf"}
{"text":"b'4200 Wilson Boulevard, Suite 800\\nArlington, Virginia 22203-1838\\n703.276.0100\\n\\n703.525.8277 (fax)\\n\\nCOUNCIL OF BETTER BUSINESS BUREAUS, INC.\\n\\nJanuary 19, 2007\\n\\nMr. Donald Clark\\n\\nSecretary of the Commission\\nFederal Trade Commission\\n600 Pennsylvania Avenue, NW\\nWashington, D.C. 20580\\n\\nRE: Request for FTC Advisory Opinion on Children\\xe2\\x80\\x99s Food and Beverage\\nAdvertising Initiative\\n\\nDear Mr. Clark:\\n\\nT am writing on behalf of the Council of Better Business Bureaus to request an advisory\\nopinion concerning an initiative that will be administered by the Council of Better\\nBusiness Bureaus to encourage increased advertising of healthier dietary choices and\\nhealthy lifestyles to children under 12. We are secking an opinion as to whether any\\nelement of the proposed program is likely to result in an enforcement action by the\\nCommission under Section 5 of the Federal Trade Commission Act or other Federal\\nantitrust laws.\\n\\nThe Council of Better Business Bureaus (\\xe2\\x80\\x9cCBBB\\xe2\\x80\\x9d) is the national organization for the\\nBetter Business Bureau (\\xe2\\x80\\x9cBBB\\xe2\\x80\\x9d) system. The BBB system is dedicated to fostering trust\\nbetween businesses and consumers, and since its beginning in 1912 has grown to become\\nthe most trusted name and recognized advocate for promoting ethical business and\\nadvertising practices.\\n\\nThe CBBB administers the advertising industry\\xe2\\x80\\x99s voluntary self-regulation program,\\nwhich includes the National Advertising Division (\\xe2\\x80\\x9cNAD\\xe2\\x80\\x9d) and the Children\\xe2\\x80\\x99s\\nAdvertising Review Unit (\\xe2\\x80\\x9c(CARU\\xe2\\x80\\x9d). NAD is responsible for resolving complaints or\\nquestions involving the truth or accuracy of national advertising. CARU was established\\nas a self-regulatory program to promote responsible children\\xe2\\x80\\x99s advertising; CARU sets\\nhigh standards for the industry to assure that advertising intended for children is not\\ndeceptive, unfair, or inappropriate for its intended audience. Information about these\\n\\nprograms can be found at www.narcpartners.org.\\n\\nIn recent years, regulatory authorities and advocacy groups have expressed concerns\\nabout increasing childhood obesity in the United States, They have urged the food and\\nbeverage industry to take responsible self-regulatory steps to change the mix of messages\\nin food and beverage advertising directed to children, and also to address other related\\n\\nThe name Heiter Busiacss Buc eau is a registered sercive mark of the Coit of Better Mnsiness Barerus, Ine.\\n\\x0cMr. Donald Clark\/January 19, 2007\/page 2\\n\\nconcerns that include use of certain marketing techniques such as advergaming, use of\\nlicensed characters to promote food and beverage products, product placement, and\\nmarketing of food and beverage products in schools, The Council of Better Business\\nBureaus and the National Advertising Review Council conducted a review of CARU\\nstandards to determine if they should be modified to address these issues. As a result of\\nthis review, it was determined that the best solution was to create a new initiative focused\\non increasing the advertising of healthier dietary choices and healthy lifestyles to\\nchildren.\\n\\nThe Children\\xe2\\x80\\x99s Food and Beverage Advertising Initiative (\\xe2\\x80\\x9cInitiative\\xe2\\x80\\x9d) was created to\\naddress the above concerns, The goal of the Initiative is to shift the mix of advertising\\nmessaging to children to encourage healthier dietary choices and healthy lifestyles. In\\norder to participate in the Initiative, advertisers must agree to do the following for\\nadvertising primarily directed to children under 12:\\n\\n\\xc2\\xa9 Devote at least half their advertising on television, radio, print and Internet to\\npromote healthier dietary choices and\/or to messages that encourage good\\nnutrition or healthy lifestyles.\\n\\ne Limit products shown in interactive games to healthier dietary choices, or\\nincorporate healthy lifestyle messages into the games.\\n\\ne Not advertise food or beverage products in elementary schools.\\n\\n\\xc2\\xa9 Not engage in food and beverage product placement in editorial and entertainment\\ncontent primarily directed to children under 12.\\n\\n\\xc2\\xab Reduce the use of third-party licensed characters in advertising that does not meet\\nthe Initiative\\xe2\\x80\\x99s product or messaging criteria.\\n\\nThe Initiative will be staffed by the CBBB. An overview of the Initiative is attached.\\n\\nParticipation in the Initiative is open to any food\/beverage advertiser. As of this writing,\\nthe following companies have agreed to participate: Cadbury Schweppes USA; Campbell\\nSoup Company; The Coca-Cola Company; General Mills, Inc.; The Hershey Company;\\nKellogg Company; Kraft Foods Inc.; McDonald\\xe2\\x80\\x99s; PepsiCo, Inc.; and Unilever.\\n\\nUnder the terms of the Initiative, participants will create an individual company \\xe2\\x80\\x9cPledge\\xe2\\x80\\x9d\\nthat will commit the company to devote a specified percentage (but not less than 50%) of\\nits advertising to children under 12 to (3) products that represent healthy dietary choices\\nin accordance with standards consistent with established scientific\/government standards,\\nand\/or (2) advertising that prominently includes healthy lifestyle messages designed to\\nappeal to the intended audience. The Pledge will be developed by individual participants\\nin consultation with Initiative staff. The Initiative wil! monitor compliance with each\\ncompany\\xe2\\x80\\x99s Pledge by reviewing advertising materials, product information, and media\\nimpression information submitted by each participant. Information submitted by\\nparticipants on a confidential basis will not be shared with other participants or outside\\ngroups. The Initiative will publicly disclose the results of its monitoring, and will\\n\\x0cMr. Donald Clark\/January 19, 2007\/page 3\\n\\ndevelop procedures for expulsion of a participant that does not comply with its Pledge.\\nAny expulsions will be publicly disclosed, with a referral made to regulatory authorities,\\n\\nThe CBBB requests that the FTC examine the elements of the proposed Initiative and\\nprovide an advisory opinion with respect to whether any element of the proposed\\nprogram is likely to result in an enforcement action by the Commission. We believe that\\nthe Initiative raises no anti-competitive issues, and believe that it will provide significant\\npro-competitive benefits to the American public by encouraging the development and\\nselection of healthier dietary choices and lifestyles.\\n\\nThank you for your attention to this important request.\\n\\nSincerely,\\n\\nCOL Ct\\n\\nAlan L. Cohen\\nVice President and General Counsel\\n\\nCc: Chairman Deborah Platt Majoras\\nJeff Schmidt, Director, Bureau of Competition\\nLydia Parnes, Director, Bureau of Consumer Protection\\nMary Engle, Associate Director for Advertising Practices\\nSteve Cole, President and CEO, Council of Better Business Bureaus\\n\\x0c'","created_timestamp":"January 19, 2007","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-alden-f-abbott-associate-director-bureau-competition-alan-l-cohen-vice-president-general\/170309_bbb_request_letter_1-19-2007.pdf"}
{"text":"b\"UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nDivision of Marketing Practices\\n\\nCraig Tregillus Direct Dial: (202) 326-2970\\nctregillus@ftc.gov Facsimile: (202) 326-3395\\n\\nNovember 27, 2007\\n\\nMr. David Nixon, President\\nNixon Consulting\\n\\nP.O. Box 440\\n\\nChatham, IL 62629-0440\\n\\nDear Mr. Nixon:\\n\\nYou have asked whether the Funeral Rule permits a funeral provider that does not offer\\ncremations to omit the \\xe2\\x80\\x9cdirect cremation\\xe2\\x80\\x9d description and price disclosure from its General Price\\nList (\\xe2\\x80\\x9cGPL\\xe2\\x80\\x9d). You have also asked whether a funeral provider who wants to offer cremation\\nservices, but not \\xe2\\x80\\x9cdirect cremation\\xe2\\x80\\x9d as defined by the Funeral Rule, can omit \\xe2\\x80\\x9cdirect cremation\\xe2\\x80\\x9d\\nfrom its GPL.\\n\\nThe answer to your first question is provided by Section 453.2(b)(4)(ii) of the Rule, which\\nrequires a price disclosure for \\xe2\\x80\\x9cdirect cremation,\\xe2\\x80\\x9d and each of the other funeral goods or services\\nrequired to be listed in the GPL, only \\xe2\\x80\\x9cif [they are] offered for sale\\xe2\\x80\\x9d by the funeral provider.\\xe2\\x80\\x99 A\\nfuneral provider that does not offer cremation therefore need not include the \\xe2\\x80\\x9cdirect cremation\\xe2\\x80\\x9d\\nentry that would otherwise be required in its GPL. However, for the reasons which follow, if a\\nfuneral provider offers packages that include cremation, the \\xe2\\x80\\x9cdirect cremation\\xe2\\x80\\x9d entry must appear\\nin its GPL.\\n\\nYour second inquiry raises the issue of whether that entry likewise might not be required if\\na funeral provider were to rely on the definition of \\xe2\\x80\\x9cdirect cremation,\\xe2\\x80\\x9d in Section 453.1(g) as \\xe2\\x80\\x9ca\\ndisposition of human remains by cremation, without formal viewing, visitation, or ceremony with\\nthe body present,\\xe2\\x80\\x9d? and offer only cremation packages that include a \\xe2\\x80\\x9cformal viewing, visitation or\\nceremony with the body present.\\xe2\\x80\\x9d However, such literal reliance on the wording of the definition\\nin isolation from its context would ignore the history and purpose of the Rule, misconstrue the\\nphrase, \\xe2\\x80\\x9cif offered for sale,\\xe2\\x80\\x9d and ultimately violate the Rule\\xe2\\x80\\x99s \\xe2\\x80\\x9cunbundling\\xe2\\x80\\x9d provision.\\n\\nAs the original Statement of Basis and Purpose (\\xe2\\x80\\x9cSBP\\xe2\\x80\\x9d) for the Rule made clear, the Rule\\nis designed to prevent \\xe2\\x80\\x9cseveral practices by funeral providers which limit the consumer\\xe2\\x80\\x99s ability to\\n\\n' 16 C.E.R. \\xc2\\xa7 453.2(b)(4)(ii). See also 16 C.F.R. \\xc2\\xa7 453.2(b)(4)Gi)(C).\\n\\n2 16 CER. \\xc2\\xa7 453.1(g) (emphasis added).\\n\\x0cMr. David Nixon\\nPage 2 of 3\\n\\nmake informed, independent choices,\\xe2\\x80\\x9d the first and foremost of which was \\xe2\\x80\\x9crequir[ing] that\\nconsumers purchase \\xe2\\x80\\x98prepackaged\\xe2\\x80\\x99 funerals, which may include goods and services which the\\nconsumers would not otherwise purchase.\\xe2\\x80\\x9d? Thus, \\xe2\\x80\\x9c[t]o ensure that funeral consumers have the\\nability to select only the goods and services they want to purchase, the rule generally requires\\nfuneral providers to \\xe2\\x80\\x98unbundle\\xe2\\x80\\x99 the goods and services they offer for sale and offer them on an\\nitemized basis\\xe2\\x80\\x9d while allowing providers to \\xe2\\x80\\x9ccontinue to offer \\xe2\\x80\\x98package funerals\\xe2\\x80\\x99 for sale as an\\nalternative to itemized purchasing.\\xe2\\x80\\x9d\\n\\nAccordingly, when amending the Rule in 1994, the Commission emphasized that \\xe2\\x80\\x9c[t]he\\nRule\\xe2\\x80\\x99s core purpose is to permit itemization so that consumers may select only the funeral items\\nthey desire, and decline unwanted items.\\xe2\\x80\\x9d> The Commission explained that \\xe2\\x80\\x9cby \\xe2\\x80\\x98bundling\\xe2\\x80\\x99 all\\nfuneral goods and services in a package, funeral providers had effectively forced consumers to\\nbuy unwanted items,\\xe2\\x80\\x9d but that the Rule\\xe2\\x80\\x99s itemized price disclosure requirements had alleviated\\n\\xe2\\x80\\x9cthe primary industry restraint on consumer choice \\xe2\\x80\\x94 package pricing.\\xe2\\x80\\x9d\\xc2\\xae\\n\\nThus, if a funeral provider offers a funeral package that \\xe2\\x80\\x9cbundles\\xe2\\x80\\x9d cremation with other\\nservices, such as a \\xe2\\x80\\x9cformal viewing, visitation or ceremony with the body present,\\xe2\\x80\\x9d it must give\\nconsumers the option of purchasing \\xe2\\x80\\x9cdirect cremation,\\xe2\\x80\\x9d as defined by the Rule, and must include\\nthe itemized price in its GPL for direct cremation required by Section 453.2(b)(4)(ii)(C) of the\\nRule. To conclude otherwise \\xe2\\x80\\x94 that the offer of a package of goods and services does not include\\nthe offer of an essential element of that package \\xe2\\x80\\x94 would contravene the purpose of the Rule.\\nThus, whenever \\xe2\\x80\\x9cdirect cremation\\xe2\\x80\\x9d is an element of a package offered by a funeral provider, it is\\n\\xe2\\x80\\x9coffered for sale,\\xe2\\x80\\x9d and Section 453.2(b)(4)(ii) of the Rule therefore requires that a price disclosure\\nfor this service appear in the provider\\xe2\\x80\\x99s GPL.\\xe2\\x80\\x99\\n\\nMore importantly, a sale of a cremation package that includes more than a \\xe2\\x80\\x9cdirect\\ncremation\\xe2\\x80\\x9d to a consumer who is not also offered an \\xe2\\x80\\x9cunbundled\\xe2\\x80\\x9d price for direct cremation\\nwould violate the \\xe2\\x80\\x9cunbundling\\xe2\\x80\\x9d provision of the Rule. Section 453.4(b)(1)(i) makes it a Rule\\n\\n3 SB&P, 47 Fed. Reg. 42260 (1982).\\n\\xe2\\x80\\x98 47 Fed. Reg. at 42261.\\n5 SB&P, 71 Fed. Reg. 1592, 1608 (1994).\\n\\n6 59 Fed. Reg. at 1602. Section 453.2(b)(6) of the Rule permits funeral providers to\\ncontinue to offer funeral packages, 16 C.F.R. \\xc2\\xa7 453.2(b)(6), as the Commission emphasized in\\nthe original SB&P and the SB&P for the 1994 amendments. 47 Fed. Reg. at 42261; 59 Fed. Reg.\\nat 1594.\\n\\n7 For this reason, the only circumstance under which a funeral provider would not\\nbe required to include an itemized price for direct cremation in its GPL would be if it simply\\ndoes not offer or sell any cremation packages or other cremation goods or services.\\n\\x0cMr. David Nixon\\nPage 3 of 3\\n\\nviolation to \\xe2\\x80\\x9c[cJondition the furnishing of any funeral good or funeral service to a person\\narranging a funeral upon the purchase of any other funeral good or funeral service, except as\\nrequired by law or as otherwise permitted by [the Rule].\\xe2\\x80\\x9d* To give a consumer no choice but to\\npurchase a cremation package that includes a formal viewing, visitation, or ceremony with the\\nbody present would condition the furnishing of cremation services on these additional services, in\\ndirect contravention of Section 453.4(b)(1)() of the Rule.\\n\\nPlease be advised that the views expressed in this letter are those of the FTC staff. They\\nhave not been reviewed, approved, or adopted by the Commission, and they are not binding upon\\nthe Commission. However, they do reflect the opinions of those staff members charged with\\nenforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted on the FTC\\nwebsite at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/ staffopinions.shtm.\\n\\nSincerely,\\n\\nlimp\\n\\nFuneral Rule Coordinator\\n\\n8 16 CFR. \\xc2\\xa7 453.4(b)(1)(@).\\n\\x0c\"","created_timestamp":"November 27, 2007","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-07-10\/opinion07-10.pdf"}
{"text":"b\"ADVISORY OPINION\\n___________________\\nIN THE MATTER OF\\n\\nACA INTERNATIONAL\\nFTC File No. P064803.\\n\\nRe:\\n\\nOpinion, October 5, 2007\\n\\nWhether the Fair Debt Collection Practices Act\\n(\\xe2\\x80\\x9cFDCPA\\xe2\\x80\\x9d) prohibits a debt collector from notifying a\\nconsumer who disputed a debt that the collector has\\nceased its collection efforts.\\n\\nDear Mr. Beato:\\nThis is in response to ACA International\\xe2\\x80\\x99s (\\xe2\\x80\\x9cACA\\xe2\\x80\\x99s\\xe2\\x80\\x9d) request for\\na Commission advisory opinion (\\xe2\\x80\\x9cRequest\\xe2\\x80\\x9d) regarding whether the\\nFair Debt Collection Practices Act (\\xe2\\x80\\x9cFDCPA\\xe2\\x80\\x9d) prohibits a debt\\ncollector from notifying a consumer who disputed a debt that the\\ncollector has ceased its collection efforts. ACA submitted the\\nRequest pursuant to Sections 1.1-1.4 of the Commission\\xe2\\x80\\x99s Rules of\\nPractice, 16 C.F.R. \\xc2\\xa7\\xc2\\xa7 1.1-1.4. As explained more fully below, the\\nCommission concludes that a debt collector providing such a notice\\nto a consumer would not violate the FDCPA.\\nThe Request focuses primarily on Section 809 of the FDCPA,\\n15 U.S.C. \\xc2\\xa7 1692g. Section 809(a) provides that, within five days\\nafter its initial communication with a consumer about a debt, a debt\\ncollector must send the consumer a written notice. Among other\\nthings, this notice must state that \\xe2\\x80\\x9cif the consumer notifies the debt\\ncollector in writing within [thirty days after receipt of the notice]\\nthat the debt, or any portion thereof, is disputed, the debt collector\\nwill obtain verification of the debt or a copy of a judgment against\\nthe consumer and a copy of such verification or judgment will be\\nmailed to the consumer by the debt collector.\\xe2\\x80\\x9d Section 809(b)\\nprovides that if a consumer provides such a notice, the debt collector\\nmust cease collection until it has obtained verification of the debt or\\na copy of the judgment and mailed it to the consumer.\\n\\n\\x0c1444\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\nVOLUME 144\\nAdvisory Opinion\\n\\nIn July 2007, ACA amended its Code of Ethics and Code of\\nOperations (\\xe2\\x80\\x9cEthics Code\\xe2\\x80\\x9d). If a debt collector receives a written\\nrequest for verification and is unable to verify the debt, the Ethics\\nCode now requires \\xe2\\x80\\x9cthe cessation of all collection efforts, removal of\\nthe account from the consumer\\xe2\\x80\\x99s credit report or reporting the\\naccount as disputed, and prompt notification of the creditor or legal\\nowner of the debt that collection activities have been terminated due\\nto the inability to provide verification information.\\xe2\\x80\\x9d Request at 3\\n(emphasis added). ACA \\xe2\\x80\\x9calso has considered amending the Ethics\\nCode to promote the notification of a consumer that collection\\nactivity has been terminated if the debt collector is unable to verify\\nthe debt following the receipt of a written request for verification.\\xe2\\x80\\x9d\\nId. (emphasis added). However, ACA has not yet amended its\\nEthics Code to include such a provision because of \\xe2\\x80\\x9cconcern that\\ncommunication with the consumer following a request for\\nverification might be construed as an attempt to collect, even though\\nthe intention merely is to inform the consumer that there will no\\nfurther collections.\\xe2\\x80\\x9d Id. at 2.\\nWe note first that courts have construed Section 809(b) as giving\\ndebt collectors two options when they receive a written dispute or a\\nrequest for verification1: (1) provide the requested verification and\\ncontinue collection activities, or (2) cease all collection activities. If\\nthe debt collector ceases collection, it is not required to provide\\n1\\n\\nCourts interpreting Section 809(b) have used the phrases \\xe2\\x80\\x9cdisputing the\\ndebt,\\xe2\\x80\\x9d \\xe2\\x80\\x9crequesting verification,\\xe2\\x80\\x9d and \\xe2\\x80\\x9crequesting validation\\xe2\\x80\\x9d interchangeably.\\nSee, e.g., Jang v. A.M. Miller and Assocs., 122 F.3d 480, 482 (7th Cir. 1997)\\n(collection agencies \\xe2\\x80\\x9cceased collection activities immediately upon receiving the\\nrequests for validation, in compliance with [Section 809(b)]\\xe2\\x80\\x9d); Wilhelm v.\\nCredico Inc., 426 F. Supp. 2d 1030, 1036 (D.N.D. 2006) (debt collector\\xe2\\x80\\x99s\\nSection 809(b) obligations triggered \\xe2\\x80\\x9conce a debt collector receives a request for\\nverification\\xe2\\x80\\x9d); Sambor v. Omnia Credit Servs., Inc., 183 F. Supp. 2d 1234, 1243\\n(D. Haw. 2002) (debt collector\\xe2\\x80\\x99s Section 809(b) obligations triggered \\xe2\\x80\\x9c[w]hen\\ntimely asked in writing to validate a debt\\xe2\\x80\\x9d); see also Clark\\xe2\\x80\\x99s Jewelers v. Humble,\\n823 P.2d 818, 821 (Kan. Ct. App. 1991) (a consumer need not use the word\\n\\xe2\\x80\\x9cdispute\\xe2\\x80\\x9d to trigger the debt collector\\xe2\\x80\\x99s obligation to cease collection and provide\\nverification of the debt, as long as the consumer\\xe2\\x80\\x99s notice makes clear that the debt\\nis contested).\\n\\n\\x0cACA INTERNATIONAL\\n\\n1445\\n\\nAdvisory Opinion\\n\\nverification. See, e.g., Guerrero v. RJM Acquisitions LLC, 2007\\nU.S. App. LEXIS 20072, at *35-36 (9th Cir. Aug. 23, 2007); Jang v.\\nA.M. Miller & Assocs., 122 F.3d 480,483 (7th Cir. 1997); Wilhelm v.\\nCredico Inc., 426 F. Supp. 2d 1030, 1036 (D.N.D. 2006); Zaborac v.\\nPhillips and Cohen Assocs, 330 F. Supp. 2d 962, 966 (N.D. Ill.\\n2004); Sambor v. Omnia Credit Servs., Inc., 183 F. Supp. 2d 1234,\\n1243 (D. Haw. 2002).\\nThe Request poses the question of whether a debt collector that\\ndiscontinues debt collection activities after receiving a written\\nrequest for verification can inform the consumer that it has done so\\nwithout violating the FDCPA. As noted above, Section 809(b)\\nrequires a debt collector to cease collection of a debt until the\\ncollector has provided verification of the debt to the consumer if the\\nconsumer, in writing within the thirty-day window, has either\\ndisputed the debt or requested verification. If a debt collector cannot\\nprovide such verification to the consumer, merely informing the\\nconsumer that debt collection efforts have been terminated is not an\\nattempt to collect a debt and therefore does not violate the FDCPA.2\\nWe note that Congress enacted Section 809 to \\xe2\\x80\\x9celiminate the\\nrecurring problem of debt collectors dunning the wrong person or\\nattempting to collect debts which the consumer has already paid.\\xe2\\x80\\x9d3\\nThe provision allows a consumer who does not believe that he or she\\nowes a debt to require that the debt collector obtain and provide\\nverification prior to contacting the consumer again. The purpose of\\nSection 809 therefore is to stop further calls and letters from\\ncollectors unless the consumer incurred and continues to owe the\\n2\\n\\nThe Request also raises the question whether a notice informing a consumer\\nthat collection efforts have ceased \\xe2\\x80\\x9cmight be construed as a 'communication\\xe2\\x80\\x99 in\\nfurtherance of collecting the debt.\\xe2\\x80\\x9d Request at 5. Regardless of whether such a\\nnotice is a \\xe2\\x80\\x9ccommunication\\xe2\\x80\\x9d under 15 U.S.C. \\xc2\\xa7 1692a(2), a debt collector telling\\na consumer that debt collection has ceased is not \\xe2\\x80\\x9cin furtherance of collecting the\\ndebt.\\xe2\\x80\\x9d\\n3\\n\\n1698.\\n\\nS. Rep. No. 95-382, at 4 (1977), reprinted in 1977 U.S.C.C.A.N. 1695,\\n\\n\\x0c1446\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\nVOLUME 144\\nAdvisory Opinion\\n\\ndebt. Interpreting Section 809 as allowing debt collectors to notify\\nconsumers that they have ceased collection efforts, without\\nconveying any other message, is consistent with this purpose. A\\nconsumer receiving such a notice would benefit both from having\\nthe calls and letters from that collector stop and from knowing that\\nthe collector will not renew its collection efforts.4\\nThe only other FDCPA provision that could be implicated by the\\nnotification that ACA proposes to require of its members is Section\\n805(c). That provision provides that, if a consumer notifies a debt\\ncollector in writing that he or she \\xe2\\x80\\x9crefuses to pay a debtor . . . wishes\\nthe debt collector to cease further communication,\\xe2\\x80\\x9d the debt\\ncollector is not permitted to communicate further with the consumer\\nabout the debt. However, Section 805(c) includes an express\\nexception to its prohibition on communication that permits a debt\\ncollector to \\xe2\\x80\\x9cadvise the consumer that the debt collector\\xe2\\x80\\x99s further\\nefforts are being terminated.\\xe2\\x80\\x9d Thus, even if a consumer demands in\\nwriting that a debt collector cease communicating about a debt, the\\ndebt collector would not violate Section 805(c) if it notified the\\nconsumer that the collector\\xe2\\x80\\x99s collection efforts have ceased.5\\nAfter reviewing the language of the FDCPA and its legislative\\nhistory as well as information contained in the Request, the\\nCommission concludes that a debt collector does not violate the\\nFDCPA if, after receiving written notice of a dispute, it informs the\\nconsumer that it has ceased collection efforts.\\n\\n4\\n\\nEven if, as the amended Ethics Code now requires, a debt collector that is\\nunable to provide verification of a debt ceases collection efforts, closes the\\naccount, and notifies the credit grantor, client, or owner of legal title to the debt\\nthat collection activities have been terminated because the collector could not\\nprovide verification of the debt, the credit grantor, client, or debt owner might\\nchoose to refer the account to a different debt collector. Thus, although the\\nconsumer will no longer be contacted by the first debt collector, he or she might\\nreceive collection calls and letters from a different debt collector.\\n5\\n\\nWe note, however, that any such communication must not violate any other\\nFDCPA provision.\\n\\n\\x0cACA INTERNATIONAL\\n\\nAdvisory Opinion\\n\\n1447\\n\\n\\x0c\"","created_timestamp":"October 5, 2007","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/advisory-opinion-whether-fair-debt-collection-practices-act-prohibits-debt-collector-notifying\/in_re_aca_international_-_ftc_file_no_9064803_10-5-07.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nDivision of Marketing Practices\\n\\nCraig Tregillus Direct Dial: (202) 326-2970\\nctregillus @ftc.gov Facsimile: (202) 326-3395\\n\\nOctober 1, 2007\\n\\nT. Scott Gilligan, Esq.\\n3734 Eastern Ave.\\nCincinnati, OH 45225\\n\\nDear Mr. Gilligan:\\n\\nThis letter is in response to your request for an informal staff advisory opinion on\\nwhether the FTC Funeral Rule permits funeral providers to display casket information,\\nincluding prices, on a computer instead of a printed price list. You state that in the past\\nfew years, several of the major casket companies have developed computer programs that\\nallow funeral providers to show consumers pictures of caskets together with price\\ninformation. Your inquiry notes that the ability to show caskets on the computer greatly\\nreduces inventory costs for funeral homes and that many consumers prefer to look at\\ncasket information on a computer.\\n\\nThe Casket Price List (\\xe2\\x80\\x9cCPL\\xe2\\x80\\x9d) provision in Section 453.2(b)(2) of the Funeral\\nRule requires funeral providers to \\xe2\\x80\\x9cgive a printed or typewritten price list to people who\\ninquire in person about the offerings or prices of caskets or alternative containers,\\xe2\\x80\\x9d and to\\noffer consumers the CPL \\xe2\\x80\\x9cupon beginning discussion of, but in any event before showing\\ncaskets.\\xe2\\x80\\x9d! The CPL must include: (i) the retail price of all caskets and alternative\\ncontainers offered by the provider that do not require special ordering with enough\\ninformation to identify each of them;? (ii) the effective date of the CPL;? (iii) the name of\\nthe funeral provider\\xe2\\x80\\x99s place of business;\\xe2\\x80\\x98 and (iv) a caption describing the CPL as a\\n\\n\\' 16 CER. \\xc2\\xa7 453.2(b)(2)(i). The Rule does not require a funeral provider to\\nmake the CPL available if the provider includes the required casket price information in\\nits General Price List (\\xe2\\x80\\x9cGPL\\xe2\\x80\\x9d). The Rule also does not require funeral providers to give\\nconsumers the CPL to keep, unlike the GPL, which they must \\xe2\\x80\\x9cgive\\xe2\\x80\\x9d consumers \\xe2\\x80\\x9cfor\\nretention.\\xe2\\x80\\x9d 16 C.F.R. \\xc2\\xa7 453.2(b)(4)(i)(A).\\n\\n2 16 CER. \\xc2\\xa7 453.2(b)(2)(i).\\n3 Id.\\n\\n\\xe2\\x80\\x98 16 C.F.R. \\xc2\\xa7 453.2(b)(2)Gi).\\n\\x0cT. Scott Gilligan, Esq.\\nPage 2 of 3\\n\\n\\xe2\\x80\\x9ccasket price list.\\xe2\\x80\\x9d\\xc2\\xb0 Section 453.2(b)(2)(i) also specifies that \\xe2\\x80\\x9c[i]n lieu of a written list,\\nother formats, such as notebooks, brochures, or charts may be used if they contain the\\nsame information as the printed or typewritten list, and display it in a clear and\\nconspicuous manner.\\xe2\\x80\\x9d\\xc2\\xae\\n\\nThe purpose of the CPL, like the other remedial price list requirements of the\\nRule, is to \\xe2\\x80\\x9cenhance the operation of market forces and cure the market failure . . . in the\\nfuneral industry\\xe2\\x80\\x9d that was demonstrated in the rulemaking record \\xe2\\x80\\x9cby giving consumers\\naccess to price information at a time and in a form which will permit them to consider\\nprice when making purchase decisions.\\xe2\\x80\\x9d\\n\\nIn conformity with the language of Section 453.2(b)(2)(i), the Statement of Basis\\nand Purpose issued when the Funeral Rule was first promulgated states that \\xe2\\x80\\x9c[t]he casket\\nprice list does not have to be prepared as a printed or written list\\xe2\\x80\\x9d and \\xe2\\x80\\x9cmay be displayed\\nin other formats, such as a looseleaf notebook with a page for each casket.\\xe2\\x80\\x9d* The\\nCompliance Guide similarly notes that the Rule does not require that caskets or\\ncontainers be listed in any particular format or order, and that the Casket Price List can be\\nin any form as long as it contains the required information displayed in a clear and\\nconspicuous manner.\\xe2\\x80\\x9d\\n\\nAccordingly, it is the opinion of staff that presenting casket and alternative\\ncontainer price information along with pictures of caskets offered by the funeral provider\\nto consumers on a computer is consistent with the Rule\\xe2\\x80\\x99s provision permitting price\\ninformation to be displayed \\xe2\\x80\\x9cin other formats,\\xe2\\x80\\x9d so long as all of the information required\\nby the Rule is displayed in a clear and conspicuous manner.\"\\n\\n5 Id.\\n8 16 CER. \\xc2\\xa7 453.2(b)(2)(i) (emphasis added).\\n\\n7 Statement of Basis and Purpose, 47 Fed. Reg. at 42260, 42272 (Sept. 24,\\n1982).\\n\\n8 47 Fed. Reg. at 42273.\\n\\n\\xc2\\xb0 Complying with the Funeral Rule, FTC (June 2004) at 15.\\n\\nto For a discussion of how the FTC determines whether a disclosure\\n\\npresented to consumers on a computer is \\xe2\\x80\\x9cclear and conspicuous,\\xe2\\x80\\x9d see e.g., Dot Com\\nDisclosures, FTC (May 2000) available at http:\/\/www ftc.gov\/bcp\/conline\/pubs\/\\nbuspubs\/dotcom.\\n\\x0cT. Scott Gilligan, Esq.\\nPage 3 of 3\\n\\nPlease be advised that the views expressed in this letter are those of the FTC staff.\\nThey have not been reviewed, approved, or adopted by the Commission, and they are not\\nbinding upon the Commission. However, they do reflect the opinions of those staff\\nmembers charged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are\\nroutinely posted on the FTC website at http:\/\/www .ftc.gov\/bcp\/conline\/edcams\/funerals\/\\n\\nstaffopinions.shtm.\\nSincerely,\\nfll\\n\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\x0c'","created_timestamp":"October 1, 2007","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-07-9\/opinion07-9.pdf"}
{"text":"b\"UNITED STATES OF AMERICA\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nDivision of Marketing Practices\\n\\nCraig Tregillus Direct Dial: (202) 326-2970\\nctregillus @ftc.gov Facsimile: (202) 326-3395\\n\\nAugust 21, 2007\\n\\nT. Scott Gilligan, Esq.\\nGilligan Law Offices\\n3734 Eastern Ave.\\nCincinnati, OH 45226\\n\\nDear Mr. Gilligan:\\n\\nThis letter responds to your inquiry about a prior staff opinion interpreting the FTC\\nFuneral Rule (\\xe2\\x80\\x9cRule\\xe2\\x80\\x9d) which concluded, inter alia, that a funeral provider may not charge a\\nstorage fee if a third party casket is delivered \\xe2\\x80\\x9cseveral days before it is needed for a visitation or\\nfuneral service.\\xe2\\x80\\x9d! You ask whether the opinion applies only to \\xe2\\x80\\x9cat need\\xe2\\x80\\x9d arrangements made\\nafter a death, as it indicates, or whether the same reasoning would also apply to prohibit a storage\\nfee if a third party casket were delivered shortly after \\xe2\\x80\\x9cpre-need\\xe2\\x80\\x9d funeral arrangements are made\\nby a consumer who \\xe2\\x80\\x9cwould not need the casket for some indeterminate time.\\xe2\\x80\\x9d\\n\\nThe prior opinion was based on the prohibition in section 453.4(b)(1)(ii) of the Rule\\nwhich bars funeral providers from charging \\xe2\\x80\\x9cany fee as a condition to furnishing any funeral\\ngoods or funeral services to a person arranging a funeral\\xe2\\x80\\x9d other than the basic services fee,\\npayments for the funeral goods and services selected, and payments for items required to meet\\nlegal, cemetery or crematory requirements.\\xe2\\x80\\x9d A related \\xe2\\x80\\x9csafe harbor\\xe2\\x80\\x9d provision in section\\n453.4(b)(2)(ii) of the Rule provides, however, that \\xe2\\x80\\x9c[a] funeral provider shall not violate this\\nsection by failing to comply with a request for a combination of goods or services which would\\nbe impossible, impractical, or excessively burdensome to provide.\\xe2\\x80\\x9d*\\n\\nIt is staff\\xe2\\x80\\x99s opinion that a request for free storage of a third party casket made in\\nconnection with pre-need arrangements would be \\xe2\\x80\\x9cexcessively burdensome.\\xe2\\x80\\x9d Consequently, a\\nfuneral provider would be protected by the safe harbor provision from liability for violating the\\nRule by \\xe2\\x80\\x9cfailing to comply\\xe2\\x80\\x9d with such a request and refusing to store a third party casket for free\\nfor some indeterminate time.\\n\\n' Staff Opinion to Joseph J. DellaVecchia, Jr. July 12, 2007) at 1, available at\\nhttp:\/\/www. ftc.gov\/bcp\/conline\/edcams\/funerals\/opinions\/opinion07-4.pdf.\\n\\n2 16 C.F.R. \\xc2\\xa7 453.4(b)(1)(ii) (emphasis added).\\n\\n3 16 CFR. \\xc2\\xa7 453.4(b)(2)(ii).\\n\\x0cT. Scott Gilligan, Esq.\\nGilligan Law Offices\\nPage 2 of 2\\n\\nAs you know, the views expressed in this letter are those of FTC staff. They have not\\nbeen reviewed, approved or adopted by the Commission, and they are not binding on the\\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted\\non the FTC website at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/staffopinions.shtm.\\n\\nSincerely,\\nIs\/\\n\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\x0c\"","created_timestamp":"August 21, 2007","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-07-8\/opinion07-8.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nDivision of Marketing Practices\\n\\nCraig Tregillus Direct Dial: (202) 326-2970\\nctregillus@ftc.gov Facsimile: (202) 326-3395\\n\\nAugust 21, 2007\\n\\nMeredyth P. Partridge, President\\n\\nRegulatory Support Services, Inc.\\nP.O. Box 83\\n\\nManakin-Sabot, VA 23103-0083\\n\\nDear Ms. Partridge:\\n\\nThis letter responds to your request for a staff opinion clarifying whether the Funeral Rule\\nrequires a funeral provider to itemize the services provided as part of direct cremation, immediate\\nburial, forwarding of remains to another funeral home and receiving remains from another\\nfuneral home when providing a Statement of Funeral Goods and Services Selected (\\xe2\\x80\\x9cStatement\\xe2\\x80\\x9d)\\nto a consumer.\\n\\nYour inquiry implicates the interplay between the General Price List (\\xe2\\x80\\x9cGPL\\xe2\\x80\\x9d) and the\\nStatement. As you know, the Rule requires a funeral provider to give consumers who inquire in\\nperson a copy of its GPL at the beginning of any discussion of funeral arrangements or prices.\"\\nAt the conclusion of the discussion of arrangements, the funeral provider must give the customer\\nan \\xe2\\x80\\x9citemized\\xe2\\x80\\x9d copy of the Statement that shows the funeral goods and services selected, their\\nprices, and the total cost.\\xe2\\x80\\x9d\\n\\nAs your inquiry notes, the Rule requires a separate listing in the GPL for each of 16\\nspecified services, including the services about which you inquire, \\xe2\\x80\\x9cif offered for sale\\xe2\\x80\\x9d by the\\nfuneral provider.? Nothing in the Rule prohibits a funeral provider from offering additional\\ngoods or services, however, including funeral packages. In fact, Section 453.2(b)(6) expressly\\nauthorizes funeral providers to give consumers \\xe2\\x80\\x9cany other price information, in any format, in\\naddition to that required by [the Rule].*\\n\\n! 16 CFR \\xc2\\xa7 453.2(b)(4).\\n2 16 CFR \\xc2\\xa7 453.2(b)(5).\\n\\n3 16 CER \\xc2\\xa7 453.2(b)(4)(ii).\\n\\n\\xe2\\x80\\x98 16 CFR \\xc2\\xa7 453.2(b)(6).\\n\\x0cMs. Meredyth P. Partridge, President\\nRegulatory Support Services, Inc.\\nPage 2 of 3\\n\\nAccordingly, the discussion of requirements for the Statement in the FTC\\xe2\\x80\\x99s compliance\\nguidelines for funeral providers, Complying with the Funeral Rule (\\xe2\\x80\\x9cFTC Compliance Guide\\xe2\\x80\\x9d)\\nadvises funeral providers:\\n\\nYou may still offer funeral packages, as long as they are offered in addition to,\\nnot in place of, itemized prices. If the consumer selects a package (after you\\noffer itemized prices), your Statement should describe the package, listing\\nindividually each of the goods and services included in the package, and state the\\npackage price.*\\n\\nThus, as your inquiry and the FTC Compliance Guide note, if a funeral package is\\nselected, the Statement must \\xe2\\x80\\x9cdescribe\\xe2\\x80\\x9d each package offered, \\xe2\\x80\\x9clisting individually each of the\\ngoods and services included in the package.\\xe2\\x80\\x9d It is this requirement that has led to your question:\\nwhether the Rule requires that the four services about which you inquire \\xe2\\x80\\x94 direct cremation,\\nimmediate burial, forwarding of remains and receiving remains \\xe2\\x80\\x94 be treated as \\xe2\\x80\\x9cpackages\\xe2\\x80\\x9d that\\nmust be \\xe2\\x80\\x9cdescribed\\xe2\\x80\\x9d in this detail in the Statement.\\n\\nIt is our opinion that the Rule does not require that the four services about which you\\ninquire be treated as \\xe2\\x80\\x9cpackages\\xe2\\x80\\x9d because the Rule requires a description in the GPL that lists\\n\\xe2\\x80\\x9cindividually each of the goods and services\\xe2\\x80\\x9d provided with these four services. The GPL must\\ninclude \\xe2\\x80\\x9ca description of the services and container (where applicable)\\xe2\\x80\\x9d included in each price\\nlisted for a direct cremation,\\xc2\\xae as well as for an immediate burial.\\xe2\\x80\\x99 Likewise, the Rule requires \\xe2\\x80\\x9ca\\nlist of the services provided\\xe2\\x80\\x9d for any price stated in the GPL for forwarding of remains,* and for\\nreceiving remains.? Consumers may keep the GPL containing these descriptions because the\\nRule requires funeral providers to give the GPL to them \\xe2\\x80\\x9cfor retention.\\xe2\\x80\\x9d\\xe2\\x80\\x9d\\xc2\\xb0\\n\\nBecause the GPL must include an itemization of the services provided for direct\\ncremation, immediate burial, forwarding remains, and receiving remains, staff has long taken the\\n\\nposition that no additional, duplicative \\xe2\\x80\\x9cdescription\\xe2\\x80\\x9d is required in the Statement for these four\\nservices. Thus, the sample statement provided in the FTC Compliance Guide contains only one-\\n\\nFTC Compliance Guide, p. 18 (bold in original; other emphasis added).\\n8 16 CFR \\xc2\\xa7 453.2(b)(4)(ii(C)G).\\n\\n7 16 CFR \\xc2\\xa7 453.2(b)(4)(ii)(D)(3).\\n\\n8 16 CER \\xc2\\xa7 453.2(b)(4)(4)(A).\\n\\n\\xc2\\xb0 16 CFR \\xc2\\xa7 453.2(b)(4)(ii)(B).\\n\\n0 16 CFR \\xc2\\xa7\\xc2\\xa7 453.2(b)(4).\\n\\x0cMs. Meredyth P. Partridge, President\\n_ Regulatory Support Services, Inc.\\nPage 3 of 3\\n\\nline entries for the prices of direct cremation, immediate burial, forwarding remains, and\\nreceiving remains.\\xe2\\x80\\x9d\\n\\nAs you know, the views expressed in this letter are those of FTC staff. They have not\\nbeen reviewed, approved or adopted by the Commission, and they are not binding on the\\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted\\non the FTC website at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/staffopinions.shtm.\\n\\nSincerely,\\n\/s\/\\n\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\nn FTC Compliance Guide, pp. 32-33.\\n\\x0c'","created_timestamp":"August 21, 2007","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-07-6\/opinion07-6.pdf"}
{"text":"b'UNITED STATES OF AMERICA,\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nDivision of Marketing Practices\\n\\nCraig Tregillus Direct Dial: (202) 326-2970\\nctregillus @ftc.gov Facsimile: (202) 326-3395\\n\\nAugust 21, 2007\\n\\nMeredyth P. Partridge, President\\n\\nRegulatory Support Services, Inc.\\nP.O. Box 83\\n\\nManakin -Sabot, VA 23103-0083\\n\\nDear Ms. Partridge:\\n\\nYou have requested a staff opinion on the circumstances, if any, under which the FTC\\nFuneral Rule (\\xe2\\x80\\x9cRule\\xe2\\x80\\x9d) requires a funeral provider to treat embalming as a \\xe2\\x80\\x9ccash advance\\xe2\\x80\\x9d item.\\nIn particular, you ask whether a funeral provider that charges a purchaser the embalming fee\\nlisted on the funeral provider\\xe2\\x80\\x99s General Price List (\\xe2\\x80\\x9cGPL\\xe2\\x80\\x9d) must list embalming as a \\xe2\\x80\\x9ccash\\nadvance\\xe2\\x80\\x9d item when the embalming is performed by a third party who charges the funeral\\nprovider less than the funeral provider charges the ultimate purchaser. Your request states that\\nthis issue may arise when a funeral provider receives embalmed remains from another funeral\\nprovider, or when the funeral provider obtains embalming services from a third party.\\n\\nYour question arises because of the difference in the Rule\\xe2\\x80\\x99s requirements for cash\\nadvance items and non-cash advance items. As you know, the Rule treats the two types of items\\ndifferently because Section 453.3(f) requires a funeral provider who is charging a customer more\\nfor a cash advance item than the funeral director paid for it to disclose that material fact.\\xe2\\x80\\x99 This\\ndisclosure must appear in writing on the Statement of Funeral Goods and Services Selected\\n(\\xe2\\x80\\x9cStatement\\xe2\\x80\\x9d) that a funeral provider must give to a consumer at the conclusion of the discussion\\nof funeral arrangements.\\xe2\\x80\\x9d\\n\\nThe Rule requires no similar disclosure for non-cash advance items. In fact, Section\\n453.2(b)(4)(ii) of the Rule expressly mandates a disclosure in a funeral provider\\xe2\\x80\\x99s GPL of \\xe2\\x80\\x9cthe\\nretail prices\\xe2\\x80\\x9d of specified goods and services offered for sale by a funeral provider that are\\n\\n! 16 C.F.R. \\xc2\\xa7 453.3(f). Only the existence of the mark-up must be disclosed, not\\nthe amount.\\n\\n4\\n\\n- 16 C_E.R. \\xc2\\xa7453.3(f)(2). In addition, any \\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d must be\\n\\xe2\\x80\\x9cspecifically itemized\\xe2\\x80\\x9d as a \\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d in the Statement. 16 C.F.R. \\xc2\\xa7 453.2(b)(5)(i)(B).\\n\\x0cMs. Meredyth P. Partridge, President\\nRegulatory Support Services, Inc.\\nPage 2 of 3\\n\\ntypically non-cash advance items.\\xe2\\x80\\x99 Section 453.2(b)(4)(ii)(A) expressly requires such a separate\\nretail price disclosure in the GPL for \\xe2\\x80\\x9cembalming.\\xe2\\x80\\x9d Like all other for-profit businesses, a\\nfuneral provider\\xe2\\x80\\x99s \\xe2\\x80\\x9cretail prices\\xe2\\x80\\x9d for the funeral goods and services it sells include a sufficient\\nmark-up over cost to provide a profit.\\n\\nA good or service offered by a funeral provider is not a cash advance item unless it meets\\none of the two tests provided by the definition of a cash advance item in Section 453.1(b) of the\\nRule:\\n\\nA \\xe2\\x80\\x98cash advance item\\xe2\\x80\\x99 is any item of service or merchandise described to a\\npurchaser as a \\xe2\\x80\\x98cash advance,\\xe2\\x80\\x9d \\xe2\\x80\\x98accommodation,\\xe2\\x80\\x99 \\xe2\\x80\\x98cash disbursement,\\xe2\\x80\\x99 or similar\\nterm. A cash advance item is also any item obtained from a third party and paid\\nfor by the funeral provider on the purchaser\\xe2\\x80\\x99s behalf.>\\n\\nThe first sentence of the definition specifies that a funeral good or service is a \\xe2\\x80\\x9ccash\\nadvance item\\xe2\\x80\\x9d if a funeral provider expressly represents to a consumer that it is a \\xe2\\x80\\x9ccash advance\\xe2\\x80\\x9d\\nitem or uses similar terms to describe it. This test is based on the Commission\\xe2\\x80\\x99s finding during\\nthe rulemaking that, in describing a particular item to a customer, a funeral provider\\xe2\\x80\\x99s use of the\\nterm \\xe2\\x80\\x9ccash advance item,\\xe2\\x80\\x9d or such alternative formulations as \\xe2\\x80\\x9caccommodation\\xe2\\x80\\x9d or \\xe2\\x80\\x9ccash\\ndisbursement,\\xe2\\x80\\x9d leads reasonable consumers to believe that the item will be provided at cost.\\nThus, in cases where a funeral provider describes an item in this manner, yet charges a consumer\\nmore for it than the provider paid, the Commission requires a corrective disclosure to prevent the\\ndeception.\\n\\nThe test in the second sentence of the definition is designed to prevent funeral providers\\nfrom evading the cash advance disclosure requirement by avoiding express representations that\\nan item is a \\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d but implying that they are providing the item at their cost when\\nthat is not the case.\\xe2\\x80\\x9d\\n\\nThus, in the absence of either an express representation that a funeral good or service is a\\n\\n\\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d or similar term, or an implied representation that the funeral provider will\\nobtain an item on behalf of a particular consumer at the funeral provider\\xe2\\x80\\x99s cost, a funeral good or\\n\\n3 16 CFR. \\xc2\\xa7 453.2(b)(4)(ii) (emphasis added).\\n\\n4 16 C.F.R. \\xc2\\xa7 453.2(b)(4)(ii)(A).\\n\\nuo\\n\\n16 C.F.R. \\xc2\\xa7 453.1(b) (omitting examples).\\n6 47 Fed. Reg. 42278-42279 (Sept. 24, 1982).\\n\\n7 See FTC, Letter to The Hon. Dan Flynn (July 7, 2005), at 5, available at\\nhttp:\/\/www .ftc.gov\/os\/2005\/07\/050707 funeralruleadvoopin.pdf.\\n\\x0cMs. Meredyth P. Partridge, President\\nRegulatory Support Services, Inc.\\nPage 3 of 3\\n\\nservice is a non-cash advance item. In that case, the Rule permits a funeral provider to charge a\\nretail price that includes a mark-up over cost without disclosing that fact.\\n\\nSince whether a funeral good or service is a \\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d depends on a funeral\\nprovider\\xe2\\x80\\x99s express or implied representations about the item, any determination that an item is a\\n\\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d requires an analysis of the facts of a particular transaction. The mere fact\\nthat a funeral good or service is initially obtained from a third party does not turn that item into a\\ncash advance item. Indeed, as previously noted, the Rule assumes that funeral providers who\\noffer embalming as one of their services ordinarily charge consumers a \\xe2\\x80\\x9cretail price\\xe2\\x80\\x9d for that\\nservice. Of course, there could be specific circumstances in which a funeral provider makes an\\nexpress or implied representation that leads consumers acting reasonably under the circumstances\\nto understand that embalming will be provided at cost. Under these circumstances, the funeral\\nprovider must list embalming as a \\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d in the Statement provided to consumers\\nat the conclusion of the arrangements conference. In addition, if a funeral provider must list\\nembalming as a cash advance item, and the price charged by the funeral provider for embalming\\nexceeds the funeral provider\\xe2\\x80\\x99s cost, the Statement must include the disclosure required by\\nSection 453.3(f)(2).\\n\\nAs you know, the views expressed in this letter are those of FTC staff. They have not\\nbeen reviewed, approved or adopted by the Commission, and they are not binding on the\\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted\\non the FIC website at http:\/\/www .ftc.gov\/bcp\/conline\/edcams\/funerals\/staffopinions.shtm.\\n\\nSincerely,\\n\/s\/\\n\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\x0c'","created_timestamp":"August 21, 2007","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-07-7\/opinion07-7.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Marketing Practices\\nCraig Tregillus\\nctregillus@ftc.gov\\n\\nDirect Dial: (202) 326-2970\\nFacsimile: (202) 326-3395\\n\\nJuly 19, 2007\\nHarvey I. Lapin, Esq.\\nHarvey I. Lapin, PC\\nP.O. Box 1327\\nNorthbrook, IL 60065-1327\\nDear Mr. Lapin:\\nYou have requested a staff opinion on whether the FTC Funeral Rule requires a funeral\\nprovider to make its facilities available for a memorial service to families who do not wish to\\nmake any other funeral arrangements with the provider. It is staff\\xe2\\x80\\x99s opinion, for the reasons\\nwhich follow, that the Rule does not require a funeral provider to do so.\\nAs you know, Section 453.4(b)(1)(i) of the Rule makes it unlawful for a \\xe2\\x80\\x9cfuneral\\nprovider\\xe2\\x80\\x9d to \\xe2\\x80\\x9c[c]ondition the furnishing of any funeral good or funeral service to a person\\narranging a funeral upon the purchase of any other funeral good or funeral service, except as\\nrequired by law or as otherwise permitted by this part.\\xe2\\x80\\x9d1 Section 453.4(b)(2)(ii) grants a safe\\nharbor, however, providing that \\xe2\\x80\\x9c[a] funeral provider shall not violate this section by failing to\\ncomply with a request for a combination of goods or services which would be impossible,\\nimpractical, or excessively burdensome to provide.\\xe2\\x80\\x9d2\\nSection 453.1(i) of the Rule defines a \\xe2\\x80\\x9cfuneral provider\\xe2\\x80\\x9d as \\xe2\\x80\\x9cany person, partnership or\\ncorporation that sells or offers to sell funeral goods and funeral services to the public.\\xe2\\x80\\x9d3 Because\\nfuneral providers are, by definition, in the business of providing both funeral goods and funeral\\nservices to the public, staff has determined in a prior opinion that the Rule is premised on the\\nunderstanding that \\xe2\\x80\\x9cfuneral providers are persons who furnish funeral arrangements, and not\\npersons who simply sell a particular good or service as a separate sales transaction.\\xe2\\x80\\x9d4 Staff\\nconcluded in that ruling that \\xe2\\x80\\x9cfor a business operation thus defined to be required to function as\\n1\\n\\n16 CFR \\xc2\\xa7 453.4(b)(1).\\n\\n2\\n\\n16 CFR \\xc2\\xa7 453.4(b)(2)(ii).\\n\\n3\\n\\n16 CFR \\xc2\\xa7 453.1(i).\\n\\n4\\n\\nStaff Opinion, Casket & Funeral Supply Association of America (July 18, 1995)\\nat 1-2, available at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/opinions\/opinion95-3.pdf.\\n\\n\\x0cMr. Harvey I. Lapin, Esq.\\nJuly 19, 2007\\nPage 2 of 2\\nsomething else, such as a casket seller\\xe2\\x80\\x9d would be \\xe2\\x80\\x9cimpractical,\\xe2\\x80\\x9d and that a funeral provider\\xe2\\x80\\x99s\\nrefusal to sell caskets at retail to individuals who do not also wish to make funeral arrangements\\naccordingly would fall within the safe harbor provided by Section 453.4(b)(2)(ii).5\\nYour request similarly asks whether the Rule requires a funeral provider to make its\\nfacilities available for a memorial service to families who do not wish to make any other funeral\\narrangements with the provider. Our prior staff opinion quotes the following excerpt from the\\noriginal Statement of Basis and Purpose for the Rule that is of particular relevance to this\\nquestion:\\n\\xe2\\x80\\x9c[T]he Commission would not consider it a violation of section 453.4(b) for a\\nfuneral provider to refuse doing business with a consumer who said \\xe2\\x80\\x98we have our\\nown casket, transportation, flowers, etc., but wish to use your viewing facilities\\nfor two hours next Monday.\\xe2\\x80\\x99\\xe2\\x80\\x9d6\\nIn view of this unambiguous statement of the Commission\\xe2\\x80\\x99s views, it continues to be\\nstaff\\xe2\\x80\\x99s opinion that it is not \\xe2\\x80\\x9cthe Commission\\xe2\\x80\\x99s intention to require a funeral provider to sell an\\nisolated good or service that is not to be used in conjunction with a funeral arranged by that\\nfuneral provider.\\xe2\\x80\\x9d7 We see no principled basis for distinguishing the use of a funeral provider\\xe2\\x80\\x99s\\nfacilities for a memorial service from their use for a viewing.\\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted\\non the FTC website at http:\/\/www.ftc.gov\/bcp\/conline\/edcams\/funerals\/staffopinions.shtm.\\nSincerely,\\n\/s\/\\nCraig Tregillus\\nFuneral Rule Coordinator\\n\\n5\\n\\nId. at 2.\\n\\n6\\n\\n47 FR 42260, 42282 n.230 (Sept 24, 1982).\\n\\n7\\n\\nStaff Opinion, supra n.4, at 2.\\n\\n\\x0c'","created_timestamp":"July 19, 2007","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-07-5\/opinion07-5.pdf"}
{"text":"b'\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/common-code-coffee-community\/071204letter.pdf"}
{"text":"b'\\x0c\\x0c\\x0c\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-07-1\/opinion07-1.pdf"}
{"text":"b\"UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nDivision of Marketing Practices\\n\\nCraig Tregillus Direct Dial: (202) 326-2970\\nctregillus@ftc.gov Facsimile: (202) 326-3395\\n\\nMarch 21, 2007\\n\\nT. Scott Gilligan, Esq.\\nGilligan Law Offices\\n3734 Eastern Avenue\\nCincinnati, OH 45226\\n\\nRe: Requiring Consumer Inspection of Third-Party Caskets\\n\\nDear Mr. Gilligan:\\n\\nYou have requested clarification of a staff opinion on the FTC Funeral Rule\\n(\\xe2\\x80\\x9cFuneral Rule\\xe2\\x80\\x9d or \\xe2\\x80\\x9cRule\\xe2\\x80\\x9d) issued on June 22, 2004, which noted that \\xe2\\x80\\x9cit may be a violation of\\n\\xc2\\xa7 453.4(b)(1) for funeral providers to refuse to use third-party merchandise in conducting agreed-\\nupon funeral arrangements until the consumer or his\/her representative physically inspects and\/or\\naccepts such merchandise.\\xe2\\x80\\x9d\\n\\nAs you know, Section 453.4(b)(1) of the Rule prohibits a funeral provider from \\xe2\\x80\\x9ctying\\xe2\\x80\\x9d or\\nconditioning the purchase of any funeral good or service offered by the provider on the purchase\\nof any other funeral good or service from the provider. The purpose of this prohibition is to\\nprevent funeral providers from requiring consumers to purchase goods or services from them that\\nthe consumer does not want. Thus, it has been the consistent position of FTC staff since 1988, as\\nyour request recognizes, that the refusal of a funeral provider to sign an acknowledgment of\\ndelivery of a third-party casket is tantamount to a refusal to accept delivery, thereby unreasonably\\nburdening a consumer\\xe2\\x80\\x99s right to use a third-party casket and effectively preventing its use in\\nviolation of \\xc2\\xa7 453.4(b)(1) of the Rule. Staff Opinions of March 10, 1988, and May 12, 2004.\\n\\nIna letter issued on June 22, 2004, FIC staff concluded that the use by funeral providers\\nof a Receipt of Third Party Merchandise form to acknowledge delivery of third-party caskets\\nwould not violate the Funeral Rule. The form, which was prepared and disseminated by the\\nNational Funeral Directors Association (\\xe2\\x80\\x9cNFDA\\xe2\\x80\\x9d), states that the funeral provider acknowledges\\nreceipt of the merchandise, but that the acknowledgment does not constitute acceptance of the\\nmerchandise or its condition, which can only be given by the purchaser. The form also provides\\na space where the funeral provider can note any visible defects or conditions that were present at\\ntime of delivery.\\n\\nAt the same time, the staff opinion made it clear that we interpret Section 453.4(b)(1) as\\nprohibiting funeral providers from \\xe2\\x80\\x9cunreasonably\\xe2\\x80\\x9d burdening a consumer\\xe2\\x80\\x99s choice to purchase an\\n\\x0citem from a third-party, such as by refusing to sign for the delivery of a casket or requiring the\\nconsumer to be present when it is delivered. Consequently, the staff\\xe2\\x80\\x99s conclusion that the use of\\nthe NFDA Receipt would not \\xe2\\x80\\x9cunreasonably burden\\xe2\\x80\\x9d consumer choice was conditioned on the\\ncaveat that the Receipt not be \\xe2\\x80\\x9cused as a justification for requiring the consumer to be present\\nwhen the merchandise is delivered or for otherwise unreasonably requiring the consumer\\xe2\\x80\\x99 s\\nphysical presence to inspect or accept the merchandise.\\xe2\\x80\\x9d\\n\\nYour request for clarification of the staff opinion argues that funeral providers may be\\nliable if the wrong casket is delivered and then used by the provider without first requiring an\\ninspection by the purchaser. You state that funeral providers should be allowed to \\xe2\\x80\\x9crequire a\\nconsumer to inspect the casket prior to placing a body in it,\\xe2\\x80\\x9d because once a body is placed in a\\ncasket, it cannot be reused or resold.\\n\\nIn fact, Funeral providers can choose any number of other mechanisms to protect\\nthemselves from liability, but they cannot require consumers to inspect the casket. For example,\\nthey could ask the consumer to provide the make, model and a description of the casket and\\ntelephone the consumer if it appears that the wrong casket has been delivered, or if the casket\\nappears damaged. Indeed, such a practice would appear to mesh neatly with the NFDA\\nGuidelines for Handling Third Party Caskets, which advise funeral providers who receive a\\ndefective or damaged third-party casket to \\xe2\\x80\\x9cimmediately alert the family and indicate to them the\\ndefect or damage noted.\\xe2\\x80\\x9d!\\n\\nAbsent clear evidence that funeral providers lack the means to avoid legal liability other\\nthan to require an inspection of third-party caskets or other merchandise by the purchaser, staff is\\nnot inclined to reverse its prior opinion, as your request for clarification would have us do. It\\nremains staff\\xe2\\x80\\x99s opinion that a funeral provider\\xe2\\x80\\x99s refusal to use third party merchandise until the\\nconsumer has inspected it may place an unreasonable burden on consumer choice, in violation of\\nSection 453.4(b)(1) of the Rule.\\n\\nPlease note that the views expressed in this letter are those of the FIC staff. They have\\nnot been reviewed, approved, or adopted by the Commission, and they are not binding on the\\nCommission or any individual Commissioner. However, they do reflect the views of FIC staff\\n\\nSincerely,\\n\\ncharged with enforcement of the Funeral Rule.\\n(1. ibe\\ncoi tooane\\n\\nFuneral Rule Coordinator\\n\\n' This letter does not express an opinion on any portion of the NFDA Guidelines\\n\\nsubmitted with your request except to the extent the Guidelines suggest that funeral providers\\nmay require consumers to inspect caskets purchased from third-party dealers, contrary to the\\nviews expressed in this opinion.\\n\\x0c\"","created_timestamp":"March 21, 2007","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-07-3\/opinion07-3.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Enforcement\\nBureau of Consumer Protection\\n\\nDecember 20,2006\\n\\nChristopher Smith, Esq. and Elaine Kolish, Esq.\\nSonnenschein, Nath & Rosenthal LLP\\n1301 K Street, NW\\nSuite 600, East Tower\\nWashington, DC 20005-3364\\nDear Mr. Smith and Ms. Kolish:\\nThis letter responds to your request on behalf of your client, Sony Electronics Inc.\\n(\"Sony\"), for a staff advisory opinion regarding Sony\\'s proposal to resell, as \"new,\" returned\\nconsumer electronics products when the company or its authorized vendor can reliably determine\\nthat the products have never been turned on and other particular conditions are met. This\\nadvisory opinion is based on the information that you have provided to us in your letter of\\nNovember 15,2006. All references to facts regarding your proposal are based on your\\nrepresentations; we have not conducted an independent investigation, or otherwise verified the\\ninformation that you provided.\\nYou note that Sony, as well as other companies in the consumer electronics industry,\\nexperience high return volumes.\\' Sony\\'s uniform practice has been to treat all opened and\\nreturned products as used. As a result, following inspection and servicing, these products are\\nsold as \"refurbished\" at significantly discounted prices and include a 90-day limited warranty.\\nYou state that, because many of the returned products in fact have never been used, the current\\nresale policy comes at a substantial financial cost to the company. Sony proposes modifying its\\npractices by distinguishing between returned products that previously have been turned on and\\nwith the latter category of products being eligible for resale as new, if\\nthose that have notY2\\nspecific criteria are met.\\n\\n1\\n\\nConsumer electronics products sold by Sony include video products (DVD\\nplayers\/recorders, digital cameras, camcorders, televisions, and combination TVNCR or\\nTV\/DVD players), computers (desktop and notebook PCs and related equipment), video game\\nsystems, audio products (desktop, component and portable devices), cell phones, portable digital\\nassistants, and vehicle electronics.\\n2\\n\\nSony would regard a product has having been \"turned on\" if electrical power had\\nbeen applied to any of the product\\'s circuitry.\\n\\n\\x0cChristopher Smith and Elaine Kolish\\nDecember 12,2006\\nPage 2\\nYou state that Sony would implement the policy modification by having it or one of its\\nauthorized vendors:\\ni.\\n\\n..\\n\\nintroduce reliable product packaging technologies that ensure an objective\\nand verifiable process for identifying returned products that have never\\nbeen turned on.3\\n\\n11.\\n\\nidentify, fiom among the products returned by retailers to Sony or its\\nauthorized vendor, those that have never been turned on;\\n\\niii.\\n\\nvisually inspect those products that have not been turned on and reject any\\ndamaged products;\\n\\niv.\\n\\nensure that returned products that satisfy the first two conditions have all\\nof their requisite parts, components, and manuals;\\n\\nv.\\n\\nrepackage the returned products that meet the above conditions;\\n\\nvi.\\n\\nprovide the same warranty for these returned products as for new products\\nthat have never been sold; and\\n\\nvii.\\n\\nreturn them to a retailer for sale as new products.\\n\\nYou then ask for the staffs opinion as to whether Sony\\'s proposed course of conduct complies\\nwith the FTC Act and other Commission policy statements.\\nSection 5 of the FTC Act, which prohibits deceptive acts or practices, governs the issue.\\n15 U.S.C. tj 45. The Commission has explored the concept of deception under Section 5 in two\\nrelevant policy statements.\\nOur analysis begins with the Commission\\'s 1969 Enforcement Policy on Merchandise\\nWhich Has Been Subjected to Previous Use on Trial Basis and Subsequently Resold as New. 34\\nFed. Reg. 176-77. The 1969 Enforcement Policy concerned the then-prevalent business practice\\nof selling, as new, products that previously had been used on a trial basis by prospective\\npurchasers. Id. at 176. In that policy statement, the Commission set out the broad principle that\\ndeception lies where a marketer \"[fails] to disclose material facts relevant to a purchaser\\'s\\ndecision to buy or not to buy.\" Id. Because consumers have a preference for new or unused\\nproducts, the Commission found that prior use was material to the purchase decision. Id. The\\nCommission, therefore, concluded that the failure to disclose prior use was unlawfbl even where\\n3\\n\\nSome of these technologies include internal chips or clocks with the ability to\\nindicate whether a product has been turned on; and tamper-evident tape, seals, or labels affixed to\\nAC plugs, connectors, or battery compartments.\\n\\n\\x0cChristopher Smith and Elaine Kolish\\nDecember 12,2006\\nPage 3\\nreturned merchandise had been refurbished to \"good as new\" condition. Id. at 177. The\\nCommission noted, however, that this policy applied only to products that in fact had been\\n\"used,\" as distinguished from products that had \"merely been inspected but not used.\" Id.\\nThe Commission provided more specific guidance in its Policy Statement on Deception,\\nappended to Clifldale Assocs., Inc., 103 F.T.C. 110, 174 (1984). The Commission stated that it\\nwill find deception where a representation, omission or practice is likely to materially mislead a\\nconsumer acting reasonably under the circumstances. Id. at 176. Materiality is a core element of\\ndeception. A misrepresentation or omission is material if it is \"likely to affect a consumer\\'s\\nchoice of or conduct regarding the product,\" and therefore, injures the consumer who may have\\notherwise made a different choice. Id. at 182-83.\\nPursuant to the guidance provided by these policy statements, we do not believe that\\nconsumers would be deceived by Sony\\'s resale of returned consumer electronics within the\\nguidelines described above. As an initial matter, by limiting its program to products that have\\nnever been turned on, it appears that Sony would be reselling products that fall within the\\n\"inspected but not used\" category referenced in the 1969 Enforcement Policy. However, the\\nanalysis does not end there. The products, as a result of prior purchase, may carry defects upon\\nreturn. For example, a returned product may never have been turned on, but nonetheless may be\\ndamaged or missing requisite parts and inserts. Sony\\'s program appears comprehensive enough\\nto avoid such defects and protect consumers from injury, thereby likely rendering the fact of prior\\npurchase immaterial. Therefore, we believe Sony would be acting lawfblly under Section 5 of\\nthe FTC Act in implementing its proposed program, as represented to Commission staff.\\nThis letter sets out the views of the staff of the Bureau of Consumer Protection, as\\nauthorized by the Commission\\'s Rules of Practice. Those views are based on information\\nprovided to Commission staff by you. Staff have not engaged in independent factual\\ninvestigation regarding the proposal. In accordance with Section 1.3(c) of the Commission\\'s\\nRules of Practice and Procedure, 16 C.F.R. 5 1.3(c), this is a staff opinion only and has not been\\nreviewed or approved by the Commission or by any individual Commissioner, and is given\\nwithout prejudice to the right of the Commission later to rescind the advice and, where\\nappropriate, to commence an enforcement action. In accordance with Section 1.4 of the\\nCommission\\'s Rules of Practice and Procedure, 16 C.F.R. 5 1.4, your request for advice, along\\nwith this response, will be placed on the public record.\\nWe appreciate your taking the time to\\n\\n~ssdciateDirector for Enforcement\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/sony-electronics-proposal-resell-new-returned-consumer-electronics-products\/061220staffopintosonyelect.pdf"}
{"text":"b'S~nnenschein\\n\\n1301 K Street N.W.\\nSuite 600, East Tower Chicago\\nWashington, D.C. 20005-3364 Kansas\\n202.408.6400 Los Angeles\\n202.408.6399 fax New Vork\\nwww,sonnenscheln.com Phoenix\\n\\nS O N N E N S C H E I N N A T H & R O S E N T H A L LLP\\n\\nChristopher Smith\\n202.408.923 1\\n\\nkitsmith@sonnenschein.com\\n\\nSan Francisco\\nShort Hills, N.J.\\nSt. Louis\\nWashington, D.C.\\nWesf Palm Beach\\n\\nElaine D. Kolish\\n202.408.3243\\n\\neltolish@sonnenschein.com\\n\\nNovember 15,2006\\n\\nThe Honorable Donald S. Clark\\nSecretary\\nFederal Trade Commission\\n600 Pennsylvania Ave., N.W.\\nWashington, DC 20580\\nRe:\\n\\nRequest For a Staff Advisory Opinion\\n\\nDear Mr. Clark:\\nOn behalf of Sony Electronics Inc. (Sony) we are requesting a staff advisory opinion,\\npursuant to 16 C.F.R. fj 1.1, on the question of whether Sony may lawfully market and sell as\\nnew certain returned consumer electronics products that have never been used and that are\\nindistinguishable from products straight fiom the factory. Specifically, Sony seeks guidance on\\nthe acceptability of selling consumer electronics products as new products under a narrowly\\ndefined program in which Sony or its authorized vendor would:\\n(i)\\n\\nidentify, fi-om among the products returned by retailers to Sony or its authorized\\nvendor, those that have never been turned on;\\n\\n(ii) visually inspect those products that have not been turned on and reject any damaged\\nproducts;\\n(iii) ensure that returned products that satisfy the first two conditions have all of their\\nrequisite parts, components, and manuals;\\n(iv) repackage the returned products that meet the above conditions;\\n(v)\\n\\nprovide the same warranty for these returned products as for new products that have\\nnever been sold; and\\n\\nY\\n\\nE\\n\\n2\\n\\nA\\n\\n0\\n\\nR\\n\\n0\\n\\nS\\n\\n6\\n\\n\\x0cS~nnenschein\\n\\nSONNENSCHEIN NATH & ROSENTHAL LLP\\n\\nFederal Trade Commission\\nNovember 15,2006\\nPage 2\\n\\n(vi) return them to a retailer for sale as new products.\\'\\nThis request is based on our understanding of prior Commission policy and precedent\\nthat require a seller to disclose when it is selling goods that have been previously used, but do\\nnot require returned goods that have merely been \"inspected\" by consumers to be described as\\nused when resold. Sony3srequest does not require the FTC staff to define the entire scope of\\nactions that can reasonably constitute inspection. Instead, we only ask the staff to conclude (a)\\nthat a product that has never been turned on will not be considered used, and (b) that the other\\nelements of Sony\\'s proposed program will assure that a consumer buying such a product will\\nencounter the same product purchase and usage experience as if he or she had bought a new\\nconsumer electronics product that had not been purchased previously.\\nWe explain below the reasons for Sony\\'s proposed course of action and provide\\nadditional details about how the program would be implemented. Additionally, we set forth an\\nanalysis of why we believe Sony\\'s proposed conduct is legally permissible and why it is\\nappropriate for the FTC staff to provide the requested guidance.\\n\\nSony\\'s Proposal to Sell Certain Unused Returned Consumer Electronics as New\\nLike many other consumer electronics companies, Sony experiences a high volume of\\nproduct returns from consumers, the wholesale value of which has grown dramatically in recent\\nyears. As a matter of policy, Sony generally treats all opened returned products as if they have\\nbeen used by consumers. These returned products, which are often inspected and serviced, are\\ndesignated by Sony as \"Class B\" products. These products are sold as refurbished products at a\\nsignificantly discounted price, and they typically include a 90-day limited warranty rather than a\\nlonger new product warranty.\\nBecause of the undifferentiating nature of its resale policy, many products designated as\\nClass B by Sony have never even been turned on - having merely been inspected by purchasers\\nbefore being returned to Sony. Such products have nothing wrong with them when returned by\\nconsumers and require no servicing before they are sold at a Class B discount.\\n\\n\\'\\n\\nThe consumer electronics products potentially covered by Sony\\'s program include but are not limited to the\\nfollowing products: video products (e.g.,DVD playerslrecorders, digital cameras, camcorders, televisions, and\\ncombination TVIVCR or TVDVD players); computers (desktop and notebook PCs and related equipment); video\\ngame systems; audio products (desktop, component and portable devices); cell phones; portable digital assistants;\\nand vehicle electronics.\\n\\nEGRITY\\nY\\n\\nE\\n2\\n\\nA\\n0\\n\\nR\\n0\\n\\nS\\n6\\n\\n\\x0cS~nnenschein\\n\\nSONNENSCHEIN NATH & ROSENTHAL LLP\\n\\nFederal Trade Commission\\nNovember 15,2006\\nPage 3\\n\\nThe financial cost to Sony of its Class B resale policy is substantial. Consequently, Sony\\nwould like to modify its policy to distinguish between returned products that have not been\\nturned on and those that have been operated. Such a modification would provide Sony with\\ngreater flexibility in both inventory control and supply chain management while ensuring\\ncompliance with the Commission\\'s policies.\\nAlthough even some use of a product reasonably could be considered mere \"inspection,\"\\nSony proposes to take an extremely conservative approach to the question of whether a returned\\nSony product has been used by a consumer. Sony\\'s proposed program is based on the simple,\\nbright line standard of whether a product has been turned on - i.e., if it has not been turned on, it\\nhas not been used. This approach avoids a potential slippery slope, because it does not require\\nthe FTC to evaluate or determine how much use is acceptable.\\nTo implement this policy change in a consistent, verifiable manner, Sony would use\\nexisting, reliable product and packaging technologies to determine if a purchaser has turned on a\\nreturned product. For example, some of Sony\\'s electronic products contain an internal chip or\\nclock that allows Sony to determine if a product has been turned on and for how long. Sony also\\nmay use tamper-evident tape, seals or labels, which can be affixed to AC plugs, connectors or\\nbattery compartments, to provide a clear indicator of consumer use of a product. Sony would\\ndetermine on a product-by-product basis which technology it would use to determine if a\\nconsumer has turned on a product. If the consumer has turned on the product at all - even if only\\nto conduct a cursory inspection of the product\\'s operation - Sony would disqualify the product\\nfi-om future sale as a new product. Sony\\'s plan thus avoids subjective evaluations about whether\\nor to what extent a returned product has been used by a consumer. Stated in its simplest terms, if\\nelectrical power has been applied to any of the product\\'s circuitry, then it cannot be sold as\\nnew.\"\\nLC\\n\\nThe other elements of Sony\\'s program ensure that the consumer purchasing experience\\nwould be the same as it would be with other new products. Sony would visually examine unused\\nproducts to ensure that they are complete and undamaged, and if so, place them in new\\npackaging.2 sony also would provide the same wmanty for these repackaged products as for\\nThis program will not involve refurbishment of products to a \"good as new\" condition. If there is visible damage,\\nsuch as scratches, dents or cracks, the product would not be eligible for the program. Of course, minor cosmetic\\nblemishes, such as fingerprints that a consumer might leave on a product when handling it, would be removed and\\nwould not render the product ineligible for the program. Otherwise damaged products would be designated for\\nSony\\'s refurbished sales program. Moreover, if the product is otherwise acceptable but a minor part or piece of\\nproduct dormation (e.g.,a headphone, manual, or warranty card) is missing because the consumer omitted the item\\nfrom the package when returning the product, then the missing item would be replaced.\\n\\n\\x0cS~nnenschein\\n\\nSONNENSCHEIN NATH & ROSENTHALLLP\\n\\nFederal Trade Commission\\nNovember 15,2006\\nPage 4\\n\\nother new similar products. Because Sony (or its authorized agent), and not retailers, would run\\nthe program, Sony can ensure that the policy is properly and uniformly applied across all returns.\\n\\nSony and Industry Experience With Returns Show the Significance of Sony\\'s Request\\nCurrently, as would be the case under the new program, retailers send all returned\\nproducts to return centers operated by Sony or its authorized agent. These return centers perfom\\nthe necessary inspections and refurbishment to prepare a returned item for resale as Class B\\nproducts. Sony\\'s experience through these return centers indicates that only a very small\\npercentage of returns are actually defective products and that a very significant percentage fall\\ninto the \"no problems found\" (NPF) category. Because many of the NPF products are items that\\nhave never been turned on, Sony incurs significant losses from their sale as Class B products.\\nSimilar industry-wide patterns of returns also have been reported. For example, a\\nconsumer survey conducted by the Consumer Electronics Association (CEA) in 2005 indicated\\nthat many consumers return products for reasons other than a defect, including (a) to obtain a\\ndifferent brand or model, (b) because they no longer wanted it, (c) because they already owned\\nit, or (d) because they spent too much money on i t 3 The CEA survey also indicated that nearly\\n50 percent of all returns occur within a week after purchase. Overall, these statistics suggest that\\nmany purchasers of consumer electronics products may merely open the box and inspect the\\nproduct without using it before returning it to the retailer or to the manufacturer.\\n\\nSony\\'s Proposed Course of Action Is Lawful\\nSony believes that its proposed course of action, as described in this letter, is lawful and\\nwould not be deceptive under the FTC Act or under the standards the Commission has expressed\\nin its 1984 Policy Statement on Deception and in its 1969 Enforcement Policy on \"Merchandise\\nWhich Has Been Subjected To Previous Use On Trial Basis and Subsequently Resold as New.\"\\nThe 1969 policy statement is particularly relevant. Although the 1969 Enforcement Policy\\npredates the Commission\\'s Policy Statement on Deception, it has not been repudiated by the\\nCommission. Moreover, we believe that application of the Deception Statement\\'s analytical\\ntools leads to the same conclusion the Commission reached in its 1969 Enforcement Policy.\\nThe 1969 statement, whle reaffirming the Commission\\'s long-held view that consumers\\nhave a preference for new or unused goods, also draws an important distinction between\\n3\\n\\n\"Return Rates and Issues for CE Products Update,\" Consumer Electronics Association (CEA) Market Research\\nReport (Nov. 2005).\\n\\nEGRITY\\nY\\n\\nE\\n\\nA\\n\\nR\\n\\nS\\n\\n\\x0cS~nnenschein\\nSONNENSCHEIN NATH & ROSENTHALLLP\\n\\nFederal Trade Commission\\nNovember 15,2006\\nPage 5\\n\\n\"inspectionyyand\\nSpecifically, the Commission concluded that trial use by a consumer\\nand subsequent refix-bishment of returned products to a good-as-new conhtion requires\\ndisclosure, but that its \"policy applies only to merchandise that has been used, and not to\\nmerchandise that has merely been inspected but not used.\"\\'\\nUnder the Deception Policy Statement there must be a representation, omission or\\npractice that is likely to mislead a consumer, acting reasonably under the circumstances, to his or\\nher detriment.6 In other words, the representation, omission or practice must be a material one.\\nUnder its proposed program, Sony would treat the products as new, in terms of their pricing,\\npackaging and warranty. The resulting implied representation that the repackaged products are\\nnew would not be misleading to consumers because the products would in fact be new, having\\nnever been used by their previous purchasers.7\\nAlthough Sony recognizes that the FTC appreciates empirical data on consumer\\nexpectations when it is available, we are unaware of any such empirical data in this case.\\nNevertheless, the absence of such data is not a bar to an advisory opinion. It is well established\\nin Cornmission case law that the Commission may use its accumulated expertise to determine\\nwhat facts are material to consumers and when it is deceptive to omit those facts from marketing\\nmaterials.\\' In the past, the Commission has generally alleged a deceptive failure to disclose\\ninformation only when the omitted information involved health or safety or the key financial\\nterms and conditions of a transaction.\\nWe also suggest that the FTC can find additional support for Sony\\'s proposed course of\\naction in various state laws that expressly or impliedly permit \"unused\" goods to be sold as new.\\nMany of these states have based their laws on the Uniform Deceptive Trade Practices Act and\\nthe Uniform Consumer Sales Act, which prohbit the resale, as new, of returned products only if\\nthe products have been used, altered, reconditioned or reclaimed. Under those statutes, mere\\n34. Fed. Reg. 176, 177.\\n\\nId. at 177.\\nAppended to ClzffdaleAssociates, Inc., 103 F.T.C. 110, 174 (1984).\\nJust as we believe that Sony has no legal obligation to disclose that goods are \"used\" because they have never been\\nturned on and thus fall squarely into the \"inspected\" category, we also believe that disclosure of the mere fact of\\nprior purchase is not a material omission that might trigger a disclosure requirement. The Commission\\'s Policy\\nStatement expressly recognizes that \"not all omissions are deceptive, even if providing the information would\\nbenefit consumers.. ..\" Id. at 183, n.4. Such a disclosure requirement also would be inconsistent with state laws, as\\ndiscussed below.\\n\\nSee, e.g., PJzer, 81 F.T.C. 23, 58 (1972).\\n\\n\\x0cS~nnenschein\\n\\nSONNENSCHEIN NATH & ROSENTHAL LLP\\n\\nFederal Trade Commission\\nNovember 15,2006\\nPage 6\\n\\ninspection that does not entail use or alteration of the product would not change the status of the\\nNotably, the Ohio Administrative Code states affirmatively that\\nproduct fiom \"new\" to\\n\"returned goods, which have not been used by a previous purchaser, shall be considered new or\\nunused.\"I0\\nFurthermore, in 1998 the Office of the Attorney General of the State of California came\\nto the same conclusion reached by the FTC in 1969 when it analyzed the question: \"must\\nmerchandise be advertised as \\'secondhand or usedyif it is used, worn, or sampled for a short\\ntime by a consumer and then returned in like-new condition pursuant to the retailer\\'s policy\\nallowing returns of merchandise at the customer\\'s discretion.\" Attorney General Daniel E.\\nLungren concluded that it must be so advertised,\" unless such use is for inspection purposes\\nonlY.\\'~\"\\n\\nIn analyzing the question, Attorney General Lungren was guided in part by the Oregon\\nSupreme Court\\'s decision in Weigel v. Ron Tonkin Chevrolet co.12 In that case the court held\\nthat because there was a transfer of legal possession of the auto and the purchaser had\\ndiscretionary use of the vehicle for his or her own purposes for five days, the auto must be\\nrepresented as used or secondhand. The court\\'s decision was based not on the fact of the sale,\\nbut on the purchaser\\'s use of the product. In that case, the court also commented on the common\\npractice of using goods for inspection purposes only, stating that \"merchandise other than\\nautomobiles sometimes is sold, examined, or tried out at home, and returned to the seller.\\nWhether such merchandise is \\'new\\' or \\'usedy does not depend on the fact of an earlier sale; it\\ndepends on whether the article was used.\"I3 The Attorney General believed that Weigel correctly\\ninterpreted the terms \"secondhand or used\" for its purposes. Thus, under the Attorney General\\'s\\nopinion, disclosure of the prior purchase of a product depends upon whether the product has been\\nused, unless such use is for inspection purposes only.\\n\\nSee Michael P. Sullivan, \\'What Goods or Property are \\'Used,\\' \\'Secondhand,\\' or the Like, for Purposes of State\\nConsumer Laws Prohibiting Claims that Such Items are New,\" 59 A.L.R. 4\\' 1192,s 2.\\n10\\n\\nSection 109:4-3-08. Other states such as Mississippi and Idaho have taken similar positions (\"goods are not\\nconsidered used if a prior consumer was given a full refund or exchange for the goods, in the normal course of\\nbusiness, and if the goods are not known to presently or formerly have defects\"). See, e.g., Mississippi, 24 000 002\\nR.5 1 (2006), and Idaho, IDAPA 04.02.02.113 (Returned Goods) (2005). See also Louisiana, LAC 16:III.S11(2003).\\nI \\' Opinion of Daniel E. Lungren, Attorney General, Clayton P. Roche, Deputy Attorney General, No. 97-1009\\n(May 22, 1998) (emphasis added).\\n\\nl3\\n\\nId. at 490, n.2.\\n\\nY\\n\\nE\\n2\\n\\nA\\n0\\n\\nR\\n0\\n\\nS\\n6\\n\\n\\x0cS~nnenschein\\n\\nSONNENSCHEIN NATH & ROSENTHAL LLP\\n\\nFederal Trade Commission\\nNovember 15,2006\\nPage 7\\n\\nSony believes that, under its proposed program, consumer electronics products that have\\nnot been turned on will not have been subjected to any use. The act of merely opening the\\npackaging and examining a product without turning it on should be considered \"inspection\" and\\nshould not trigger any affirmative disclosure duties nor any prohibition on representing the goods\\nas new.\\nAt its most basic level, Sony\\'s proposed program embodies the principles contained in\\nthe Commission\\'s 1969 policy statement and in the principles expressed in state laws and in the\\nCalifornia Attorney General\\'s opinion regarding a company\\'s disclosure duty. We believe that\\nthe principles of the 1969 policy statement remain valid and are consistent with those in the more\\nrecent Deception Policy Statement. Accordingly, Sony submits that it would be appropriate for\\nthe FTC to conclude that Sony consumer electronics products returned by consumers without\\never being turned on can be considered \"merely inspected\" and not \"used\" and thus be eligible\\nfor sale as new products.\\n\\nSony\\'s Request Satisfies the Commission\\'s Criteria for a Staff Advisory Opinion\\nSony believes that the issues raised by this request satisfy the criteria in the Commission\\'s\\nRules of Practice for issuance of a staff advisory opinion. The question posed by Sony is not a\\npurely hypothetical or theoretical one, because Sony is prepared to act upon a favorable opinion\\nissued by the staff. Sony is seeking this advisory opinion because, as noted above, the FTC has\\nnot issued guidance in this area in nearly 40 years, and there is no clear FTC or other guidance\\non the particular question posed by Sony. Furthermore, because of uncertainty about this issue,\\nSony and possibly other manufacturers are unnecessarily designating unused, \"merely inspected\"\\nproducts as Class B products. This situation creates substantial economic injury to\\nmanufacturers such as Sony, as well as to consumers, who may pay higher overall retail prices or\\nmay experience the effects of reduced marketplace competition resulting from lower\\nmanufacturer profitability. Thus, resolution of Sony\\'s question is likely to be of significant\\npublic interest.\\n\\nConclusion\\nThe conservative approach Sony is proposing will assure that returned products that\\nqualify under this program will be indistinguishable from new products delivered &om the\\nfactory. The fact that a qualifylng product was previously purchased will not affect its\\nperformance because the product will never have been turned on and thus never have been used.\\nMoreover, Sony\\'s plan to examine qualifylng returned products visually for damage and\\ncompleteness prior to repackaging and to provide a new product warranty will ensure that the\\nreturned products are indistinguishable from products that have never been sold. This\\n\\nEGRlN\\nY\\n\\nE\\n\\nA\\n\\nR\\n\\nS\\n\\n\\x0cS~nnenschein\\nSONNENSCHEIN NATH & ROSENTHAL LLP\\n\\nFederal Trade Commission\\nNovember 15,2006\\nPage 8\\n\\ncomprehensive plan will eliminate any potential harm to subsequent purchasers resulting from\\nthe qualifying products\\' previous purchase. Accordingly, Sony believes that its proposed\\nprogram to sell, as new, returned products that have not been turned on and that meet the\\nprogram\\'s other criteria will satisfy the Commission\\'s consmer protection objectives and\\nrequirements.\\nWe appreciate your consideration of this request. Please let us know if you would like us\\nto provide additional information to assist the staffs review. We would also be pleased to meet\\nwith the staff to discuss any questions they might have.\\n.\\n\\n..\\n\\nYours very truly,\\n\\nChristopher Smith\\nElaine D. Kolish\\ncc:\\n\\nLydia B. Parnes, Director, Bureau of Consumer Protection\\nJames A. Kohm, Associate Director, Division of Enforcement\\nSandy Prabhu, Esq., Division of Enforcement\\n\\nY\\n\\nE\\n\\n2\\n\\nA\\n\\n0\\n\\nR\\n\\n0\\n\\nS\\n\\n6\\n\\n\\x0c'","created_timestamp":"May 22, 1998","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/resale-consumer-electronics\/sony-request-staff-opinion-11-15-06.pdf"}
{"text":"b'\\x0c\\x0c\\x0c\\x0c\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-commercial-alert-concluding-respect-type-amplified-word-mouth-marketing-staff-will-determine\/061211staffopiniontocommercialalert.pdf"}
{"text":"b'm\\nE. I. du Pont de Nemours and Mohawk Industries, Inc.\\nCompany\\n\\nPTT Poly Canada\\n\\nSeptember 7, 2006\\nOffice of Secretary\\nFederal Trade Commission\\n600 W. Pennsylvania Ave., NW\\nWashington, DC 20580\\n\\nRevised Petition To Establish A New Generic Subclass\\nMohawk Industries, Inc.1 (Mohawk), E. I. du Pont de Nemours and Company2 (DuPont), and\\nPTT Poly Canada3 (PTT Canada) (collectively \\xe2\\x80\\x9cPetitioners\\xe2\\x80\\x9d) hereby submit this Revised\\nPetition to the Federal Trade Commission (the \\xe2\\x80\\x9cCommission\\xe2\\x80\\x9d) for the establishment of a new\\ngeneric subclass within the existing polyester category for fibers made from poly(trimethylene\\nterephthalate) (\\xe2\\x80\\x9cPTT\\xe2\\x80\\x9d) to restate and supplement the contents of the Petition dated February,\\n21, 2006 in order to address certain questions raised by the Commission. Petitioners note the\\nCommission\\xe2\\x80\\x99s April 18, 2006 action taken in response to the February 21, 2006 Petition\\nassigning the designation \\xe2\\x80\\x9cPTT001\\xe2\\x80\\x9d for PTT fiber for temporary use until a final\\ndetermination is made by the Commission as to the merits of this Petition. Petitioners\\npropose in order of preference the following names for a new generic subclass of polyester\\nthat may be used with respect to PTT fibers: 1. triexta; 2. resisoft; and 3. durares.\\n1\\n\\nMohawk was founded more than 120 years ago and today is the leading producer and distributor of flooring\\nworldwide. Mohawk products serve all major flooring categories: carpet, rugs, hardwood, laminate, ceramic tile,\\nand vinyl flooring. Mohawk has launched a line of carpets manufactured from PTT and sells such carpets under\\nthe trademark SmartStrand.\\n2\\n\\nFounded in 1802, DuPont is a science company operating in more than 70 countries. DuPont offers a wide\\nrange of innovative products and services for markets including agriculture, nutrition, electronics,\\ncommunications, safety and protection, home and construction, transportation and apparel. DuPont markets PTT\\nunder the trademark Sorona\\xc2\\xae.\\n3\\n\\nPTT Poly Canada is a 50 \/ 50 Limited Partnership between Shell Chemicals Canada LTD and SGF Chimie, a\\nsubsidiary of Societe Generale de Financement du Quebec (SGF). PTT Poly Canada markets PTT under the\\ntrademark Corterra\\xc2\\xae Polymers.\\n\\n\\x0cSummary of Petition\\nPetitioners seek to establish a generic subclass for fibers spun from PTT on the grounds that\\nsuch fibers satisfy the three tests required by the Commission for the use of a generic\\nsubclass.4 These tests are satisfied by fibers spun from PTT because:\\n1. PTT fiber has the same general chemical composition as the Commission\\xe2\\x80\\x99s established\\npolyester generic fiber category.\\n2. PTT fiber, while having the general chemical composition of polyester, has distinctive\\nproperties of importance to the general public as a result of its unique chemistry,\\nmolecular design, and fiber structure. These properties are durability, resilience,\\nsoftness, and stretch with recovery.\\nPTT fiber\\xe2\\x80\\x99s distinctive features of durability, resilience, softness, and stretch with recovery\\nmake PTT fiber suitable for uses which conventional polyester (PET) is significantly less well\\nsuited. These features are as follows:\\na) Carpet applications: Durability and softness.\\nb) Apparel applications: Softness and stretch with recovery.\\nFiber Attributes Of Importance In Markets Where PTT Fiber Is Used\\nAn important issue in an application for a generic subclass is the requirement that the\\ndistinctive features of any new polymer or fiber be important to the general public, and that\\nsuch features make the fiber suitable for uses for which other fibers which fall under the\\nestablished generic name are not suited, or would be significantly less well suited.\\nSince the distinctive features of a fiber may differ from application to application, it is useful\\nto first discuss the two fiber markets where fibers made from PTT are used so that the\\nproperties of PTT can be compared to the properties of the other polyester that is used for\\nfiber applications. These markets are apparel and residential carpet. In these markets, the\\nform of polyester that is most widely used is poly(ethylene terephthalate) (\\xe2\\x80\\x9cPET\\xe2\\x80\\x9d).\\nAccordingly, Petitioners will provide data comparing the chemistry and crystalline structure\\n\\n4\\n\\nThese factors were identified as follows by the Commission in its Notice of Proposed Rulemaking of February\\n15, 2002 appearing at 67 FR 7104:\\n\\xe2\\x80\\x9cThus, a new generic fiber subclass may be appropriate in cases where the proposed subclass fiber: (1) Has the\\nsame general chemical composition as an established generic fiber category; (2) has distinctive properties of\\nimportance to the general public as a result of a new method of manufacture or substantially differentiated\\nphysical characteristics, such as fiber structure; and (3) the distinctive feature(s) make the fiber suitable for uses\\nfor which other fibers under the established generic name would not be suited, or would be significantly less well\\nsuited.\\xe2\\x80\\x9d\\n\\n2\\n\\n\\x0cof PTT to PET and the performance of fibers made from these polymers in carpet and apparel\\napplications.5\\nResidential Carpet\\nPrior to the launch of residential carpet made from PTT by Mohawk Industries, Inc. and Shaw\\nIndustries, Inc. (the two largest United States suppliers of carpet for the residential market),\\nthe four principal types of man-made fiber used to manufacture carpet were nylon, PET\\npolyester, and polypropylene. Of these four materials, nylon carpet offered the broadest range\\nof attributes most highly valued by consumers. As a result, for comparable carpet\\nconstructions, nylon carpet has commanded the highest price. Carpet made from PET has\\nbeen less highly regarded because PET fiber lacks the durability and resilience of nylon and\\nbecause, compared to many recent nylon carpet constructions, PET fibers were less flexible\\nand not as soft as some nylon constructions.\\nWith the launch of carpet based on PTT, consumers have a choice of a fiber that has stain\\nresistance properties superior to nylon, together with durability, resilience and softness that\\nmatches the highest quality constructions of nylon residential carpet.\\nIn a 2004 study of consumer purchasing preferences6, 1600 consumers between 25 and 64\\nyears of age who shopped for carpet in the past were asked questions pertaining to carpet fiber\\nperformance and preferences. A list of those carpet attributes that relate to fiber performance\\nand the percentages of consumers who rated the attribute as very important is in Table 1\\nbelow. The attributes where PTT fiber has a significant performance advantage in residential\\napplications over PET fiber because of its physical and chemical properties are highlighted in\\nbold italics.\\nTable 1: Consumer preferences in carpets\\nAttribute\\n\\nPercentage Rating Attribute As Very Important\\n\\nCommon spills and pet accidents can be removed 69%\\neasily even after they have dried\\nThe carpet will stand up to years of foot traffic 67%\\nwithout matting down\\nDirt and soil can be removed easily from the carpet 66%\\nwith regular vacuuming\\nAreas where spills have been cleaned will not be 64%\\nvisible\\n\\n5\\n\\nIn addition, Petitioners will provide data comparing the performance of PTT in carpet applications to the\\nperformance of nylon carpet because nylon currently has the largest market share in residential carpet.\\nAccordingly, the properties of nylon fibers are a useful reference to define those features of PTT carpet fibers\\nthat are of importance to the general public.\\n6\\n\\nData taken from a August 23, 2004 study titled Carpet Fiber Performance and Preferences prepared for\\nMohawk Industries by the Brandware Group.\\n\\n3\\n\\n\\x0cStain resistant properties will not diminish over the 63%\\nlife of the carpet\\nSoil resistance properties will not diminish over the\\nlife of the carpet\\nThe pile of the carpet stays tight and will stand up\\nlike new after normal vacuuming\\nThe color of the carpet will stay the same year after\\nyear and never fade, even in direct sunlight\\nHeavy soil and most stains can be removed from\\nthe carpet with just plain water\\nThe carpet pile will not shed or fuzz\\nThe carpet is soft and comfortable to sit on or lie\\non\\nThe carpet can be professionally cleaned as often\\nas you want\\nThe carpet never shows tracks from footprints or\\nvacuuming\\nThe carpet will never produce static shock, even if\\nyou walk on it in wool socks\\n\\n61%\\n58%\\n56%\\n53%\\n53%\\n49%\\n36%\\n27%\\n24%\\n\\nApparel\\nThere are many man-made fibers used in the apparel industry, and the supply chain is far\\nmore complex than in the carpet industry. However, it is still possible to obtain market\\nrequirements information thru a carefully designed \\xe2\\x80\\x9cvoice of customer\\xe2\\x80\\x9d process by\\ninterviewing fabric buyers and brand managers in the apparel industry. These steps in the\\nsupply chain determine what fabrics are made into garments for the consumer public. Fabric\\nbuyers and brand managers understand the downstream requirements and must match that\\ndemand to the supply of fabrics and in turn what polymers and fibers are used in those fabrics.\\nIn order to understand these preferences, DuPont conducted a survey7 of downstream\\nparticipants in the supply chain to determine preferences in the apparel supply chain where\\ndifferences in fabric fiber content were important and discernable. Table 2 lists the\\ncompanies that were surveyed in the countries which are the major sources of fabrics made\\nfrom man-made fibers. The purpose of the survey was to determine the attributes of fabrics\\nthat are of greatest importance to consumers.\\n\\n7\\n\\nThis study was conducted by DuPont employees in the first and second quarter of 2004.\\n\\n4\\n\\n\\x0cTable 2: Apparel fabric preferences survey participants\\nCountry\\nKorea\\n\\nFabric Producer or Purchaser\\nLi & Fung, C&A\/Mondial, Sears, SAE-A\\nTrading Company, Mastex, Liz Claiborne,\\nMast Industries\\nEsquel, Levi, TAL, Adidas, Li & Fung,\\nNike, Puma, Eddie Bauer\\nBurringtex, Liz Claiborne, Federated, May\\nCo., Mast, Newtimes Jones (Jones New\\nYork)\\n\\nTaiwan\\nChina\\n\\nSurvey participants were asked to rate the following attributes on a scale of 0 to 5. The results\\nare shown in Figure 1 with the mean denoted by the small square and the range denoted by\\nthe box. The average of the responses is the horizontal line.\\n1.\\n2.\\n3.\\n4.\\n5.\\n6.\\n7.\\n8.\\n\\nStretch\\nSoftness (also referred to as \\xe2\\x80\\x9cDrape\\xe2\\x80\\x9d)\\nEasy Dye\\nEasy Care\\nMade from renewable resources\\nStain resistance\\nResilience\\nPrintability\\n\\nFrom this list of eight attributes, the three which had the greatest importance were easy care,\\nsoftness (hand or drape), and stretch with recovery. PTT fiber is superior to PET fiber with\\nFigure 1: Fabric survey results \\xe2\\x80\\x93 Box represents 95% of questionnaire responses;\\nof Importan\\nby responses;\\nAttribut\\nred dot equals the Boxplots\\nnumerical\\naverage of\\nhorizontal line equals the mean of\\n(means are\\nindicated\\nby solid\\ncircles)\\nthe responses; and vertical\\nline\\nequals\\nhigh\\nand low ranges of responses.\\n5\\n\\nImportance\\n\\n4\\n\\n3\\n\\n2\\n\\n1\\n\\nStretch\\n\\nStain Res.\\n\\nSoft\\n\\n5\\n\\nResilience\\n\\nPrints\\n\\nGreen\\n\\nDye\\n\\nAttribute\\n\\nCare\\n\\n0\\n\\n\\x0crespect to two of these three attributes: softness and stretch with recovery.\\n\\nDiscussion of Factors Needed For The Designation Of A New Generic\\nSubclass For Fibers Spun From PTT Polymer\\nSection 1. PTT polymer and fibers spun from PTT have the same general chemical\\ncomposition as the FTC\\xe2\\x80\\x99s established polyester generic fiber category.\\nRule 7(c) defines \"polyester\" as \"[a] manufactured fiber in which the fiber-forming substance\\nis any long chain synthetic polymer composed of at least 85% by weight of an ester of a\\nsubstituted aromatic carboxylic acid, including but not restricted to substituted terephthalate\\nunits, [formula omitted] and para substituted hydroxy-benzoate units, [formula omitted].\" 16\\nCFR 303.7(c).\\nPTT polymer is made by reacting (a) dimethyl terephthalate (DMT) or terephthalic acid\\n(TPA), both of which are substituted aromatic carboxylic compounds, and (b) 1,3-propanediol\\n(PDO) to form a long chain synthetic polymer consisting of more than 85% of substituted\\nterephthalate esters. Accordingly, fiber made from PTT polymer has the same chemical\\ncomposition as is described by Rule 7(c).\\nSection 2. PTT fiber, while having a chemical composition which causes it to fall within\\nthe definition provided for polyester set forth in 16 CFR 303.7(c), has distinctive\\nproperties of importance to the general public as a result of its unique chemistry,\\nmolecular design, and fiber structure.\\nThe generic class of aromatic polyesters today consists of several different chemical\\nformulations including poly(ethylene terephthalate) (PET) and PTT. The type of polyester\\nthat is familiar to consumers because of its use in carpet and apparel applications is PET.\\nHowever, the molecular differences between PET and PTT are quite profound, and result in\\nsignificantly different physical properties of fibers.\\nThese properties are (a)\\ndurability\/resilience for carpet applications, (b) softness for both consumer carpet and apparel\\napplications, and (c) stretch and recovery for apparel applications.\\na) Durability\/Resilience\\nFiber durability, which in carpet applications is measured by the resiliency of the fiber and its\\nability to recover from compression, is together with stain resistance the most important\\nproperty that consumers look to when selecting a residential carpet as shown in the consumer\\nsurvey results set forth above. This property is inherently better in fibers made from PTT vs.\\nPET because of PTT\\xe2\\x80\\x99s chemistry and molecular design. PET and PTT crystallize into triclinic\\nunit cells during fiber formation. However, the glycol portion of their chemical chains\\ncrystallizes into different conformations. The two methylene units in the glycol portion of\\nPET are arranged trans to each other, whereas the three methylene units in PTT are arranged\\nin a gauche-gauche conformation as shown in Figure 2 below:\\n\\n6\\n\\n\\x0cFigure 2. PTT molecule showing gauche-gauche Conformation (ref. 1)\\n\\nBecause of the methylene diol\\xe2\\x80\\x99s conformations, PTT chains are contracted by 24.7% while\\nthe PET chain is fully extended. Also the benzene ring of the terephthalic ester groups of\\nPET are oriented parallel to each other in every chemical repeating unit. However, the\\norientation of PTT\\xe2\\x80\\x99s benzene ring in the successive terephthalic ester units is at an angle to\\neach other), thus PTT molecular chain forms a 2\/1 helix, which is made up of two repeating\\nunits per turn which introduces a zigzag shape to the polymer chain. This difference is\\nillustrated in Figure 3 which compares the molecular structures of PET and PTT. As a result\\nof this structure, compressive forces translate at the molecular level to bending and twisting of\\nbonds, rather than just stretching. The molecular structure of PTT is more like a coil spring\\ncompared to a straight wire structure in the case of PET polyester.8 Therefore, PTT fiber can\\ntake an additional level of applied strain and recover completely.\\n\\n8\\n\\nThis property of PTT polymer has also been confirmed through study of x-ray diffraction patterns which occur\\nwhen fibers of PTT are subjected to stress. See Crystal Deformation in Aromatic Polyester, Journal of Polymer\\nScience, Vol. 13, 799-813 (1975) ref 2.\\n\\n7\\n\\n\\x0cFigure 3: Structural differences between PET and PTT (ref 3)\\n\\nError!\\n(a)\\n\\n(b)\\n\\nArrangement of PET (a) and PTT (b) crystalline molecular chains. Arrow indicates\\nthe alignment direction of the benzene ring.\\nAccordingly, when a PET fiber is subjected to compression forces in carpet applications (e.g.,\\nwhen carpet is walked on or subjected to carpet industry tests that simulate foot traffic), the\\nmolecular chain structure of PET changes and develops a larger permanent set or crystal\\ndeformation which is not completely recoverable. This causes consumer carpet made from\\nPET polyester to develop a crushed appearance where the carpet fibers do not continue to\\nstand up as they did when the PET carpet was new.\\nIn the case of PTT, compression forces in carpet applications cause the molecular chain\\nstructure to deform. However, the crystalline structure is able to recover without developing a\\npermanent set. The carpet fibers continue to stand up and appear new for a significantly\\nlonger period of time. The basis for this performance difference is the molecular structure of\\nthe two polymers, extended to larger physical properties differences such as crimp retention\\nas shown in Figure 4 below:\\n\\n8\\n\\n\\x0cFigure 4: Crimp recovery of PET and PTT BCF yarns (Shell internal study)\\n100\\n\\n% Crimp Recovery\\n\\n80\\n\\nPTT\\n\\n60\\n\\n40\\n\\nPET\\n\\n20\\n\\n0\\n0.00\\n\\n0.50\\n\\n1.00\\n\\n1.50\\n\\nTension, g\/den.\\nb) Softness\\nSoftness is important to the consumer for both carpet and apparel applications. Consumers\\njudge the softness of a residential carpet by touching or walking on the upright twisted fibers\\nor yarns. The ease with which the yarns bend over is a measure of softness. Consumers\\njudge the softness of a fabric by assessing its hand or drape (the ease with which conforms to\\nthe shape of the body). The degree of softness in both cases is proportional to the amount of\\nforce required to bend the fiber. The laboratory measurement of the amount of force required\\nto bend a fiber is know as fiber modulus, which can also ascertain the relative softness of the\\nresulting fabric or article.\\nThe lower modulus of PTT fibers over PET fibers is explained on a molecular level by the\\nlower crystalline modulus of PTT. The odd number of carbon atoms in the tri-methylene\\nconstituent of PTT results in different chain conformations for PTT as compared to PET.\\nPTT conformation is more helical or spring like, whereas PET is straighter like a wire.\\nNaturally, more force is needed to deform a straight wire while very little force is required to\\ndeform a coil spring to the same extent, therefore, PTT with coil spring structure has a very\\nlow crystal modulus, 2.5 GPa vs. 107 GPa (ref 5) for PTT and PET crystals, respectively.\\nAs a result, the crystals of PTT are relatively weaker and easier to bend compared to PET, and\\nthe fiber made from this polymer has lower modulus.\\n\\n9\\n\\n\\x0cEvidence of this different crystalline modulus caused by molecular structure differences is\\napparent also in the higher glass transition temperatures (Tg) and crystalline melting\\ntemperatures (Tm) of PET vs. PTT. These higher temperatures generally correspond to stiffer\\nmolecular structures. See Table 3 below:\\nTable 3: Differences in physical properties of PTT and PET (ref. 4)\\n\\nPhysical properties of PTT vs. PET\\nPTT\\n\\nPET\\n\\nTm (\\xc2\\xb0C)\\n\\n228\\n\\n255\\n\\nTg (\\xc2\\xb0 C)\\n\\n50\\n\\n75\\n\\nYoung\\xe2\\x80\\x99s modulus is yet another measure of the relative hardness of a material, and from the\\ndata in Figure 5 it is readily apparent that PTT has far lower modulus than PET.\\nFigure 5. Young\\xe2\\x80\\x99s modulus of PET and PTT fibers (ref 5)\\n\\nFinally, Figure 6 shows a stress (force) vs. strain (fiber deformation) comparison of fibers\\nmade from PET, nylon 66, and PTT. This graph shows that the properties of PTT polymer\\nresult in fibers of PTT which have lower modulus than fibers made from either PET or nylon\\n66.\\n\\n10\\n\\n\\x0cFigure 6. Modulus of PET and PTT Fibers vs. Nylon 6,6 (ref 5)\\n\\nStress g\/den.\\n\\n6\\nPET\\n\\n5\\n\\nN66\\n\\n4\\n3\\n\\nPTT\\n\\n2\\n1\\n0\\n0\\n\\n10\\n\\n20\\n30\\nStrain, %\\n\\n40\\n\\n50\\n\\nAs a result of the lower modulus of the PTT fibers, carpets made from PTT fibers are\\nperceived to be softer, and apparel fabrics made from PTT fibers have greater softness and\\nsuperior \\xe2\\x80\\x9chand\\xe2\\x80\\x9d.\\n(c) Stretch with Recovery\\nStretch and recovery of fiber is important in apparel applications in order to improve the\\ncomfort of garments and increase their ability to retain their shape and appearance.\\nElastic recovery is measured by first extending the fiber in a tensile tester to a given strain\\n(percent of extension) and then holding the fiber at that position for a given time, after which\\ntime the strain is completely released. After a fixed period of relaxation time, the fiber is reextended and released to measure its recovery again. The difference between these two\\nextensions and recoveries represents the immediate recoverability of the fiber and the\\npermanent set. More elastic fibers recover immediately with lower permanent set. The\\nterms are further defined in Figure 7.\\n\\n11\\n\\n\\x0cFigure 7. Elastic extension and recovery terminology (ref 5)\\n\\nAs shown in Section 2(a) above, the crystalline region of the PET polymer will absorb only a\\nlimited amount of strain. Strain beyond that point will cause the fiber to deform irreversibly.\\nIn the case of PTT, the strain is absorbed by the crystal structure uncoiling like a spring.\\nWhen the strain is released, the crystalline structure recovers. This difference is shown in\\nFigure 8 which compares the stretch and recovery performance of PET and PTT fibers. The\\ndata indicates that PTT fiber can be stretched with total recovery more than five times the\\nstretch after which PET fails to recover.\\n\\n12\\n\\n\\x0cFigure\\n\\n8.\\n\\nStretch\\n\\nwith\\n\\nrecovery\\n\\nof\\n\\nPET\\n\\nand\\n\\nPTT\\n\\nfibers\\n\\n(ref\\n\\n5)\\n\\nPET\\nPTT\\n\\nSection 3. The properties of fibers made from PTT described in Section 2 above cause\\nPTT fibers to be suitable for carpet and apparel applications for which other fibers\\nmarketed under the established generic name polyester would be significantly less well\\nsuited.\\nAs discussed above, the attributes of durability\/resilience and softness are of greater\\nimportance to consumers when purchasing residential carpet. For apparel applications,\\nsoftness and stretch with recovery are among the most important attributes of any fabric. The\\ntest results set forth below illustrate the improved performance of PTT fibers over PET fibers\\nwith respect to these attributes. Each test is preceded by a description of the protocol, and the\\nidentity of the company performing the test.\\na) Durability\/Resilience\\nCarpet durability and resilience can be measured by a number of standard tests. For example,\\nthere are simple floor walking tests, where a sample of carpet is placed in a high traffic\\nlocation and the number of walkers is simply counted using an electric eye trigger. Another\\n13\\n\\n\\x0ctest, called the Hexapod Wear Test is an appearance retention test endorsed by the Carpet and\\nRug Institute (CRI). It follows a defined accelerated fatigue process developed through\\nstudies conducted by CRI\\xe2\\x80\\x99s Performance Standards Committee which simulates the most\\naggressive parts of a walking action. These samples\\xe2\\x80\\x99 appearance retention is then assessed\\naccording to a defined protocol vs. its \"newness\" look, where 5 = no change and 1 = severe\\nchange.\\nSet forth in Figures 9, 10 and 11 below are the results of the Hexapod Wear Test conducted\\nby Mohawk at its industry certified lab in Lyerly, Georgia on three carpet samples consisting\\nof carpets of identical constructions9 made from nylon fiber, PET fiber, and PTT fiber. Tests\\nwere performed after 12K cycles, 24K cycles, and 36K cycles. These tests reveal that carpet\\nmade from PTT fibers perform better than carpet made from PET fibers. The performance of\\nPTT is equal to the performance of nylon, which has been the performance standard for\\nconsumer carpet prior to the introduction of PTT. Such performance continues over time as\\ndemonstrated by this industry standard accelerated wear test.\\nFigure 9:\\n\\nHexapod Wear Test (12K Cycles)\\nIndividual Value Plot of Hex. 12K vs Carpet\\n\\n4.5\\n\\nHex. 12K\\n\\n4.0\\n\\n3.5\\n\\n3.0\\n\\n2.5\\nNylon\\n\\nPET\\nCarpet\\n\\nSorona\\n\\nPTT\\n\\nThere are statistically significant differences between PET, and both PTT and nylon. PTT\\xe2\\x80\\x99s\\nperformance continues to be like nylon, rather than PET polyester. The differences\\nbetween PTT and nylon are not statistically significant.\\n\\n9\\n\\nSee appendix for test carpet constructions\\n\\n14\\n\\n\\x0cFigure 10:\\n\\nHexapod Wear Test (24K Cycles)\\n\\nIndividual Value Plot of Hex. 24K vs Carpet\\n4.5\\n4.0\\n\\nHex. 24K\\n\\n3.5\\n3.0\\n2.5\\n2.0\\n1.5\\nNylon\\n\\nPET\\nCarpet\\n\\nSorona\\n\\nPTT\\n\\nAfter 24K cycles, there continue to be statistically significant differences between PET,\\nand both PTT and nylon. PTT\\xe2\\x80\\x99s performance continues to be like nylon. The differences\\nbetween PTT and nylon are not statistically significant.\\n\\nFigure 11:\\n\\nHexapod Wear Test (36K Cycles)\\nIndividual Value Plot of Hex. 36K vs Carpet\\n\\n4.0\\n3.5\\n\\nHex. 36K\\n\\n3.0\\n2.5\\n2.0\\n1.5\\n1.0\\nNylon\\n\\nPET\\nCarpet\\n\\nSorona\\nPTT\\n\\nAfter 36K cycles, statistically significant differences continue between PET, and both PTT\\nand nylon. PTT\\xe2\\x80\\x99s performance remains like nylon. The differences between PTT and\\nnylon are not statistically significant.\\n\\nWhile hexapod test data simulates wear through a mechanical device, PTT\\xe2\\x80\\x99s advantages over\\nPET are equally apparent when carpet is walked on by human subjects. The performance of\\nnylon, PET, and PTT carpet in this test is compared by measuring the appearance of carpet\\nafter a certain numbers of cycles (human footsteps on carpet). Results of this test conducted\\nat an industry certified testing lab operated by Mohawk at Lyerly, Georgia after 20 thousand,\\n15\\n\\n\\x0c40 thousand and 60 thousand cycles are set forth below in Figures 12, 13, and 14. Consistent\\nwith the results from the hexapod test, the performance of PTT carpet was much better than\\nthe performance of PET carpet and was comparable to the performance of nylon carpet.\\n\\nFigure 12:\\n\\nPerformance Appearance Rating (20K Cycles)\\n\\nIndividual Value Plot of PAR 20K vs Carpet\\n4.5\\n\\nPAR 20K\\n\\n4.0\\n\\n3.5\\n\\n3.0\\n\\n2.5\\n\\n2.0\\nNylon\\n\\nPET\\nCarpet\\n\\nSorona\\nPTT\\n\\nThere are statistically significant differences between PET, and both PTT and nylon.\\nIn other words, PTT\\xe2\\x80\\x99s performance in this test is like nylon, rather than polyester. The\\ndifferences between PTT and nylon are not statistically significant.\\n\\n16\\n\\n\\x0cPerformance Appearance Rating (40K Cycles)\\n\\nFigure 13:\\n\\nIndividual Value Plot of PAR 40K vs Carpet\\n4.0\\n\\nPAR 40K\\n\\n3.5\\n\\n3.0\\n\\n2.5\\n\\n2.0\\n\\n1.5\\nNylon\\n\\nPET\\nCarpet\\n\\nSorona\\n\\nPTT\\n\\nAfter\\n40K\\ncycles,\\nthere\\nalso\\nstatistically\\nsignificant\\ndifferences\\nbetween\\nPET,\\nboth\\nAfter\\n40K\\ncycles,\\nthere\\nareare\\nalso\\nstatistically\\nsignificant\\ndifferences\\nbetween\\nPET,\\nandand\\nboth\\nPTT and\\nand\\nnylon.\\nAgain, Sorona\\n\\xe2\\x80\\x99s test\\nperformance\\nin this\\ntestthan\\nis like\\nnylon, rather\\nnylon.Sorona\\nAgain,\\nPTT\\xe2\\x80\\x99s\\nperformance\\nin this\\nis like nylon,\\nrather\\npolyester.\\nThe than\\ndifference\\nbetween\\nPTT and\\nnylon\\nare not statistically\\nsignificant.\\npolyester.\\nThe\\ndifferences\\nbetween Sorona\\nand nylon are not statistically significant.\\n\\nFigure 14:\\n\\nPerformance Appearance Rating (60K Cycles)\\n\\nIndividual Value Plot of PAR 60K vs Carpet\\n4.0\\n\\nPAR 60K\\n\\n3.5\\n\\n3.0\\n\\n2.5\\n\\n2.0\\n\\n1.5\\nNylon\\n\\nPET\\nCarpet\\n\\nS orona\\n\\nPTT\\n\\nAfter\\n60K\\ncycles,\\nthere\\nareare\\nalso\\nstatistically\\nsignificant\\nAfter\\n60K\\ncycles,\\nthere\\nalso\\nstatistically\\nsignificantdifferences\\ndifferencesbetween\\nbetweenPET,\\nPET, and\\nand both\\nboth\\nnylon and PTT. PTT\\xe2\\x80\\x99s performance continues to be like nylon, rather than polyester. The\\nSorona\\nand\\nnylon.\\nSorona\\xe2\\x80\\x99s\\nperformance\\ncontinues\\nto\\nbe\\nlike\\nnylon,\\nrather\\nthan\\ndifferences between PTT and nylon are not statistically significant.\\npolyester. The differences between Sorona and nylon are not statistically significant.\\n\\nThe data in Figures 15(a) and 15(b) is provided as additional confirmation of the superior\\ndurability and resiliency of even low denier per filament (dpf), soft PTT fiber as compared to\\n17\\n\\n\\x0cidentical PET fiber. Shell Chemical LP, acting under contract as the marketing and technical\\nservice provider to PTT Canada, arranged to have identical PTT and PET carpets made and\\ntested. The bulked continuous filament (BCF) yarns were made on a commercial extruder at\\nCAF Extrusion, Inc. in Calhoun, Georgia. The same spinneret with 120 holes was used for\\nboth yarns resulting in 12 dpf PTT and PET yarns. These yarns were then each twisted at 5\\nturns-per-inch (TPI), Superba heat-set, and converted into carpet. Durability and resiliency\\ntesting was conducted at the certified laboratory of Independent Textile Testing Service, Inc.\\n(ITTS) in Dalton, Georgia. The carpet specifications are shown in Table 4 below; each point\\nis the average of three \\xe2\\x80\\x98raters\\xe2\\x80\\x99.\\nTable 4: Head-to-head comparison of PTT vs PET carpets\\nCarpet Construction Details\\nGauge\\nPile Height (inches)\\nStitches per Inch (SPI)\\n\\n25-ounce per square\\nyard\\nPTT\\nPET\\n5\/32\\n5\/32\\n13\/32\\n13\/32\\n10\\n10\\n\\n35-ounce\\nyard\\nPTT\\n3\/16\\n3\/4\\n10\\n\\nWear Performance\\n20 K Cycle Walk Test\\n12 K Cycle Hexapod\\n\\n3.5\\n3.4\\n\\n3.9\\n4.0\\n\\n2.7\\n1.8\\n\\nper\\n\\nsquare\\n\\nPET\\n3\/16\\n3\/4\\n10\\n3.0\\n3.2\\n\\nFigure 15(a) : Hexapod Wear Test \\xe2\\x80\\x93 25 Oz Per SqYd (opsy) carpet, 12K cycles\\n\\n18\\n\\n\\x0cFigure 15(b) : Hexapod Wear Test \\xe2\\x80\\x93 35-Oz Per SqYd (opsy) carpet, 12K cycles\\n\\nb) Softness\\nSoftness is an aesthetic that is valued particularly for apparel fabrics, where skin contact is\\nprevalent. Softness in carpet, on the other hand, is not associated with direct skin contact. In\\nboth cases, softness is impacted by the ease in which yarns can bend. While fabric and carpet\\nconstruction differences can vary widely, articles constructed similarly from different fibers\\nor yarns have softness values that reflect the differences in their constituent polymers. A\\nvery useful measure of this difference in yarn softness is the force or stress required to deflect\\nor strain the fiber a given distance. Therefore the stress vs. strain curves for fibers made from\\ndifferent polymers correlates well with expected fabric softness aesthetics. Figure 16 (as\\nshown on the following two pages) represents first the stress vs. strain performance of PET\\nand PTT fibers as compared to nylon 66 using 56 dtex yarns, and second a measure of relative\\nsoftness by showing a comparison of the force to deflect these same yarns a given distance.\\n\\n19\\n\\n\\x0cFigure 16: Stress vs. Strain and Softness measurements (cn\/dtex and gms force) of\\nPET,\\nN6,6\\nand\\nPTT\\nyarns\\n(ref\\nhttp:\/\/www.solotex.co.jp\/en\/soft.html)\\n\\nPET\\nNylon 66\\nPTT\\n\\n20\\n\\n\\x0cPTT\\n\\nPET\\n\\nNylon 66\\n\\n21\\n\\n\\x0cc) Stretch with recovery\\nThe superior stretch and recovery properties of fabrics knitted or woven from PTT compared\\nto fabrics made with PET is demonstrated by the following tests conducted for PTT Canada\\nby Shell Chemical:\\nKnitted Fabrics\\nKnitted fabrics with identical constructions made from draw-textured PET and PTT yarns\\nwere dyed and heat-set according to widely used industry protocols. 76\/32 PET yarns were\\ncompared to 78\/32 PTT yarns. The PTT was disperse dyed at atmospheric boil and finished at\\n150\\xc2\\xb0C while the PET fabric was dyed at 130\\xc2\\xb0C and finished at 180\\xc2\\xb0C. The two knitted\\nfabrics were also softened with equal amount of silicone softener.\\nFigure 17 (a) shows the % fabric elongation at 10 N force and Figure 17 (b) show the %\\npermanent deformation after one cycle loading. Even though the PET fabric has slightly\\nhigher elongation characteristics (an artifact of the fabric construction as explained below) the\\nPTT fabric has better recover and thus lower set than the PET fabric.\\nFigure 17: (a) % Elongation performance for fabrics @ 10 N force; (b) % Permanent\\nset for fabrics after elongation @ 10 N force (ref 6)\\n% Permanent Set\\n\\n% Elongation\\n\\n190\\n180\\n170\\n160\\n150\\n140\\n130\\nPTT\\n\\n78\/32\\n\\n10\\n8\\n6\\n4\\n2\\n0\\n\\nPET\\n\\nPTT\\n\\n76\/32\\n\\n78\/32\\n\\nPET\\n\\n76\/32\\n\\nWoven Fabrics\\nThe PET and PTT yarns used for comparing woven fabrics were 72\/36 and 78\/22\\nrespectively. The number of picks\/cm used for the PTT fabric was 40 while only 31\\npicks\/cm were used for the PET fabric, which explains the slightly higher elongation.\\nBoth fabrics were woven with a 2\/1 construction. Since commercial PET draw-textured\\nyarns were used in the woven fabrics evaluation, there were some differences in the yarn\\ncounts, which must be taken into account when comparing the stretch and recovery of the\\nfabrics.\\nFigure 18 shows the % stretch of these fabrics in the weft direction with 10 N load, and\\nthe permanent set after one cycle loading. The PTT woven fabric has high stretch of 22.5\\ncompared to the 8% stretch of the PET fabric. Both fabrics have <5% permanent set after\\none cycle loading.\\n\\n22\\n\\n\\x0cFigure 18: % Elongation in the weft direction of PET and PTT woven fabrics (ref 6)\\n\\n% Elongation\\n\\n40\\n30\\n20\\n10\\n0\\nPET\\n\\nPTT\\n\\nOther Information Relevant To This Petition\\nSubclass Definition\\nApplicants propose the following definition for a new subclass of polyester at 16 C.F.R.\\n303.7(c):\\n\"[a] manufactured fiber in which the fiber-forming substance is any long chain\\nsynthetic polymer composed of at least 85% by weight of an ester of a substituted\\naromatic carboxylic acid, including but not restricted to substituted terephthalate units,\\n[formula omitted] and para substituted hydroxy-benzoate units, [formula omitted] and\\nwhere specifically the glycol used to form the ester consists of at least ninety mole\\npercent 1,3-propanediol.\"\\nThis definition is appropriate because if a polymer manufacturer uses the above proportions of\\nstarting materials, the resultant polymer will exhibit a molecular or crystalline structure that\\nwill permit fiber extruded from such polymer to exhibit the properties described in this\\npetition.\\nExtent of Commercialization of PTT Fibers\\nPTT has been commercialized by E. I. du Pont de Nemours and Company and PTT Canada.\\nCarpet fiber spun from PTT has been commercialized by Mohawk Industries (including Lees\\nCarpets), Shaw Industries and CAF Extrusions. Apparel fibers spun from PTT have been\\ncommercialized by the following firms mills grouped according to apparel type:\\n\\n23\\n\\n\\x0cPTT apparel fiber mills grouped by apparel type\\n\\xe2\\x80\\xa2\\n\\nSwimwear\\nO-Sung, Houndey, Haitian\\n\\n\\xe2\\x80\\xa2\\n\\nActive Sportswear\\nEverest, Favis, Yon-Il K, FETL, Shanghai Challenge\\n\\n\\xe2\\x80\\xa2\\n\\nCasual Shirts and Pants\\nAkore, Huvis, Visionland, Chia Her, Wujiang Jili\\n\\n\\xe2\\x80\\xa2\\n\\nCasual Shirts\\nO-Sung, Samil\\n\\n\\xe2\\x80\\xa2\\n\\nJackets and Pants\\nSaehan, Ulhwa\\n\\n\\xe2\\x80\\xa2\\n\\nReady to Wear\\nNew Wide, True Way, Haitian, Fountain Set\\n\\n\\xe2\\x80\\xa2\\n\\nLuggage\/Backpacks\\nRueyhwa, Tay Shin\\n\\nSuggested Names For A New Subclass of Polyester Fiber Than May Be Used With\\nRespect To Fibers Spun From PTT\\nAs indicated above, Petitioners propose in order of preference:\\n1. triexta; 2. resisoft; and 3. durares.\\nas possible generic names for a new subclass of PTT fibers.\\nPetitioners have done word searches for each of these proposed generic subclass names and\\nhave found no confusingly similar use of these names by any other company either as a\\ntrademark or product name.\\nPetitioners note the Commission\\xe2\\x80\\x99s choice of \\xe2\\x80\\x9cPTT001\\xe2\\x80\\x9d as a temporary designation.\\n\\nRecycling Properties\\nRecycling of man-made fibers, while of secondary importance for consumers in the United\\nStates at this time, will assume increasing importance as consumers increasingly adopt\\npreferences for sustainable products. To the extent that PET and PTT are included in the\\nsame pool of polymer to be recycled because they are currently both classified as polyester,\\nmixing of the two types of polyester could have adverse effects on the properties of the\\nrecycled polymer (melt temperature and tenacity) and will require different safe handling\\n\\n24\\n\\n\\x0cprocedures during processing. For this reason, the use of a different generic that would\\nfacilitate the separation of the polymers during recyling is an important consideration.\\nFigure 20: impact of mixing waste PET and PTT on melting temperature of the polymer\\n(ref7)\\n300\\n\\nMelting Point, oC\\n\\n250\\n200\\n150\\n100\\n50\\n0\\n0\\n\\n20\\n\\n40\\n\\n60\\n\\n80\\n\\n100\\n\\nMole % PTT\\n\\nFigure 21: tenacity of PET fibers melt blended with PTT(ref8)\\n45\\n\\nTenacity (cN\/tex)\\n\\n40\\n35\\n30\\n25\\n20\\n15\\n10\\n5\\n0\\n0\\n\\n20\\n\\n40\\n\\n60\\n\\n80\\n\\n% PTT\\n\\n25\\n\\n100\\n\\n\\x0cFinally, the major byproduct produced during the processing of PET is acetaldehyde. The\\nmajor byproduct produced during the processing of PTT is acrolein. These gases have\\ndifferent properties and quite different OSHA 8 hour personal exposure limits and short-term\\nexposure limits. Since firms involved in recycling articles made from PET vs. PTT should be\\naware of these differences, a new generic name for PTT is appropriate.\\nQuestions regarding this petition may be addressed to:\\nCarl G. Bartholomaus, Corporate Counsel\\nDuPont Company\\nBuilding 23-2128\\nBarley Mill Plaza\\nWilmington, DE 19880-0023\\n302-992-3207\\nCarl.G.Bartholomaus@usa.dupont.com\\n\\nRespectfully submitted:\\nMohawk Industries, Inc.\\nBy _____________________________\\nPTT Poly Canada\\nBy _____________________________\\nE. I. du Pont de Nemours and Company\\nBy _____________________________\\n\\n26\\n\\n\\x0cReferences\\n1. I. J. Desborough, I. H. Hall, and J. Z. Neisser, The Structure of Poly(trimethylene\\nterephthalate), Polymer, 20, 545 (1979)\\n2. R. Jakeways, I. M. Ward, and M. A. Wildings, Crystal Deformation in Aromatic Polyesters, J.\\nPolym. Sci., Phys. Ed., 12, 799 (1975)\\n3. H.H. Chuah, Synthesis, Properties and Applications of Poly(Trimethylene Terephthalate)\\nin Schiers, J. and Long, T.E. ed., Modern Polyesters: Chemistry and Technology of\\nPolyesters and Copolyesters, Chapter 11, pp. 361-391, John Wiley, 2003.\\n\\n4. I. Goodman, \\xe2\\x80\\x9cEncyclopedia of Polymer Science\\xe2\\x80\\x9d, Vol. 11, New York: J. Wiley and Sons,\\n1969\\n5. I.M. Ward, M.A. Wilding and H. Brody, The Mechanical Properties and Structure of Poly\\n(m-methylene Terephthalate) Fibers, J. Polym. Sci., Polym. Phys. Ed., 14, 263 (1976).\\n6. M. Moerman and G. Hess, Corterra Polymers, Value Proposition in TextileApparel\\nApplications, Technical Bulletin, SC-3014-00, Shell Chemical-Company, 2000.\\n7. E. Punusamy and T. Balakrishnan, Macromol. Sci., Chem., A22(3), 373(1985).\\n8. W. Opperman, P. Hirt and C. Fritz, Chem. Fibers Int., 49, 33\\n\\n27\\n\\n\\x0cAppendixFOR\\nA: Carpets\\nused for performanceTESTS\\ntests\\nCARPETS USED\\nPERFORMANCE\\n\\nwt.\\noz\/yd2\\n\\ngauge\\n\\ndenier\\n\\ndpf\\n\\npolymer\\n\\nply twist\\n\\ntpi\\n\\nStain Blocker\\n\\n35\\n45\\n55\\n50\\n40\\n60\\n32\\n42\\n52\\n42\\n32\\n52\\n32\\n\\n3\/16\\n3\/16\\n3\/16\\n1\/8\\n1\/8\\n1\/8\\n3\/16\\n3\/16\\n3\/16\\n3\/16\\n3\/16\\n3\/16\\n3\/16\\n\\n1480\\n1480\\n1480\\n1480\\n1480\\n1480\\n1480\\n1480\\n1480\\n1480\\n1480\\n1480\\n1480\\n\\n18\\n18\\n18\\n18\\n18\\n18\\n18\\n18\\n18\\n18\\n18\\n18\\n18\\n\\nPTT\\nPTT\\nPTT\\nPTT\\nPTT\\nPTT\\nPTT\\nPTT\\nPTT\\nPTT\\nPTT\\nPTT\\nPTT\\n\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n\\n5.5\\n5.5\\n5.5\\n5.5\\n5.5\\n5.5\\n5.5\\n5.5\\n5.5\\n5.5\\n5.5\\n5.5\\n5.5\\n\\nNo\\nNo\\nNo\\nNo\\nNo\\nNo\\nNo\\nNo\\nNo\\nNo\\nNo\\nNo\\nNo\\n\\n35\\n40\\n50\\n35\\n52\\n38\\n35\\n38\\n35\\n55\\n46\\n35\\n65\\n46\\n\\n3\/16\\n3\/16\\n3\/16\\n3\/16\\n3\/16\\n3\/16\\n3\/16\\n3\/16\\n3\/16\\n1\/10\\n1\/8\\n1\/8\\n1\/10\\n5\/32\\n\\n995\\n995\\n995\\n995\\n995\\n995\\n995\\n995\\n995\\n1045\\n1045\\n1045\\n1045\\n1045\\n\\n12\\n12\\n12\\n12\\n12\\n12\\n12\\n12\\n12\\n12\\n12\\n12\\n12\\n12\\n\\nNylon\\nNylon\\nNylon\\nNylon\\nNylon\\nNylon\\nNylon\\nNylon\\nNylon\\nNylon\\nNylon\\nNylon\\nNylon\\nNylon\\n\\n2x2\\n2x2\\n2x2\\n2x2\\n2x2\\n2x2\\n2x2\\n2x2\\n2x2\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n\\n6.5 x 1\\n6.5 x 1\\n6.5 x 1\\n6.5 x 1\\n6.5 x 1\\n6.5 x 1\\n6.5 x 1\\n6.5 x 1\\n6.5 x 1\\n6.5\\n5.25\\n5.5\\n6.5\\n6.5\\n\\nYes\\nYes\\nYes\\nYes\\nYes\\nYes\\nYes\\nYes\\nYes\\nYes\\nYes\\nYes\\nYes\\nYes\\n\\n34\\n40\\n51\\n51\\n40\\n32\\n40\\n52\\n42\\n35\\n58\\n\\n3\/16\\n3\/16\\n3\/16\\n3\/16\\n3\/16\\n3\/16\\n3\/16\\n1\/8\\n1\/8\\n3\/16\\n5\/32\\n\\n1460\\n1460\\n1460\\n1460\\n1460\\n1460\\n1459\\n3.0 cc\\n3.0 cc\\n3.15 cc\\n3.0 cc\\n\\n15\\n15\\n15\\n15\\n15\\n15\\n15\\n15\\n15\\n15\\n15\\n\\nPET\\nPET\\nPET\\nPET\\nPET\\nPET\\nPET\\nPET Staple\\nPET Staple\\nPET Staple\\nPET Staple\\n\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n1x1\\n\\n5.5\\n5.5\\n5.5\\n5.5\\n5.5\\n5.5\\n5.5\\n4.8 x 4.0\\n4.8 x 4.0\\n5.3 x 6.4\\n4.8 x 4.0\\n\\nNo\\nNo\\nNo\\nNo\\nNo\\nNo\\nNo\\nNo\\nNo\\nNo\\nNo\\n\\n28\\n\\n\\x0c'","created_timestamp":"September 7, 2006","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/dupont\/mohawk\/ptt-poly-canada-revised-petition\/pttgenapprev8-30-06.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nThomas P. Rowan\\nAttorney\\n600 Pennsylvania Ave., N.W., Room 286\\nWashington, D.C. 20580\\ntrowan@ftc.gov\\n202-326-3302\\n\\nJuly 19, 2006\\nMichael Goodman, Esq.\\nHudson Cook, LLP\\n1020 19th Street, N.W., 7th Floor\\nWashington, D.C. 20036\\nRe:\\n\\nRequest for Informal Advisory Opinion Concerning the Application of the Telemarketing\\nSales Rule\\xe2\\x80\\x99s \\xe2\\x80\\x9cEstablished Business Relationship\\xe2\\x80\\x9d Exemption to an Internet-based Lead\\nGeneration Mechanism\\n\\nDear Mr. Goodman:\\nThis staff advisory opinion responds to your letter of April 3, 2006, seeking an informal\\nopinion letter regarding the application of the Telemarketing Sales Rule\\xe2\\x80\\x99s (\\xe2\\x80\\x9cTSR\\xe2\\x80\\x99s\\xe2\\x80\\x9d or the\\n\\xe2\\x80\\x9cRule\\xe2\\x80\\x99s\\xe2\\x80\\x9d) established business relationship (\\xe2\\x80\\x9cEBR\\xe2\\x80\\x9d) exemption to an Internet-based lead\\ngeneration mechanism. The central issue your letter presents is whether the exemption applies to\\na lender that initiates a telephone call to a consumer based on contact information the lender\\nobtains from a lead generator.\\nOur conclusion is that, under a strict reading of the language of the Rule, the lender does\\nnot have an EBR with a consumer who responds to a lead generator\\xe2\\x80\\x99s solicitation, and therefore\\nwould not normally be entitled to claim the EBR exemption. However, FTC staff would not\\nrecommend a Do Not Call enforcement action against a lender that calls consumers who have\\nresponded to a lead generator\\xe2\\x80\\x99s solicitation if, as described more fully below, the lead generator\\nmakes full and adequate prior disclosure of certain material facts about the consequences of\\nresponding to such solicitations. The opinions expressed in the following discussion of the basis\\nfor this conclusion are those of Commission staff only and are not attributable to, nor binding on,\\nthe Commission itself or any individual Commissioner.\\nRule Provisions\\nSection 310.4(b)(1)(iii) of the TSR provides, among other things, that it is a violation of\\nthe Rule to initiate any outbound telemarketing call to a person when that person\\xe2\\x80\\x99s telephone\\nnumber is on the National Do Not Call Registry unless the seller has an EBR with such person.\\nSee 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(iii). The Rule defines an EBR as:\\n\\n\\x0cMichael Goodman, Esq.\\nHudson Cook, LLP\\nJuly 19, 2006 - Page 2\\na relationship between a seller and a consumer based on:\\n(1) the consumer\\xe2\\x80\\x99s purchase, rental, or lease of the seller\\xe2\\x80\\x99s goods or\\nservices or a financial transaction between the consumer and seller,\\nwithin eighteen (18) months immediately preceding the date of a\\ntelemarketing call; or\\n(2) the consumer\\xe2\\x80\\x99s inquiry or application regarding a product or\\nservice offered by the seller, within the three (3) months\\nimmediately preceding the date of a telemarketing call.\\n16 C.F.R. \\xc2\\xa7 310.2(n).\\nDiscussion\\nYour letter discusses an Internet-based mechanism that generates leads for lenders. It\\ndescribes the mechanism in the following way:\\n[The] consumer visits a website that offers to arrange for several\\nlenders to compete for the consumer\\xe2\\x80\\x99s business. Before the\\nconsumer submits an inquiry, the website may disclose\\napproximately how many lenders are likely to respond. The names\\nof those lenders are not disclosed at that point, however, because\\nthey have not yet been determined. The website may have a\\nnetwork of dozens or even hundreds of lenders who may be asked\\nto respond to a consumer\\xe2\\x80\\x99s inquiry with proposed lending\\nterms. . . . The lenders\\xe2\\x80\\x99 names are disclosed to the consumer when\\nthe lenders contact the consumer to present lending terms.\\nThe consumer is asked to submit contact information with her\\ninquiry. Typically, this includes an email address and telephone\\nnumber. Some websites may expressly disclose that contact\\ninformation is collected so that lenders can respond to the\\nconsumer.\\nFTC staff\\xe2\\x80\\x99s opinion is that a lender who receives a consumer\\xe2\\x80\\x99s contact information from\\nsuch a lead generation mechanism generally does not have an EBR with the consumer.1 The\\n\\n1\\n\\nFor the purposes of this advisory opinion, we presume that the lenders described\\nin your letter are \\xe2\\x80\\x9cpersons, partnerships, or corporations\\xe2\\x80\\x9d under Sections 5(a)(2) and 19(a) of the\\nFederal Trade Commission Act, 15 U.S.C. \\xc2\\xa7\\xc2\\xa7 45(a)(2) and 57b(a), and meet the definition of a\\n\\xe2\\x80\\x9cseller\\xe2\\x80\\x9d under Section 310.2(z) of the TSR, 16 C.F.R. \\xc2\\xa7 310.2(z).\\n\\n\\x0cMichael Goodman, Esq.\\nHudson Cook, LLP\\nJuly 19, 2006 - Page 3\\nRule provides that, for the EBR exemption to apply, the seller must itself have a relationship with\\nthe consumer. See 16 C.F.R. \\xc2\\xa7\\xc2\\xa7 310.4(b)(1)(iii)(B)(ii) and 310.2(n). In the scenario your letter\\ndescribes, it is the lead generator, not the seller, that has an inquiry-based established business\\nrelationship with the consumer.\\nHowever, we agree with your letter\\xe2\\x80\\x99s assertion that the consumer\\xe2\\x80\\x99s reasonable\\nexpectations regarding the lender must be considered. In the Statement of Basis and Purpose\\n(\\xe2\\x80\\x9cSBP\\xe2\\x80\\x9d) accompanying the Rule, the Commission states: \\xe2\\x80\\x9cThe consumer\\xe2\\x80\\x99s expectations of\\nreceiving the call are the measure against which the breadth of the [EBR] exemption must be\\njudged.\\xe2\\x80\\x9d SBP, 68 Fed. Reg. 4594, Jan. 29, 2003. The SBP does not discuss consumer\\nexpectations specifically in the context of lender-clients of a lead generator. However, it does\\ndiscuss them in a related context, i.e., with regard to the affiliates of a corporate seller:\\nIf consumers received a call from a company that is an affiliate or\\nsubsidiary of a company with whom they have a relationship,\\nwould consumers likely be surprised by that call and find it\\ninconsistent with having placed their telephone number on the\\nnational \\xe2\\x80\\x9cdo-not-call\\xe2\\x80\\x9d registry?\\nId.\\nThus, the question is whether the consumer in the scenario your letter describes has a\\nreasonable expectation of receiving calls from lenders who receive her name and telephone\\nnumber from a lead generator. We believe that the consumer\\xe2\\x80\\x99s expectation of privacy is such\\nthat, if she receives (1) calls from lenders when she does not expect to receive such calls, (2)\\ncalls from an infinite number of lenders when she only expects to receive calls from a few, or (3)\\ncalls from lenders whose identities are not linked in her mind to her online inquiry, she will be\\nsurprised, and find these calls invasive of her privacy and contrary to the promised protection of\\nthe National Do Not Call Registry. However, we also agree with your letter\\xe2\\x80\\x99s basic assertion that\\nthe consumer expects to receive some calls as a result of her visit to the website. In addition, we\\nbelieve the lead generation mechanism your letter describes offers the consumer a true benefit,\\ni.e., the ability to quickly and easily obtain multiple credit offers based on her unique financial\\nsituation.\\nIn view of these considerations, FTC staff believes that the Commission should exercise\\ndiscretion in evaluating the use of lead generators by lenders, as described in your letter. As long\\nas the lead generator provides the consumer with certain material disclosures, staff likely would\\nnot recommend filing a Do Not Call enforcement action against the lender. Specifically, staff\\nlikely would not recommend taking such action if the lead generator clearly and conspicuously\\ndiscloses to the consumer, before the consumer divulges her telephone number, both that the\\nconsumer may receive telemarketing calls as a consequence of submitting her telephone number,\\nand the maximum number of entities from which the consumer may receive these calls.\\n\\n\\x0cMichael Goodman, Esq.\\nHudson Cook, LLP\\nJuly 19, 2006 - Page 4\\nIn addition, FTC staff\\xe2\\x80\\x99s opinion is that the consumer should, if possible, be informed of\\nthe identities of the lenders who may call the consumer before the consumer receives any such\\ncalls.2 This disclosure should be made in a manner likely to be seen and understood by the\\nconsumer, in light of the medium used to induce the consumer to submit her information to the\\nlead generator.3 We note that, as a practical matter, notifying the consumer in this way about\\nwhich specific lenders may be calling makes good business sense. The consumer is more likely\\nto accept a telemarketing call from a lender when she is expecting that particular lender to call.\\nShe may reject a call from a lender she does not recognize and instruct the lender not to make\\nfurther telemarketing calls to her, thereby asserting her rights under the TSR\\xe2\\x80\\x99s entity specific Do\\nNot Call provision. See 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(iii)(A). Of course, consistent with Section\\n310.2(n)(2) of the TSR, 16 C.F.R. \\xc2\\xa7 310.2(n)(2), the lender may only initiate an outbound call to\\nthe consumer within three months of the date of the consumer\\xe2\\x80\\x99s inquiry to the lead generator. In\\nthe staff\\xe2\\x80\\x99s opinion, fulfilling the above conditions ensures that the use of lead generators is\\nconsistent with the privacy expectations of a consumer who has placed her number on the\\nRegistry.\\nI hope this discussion is helpful to you. If you have any further questions, please do not\\nhesitate to contact me.\\nSincerely,\\n\\nThomas P. Rowan\\n\\n2\\n\\nThe lead generator should not refer the consumer to a lengthy list of hundreds or\\nthousands of lenders that may contact the consumer. Rather, it should inform the consumer of\\nthe identities of the lenders with which it has \\xe2\\x80\\x9cmatched\\xe2\\x80\\x9d the consumer.\\n3\\n\\nIf contact between the lead generator and the consumer occurred online, these\\ndisclosures appropriately could be made via email. Conventional mail disclosures likely would\\nnot be adequate where the initial exchange took place online. Nothing in this letter should be\\nconstrued to mean that such electronic message need not comply with the CAN-SPAM Act, 15\\nU.S.C. \\xc2\\xa7\\xc2\\xa7 7701 - 7713. Note, however, that the email likely would constitute a \\xe2\\x80\\x9ctransactional or\\nrelationship message,\\xe2\\x80\\x9d and would therefore not be subject to many of the CAN-SPAM Act\\xe2\\x80\\x99s\\nrequirements. See 15 U.S.C. \\xc2\\xa7 7702(17).\\n\\n\\x0c'","created_timestamp":"July 19, 2006","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-06-2\/hudsoncookadvisoryop_0.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nThomas P. Rowan\\nAttorney\\n600 Pennsylvania Ave., N.W., Room 286\\nWashington, D.C. 20580\\ntrowan@ftc.gov\\n202-326-3302\\n\\nMay 31, 2006\\nMr. Jerry Cerasale\\nSenior Vice President\\nGovernment Affairs\\nDirect Marketing Association\\n1111 19th Street, N.W., Suite 1100\\nWashington, D.C. 20036-3603\\nRe:\\n\\nRequest for Advisory Opinion Concerning Upselling and Certain Exemptions to the\\nTelemarketing Sales Rule\\n\\nDear Mr. Cerasale:\\nThis staff advisory opinion responds to your letter of April 3, 2006, seeking informal\\nclarification of whether the telemarketing program it describes (\\xe2\\x80\\x9cmarketing program\\xe2\\x80\\x9d or\\n\\xe2\\x80\\x9cprogram\\xe2\\x80\\x9d) constitutes \\xe2\\x80\\x9cupselling\\xe2\\x80\\x9d under the Telemarketing Sales Rule (\\xe2\\x80\\x9cTSR\\xe2\\x80\\x9d or \\xe2\\x80\\x9cthe Rule\\xe2\\x80\\x9d),\\n16 C.F.R. Part 310. As you noted in your letter, if the program does not constitute upselling,\\ncalls made as part of the program may be exempt from the Rule under Sections 310.6(b)(4) and\\n(5), 16 C.F.R. \\xc2\\xa7\\xc2\\xa7 310.6(b)(4) and (5).\\nBased on your description, our conclusion is that the program does constitute upselling\\nand is not exempt from the Rule. The opinions expressed in the following discussion of the basis\\nfor this conclusion are those of Commission staff only and are not attributable to, nor binding on,\\nthe Commission itself or any individual Commissioner.\\nRule Provisions\\nThe TSR defines \\xe2\\x80\\x9cupselling\\xe2\\x80\\x9d to mean:\\nsoliciting the purchase of goods or services following an initial\\ntransaction during a single phone call. The upsell is a separate\\ntelemarketing transaction, not a continuation of the initial\\ntransaction. An \\xe2\\x80\\x9cexternal upsell\\xe2\\x80\\x9d is a solicitation made by or on\\nbehalf of a seller different from the seller in the initial transaction.\\nAn \\xe2\\x80\\x9cinternal upsell\\xe2\\x80\\x9d is a solicitation made by or on behalf of the\\nsame seller as in the initial transaction, regardless of whether the\\n\\n\\x0cMr. Jerry Cerasale\\nDirect Marketing Association\\nMay 31, 2006 - Page 2\\ninitial transaction and subsequent solicitation are made by the\\nsame telemarketer.\\n16 C.F.R. \\xc2\\xa7 310.2(dd). Upselling is the \\xe2\\x80\\x9cdirect solicitation for a product or service other than\\nthat for which the consumer initiated the call.\\xe2\\x80\\x9d Statement of Basis and Purpose (\\xe2\\x80\\x9cSBP\\xe2\\x80\\x9d)\\naccompanying the amended Rule, 68 Fed. Reg. 4656, Jan. 29, 2003. Upselling is subject to each\\nof the Rule\\xe2\\x80\\x99s requirements except the Do Not Call provisions, 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(iii), and\\ncalling time restrictions, 16 C.F.R. \\xc2\\xa7 310.4(c). SBP, 68 Fed. Reg. 4596.\\nCertain types of calls are exempt from the Rule. See 16 C.F.R. 310.6. These include:\\ntelephone calls initiated by a customer or donor \\xe2\\x80\\x9cthat are not the result of any solicitation by a\\nseller, charitable organization, or telemarketer . . .\\xe2\\x80\\x9d or that are \\xe2\\x80\\x9cin response to an advertisement\\nthrough any medium other than direct mail solicitation . . ..\\xe2\\x80\\x9d 16 C.F.R. \\xc2\\xa7\\xc2\\xa7 310.6(b)(4) and (5).\\nThese exemptions do not apply \\xe2\\x80\\x9cto any instances of upselling included in such telephone\\ncalls.\\xe2\\x80\\x9d Id.\\nDiscussion\\nThe program you describe in your letter is one whereby DMA members market products\\nthrough relationships with financial institutions, such as banks and mortgage companies.\\nSpecifically, you state:\\nThe marketing program involves an inbound call from a customer\\nof the . . . [financial institution] to the . . . [financial institution]\\nwhere the customer requests account, transaction, balance and\/or\\npayment information. After responding to the customer\\xe2\\x80\\x99s request,\\nthe . . . [financial institution] highlights a service offering and asks\\nthe customer if he\/she would like to hear more about it. If the\\ncustomer says yes, the call is transferred to the Member. The\\ncustomer\\xe2\\x80\\x99s call initially might be answered and transferred to the\\nMember via an individual or a voice response unit.\\nFTC staff\\xe2\\x80\\x99s opinion is that the member in this scenario is engaged in upselling. The\\nmember is soliciting the purchase of goods or services following an initial transaction during a\\nsingle phone call. See 16 C.F.R. \\xc2\\xa7 310.2(dd). The initial transaction involves an inbound call to\\na financial institution by a customer seeking account or other similar information. The\\nCommission contemplated such a transaction as a precursor to an upsell. The Commission stated\\nin the SBP: \\xe2\\x80\\x9cThe term \\xe2\\x80\\x98initial transaction\\xe2\\x80\\x99 is intended to describe any sort of exchange between\\na consumer and a seller or telemarketer, including but not limited to . . . customer service calls\\ninitiated by . . . the consumer . . ..\\xe2\\x80\\x9d SBP, 68 Fed. Reg. 4596.1\\n\\n1\\n\\nSee SBP, 68 Fed. Reg. 4597 n.180 (\\xe2\\x80\\x9c\\xe2\\x80\\x98The upsell can follow either a sales call or a\\ncall related to customer service, such as a call about an account payment or product repair\\n\\n\\x0cMr. Jerry Cerasale\\nDirect Marketing Association\\nMay 31, 2006 - Page 3\\nDMA argues that the member is not engaged in upselling because the initial transaction\\ndoes not involve a \\xe2\\x80\\x9cseller\\xe2\\x80\\x9d as that term is defined in the Rule. We disagree with this assertion.\\nWhile the upselling definition includes language describing two types of upsells in which the\\ninitial transaction involves a seller, the first sentence of the definition \\xe2\\x80\\x93 \\xe2\\x80\\x9c[u]pselling means\\nsoliciting the purchase of goods or services following an initial transaction during a single\\ntelephone call\\xe2\\x80\\x9d \\xe2\\x80\\x93 is sufficiently broad to include other scenarios. See 16 C.F.R. \\xc2\\xa7 310.2(dd). In\\nour view, the meaning of the term \\xe2\\x80\\x9cinitial transaction\\xe2\\x80\\x9d is not narrowly restricted to sales or the\\nconsummation of other types of contracts, but instead, as indicated by the SBP, broadly reaches\\nto include such exchanges as completed customer service calls. Therefore, we believe that the\\nscenario described in the DMA letter constitutes \\xe2\\x80\\x9cupselling\\xe2\\x80\\x9d under Section 310.2(dd).\\nIn addition, we believe that DMA\\xe2\\x80\\x99s interpretation of the TSR\\xe2\\x80\\x99s upselling provisions is\\ninconsistent with the provisions\\xe2\\x80\\x99 underlying purpose: \\xe2\\x80\\x9cto ensure that consumers in upselling\\ntransactions receive the same information and protections as consumers in other telemarketing\\ntransactions subject to the Rule.\\xe2\\x80\\x9d See SBP, 68 Fed. Reg. 4596. From the consumer\\xe2\\x80\\x99s standpoint,\\nthere is little or no material difference between an upsell and an outbound telemarketing call:\\n[T]he consumer is hearing the terms of the upsell offer for the first\\ntime on the telephone. The consumer has not had an opportunity\\nto review and consider the terms of the offer in a direct mail piece,\\nor to view an advertisement and gather information on pricing or\\nquality of the particular good or service before determining to\\nmake the purchase.\\nId at 4597.\\nThe consumer encountering the marketing program described in your letter is in this\\nposition. The consumer receives the offer by phone and has not had the opportunity to review\\nthe terms of the offer in writing or to gather information on the pricing or quality of the good or\\nservice. In addition, because the member may have access to the consumer\\xe2\\x80\\x99s financial\\ninformation through its relationship with the financial institution, the consumer is particularly\\nvulnerable to financial injury. As the Commission noted in the SBP: \\xe2\\x80\\x9c[l]aw enforcement\\nexperience indicates that the fact that the consumer has already provided or authorized use of his\\nor her billing information in an initial transaction may actually result in greater risk or abuse\\nduring the second transaction.\\xe2\\x80\\x9d Id. at 4597-98 n.192.\\nThe TSR provides important protections for the consumer presented with the described\\nmarketing program. Among other things, the Rule requires disclosure of all information material\\nto the consumer\\xe2\\x80\\x99s decision to accept the offer before the consumer authorizes payment for the\\npurchase. See 16 C.F.R. \\xc2\\xa7\\xc2\\xa7 310.3(a)(1) and 310.4(d). It also requires the member to obtain\\n\\n. . ..\\xe2\\x80\\x99\\xe2\\x80\\x9d)(quoting the National Association of Attorneys General Comment on the January 30, 2002\\nNotice of Proposed Rulemaking accompanying the proposed amended TSR).\\n\\n\\x0cMr. Jerry Cerasale\\nDirect Marketing Association\\nMay 31, 2006 - Page 4\\nexpress, informed consent before submitting the consumer\\xe2\\x80\\x99s billing information for payment.\\nSee 16 C.F.R. \\xc2\\xa7 310.4(a)(6). In our view, the Rule cannot be interpreted in a manner that would\\nresult in the removal of these protections for consumers confronted by marketing scenarios like\\nthe one described in your letter. Moreover, TSR coverage of upsells in the scenario you describe\\nrequires no more than basic fair dealing with consumers, and imposes no undue burden on the\\nupseller.\\nConclusion\\nFTC staff\\xe2\\x80\\x99s opinion is that the described marketing program constitutes upselling and is\\nnot exempt from the TSR. The member is soliciting the purchase of goods or services following\\nan initial transaction during a single phone call. The term \\xe2\\x80\\x9cinitial transaction\\xe2\\x80\\x9d includes\\ncompleted customer service calls. Moreover, the purpose of the upselling provisions is to cover\\nthe type of marketing program described in your letter. The TSR makes clear that, absent any\\nother safeguards, the Rule\\xe2\\x80\\x99s most basic protections apply to consumers who are initially solicited\\nto purchase goods and services over the telephone. As the consumers in the marketing program\\nyou describe fall into this category, they should receive the Rule\\xe2\\x80\\x99s protections.\\nI hope this discussion is helpful to you and to DMA\\xe2\\x80\\x99s members. If you have any further\\nquestions, please do not hesitate to contact me.\\nSincerely,\\n\\nThomas P. Rowan\\nStaff Attorney\\n\\n\\x0c'","created_timestamp":"May 31, 2006","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-06-1\/opinion0601_0.pdf"}
{"text":"b\"Federal Trade Commission\\n\\nSTATEMENT OF\\nDEBORAH PLATT MAJORAS\\n\\n1\\n\\nCHAIRMAN, FEDERAL TRADE COMMISSION,\\nBEFORE THE\\nANTITRUST MODERNIZATION COMMISSION\\nMARCH 21, 2006\\n\\nThank you for inviting me to participate in this hearing. I appreciate the opportunity to\\nshare my views on some of the important issues that the Antitrust Modernization Commission is\\nconsidering, and I am privileged to appear with my colleague and friend, Assistant Attorney\\nGeneral, Tom Barnett.\\nAs I understand it, the AMC is charged with determining whether the antitrust laws,\\nsome of which are more than a century old, should be \\xe2\\x80\\x9cmodernized\\xe2\\x80\\x9d so that they function\\nproperly in our post-industrial economy. In my view, to the extent that any of the antitrust laws\\nneed to be \\xe2\\x80\\x9cmodernized,\\xe2\\x80\\x9d it is to bring them in line with modern antitrust thinking, not to change\\nthem to fit particular industries.\\nFundamentally, we do not need to make substantive changes to the primary federal\\nantitrust laws. Nearly 120 years of experience in the interpretation and enforcement of these\\nlaws have established that the nation\\xe2\\x80\\x99s antitrust laws, subjected to rigorous judicial\\n\\n1\\n\\nThe views expressed herein are my own and do not necessarily reflect the views of the Federal\\nTrade Commission or of any other individual Commissioner.\\n\\n\\x0cinterpretation, as well as scrutiny by practioners and scholars, are highly effective in protecting\\nand preserving the nation\\xe2\\x80\\x99s free market system.\\nThis does not mean that no changes are needed. Over time, the reach of the antitrust laws\\nhas been narrowed by a large number of formal statutory exemptions and immunities. Most of\\nthese \\xe2\\x80\\x9cexceptions\\xe2\\x80\\x9d to the antitrust laws may have had sound policy justifications when they were\\nenacted, but advancements in technology and the increased mobility of capital likely have\\nrendered many of them inconsistent with the core principles underlying our nation\\xe2\\x80\\x99s economic\\npolicy. Technological changes and globalization also require the modernization of some of the\\nprocedures that we use to apply our antitrust laws, particularly with respect to merger review, but\\nthat should be done internally at the agencies. Finally, the spread of free markets and the\\nproliferation of competition authorities require that, as U.S. antitrust practioners, we seek to\\nimprove our interaction and coordination with competition practioners throughout the world.\\n1.\\n\\nSubstantive Antitrust Laws\\n\\nThe broadly worded language in Sections 1 and 2 of the Sherman Act, as well as the\\nClayton and Federal Trade Commission Acts, permits the courts, enforcement agencies, and\\npractitioners to apply the antitrust laws in ever-more-sophisticated and flexible ways, as legal\\nand economic learning evolve and our understanding of markets improves. Although I (like the\\nmembers of the AMC) may not agree with the decision in every antitrust case, questionable\\ndecisions do not flow from deficiencies in the statutory language; rather, they reflect flaws in\\nlegal and economic thinking. Moreover, history has shown that flawed decisions usually are\\nremedied through the corrective mechanisms of litigation and the steady intellectual\\ndevelopment of the courts, the agencies, practitioners, and academics.\\n\\n2\\n\\n\\x0cConsider Section 7 of the Clayton Act and merger practice. The statute has proven\\nsufficiently flexible over the past half century to accommodate substantial changes in antitrust\\nmerger jurisprudence. The courts and enforcement agencies historically relied almost\\nexclusively on market shares and other structural presumptions to determine whether a\\ntransaction violated the antitrust laws. Although structural analysis retains a place in current\\nmerger practice, a progression of judicial decisions, agency guidelines, and academic work has\\nchanged merger practice, such that nearly all practitioners rely heavily on direct analyses of\\ncompetitive effects.\\nThere has been a similar evolution in the treatment of efficiencies in merger analysis.\\nThroughout the 1960s, the Supreme Court held that efficiencies were not an appropriate factor to\\nconsider in the antitrust review of mergers.2 Shortly thereafter, however, there began changes in\\nthe thinking of the courts, the enforcement agencies, private practioners, and academics that\\nresulted in efficiencies assuming a central role in merger analysis.3\\n\\n2\\n\\nSee FTC v. Procter & Gamble Co., 386 U.S. 568, 980 (1967) (\\xe2\\x80\\x9cPossible economies cannot be\\nused as a defense to illegality. Congress was aware that some mergers which lessen competition\\nmay also result in economies but it struck the balance in favor of protecting competition.\\xe2\\x80\\x9d); U.S.\\nv. Philadelphia Nat'l Bank, 374 U.S. 321, 371 (1963) (\\xe2\\x80\\x9ca merger the effect of which may be\\nsubstantially to lessen competition is not saved because, on some ultimate reckoning of social or\\neconomic debits and credits, it may be deemed beneficial\\xe2\\x80\\x9d) (citations and quotations omitted);\\nBrown Shoe Co. v. U.S., 370 U.S. 294, 344 (1962) (\\xe2\\x80\\x9cWe cannot fail to recognize Congress\\xe2\\x80\\x99\\ndesire to promote competition, through the protection of viable, small, locally owned business.\\nCongress appreciated that occasional higher costs and prices might result from the maintenance\\nof fragmented industries and markets. It resolved these competing considerations in favor of\\ndecentralization.\\xe2\\x80\\x9d).\\n3\\n\\nSee FTC v. H.J. Heinz Co., 246 F.3d 708, 720 (D.C. Cir. 2001) (\\xe2\\x80\\x9cthe trend among lower courts\\nis to recognize the [efficiencies] defense\\xe2\\x80\\x9d); FTC v. University Health, Inc., 938 F.2d 1206, 1222\\n(11th Cir. 1991) (\\xe2\\x80\\x9can efficiency defense to the government\\xe2\\x80\\x99s prima facie case in section 7\\nchallenges is appropriate in certain circumstances.\\xe2\\x80\\x9d); U.S. Dep't of Justice & Federal Trade\\nComm'n, Horizontal Merger Guidelines \\xc2\\xa7 4 (as amended Apr. 8, 1997).\\n3\\n\\n\\x0cSignificantly, neither of these substantial changes in substantive merger law, nor shifts of\\ncomparable magnitude in the treatment of vertical restraints, resulted from or generated statutory\\namendments to the antitrust laws. Rather, they arose out of advances in the knowledge and\\nexperience of the courts, practitioners, and scholars. The clear lesson is that the antitrust laws\\nare sufficiently flexible to support and sustain significant changes in their interpretation and\\napplication, driven by litigation, changed enforcement policies, and new scholarship. The\\nSupreme Court made precisely this point in State Oil Co. v. Khan, where it held that vertical\\nmaximum price fixing was not per se unlawful, overruling prior cases:\\n[T]he general presumption that legislative changes should be left to Congress has\\nless force with respect to the Sherman Act in light of the accepted view that\\nCongress expected the courts to give shape to the statute's broad mandate by\\ndrawing on common-law tradition . . . [T]his Court has reconsidered its decisions\\nconstruing the Sherman Act when the theoretical underpinnings of those decisions\\nare called into serious question . . . Although we do not lightly assume that the\\neconomic realities underlying earlier decisions have changed, or that earlier\\njudicial perceptions of those realities were in error, we have noted that different\\nsorts of agreements may amount to restraints of trade in varying times and\\ncircumstances, and it would make no sense to create out of the single term\\nrestraint of trade a chronologically schizoid statute, in which a rule of reason\\nevolves with new circumstances and new wisdom, but a line of per se illegality\\nremains forever fixed where it was.4\\nMy inclination against substantive statutory changes extends to proposals to modify the\\nantitrust laws to address specific circumstances in particular sectors of the economy. A virtue of\\nthe U.S. antitrust laws and legal system is that the courts and enforcement agencies generally\\nhave applied the same criteria flexibly to an enormous array of industries. The result has been a\\nconsistent competition policy that gives firms a reasonable degree of certainty and transparency.\\nThus, I disagree with those who maintain that the antitrust laws are not well-suited for today\\xe2\\x80\\x99s\\n\\n4\\n\\n522 U.S. 3, 20-21 (1997) (citations and quotations omitted).\\n4\\n\\n\\x0crapidly-changing high-technology industries, such as software and pharmaceuticals. Over the\\npast two decades, the antitrust community has developed and emphasized doctrines that enable\\nthe sound application of our antitrust laws to even the fastest-moving sectors of our economy.\\nFor example, advancement in theories relating to entry and the contestability of markets has\\ngreatly informed agency and judicial decisions about the competitive effects of mergers and\\nother conduct in high-technology industries.\\nThere is one significant caveat to my reluctance to make substantive changes to the\\nantitrust laws. The Commission should seriously consider recommending the repeal of the\\nRobinson-Patman Act, the overall purpose of which stands in contrast to the recognized goals of\\nmodern antitrust law \\xe2\\x80\\x93 the protection and enhancement of consumer welfare. Legal and\\neconomic scholarship has persuasively demonstrated that, on balance, the statute is more harmful\\nthan beneficial to consumers. Admittedly, recent cases such as Volvo Trucks North America,\\nInc. v. Reeder-Simco GMC, Inc.5 demonstrate judicial appreciation of the need to interpret the\\nAct narrowly and consistently with the contemporary thrust of antitrust law \\xe2\\x80\\x93 protecting\\ncompetition rather than competitors. But this interpretation lends support to the view that any\\nprice discrimination that is anticompetitive in the sense that it harms consumers can be addressed\\nunder the Sherman Act. Further, while the Volvo decision lent a welcome, modern antitrust\\ninterpretation to the statute, it does not, in my view, sufficiently negate the costs of complying\\nwith the Act or its potential to deter aggressive price-cutting that benefits consumers. And even\\nif Congress were ultimately to decide that the protection provided by the Act is still desirable, it\\nwould be useful to have that decision made in the political process today. Finally, there is no\\n\\n5\\n\\n126 S. Ct. 860 (2006).\\n5\\n\\n\\x0cquestion that, as we work with new competition agencies around the globe and they look to the\\nUnited States as an example of an antitrust regime with consumer welfare as its centerpiece, the\\nAct stands out as representing contrasting policy goals and the protection of special interests \\xe2\\x80\\x93\\nsomething against which we repeatedly caution our counterparts.\\n2.\\n\\nStatutory Exemptions\\n\\nEven as the antitrust laws have evolved to make greater use of economics and to focus\\nprimarily on consumer welfare, the number of statutory exemptions that shield competitors from\\nthe antitrust laws remains high. Exemptions covering a substantial volume of commerce that are\\ndecades old remain on the books. I recommend that the AMC evaluate some of these\\nexemptions and urge Congress and the President to consider their elimination.\\nFundamentally, antitrust exemptions typically are inconsistent with a central premise of\\nU.S. economic policy \\xe2\\x80\\x93 that vigorous competition in a free market, protected by the sound\\napplication of the antitrust laws, is the best approach to promote consumer welfare and\\nefficiency. Thus, the potential for antitrust exemptions to harm consumers and the economy is\\nsubstantial. Indeed, standard economic theory predicts that unless certain conditions of market\\nfailure are present, government limits on competition can produce higher prices, reduced output,\\nand less innovation. Moreover, this is not simply a matter of theory. The successful experience\\nof deregulation in various sectors of the American economy over the past three decades teaches\\nvaluable lessons. Numerous studies show that the removal of government limits on competition\\nhas resulted in greater economic efficiency and produced significant benefits for consumers.6\\n\\n6\\n\\nFor surveys, see, e.g., Clifford Winston, Economic Deregulation: Days of Reckoning for\\nMicroeconomists, 31 J. Econ. Lit. 1263 (1993); Clifford Winston, U.S. Industry Adjustment to\\nEconomic Deregulation, 12:3 J. Econ. Perspectives 89, 98-102 (1998). See also Elizabeth E.\\n6\\n\\n\\x0cTo be sure, circumstances that make restrictions on competition necessary to generate\\nsubstantial efficiencies may arise, and thus warrant a departure from a free market economic\\nmodel. It is important, however, that the Congress make certain that those conditions truly exist,\\nand that consumers rather than competitors will benefit from statutory exemptions from the\\nantitrust laws. If there is one thing that modern antitrust thinking recognizes, it is that markets\\nare not static. Yet, many exemptions are several decades old and likely were based on market or\\nregulatory justifications that probably no longer are valid. Innovations in communications and\\ntransportation and other technologies have improved capital markets and increased the ability of\\nconsumers and business customers to evaluate competitive alternatives without the assistance of\\ngovernment regulation. Consequently, some exemptions that were needed to correct market\\nfailures when enacted likely no longer serve consumers and the economy.\\nThere also probably are less restrictive ways than antitrust immunity to allow efficiencyenhancing collaborations among competitors in some of the industries to which the exemptions\\napply. Over the past three decades, antitrust analysis has been refined to incorporate economic\\nprinciples that allow for procompetitive joint ventures and other forms of cooperation. These\\nprinciples are reflected in antitrust case law and the guidelines promulgated by the antitrust\\nenforcement agencies. For example, the FTC\/DOJ Statements of Antitrust Enforcement Policy in\\nHealth Care7 provide that the agencies usually will not challenge forms of collaboration among\\nhealth care providers if the collaborative efforts are reasonably necessary to achieve efficiencies\\n\\nBailey, Price and Productivity Change Following Deregulation: The US Experience, 96 Econ. J.\\n1 (1986).\\n7\\n\\nAvailable at http:\/\/www.ftc.gov\/reports\/hlth3s.htm.\\n7\\n\\n\\x0cthat benefit consumers. The FTC\/DOJ Antitrust Guidelines for Collaborations Among\\nCompetitors8 similarly allow efficient forms of collaboration among competitors. Assuming that\\nthere still are economically efficient forms of collaboration in some of the industries that\\ncurrently enjoy antitrust exemptions, it is likely that the antitrust laws are sufficiently flexible to\\npermit the collaboration without the need for formal antitrust immunity.\\nFinally, statutory exemptions from the U.S. antitrust laws can significantly hinder the\\nability of the United States to promote sound competition policies abroad. The health of the\\nUnited States economy has become increasingly affected by the competition policies of other\\ncountries. The United States has been and remains at the forefront in advocating for the\\nadoption of competition laws that reflect free market economic principles. Our ability to do so\\neffectively is reduced, however, when we do not practice what we preach. The United States\\xe2\\x80\\x99\\ncompetition policies and practices will be imitated only to the extent that they are worth\\nemulating. A critical review by the AMC of the U.S. antitrust exemptions will assist all of our\\nefforts to advocate for competition policies that promote vibrant consumer-oriented competition\\nboth in the United States and abroad.\\n3.\\n\\nPatent Reform\\n\\nA comprehensive review of our antitrust laws requires cognizance of other statutory\\nregimes that regularly interact with the antitrust laws in ways that significantly affect\\ncompetition and consumers. Today, the patent system is the area of law that perhaps looms the\\nlargest in its impact on the antitrust laws and competition policy. Patents are, of course, critical\\nto promoting investment and innovation. By preventing competing rival firms from free riding\\n\\n8\\n\\nAvailable at http:\/\/www.ftc.gov\/os\/2000\/04\/ftcdojguidelines.pdf.\\n8\\n\\n\\x0con discoveries, patents allow firms to recoup their often substantial capital investments in\\ndeveloping new products. Indeed, the patent and antitrust laws share the same goal of promoting\\ninvestment and competition, so it should come as no surprise that the two systems typically work\\nwell together. Moreover, most patents do not yield market power that can impair competition,\\nand even when they do, if a patent is properly granted under appropriate standards, the incentives\\nand other advantages it provides typically outweigh possible market power concerns.\\nIf improperly administered or misused, however, the patent system can harm innovation\\nand competition. Dubious patents can slow innovation by discouraging firms from conducting\\nresearch and development out of fear of patent infringement and can result in the payment of\\nunnecessary royalties, which are passed on to consumers.\\nThe FTC\\xe2\\x80\\x99s recent attention to patent issues dates from a series of hearings in 2002 that\\nled to issuance of a major report in October 2003, \\xe2\\x80\\x9cTo Promote Innovation: The Proper Balance\\nof Competition and Patent Law and Policy.\\xe2\\x80\\x9d9 One of the chief recommendations in the FTC\\nReport is that Congress enact legislation establishing procedures for post-grant review by the\\nPatent and Trademark Office. This recommendation seconded a proposal in the PTO\\xe2\\x80\\x99s own 21st\\nCentury Strategic Plan. The Report reasons that some questionable patents inevitably will slip\\nthrough the examination system. Litigation weeds out invalid patents only slowly and at great\\ncost; challengers cannot seek declaratory judgments until imminently threatened with suit.\\nCollectively, these considerations suggest that some unwarranted patents will be issued and will\\nremain factors in the market for a considerable time, which may create unnecessary market\\npower and transaction costs and infect markets with risk, uncertainty, and distorted business\\n\\n9\\n\\nAvailable at http:\/\/www.ftc.gov\/os\/2003\/10\/innovationrpt.pdf.\\n9\\n\\n\\x0cplanning. An improved post-grant opposition system could offer a quicker, less costly means for\\nresolving validity issues. The Report recommended a system that provides an early and effective\\nreview beneficial to competition and rational business planning, while sheltering patentees from\\nharassment and impairment of legitimate patent rights. I urge the AMC to support this and other\\nrecommendations for patent reform, which currently are under Congressional review.\\n4.\\n\\nMerger Review Process\\n\\nModern advances in merger analysis, and advances in the technology of document and\\ndata creation and retention, have led to increased costs and burdens in the agencies\\xe2\\x80\\x99 merger\\nreview process. The process must be updated to meet new realities, as I recognized when I\\nrecently introduced significant reforms to our process at the FTC. The needed reforms, however,\\nare best developed and implemented by the enforcement agencies, working in concert with the\\nbar and the business community, rather than through new legislation. To improve the merger\\nreview process requires reforms that are durable and firm, but also that are sufficiently flexible to\\nsupport a wide variety of merger reviews across a wide range of industries. The agencies can\\nimplement such flexible revisions readily through changes to their internal procedures. In\\ncontrast, crafting the revisions through more static legislation presents substantial challenges\\nbecause changes in technology continually affect how the agencies review mergers.\\nLast month, I introduced a series of substantial reforms to the procedures that the FTC\\nuses to review all transactions that are reported under the Hart-Scott-Rodino Act.10 The reforms\\nare the product of study by our Merger Process Task Force, which was charged with conducting\\n\\n10\\n\\nReforms to the Merger Review Process (Feb. 16, 2006), available at\\nhttp:\/\/www.ftc.gov\/os\/2006\/02\/mergerreviewprocess.pdf.\\n10\\n\\n\\x0ca top-to-bottom review of the FTC\\xe2\\x80\\x99s merger review process. The central purpose of the reforms\\nis to lower the costs of merger investigations for the FTC and the parties by reducing the volume\\nof materials that parties must preserve and produce to respond to a second request, while\\npreserving the FTC\\xe2\\x80\\x99s ability to conduct thorough merger investigations. Particularly significant\\nis that the reforms place substantial restrictions on the number of custodians that a party will be\\nrequired to search \\xe2\\x80\\x93 one of the most important factors (if not the most important factor) in the\\nsize and cost of second request productions. The limits on the number of custodians in second\\nrequest search groups constitutes the first time that a U.S. antitrust enforcement agency ever has\\nimposed such a limitation on itself.\\nThe reforms contain four core presumptions:\\n1. a party will not be required to search the files of more than 35 of its employees when\\nresponding to a second request, if the party complies with specified timing conditions;\\n2. a party will not be required to produce responsive documents that were created more\\nthan two years prior to the issuance of the second request (a reduction from the current threeyear period);\\n3. a party will be required to preserve backup tapes for only two calender days identified\\nby FTC staff; and\\n4. a party will be entitled to produce a limited partial privilege log, rather than a \\xe2\\x80\\x9cfull\\xe2\\x80\\x9d\\nlog, for most of the custodians in the second request search group.11\\n\\n11\\n\\nThe reforms also contain modifications to the instructions and the specifications of the second\\nrequest that are designed to reduce the burdens on the parties.\\n11\\n\\n\\x0cOne thing made clear by the FTC\\xe2\\x80\\x99s internal review process was that meaningful reform\\nrequires the participation of all components of the agency, not only the staff. Consequently, in\\naddition to implementing presumptive limitations on the size of second requests, the reforms\\nincrease the responsibility of the senior management of the Bureaus of Competition and\\nEconomics for ensuring that second requests do not impose undue burdens on the parties. For\\nexample, the agency may require a party to search the files of more than 35 employees only if\\nthe Bureau of Competition Director approves the larger search group. Parties are entitled to\\nmeet or confer with the BC Director before the Director decides whether to authorize a larger\\nsearch group, and I highly encourage them to do so. Similarly, because requests for empirical\\ndata also have contributed to higher costs, the reforms provide that a party will be entitled to\\nmeet or confer with a Director or a Deputy Director from both the Bureau of Competition and\\nthe Bureau of Economics if the party believes that the data requests are unnecessarily broad. We\\nalso are requiring that an FTC lawyer with substantial experience participate in all second\\nrequest negotiations with the parties.\\nMoreover, as I stated when I released the reforms, they represent the start rather than the\\nend of the FTC\\xe2\\x80\\x99s efforts to improve the merger review process. For example, we will continue\\nto work to reduce the burden of requests for empirical data. The merger process reforms contain\\nprovisions that should reduce the costs of data requests, but further work and experience are\\nneeded to ensure that the FTC obtains the data it needs to analyze the competitive effects of\\ntransactions, while minimizing the costs on the parties. I encourage all members of the antitrust\\ncommunity to work with the FTC in this effort.\\n\\n12\\n\\n\\x0cI also intend to devote significant resources to improving the technologies that the FTC\\nuses in merger investigations, particularly the hardware and software for processing and\\nreviewing electronic documents and data. Such improvements will benefit everyone \\xe2\\x80\\x93 the\\nagencies, the parties, the bar, and, most important, U.S. consumers. Currently, FTC staff,\\noutside counsel, and the parties devote far too much time during many merger investigations to\\nresolving technical issues related to the format and methods used to produce electronic\\ndocuments. I hope to develop a set of more standardized options for parties to use when they\\nproduce electronic documents in response to a second request, which will free up valuable\\nresources to further the agency\\xe2\\x80\\x99s core mission in merger analysis \\xe2\\x80\\x93 determining whether the\\ntransaction is likely substantially to harm consumers.\\nAs I stated, despite the need for significant improvements to the merger review process, I\\ndo not believe that formal statutory or regulatory changes are warranted. The reforms that I\\nissued last month address the primary sources of the growing costs of the merger review process\\n\\xe2\\x80\\x93 the size of the search groups, the time period for which parties are required to produce\\ndocuments, the preservation of backup tapes, and the production of privilege logs. Further, I\\nurge the AMC to exercise significant caution about recommending modifications to the merger\\nreview process that assign direct responsibility to other components of the government, such as\\nthe courts. Experience shows that adding more procedural requirements to merger investigations\\ngenerally decreases the ability of the agencies and the parties to resolve matters expeditiously,\\nand increases the cost and overall burdens imposed on all involved.\\n5.\\n\\nTwo Antitrust Agencies\\n\\n13\\n\\n\\x0cThe question whether a \\xe2\\x80\\x9cmodern\\xe2\\x80\\x9d U.S. antitrust regime should include two agencies with\\nlargely overlapping jurisdiction has threaded through your mandate since the AMC\\xe2\\x80\\x99s formation.\\nAnd given that I have held senior positions in both agencies within the last five years, I often am\\nasked for my opinion on whether we really need two agencies and about the strengths and\\nweaknesses of each. My answer is unlikely to surprise you. There is no point in the AMC\\xe2\\x80\\x99s\\nconsidering how to create an antitrust regime from scratch and whether that means creating two\\nagencies, because you are not starting from scratch. You have before you two strong agencies,\\nwith overlapping and also differing strengths. To change the current system would come at a\\ncost that would not be offset by countervailing benefits.\\nFor example, the Federal Trade Commission was formed, in part, to study markets and\\ncompetition issues in depth, and that responsibility comprises a significant part of what we do.\\nDivorced from actual enforcement experience, however, that research and policy work would be\\nfar less effective and informed. And to maximize consistency between the two agencies in civil\\nantitrust analysis, in recent years, the FTC has involved the Antitrust Division in its major policy\\nhearings and projects. Further, the FTC\\xe2\\x80\\x99s antitrust analysis benefits from input from the\\nconsumer protection work we perform, and vice-versa.\\nIn addition, one should not assume that combining all of the strengths and talents in one\\nlarge agency would be more efficient and therefore better. I am in no way convinced that bigger\\nis better in government agencies. Indeed, the relatively small size of the FTC enables us to react\\nrelatively nimbly and responsively to market issues as they arise. Further, as a champion of the\\nidea that competition is a driver of greatness, I do not mind admitting that healthy competition\\n\\n14\\n\\n\\x0cbetween the two agencies drives them toward greater effectiveness and responsiveness to the\\nneeds of our public.\\nConversely, I do not see public harm from having two agencies. We avoid duplication in\\ninvestigations, so that is not an issue. To the extent that some parties claim that their treatment\\nmay vary as between agencies, I see no more variance between agencies than I see among\\ndifferent staff even within the same agency \\xe2\\x80\\x93 something that we are taking concrete steps to\\nminimize both within the FTC and between agencies. The clearance process works effectively in\\nmore than 90% of matters, and we are actively working together to make the process faster and\\nsmoother. Still, not only do I recognize the warts in the clearance process, but I disdain the\\nconflicts that develop in a handful of matters. As the AMC is well aware, the two agencies\\nendeavored to improve the clearance process in 2002, but were forced to abandon the reforms\\nunder Congressional pressure. Should the AMC determine that improvements to the clearance\\nprocess are warranted, I would not object to the AMC\\xe2\\x80\\x99s making such a recommendation.\\n6.\\n\\nInternational Competition Policy\\n\\nFinally, no modern antitrust regime can be effective without a strong international\\ncomponent. As champions of market-based economies, we are highly encouraged by the large\\nnumber of nations that slowly have been shifting away from government-based economies over\\nthe last 15 years. Nonetheless, concern over the fact that multiple antitrust agencies around the\\nglobe may make their own decisions about the same merger or conduct has prompted questions\\nabout the desirability of additional procedures to promote greater comity in the application of\\nantitrust laws.\\n\\n15\\n\\n\\x0cThe FTC, together with the Antitrust Division, devotes substantial resources to\\nparticipating in international competition fora, maintaining strong bilateral relationships, and\\npromoting convergence with competition agencies throughout the world. U.S. consumers\\nstrongly benefit from these efforts. Increasingly our investigations overlap with those of nonU.S. agencies. Maintaining reliable channels of communication and working to promote\\ncomparable standards assist in avoiding substantive conflicts. In those very few circumstances\\nwhere we cannot avoid substantive conflict, the agencies still benefit from gaining a better\\nunderstanding of the areas of difference, and possibly avoid future conflict. The divergent\\nresults reached by the Antitrust Division and the European Commission on the GE\/Honeywell\\ntransaction, for example, led our two jurisdictions to increase our communication and\\nunderstanding on the issues of conglomerate mergers and portfolio effects.\\nThe U.S. agencies have incorporated comity into their Guidelines for International\\nOperations,12 and the United States\\xe2\\x80\\x99 bilateral antitrust cooperation agreements provide for the\\napplication of comity and list the factors that the parties should take into account in applying it to\\nparticular cases.13 The bilateral agreements also provide for \\xe2\\x80\\x9cpositive comity\\xe2\\x80\\x9d mechanisms,\\nwhich enable a competition agency to request that another competition agency investigate and\\nenforce action with respect to anticompetitive conduct that is illegal in the requested jurisdiction\\n\\n12\\n\\nU.S. Department of Justice and FTC Antitrust Enforcement Guidelines for International\\nOperations \\xc2\\xa7 3.2 (April 1995), available at\\nhttp:\/\/www.usdoj.gov\/atr\/public\/guidelines\/internat.htm.\\n13\\n\\nE.g., US-EC agreement, Article VI,\\nhttp:\/\/www.ftc.gov\/bc\/international\/docs\/agree_eurocomm.pdf.\\n16\\n\\n\\x0cand also adversely affects the interests of the requesting jurisdiction. In addition, the U.S.\\nSupreme Court recently recognized and applied comity principles in its Empagran decision.14\\nStill, as the AMC has observed, there remains considerable interest in the United States\\nin determining whether it is possible to develop additional bilateral and multilateral procedures\\nto enhance international antitrust comity. While I am unaware of any international consensus on,\\nfor example, an approach that would assign exclusive, or even primary, enforcement\\nresponsibility to a jurisdiction most affected by the merger or conduct at issue, I am open to\\nconsidering new ways of implementing comity principles, consistent with my responsibility to\\nprotect competition in the United States.\\nCurrently, however, we are not without meaningful options to further the objectives of\\ncomity, irrespective of the presence or lack of written agreements. Our job as enforcers is to\\nprotect competition, and doing so effectively requires understanding and accounting for what\\nother jurisdictions do or may do. This is because any meaningful action taken by a competition\\nauthority will impact the market in question. Thus, another agency\\xe2\\x80\\x99s regulatory intervention\\nshould be considered as another market fact (just as a regulatory scheme or another U.S.\\nagency\\xe2\\x80\\x99s action is taken into account). Nowhere is this more important than in the imposition of\\nremedies, because a company\\xe2\\x80\\x99s divestiture or a company\\xe2\\x80\\x99s actions taken (or not taken but rather\\nforbidden) pursuant to an order entered outside of the United States can cause effects in the U.S.\\nmarket.\\n\\n14\\n\\nF. Hoffmann-La Roche Ltd. v. Empagran S.A., 542 U.S. 155 (2004).\\n17\\n\\n\\x0cTo further reduce the likelihood of inconsistent results and unnecessarily redundant\\ninvestigations, the U.S. enforcement agencies, in cooperation with the bar, will continue actively\\nto engage our foreign counterparts on the major substantive antitrust issues. For example, next\\nweek, the FTC and the Antitrust Division will co-host a program on merger investigations for\\nmembers of the International Competition Network. In two weeks, I will travel to Asia to\\ndiscuss, among other topics, the development of China\\xe2\\x80\\x99s competition law. This year, both the\\nFTC and the Antitrust Division will continue our active participation in the Organization for\\nEconomic Cooperation and Development and ICN meetings and working groups.\\nExperience shows that these and related efforts bear fruit. Indeed, since the uranium and\\nother conflicts of a generation ago, policies designed to protect competitors at the expense of\\nconsumers in many nations have been weakened, and even disappeared. State tolerance of\\ncartels also has declined. At the same time, it is clear that our active engagement with other\\ncompetition agencies has resulted in those agencies adopting policies that favor prudent restraint\\nin the application of their competition laws in circumstances where they did not always do so. In\\nparticular, there has been a substantial increase in many foreign competition agencies\\xe2\\x80\\x99 use of\\neconomic principles that focus competition law where it should be, on the welfare of consumers.\\nI look forward to working with the AMC and all members of the antitrust community to continue\\nour efforts to promote healthy convergence and comity among competition authorities.\\nThank you again for the opportunity to appear before the AMC today. I look forward to\\nanswering your questions.\\n\\n-18\\n\\n\\x0c\"","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/statement-chairman-majoras-antitrust-modernization-commission\/060321antitrustmodernization.pdf"}
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{"text":"b'1186\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\nVOLUME 140\\nCommission Advisory Opinion\\n\\nThe Honorable Dan Flynn\\nTexas State Representative\\nHouse District 2\\nP.O. Box 2910\\nAustin, TX 78768-2910\\n\\nDear Representative Flynn:\\nThis responds to your letter dated April 12, 2005, in which you\\nrequest a Commission opinion on the lawful construction of the\\nterm \\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d as used in the FTC\\xe2\\x80\\x99s Funeral Rule, 16\\nC.F.R. \\xc2\\xa7 453.1(b) (\\xe2\\x80\\x9cthe Funeral Rule\\xe2\\x80\\x9d or \\xe2\\x80\\x9cthe Rule\\xe2\\x80\\x9d).\\nSpecifically, you question whether a Texas trial court is correct in\\nruling that \\xe2\\x80\\x9call goods or services purchased from a third-party\\nvendor, even though not included on the contract, are \\xe2\\x80\\x98cash\\nadvances\\xe2\\x80\\x99\\xe2\\x80\\x9d under the Funeral Rule.1 Correct interpretation of the\\n\\n1\\n\\nIt is our understanding that your request is prompted by the\\nMay 2004 decision granting partial summary judgment in Hijar v.\\nSCI Texas Funeral Services, Inc., No. 2002-740, Order Granting\\nPlaintiff\\xe2\\x80\\x99s Motion for Partial Summary Judgment and Establishing\\nIssues Under Rule 166a(e), T.R.C.P. and Denying Defendants\\xe2\\x80\\x99\\nSecond Motion for Summary Judgment (County Court at Law No.\\n3, El Paso, May 21, 2004), in which the court held that the\\ndefendant violated the cash advance disclosure provision of the\\nFuneral Rule by failing to disclose each fee charged to the plaintiff\\nfor the cost of advancing funds on behalf of the plaintiff for goods\\nand services purchased from third parties and resold to plaintiff.\\nThe Court in Hijar based its holding on an interpretation of the\\nterm \\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d that would include the following items,\\nwhen purchased from a third party and resold to persons arranging\\nfunerals: \\xe2\\x80\\x9cdirect cremation; immediate burial; forwarding\\nremains; receiving remains; embalming; refrigeration; other\\npreparation; transportation; casket\/cremation casket; alternative\\ncontainer; outside enclosure; clothing\/shroud; memorial booklet;\\nservice folders\/prayer cards; acknowledgment cards; flowers;\\n\\n\\x0cFEDERAL TRADE COMMISSION DECISIONS\\nVOLUME 140\\n\\n1187\\n\\nCommission Advisory Opinion\\n\\nterm \\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d is important because it determines the\\nbreadth and impact of certain substantive provisions of the\\nFuneral Rule that employ that term.\\nThe Commission believes that the court is incorrect in ruling\\nthat all goods or services purchased from a third-party vendor are\\ncash advance items. This interpretation sweeps far too broadly,\\npotentially bringing within its scope every component good or\\nservice that comprise a funeral. This was not and is not the\\nCommission\\xe2\\x80\\x99s intention in the \\xe2\\x80\\x9ccash advance\\xe2\\x80\\x9d provisions of the\\nRule. In our opinion, the term \\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d in the Rule\\napplies only to those items that the funeral provider represents\\nexpressly to be \\xe2\\x80\\x9ccash advance items\\xe2\\x80\\x9d or represents by implication\\nto be procured on behalf of a particular customer and provided to\\nthat customer at the same price the funeral provider paid for them.\\nThis conclusion is based on the analysis set forth below.\\nAnalysis\\nThe Funeral Rule2 defines the term \\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d as\\nfollows:\\n[a]ny item of service or merchandise described to a\\n\\nshipping container; crematory services; crucifix; escorts; certified\\ncopies; public transportation; outside funeral director\\xe2\\x80\\x99s expense;\\nvault installation; clergy\/religious facility; musicians or singers;\\nhairdressing; and permits.\\xe2\\x80\\x9d\\n2\\n\\nThe Commission promulgated the original Funeral Rule on\\nSeptember 24, 1982, making it fully effective on April 30, 1984.\\n47 Fed. Reg. 42260 (Sept. 24, 1982). The Commission amended\\nthe Rule in 1994, following a lengthy review proceeding, and that\\n1994 amended Rule continues to be in effect. 59 Fed. Reg. 1592\\n(Jan. 11, 1994). All references to \\xe2\\x80\\x9cthe Funeral Rule\\xe2\\x80\\x9d or \\xe2\\x80\\x9cthe\\nRule\\xe2\\x80\\x9d are to the 1994 amended Rule, currently in effect.\\nReferences to the 1982 Rule are to \\xe2\\x80\\x9cthe original Rule.\\xe2\\x80\\x9d\\n\\n\\x0c1188\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\nVOLUME 140\\nCommission Advisory Opinion\\n\\npurchaser as a \\xe2\\x80\\x9ccash advance,\\xe2\\x80\\x9d \\xe2\\x80\\x9caccommodation,\\xe2\\x80\\x9d \\xe2\\x80\\x9ccash\\ndisbursement,\\xe2\\x80\\x9d or similar term. A cash advance item is also\\nany item obtained from a third party and paid for by the\\nfuneral provider on the purchaser\\xe2\\x80\\x99s behalf. Cash advance\\nitems may include, but are not limited to: cemetery or\\ncrematory services; pallbearers; public transportation; clergy\\nhonoraria; flowers; musicians or singers; nurses; obituary\\nnotices; gratuities; and, death certificates. 16 C.F.R.\\n\\xc2\\xa7 453.1(b).\\nThe first sentence of this definition quite clearly states that any\\nitem a funeral provider describes expressly using the words \\xe2\\x80\\x9ccash\\nadvance\\xe2\\x80\\x9d item (or similar words or phrases) is, in fact, a cash\\nadvance item for purposes of the Funeral Rule. The second\\nsentence broadens the definition to cover situations when a funeral\\nprovider purports to act \\xe2\\x80\\x9con behalf\\xe2\\x80\\x9d of a particular customer, more\\nas that customer\\xe2\\x80\\x99s procurement agent rather than as a retailer\\nserving the general public. The third sentence merely provides an\\nillustrative list of the various types of goods or services that\\nfuneral providers typically may treat as cash advance items.\\nCertain substantive provisions in the Funeral Rule employ the\\ndefined term \\xe2\\x80\\x9ccash advance item.\\xe2\\x80\\x9d Specifically, \\xc2\\xa7\\xc2\\xa7 453.3(f)(1)(ii)\\nand 453.3(f)(2) require a funeral provider who is charging a\\ncustomer more for a cash advance item than the funeral director\\npaid for it to disclose that material fact (i.e., the existence of a\\nmark-up, but not the amount) to the customer on the statement of\\nfuneral goods and services selected by the customer.3\\n\\n3\\n\\nAlso, the statement of goods and services that the funeral\\nprovider must give to the customer at the conclusion of the\\ndiscussion of funeral arrangements must itemize any cash advance\\nitems that are part of the agreed-upon funeral arrangements, and\\nmust state the price, or if not known, the estimated price, of those\\nitems. The Rule states: \\xe2\\x80\\x9c(These prices must be given to the\\nextent then known or reasonably ascertainable. If the prices are\\nnot known or reasonably ascertainable, a good faith estimate shall\\n\\n\\x0cFEDERAL TRADE COMMISSION DECISIONS\\nVOLUME 140\\n\\n1189\\n\\nCommission Advisory Opinion\\n\\nThe Commission included these \\xe2\\x80\\x9ccash advance\\xe2\\x80\\x9d disclosure\\nprovisions in the Rule to address a practice in the marketplace that\\nthe Commission had identified as being harmful to consumers.\\nSpecifically, some funeral providers misrepresented that they\\nwould obtain goods or services for their customers at cost, when\\nin fact these funeral providers profited by marking up the price of\\nthe items.4 The Final Staff Report on the original Funeral Rule,\\nwhich is part of the rulemaking record on which the Commission\\nrelied in adopting the Rule, succinctly describes the problem:\\nCash advance charges are completely separate from, and\\nadditional to, the funeral director\\xe2\\x80\\x99s own charges. They\\nusually appear on the funeral bill under such headings as\\n\\nbe given and a written statement of the actual charges shall be\\nprovided before the final bill is paid.)\\xe2\\x80\\x9d 16 C.F.R.\\n\\xc2\\xa7 453.2(b)(5)(i)(B).\\n4\\n\\nThis mark-up was achieved both directly and indirectly. As\\nnoted in the Final Staff Report, \\xe2\\x80\\x9c[s]ometimes, [the mark-up] has\\nbeen accomplished by simply inflating the amount of the charge\\non the customer\\xe2\\x80\\x99s bill. In other instances, the same effect has\\nbeen achieved by the funeral home securing some form of\\nkickback or rebate from the supplier of the cash advance item\\nafter charging the customer the full price.\\xe2\\x80\\x9d Final Staff Report\\n(June 1978) at 249. Marking up cash advance items was not an\\nuncommon practice. The Commission noted, in adopting the\\noriginal Rule, that \\xe2\\x80\\x9cthe evidence demonstrates that many\\nindividual funeral providers do charge mark-ups for cash\\nadvances. In a 1976 survey of California funeral directors, 12% of\\nthe 291 respondents admitted charging \\xe2\\x80\\x98in excess of the amount\\nactually advanced for any items of service labeled as \\xe2\\x80\\x98cash\\nadvances\\xe2\\x80\\x99 or \\xe2\\x80\\x98accommodation items.\\xe2\\x80\\x99 [The National Funeral\\nDirectors Association\\xe2\\x80\\x99s] annual survey of funeral homes indicates\\nthat, on a national level, funeral homes are receiving a 5% markup on cash advance items. . . .\\xe2\\x80\\x9d 47 Fed. Reg. 42279 (Sept. 24,\\n1982).\\n\\n\\x0c1190\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\nVOLUME 140\\nCommission Advisory Opinion\\n\\n\\xe2\\x80\\x9caccommodations,\\xe2\\x80\\x9d \\xe2\\x80\\x9ccash disbursements,\\xe2\\x80\\x9d and \\xe2\\x80\\x9ccash\\nadvanced for your convenience.\\xe2\\x80\\x9d This terminology clearly\\nindicates the basic conception, both by the funeral home and\\nthe consumer; that is, that the family is simply reimbursing\\nthe funeral director for cash outlays. The traditional use of\\nsuch terms, as well as the obvious fact that these items are\\nbeing provided by the third party, create the expectation that\\nthe amount billed is the same as that paid or owed. . . . Our\\ninvestigation revealed, however that some funeral homes\\nhave generated extra revenues by charging their customers\\nmore for cash advance items than the funeral home actually\\npaid out.5\\nBased on the record evidence of this problem, as summarized and\\nanalyzed in the Final Staff Report, the Commission adopted\\n\\xc2\\xa7 453.3(f) to remedy it. As noted in the Statement of Basis and\\nPurpose issued by the Commission when it adopted the original\\nRule, \\xc2\\xa7 453.3(f) is intended to prevent consumers from being led\\nto believe, incorrectly, that the cost to the consumer for a\\nparticular item is the same as the cost to the funeral provider:\\n[C]onsumers believe that items labeled \\xe2\\x80\\x9ccash advances\\xe2\\x80\\x9d . . .\\nare being provided at cost. There is an implicit\\nrepresentation that the cash advance transaction involves\\nmerely a forwarding of cash by the funeral provider and a\\nsubsequent dollar-for-dollar reimbursement by the consumer\\n. . . . The use of this term in connection with items such as\\nflowers, obituary notices, etc., which the consumers could\\neasily obtain from a third party, creates the expectation that\\nthe amount billed the consumer is the same as the amount\\npaid by the funeral provider. Given this expectation, the\\nfailure to disclose the existence of a mark-up is a deceptive\\npractice.6\\n\\n5\\n\\nFinal Staff Report (June 1978) at 249.\\n\\n6\\n\\n47 Fed. Reg. 42278-42279 (Sept. 24, 1982).\\n\\n\\x0cFEDERAL TRADE COMMISSION DECISIONS\\nVOLUME 140\\n\\n1191\\n\\nCommission Advisory Opinion\\n\\nThe Commission found that, in describing a particular item to a\\ncustomer, a funeral provider\\xe2\\x80\\x99s express use of the term \\xe2\\x80\\x9ccash\\nadvance item\\xe2\\x80\\x9d (or alternative formulations such as\\n\\xe2\\x80\\x9caccommodation\\xe2\\x80\\x9d or \\xe2\\x80\\x9ccash disbursement\\xe2\\x80\\x9d) implies that the cost\\nto the customer for that item is the same as the cost to the funeral\\nprovider. Thus, in cases where a funeral provider describes an\\nitem in this manner, yet charges the customer more for it than the\\nfuneral provider paid for it, the Commission requires a corrective\\ndisclosure to prevent the customer from being deceived.\\nSpecifically, in such a circumstance, the Funeral Rule requires\\nthat the following disclosure be placed on the statement of funeral\\ngoods and services selected: \\xe2\\x80\\x9cWe charge you for our services in\\nobtaining: (specify cash advance items).\\xe2\\x80\\x9d7 This is the scenario\\naddressed by the first sentence in the \\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d\\ndefinition.\\nThe second sentence of the definition, indicating that \\xe2\\x80\\x9c[a] cash\\nadvance item is also any item obtained from a third party and paid\\nfor by the funeral provider on the purchaser\\xe2\\x80\\x99s behalf,\\xe2\\x80\\x9d is in the\\nnature of a \\xe2\\x80\\x9cfencing-in\\xe2\\x80\\x9d provision.8 The Commission\\xe2\\x80\\x99s intention\\nin including this sentence is to bring within the ambit of \\xc2\\xa7 453.3(f)\\nany situation where a funeral provider might, without using the\\nspecific term \\xe2\\x80\\x9ccash advance,\\xe2\\x80\\x9d offer to obtain an item for a\\nparticular customer that the customer could obtain on her own \\xe2\\x80\\x93\\npurporting to act \\xe2\\x80\\x9con behalf\\xe2\\x80\\x9d of that customer, more as that\\ncustomer\\xe2\\x80\\x99s procurement agent than as a retailer serving the\\ngeneral public. Specifically, the purpose of this fencing-in aspect\\nof the definition is to deter the less scrupulous funeral provider\\nfrom evading the Rule by eschewing express description of an\\n\\n7\\n\\n16 C.F.R \\xc2\\xa7 453.3(f)(2). The Rule also specifically prohibits\\nthis type of affirmative misrepresentation. 16 C.F.R\\n\\xc2\\xa7 453.3(f)(1)(i).\\n8\\n\\nUnder the \\xe2\\x80\\x9cfencing-in\\xe2\\x80\\x9d doctrine, the FTC may frame a\\nremedy which extends beyond the precise illegal conduct found.\\nBristol-Myers Co. v. FTC, 738 F.2d 554, 561 (2d Cir. 1984).\\n\\n\\x0c1192\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\nVOLUME 140\\nCommission Advisory Opinion\\n\\nitem as a \\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d (or alternative formulations), yet\\nnevertheless conveying to a customer acting reasonably under the\\ncircumstances that obtaining the item involves merely a\\nforwarding of cash by the funeral provider and a subsequent\\ndollar-for-dollar reimbursement by the customer. The\\nCommission\\xe2\\x80\\x99s intention, in sum, is that this part of the \\xe2\\x80\\x9ccash\\nadvance item\\xe2\\x80\\x9d definition function to foreclose funeral providers\\nfrom attempting to sidestep the strict letter of the Rule by using\\nimplied misrepresentations rather than express ones.\\nIn the absence of either the funeral provider\\xe2\\x80\\x99s express\\nrepresentation that an item is a \\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d or implied\\nrepresentations that the item is procured for a particular customer\\nat the funeral provider\\xe2\\x80\\x99s cost, a consumer, acting reasonably under\\nthe circumstances, would not believe that the amount he or she is\\nbilled for an item is the same as the amount the funeral provider\\npays its supplier. Indeed, such a belief would be contrary to a\\nreasonable consumer\\xe2\\x80\\x99s most elementary experience in the\\neveryday marketplace. In these circumstances, the funeral\\nprovider is generally acting like any retailer who purchases goods\\nor services from third parties for resale to consumers.\\nThe Commission believes that reasonable consumers generally\\nunderstand that the price charged by a retail seller \\xe2\\x80\\x93 including\\nfuneral providers \\xe2\\x80\\x93 includes profit.9 Thus, the corrective\\ndisclosure about cash advance items that \\xc2\\xa7 435.3(f)(2) requires is\\nunnecessary when the funeral provider does not mislead the\\ncustomer through either express representations that the item is a\\n\\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d (or alternative formulations), or implied\\nrepresentations that the customer is paying no more for an item\\nthan the amount the funeral provider paid for it.\\n\\n9\\n\\nAs the Commission noted in the Statement of Basis and\\nPurpose for the original Rule, \\xe2\\x80\\x9cThe Commission does not suggest\\nthat it is improper for funeral providers to profit on items obtained\\nfrom third parties. It is clear that it is wholly proper for providers\\nto do so.\\xe2\\x80\\x9d 47 Fed. Reg. 42278 (Sept. 24, 1982).\\n\\n\\x0cFEDERAL TRADE COMMISSION DECISIONS\\nVOLUME 140\\n\\n1193\\n\\nCommission Advisory Opinion\\n\\nIt is worth noting that the text and structure of the Rule overall\\nreflect the fundamental distinction between cash advance items\\nand non-cash advance items. For items that are typically non-cash\\nadvance items, the Rule requires disclosure of the retail price of\\nspecified goods and services offered for sale by a funeral\\nprovider.10 An obvious example is the Rule\\xe2\\x80\\x99s treatment of\\ncaskets, for which it requires a separate price list containing only\\nthe funeral provider\\xe2\\x80\\x99s retail price.11 Therefore, items that must\\nappear on a funeral provider\\xe2\\x80\\x99s price list12 would not trigger\\n\\n10\\n\\nFuneral providers must \\xe2\\x80\\x9c[i]nclude on the [general] price list,\\nin any order, the retail prices (expressed either as the flat fee, or as\\nthe price per hour, mile or other unit of computation) and the\\nother information specified below for at least each of the\\nfollowing items, if offered for sale . . . .\\xe2\\x80\\x9d The rule then lists:\\nforwarding of remains to or receiving remains from another\\nfuneral home; direct cremation; immediate burial; transferring\\nremains to the provider\\xe2\\x80\\x99s premises; embalming and other\\npreparation of the body; use of the provider\\xe2\\x80\\x99s facilities and staff\\nfor viewing, for a funeral ceremony, or for a memorial service; use\\nof the provider\\xe2\\x80\\x99s equipment and staff for a graveside service; the\\nuse of the provider\\xe2\\x80\\x99s hearse or limousine; and the provider\\xe2\\x80\\x99s basic\\nservices fee. 16 C.F.R. \\xc2\\xa7 453.2(b)(4). (Emphasis supplied.)\\n11\\n\\n\\xe2\\x80\\x9cThe funeral provider must offer the [casket price] list upon\\nbeginning discussion of, but in any event before showing caskets.\\nThe list must contain at least the retail prices of all caskets and\\nalternative containers offered which do not require special\\nordering, enough information to identify each, and the effective\\ndate for the price list.\\xe2\\x80\\x9d 16 C.F.R. \\xc2\\xa7 453.2(b)(2)(i). (Emphasis\\nsupplied.)\\n12\\n\\nSection 453.2(b)(4)(i)(C) of the Rule sets forth the\\nminimum information that must be included on a funeral\\nprovider\\xe2\\x80\\x99s general price list. These items include: caskets; outer\\nburial containers; forwarding of remains to or receiving remains\\nfrom another funeral home; direct cremation; immediate burial;\\n\\n\\x0c1194\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\nVOLUME 140\\nCommission Advisory Opinion\\n\\nthe cash advance disclosures unless the funeral provider expressly\\nrepresents the items as \\xe2\\x80\\x9ccash advance items\\xe2\\x80\\x9d (or alternative\\nformulations) or represents by implication that items can be\\nprocured on behalf of the particular customer and provided at the\\nsame price the funeral provider paid for them.\\nAccordingly, the Commission wishes to be clear that the term\\n\\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d does not apply to every good or service that a\\nfuneral provider obtains from a third party. This overbroad\\ninterpretation, which potentially brings within its scope every\\ncomponent good or service of a funeral, does not comport with the\\nCommission\\xe2\\x80\\x99s intention in promulgating the \\xe2\\x80\\x9ccash advance\\xe2\\x80\\x9d\\nprovisions of the Rule. Rather, based on a review of the original\\nRule and the rulemaking record, the Commission finds that the\\nterm \\xe2\\x80\\x9ccash advance item\\xe2\\x80\\x9d in the Rule applies only to those items\\nthat the funeral provider represents expressly to be \\xe2\\x80\\x9ccash advance\\nitems\\xe2\\x80\\x9d or represents by implication to be procured on behalf of a\\nparticular customer and provided to that customer at the same\\nprice the funeral provider paid for them.\\n\\ntransferring remains to the provider\\xe2\\x80\\x99s premises; embalming and\\nother preparation of the body; use of the provider\\xe2\\x80\\x99s facilities and\\nstaff for viewing, for a funeral ceremony, or for a memorial\\nservice; use of the provider\\xe2\\x80\\x99s equipment and staff for a graveside\\nservice; the use of the provider\\xe2\\x80\\x99s hearse or limousine; and the\\nprovider\\xe2\\x80\\x99s basic services fee.\\n\\n\\x0c'","created_timestamp":"April 12, 2005","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/advisory-opinion-lawful-construction-term-cash-advance-item-used-ftcs-funeral-rule-16-cfr-ss-4531b\/letter_to_state_representative_dan_flynn_-_decisions_volume_140_7-7-05.pdf"}
{"text":"b'\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-commercial-alert-applying-commission-policy-determine-case-case-basis-whether-particular\/050210productplacemen.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Marketing Practices\\n\\nJuly 22, 2004\\nVIA FAX AND FIRST CLASS MAIL\\nBrian D. Dautch\\nDirector of Government Affairs\\nThe Council for Marketing & Opinion Research\\n6931 Arlington Road, Suite 308\\nBethesda, MD 20814\\nDear Mr. Dautch:\\nThis letter responds to your request for a staff advisory opinion filed on April 26, 2004,\\non behalf of the Council for Marketing & Opinion Research (\\xe2\\x80\\x9cCMOR\\xe2\\x80\\x9d). In your letter, you ask\\nvarious questions concerning access to the National Do Not Call Registry by members of the\\nmarket or opinion research industry. In summary, your questions concern: (1) the exempt status\\nof survey research firms from the Do Not Call provisions of the Telemarketing Sales Rule\\n(\\xe2\\x80\\x9cTSR\\xe2\\x80\\x9d), 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(iii); (2) whether exempt firms may access the National\\nRegistry; and (3) the effect such access may have on the exempt status of such firms. This letter\\nwill answer each of your questions in turn.\\nAs an initial matter, you ask the FTC to reconfirm that the \\xe2\\x80\\x9csurvey research industry as a\\nwhole consists of organizations that are Exempt Organizations (\\xe2\\x80\\x9cEOs\\xe2\\x80\\x9d) from the Do Not Call\\nlist.\\xe2\\x80\\x9d That is true as a general proposition. Specifically, the Do Not Call provisions of the TSR\\napply to \\xe2\\x80\\x9csellers\\xe2\\x80\\x9d and \\xe2\\x80\\x9ctelemarketers\\xe2\\x80\\x9d engaged in \\xe2\\x80\\x9ctelemarketing,\\xe2\\x80\\x9d as those terms are defined in\\nthe Rule. \\xe2\\x80\\x9cTelemarketing\\xe2\\x80\\x9d is defined, in part, as \\xe2\\x80\\x9ca plan, program, or campaign which is\\nconducted to induce the purchase of goods or services or a charitable contribution. . . .\\xe2\\x80\\x9d\\n16 C.F.R. \\xc2\\xa7 310.2(cc). As a result, survey research firms calling consumers for the sole purpose\\nof conducting a survey are not engaged in \\xe2\\x80\\x9ctelemarketing.\\xe2\\x80\\x9d Therefore, such firms are not\\nrequired to comply with the Do Not Call provisions of the TSR or access the National Do Not\\nCall Registry. On the other hand, callers purporting to take a \\xe2\\x80\\x9csurvey,\\xe2\\x80\\x9d but also calling to induce\\nthe purchase of goods or services, are engaged in telemarketing and must comply with the TSR,\\nincluding the Do Not Call provisions.\\nYour second question concerns whether exempt organizations may access the National\\nRegistry. Specifically, you ask for confirmation of the following statement:\\nSurvey research organizations may choose to obtain a Subscription Account\\nNumber (\\xe2\\x80\\x9cSAN\\xe2\\x80\\x9d), for the purpose of satisfying data vendors who insist that\\nmarket and opinion researchers have a SAN. Many data vendors and end users\\ndemand this information from our organizations before they will sell our\\norganizations any information, or contract for services.\\n\\n\\x0cExempt organizations are allowed to access the National Registry voluntarily in order to\\navoid calling consumers who do not want to receive telemarketing calls. However, all\\norganizations accessing the National Registry must certify, under penalty of law, that they are\\ngaining access solely to comply with the provisions of the TSR \\xe2\\x80\\x9cor to otherwise prevent\\ntelephone calls to telephone numbers on the registry.\\xe2\\x80\\x9d 16 C.F.R. \\xc2\\xa7 310.8(e). As a result, the\\nanswer to your query depends on the type of information that survey research organizations\\nobtain from data vendors. If survey research organizations want to avoid calling consumers with\\nregistered telephone numbers, and they obtain a \\xe2\\x80\\x9cscrubbed\\xe2\\x80\\x9d list of contacts from the data vendor,\\ni.e., a list that excludes registered telephone numbers, then the survey research organizations\\nmust obtain a SAN prior to being provided that scrubbed list.\\nOn the other hand, data vendors have no basis under FTC rules to require exempt\\norganizations to obtain a SAN prior to selling telephone lists to those organizations unless those\\norganizations, based on their own requirements, ask for lists that are \\xe2\\x80\\x9cscrubbed\\xe2\\x80\\x9d of numbers\\nincluded in the National Registry. In other words, if an exempt organization wants to call\\nconsumers whose numbers are included in the National Registry, the organization is not\\nprohibited by law from doing so.1 Data vendors or list providers should understand that not all\\ncompanies that call consumers are required to access the National Do Not Call Registry. As\\ndiscussed above, bona fide survey research firms not engaged in \\xe2\\x80\\x9ctelemarketing,\\xe2\\x80\\x9d as defined by\\nthe TSR, are exempt entities not required to access the registry. So are firms that call consumers\\nsolely to induce charitable contributions, or for political fund raising.2 In addition, firms that call\\nonly persons with whom they have an established business relationship as defined by the TSR,\\n16 C.F.R. \\xc2\\xa7 310.2(n), or from whom they have obtained express written agreement to call,\\n16 C.F.R. \\xc2\\xa7 310.4(b)(1)(iii)(B)(i), also do not have to access the National Registry. Thus, data\\nvendors may sell \\xe2\\x80\\x9cunscrubbed\\xe2\\x80\\x9d lists to exempt organizations without requiring those\\norganizations to obtain a SAN. Data vendors, of course, may choose to sell only lists that are\\n\\xe2\\x80\\x9cscrubbed\\xe2\\x80\\x9d of numbers in the National Registry. In that case, an exempt organization that wants\\nto obtain an \\xe2\\x80\\x9cunscrubbed\\xe2\\x80\\x9d list likely will seek to employ a data vendor that does not impose such\\nrestrictions.\\nThe third part of your request for a staff advisory opinion concerns a number of issues\\ninvolving the effect accessing the National Registry by an exempt organization may have on the\\nexempt status of such entities. For purposes of this portion of this advisory opinion, we will\\nassume that the exempt organization is properly accessing the National Registry, i.e., solely to\\nprevent telephone calls to telephone numbers on the Registry.\\n\\n1\\n\\nIn fact, those organizations that want \\xe2\\x80\\x9cun-scrubbed\\xe2\\x80\\x9d lists may not obtain a SAN,\\ngiven the need to complete the certification. As the certification makes clear, the only\\npermissible purpose to access the registry is to prevent calls to consumers who have registered.\\n2\\n\\nOn the other hand, for-profit telemarketers calling to solicit charitable\\ncontributions are required to comply with the company-specific do not call provisions of the\\nTSR, 16 C.F.R. \\xc2\\xa7 310.4(b)(1)(iii)(A), not the National Registry requirements.\\n-2-\\n\\n\\x0cYou ask whether exempt organizations that obtain a SAN may access the National\\nRegistry at their discretion, \\xe2\\x80\\x9cas infrequently as they wish,\\xe2\\x80\\x9d without such access having an effect\\non their exempt status. That is correct. Exempt organizations are, by definition, not required by\\nlaw to abide by the Do Not Call regulations. When they access the National Registry, they can\\ndo so only for the purpose of preventing telephone calls to telephone numbers on the registry.\\nHowever, if they decide to access the registry to prevent calls to registered consumers only at\\ncertain times of year, or only on behalf of some exempt clients but not others, they are free to do\\nso. Accessing the National Registry will not require them to continually do so in the future, or on\\nbehalf of all clients with which they do business. The choice is entirely up to the exempt\\norganization.\\nOn the other hand, you ask whether an exempt organization may obtain a SAN but choose\\nnever to access the National Registry. If an exempt organization purchases a scrubbed list, it has\\naccessed the registry indirectly, and must obtain a SAN. It need not ever access the registry\\ndirectly. If the organization purchases an unscrubbed list, it would appear to have no reason to\\nobtain a SAN in the first place, other than, possibly, to placate the demands of a data vendor. As\\ndiscussed above, that is an improper use of the National Registry, and any such demand by a data\\nvendor is unsupported by the TSR. Rather than obtaining a SAN in such a case, an exempt\\norganization may instead want to search for another data vendor that will provide the requested\\ninformation without demanding a SAN.\\nYou also ask if an exempt organization that accesses the National Registry \\xe2\\x80\\x9caccidentally\\ncalls someone on the Registry,\\xe2\\x80\\x9d whether such accidental call will subject the exempt entity to\\npotential enforcement actions or fines by the FTC. As discussed above, an exempt organization\\nis not required to access the National Registry. The FTC has allowed exempt organizations that\\nchoose to prevent calls to consumers with registered telephone numbers to access the registry for\\nthat purpose. Assuming that an exempt organization\\xe2\\x80\\x99s access was for a proper purpose, that\\naccess will not make the exempt organization liable for an \\xe2\\x80\\x9caccidental\\xe2\\x80\\x9d call made to a registered\\nnumber. The same is true if the exempt organization is accessing the registry on behalf of an\\nexempt client, and the client accidentally calls a registered number.\\nPlease be advised that this opinion is based exclusively on all the information furnished\\nin your request. This opinion applies only to the extent that actual company practices conform to\\nthe material submitted for review. Please be advised further that the views expressed in this\\nletter are those of the FTC staff. They have not been reviewed, approved, or adopted by the\\nCommission, and they are not binding upon the Commission. However, they do reflect the\\nopinions of the staff members charged with enforcement of the Telemarketing Sales Rule.\\nSincerely,\\n\\nDavid M. Torok\\nStaff Attorney\\n-3-\\n\\n\\x0c'","created_timestamp":"July 22, 2004","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-04-2\/tsropinsurvey_0.pdf"}
{"text":"b\"43i\\nUNITD STATES OF At\\\\1ERICA\\n\\nFEDERAL TRADE COMMSSION\\nWASHINGTON, D. C. 20580\\n\\nJune 22 , 2004\\n\\nT. Scott Giligan , Esq.\\nGilligan Law Offices\\n3734 Eastern Avenue\\n\\nCincinnati , OR 45226\\nRe: Receipt for Third- Pary\\n\\nCaskets\\n\\nDear Scott:\\n\\nThis is in response to your letter of June 9 , 2004 , regarding further clarification of the\\nFTC's position on providing receipts for third- pary caskets. As you indicate , the FTC staff's\\nposition continues to be that which was first stated in 1988: The Funeral Rule requires that\\nfuneral homes sign a receipt acknowledging delivery of third- party caskets, Any other action\\nwhich would act as a deterrent to a consumer who wishes to purchase goods from another party\\nmay violate the Rule s prohibition in Section 453A(b)(1) against conditioning the furnishing of\\nany funeral goods or services to a person aranging a funeral upon the purchase of any other\\nfuneral good or service,\\n\\nYou note that the receipt for the third- pary casket that is presented to funeral directors\\noften require that the funeral home acknowledge that the casket has been inspected and that the\\ncondition of the casket is acceptable. You have advised funeral homes to sign only the receipt\\nthat acknowledges delivery and receipt of the casket , but not to sign any receipt that also includes\\na representation regarding acceptance of the casket. You indicate that you have provided this\\nadvice because the funeral home is not a pary to the contract and , therefore , are not in a position\\nto legally accept the merchandise , much less be sure that the merchandise is what the consumer\\npurchased, You include a copy of a Receipt of Third Pary Merchandise form which you have\\n\\nsuggested that the funeral homes provide to third-pary casket companies that are delivering\\ncaskets, You ask whether the use of the NFA receipt form would be acceptable under the\\nFuneral Rule.\\n\\nThe NFA' s Receipt of Third Pary Merchandise enclosed with your letter appears to be\\nidentical to the one you submitted in 1999 as Appendix B to your comments on the Rule Review,\\nThe form states that the funeral director acknowledges receipt of the merchandise , but that the\\nacknowledgment does not constitute acceptance of the merchandise or its condition , which may\\nonly be given by the purchaser. The form also provides a space where the funeral home can note\\nany visible defects or conditions that were present at time of delivery.\\n\\n\\x0cAs you know , Section 453A(b)(I) prohibits funeral providers from requiring consumers\\nto purchase goods that they do not want. The Commssion staff has interpreted that provision to\\nunreasonablv burden the consumer s choice to\\nalso mean that the funeral provider must not\\n\\npurchase an item from a pary other than the funeral home. Among the practices that may\\n453A(b)(I) are requiring the consumer to be present when the casket is delivered and\\nviolate\\nrefusing to sign for delivery of the casket. It is my opinion that the NFA\\n\\nReceipt of Third Pary\\n\\nMerchandise does not constitute an unreasonable burden on the consumer, as long as it is not\\nused as a justification for requiring the consumer to be present when the merchandise is delivered\\nor for otherwise unreasonably requiring the consumer s physical presence to inspect or accept the\\nmerchandise. I\\n\\nI hope this information is helpful to you. Please note that the views expressed in this\\nletter are those of the FTC staff. They have not been reviewed , approved or adopted by the\\nCommssion , and they are not binding on the Commission or any individual Commssioner.\\nHowever , they reflect the opinions of the staff members who are charged with enforcement of the\\n3115 (email\\nFuneral Rule. If you have any questions , please feel free to contact me at (202) 326cdanielson 0!ftc. gov\\nSincerely,\\n\\nCarole L Danielson\\nSenior Investigator and\\nFuneral Rule Coordinator\\n\\nFor example , it may be a violation on 453A(b)(I) forfuneral providers to refuse\\nto use third-pary merchandise in conducting agreed- upon funeral arangements until the\\nconsumer or his\/heuepresentative physically inspects and\/or accepts such merchandise.\\n\\n\\x0c\"","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-04-2\/opinion04-2.pdf"}
{"text":"b'lJNI1 t V STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON. D C. 20580\\n\\nJune 17,2004\\n\\nJonathan L. Kempner\\nPresident and Chief Executive Officer\\nMortgage Bankers Association\\n1919 Pennsylvania Avenue, N.W.\\nWashington, D.C. 20006-3404 ,\\nRe:\\n\\nStipulated Final Judgrnent and Order as to Fairbanks Capital Corp. and Fairbanks\\nCapital Holding Corp, reached in United States of America v. Fairbanks Capital\\nCorp., et al., Civil Action No. 03-12219 (DPW) (D. Mass.)\\n\\nDear Mr. Kempner:\\nThank you for your letter regarding the Comission\\'s recent settlement with Fairbanks\\nCapital Holding Corp. and Fairbanks Capital Corp. (collectively, \"Fairbanks\"). You have asked\\nfor the Commission\\'s position regarding the scope of the Order and the application of the\\nprovisions contained therein to other mortgage servicing companies that were not a party to the\\nagreement. I am pleased to provide you with the following staff guidance. Please understand\\nthat these are the views of the staff and do not constitute a formal Commission opinion.\\nThe Federal Trade Commission often enters into consent orders with individuals and\\ncompanies that the Commission has reason to believe have violated the FTC Act or other laws\\nenforced by the Commission. In general, consent orders enjoin the defendants from violating the\\nlaw in the future, for example, by prohibiting the alleged unfair or deceptive practices.\\nMoreover, to protect the public from those who have demonstrated a propensity to violate the\\nlaw, these orders often contain provisions that place additional constraints upon a wrongdoer that\\ndo not necessarily apply to other businesses that have not engaged in violations. See FTC v.\\nColgate-Palmolive Co., 380 U.S. 374, 395 (1965) (\"The Commission is not limited to\\nprohibiting the illegal practices in the precise form in which it is found to have existed in the\\npast. Having been caught violating the [FTC] Act, respondents must expect some reasonable\\nfencing in.\"). These \"fencing-in\" provisions have legal force only against the defendants who\\nsigned the order and anyone with whom those defendants act in concert. The Commission\\'s\\nconsent order with Fairbanks reflects the Commission\\'s views of the specific remedies necessary\\nto resolve the particular allegations against that company.\\n\\n\\x0cJonathan L. Kempner\\nMay 18,2004\\nPage 2\\n\\nBy way of example, Part V of the Fairbanks order enjoins the defendants from assessing\\nor collecting certain fees - that may be otherwise authorized and permitted by law - except as\\nprovided in the order. This section includes specific conditions and time frames for the\\nimposition of such fees. The provision is not intended to impose a Federal rule or standard\\nrequiring all mortgage servicers to abide by the enumerated requirements. Rather, it serves the\\ndual purposes of protecting consumers from further deception by the defendants, and providing\\nspecific guidance to the defendants on complying with the order. It should be noted that this\\nprovision expires after five years.\\nThank you for your inquiry.\\n\\nSincerely,\\n\\nociate Director\\nision of Financial Practices\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-mortgage-bankers-association-regarding-ftc-settlement-fairbanks\/040617staffopltrtomba.pdf"}
{"text":"b'May 6, 2004\\n\\nMr. Joel Winston\\nAssociate Director\\nDivision of Financial Practices\\nFederal Trade Commission\\n601 New Jersey Ave., N.W.\\nWashington, D.C. 20580\\nRE: Stipulated Final Judgment and Order as to Fairbanks Capital Corp. and\\nFairbanks Capital Holding Corp. reached in United States of America v.\\nFairbanks Capital Corp. et. al.\\nDear Mr. Winston:\\nSince the Federal Trade Commission\\'s November 12, 2003 announcement of its\\nsettlement with Fairbanks Capital Holding Corp. and Fairbanks Capital Corp.\\n(hereinafter collectively as \"Fairbanks\"), some advocates have suggested to members\\nof the Mortgage Bankers Association (\"MBA\")1 that the Commission has created federal\\nrules relating to the servicing of mortgage loans that are set forth in the Stipulated Final\\nJudgment and Order as to Fairbanks Capital Corp. and Fairbanks Capital Holding Corp.\\n(hereinafter \"the Order\"). These advocates suggest that a mortgage servicer that fails\\nto follow the rules set forth in the Order will be subject to legal liability.\\nMBA and its members have concerns regarding this assertion because several\\nprovisions of the Order appear to be either inconsistent with federal regulations, judicial\\nopinions, and\/or state law or not supported by those regulations, opinions, or state laws.\\nWhile a detailed analysis of the Order is beyond the scope of this letter, we would be\\nmore than happy to provide you with a detailed analysis of the provisions upon your\\nrequest.\\n\\n1\\n\\nThe Mortgage Bankers Association (MBA) is the national association representing the real estate finance\\nindustry, an industry that employs more than 400,000 people in virtually every community in the country.\\nHeadquartered in Washington, D.C., the association works to ensure the continued strength of the nation\\xe2\\x80\\x99s\\nresidential and commercial real estate markets; to expand homeownership prospects through increased\\naffordability; and to extend access to affordable housing to all Americans. MBA promotes fair and ethical\\nlending practices and fosters excellence and technical know-how among real estate finance professionals\\nthrough a wide range of educational programs and technical publications. Its membership of approximately\\n2,700 companies includes all elements of real estate finance: mortgage companies, mortgage brokers,\\ncommercial banks, thrifts, life insurance companies and others in the mortgage lending field. For additional\\ninformation, visit MBA\\xe2\\x80\\x99s Web site: www.mortgagebankers.org.\\n\\n\\x0cMr. Joel Winston\\nMay 6, 2004\\nPage 2\\n\\nMBA and its members would appreciate you providing us with the Commission\\'s\\nposition regarding the scope of the Order and the application of the provisions\\ncontained therein to other mortgage companies that were not a party to the agreement.\\nIf you have any questions, do not hesitate to contact me at (202)557-2701.\\nMost sincerely,\\n\\nJonathan L. Kempner\\nPresident and Chief Executive Officer\\n\\n\\x0c'","created_timestamp":"May 6, 2004","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/letter-mortgage-bankers-association-regarding-ftc-settlement-fairbanks\/040506mbaltrtojwinston.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nOffice of the Secretary\\n\\nPUBLIC RECORD VERSION\\nMay 24, 2004\\nMr. Richard J. Stark, Esq.\\nCravath, Swaine & Moore LLP\\nWorldwide Plaza\\n825 Eighth Avenue\\nNew York, NY 10019-7475\\nRe:\\n\\nIn the Matter of Bristol-Myers Squibb Company, Docket No. C-4076\\n\\nDear Mr. Stark:\\nOn April 12, 2004, Bristol-Myers Squibb Company (\\xe2\\x80\\x9cBMS\\xe2\\x80\\x9d), pursuant to the\\nrequirement of the second proviso to Paragraph XII of the above-referenced order (\\xe2\\x80\\x9cOrder\\xe2\\x80\\x9d) that\\nit obtain from the Commission an advisory opinion related to specified settlements, submitted its\\nproposed agreement with Teva Pharmaceuticals USA, Inc. (\\xe2\\x80\\x9cTeva\\xe2\\x80\\x9d) to settle their litigation over\\nthe validity of BMS\\xe2\\x80\\x99s patent for the drug Carboplatin. Specifically, as relevant to the proposed\\nsettlement, Paragraph XII and its proviso prohibits BMS from:\\n. . . being a party to any Agreement resolving or settling a Patent Infringement Claim in\\nwhich:\\nA.\\n\\nAn ANDA Filer receives anything of value; and\\n\\nB.\\n\\nThe ANDA Filer agrees not to research, develop, manufacture, market, or\\nsell, the ANDA Product for any period of time.\\n\\nPROVIDED, HOWEVER, that nothing in this Paragraph XII shall prohibit:\\n...\\n(2)\\n\\nRespondent BMS from resolving or settling a Patent Infringement\\nClaim after the Commission, in response to a request by\\nRespondent BMS for an advisory opinion . . . determines that the\\nsettlement Agreement would not raise issues under Section 5 of the\\nFederal Trade Commission Act.\\n\\n\\x0cIn the Matter of Bristol-Myers Squibb Company, Docket No. C-4076\\nAdvisory Opinion of the Commission (Public Record Version)\\n\\nPage 2\\n\\nThis Order provision arose from BMS conduct that included an agreement to settle\\ncertain patent litigation by paying the alleged infringer millions of dollars for the alleged purpose\\nof eliminating competition from a generic drug. Paragraph XII of the Order therefore bars,\\nunless an applicable proviso applies, such payments to an ANDA filer in exchange for an\\nagreement not to market its product for some period of time.\\nAccording to BMS, the proposed settlement with Teva that is the subject of this request\\nfor an advisory opinion will be entered into to resolve an ANDA patent litigation concerning the\\ndrug Carboplatin and U.S. Patent No. 4,657,927 (the \\xe2\\x80\\x9c\\xe2\\x80\\x98927 patent\\xe2\\x80\\x9d),1 in which the U.S. Court of\\nAppeals for the Federal Circuit vacated and remanded a district court determination on summary\\njudgement that the \\xe2\\x80\\x98927 patent was not invalid.2 BMS has filed a motion for a rehearing en banc.\\nBMS has also informed the Commission that, although the \\xe2\\x80\\x98927 patent expired on April 14,\\n2004, the dispute with Teva is not moot, because BMS has filed with the Food and Drug\\nAdministration (\\xe2\\x80\\x9cFDA\\xe2\\x80\\x9d) for pediatric exclusivity, which, if granted, would result in an additional\\nsix months of exclusivity (\\xe2\\x80\\x9cexclusivity period\\xe2\\x80\\x99) for BMS. No company therefore could enter the\\nCarboplatin for Injection market prior to the expiration of the exclusivity period, i.e., until\\nOctober 14, 2004. The parties are, however, uncertain whether a final determination that the\\n\\xe2\\x80\\x98927 patent is invalid would affect the exclusivity period, and that uncertainty has led the parties\\nto reach the proposed settlement.\\nThe terms as proposed provide that BMS and Teva agree to dismiss the litigation and that\\nas of June 24, 2004, BMS will appoint, and qualify under BMS\\xe2\\x80\\x99s NDAs, Teva (or its designee)\\nas a distributor of Carboplatin for Injection.3 Morever, Teva has the option to purchase\\n[redacted] its requirements of BMS\\xe2\\x80\\x99s NDA drugs from June 24, 2004, until [redacted], in\\nexchange for sharing its profits with BMS. Finally, upon expiration of the exclusivity period, on\\nOctober 14, 2004, Teva may begin to sell its ANDA drugs and cease to purchase the BMS NDA\\ndrugs.\\nUnlike the settlement that led to entry of the Order, in which BMS allegedly paid the\\ngeneric challenger to defer entry beyond the date that would represent an otherwise reasonable\\n\\n1\\n\\nMemorandum Opinion and Order, Bristol-Myers Squibb Company and Research\\nCorporation Technologies, Inc. v. Pharmachemie, B.V., C.A. No. 01-3751 (MLC) (D.N.J. July\\n29, 2002).\\n2\\n\\nDecision, Bristol-Myers Squibb Company and Research Corporation\\nTechnologies, Inc. v. Pharmachemie B.V., Appeal No. 03-1077 (Fed. Cir. Mar. 17, 2004).\\n3\\n\\nforms)).\\n\\nSee NDA 20-452 (ready to use forms); NDA 19-880 (lyophilized (freeze-dried\\n\\n\\x0cIn the Matter of Bristol-Myers Squibb Company, Docket No. C-4076\\nAdvisory Opinion of the Commission (Public Record Version)\\n\\nPage 3\\n\\nlitigation compromise,4 this settlement does not involve a payment to Teva in exchange for\\nTeva\\xe2\\x80\\x99s agreement not to enter the market. Thus, we presume that the entry date, three months\\nprior to the expiration of the exclusivity period, reflects a reasonable assessment of BMS\\xe2\\x80\\x99s and\\nTeva\\xe2\\x80\\x99s respective litigation positions.\\nThe settlement agreement provides no mechanism for BMS to share supracompetitive\\nprofits with Teva. Teva earns profits only by competing. Because Teva\\xe2\\x80\\x99s payments to BMS\\nlikely will reduce Teva\\xe2\\x80\\x99s profits, Teva will have the incentive to bring its ANDA drug products\\nto the market as soon as possible after the exclusivity period. Importantly, the settlement\\nagreement does not prevent Teva from marketing its own product under its ANDA at any time\\nafter October 14, 2004. Even while selling BMS\\xe2\\x80\\x99s products, Teva retains the ability and\\nincentive to price independently.\\nThe Commission therefore has determined that the proposed agreement between BMS\\nand Teva to settle the aforementioned litigation concerning the drug Carboplatin and the \\xe2\\x80\\x98927\\npatent does not raise issues under Section 5 of the Federal Trade Commission Act, and\\naccordingly, BMS may enter the proposed settlement.\\nBy direction of the Commission.\\n\\nDonald S. Clark\\nSecretary\\nSEAL:\\n\\n4\\n\\nSee also Opinion of the Commission, In the Matter of Schering-Plough\\nCorporation et al., Docket No. 9297\\n\\n\\x0c'","created_timestamp":"May 24, 2004","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/commission-advisory-opinion-addressing-proposed-agreement-between-bristol-myers-squibb-company-and.\/040525advisoryc4076.pdf"}
{"text":"b'SWAINE & MOORE LLP\\n\\nCRAVATH\\n\\nWORLDWIDE PLAZA\\n\\nGEORGE J. GILLESPIE , m\\nTHOMAS R. BROME\\nROBERT D. JOFFE\\nALLEN FINKELSON\\nRONALD S. ROLFE\\n\\nFRANCIS P. BARRON\\nRICHARD W. CLARY\\nWILLIAM P. ROGERS . ..R.\\n\\nJAMES D. COOPER\\n\\nPAUL C. SAUNDERS\\n\\nDOUGLA D. BROADWATER\\nALN C. STEPHENSON\\nMAX R. SHULMAN\\nSTUART W. GOLD\\nJOHN W. WHITE\\n..OHN E. BEERBOWER\\n\\nEVAN R. CHESLER\\nPATRICIA GEOGHEGAN\\nD. COLLIER KIRKHAM\\nMICHAEL L SCHLER\\nKRIS F. H EI NZELMAN\\nB. ROBBINS KIESSLING\\nROGER D. TURNER\\nPHILIP A. GELSTON\\nRORY O. MILLSON\\n\\nNEIL P. WETREICH\\n\\n825 EIGHTH AVENUE\\nNEW YORK ,\\n\\nSTEPHEN L. GORDON\\nDANIEL L MOSLEY\\nGREGORY M. SHAW\\nPETER S. WILSON\\nJAMES C. VARDELL . m\\nROBERT H. BARON\\nKEVIN oJ. GREHAN\\nW. CLAYTON ..OHNSON\\nSTEPHEN S. MADSEN\\nC. ALLEN PARKER\\n\\nNY 10019- 7475\\n\\nTELEPHONE: (212) 474- 1000\\n\\nF\\'ACSIMILE: (212) 474-3700\\nCITYPOINT\\nONE ROPE MAKER STREET\\n\\nLONDON EC2Y 9HR\\nTELEPHONE: 44- 207- 453- 1000\\nFACSIMILE: 44- 207- 860. 1150\\n\\nMARC S. ROSENBERG\\nWILLIAM B. BRANNAN\\nLEWIS R. STEINBERG\\n\\nWRITER S DIRECT DIAL NUMBER\\n\\nSUSAN WEBSTER\\nTIMOTHY G. MASSA\\nDAVID MERCADO\\nROWAN D. WILSON\\n..OHN T. GAFFNEY\\n\\n(212) 474- 1564\\n\\nPETER T. BARBUR\\nSANDRA C. GOLDSTEIN\\nPAUL MICHALSKI\\n\\nTHOMAS G. RAF\"FERT\\nMICHAEL S. GOLDMAN\\n\\nRICHAD HALL\\nELIZABETH L. GRAYER\\n\\n..ULIE A. NORTH\\nSTEPHEN L BURNS\\nKATHERINE B. FORREST\\nKEITH R. HUMMEL\\nDANIEL SLlFKIN\\nJEFFREY A. SMITH\\nROBERT I. TOWNSEND. m\\nWILLIAM J. WHELAN, m\\nSCOTT A. SARSHAY\\nPHILIP ... aOECKMAN\\nROGER G. BROOKS\\nWILLIAM V. FOGG\\nFAIZA... SAEED\\nRICHARD J. STARK\\nTHOMAS E. DUNN\\n\\nJULIE T. SPELLMAN\\nRONALD CAMI\\nMARK I. GREENE\\nSARKIS .. EBE. IAN\\nJAMES C. WOOLERY\\nDAVID R. MARRIOTT\\nMICHAEL A. PASKIN\\nANDREW J. PITTS\\nMICHAEL T. REYNOLDS\\nANTONY L RYAN\\nGEORGE E. ZOBITZ\\nGEORGE A. STEPHANAKIS\\n\\nSPECIAL COUNSEL\\nSAMUEL C. BUTLER\\nTHOMAS D. BARR\\nOF COUNSEL\\nROBERT ROSENMAN\\n\\nCHRISTINE BESHAR\\n\\nCONFIDENTIA TREATMENT REQUESTED\\n\\nApril 29 , 2004\\n\\nCarboplatin\\nDear Ms. Schenof:\\n\\nBristol-Myers Squibb Company (\"BMS\") submits ths letter and the\\nenclosed materials in response to the requests for additional inormation contained\\nyour letter of April 20 , 2004 , and made durng recent conversations with outside counsel\\nfor BMS and\/or Teva Pharmaceuticals USA , Inc. (\" Teva\\n\\nTermation.\\nYou asked us to consider modifying the term ofT eva s distrbutorship\\nrights to provide that Teva s distrbutorship rights expire at the earlier of some period\\nafter Teva receives Food and Drg Admstration (\"FDA\") approval of its ANA\\n(perhaps 30 or 60 days) or June 24 2005.\\n\\nThe paries addressed ths request in Aricle 9 of the Distrbution and\\nSupply Agreement between BMS and Teva, dated April 26 , 2004 , (the \" Distrbution and\\nSupply Agreement\") submitted to the FTC on April 27 , 2004. BMS respectfully refers\\nyou to the following specific provisions of the Distrbution and Supply Agreement:\\nSections 9. 1.1\\n\\n5 and 9. 6.1\\n\\n(c).\\n\\nCarboplatin ANA Filers\\n\\nYou requested that BMS identify, by the form and dose specified in the\\nAgreement, which companes have fied an ANA for carboplatin.\\n\\nCONFIDENTIAL\\n\\n\\x0cEnclosed is a list of generic companes that , to BMS\\' s knowledge , have\\n\\nfiled ANDAs for carboplatin. BMS does not generally have knowledge of ANDA filings\\nprior to tentative approval unless it receives notice that a company filed an ANDA\\ncontaining a paragraph IV certification. It is therefore possible that other generic\\ncompanies have filed ANDAs for carboplatin about which BMS does not have\\nknowledge.\\nBMS\\' s Annual Sales ofParaplatin\\n\\nYou requested that BMS identify its annual sales of carboplatin.\\nEnclosed is a chart that provides annual domestic net sales for Paraplatin i!\\n\\nin lyophilized and solution form , by dose , for 2003. BMS also markets a 600 Mgs\\nsolution product. This product launched earlier this year and accordingly no net sales\\nfigures for this dosage are included.\\nClaims and Potential Claims that are Resolved by the Agreements\\n\\nYou requested a copy of any counterclaims asserted by Teva that would be\\ndismissed as part of the resolution of the litigation at issue.\\nPharachemie B. V. (\"Pharachemie ) filed three answers in which it\\nasserted counterclaims. In its most recent answer , the Amended Answer and\\nCounterclaim to Consolidated Amended Complaint , dated October 22 , 2002 , Teva\\nasserted only one counterclaim for declaratory judgment of patent invalidity. A copy of\\nthe Amended Answer and Counterclaim to Consolidated Amended Complaint is\\n\\nenclosed.\\n\\nREDACTED\\n\\nPharachemie has also argued that it could obtain approval of ANDA 76162 notwithstanding BMS\\' s pending pediatric exclusivity. BMS disagreed , and continues\\nto disagree , with this contention.\\n\\nThe language in the agreements relevant to the resolution of the claims\\nand potential claims of the paries may be found in paragraphs 2 , 3 and 4 of the\\nSettlement Agreement between BMS , Teva and Research Corporation Technologies\\nInc. , dated April 26 , 2004 , submitted to the FTC on April 27 , 2004 , and section 2. 1.4 of\\nthe Distribution and Supply Agreement.\\n\\nCONFIDENTIAL\\n\\n\\x0cTeva s Corporate Strctue.\\nYou requested information regarding Teva s corporate strctue\\nrelationship between Teva and Pharachemie.\\n\\nand\\n\\nthe\\n\\nTeva and Pharachemie are both subsidiares of Teva Pharaceutical\\nIndustres Ltd., an Israeli company that does not do business in the United States.\\nPharachemie is a Europea company that does not directly distrbute products in the\\nUnited States and relies upon Teva and others physically to sell and distrbute\\nthe United States.\\n\\nproducts in\\n\\nTo aid in the FTC\\' s understadig of the corporate strctue ofTeva , I am\\n\\nenclosing a printout from Mergent Online that provides additional information\\nconcerng Teva Pharaceutical Industres Ltd.\\n\\nConfdential treatment of ths letter and the enclosed materials is\\nrespectfully requested.\\n\\nThan you for your consideration and assistance. If you have any\\nquestions, please do not hesitate to call me at the number above.\\nRespectfully,\\n\\nRichard J. Stark\\n\\nAne Schenof, Esq.\\nBureau of Competition\\nFederal Trade Commission\\n601 New Jersey Avenue , N.\\nWashington , DC 20580\\nEncls.\\n\\nFEDERA EXPRESS\\nCopies\\n\\nwi\\n\\nencls. to:\\n\\nAlan Bar, Esq.\\nAssistat Attorney General\\n\\nOffice of the Attorney General\\n200 Saint Paul Place\\nAntitrst Division , 19th Floor\\nBaltimore , MD 21202-2202\\n\\nCONFIDENTIA\\n\\n\\x0cRichard L. Schwar , Esq.\\nAssistant Attorney General\\nOffce of the Attorney General of New York\\nAntitrst Bureau\\n\\n120 Broadway\\nSuite 26-\\n\\nNew York, NY 10271\\n\\nWiliam Shieber, Esq.\\nAssistat Attorney General\\nAntitrst Section\\n\\nOffce of the Attorney General\\n300 W. 15th Street\\nAustin , TX 78701\\nAlan C. Witten, Esq.\\nAntitrst Section\\n\\nOhio Attorney General\\n\\n150 East Gay Street , 20th Floor\\n\\nColumbus , OH 43215- 3130\\n\\nMeredyt Smith Andrs, Esq.\\nAssistant Attorney General\\nOffice of the Attorney General\\nAntitrst Division\\n\\n200 St. Paul Place\\nBaltimore , MD 21202\\n\\nNicholas J. Weilhammer, Esq.\\nAssistat Attorney General\\n\\nOffce of the Attorney General\\nThe Capitol , PL 01\\nTallahassee, FL 32399\\n\\nFEDERA EXPRESS\\n\\nCONFIDENTIA\\n\\n\\x0cCarboplatin\\nKnown\\n\\nCaboplatin Injection USP\\n10 mglmL , Rx\\n\\nMayne Phara\\n\\nAND A\\n\\nANA\\n\\nFilers\\n\\n3\/30\/04\\n\\nSolution\\n\\nFDA\\nWebsite\\n\\n76- 517\\n\\nTentatively Approved\\n\\nCarboplatin Injection USP\\n, 150 and 450 mg, Rx\\n\\nFaulding\\n\\nANDA\\n76- 473\\n\\n4\/16\/03\\n\\nLyophilized\\n\\nPharaceutical\\n\\nFDA\\nWebsite\\n\\nAmerican\\n\\nANA\\n\\n5\/22\/02\\n\\nLyophilized\\n\\nPharaceutical\\n\\n76-235\\n\\nFDA\\nWebsite\\n\\nANDA\\n76- 227\\n\\n8\/12\/02\\n\\nSolution\\n\\nFDA\\nWebsite\\n\\nANDA\\n76- 162\\n\\n1\/14\/03\\n\\nLyophilzed\\n\\nFDA\\nWebsite\\n\\nANDA\\n76- 292\\n\\nN\/A\\n\\nSolution\\n\\nTentatjvely Approved\\n\\nCarboplati Injection USP\\n, 150 or 450 mg, Rx\\nTentatively Approved\\n\\nCarboplati Injection USP\\n10 mglmL , Rx\\nTentatively Approved\\n\\nCarboplati Injection USP\\n, 150 or 450 mg, Rx\\n\\nParers , Inc.\\nGensia Sicor\\n\\nPharaceuticals,\\nInc.\\n\\nPharachemie\\nB.V.\\n\\nTentatively Approved\\n\\nCarboplati Injection\\n10 mglmL , 5 mL , 15 mL\\nand 45 mL vials\\nStatu Unknown\\nCarboplatin Injection USP\\n10 mglmL , Rx\\n\\nPharachemie\\nB.V.\\n\\nNotice of\\n\\nParagraph IV\\n\\nCertfication\\nBedford\\nLaboratories\\n\\nANDA\\n76- 039\\n\\n6\/6\/03\\n\\nSolution\\n\\nFDA\\nWebsite\\n\\nBedford\\nLaboratories\\n\\nANDA\\n76- 099\\n\\n9\/18\/02\\n\\nLyophilized\\n\\nFDA\\nWebsite\\n\\nSpectr\\n\\nUnkown\\n\\nN\/A\\n\\nUnkown\\n\\nPublic Press\\nRelease\\n\\nTentatively Approved\\n\\nCarboplatin Injection USP\\n, 150 & 450 mg, Rx\\nTentatively Approved\\n\\nCarboplatin Injection\\nDosage Unknown\\nStatus Unknown\\n\\nPharaceuticals\\nInc.\\n\\nCONFIDENTIA\\n\\n\\x0cParaplatin\\n2003 Domestic Net Sales\\n\\nREDACTED\\n\\nCONFIDENTIAL\\n\\n\\x0c- Mergent Online\\n\\nPage 1 of2\\n\\nMERGENT ..\\n\\nCONTACT US I HELP\\n\\nMUtiE:-r\\n\\nHome: I Basic Search: I Search Results: I Company Details\\n\\nTeva Pharmaceutical Industries Ltd. (Israel) (NMS: TEVA)\\nI Company Detailsl Company Financial\\n\\nSynopsis I Highlights\\n\\nDebt I Executives I\\n\\nEDGA\\n\\nCreate Report\\n\\nNew\\n\\nI History I Joint Ventures I Business\\nI Propert I Subsidiaries I Long Term\\n\\nCapital Stock\\n\\nCustom Report List\\n\\nTeva Pharmaceutical\\n\\nBusiness Summary\\n\\nIndustries Ltd. (Israel)\\n5 Basel St.\\n\\nTeva Pharmaceutical Industes Limited is a global\\n\\nto Custom Reportng List\\n\\nPetach Tikva, 49131 Israel\\nIncorporated: 1944 ,\\n\\nIsrael\\n\\nNumber of\\nEmployees: 10, 960\\n(Approximate Full-Time\\n\\npharmaceutical company producing drugs in all major\\ntreatment categories. Co. utilizes its production and\\nresearch capabilites to establish a global pharmaceutical\\noperation focused on supplying the growing demand for\\ngeneric drugs and on the opportnities for proprietary\\n\\nto Company Analysis List\\n\\nbranded products for specifc niche categories, such as its\\nas of\\n\\n12\/31\/2003)\\nCountry:\\n\\nExpand\\n\\nI Company Analysls List (0)\\n\\nIsrael\\n\\nTicker: TEVA\\n\\nbranded drug Copaxon\\nr multple sclerosis. Co. \\' s actve\\npharmaceutical ingredients (API) business provides both\\nsignificant revenues and profis from sales to third part\\nmanufacturers and strtegic benefits to Co. \\' s own\\npharmaceutical production through its timely delivery of\\nsignifcant raw materials.\\n\\nPrimary SIC: 2834 Pharmaceutical preparations\\nPrimary NAICS: 325412-\\n\\nPharmaceutical Preparation\\nManufacturing\\n\\nNumber of\\nShareholders: 1 600 (as of\\n\\nFinancial Highlights (In USD as of 12\/1\/2003)\\n\\nTotal Revenue 3,276,400, 000\\n\\nNet Income 691,\\n\\n01\/30\/2004)\\n\\nTotal Liabilties\\n\\nClosing Stock Price: As of\\n\\nCurrent Liabilites\\n\\n4\/212004 $64.47\\nPE Ratio N\/A\\n\\nCompany Website:\\n\\nww.tevapharm. com\\nMergent Dividend\\n\\nAchiever\\nAnnual Meeting:\\n\\n000, 000\\n915,900, 000\\n716,400, 000\\n2,626, 500, 000\\n1, 694,900, 000\\n900, 000\\n289, 400, 000\\n\\nTotal\\nAssets 5,\\nCurrent Assets 3,\\n\\nLong Term Debt 449,\\n\\n\\' Equit 3,\\n\\nStockholders\\n\\nKey Executives\\nEli Hurvitz - Chmn.\\n\\nIsrael Makov - Pres. , C.EO.\\n\\nPrincipal Offces\\n\\nAuditor\\n\\n5 Basel St.\\n\\nKesselman & Kesselman\\n\\nPetach Tikva, 49131\\n\\nIsrael\\nOther Search Tools\\nEDGAR\\n\\nlegal Counsel\\nTulchinsky - Stem & Co.\\nWillkie Farr & Gallagher\\n\\nPricing Information\\n\\nhtt:\/\/:fsonlinel. fisonline. comfcomDdetaiLa.\\'m?comn\\n\\nnv mp.t=\\n\\n\\'\\\\Rt\\\\7\\n\\n&r.nmn nv=_\\n\\nLi\/1\\n\\n\/\\' (\\\\(\\\\Li\\n\\n\\x0c. Mergent Online\\n\\nPage 2 of2\\n\\nk-\\n\\nTicker: TEV A Exchange: NMS\\nClosing Price As of 4\/212004 $64.\\nWeeks Ending\\n04\/03\/2004 03\/27\/2004 03\/20\/2004 03\/13\/2004\\n\\nOpen\\nPrice 64.\\n\\n64.\\n\\n64.\\n\\n63.\\n\\n62.\\n\\n63.\\n\\n65.\\n\\n61.\\n\\n62.\\n\\n61.\\n\\n61.\\n\\n62.\\n\\n64.\\n\\n8,421, 200\\n\\n12, 287, 000\\n\\nHigh\\nPrice 64.\\n\\nLow\\nPrice 61.\\n\\nLast\\nPrice 62.\\n\\nTotal\\nVolume 8, 714 800\\nAverage\\nVolume\\nfor Past\\n\\n375, 200\\n\\n30 days 62\\n\\n52-\\n\\nWeek 55. 14Range 67.\\n\\nCOPYRIGHT\\n\\n2003 MERGENT I PRIVACY POLICY I FEEDBACK\\n\\nhtt:\/\/fisonlinel. fisonline. com\/compdetal.asn?cornnanvmer-\\n\\n4\\\\Rf\\\\7\\n\\nnmn!\\'n\\'=-\\n\\nA\/1,\/,)f\\\\l\\\\A\\n\\n\\x0cMergent Online: Teva Pharmaceutical Industries Ltd. (Israel) (NMS: TEVA)\\nHistory\\nIncorporated in Israel on Feb. 13, 1944. Present Co. estalished\\nAssia , which were originaly established in Isrel in the 1930\\'\\n\\nin 1976 upon the merger of thee companes, Teva ,\\n\\nZori and\\n\\nIn Mar. and Apr. 1980, Co. acquid Ikphar Ltd. , a phareutical manufactur (merged effective Mar. 31 , 1982), and Dr.\\nN. Premiger Ltd. (now Promedco Ltd. ) an importer of medicines and medical equipment.\\nIn Feb. 1986, Co. ,\\n\\nthough its U. S. joint ventue company, acqud Lemmon Company, a U. S. producer and maketer of\\n\\ngeneric drgs.\\n\\nOn Apr. 10, 1987 , Co. sold Promedico to foreign investors for US$4 000 000.\\n\\nOn Jan. 21, 1988 , Co. purchased from Baxter-Interntional Inc. , a U. S. company, al of the issued and outstadig shares of\\nTravenol Laboratories (Israel) Ltd. The shares of the above two companes were purchased for a tota of approx.\\nUS$8 200 000.\\n\\nOn Mar. 29 , 1988, Co. acquied the remag outstadig shares ofMigad Ltd. and Ada Ltd., Israeli companes which\\nwere previously 45% owned and 50% controlled, for approx. US$I, OOO OOO.\\nOn Oct. 11 ,\\n\\n1988, Co. acquied approx. 98% of the equity of the issued and outstadig\\n\\ncorporation which, diectly and indiectly,\\n\\nshars of Abic Ltd. , an Israeli\\n\\nthough subsidiares;\\'manufactues and markets pharaceutical\\n\\nand\\n\\nproducts , for approx. US$26, 6000, 000.\\n\\nveteri\\n\\nIn 1989 , Travenol Laboratories and Migada Ltd , subsidiares of Co., were merged.\\nCo. acquied the remaig 49. 8% interest in TAG Pharaceuticals, Inc. from W. R. Grace &Co. for\\nUS$20 000, 000, plus up to US$4 000, 000 payable based on the operatig results of TAG until the year 2000.\\n\\nIn Jan. 1991 ,\\n\\nIn 1992, Co. acquied 100% of the share capita ofProchemia S.d.\\n\\nand is subsidiares\\n\\nfor a tota payment ofUS$23 200, 000.\\n\\nar\\n\\nIn 1994, Co. acquied 34% of the share capital of Pro grph\\nLaboratories for consideration ofUS$7, 200,000 and 30% of\\nthe share capital of Portan Pharceuticals Inc. in consideration of US$ 1 500 000.\\nIn Oct. 1995 ,\\n\\nCo. acquied Industre Chiche\\n\\nItaane S.\\n\\nIn Nov. 1995 , Co. acquied 78% of Biogal Phaaceutical W odes.\\n\\nIn 1996 , Co. acquied Approved Prescription Services Ltd., a U.K. generic drg\\n\\ncompany,\\n\\nfor US$52. 2 millon.\\n\\nOn July 1, 1998 , Co. acquired ful ownership and control ofPharchemie N. V. for approx. US$83 millon.\\nOn Sept. 21 1999, Co. acquied Copley Pharaceutical , Inc. for US$220 mion\\n\\n(includig acquisition\\n\\ncosts).\\n\\nIn Apr. 2000 , Co. acquired Novophar Ltd. In consideration, the vendor was issued 2. 1 millon ordiar shares of Co. and 6.3\\nmillon special shares that are exchangeable into ordiar shares of Co. at his discretion on a one-to-one ratio.\\nOn Dec. 31 , 2000 , Co. acquied the shares in a subsidiar of Novophar from the\\na total amount of US$12 millon.\\n\\nmiority shareholders in ths subsidiar, for\\n\\nIn June 2002 , Co. acquied fu control and ownership of Honeywell Phaaceutical Fine Chemical S. d. (subsequently\\nrenamed Teva Pharaceutical Fine Chemicals S. ) in Itay and Bayer Classics S.A. (subsequently renamed Teva Classics\\n) in France, as well as a shareholders \\' loan ofUS$34 millon grted to the acquied company by the vendor. Tota\\n\\n\\x0cMergent Online: Teva Pharmaceutical Industries Ltd. (Israel) (NMS: TEVA)\\nconsideration paid for the two acquisitions (includig the shareholder s loan mentioned above and acquisition costs) was\\nUS$168 millon in cash. Co. accounted for these acquisitions by the purchase method.\\nOn Jan. 22 , 2004, Co. acquied Sicor Inc. The purchase price paid by Co. amounted to approxitely $3 460, 000, 000 in a\\ncombintion of cash and Co. shares.\\n\\nJoint Ventures\\n\\nSubsidiaries\\n\\nStF\\n\\nijJ.\\nMexico\\n\\nr;,!\\n\\ni;:\\n\\n\\x0c2,\\n\\nSTERNS & WEINOTH\\nA Professional Corporation\\n50 West State Street\\nSuite 1400\\n. Trenton , NJ 08607\\nKC- 0848\\nAttorneys for Defendant\\nPhanachemie B.\\n\\nUNTED STATES DISTRICT COURT\\nFOR THE DISTRICT OF NEW JERSEY\\n\\nBRISTOL- MYERS SQUIBB\\nCOMPANY and\\nRESEARCH CORPORATION\\nTECHNOLOGIES , INC.\\n\\nPlaintiffs\\n\\nI CIVIL ACTION No. 01- 3751 (MLC)\\nI (Civil Action No. 02- 1270 has been\\n\\nI consolidated herewith)\\n\\nPHACHEMIE B.\\nDefendant.\\n\\nAMNDED ANSWER AN COUNTERCLAIM TO\\nCONSOLIDATED AMNDED\\n\\nCOMPLAIT\\n\\n\\x0cDefendant\\n\\nPhanachemie\\n\\nPharmachemie\\n\\nanswers\\n\\nthe\\n\\ncorrespondingly numbered paragraphs of plaintiffs \\' Amended Complaint for\\nPatent Inmngement as follows:\\n\\nPharachemie is without lrowledge or information sufficient to\\nform a belief as to the trth\\n\\nof\\n\\nthe allegations of Paragraph 1 , except that it\\n\\nbelieves that Bristol-Myers Squibb Company (\"BMS\"\\n\\nis a Delaware\\n\\ncorporation with a principal place of business in New York, New York.\\n\\nPharachemie is without knowledge or information sufficient to\\n\\nform a belief as to the trth\\n\\nof\\n\\nthe allegations of Paragraph 2 , except that it\\n\\nbelieves that Research Corporation Technologies , Inc. (\"RCT\" )\\n\\nis a Delaware\\n\\ncorporation with a principal place of business in Tucson , Arzona.\\n\\nAdmts.\\n\\nAdmts.\\n\\nPharachemie admits that it designated\\nprocess in New Jersey\\nNo. 01- 3751\\n\\nan agent for\\n\\nservice of\\n\\noriginally filed Civil Action\\n\\nin connection with the\\n\\n(MLC) and fuher admts , for puroses of this\\n\\naction only, that\\n\\nPhanachemie is subject to personal jursdiction in this judicial distrct and that\\n\\nvenue is proper in this. Cour under\\n\\n28 D.\\n\\nC.\\n\\n1391(c) and 1400(b).\\n\\nPhanachemie denies the remaining allegations of Paragraph 5.\\n\\n\\x0cPharachemie admts that United States Patent No. 4 657 927\\n(hereinafter the \"\\' 927 patent\" ) issued on April 14, 1987 , and that copies of the\\n\\n927 patent and Certficates\\nComplaint as Exhbit A.\\nsufficient to\\n\\nof Correction are attached to the\\n\\nPhanachemie is without lrowledge or\\n\\nform a belief as to\\n\\nthe trth of the remaining\\n\\nAmended\\n\\ninformation\\n\\nallegations of\\n\\nParagraph 6.\\n\\nPharmachemie is without knowledge or information sufficient to\\nform a belief as to the trth\\n\\nof\\n\\nthe allegations of Paragraph 7.\\n\\nPharmachemie is without lrowledge or information sufficient to\\nform a belief as to the trth\\n\\nof the\\n\\nallegations of Paragraph 8.\\n\\nPharachemie admits\\napplication (\"ANDA\" )\\nFDA\")\\n\\nthat it\\n\\nwith the United\\n\\nfor approval to market\\n\\nfiled an abbreviated new drg\\n\\nStates Food and Drug Administration\\n\\npowder for injection\\n\\nproducts containing\\n\\ncarboplatin as their active ingredient; that its ANDA included a certfication\\nunder\\n\\n505G)(2)(A)(vii)(IV) of the Federal Food, Drug and Cosmetic Act that\\n\\nthe \\' 927 patent is invalid , unenforceable , or will not be infrnged; and that RCT\\n\\nand BMS received notice of the certfication on June 26 , 2001. Pharachemie\\ndenies the remaining allegations of Paragraph 9.\\n10.\\n\\nPharachemie admits that it filed an ANA with the FDA for\\n\\napproval to market injection products\\n\\ncontaining carboplatin as their\\n\\nactive\\n\\n\\x0cingredient (together with the powder for injection products which are the subject\\nof\\n\\n9 above referred to as \"Phanachemie Carboplatin Products\\n\\nANA\\n\\n); that its\\n\\n505(j)(2)(A)(vii)(IV) of the Federal\\n\\nincluded a certfication under\\n\\nFood, Drug and Cosmetic Act that the \\' 927 patent is invalid , unenforceable , or\\n\\nwill not be infunged; and that BMS received\\nFebruary 25 ,\\n\\nnotice of the\\n\\ncertfication on\\n\\n2002. Furher answering, Pharachemie states that RCT received\\n\\nnotice of the certfication on Februar\\n\\n27 ,\\n\\n2002. Phanachemie denies\\n\\nthe\\n\\nremaining allegations of Paragraph 10.\\n11.\\n\\nPhanachemie admts that if the \\' 927 patent is valid , its filing of\\n9 and 10 constitutes\\n\\nthe ANDAs referenced in\\n\\nan act of\\n\\n. least one claim of the \\' 927 patent pursuant to 35 D.\\n\\nplaintiffs to an order\\n\\nC.\\n\\ninfrgement of\\n\\n271(e)(2)(A) entitling\\n\\nthat the effective date. of the approval of both of\\n\\nPhanachemie s ANDAs be a date which is not earlier than the April 14 , 2004\\nexpiration date of the \\'\\n\\n927 patent.\\n\\nPharachemie denies\\n\\nthe remaining\\n\\nallegations of Paragraph 11.\\n\\nFIST\\n\\nAFTI\\n\\nDEFENSE\\n\\nClaims 1 and 3 of the \\' 927 patent are invalid and unenforceable against\\nPhanachemie by reason of obviousness-tye\\n\\ndouble\\n\\npatenting.\\n\\n\\x0cCOUNRCLAI\\nDECLARTORY JUGMENT OF\\nPATENT INALIDITY\\nFor its counterclaim Pharachemie alleges the following:\\n\\nPharachemie is a Netherlands corporation with a -pricipal place\\nof business in Haarlem, The Netherlands.\\n\\nOn infoffation and belief, BMS is a Delaware corporation with a\\npricipal place of business in\\n\\nNew York , New York.\\n\\nOn infoffation and belief, RCT is a D\\n\\nware corporation with a\\n\\nprincipal place of business in Tucson, Arzona.\\n\\nSubject matter jurisdiction exists pursuant to 28 D.\\n\\nC. g 1331 and\\n\\ng 1338.\\n\\nPhannachemie incorporates by reference the statements in\\nparagraph 5 of its Answer establishing venue over this action in this Court.\\nTHE RCT\/BMS PATENTS\\n\\nS. Patent No. 4 140 707 (the \"\\' 707 patent\"),\\nFebruar 20 , 1979 ,\\nJames Hoeschele\\n\\nissued on\\n\\nidentifies the inventors of that patent as Michael Cleare\\n\\n, Barett Rosenberg, and Loretta VanCamp. The patent was\\n\\nsubject to reexamination and a Reexamination Certficate issued on December\\n\\n, 1989. The tenn of the \\' 707 patent was extended\\n\\nby 916 days under 35\\n\\n\\x0cC. 9 156 in response to an application submitted to the United States Patent\\n\\nand Trademark Office by RCT based on the period of time required by FDA to\\n\\nreview BMS\\' application for approval to market its carboplatin products in the\\nUnited States. Copies of the \\' 707 patent , the Reexamation Certficate and the\\nCertficate Extending Patent\\n\\nTerm are attached as Exhbit\\n\\nA.\\n\\nThe \\' 707 patent expired on August 24 , 1998.\\nClaims 1 ,\\n\\n5 6 and 7 of the \\' 707 patent , after Reexamination , claim\\n\\ndiammineplatium(II) dicarboxylate compounds.\\n\\nClaim 7\\n\\nis limited to\\n\\ncarboplatin.\\n\\nThe \\' 927 patent issued\\ninventors of that patent as the\\n\\non April 14 , 1987 , and identifies the\\n\\nsame inventors identified in the \\' 707 patent:\\n\\nMichael Cleare , James Hoeschele , Barett Rosenberg, and Loretta Van Camp.\\nUnless declared invalid or unenforceable , the \\' 927 patent will continue in force\\nuntil April 14 , 2004 , when it is currently scheduled to expire.\\n10.\\n\\nClaims 1 and 3 of the \\' 927 patent generally claim compositions\\n\\ncontaining, and a method of treatment using, compounds ,\\nclaimed in claims 1 , 5 , 6 and 7 of\\n\\nthe \\' 707 patent,\\n\\nincluding those\\n\\nto be admnistered\\n\\nparenterally. More specifically, Claim 1 of the \\' 927 patent claim a method for\\n\\ntreatig a specified malignant tumor which \"comprises parenterally\\nadmnistering to an animal\\n\\naffected with said malignant\\n\\ntumor a\\n\\nsolution\\n\\n\\x0ccontaining in an amount sufficient to cause regression of. the\\n\\ntuor.\\n\\n. . (one of\\n\\nthe diammneplatinum(II) dicarboxylate compounds claimed in the \\' 707 patent\\n\\nand other (platinum(II) and) platinum(IV) compounds) . . . . \" Claim 3 of the\\n\\n927 patent claims a \" composition suitable for parenteral admnistration to an\\nanimal affected with a .\\n\\n. (specified\\n\\npharaceutically acceptable carer\\n\\nmalignant) tumor\\n\\nand\\n\\n. comprising a\\n\\n(one of the diammneplatium(II)\\n\\ndicarboxylate compounds claimed in the \\' 707 patent and other (platinum(II)\\nand) platinum(IV) compounds) . . . .\\n\\nTHE PHAACHEMIE CAROPLATIN PRODUCTS\\n11.\\n\\nThe Pharachenre Carboplatin Products are 1)\\n\\ninjection products containing carboplatin\\n\\nas their active\\n\\npowder for\\n\\ningredient which ,\\n\\nif\\n\\napproved for marketing in the United States , will be available in strengths of\\n50mg per vial 150mg per vial and 450mg per vial; and 2) injection products\\n\\ncontaining carboplatin\\n\\nas their\\n\\nactive ingredient which ,\\n\\nif approved\\n\\nfor\\n\\nmarketing in the United States , will be available in 10mg\/mL, 5mL , 15mL and\\n45mL vials.\\n12.\\n\\nOn or about April 16 , 2001 , Pharachemie filed with the FDA an\\n\\nANA seekig approval\\n\\nto market the\\n\\npowder for . injection form of\\n\\nPharmachemie Carboplati Products in the United States.\\nDecember 6 , 2001\\n\\nthe\\n\\nOn or about\\n\\nPharachemie filed with the FDA an ANDA seeking\\n\\n\\x0capproval to market the\\n\\ninjection fonn of\\n\\nthe\\n\\nPharachemie Carboplati-\\n\\nProducts in the United States.\\n13.\\n\\nPursuant to the Federal Food, Drug and Cosmetic Act , each ANA\\n\\ncontaed a certfication by Pharachemie that, in its opinion, the \\' 927 patent\\nwas invalid ,\\n\\nunenforceable or not infrnged.\\n\\nBy letter dated June 20 ,\\n\\n2001\\n\\nnotice of the certfication in the April 16 , 200 I ANDA submission setting fort\\nthe factual and legal basis for the opinion regarding the \\' 927 patent was sent to\\n\\nRCT and BMS. By letter dated February 20 , 2002 , notice of the certification in\\nthe December 6 , 200 I ANDA submission setting fort the factual and legal\\nbasis for the opinion regarding the \\' 927 patent was sent to RCT and BMS.\\n14.\\n\\nBMS and RCT have asserted and are continuing to assert that the\\n\\nPhanachemie Carboplatin\\n\\nProducts will infrnge claims\\n\\n1 and 3 of the \\' 927\\n\\npatent.\\n\\nPharmachemie seeks a declaratory judgment that claims 1 and 3 of\\n\\n15.\\n\\nthe \\' 927\\n\\npatent are invalid based on obviousness-\\n\\ntye double patenting and\\n\\ntherefore , the Phanachemie Carboplatin Products , when marketed in the United\\nStates , will not infrge those claims.\\n16.\\n\\nThe only difference between the subject matter of the earlier issued\\n\\nclaims in the \\' 707 patent and the subject matter of the later issued claims 1 and 3\\n\\nof the \\' 927\\n\\npatent ,\\n\\nwith respect to the compounds claimed in the \\' 707 patent , is\\n\\n\\x0cthe parenteral use of a solution\\n\\nmalignant tuor\\n\\ncontaining such compounds to treat a specified\\n\\n(claim I) and a composition\\n\\ntogether with a \"pharaceutically\\nadmnistration of such\\n\\nthat includes such compounds\\n\\nacceptable carer\\n\\n(claim 3).\\n\\ncompounds to regress the tumors specified\\n\\nclaims , and the manufactue or use of a composition containing such\\n\\nin an amount suffcient to regress such tuors , would have been\\n\\nThe\\n\\nin those\\n\\ncompounds\\n\\n, to a person of\\n\\nordinar skill in the relevant art and in light of the prior art\\n\\n, an obvious\\n\\nmodification of the inventions claimed in the \\' 707 patent. 17.\\n\\nactual\\n\\ncontroversy\\n\\nexists\\n\\nbetween\\n\\nPhanachemie with respect to invalidity of claims I and 3\\n\\nreason of obviousness- tye\\n\\ndouble\\n\\nRCT\/BMS\\n\\nand\\n\\nof the \\' 927 patent by\\n\\npatenting.\\n\\nWHEREFORE , Phanachemie prays for judgment\\n\\nagainst BMS and RCT:\\n\\n(a)\\n\\nDismissing the Amended Complaint herein;\\n\\n(b)\\n\\nDeclarng that claims\\n\\nI and 3\\n\\nunenforceable based on obviousness-\\n\\nof the \\' 927 patent are invalid and\\n\\ntye double\\n\\npatenting; and\\n\\n\\x0c(c)\\n\\nservants ,\\n\\nPennanently enjoinng RCT\/BMS , their offcers , agents , directors\\nemployees ,\\n\\nauthority of or in\\n\\nsubsidiares and assigns , and all those\\n\\nprivity with them or with any\\n\\nof them ,\\n\\nacting under the\\n\\nfrom assertg or\\n\\notherwse seekig to enforce the \\' 927 patent against Phanachemie.\\n\\nPHARMACHEMIE B.\\nBy its attorneys\\n\\nSTERNS & WEINROTH\\nA Professional Corporation\\n50 West State Street\\nSuite 1400 .\\n\\nTrenton , NJ 08607\\n\\nDated: October 22 , 2002\\n\\nOF COUNSEL:\\n\\nFrancis C. Lynch\\nLaure S. Gill\\n\\nPALMER & DODGE LLP\\n\\nIII Huntigton\\n\\nAvenue\\n\\nBoston, MA 02199\\n\\n\\x0cUnited States Patent (19)\\n\\n(11)\\n\\n140 707\\n\\nOeare et &1.\\n\\n(45)\\n\\nFeb. 20, 1979\\n\\n(54) MALO ATO PLATINUM ANI-TUMOR\\n\\nReferce aled\\n\\n(56)\\n\\nPUBUCA nONS\\n\\nCOt\\\\IPOUNDS\\n\\n(75) Inventors: Micbael J. Oeae; James D.\\n\\nWard ct aI-. CaccTre.tmnt Repom. vol. 60, No. II,\\n\\nHoeele; Barett Rosenberg;\\n\\nLorett L VBJ Cap, aD of Eat\\nLaing, Mich-\\n\\n(73) Assignee: Reseach Corpration ,\\n\\nNew Yotk\\n\\n1675-1678 (1976).\\n42-47 (1971).\\nRosenbeg Pial Meta Rev. IS,\\nLcb ct aI_ , J. Pha3CUt Scince, 65, No. 3 (1976),\\n3IS-320.\\n\\nRoscnberg ct 21, Natue 222. 385- 386 (1969).\\n(21) Appl. No. : 778,955\\n\\nPrnu\\n\\n(22) I:ilcd: Mar. 18 , 1977\\n\\n(57)\\n\\nRelated U.s. Applicaon Data\\n(63)\\n\\nContinuation of Ser- No. 260.989,\\n\\nJun B, 1972.\\n\\n...____n...___n-.__._..n.....-_-\\'-\\n\\n(52) U.s. a. _n\"\"n-_\\'-\\'-----\"\\'-\"-\\'\\n\\n(5&) Field of Secb\\n\\n_n...__..n\",,,,__,,\"n\\'_\\'\\n\\n26\/429\\n\\nC0\\n\\nR;\\n424\/287;\\n\\nABCf\\n\\nMaJonato platinum cOrdintion compounds and\\n\\nmethod of treatig JDgnt\\n\\nab.su!onr.\\n\\n(51) Int. 0.\\n\\nEran:iner-Helc: M. S. Snc:\\n.fm:-Dcu. P. Clake\\n\\nArtomq. Agmt. ar\\n\\n15\/00\\n\\n424n45;\\n\\n54\/4\\n\\n260\/429\\n\\np3rteral\\n\\nadti:l\\n\\na\\n\\ntuors comprig the\\n\\nto 3D afected\\n\\nsolution of the compot:\\n\\n4 a., No Ih-awi\\n\\nan of a .\\n\\n\\x0c140 707\\nnum (IV) forms d2 3 coordination compounds which\\nhave an octahedra arrangement ir space.\\n\\nMALONATO PLATINUM ANTI-TtIOR\\n\\nThe coordination compounds of the. invention ind tra.\\'!, isomers of platium 01) and\\nwhicb conlz the bidentate malonato\\nTbe invention described . herein was made in the S platinum\\nligand which may be lubstituted or.unsubstituted. Tbe\\nof work under a grant or award from the Dc.\\ncou\\nmaonato ligand may contan substituents sc:ected from\\nparJme:nt of Healtb, Education and Welfare. .\\nthe group consising oflower aJkyl. (e.g., methyl , ethyl,\\nThis is a continuation, of application Ser. No.\\npropyl , isopropyl, n-butyl, etc.); arl, (e.g., phenyl;\\n260. 989, fied June 8, 1972, now abandon\\nCOMPOl;1\\'\"DS\\n\\ndude thc cis\\n\\n(I\\n\\n10 lower alkyl., lower alkenyl-, halo-, nino-, lower aJkoxysubituted phenyl and naphthyl); aralkyl , (e.g- , pbenylmethyl (benzyl). 2-(l-n:.phthy1)methyl); alkenyl, (e_\\nThe pre:sent invention rc:ate:s to novel malonato plau4-ami:IO- butene. allyl); cycloakyl. (e.g cyclopropyl,\\nnum coordination compounds and to thc:r use in cancer\\ncydo e:t) I, etc.); cydoalk=nyl, (e. , 2-cyclopcntcnchemotherapyIS I-yl. 2-cyc1obexcn- yl); alkoxy, (e. , mctboxy, ethoxy,\\netc. ), and bydroxy. Also suitable are the . I-cydoaJkSUMMARY OF THE INVENTION\\nylenedi ar\\\\;oxylic acids , (e.\\nI-cycloThe invention provides platinum coordination compropanedicaob\"ylic acid, l l-cyclobutanedicarboxylic\\npounds having the fonnula:\\nacid . e:c.) and the 1, I-cyc1oal1:nyldicuboxylic acids\\n20 (e. , I, I-cyclopropenedicaboxylic acid , 1\\n(P\\\\(II)A (OOI.. CRR.l Dr\\ncyclobut ncdicarbo\"ylic acid.. dc.\\nThe cordination compounds of the invention also\\nci, or ,nn,IP,(JVIA (OOCh- CRRlhLzl\\ncont3i Iwo monodcnbt\"e amonia or priary or heter- acyclic amie ligands, i. e., when x in the above formul\\nis 2 or one bideDtatc amine ligand, i. , when. x is I.\\n,2S\\nx =.1 . or 2;\\nSuitable monodentate ame ligands indude lower\\nalk).1 amincs , (e. , methyl., ethyl-, n- propyl-, ispropylI, Z is , butyl- 3Jines , etc.), aryl amincs (e.g. . aniline), aratprovided that when y = 2, Z = 0 and when y\\n1:yl amines, (e. g:, bczylaine), hydroxy lower\\nRand RJ are. selected from the group consisting of H. 30 ames, (e_ g., ethaolame, propanolame; etc), bylower alkyl, aryl. aralkyl , al1:enyl, cydoalkyl, cy- dr oxybmi , lower alk ?, ames (e.g. , methxyla, etc.). aJkoxyalkyl\\nes\\n, lIethox3?.etbylac1o:.lkenyl. alkoxy, OH, or are combined \\\\lith the ca.\\netc.), and h:krocycli\\n(e. , pyn me and\\nbon atom to fonn a cycloa1yl or c)\"c1oaJkenyl group,\\nandme).\\nIncluded are the 3I0 acid, ie.,\\nand substituted derivaives thrcof\\nwhen x = I, A is HR2\\nCHRr-H NRsH 3S Rr- Cm-\\'Hl OOH wherein R is H, lower alkyl\\nand when x = 2, A is H NR6a heterocyclic amine or an (e. g.. methyl, ISpropyl. ele.), hydroxy lower alyl (e.\\namino acid, wherein Rz, R), . :a R, are the sae or hydroxymethyl, hydroxyeth).I, etc.). aralkyl (e. g., bendifferent and are selected from rhe group consisg of zyl, e Ie).\\nIt 15 to be\\nr.ders ood Ilt. the roordll lIo comH. CH . C H,. hydroxy and lower alkoxy provided thaI\\n.& p?und of the: mve:nl1o may uaclude two Idenllca or\\nR and R may also be ary) or -\\' Y I. and each R is the\\ndlfT rent monode:nbte: bgands\\nsae or dIfferent and IS se ecku from regroup consast. L e I enta e amme: gan s\\nUlta\",\\nIDC u e t e su taIDg 0 H, tower alkyl , arl, aralkyl, h)\"woxy lower\\nU\\ne\\ntuuo pnmary an secon\\nalkyl , hydroxyl and al oxyl annes. alkoxy!akylanncs\\ne th\\ny I cd\\n?:So. De or 0\\nr on a oms 0\\nwherein all of sad alyl groups are lower alkyls\\n4S the: ethyleneda..rune: may contam subslltuents such as\\neteroc c IC su ntuen anc u IDg S3 as a nog lo\", er aJkyl (e. , methyl, ethyl), hydroxyl,\\naloxy (e.g.\\nmember\\n, ethoxy, etc). Secondary ethylenedies\\nwhen z = I, L !S a bJdenlate anlont\\nwherein one or more of the ame groups conta sub.z=\\n, L IS a monodentate amomc h\\nstNents sueh as lisJed above for the carbon atoms of the\\nThe IDventlo . also elatcs to a C\\nSJlJOn and SO primar ame a.\\'!d\\n(e.g. , phenyl) and aralkyl Co e.g.\\nod for treating mal &?ant. tUors In\\nunaJs com- benzyl) may al bearlutilied.\\nlDg pa entcraJly admmaste\\nThe Pt (II) coordintion compounds specifed herein\\na;ng to an.a?lma aff\\n\\\\V1Ih a. ma!lgnaot tumor a solution O!mral\\ng a plat\\ndo not ext as geometrica ismer; however, the\\nompound as defint: hereanabove 10 an OV) compou nds ext as cis and tran ismers. II is to be\\ncoordllallon\\namount suffCIent to caus regrason of the .\\nSS\\nunderstoo that the inventin is inclusie oftbe\\n\\nBACKGROUND OF THE INVENTON\\n\\n,I\\n\\nwherein:\\ny\\nI Ioror2:\\nz == 0,\\n2.\\n\\nall\\n\\ngreater tban 0;\\n\\nIIcs\\n\\n-A\\n\\nar\\n\\nbs\\' ts\\n\\n\\'I\\n\\n\\'0\\n\\nnan=WI\\n\\nd\\' \\' d N and\\n. - d,\\nmethox).\\nand\\n\\nt: th f th\\n\\nd.\\n\\nted\\n\\n!num\\ntumor. furr\\n\\nTIE . ci and(Itr-iomcrs.\\nINVNTON\\n\\nDETAILED DESCRIPTION OF\\nIatlnum\\n\\nl!\\'\\n\\nThe PI\\ncordintioa compounds may also conra tw monoeDtate or one bidentate anioni ligand\\ncompounds and methods for where only one malonato ligad is present, i. e.. where y\\n\\nrhe r producpon are desn\\'bd by J. C.. Baiu, Jr.. The 60 = I in the above fonnula.\\nChe\"!ir ry of the Coordination Compounds\\nSaiitable monodentate anionc ligads\\n\\nR:Wold\\n\\nPubbshang Corp-, N.Y.. 1956, Chap. 2; J. LeWI eI ai,\\n\\nY., 1963.\\n\\ninclude cbJonitrate sulfbideDtatc aionic ligands which\\n\\nride. brolle. iodide. oitrte.- hydroxide,\\n\\nCItmistry Prnciples and Method\\nModer\\nJlt:, etc. A:ong the\\nn. Coordina\\nIntersclence Pubbshers Inc., N. Y., 1960 and Kauffma may be present are oxakte, pyrophosphate, dithioxaIrrorganic Synthtsis\\n\\n- N.\\n\\n7, McGraw-Hil . Book Co., Inc.,\\n\\n6S late- .\\n\\nIt is to be understood\\n\\nthat the invention includes\\n\\nPlatinum (II) fonns dsp2 cordination compounds thos coordination compounds contanig\\n\\nwhich have a square planar arrangement iD space. Plati- dent3!e anonic ligads;;\\n\\nmixed mono.\\n\\n\\x0c140, 707 The preferred compounds are those wherein R.\\n\\nRt in Ibe above formuJa are H, metbyl or ethyl\\n\\nwhite crys.\\nand (to avoid \"bumping ) on the bot plate untilquatity.-The\\ntas of Ihe produci started to form in greal\\n\\ni_\\n\\nmalonatopleUnum. methylmaloDatopb.tioum ard ethyl-\\n\\nmiture was then cooled to room temperature and Ihe\\n\\nmaJon:topl:lunum cordination eompoWlds- The most product fIlered ofT.\\n\\n(I\\n\\npreferred Pt\\n\\nThe: filr;ole: W2 rebeated for 5-10\\n\\ncompounds arc Ibose mzonato- 5 miUles and coled to 0\\'\\n\\nC. 10 col1cct a furlher crop.\\n\\nSg (93%).\\nstage\\nplatium (II) compounds of the abovc f~rmula \",hcrein The crde yield at ths\\nwa recystallized .by dislving in boil,\\nmaonalocThe\\nproduct\\nX = 1 and Rl\\' RJ\\' RJ and R) are each H\\n5g) rethylenediamine platium (II), metbylmalonatoc- ing or nea boiling water. Thc above yield (20. diss\\nylmilonatoclilers\\nof\\nboilng\\nwaler\\nCor\\ncomplele\\nquired about\\nthylened!am!oepI31!nUm (II) and el\\ntmum 01);. and .wbere!o x = 2 and 10 lution. Milonic acid IgI was dislved io the waler to\\nIbylcn a.tn\\nme- suppresi any hydrolysis.- The fJtered solution was\\neach R6\" H. e., m lonat tammmeplatinum (II).\\nethyl- colcd - to. .\\nto give while fluffy neees\\nmeplatmUD\\n01)\\nthylmalol1tod\\n\\nan\\n\\n0\\' C\\n83%).\\n\\nnCllip\"btc.\\n\\nmilonalodtamrmneplatmum (II).\\n. (18.1511show. .ha. hydrlysi.\\nThe prdctTcd Pt OV) compounds arc those wbcrem \\'U. V JVla ,pertlo! and conduclivi.y .,udi.. havc\\nbismalonato\\n(or\\nIS\\nis\\nX = 2, eacb R6 is H and y = 2, ie.,\\nThe: crysub decompose between 185\\' 190\\' C. The\\nbismelbylmalonaloorbis:tbylmalonato)di:mineplat-structure of the: product was verfied cia an ir. sp-\\n\\num (IV).\\nThe cordination compounds of\\n\\nIbe: invention lUy\\n\\nbe tru Solubility of the prouct i, low in cold water, i.e..\\nc.,\\n\\n20 mg\/IOO mls at 20\\' C. and 43 mgllOO mls al 37\\'\\nprepared by one ofa varidy of well-mown methods. A\\nhigher in near boiling water (90\\' - 100\\' C)- 65g1100\\ngene:ral method of preparation of the: Pt OI) cordina- 20 but\\nmi.\\ntion compounds is as follows: Staing compounds hav- The empirca composition was verified\\ny elemental\\ning the formula cis-(Pt A(Hal)zl whcrein Hil is I, Cl or\\nanilysis:\\namine\\nBr and A is one bidentate or two monodenta:e\\nMalonatodmicplatinwn(I (P(Nil(CJ\\nIig:mds (prepared by the method of S. C.Dba\\nCaculated for C HaNl Pt. C: 10. 88; -H: 2.43; N:\\n\\nIndia\\n\\nJ. Cbcm., V91 S, p. 193 (1970))\\n\\nare\\n\\nreact with silver 2S\\n\\nreacted with Ihe milonate ion to form the cordintion\\n\\ncompounds of the invention. Th\\nseted by the foUoy..ing\\n\\n\\' 8. 46: Pt 58. 9;\\n\\nlattr is then\\n\\nnitrte to form the diaquo eomplcx.\\n\\n(P\\n\\nFound C: 10. 67; H: 2. 35; N: 8. 54;\\n\\nmethod is replt-\\n\\n30\\n\\nrcacdon scheme:\\n\\ncilPt AOJJ + lAgNOJ + 1HzO) - a..\\n\\n(PI (en) (C.\\n\\nPI 58.\\n\\nEXMPLE 2\\n\\n(j4)) (en = H2N(CH NHJ; C.I0,\\n\\n- =OJ\\n\\n. CH(CH)) cOt -\\n\\n;Utrate (3. 64g)\\n\\nwa dislved in 20 ml ofwalcr\\n\\nA(H20) JJetmJh + 2,,&a Silver\\n:z(CH:zCL21 (3..g) supended iD\\nand adde:d to\\nThe miture was ,fued\\na..(P A(HzO)zjOJh +. 1t2C-iCOh .. IPI water (30 cl) in a conica () !51c.\\n10 miutC$ unti all the ydhOI\\nplate\\nfor\\n5::\\nwar\\non\\na\\n1KOJ\\n+\\n2H\\nA(OOHii +\\nJS low platinum complex Iw dilved to give a yenow\\nhgand\\nor\\ntwo\\nmouoame\\nliquor plus a copious white siver. choride precpitte.\\ne\\nb.dentate\\nwherem A!s o\\nhrough a lie pore fiter and :\\n.\\nhgands.\\nThe\\nmitue was ftt.red\\ndentate amIDe\\nvolumes of hot\\nThe followmg non-hmJtl exple: are iJustraUve the precipitate washed lwie with smallwas\\nwasgs added to an\\n?f the . melhods for prepag the compounds of the water. The clea fttl1tc plus\\n\\nmvenUon.\\nEXAMPLE 1\\n\\nM2.onalodiacplaUnlim(II)\\n(P1(NJMC\\n\\n04)) fillc\\n\\n0, + 2Hl0)\\n\\n(PI(NHY1(Hl 0)zClO,) + lA,a\\n\\n(PJh:\\n\\nO)z(NoPz + C,\\n\\n(Pt(NHJh(c)1tJ\\n\\nO.z-\\n\\n0. tI\\n\\n1 + 2N0, - +1H1\\n\\ntrte (21;558\\n\\nilvcr\\n\\nred and \"\"\"ahCd with colif water\\n\\nand actone (Yeld\\n\\naqu.\\n\\n45 2.65g). The mothe:r liquor plus\\nwashis wa\\nreduce 10 about half its origi Volume (- 30 mI) to\\n\\nReactions:\\n\\n(PtJhOzJ + 1AI\\n\\nsolution of mcthylnonic acid (2g in 20mb)\\nwhich had ben adj!l!i. to pH 5-6. The miture wa heated 10 aboul SO\\' C for five miutcs and then cooled\\nto 0: c. The shny white crysta whicb .formed were\\n\\n40 aqueou\\n\\nyield a second crop on coing to. O\\' C. (Yield 0. 85g).\\n\\nTota Crude: yi.c1d\\nwas recf)\"Stalized from :a\\n\\nwith falr:tiori Ihrougb a fine\\npore mtcr prior to eooling.\\nYield of shiy whit leaets 2.96g (74%).\\nwater (arund 250 mJs)\\n\\ntOIcoola-\\n\\nsligbtl les tha the S\\n\\n(88%). The complex\\n\\ninum volum of boiling\\n\\nto ct c.\\n\\nC:19.41 H 3.26 N:7.sS;\\n\\nCacuJatCd for\\n\\nFound C:19. U H 3. 61 N:7. 89. omelne 3;0oot m. order to aVOId silver\\n) and 2\/dc to\\'5 A second crop (0.33g\\':8%) viis obtaed by reducing\\ntion) was dISlved . m watc: (SO\\nk. P\\' e co\\n) m \\' 2 mJ. comca\\nthe bulk of tbe mother liquor. \"\\n(Pt(N\\n\\' J)zOzl (2OS\\neo were\\n\\nstig\\n\\nwae O\\\\ OD\\n\\nmi.\\n\\na\\n\\npiawa\\ne WI\\nrap \\'EXPLE 3\\ncom.\\n\\nunil the siver chloride precpitatioD\\n\\nThe I--\\n\\n\\'.ro IV . - J ,-m\\nplcte and . the mother liqoor wa alost c:Jor1\\nsilver cbloride wa fJtercd offusg a fie pore\\nSilver nitr (5.45g) wa dilved in water (J mJ\\nglas fiter and the precipitate wa washed seve tiesand\\n(Pt(NJna.. (3g) suspcdcd in\\nadded to\\nwith bot water to give a tota6lrrate volume of 100200\\nWiter (30 ml) cotag_ conCetrted nitrc acd (3\\nloblonic acid (13g - a twofold\\n\\nsitcred 60 .\\n\\nexces) wa\\n\\ndilved ml), The.\\n\\nwaed on\\n\\n-8.\\n\\na hot plate (70\\'\\ncootets were\\nmixture\\nstired Cor.at leat ot: hour- The\\nglas fiter to\\nfttered through a fine pore sintere\\n\\nin water (30 ml.) and neutred wilh a solution of 65 C.) an\\n\\npota-\\n\\ntr\\n\\nre-\\n\\nKOH (- 13g in 30 mi.) 10 pH 5-6. The: resuJt.g\\nprecpilate wa washe\\n. sium maJor-ate solution wa added to the: platinum eoo- move the silver chloride:. The\\ne dea fI.\\nr.\\nwning fttrate and the mixture was cacCully warmed t..ice v.;tb n smal volume of hot wat\\n\\n\\x0c140 707\\ntrJle plus WJsbir:gs was tested wilh a drop\\n\\nof 1M KCI following standard protocols for Ibis tesling as set by\\n\\nsclutions to detennin if excess silver chloride was pres- the National Cancer\\nent. (If Ihe test is posilive. surtdent KCI is added dropRep..\\n\\n25(1962)).\\n\\nInstitute.\\n\\n(Cancer Chemotherapy\\n\\nwise to th: bul;c solution until no silver chloride is pre- For thes tests an SJ80 tumor taken from a sacrifice\\ncipilaled.) The solution \\\\I\\':S refiltered and the filtrate S mouse was disected free of superfluous tissue and cut\\nreduced to 20-:!0 mls in volume and cooled to O\\' C. to\\n\\nyield plate yellow crytals\\n\\nunder sterile conditions into approxitely 10 miJi-\\n\\n(presumably trans gram size \\' pieces\\n\\n(PI(NH3)z(NOJ)\\')). These were washed with a\\n\\nThese lisue pieces were then im-\\n\\nliule planted by Irocr in the left axlar region. subcutae-\\n\\nof\\n\\nco!d water and then acetone (Yield 1.8g). A ponion\\nously, in new mice. -The mice were, on the average.\\nthis)\\' ield (lg)wasdisslvedinnminimumofhotweter 10 approximately fouf wecks old and weighed 18-20\\nto which sodium. nitrate (0. 2g) bad bccn added. This grams. Takng day 0 as the day of implat. the anmas\\nsolution was filtered iulO zn aqueous solution of malonic were sacrificed on day JO. The tumors were excisd and\\nacid (0.5g\\n\\n- a slight excess) which had bccn adjusted to\\n\\n80.\\n\\npH 5-6 with sodium hydro\"idc. Wbitc nucro-ryslals of\\nthe complex quickly form on cooling. These were fi.\\n\\nIS\\n\\ntered ocr and washed with cold waler and acetone.\\n\\n(Yidd 0. 7g - 30-%).\\nC:Iculatec! for\\n\\n20a Pt\\n\\nC:16. 63\\n\\nH 2. 33\\n\\nN:6A7;\\n\\nFound C:IU H 2. 64 N:6.\\nGENERAL STUCTRE CONFORM TJON\\nThe malonate g,roup is shown to be coordinzted\\nplatinum by the o\\n\\nweighed and the ratio of the weights of the tumors in\\nmice\\nin the: treated animals to the control set of anma\\nwas obtained. This ralio, multiplied by 100, is given as\\nthe\\n\\nTIC\\n\\nratio in Table I,\\n\\nFor the flIt set of tests the coordination compound\\nwas freshly dislved in stenle distiled water and in-\\n\\njected intraperiton ally on day I into each of the tet\\n\\nThe volume of the injecton wa usually I mI.\\nanito mal where\\nthe chemical was not soluble in\\n20\\n\\nmice.\\n\\nsome cases. in order to get an active dose into the\\n\\nth amount\\n\\nrved change in the electronic \\'\\n\\nspectra on soicg from Ih aquo to Ihe malonate speces of solvent, a fine dispersion was prepared of the dose .\\nThus, structures such as- (Pt(NH)Jz(H20)zJzH2 C)O,)) Deeed for the tes Thus so e of our test rcsults w~re\\n3n ruled out confirming the analyt!;al data Simiarly, 25 obtamcd oil - animal where a sluny of ,the co pound .\\nzero. time conductivit). m asuremenrs support a neuual was injected. These are so noted in Table I below. In\\ncompound. The i.r. specua show the presence of coor- adilition ,\\n\\ndi:tated carboxyl ,groups (16001650 cm\\n\\nfor some of the compounds,\\n\\nthere wa injcctl:\\n\\nI and 140 about I m1 of sol uti an, either in one single injection. or\\n\\nno COzH sroups (which would show at in 2 injecuons given a few hours apart of I m1 each.\\nwith\\niferent dose\\n1700- 1750 cm). Finally Ihe cerboxyl group vibrations 30 These injections were initilly given in 4\\nare compalible: \",ith a ehelated strulure as compared to levels for eacb Dew compound with 6 mice in each dose\\n\\nulate complexes of known struclures. leveL The tess covered a dose rage from a low mefThe comtJunds of the invention were tcsted for fective dose, to en upper dose level which prodlJd\\nanti- tuDor a::livily using our standard screening tumor, some: death within the tie period of the experiment.\\nsolid szrcorua I SO tume: in female: Swiss white: mice, 35 The results are 3d forth in Table\\n\\nI.\\n\\nTABLE I\\nTOb of ADtit.\",or Activity or Malo..lo aDd Substituted MaI..to\\nCordinat:oa Coplex or Plarm\"\"\\n\\nS..cor.. ISO ADal.\\n\\nFcme Swi while mice\\nTw:orSi. e injectia 00 day. Doled iatupcritoc.\\nDay oK\\n\\nCoordinalion Comptcl.\\n\\nI\\'lCCioD\\n\\nLet\\n\\nNo. of\\n\\nTIC D..1h\\n\\n10 mEls\\nJ5 rnEls\\n20 ..(le\\n25 rnEle\\n\\nM2!O:tJ.todi1.cctncpbt:\\\\:D1\\n\\n(II) (.Iurry in HID)\\n\\nDose\\n\\n.\\n\\n)0 rn&\/\\n\\n1\/6\\n6\/6\\n5\/6\\n6\/6\\n\\n40 ..eI!:\\n50 rn\\n\\n(solution ia HP)\\n\\nD.ily ror\\n\\ndlY\\' 1-\\n\\nIi4 mes\\nrnsle\\n\\n5 lDe\\n\\n6 rn&\\nMethylml!o..todiaminef\\'atinam(ll) (Slution in H\\n\\n1 ..eI&\\n\\n30 ..eI!:\\n\\n40 \"\\'ele\\n\\n\\'0 \"\\'sis\\neo \"\\'Slg\\n10 \"\\'els\\n\\n124\\n\\n138\\n\\npbtlnum (II)\\n\\n100\\n120\\n\\nclhylmalon\\'lo:thytencdminpla riD\"\\n\\n(U\\n\\n100\\n110\\n120\\n\",\"10..0.\\\\. propylen::i.:nin..\\n\\nplatinum (II)\\n\\n3\/6\\n\\n616\\n\\n50 ..&:!:\\n\\nmalonlOdhylcasruir.c\\n\\n\\x0c140 707\\n-continued\\nDoy of\\n\\nCoorC:in\\n\\nan\\n\\nlnje-lion\\n\\nCo:rp1cs\\n\\nt:o.of\\n\\nTIC !)Ibs\\n\\nDox LcvcJ\\n\\ns:r\",, I:l;clil k.c.\\n\\nr.:Jo:c:o-t.3\\n\\nrlal,nu;: (tl)\\n\\n30m\\nC( mg\/r;\\n50 mglr;\\nII mgr;\\n70 mglr;\\n90 mglg\\n\\ncch)-1m3!o:o:cc:h!t cDt\\n\\nI!:amir!:aliu:n (II)\\n(sclurioa r. H\\n\\nJO Ins\/g\\n\\nclh)\\':\"\"lor. w=\\\\r\\npb.in=(11)\\n(..I\"lion in HPI\\n\\n40 mg\/g\\nIng\/1\\n70 mglg\\n20 mg\/jJ\\n10 mglg\\n\\nmaJoDa:oct!ylc3ei:.a-i:C\\'\\npb.icuIR (II)\\n\\nJO mV\\\\1\\n\\n(..:uc:n i., 8;\\n\\n\\'\" mglg\\n\\n45 mg\/g\\n50 mglE\\n55\\n\\n\",elg\\n\\n3\/6\\n3\/6\\n\\nmV\\\\1\\n10 m;Va\\n\\n10 mglg\\n40 mglg\\n60 mV\\\\c\\n\\n1.c)\\'\"looulo,,-.i: 1 yb,:\\nlUm::\":cpb.i\\' :1 (II)\\n\\n10\\n\\nmgr;\\n\\n100 lIg\/c\\n\\nno mg\/c\\n160 \"\\'&11\\n\\n10 mBlke\\n\\nJ:elt:).br:ne)\\n\\'\" (\\\\0\\n\\nl:!or..I\\nF1zlin\\n\\n100\\n110\\n\\n..ile\\nmelc\\n\\n140 mg\/c\\n\\n160 IIg\/r;\\n\\n180 mg8\\n\\nday 1 injections descrbed above. in 35\\ninj tions were delayed until day g\\nthe tumor was usU3ly at\\nIn thes\\n\\nIn a.dilion to th\\n\\na nu;nl: r oC C2\\ntUIor growth.\\n\\ncas\\n\\nleast brg=r than 1 g:.\\n\\na.s wue\\n\\nas estimated by palpatioD.\\n\\nthOt inject\\n\\nTbe\\n\\nDo\\n10\\n10 lDg\/g\\nmtlB\\n\\nTVtr: W.1icr 2\\'6 CacC: 0Srcoma ..\\n\\nand observed Cor a period\\n\\nwhik stilllliowing the anl\\n\\n40\\n\\nto sur-\\n\\n\"ive for this time period. Such test results are descrbed\\n\\nin TABLE II below.\\n\\n40 milB\\n\\n,. IDllibitD\\nDo\\n10\\n15\\n40 100\\nDo..\\n20\\n100\\n\\nMoIo..rDelb)\"cncdWnin.pbtinull(U\\nJ56 Carcnosacoma. ADim. . Rat\\nSiDa!e injcc.ion Do)\\' Iln Oi lotnperilonc:ally\\n\\nIIi\\n\\naI:: 110 Ar.!. Fame S..u. while mic:\\n\\nSi...ilc injeODS \"0\\n\\nTou! Nu:nbcr\\nCcordiurion Comp!cr.\\n\\nrr.t!c:ut\\n\\n,.i.c..\\n\\np:\"ti.,=(II)\\n\\nDoo\\n\\nof Repesons\\n\\nOall\\n\\nDea\\n\\nall\\n\\nTumor: ADJIPC6,\\\\ . \"\"IDol - Mouo\\nSingle injeioo Da)\\' 15 in Oil. IntraperioDuUy Death\\n,. Inhibition\\n\\nU mgllB\\n\\n100\\n\\n16 IDg\/g\\n\\nII mglg\\n\\n10 IDi:B\\n::.2tcutoe!hyICDC\"\\n\\n100\\n100\\n\\nTI:r: Walker\\n\\n.. b)\\' MaC21O\\n\\nDay\\' irav.cac:)\\' iI H.O solU1o\\n\\ntOO\\n\\n11 lDelS\\n\\nTABLE II\\n\\nTcs of Luge SL-Co: I!O\\nC1 Coplescs cC Plaw\"...\\n\\nT=o\\'.\\n\\nAairn. R:at\\nDotll\\n\\nSinele injccacn In)\\' 1 in Oil. Inmpen.onc.lly\\n,. Inhibiuoo\\n\\napproxia:ely 60 days. Activity was measured by tbe\\noC aniraI whos tumon had regresd to the\\nnumber\\n\\naoi:ng PO:Dt.\\n\\nTABLE II\\nCODfirmtory Test5 or Aftdrumor Aclivity\\nMoIO\"\"loda..mi..cpla.inum(tl)\\n\\ndie\\n\\n40 mr;l\\n\\nand maonato\\nSamles of tbe malonato\\nethylene diarno complexes of phtinum(Il) wae sub60 mal.\\nmitted to the Drg Rcsn: and Development Brach\\nfor mUtuoftbe Natiott Cancer Inslitute for\\nTh Jesuits dcsn\"b in Tabl s I and Jl indicate Imt ro mor actvity against Ihe LI110 tumor in mi The rcsalts obtaind on th tumor system arc shown in Table\\nthe compouDds of the invention are very potent anlituDor agents againsl the S 180 tumor in Swi white mice\\nIV. They confirm the actty of the compounds of the\\n\\ndi=crhliu:(l1)\\n\\n4\\' lDg\/g\\n\\n\\'\" IDaI&:\\n\\nscrg\\n\\nConfirmatory tests of anlitumor activity\\n\\nagait the\\n\\nWalker 256 Circiosacoma in rats . and the ADJIPC6A tu\"1or in tnc= were conducted. The initial test\\nresuI:s 2re shown in Table III and confinn the potent\\nact:on of the C3mI=oc.nds of the invenlion against these\\no:her tUtor s)\"\\n\\nSlern.\\n\\ninVcnIiOD.\\n- TABLE IV\\nCoDr\"\".,o,y Tests of Anrilumoc Activity\\nNoEioa1 Cancer Institute.\\n\\natlb\\n\\nTumor:\\nLl110 Animal - Mia\\nDaily injcclons D )\\'s 1-. In\"apcrilon..lIy\\n\\n\\x0c707\\nTABLE IV-continued\\nConrirrrINY Tnti or Anti1u or Aclivit7\\nbtion31 Cancer Institute.\\n\\nWe claim:\\nIt Ihe\\n\" IDeu:\\n\\nCnonln..:a. Compteo\\n\\nDose\\n\\nM.IoNl,xD::micepb.i.um(II)\\n\\n50 malg\\nU malg\\n\\n163\\n\\n50 mglg\\n\\n101\\n\\nD3ity\\n\\nCoo,\\n\\ninj\\n\\nlons Da)\\' s 1- 9.\\n\\n13)\\n\\nII)\\n\\n12-\\' m&lg\\n\\ntolatanOlocth)\\'l:nediOl:ncpbtiwo(ll)\\n\\n(..;ot\\nIn:1\\nTumor: LlltO\\n\\nin Life,po\"\\n\\nmglg\\n\\nx-=lor2;\\n\\nRand R, arc selected from the group consistig oCH.\\n\\n1)1\\n\\nlower alyl, arl, aralkyl. aIcnyl.\\n\\n121\\n\\nAniml- Mice\\n\\nInu3palolu~.JII,\\n\\nDos\\n\\n.,t:c. Camp!:..\\n\\nV. JnC1C\\'\\n\\nin U\\'::pa\\n\\n25 mglg\\n\\n196\\n\\nII mglg\\n\\n160\\n141\\n\\n16-\\'\\n\\nmilg\\n\\nand arc selecled Crom the group consisting\\n\\nor suspended in 20\\nwaler or other pharmaceulically acceptable carrier\\nliquids, . The p:ucnleral1y adminislcnble composition\\n\\nto about\\n\\nat the amount may\\n\\nIOmg per mL, it being undersoo\\n\\ncO!Dpound 2S\\n\\nThe platinum coordination compounds or the invenlion. are preferably adminitered parenteraly 10. an ani.\\n\\nm3J affected with a malignant Iwnor. The durtion\\ntreatmenl and the dos\\n\\nlevel,\\n\\nor\\n\\nr cours, will depnd in 30\\n\\nupon the size of the hot anim, natue and\\nsize oflhe lumor. etc. Gcneraly, however, a dose level\\nor rroJ: about 20 to about 200 mg\/g or boy weight\\neach c\\n\\nper day will be suffcienL It is 10 be undersloo. however, th:!1 tbe plalinum coordination compounds eom- 3S\\npounded \\' wilh a suitable pharaceulical carner in the\\nmay also be adminis-\\n\\nS3me proportions as rected a.bove\\n\\ntered orally al the s.e\\n\\ndosage leVels.\\n\\nI, A is HR N-CHR)NR5H\\nor an amino acid\\nand when x = 2, A is H2\\nwherein R . R3. R. and Rs are the same or different\\n\\nthe inv::nlion are preferably disslved\\n\\nvary greatly depeding .upon the parular\\nemplo)\\' cd and Ihe anima to be !reatm.\\n\\ncycloalkyl, cy-\\n\\ncloakenyl , alkoxy, OH. or combine with the carbon atom 10 form a cycloalkyl or cycloalkenyl\\ngroup;\\nwhen x =\\n\\nThe malonatoplatinum cordination compounds\\n\\nshould preferably conlain from about O. Smg\\n\\n(PI(II)At(OOz-CRR\\nwherein: -\\n\\n160\\n\\n12-\\' mglg\\n)1-\\' mVkg\\n\\n1. Plalinum coordiD3lion compounds havig the formula:\\n\\nCH), CzH\"\\n\\noC\\n\\nhydroxy aDd lower aJkoxy, provided\\n\\nIhat Rz and Rs may al be aryl or aralkyl and each\\nR6 is the sae or diffcrenl and is selected from the\\ngroup consting\\n\\noC\\n\\nH. lower aJyl, aryl.\\n\\naral.\\n\\nhydroxy lower alkyl , hydroxyl- and alkoxylamincs.\\nand alkoxyl aJkyl amines.\\n2. The: compowid oCctaim t\"having Ihe Connula:\\n(PI(lI)A\\n\\n((OOCHz))\\n\\nwherein\\n\\n:I = I, and\\nR2\\' R\\n\\nand R) arc each H-\\n\\n3. The compound\\n\\n(PI(lI)\\'\"\\n\\noC\\n\\nclai 1 having\\n\\nt(OOCK z)l\\n\\nwherein:\\nand each\\nis H.\\n4. Malonalo diamine platinum\\n\\nx = 2,\\n\\n(0,\\n\\nthe formula:\\n\\n\\x0c(19)\\n\\nREEXAATION CERTIFICATE (1173rd)\\n(II) Bl 4 140 707\\n\\nUnited States Patent\\n\\nCertcate Issued De. 19, 1989\\n\\n(4S)\\n\\nOeae et\\n\\n(S4)\\n\\nl\\\\1ANAYo PU\\'1\\'UM ANTI-TUOR\\n\\nCOMP\\'U\\n\\n(7S) Inventors:\\n\\nOc\\nHcecr Ba\\n\\nMkhsc J.\\n\\n(S\\n\\nJames D.\\n\\nLo L Vm CaP, al or i:t\\n\\nLag. Micl\\n(73) A5\\n\\na Reque\\n\\n1989\\n\\nCecs ror. .\\n\\nb.uc:\\n\\nPatct No.\\n\\nFdcd:\\n\\nAppl. No.\\n\\n4.140707\\n\\nI) ID\\n\\n(S1)\\n\\nFeb 20 199\\n77,,55\\nMa. 18,\\n\\no.\\n\\n160.919. JUD 3. 1912. abon\\n\\ndoned\\n\\nt. a.\" --.-_u_--..----...-..-.- C1 15\/0\\n\\nU.s. a. -....-..-.--.....-.-.-- 556\/137;\\n\\n8) Fldd of\\n\\nSc\\n\\n5412\\n\\n556\/17\\n\\nS46n; \\'\\n\\n--._u.--\\'-\\n\\n6\/I1,\\n\\n137\\n\\nRdcr ate\\n\\nPUBLICATIONS\\nOn the Srcreohrn!r or Pla:o S.u (I\". authored\\nby A. A. Gruberg 00 Jan. 8. 1931 2.d pub cd OD\\n\\n455-72.\\nMay 2. 193\\n\\nlA TUcn.\\nNo. 90101.716 , Feb. 14,\\n\\nConrinuation of $cr.\\n\\n(S6)\\n\\n: Res CorU TlthDol\\n\\nt1OC\\n\\n. Relarrd U.s. AppUodoD Ibis\\n(63)\\n\\nI in Hclvcrica\\n\\nCbi Acta xrv at pp.\\n\\nPrmary bDmilltr- A. McFarlane\\n\\n(57).\\n\\nABCT\\n\\nMaJonato platium c oOrd\\n\\nD co poUDds and \\' 1\\n\\nmethod or tr tig uWgnt ncOD compriiDg th\\nof 1\\nparentera adtntiOD to an\\nsolutin or die compoUDd.\\n\\nafcc an\\n\\n.\\n\\n\\x0cB14. 14O 707\\n\\n(P.((octJl\\n\\nCERTICATE\\nREATION\\nER 35 U. C. 307\\n\\nwherein:\\n\\nISS\\n\\nTIrE PATE IS HEBY AMNDED\\nJNICAlCD BELOW.\\nMJlttu c.clos In hCA1\\'\\n\\npatu but h.\\npatet;\\n\\n_tt\\n\\nbrackets ()\\n\\n1nca adtions\\n\\n:ad R 1\\n\\ntcd from 1Ie group c:nsistig\\n\\nof It\\n\\nanl, alcuyl, cyc1oayl. cy.\\n\\ncloalkenyl, aloxy, OR, or combine with the cato form .. cycloalkyl or cyCRRt\\nbon :al0m Us\\ncloalftenyl grup;\\nwhen x= 1. A is HRIN-CHR)-CKR-NR,H and\\nwhco x=2. A is H2N\\'or aD amo:ad, wherein\\n\\nthe 10\\n\\nRI. RJ. 1U and R, arc the sme or dierent and arc\\n\\nto the palat.\\n\\nselecte (ro:n the grup constig of It CH).\\n\\nAS A REULT OF REATION. IT HAS\\nTIT:\\nEEN\\n\\nUC sd\\n\\nlower ilyl. arl,\\n\\na.pa orIn thc\\n\\nb1n deleted and is DO lODger. pa\\n\\npritc. In ItAcs\\n\\n%=1 or 2;\\n\\n5 R\\n\\nC1H\" hydroxy and lower aloJ;, provided tht\\nRl u: R, (ImY al be) c:re als scl dfrm\\npoup conr..ng \\'of arl or anl an c.h 14 is the\\n\\nDETD\\n\\nsae or dicrct an is seec\\n\\nCW 3 JId 4 are caccUcd\\n\\nco03g of R,\\n\\nlower all, arl.\\n\\nfr the grup\\n\\nanyJ; hydrol:Y\\n\\nhydroxyl.\\nand A\\nCl 1 is detc to be patetable as amended. 20 uHvVR,anJ R,isH.rf.\\nmR GnJRIlUnDrbachH.\\ntcUII\\ncompond af claim 1 \\'\\nCl 2; depdent 00 an\\ncicd 10 be patentale.\\nlower all,\\n\\no. aloxy1ao,\\nwhclI JC=l\\n\\nprori&J rMl\\n\\n.noxyl alyl acinC1\\n\\namended c!,uCl is delAr-\\n\\nNew cWr S, 6, and 7 ar\\n\\n..ilh\\n\\nL Pbtium cordilico compounds hAvig the for-\\n\\nmuh\\n\\nru\\n\\ncarbll\\n\\nto\\n\\nC)doal1cl grp.\\n\\ndetcn:ed to 25\\n\\nbe patctale.\\nadded LDd\\n\\n..urcu. R\\n\\n5. Tic\\n\\nrogclu,\\n6.\\n\\n11e compond of claim\\n\\nrogtrhtr wirk\\n\\nl!re coban alom\\n\\nform a CJloblran\\n7. 1.\\n\\n(ll)\\n\\nk1s rhey\\n\\n13M Ri\\n\\nan aru!rcd form\\n\\n..!rcreill R OM Rlltun\\nro ..1ah\\n\\nrhey\\n\\nan Imai:hed\\n\\ncylotrar:t tficrba;r!clt c!i4mrint pla:illum\\n\\n\\x0cJ:-\\n\\nTRDEM OFFICE\\n\\nUNITED STATES PATENT AND\\n\\nCERTIFICATE EXTENDING PATENT TERM\\nC. 156\\nUNDER 35 U.\\n\\n140 707\\n\\nPatent No.\\nDa\\n\\nted\\n\\nFebruary 20, 1979\\n\\nInventor (s)\\n\\nMichael J. Cleare et al\\n\\nPatent Owner\\n\\nResearch corporation\\n\\nTechnologies, Inc.\\n\\nThis is to certify that there has been presented to the\\n\\nCOMMISSIONER OF PATENTS AND TRADEMAS\\nan application under 35 U. C. 156 for an extension of the\\nsince it appears that the requirements of the law\\n,\\nhave been met this certificate extends the term of the patent\\nfor the period of\\n\\npatent term.\\n\\n916 DAYS\\nwith all rights pertaining thereto as provided by 35\\nUSC 156 (b).\\n\\n\\' . J.\\n\\nII) ,\/ .\\n\\n,;-\\\\\\\\,\\\\\\' f\\n\\n. \\'t \/\\n\\nri\\n1\/\\n\\nI\\'),\\n\\nu\\' .\\n\\nI .,\\n\\nIj ..\\n\\nt\"\\n\\ntfi\\'\\n\\nI have caused the seal of the Patent\\nand Trademark Office to be affixed\\nthis 25th day of January 1990.\\n\\n- ,\\\\1\\n\\nI I.\\n;L\\n\\n.,.\" Xx\\'\"\\nt:.\\n\\n,j,tl\\n\\n-o\\\\i .\\n\\n. I. .\\n\\n,(r\\n\\nk.\\n\\n(I\/\\n\\n. r:..\\n\\nJiWf\\n\\n\"\\'\\\\1 ,\\n\\nJeffrey H. Samuels\\nActing commissioner of\\npa tents and Trademarks\\n\\n\\x0c'","created_timestamp":"July 1, 1998","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/commission-advisory-opinion-addressing-proposed-agreement-between-bristol-myers-squibb-company-and.\/040429advisoryc4076.pdf"}
{"text":"b'UNn\\'ED STATESOF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON,\\nD.C.20580\\n\\nApril 27, 2004\\nKevin B. Chilson\\nChilsonFuneralHome\\n200 FairlawnAvenueWest\\nP.O. Box 1097\\nWinsted,MN 55395\\nDear Mr. Chilson:\\nThank you for your recent letter to the FTC\\'s Consumer ResponseCenter, which has\\nbeen forwarded to me for response. You enclose a General Price List (\"GPL \") that Iten Funeral\\nHomes recently provided to a consumer. You ask the FTC\\'s legal opinion on whether-the GPL\\ncomplies with the FTC Funeral Rule.\\nFirst, I cannot state definitively whether Iten Funeral Home violated the Funeral Rule\\nbecause that would be an impermissible legal opinion. Whether Crist has actually has violated\\nthe Funeral Rule is a factual and legal question that only the courts can determine. However, I\\ncan offer an informal staff opinion on the requirements of the Funeral Rule. You should note\\nthat Ithis is the opinion of FTC staff only and is not binding on the Commission or on any\\nindividual Commissioner. Having given those disclaimers, here is my interpretation of the\\nFunbral Rule requirements that are applicable to the GPL you sent.\\nYou seemto have three primary concerns with the GPL.. First, you ask whether the\\nfuneral home must list a charge for goods and services offered in connection with \"Use of\\nFun~ralHome Facilities;\\' and with \"Transportation\" (and which are Jisted in the GPL as \"no\\ncharge.\"). Second, you ask whether the home should have listed or itemized the prices and goods\\nor services included in the cost of a memorial seryice and in the cost of a funeral service for an\\ninfant or child. Third, you ask whether the crematory charge should be listed as part of the direct\\ncremation charge rather than as a cashadvanceitem.\\nAs you know, the Federal Trade Commission does not regulate the prices charged by\\nfun~ral providers. The purpose of the Funeral Rule is to make price information readily available\\nto c~nsumersto enable them to do comparative shopping for funeral goods and services. In\\naddition, disclosures required to appear on the general price list inform consumers that they have\\nthe right to purchase only those goods and services that they specifically select. The Rule seeks\\nto promoteinfoimed decision-making so that consumers are able to make funeral arrangements\\nthat ,are within their means. To that end, the Funeral Rule requires funeral providers to give\\ncon$umersan accurate price list itemizing its prices for 16 specific items of funeral goods and\\nservices. The Rule does not require that the funeral home offer all 16 of these goods and\\n\\n\\x0cservices. If a funeral home does not offer a particular good or service, it need not list that good\\nor service on its GPL. In addition, the Rule does not prohibit listing other items that the home\\noffers, including the prices for any packagefunerals. Among the s~ified 16 items for which\\nprices must be listed are (1) use of facilities and staff for viewing; (2) use of facilities and staff\\nfor funeral ceremony; (3) use of facilities and staff for memorial service; (4) use of facilities and\\nstaff for graveside service; and ( 5) limousine. Iten\\' s GPL does not list prices for these five\\nitems.\\n\\nIn the FTC\\'s businesspublication\"Complying with the FuneralRule,\" the Commission\\nstaff statesthat a funeralhome:\\ncannot list any of the 16 items required to be separatelyitemized\\non the GPL as \"free\" or \"no charge.\" Because you recover the cost\\nof the free item in in your other prices on the GPL, the customer\\nmay not have the choice of rejecting the charge. However, you can\\noffer items not required to be separatelyitemized on the General\\nPrice List (such as acknowledgment cards) at \"no charge,\" as longas your state or local laws do not prohibit this practice. (p. 27)\\nThus, items on the Iten GPL that are not required to be separatelyitemized -e.g., the flower car,\\npallbearer vehicle, and funeral sedan--can be listed at \"no charge\".if they are available at no\\nchargeto all consumerswho make any type of funeral arrangement with the home. However, the\\nhome must list a specific price if the charge is available at \"no charge\" only to some consumers\\nwhile other consumers are charged separately,depending on the type of funeral service they buy.\\nIn that instance, the charges become declinable fees for specific goods or services.\\n\\nIten\\'s GPL lists \"no charge\"for useof the preparationroom whenthe consumerbuysthe\\nstandardfuneralpackage.However,the FTC\\'s \"Complying with the FuneralRule\" statesthat\\nthe price for embalmingshouldincludeuseof the preparationroom. Therefore,Iten\\' s GPL does\\nnot comportwith the FuneralRule with respectto that item.\\nThe FuneralRule allows a funeral providerto useseparateprice lists for specialgroups,\\nsuchasfuneral arrangements\\nfor childrenandinfants. The Rule allows funeral providersto list\\nthe differentfeesin two ways: (1) on the GPL, CasketPrice List and OuterBurial Price List,\\nalong with the regularofferings; or (2) a separateprice list for thesearrangements.If the funeral\\nproviderpreparesseparateprice lists, he or sheneednot give them out to anyoneexceptthose\\npersonsinquiring abouta funeral for a child or an infant. (See\"Complying with the Funeral\\nRule\" (p. 14\\xc2\\xbb\\nIn addition,the FuneralRule doesnot requirethe GPL to include the costof cremationin\\nthe price for directcremation. In \"Complying with the FuneralRule, the Commissionstaff\\nstates:\\nThe price of the actualcremationof the deceasedmayor may not\\nbe included in yourchargefor directcremation. If you own a\\ncrematory,it would be appropriateto include the cremationcharge\\nin this fee. However,if youusea crematorythat someoneelse\\n\\n\\x0c~\\n\\nowns, you may treatthis chargeas a cashadvanceitem. In that\\ncase,you shouldmakeclearto the customerthattherewill be an\\naddedchargeby the crematory.(p. 10)\\nI am enclosing a copy of the Commission\\'s guide \"Complying with the Funeral Rule\" for\\nyour future reference.\\n\\nI hopethis informationis helpful to you.\\nSincerely,\\n\\n~\\n\\nJ ~~g.~~It,~t~j~~~~.\"\\'\/\\n\\nCaroleI. Danielson\\nSeniorInvestigatorand\\nFuneralRule Coordinator\\nEnclosure\\n\\n\\x0c'","created_timestamp":"April 27, 2004","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-04-3\/opinion04-3.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\nDivision of Marketing Practices\\nJames K o h m\\nDirect Dial\\n202 326 2640\\n\\nFax Numb er\\n202 326 3395\\n\\nJanuary 14, 2004\\nMr. Neil H. Offen, President\\nDirect Selling Association\\n1275 Pennsylvania Ave., NW\\nSuite #800\\nWashington, DC 20004-2411\\n\\nRe: Staff Advisory Opinion - Pyramid Scheme Ana lysis\\nDear Mr. Offen:\\nThank you for your inquiry requesting a staff Advisory Opinion regarding the Federal Trade\\nCommission\\'s analysis of pyramid schemes. You have identified two areas of concern: 1) the\\nCommission\\'s analysis of compensation based on personal consumption by members of a multi-level\\ncompany\\'s sales force (\"internal consumption\\xe2\\x80\\x9d); and 2) the legal significance of consent orders that the\\nCommission has entered into with several pyramid scheme operators. I am pleased to provide you with\\nthe following staff guidance.\\nInternal Consumption\\nMuch has been made of the personal, or internal, consumption issue in recent years. In fact, the\\namount of internal consumption in any multi-level compensation business does not determine whether\\nor not the FTC will consider the plan a pyramid scheme. The critical question for the FTC is whether the\\nrevenues that primarily support the commissions paid to all participants are generated from purchases of\\ngoods and services that are not simply incidental to the purchase of the right to participate\\nin a money-making venture.\\n.\\nA multi-level compensation system funded primarily by such non-incidental revenues does not depend\\non continual recruitment of new participants, and therefore, does not guarantee financial failure for the\\nmajority of participants. In contrast, a multi-level compensation system funded primarily by payments made\\nfor the right to participate in the venture is an illegal pyramid scheme.\\n\\n\\x0cIn a pyramid scheme, participants hope to reap financial rewards well in excess of their investment\\nbased primarily on the fees paid by members of their \"downlines.\" Downline members pay these fees\\nto join the scheme and meet certain prerequisites for obtaining the monetary and other rewards offered\\nby the program. A participant, therefore, can only reap rewards by obtaining a portion of the fees paid by\\nthose who join the scheme later. The people who join later, in turn, pay their fees in the hope of\\nprofiting from payments of those who enter the scheme after they do. In this way, a pyramid scheme\\nsimply transfers monies from losers to winners. For each person who substantially profits from the\\nscheme, there must be many more losing all, or a portion, of their investment to fund those winnings.\\nAbsent sufficient sales of goods and services, the profits in such a system hinge on nothing more than\\nrecruitment of new participants (i.e., fee payers) into the system.\\nThe Commission\\'s recent cases, however, demonstrate that the sale of goods and service; alone does\\nnot necessarily render a multi-level system legitimate. Modem pyramid schemes generally do not\\nblatantly base commissions on the outright payment of fees, but instead try to disguise these payments\\nto appear as if they are based on the sale of goods or services. The most common means employed to\\nachieve this goal is to require a certain level of monthly purchases to qualify for commissions. While\\nthe sale of goods and services nominally generates all commissions in a system primarily funded by\\nsuch purchases, in fact, those commissions are funded by purchases made to obtain the right to\\nparticipate in the scheme. Each individual who profits, therefore, does so primarily from the payments\\nof others who are themselves making payments in order to obtain their own profit. As discussed\\nabove, such a plan is little more than a transfer scheme, dooming the vast majority of participants to\\nfinancial failure.\\n1 A participant\\xe2\\x80\\x99s downline usually consists of the people the participant recruits to join the\\nprogram as well as the people her recruits recruit, and so on through a predetermined number of\\nlevels.\\n2 It is important to distinguish an illegal pyramid scheme from a legitimate buyers club. A\\nbuyers club confers the right to purchase goods and services at a discount. If a buyers club is\\norganized as a multi-level reward system, the purchase of goods and services by one\\xe2\\x80\\x99s downline\\ncould defray the cost of one\\xe2\\x80\\x99s own purchases (i.e., the greater the downline purchases, the greater\\nthe volume discounts that the club receives from its suppliers, the greater the discount that can be\\napportioned to participants through the multi-level system). The purchase of goods and services\\nwithin such a system can, therefore, be distinguished from a pyramid scheme on two grounds.\\nFirst, purchases by the club\\'s members can actually reduce costs for everyone (the goal of the\\nclub in the first place). Second, the purchase of goods and services is not merely incidental to the\\nright to participate in a money-making venture, but rather the very reason participants join the\\nprogram. Therefore, the plan does not simply transfer money from winners to losers, having the\\nmajority of participants with financia11osses.\\nPage 2\\n\\n\\x0cConsent Orders\\nWith regard to your second question, the Federal Trade Commission often enters into consent orders\\nwith individuals and companies that the Commission has determined have violated the FTC Act. To\\nprotect the public from those who have demonstrated an unwillingness to follow the law, these orders\\noften contain provisions that place extra constraints upon a wrongdoer that do not apply to the general\\npublic. These \"fencing-in\" provisions only apply to the defendant signing the order and anyone with\\nwhom the defendant is acting in concert. They do not represent the general state of the law.\\nFor example, when the Commission brings a pyramid scheme action, the case often concludes with a\\nconsent order. The scope and severity of the order will depend upon the facts of the case; however,\\nmost such orders contain definitions that exclude any sale to a participant in the business from the\\ncalculation of the venture\\xe2\\x80\\x99s legitimacy. These definitions draw very clear lines for those who have\\ndemonstrated a willingness to violate the law, but are not intended to represent the sta te of the law for\\nthe general public.\\nThank you for your inquiry.\\n\\nJames A. Kohm\\nActing Director of Marketing Practices\\n\\nPage 3\\n\\n\\x0c'","created_timestamp":"January 14, 2004","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/staff-advisory-opinion-pyramid-scheme-analysis\/040114bizopp-pyramid.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nDivision of Marketing Practices\\n\\nJanuary 6, 2004\\nVIA FAX AND FIRST CLASS MAIL\\nWilliam E. Raney, Esq.\\nCopilevitz & Canter, LLC\\n423 W. Eighth Street\\nSuite 400\\nKansas City, MO 64105\\nDear Mr. Raney:\\nThis letter responds to two separate requests for advisory opinions filed by your firm,\\ndated October 29 and November 11, 2003, concerning the application of the Telemarketing Sales\\nRule fee provision found at 16 C.F.R. \\xc2\\xa7 310.8 (\\xe2\\x80\\x9cthe TSR Fee Rule\\xe2\\x80\\x9d).\\nEntities Required to Pay the Fee\\nIn your first request, you ask which entity is required to pay the fee for access to the\\nNational Do Not Call Registry in the following two circumstances:\\n1)\\n\\nCompany A is a large insurance company with more than 10,000 independent agents.\\nCompany A desires to provide a telemarketing campaign to its agents to promote and\\nmarket its services. In connection with this campaign, Company A will provide scripts,\\nfulfillment materials, and telephone consumer leads. Can Company A pay for access to\\nthe National Do Not Call Registry and provide \\xe2\\x80\\x9cscrubbed\\xe2\\x80\\x9d leads to its agents for use with\\nthis campaign for Company A\\xe2\\x80\\x99s services only?\\n\\n2)\\n\\nCompany B is a large real estate company with more than 10,000 franchised agents doing\\nbusiness only in the name of Company B. Can Company B purchase access to the\\nregistry and provide its Subscription Account Number to its agents for marketing\\ncampaigns solely in the name of Company B?\\n\\nThe TSR Fee Rule requires sellers to pay the fee to access the National Do Not Call\\nRegistry prior to engaging in telemarketing. Specifically, the TSR Fee Rule states: \\xe2\\x80\\x9cIt is a\\nviolation of this Rule for any seller to initiate, or cause any telemarketer to initiate, an outbound\\ntelephone call to any person whose telephone number is within a given area code unless such\\nseller, either directly or through another person, first has paid the annual fee . . . for access to\\ntelephone numbers within that area code that are included in the National Do Not Call\\nRegistry . . .\\xe2\\x80\\x9d 16 C.F.R. \\xc2\\xa7 310.8(a). The TSR Fee Rule also prohibits independent entities from\\n\\n\\x0csharing the cost of accessing the registry, as follows: \\xe2\\x80\\x9cAny person accessing the National Do Not\\nCall Registry may not participate in any arrangement to share the cost of accessing the registry,\\nincluding any arrangement with any telemarketer or service provider to divide the costs to access\\nthe registry among various clients of that telemarketer or service provider.\\xe2\\x80\\x9d 16 C.F.R.\\n\\xc2\\xa7 310.8(c).\\nIn the case of independent or franchised agents of a company, we believe it is appropriate,\\nfor purposes of the TSR Fee Rule, to treat such agents as if they were separate corporate\\naffiliates, and apply the test for corporate affiliates set forth in the Statement of Basis and\\nPurpose for the TSR Fee Rule, to determine if the independent agents must separately pay for\\naccess to the national registry. See 68 Fed. Reg. 45134, 45139 (July 31, 2003). Under that test,\\nthe independent agents of a company will be REQUIRED to pay a separate annual fee for access\\nto the national registry if they meet EACH of the following two criteria: (1) The agent is\\nseparately incorporated or, for a non-corporate entity such as a partnership, is a similarly distinct\\nlegal entity; AND (2) the agent markets under a different name. Thus, if the agent of Company B\\nis not incorporated and markets under the name of Company B, then the agent will not be\\nconsidered a separate seller. Even if the agent is a separate legal entity, it will not be considered\\na separate seller if it markets only under the name of Company B. The same is true if that agent\\nmarkets under the name \\xe2\\x80\\x9cCompany B, John Smith, independent agent.\\xe2\\x80\\x9d If, however, a\\nseparately-incorporated agent markets under the name \\xe2\\x80\\x9cJohn Smith\\xe2\\x80\\x99s Independent Services,\\xe2\\x80\\x9d\\nwithout using the name of Company B, then the agent will be considered a separate seller and\\nwill be required to pay the appropriate fee for access to the registry.\\nIf the independent agents are considered separate sellers under the test described above,\\nthen the parent company is prohibited from sharing in any manner information obtained from the\\nnational registry with those agents, unless each agent separately registers and pays the\\nappropriate annual fee. On the other hand, if the agents are not treated as separate sellers under\\nthe Fee Rule, then it is entirely appropriate for the parent company to pay for access to the\\nregistry and provide \\xe2\\x80\\x9cscrubbed\\xe2\\x80\\x9d leads to its agents. It is also appropriate in that situation for the\\ncompany to purchase access to the registry and provide its Subscription Account Number to its\\nagents for their use in scrubbing their own lists to be used for marketing campaigns in the name\\nof the company.\\nIndependent Telemarketer Access to the National Registry\\nIn your second request for an advisory opinion, you ask whether a telemarketer that places\\ncalls on behalf of sellers that have properly obtained and paid for access to the national registry\\nmay, for \\xe2\\x80\\x9cconvenience and programming purposes,\\xe2\\x80\\x9d use its own Subscription Account Number\\n\\xe2\\x80\\x9cthat it has properly obtained to access the national list.\\xe2\\x80\\x9d\\nThe simple answer to your query is yes. The TSR Fee Rule Statement of Basis and\\nPurpose states the answer as follows:\\n\\n-2-\\n\\n\\x0c[T]he Commission agrees that allowing independent access to the national registry by\\ntelemarketers or other service providers is appropriate. As a result, telemarketers or\\nservice providers will be allowed to gain access to the national registry on their own\\nbehalf, without being limited solely to the access allowed for their seller-clients. To\\nmaintain the fairness of the fee structure, however, telemarketers and service providers\\nwill be required to pay the appropriate fee for such independent access. Moreover,\\ncovered sellers still will be required to pay the fee prior to engaging in, or causing a\\ntelemarketer to engage in, outbound telephone calls for which access to the \\xe2\\x80\\x9cdo-not-call\\xe2\\x80\\x9d\\nregistry is required by the Amended TSR. This \\xe2\\x80\\x9ccovered seller pays\\xe2\\x80\\x9d requirement\\nremains in place regardless of whether the telemarketer or service provider employed by\\nthe seller independently and voluntarily pays for access to the national registry. In\\naddition, telemarketers and service providers paying for such independent access must\\ncertify that they are accessing the national registry solely to comply with the provisions of\\nthe Amended TSR, or otherwise to prevent telephone calls to telephone numbers on the\\nnational registry. Finally, such telemarketers or service providers are not permitted to use\\nthe information they obtain from the national registry on behalf of any entity, covered\\nseller or exempt, unless that entity has paid the appropriate fee for access to the\\ninformation or, for exempt sellers, has submitted the appropriate certification to gain\\naccess to the national registry.\\n68 Fed. Reg. at 45137 (July 31, 2003).\\nPlease be advised that our opinion is based on all the information furnished in your\\nrequest. This opinion applies only to the extent that actual company practices conform to the\\nmaterial submitted for review. Please be advised further that the views expressed in this letter\\nare those of the FTC staff. They have not been reviewed, approved, or adopted by the\\nCommission, and they are not binding upon the Commission. However, they do reflect the\\nopinions of the staff members charged with enforcement of the Telemarketing Sales Rule.\\nSincerely,\\n\\nDavid M. Torok\\nStaff Attorney\\n\\n-3-\\n\\n\\x0c'","created_timestamp":"January 6, 2004","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-04-1\/tsropinfees_0.pdf"}
{"text":"b'manatt\\n\\nMartin J. Thompson\\nDirect Dial: (714) 371-2530\\nE-mail: mthompson@manatt.com\\n\\nOctober 18, 2002\\n\\nClient-Matter: 24698-030\\n\\nmanatt I phelps I phillips\\n\\nVIA FEDERAL EXPRESS\\nDonald Clark\\nSecretary, Federal Trade Commission\\n600 Pennsylvania Avenue, N.W.\\nRoom H177\\nWashington, D.C. 20580\\nRe:\\n\\n- -- -- - - _j\\n\\nStaff Advisory Letter Request\\n\\nDear Mr. Clark:\\nThis request for a staff advisory letter is submitted on behalf of six county medical\\nsocieties located in adjacent counties in or near the San Francisco Bay area of Northern\\nCalifomia. 1 These societies propose to create a messenger-model physician network, tentatively\\nnamed Bay Area Preferred Providers (\"BAPP\"). This request is submitted pursuant to 16 CFR\\n\\xe0\\xb8\\xa2\\xe0\\xb8\\x87 1.1 and with reference to the August, 1996 Statements of Antitrust Enforcement Policy in\\nHealthcare, Statement No.8.\\nBACKGROUND\\nNumerous physician networks seeking to serve portions of Northern California have\\nfailed during recent years. 2 These were typically delegated model IPAs accepting capitation, and\\ndiscovering too late that their costs exceeded their revenues. As a result of the disappearance of\\nthese IP As from the market, portions of Northern California appear to be underserved by\\nphysician networks adequate to offer sufficient contracting opportunities for physicians seeking\\nto participate in managed care arrangements.\\nThe sponsors ofBAPP have concluded that a messenger-model network with geographic\\ncoverage co-extensive with the seven counties represented by the sponsors (possibly adding\\nSanta Clara as well) may create efficiencies for the payors that access the market through this\\nnetwork and may create contracting opportunities for physicians who choose to participate.\\n\\n1\\n2\\n\\nAlameda-Contra Costa, San Mateo, San Francisco, Sonoma, Napa and Solano.\\nSee Exhibit A, attached.\\n650 Town Center Drive, Suite 1250, Costa Mesa, California 92626 Telephone: 714.371.2500 Fax: 714.371.2550\\nLos Angeles\\n\\n70009352. 1\\n\\nI\\n\\nMexico City\\n\\nI\\n\\nMonterrey\\n\\nI\\n\\nOrange County\\n\\n1\\n\\nPalo Alto\\n\\n1\\n\\nSacramento\\n\\n1\\n\\nWashington, D.C.\\n\\n\\x0cmanatt\\nmanatt 1 phelps 1 phillips\\n\\nDonald Clark\\nOctober 18, 2002\\nPage 2\\nSTRUCTURE AND OPERATION\\nThe sponsors propose to organize BAPP as a California nonprofit mutual benefit\\ncorporation. Each sponsor will elect two directors and physician participation in BAPP will be\\nentirely non-exclusive. The physician members of each sponsoring society will be invited to\\nparticipate, and participating physicians will be required to provide funding for BAPP through\\napplication fees and periodic assessments as necessary to cover costs. BAPP will credential its\\nparticipating physicians consistent with standards established by the National Committee on\\nQuality Assurance, saving payors and providers the cost and time inherent in re-credentialing.\\nBAPP will function as a traditional messenger-model network. It will employ an\\nindividual who will serve as an agent or \"messenger\". This person will not be permitted to\\nattempt to negotiate or otherwise influence pricing of services. BAPP will solicit minimum\\nacceptable reimbursement levels from individual physicians or fully-merged physician groups.\\nBAPP will develop a fee schedule depicting numbers of physicians offering to contract at\\ndifferent pricing levels. BAPP will maintain the confidentiality of this information with respect\\nto the participating providers, and communicate the information to payors. BAPP will be\\nauthorized to bind participating providers to contracts at or above their minimum acceptable\\nrates.\\nBAPP will communicate to the participating providers each payor offer. Contracts will\\nbe administered by BAPP only when 50% or more of the participating providers accept offers\\nfrom a given payor. With the consent of the payor in question, BAPP members will be given the\\nopportunity to opt in to BAPP contracts that they initially rejected. Where less than 50% of the\\nparticipating providers accept the offer of a given payor, BAPP will distribute the proposed\\ncontract to all BAPP providers, allowing the payor to seek to negotiate arrangements with\\nindividual providers or groups independently ofBAPP.\\nInformation may be communicated by BAPP to participating providers about a given\\ncontract when requested, but any such information will be limited to objective information about\\nspecific contract terms. BAPP will make no recommendations encouraging or discouraging\\nparticipating providers from accepting the terms of a given contract.\\nANTICIPATED PARTICIPATION\\nAttached as Exhibit B is a chart setting forth the number of active practicing physicians\\nwithin each of the counties covered by the BAPP sponsors, the number of actively practicing\\nphysicians who are members of each such sponsor, and the number of physicians currently\\nexpected to participate in BAPP from each such county. The anticipated level of participation is\\nderived from internal polling by each of the sponsors, and does not represent a firm commitment\\n\\n70009352.1\\n\\n\\x0cmanatt\\nmanatt I phelps I phillips\\n\\nDonald Clark\\nOctober 18, 2002\\nPage 3\\nto participate by those responding affirmatively, nor a firm commitment not to participate by\\nthose responding in the negative. It is, however, believed to be a reasonably reliable prediction\\nof the level of participation. Although membership in each of the sponsoring societies is open to\\nall physicians practicing within the county in question, the chart also indicates that total\\nparticipation in county medical societies is generally not high, particularly in the larger counties.\\nThe sponsoring societies have concluded that there are no geographic regions within their\\nrespective counties and no medical specialties that have disproportionately high representation or\\nare likely to achieve participation rates significantly different from the county as a whole.\\nCONCLUSION\\nThe sponsors ofBAPP are aware that the messenger model does not lend itselfto\\nplacement within the antitmst safety zone set forth in Statement No. 8 of the Statements of\\nAntitrust Enforcement Policy in Healthcare. Nevertheless, they believe that a review of the\\nmarket conditions as described above (which they believe are readily verifiable) and the business\\nplan for BAPP as it currently exists, leads to the conclusion that BAPP has the potential to create\\na valuable addition to the healthcare market place in the greater San Francisco Bay area. The\\nsponsors are also aware that their status as county medical societies may cause some level of\\nconcern over the possible influence which they may have over the participating physicians. The\\nsponsors submit, however, that the business plan for BAPP as described herein creates\\nreasonable protection against any material anti-competitive risk.\\nThe sponsors request a staff advisory letter, to confirm that staff perceives no inherent\\nviolation of the Federal Trade Commission Act in the structure, sponsorship or operations of\\nBAPP as described above.\\nSincerely,\\n\\n~\/~\\nMartin J. Thompson\\n\\ncc:\\n\\nHealth Care Division\\n\\nMJT:laj\\n\\n70009352. 1\\n\\n\\x0c'","created_timestamp":"October 18, 2002","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/bay-area-preferred-physicians\/021018thompsonltr.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\nOffice of the Secretary\\n\\nKeith E. Whann, Esq.\\nWhann & Associates\\n6300 Frantz Road\\nDublin, Ohio 43017\\nDear Mr. Whann:\\nThe Commission is responding to your request for the Commission\\'s views whether\\ncertain warranty terms violate the \"tying\" provisions of the Magnuson-Moss Warranty Act.\\nYour inquiry arose in the context of used vehicle warranties commonly called \"50\/50\\nwarranties.\" These are limited warranties under which the dealer promises to pay 50% of the\\nlabor cost and 50% of the cost for parts for repairs covered by the warranty, with the remainder\\npaid by consumers. 1 Your concern is whether Section 102(c) of the Magnuson-Moss Warranty\\nAct2 and Section 700.10 of the Federal Trade Commission\\'s Interpretations of Magnuson-Moss\\nWarranty Act3 prohibit dealers who offer 50\/50 warranties from requiring that warranty repairs\\nbe performed at a repair facility designated by the dealer. It is the Commission\\'s view that\\nneither the Act nor the Interpretations prohibit such warranty terms.\\nThe Magnuson-Moss Warranty Act is the federal act governing written warranties on\\nconsumer products. 4 Among other things, the Act contains provisions that protect consumers\\nfrom deceptive or unfair warranty practices. One of these provisions is Section 102(c), which\\nprohibits warrantors from conditioning warranty coverage on the consumer\\'s \"using, in\\nconnection with the warranted product,\" an article or service identified by brand, trade, or\\n\\n1\\n\\nThe discussion of 50\/50 warranties in this letter applies equally to a warranty with a\\ndifferent percentage allocation or with a deductible.\\n2\\n\\n15 U.S.C. 2302(c).\\n\\n3\\n\\n16 C.F.R. Part 700.10.\\n\\n4\\n\\nThe Act defines \"consumer product\" as \"any tangible personal property which is\\ndistributed in commerce and which is normally used for personal, family, or household purposes\\n(including any such property which is intended to be attached to or installed in any real property\\nwithout regard to whether it is so attached or installed).\\n\\n\\x0ccorporate name, unless the warrantor provides the article or service without charge. 5 This\\nprovision prevents warrantors from imposing tying arrangements that restrict consume~s\\'\\npurchase options with respect to articles or services used in connection with the warranted\\nproduct. In the Commission\\'s view, performing the very service promised under the warranty is\\nnot \"using\" a service \"in connection with\" the warranted product.\\nThe legislative history for this provision, though scanty, mentions specific types of tying\\narrangements that would be prohibited: \"Unde~ this prohibition, for example, no automobile\\nmanufacturer may condition his warranty of an automobile on the use of a named motor oil or\\non the use of its own automobile parts unless he shows that any other motor oil or automobile\\nparts which are available will not function properly and will not give equivalent performance\\ncharacteristics in the automobile.\" 6 The Commission provided additional guidance in its 1977\\nInterpretations of the Magnuson-Moss Warranty Act, 16 C.F .R. Part 700. 7 Section 700.1 O(b)\\nclarified that, when a limited warranty covers only replacement of parts but the consumer pays\\nthe labor charges, Section 102(c) would prohibit the warrantor from requiring that the consumer\\nuse only specified service or labor to install those parts. Conversely, the Commission explained,\\nunder a limited warranty that covers labor charges only, Section 102(c) prohibits a condition that\\nthe consumer use only a brand of parts identified by the warrantor or that the parts be purchased\\nfrom a particular seller.\\nA tie-in prohibition that preserves consumers\\' purchase options makes sense with\\nrespect to non-warranted articles or services that are severable from the dealer\\'s responsibilities\\nunder the warranty. Accordingly, if a warranty covers only repair parts, the repair service is not\\na service promised or covered under the warranty, and the consumer may choose the servicer.\\nSimilarly, if the warranty covers only service, the parts are not covered under the warranty and\\nthe consumer can obtain the parts from any supplier. For the same reason, as noted in the\\nlegislative history, the tie-in provision would prohibit conditioning warranty service on the\\nconsumer\\'s use of a certain brand of motor oil or automobile parts.\\nIn the case of 50\/50 warranties, the warranting dealer has a direct interest in providing\\nthe warranty service for which it is partly financially responsible. Unlike the above examples, in\\na 50\/50 warranty the warranted repair work is not, as a practical matter, severable into two parts:\\none that the warrantor can perform and another part that another auto repair shop could perform.\\nNor can a warranted part be separated into a fractional part provided by the warrantor and\\nanother fractional part that the consumer can purchase elsewhere. Rather than conditioning the\\n5\\n\\nThis section states in pertinent part as follows: \"No warrantor of a consumer product\\nmay condition his written or implied warranty of such pro9.uf1.9n the c9nsumer~s using, in\\nconnection with such product, any article or service (oth~r than an article or service provided\\nwithout charge under the terms of the warranty) which is identified by brand, trade, or corporate\\nname ... \"\\n6\\n\\nH.R. Rep. No 93-1107, at 36-37 (1974).\\n\\n7\\n\\n42 FR 36112 (July 1_3, 1977).\\n\\n2\\n\\n\\x0cwarranty on the purchase of a separate product or service not covered by the warranty, a 50\/50\\nwarranty shares the cost of a si11gle product or service. Dealers who pay a proportion Q[ repair\\ncosts need some control over the diagnosis of the repair needed and the quality of the repair.\\nBarring dealers from providing the repair under these types of warranties could impose\\nhardships and costs on both consumers and dealers that do not appear warranted by the purpose\\nor intent of the statute. 8\\nThis opinion is consistent with staffs advice on the issue beginning over twenty-five\\nyears ago, when the warranty statute was enacted. 9 In addition, the Commission\\'s Buyers Guide\\nfor used cars was designed to accommodate disclosure of warranties that cover less than 100%\\nof the cost for warranty repairs. 10 We note, however, that a 1999 statement by the Commission\\nappears to express a different view on the issue. In a Federal Register Notice (\"FRN\")\\npublishing the results of its review of the Magnuson-Moss Warranty Act Interpretations, 11 the\\nCommission stated that used car warranties that cover a percentage of parts and labor and\\nprovide that the repair must be done by the dealer\/warrantor \"likely violate Section 102(c). \" 12\\nHowever, the Commission did not take a definite position at that time on the applicability of\\nSection 102(c) to these types of warranties.\\nTo resolve any uncertainty, the Commission is issuing this letter opinion, adopting the\\nstaffs long-held opinion that Section 102(c) does not prohibit 50\/50 warranties (or other\\nwarranties under which the warrantor pays- a percentage of the costs for covered repairs) from\\nrequiring that the warrantor perform all covered repairs. This opinion is limited to the question\\nof whether section 102(c) prohibits such warranty terms. It does not constitute approval of any\\n\\n8\\n\\nThe Commission recognizes that there is some concern that dealers may inflate the costs\\nof warranted repairs and in this way impose all or most of the repair cost on the purchaser. If\\nsuch practices occur, they would likely constitute deceptive practices and could also constitute\\nbreaches of warranty (as failing to provide the benefit promised in the warranty).\\n9\\n\\nSee, e.g., ChristianS. White, Title L Magnuson-Moss Federal Trade Commission, in\\nPractising Law Institute, THE FEDERAL TRADE COMMISSION IN 1975, at 33.\\n10\\n\\nThe Commission\\'s Used Motor Vehicle Trade Regulation Rule, 16 C.P.R. Part 455,\\nrequires that used car dealers display a Buyers Guide on all used cars offered for sale. This\\nBuyers Guide must disclose the basic terms of any warranty offered in connection with the sale\\nof the used car, including the duration of coverage, the percentage of total repair costs to be paid\\nby the dealer, and the exact systems covered by the warranty.\\nFinal Action Concerning Review of Interpiet~tl~r{~-\\xc2\\xb7~f Magn~so-ll.-Mo-ss Warranty Act:\\nRule Governing Disclosure of Written Consumer Product Warranty Terms and Conditions; Rule\\nGoverning Pre-Sale Availability of Written Warranty Terms; Rule Governing Informal Dispute\\nSettlement Procedures; and Guides For the Advertising of Warranties and Guarantees, 64 FR\\n19700 (1999).\\n--\\n\\n1\\n\\nr\\n\\n12\\n\\n!d. at 19703.\\n3\\n\\n\\x0cother terms of such warranties. Moreover, certain acts or practices, such as inadequate\\ndisclosures, could constitute deceptive or unfair practices in violation of Section 5 oft~_e Federal\\nTrade Commission Act, 15 U.S.C. \\xc2\\xa7 45, or relevant state laws. Any such determination would\\nbe made on a case-by-case basis.\\nIn accordance with Section 1.3(b) of the Federal Trade Commission\\'s Rules ofPractice\\nand Procedure (16 C.F.R. \\xc2\\xa7 1.3(b)) the Commission retains the right to reconsider the questions\\ninvolved in this opinion and to rescind or revoke the opinion should the public interest so\\nrequire. Further, in accordance with Section 1.4 of the Commission\\'s Rules of Practice and\\nProcedure (16 C.F.R. \\xc2\\xa7 1.4), your letters, the submission from the National Consumer Law\\nCenter, and this response will be placed on the public record.\\n\\nBy direction of the Commission.\\n\\nDonaldS. Clark\\nSecretary\\n\\n4\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/national-independent-automobile-dealer-association\/clark_to_whann_letter.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERALTRADE COMMISSION\\n600 PENNSYLVANIA\\n\\nA VENUE, NW\\n\\nWASHINGTON,\\nD.t. 20580\\nDivision of Enforcement\\nBureau of Consumer Protection\\n\\nAugust 5, 2002\\n\\nJohn S. Rode\\nRode & Qualey\\n295 Madison Avenue\\nNew York, New York 10017\\nDear Mr. Rode:\\nI am writing in responseto your requestfor an advisory opinion on behalf of Amicale\\nIndustries. I apologize for the delay in response.\\nYour letter describes in detail Amicale\\'s quality control procedures in the manufacture of\\ncashmereand cashmere\/woolblend fabrics. The letter then asks whether theseproGedures\\nconstitute \"due care\" as the tenn is used in the Wool Products Labeling Act. The relevant\\nlanguage of the statutereads as follows:\\nProvided, That deviation of the fiber contents of the wool product from percentages\\nstated on the stamp, tag, label, or other means of identification, shall not be misbranding\\nunder this section if the person charged with misbranding proves such deviation resulted\\nfrom unavoidable variations in manufactureand despite the exercise of due care to make\\naccuratethe statementson such stamp,tag, label, or other means of identification.\\n15 V.S.C. \\xc2\\xa7 68b(4)(a)(2)(A).\\nThe Commission\\'s Rules of Practice, 16 C.F.R. \\xc2\\xa7 1.1(a)state: \"Any person,partnership,\\nor corporation may requestadvice from the Commission with respectto a course of action which\\ntoe requesting party proposes to pursue.\" The Rules further state: \"Hypothetical questions will\\nnot be answered,\\n\"\\nAmicale\\'s quality control procedures,as described in your letter, appearto be exemplary.\\nIndeed, suchproceduresshould ensure that fabrics manufactured by Amicale are accurately\\nlabeled with respectto fiber content.\\n\\n\\x0cJohnS. Rode,page2\\nHowever, your letter does not set forth a proposed course of action for which an advisory\\nopinion would be relevant or appropriate. The proceduresdescribedare Amicale\\'s general\\nbusinesspractices, which presumablyhave been in effect for some time. Weare aware of no\\nallegation or suggestionthat any of Amicale\\'s products are improperly labeled. Therefore, there\\nis no question for which a Commission or Commission staff advisory opinion would be\\nappropriate.\\nWe do appreciateAmicale\\'s high level of concern and attention to labeling issuesand its\\ncare in adhering to manufacturing and testing proceduresdesignedto ensureaccuratelabels.\\nPursuantto Section 1.4 of the Commission\\'s Rules of Practice, 16 C.F.R. \\xc2\\xa7 1.4, your\\nletter, together with this response,will be placed on the public record.\\n\\nSincerelyyours,\\n\\n~ ~ 9~1-n?\"\"~~\\nCarol J. Jennings\\n\\n\\x0c]OHN S. RODE\\n\\nATrORNEYS AT LAW\\n295 MADISON AVENUE\\nNEW YORK, N.Y. 10017\\n\\nMICHAEL S. O\\'ROURKE\\nPATRICK D. GILL\\n\\nWASHINGTON OFFICE\\n1742 N STREET, N.W\\nWASHINGTON, D.C.\\nTELEPHONE: (202) 223-0957\\nFACSIMILE: (202)785-2210\\n\\nR. BRIAN BURKE\\nWILLIAM].\\n\\nTELEPHONE: (212) 685-4437\\nFACSIMILE: (212) 213-3206\\n\\nMALONEY\\n\\nE-MAIL: TRADELA W@AOL.COM\\nELEANORE KELLY-KOBAYASHI\\n\\nWWW.RODE-QUALEY.COM\\n\\nM ILYAS KHAN, OF COUNSEL\\n(ADMITTED\\n\\nIN PAKISTAN)\\n\\nKARACHI, PAKISTAN\\nTELEPHONE: (92-21) 5685541\\nFACS1MILE: (92-21) 5683050\\n\\nDecember6,2001\\n\\nDivision of Enforcement\\nBureau of Consumer Protection\\nUnited States Federal Trade Commission\\n600 Pennsylvania\\n\\nAvenue, N. W.\\n\\nWashington, D.C. 20580\\n\\nRe Labeling of Woven Fabrics Produced From 100% Cashmere Yarns\\nand From Blended Cashmere and Wool Yarns\\n\\nDear Sir:\\n\\nAmicale Industries, Inc., with headquarters at 1375 Broadway, New\\nYork, N.Y. 10018, is a leading maker of cashmere fabrics in the United States and is\\nthe largest cashmere merchant in Europe; Amicale has asked us to seek your advice\\nwith respect to the labeling of the woven fabrics they produce from yarns spun by\\nAmicale from cashmere and wool fibers at Amicale\\'s fabric division in the United\\nStates. All of these fabrics fall within two general categories: fabrics produced from\\nyarn spun from 100% cashmere fibers, and fabrics made from blended yarn spun\\nfrom cashmere and wool fibers.\\ncategory are most frequently\\n\\nThe blended yarns used to produce the latter\\n\\nspun from 50% (by weight) cashmere and 50% (by\\n\\nweight) of wool fibers, although Amicale often spins blended yarns to the order of\\n\\n\\x0ctheir customers, in which the proportion of cashmere to wool is other then 50\/50,\\ne.g., 80% cashmere, 20% wool.\\n\\nAmicale, established. over fifty years ago, follows the Rules and\\nRegulations issued under the Textile Fiber Products Identification Act and the Wool\\nProducts Labeling Act, as well as the dictates of the commercial market for 100%\\ncashmere and cashmere\/wool blended products, and has accordingly devoted\\nsubstantial time and resources to ensure that the articles produced by Amicale meet\\nor exceed all applicable legal and commercial requirements.\\n\\nTo that end, upon\\n\\nwhich their worldwide reputation depends, Amicale rigorously controls all phases of\\ntheir production from raw material procurement through finished goods. Our client\\nis able to exercise such control because their production is vertically integrated,\\nunlike some of their competitors, who must relinquish control over their materials\\nand intermediate products at various stages of production, and send such materials\\nand intermediate\\n\\nproducts to unrelated mills for the performance\\n\\nof manufacturing\\n\\noperations which they cannot conduct in their own facilities.\\n\\nConsequently, and perhaps uniquely, when Amicale delivers a finished\\nfabric to one of its customers, our client is in a position to represent, accurately, that\\nevery step in the manufacture of that product was accomplished within the facilities\\nowned, operated, and supervised directly by Amicale\\n\\nCashmere and Wool Fiber Procurement\\n\\nAmicale purchases cashmere fibers from three principal sources:\\n\\n2\\n\\n\\x0c1.\\n\\nAmicale obtains Mongolian cashmere from its joint venture with\\n\\nthe government of Mongolia, Mongol-Amicale, which was established in 1990.\\nMongol-Amicale purchases the raw cashmere directly from the herdsmen through a\\nchain of over twenty regional warehouses; this fiber is transported from those\\nwarehouses to the Mongol-Amicale factory in Ulaan Baatar, where every kilogram\\nof raw fiber is hand-sorted and examined, tested in the joint venture\\'s laboratory,\\nscoured, dehaired, baled, and then shipped to Amicale\\'s wholly-owned subsidiary,\\nW. Fein & Sons Limited, in Bradford, U.K.\\n\\n2.\\n\\nwhich\\n\\nis\\n\\nsupervised by the former head of the Export Section of the Cashmere Department\\n\\nof\\n\\nInner Mongolia.\\n\\nAmicale\\n\\nhas an office in Inner\\n\\nMongolia,\\n\\nChina,\\n\\nThis office of Amicale draws samples from every lot of Chinese\\n\\ncashmere which is offered for purchase, and forwards those samples to the\\nlaboratory of W. Fein & Sons Limited for testing.\\n\\nIf a sample meets Amicale\\'s\\n\\nquality standard, the office in Inner Mongolia is then authorized to purchase the lot\\nfrom which that sample was drawn, and arrange for delivery of the approved lot to\\nAmicale in Inner Mongolia, where the fibers are again inspected before shipment of\\nthe Chinese cashmere to W. Fein & Sons Limited in the United Kingdom.\\n\\n3.\\n\\nAmicale also acquires cashmere fibers from other sources,\\n\\nprincipally\\n\\nraw cashmere offered on the \"spot\" market in Euroli>e; samples of these\\n\\nshipments\\n\\nare tested at the laboratories\\n\\nof W. Fein & Sons Limited,\\n\\nand fibers\\n\\npurchased on the spot market are usually shipped to W. Fein & Sons although, on\\noccasion, such fibers may be shipped directly to Amicale in the United States.\\n\\nAmicale also purchases wool fibers for their use in blending; as with\\ncashmere fiber purchases, the wool is inspected, sampled, and tested by Amicale,\\n\\n3\\n\\n\\x0c~ODE & QUALEY\\n\\nand, as is done with Amicale\\'s cashmere fiber, all lots of fiber are segregated by lot\\nnumber until withdrawn from inventory for further manufacture. When such fibers\\nare shipped to Amicale\\'s fabric division in Charlotte, North Carolina, whether\\nshipped by W. Fein & Sons or from other sources, each fiber lot is inspected and\\ntested by the Quality Control Laboratory at Amicale North Carolina and is then\\nplaced in inventory until required for production. Amicale maintains records of all\\nexamination, sampling, and testing, whether performed in Mongolia, in China, at\\nW. Fein & Sons, or in North Carolina, and maintains\\n\\nlot number integrity\\n\\nthroughout its manufacturing processes.\\n\\nFabric Production\\nProduction in the United States of 100% cashmere fabrics and of\\nblended cashmere\/wool fabrics begins with the withdrawal from Amicale\\'s inventory\\nin North Carolina of selected lots of cashmere and, in the case of blended\\ncashmere\/wool fabrics, wool fibers.\\n\\nIf the desired end product is, for example, a\\n\\n50\/50 cashmere\/wool fabric, equal quantities of each fiber will be selected from our\\nclient\\'s inventory, typically 1,000 pounds of cashmere fiber and 1,000 pounds of\\nwool fiber. The lot numbers of the selected cashmere or cashmere and wool fibers\\nare recorded, and these fibers are then blended after a mixture of oil and water\\nequal to approximately 6% of the total weight of fibers has been added. The oil in\\nthis mixture lubricates the individual fibers so that they will be evenly mixed, and\\nthe water provides moisture which minimizes breakage of the individual\\n\\nfibers\\n\\n.during the mechanical blending process. When the cashmere or cashmere and wool\\nfibers have been blended to the satisfaction of the Amicale North Carolina Quality\\nControl Laboratory, the resultant blend is carded into the form of a web, the web is\\nconverted to sliver form, and the yarn is then spun. The finished yarn is then\\n\\n4\\n\\n\\x0ctested to ensure that the yarn is uniform throughout, that is, that the different\\nlength cashmere or cashmere and wool fibers are evenly distributed throughout the\\nfull length of the yarn which has been produced; if the yarn contains both cashmere\\nand wool fibers, it is further tested to ensure that the two fibers are evenly\\ndistributed in the 50\/50 or other specified proportions, as appropriate, at all points.\\n\\nAmicale notes that the different characteristics of cashmere and wool\\nfibers, particularly the fiber diameter which, in the case of cashmere, ranges from\\n14.5 to 16.5 microns, with a maximum of 17 microns, in contrast to the diameter of\\nwool fibers which exceeds 18 microns, requires particular\\nfibers to yield a uniform blend throughout\\ntesting of the finished\\nyarn, the total variation\\n\\nMer\\nfibers\\n\\ninto yarn,\\n\\ncare in the mixing of these\\n\\nthe yarn run, and necessitates laboratory\\n\\nyarn to ensure that, whether it is a 50\/150or other blended\\nover the run does not exceed 1-2%.\\n\\nspinning the 100% cashmere or blended cashmere and wool\\nand upon completion\\n\\nof testing\\n\\nto ensure that\\n\\nevery finished\\n\\nblended yarn does not deviate significantly from the specified proportions, the 100%\\ncashmere or blended cashmere\/wool yarns are then woven into fabrics within the\\nfacilities of Amicale North Carolina. As a consequence,Amicale is able to maintain\\ncomplete control over this final stage in the production of 100% cashmere and\\ncashmere\/wool blended fabrics, and, as in each of the preceding production stages,\\nAmicale is able to ensure that no materials other than the tested yarns spun by\\nAmicale are introduced into the finished fabrics. The finished fabrics are, in fact,\\nmade from and composed solely of the yarn spun by Amicale from the cashmere and\\nwool fibers maintained in our client\\'s inventory; our client\\'s strict control over all\\nphases of manufacturing eliminates any possibility of the introduction of any other\\nnon-specification yarns or fibers.\\n\\n5\\n\\n\\x0cl\\\\ODE & ~UALEY\\n\\nAmicale\\'s\\n\\nLaboratory\\n\\nEguigment\\n\\nand Personnel\\n\\nThe quantity of cashmere fibers purchased by Amicale, coupled with\\nthe volume of production at our client\\'s integrated facilities, has led Amicale to\\nconclude that\\nquantitative\\n\\nthey cannot depend upon outside laboratories to conduct the\\nand qualitative\\n\\ntesting and analyses at each of the stages of\\n\\nprocurement and manufacture of these high-quality luxury fabrics which our client\\nhas determined are necessary for the production of 100% cashmere and blended\\ncashmere\/wool fabrics which will meet the standards of Amicale and its customers.\\nWhile Amicale does use outside laboratories for some purposes, the scale and\\nvolume of Amicale\\'s manufacturing\\n\\noperations are viewed by our client as\\n\\nsufficiently great enough to warrant the investment in appropriate equipment and\\nqualified personnel at their facilities in Mongolia, the United Kingdom, and North\\nCarolina.\\n\\nThe testing performed in Amicale\\'s laboratories is conducted in\\naccordance with the standards and methods used by accredited independent\\nlaboratories; in particular, Amicale\\'s laboratories follow all applicable Standards\\nand Procedures approved by ASTM and the\\nManufacturers\\n\\nInstitute,\\n\\nCashmere and\\n\\nCamel Hair\\n\\nof which latter organization the President of Amicale,\\n\\nBoris Shlomm, is one of the two co-founders. Attached to this letter, as Exhibit A, are\\nlists of the equipment maintained in each of Amicale\\'s laboratories, as well as lists of\\n.the personnel employed in each of those laboratories, with a summary of their\\nexperience and qualifications.\\n\\n6\\n\\n\\x0cConclusion\\nAmicale believes, based upon over fifty years of experience in the\\nproduction of 100% cashmere and cashmere\/woolblended yarns and fabrics, that they\\ntake appropriate steps to ensure that all of their cashmere and cashmere\/wool yarns\\nand fabrics will not vary from their stated fiber content for any reason other than \"a\\n\\nsmall amount of unintended inconsistency in the manufacturing process,\" for purposes\\nof the Textile Fiber Products Identification Act, or \"unavoidable variation\\nmanufacture\\n\\nin\\n\\ndespite the exercise of due care to make accurate the statements\" on\\n\\ntheir labels, for purposes of the Wool Products Labeling Act. We would very much\\nappreciate your advising us whether, on the basis of the information\\nthis\\n\\nletter\\n\\nand the material\\n\\nincluded\\n\\nin Exhibit\\n\\nA, you would\\n\\nset forth above in\\nagree that the\\n\\nprocedures followed by Amicale constitute \"due care\" to ensure the accuracy of the\\nlabels applied by Aniicale to their finished 100% cashmere and blended cashmere\/wool\\n\\nfabrics. In the event you need additional information about the yarns and fabrics\\nproduced by our client, please do not hesitate to call me at your convenience\\n\\nJSR\/cps\\n\\nEnclosure\\n\\n7\\n\\n\\x0cNov\\'-13-01\\n\\nP.~2\\n\\n03:31P\\n\\n13-t--OJ-2001\\n\\n10:~\\n\\nFR(J1\\n\\nlJ F=EI N ~\\n\\nS!J-IS\\n\\nTO ~I~\\n\\nQ~a1ity Cobtrol PenoDQel& EouinmeDt\/P~cedura at Mouaol-Amicale.JY\\n\\nQC O~rativ.\\xc2\\xa3~\\n\\nTumendemberel- Raw MaterialsManage!\\n1.\\n\\n2.\\n3.\\n\\n4.\\n5.\\n\\n6.\\n\\n.,.\\n8.\\n\\n9.\\n1O.\\n\\nBulgan -Sorting\\nBadamsetseg -Sorting\\nMunkhzul -Sorting\\nOtto Suren -Scouring\\n\\nHorol Suren-Scouring\\nBolonuya -Scourinj\\nAlginnaa -QC Mllnaaer\/Dehairing\/Press Control\\nEnkhtungalag -Dehairiu&fPress Control\\nUnmchimig -Carding\/Spilming\\nZ 01tuy a -C aring\/ Spinning\\n\\n~guinment Used in Laboratorv:-\\n\\nMicron -Projectina Microscope\\nMicron -Summa Sketch3\\nScollrini -WlRA Grease Extractor\\nScouring -Soxhlet ApparatuS\\nScow-jng -Precision Economy Oven\\nScouring -AND Moisture Determinine Balancc\\n\\nDehairing-Alfred SuterCo. LengthTester\\nCarding\/Spinning\\nCarding\/Spinning\\nCarding\/SpiMing\\nCarding\/Spinning\\n\\n-Henry\\n-Twist\\n-Brown\\n-James\\n\\nL Scott Strength Tester\\nTester\\n81.Sharpe Count Tester\\nH Heal Strength Tcste:r\\n\\nCaJ-dingiSpinning- CCV Teater\\nCarding\/Spinning -Uster Tester 3\\nCarding\/Spinning -WtRA Graphing Balancc:\\n\\nCarding\/Spinning-Uster Roving Sensor\\nElectronic Balance x 3\\n\\nP.O2\/16\\n\\n\\x0cNov-13-0103:32P\\n1\\';\\'-f\\'U}-~l.\\n\\n..~\\n\\n~~: ~\\n\\nt.JFEIN AtJD50\\'S\\n\\nTO ~ICALE\\n\\nQuality Control Laboratory\\nW. FEIN & SONSLIMITE!)\\n\\nLahoratorv ~uilment\\n\\nWIRA Rapid oil contenttester\\nHC31\\'swrap reel\\nBlack boards I whitc boards I velvet board\\n\\nUsterAutomatic ~omctc\\n\\n(Str8nith and Elonaation)\\n\\nUs~er Evenness tester\\n\\nHeal\\'! Two-fold tWisttester\\nSUtercomb ~orter\\nWIRA Fibre fiDCDefSmI;ter\\n\\nTorsionbalance\\nDigital bWance\\nHeal\\'s conditioning oven\\nHeal\\'s ayrow.sh.\\nBauschand Lomb projection mieroscope\\nSamplecard\\nSampl~spinne::r\\nStreatelectroni~moisture meter\\nElectrOnic moisture probe\\n\\nLi~ cabinet\\nFumc cupboard\\nHot plat~\\nvarious chemicals (for oil extncUon,dye mipping, scouring)\\nMatsuya 12 gaugcknittini roacbine\\nTritex LT1OI 5 puge circl\\\\latbUningmachlnc\\n\\n10 gaugestrap knitting machine\\nAir condjtioD~ laboratory\\nComnute\\'r:\\n\\nP.cjJ4\\nP.04\/16\\n\\n\\x0cNov-13-0103:32P\\n\\nJ...)-~1-,,-~1\\n\\nl~: ~\\n\\n~~\\n\\nW I-clN ru~ 5()\\xc2\\xa3\\n\\nTO 1:t1ICALE\\n\\nP.05\/16\\n\\nJulie Ann Smith\\nQuality Control Manaler\\n\\nResponsibilities\\n.Oreanisation\\nand day.to-day running of the Quality Control l.aboratory\\n.Monitoring\\n\\nof dehai red cashmere\\n\\nand yarn quality to ensure that the\\n\\nreQuired standards are met.\\nEducation\\n\\nand Qaaaliftcations\\n\\n1983-1990\\nLanpands Community College, St. N8otS~ Camba.\\nThree A\\' levels (advanced leve\\'). one O\\' \\'evel (ordinary level) and Eight GI:SE\\'s\\n\\n(Genera! certificate of secondary .ducatlon:,\\n1990-1994\\n\\nThe University of Hudder5field. Huddersfi.ld,\\n\\nBEng. (Bachelor of Enlineering)\\n\\nWest Yorks.\\n\\nIn I-extile Manufacture with Clothing Studies\\n\\nUpper second class honours degree\\n(subjects incorporated. yarn and fabric: manufacture, computing, enginecring,\\ninstrumentation and control, management, mate(ials science. product\\nevalu~tion, textile manUfacturing and developments, indu5trlat training).\\n\\nWork Experience\\nF\\'ebr.Sept.1993\\nJ. H. WalkerLimited, ~.n.thorp8,\\n\\nWest Yorks-\\n\\nIfldustrial training as part of the BEng. Textile Manufacture degree cour~le.\\nQuality Control Assistant responsible for the daily monitoring of weft krntted\\nfleece and leisure wear fabrics. Other duties involved colour matching,\\ncompiling fabric reports, 3S51sting with product development. producing fabric\\n\\nperformance standards and product specifications.\\nMarch 1995.Present da,\\nQuality Control Ma\"ag~r\\nLaboratory.\\n\\nMonitoring\\n\\nW. \\'ein\"\\n.Orpnisation\\n\\nSons Limited, Bradford, West Yorks.\\nand runntng of the Quality Control\\n\\nof quality standards,\\n\\ndehaired fibre purchases\\n\\n3\"d\\n\\nassisting in the assessment of greasy and scoured material.\\n\\nTraining\\nOct. 1115\\n\\nYocOltl-McCoIlTestiftC laborltoraH (Denver, USA)\\n\\nOne we~k training tl> use The Suter Comb Sorter (fibre length) and fibre\\nid~ntification and measurement using a projection microscope, OFDA a,d\\nLaserscan\\n\\nNov. 2001\\nYorkshi,. Post Tralninc, Leeds, West Yorks.\\n\"I nsight to Mansgement\" Management training course.\\n\\nP.~5\\n\\n\\x0c~\\n\\nr t<U\\'1 I\" I-~ I N ~ND :;LJ\"S\\n\\nTO\\n\\nAMICALf::\\n\\nP.06\/16\\n\\nClaireLoui.eArmital8\\nJob Title\\nQuality Control Laboratory Technician\\n\\nReapon;i billtles\\n.Daily\\n\\nmonitoring\\n\\nof dehalred\\n\\ncashmere\\n\\nquality.\\n\\n.Routine\\nte~ting of cashmere fibre to ensure required standards are m~t\\n.Perform\\ntests to ensure that yarn proces$ed by commission dyers an(i\\nspinner\\'Scmeets required $tandards.\\n\\nEdueatlon Deta11s\\n1\"6~19\\'4\\nHanley High School & Stxth Form Centre\\nOne A\\' Level (advanced level), ten GCSE\\'s (General certificate of second~ry\\neducation). City & Guilds (Information Technology) and RSA (Royal SOClf!ty of\\nArts) (D~sk top pub\/ishini).\\n\\n1997-2000\\n\\nModern ApprenticeshiP\\n\\n8TEC (8usinesfo Technical Education Council) National Certificate in Textile\\n\\nTechnology\\n\\nBTEC Higher National Certificate in Textile Technology\\nNVQ (Nationa[ Vocational Qualification) in Manufar..-turing Textiles (1extile\\n\\nLaboratory Technician)\\nNEBS (National Examination Board) Management\\nTrainee of the Year BTEC Natlonat Certificate Year 2. 1998\\nTrainee of the Year BTEC ~igh8r National Certificate Year 1 .1999\\nJohn 5 Dryer Cup for Innovation of Raw Materia! -1999 & 2000.\\n\\nWork Experience\\nOct 1990\\nR. Butterworth .& Sons (Hudder$field W Yorks)\\nSchool work experience. Observed and took part in various practices around\\nthe spinning mill, conc&ntrating mainly on the twisting operation.\\n\\nOct 1994-Mar\\n\\n1196\\n\\nPatons RTN (Huddersf1eld\\n\\nW Yorks)\\n\\nTrained as a y~rn colour matcher at ths carding and spinning mill\\nMar 1996-Present\\n\\nDay\\n\\nW. Fein ..Sans (Bradford W Yorks)\\n\\nTrained as a Quality Control Laboratory Technician at the Ceshmer8\\nDehairers.\\n\\n\\x0c\"\\n\\n,Nav-13-0103:34P\\n\"\"\"-\"\"\"\"-\"\\'UU.1\\n\\nJ.t:)..).)\\n\\n\"\\'~U\\'I\\n\\nw t\"t:.l N\\n\\nHNlJ\\n\\n~U\"I~\\n\\nIU\\n\\nF~W,\",.\"t list.\\nLI~ ~i~o.f:ope ~P~na.\\n\\n, I\\nI I\\n\\nI .\\n~I\\n)\\n\\n:;\\n;\\nUstcr ~~n&$ Test,er( UT\\'4)\\n\\nFoftf.\\'~~$~~~AJ\\nI\\n\\nr!,8\\'*-\\\\.nd E\\'~ption Tes~f\\' ( SpliccScan\".\" 11)\\n\\np~ple~\\n.\\n\\nI ;\\n\\nI (\\n,:\\n\\n\\\\\\n\\nP.14\/16\\n\\n1-I\\'11~1;\\n\\nI I\\n\\nI :\\ni\\n(\\n\\nI !\\nI\\n,\\n\\n~.:rI;\\n\\nt\\n\\n:\\n\\ns~ Oil~..~ andS<..\\\\~\\nu~ ..n~\\nst..\" 1r~.. Kftitti\"1MaeniftU\\n,\\n\\nT~;,t\\n\\nI\\n\\n\\'t~r\\'i\\n\\n\\'\\n\\nI\\n\\n~\\n\\nL\\n\\nPr\\'fods,bft\\n8a4atK&\\nrli d Elecb-oni~\\n50\\'!\\n\\nI\\n\\nsa~p\\\\e c:.Tdp:ran~ S,.\",ncrMachina (on order)\\n\\n~aw .k.a\"\\n..,.\\n\\nI\\n\\ni\\n\\nDe\"\"~!\\n\"\\n\\n:\\nI\\n\\n;\\n\\n.,\\n\\n.\\n\\nI.\\n\\n,.\\'Ii\\n~., ...,\\',\\n\\nI\\nI\\n\\nI\\nI\\n\\nII\\nI ~\\n! !\\n\\nI\\n\\nH,,#d~~P~:\\n\"\\n\\ny.T1oi~f.~\\n,\\n\\n;.\\n\\n\"\\n\\nI\\n\\nc~,\\n\\n~Iidp~~e\"\\n\\n;\\',:\\n\\nLi~\\n\\n!\\n\\n,\\n\\nJ\\n\\n8igc ;\\n\\n\"\\n\\ni\\n\\n!\\n!\\n\\n!,\\n\\\\\\n;\\n\\nI\\n\\nI\\' ,\\n\\nI\\n\\n;:\\n\\n.\\'.\\n\\nI\\n\\nI\\n\\nI\\n:\\nI\\n\\nI\\nI\\nI\\n\\n.\\n\\'\\n\\nI\\n\\nI\\n\\n4\"(J~:M.\"\"v.\",\"-\\xc2\\xbbI :\\n\\nl\\'\"c:~~1\\n\\ni.\\n\\n~,l\"L\\'()~\\n\\'.\\nl\"I\\'C:O\"..\\'~:\"\"7()d) \\'.\".;l;::!\\n\\nt-\" (7(.\\'..i\\'\":i, 1,:4~\\n\\n..\\n\\n,.\",,~II; \":\"\\'TtJ\\'I\\\\I~\"\\'.IIM)\\'\"\\n\\nrOTRL P.04\\n\\nP_1~\\n\\n\\x0c\"\\n\\nNav-13-0103:34P\\n\"\\'V\"- c.~\"\"J.\\n\\n.A...\\n\\n..~..).)\\n\\nr~UI\\'1\\n\\n\\'41 r-t:.lN\\n\\nH~\\n\\n~~\\n\\nIU\\n\\n\\\\\\n\\n~1(\\';RLf:\\n\\nFax\\ni\\nI\\n\\nQ.c.T-t ~odt ~nd,Stan~Tds.\\n!\\n\\nQ\\\\lanti~~.. \\'AIIa~is\\nI\\n\\nASrM D6Z9 .88\\n\\nF\\'1b~Di.\\'\"~tfr(~iao\" -l.lpt Micros~)\\n\\nASTM\\n\\nfl~: Unsthl(Hi\"~ M~\\n\\nM~od\\n\\nI\\n\\nI\\n\\nDarki~ir :c+1tt\\n\\nI\\n\\nwh~~~t:\\n\\nI\\n\\nI\\n\\n,\\n\\n~ 8&\\n\\napprl1\\\\lCd by CCMl\\n\\nMethod approYedby CCMI\\nM8thod IpprO~e4by CCM!\\n\\n..,\\n\\nN$Pi ~8\\n\\n062.9\\n\\n~~od\\n\\n~lantl\\nI\\n\\na~raved\\n\\nby .co.t\\'l\\n\\nI\\n\\nASn4 Dl~13 .\\'1\\n\\nTwiit TCft\\n\\n~\\n\\n019(\\\\7.39\\n\\nAm\" 014,~-s,\\n~TW Dl44S .90\\nAST).\\\\ D1574-17\\nASTM D 1113:-\\n\\n--.\\n\\n.10~~~~~j.,~\\nI\\n\\n(.~~~..\\n\".\\nl\\'I\\'4:Jc\\'\\n.,1 (!(~J,-;~:\\'\\n\\n\\'\\n~(\\'4.~\\n\\n1-\\'\\\\\\';CfI>4)\" :~~li~~\\n\\ni\\n\\nI\\n1\"\"\\n~-IIt*i ~~\\\\~~\\\\~!\\'Il\\\\14\"\"\\nI\\n\\n90\\n\\nP.~3\\nP. 13..\\'16\\n\\n\\x0cNov\\':13-0103:34P\\n\\n.J..:J-,\\'tUV-~~.L\\n\\n!~..)~\\n\\n!-\/\\'(Uf\\'1\\n\\nW J-t: I N ~\\n\\n;;ur-4~\\n\\nTO\\n\\nI=v\\'1ICALI:::\\n\\nF:mc\\n\\nTo:\\nF\\n\\n:\\n:\\n\\nI\\n\\nM\"- :GtI~.\\n\\n0*;\\n\\n~\\n\\n11J\/12(01\\n\\nf\\'C)fft:\\n\\nM ~\\',8.StIkJmm\\n\\nff,8tnl Tr.de Commission.\\n\\n5u~:i\\n\\n\"a~:\\'\\n\\n,\\n\\n4. I~\"d~ng1ttis\\n,\\nI\\n~ ~~\\ni~..:~,~\\nCotrttol: 3\\n\\n~.bfr\\n\\n:\\n\\n:\\n\\n.i\\n\\nMa~r\\nT~Gl.\\n\\n~Aif AIS~aU of~e T~18 I,,~\\n.nd Chartered T~1e\\n~ J!O)\\'rs expericft\\xc2\\xab witt. Spedt1t)lflbT\\'U. \"~mc\\'ly Cash?ne.rc\\nand\\n\\nCa~.t\\n~.jr.\\n\\nI\\n\\n~c\"Ns\\'laU\\n\\npecfS.of QC taIti\"l\" QtTttte)\\'ant div!s;o.,.\\n\\nkepQ.\\'t\\'s r~~~ Qnrawtn.wna.1Ind yam tc Mt.A.5hlomm.andreslAltson\\nfa~t\\n~~m. yn, ha.~. cm~t Amiale Norttt Carulira.\\nA\\nm{~ fp\\' M7\\'.fo-12D\\nOt\\'pftizd (O~1AtiOt\\\\~\\n~ li.tIe,\"c~pan)\\' in Enp\"d a~~:a~o\"\\'aft~n\\nQua1~ orM~I!.\\nAJttical.yam.\\n;\\n\\'~~~\\'P\\'~ \" ..~d tr;ats Whanavailablc.\\nKnitttnr ~\\n!~\\n~sht\\nofkn~\\nfabric. stttr.h if.nJth, count. Cf ctc..:\\n~\\n41~ .~.\\n\\'t1t.11: wt rC5l1~ Oft nw mmml,\\nspltn ya~ I\\'ltd aJl\\'tlltS\\n\\nam~ollt\\n\\nI,QC ;.0. ,\\n\\nNowbCiftJi~~~\\n\\n,\\n\\nwith fabri~ inspc(;tjon,~ tt\\\\.. fabrk fi\"ishing dtriSi~-\\n\\n..\\n\\nsupe~r:\\': 11 ~ ~~\\n\\n>\\'\" i\".\\xc2\\xab~.\\n\\nat \",,\"law...sta.rtit\\\\fU a JpilftnuWithtit. laStIS\\n\\n:\\n\\n~CI ;~. ...I\\n~.;~\/:\\n\\n:..\\n\\not\\\\~,~..\\n\\n:.;\\n\\nI\\n\\n~~\\n\\n::\\n\\n1~\\'IA4\"m,\\'\\nfibreaut)lm,fibredia~. ~~\\n\\nftk. \"\"stt. (Rand\\n~.\\n:.\\n\\n~.~ ;: qit i ..,;;\\n.R~\\n0:\" cards,~,a~\\n:.1M~. ~\" : ,\\n;c.:-.~\\' -.ct eton_~\\nTwI..nl ~ \\' :.t \"~ or .pikes ~ ~\"\\'. N~N\\n\\n~ctab1e, Ntbt \\'~)\\n\\nacros.sca\\'-; spl\"~\"g (Oa~\\nwe_, U$ti1lr. ~~r\\n,\\n~.~\\nO\" \"\\'nishe.d \\'\\n\\npa(~P, ...d, \\'. 1\"1.\"\"~...qUf\"\"d..\\n;\\n\\nI\\n\\n,\\n\\nI\\n\\nQC Tedlnfdan : 28 )ITS:e~crien~\\n~\\ntJ\\\\Ctut .t >\"is:i\", QC.\\n\\n~\\n\\n: ..w~~t!t~\\n\\nMCttI9d),,.~~\\n\\n~\",.\\n\\n~n~ ~,\\n\\n\\'r\\n\\nI\\n\\n~7()1 ~\\\\\\'\\\\\"\"zI\\n\\ni\\n\\n_.\\'-I\\'~-\\'\\n~. I~~~ I ,\\nI\\n\".I..(r\\'.c),\\'fl;y~..t>!)\\n\\'-.\\n~:It;~):J\\n\\nbatrC4Utrt.,\\nncp\/sal1.CO\\\\tnts,\\nfibreI4\\'\"gthtJland\\n\\n~\\n\\n~,ttI\\n\\nOfturd5. vaNtlQn 10\"0\" cards. -spinnins =WIJt\\n\\nandcl~gzttoIt.Usur8Ve~s tGtinr.\\n\\nI\\n\\n,\/\",\\n\\n.~t:J1\"\\'1 \"\"\\'r\"\"%.1\"\\\\2\\'i\"\"-\"\"\"\\'\"\\n,\\n\\n,\\n\\nIt Amlcale, iMludins spi\"ning: ~nd s~pl:t\\n\\nmatt..1\\'(\\\\11.4),\\noil bt\\'b. NPt\\'b.\\n\\nYam. ~ai~t8s\".c,~cki\":J\\n\\nand~\\n\\n.\\n\\n\\'\\n\\nP.12\/16\\n\\nP.1jz\\n\\n\\x0c'","created_timestamp":"August 5, 2002","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/amicale-industries\/amicaleindustries_aug2002.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nBureau of Consumer Protection\\n\\nApril 8, 2002\\n\\nRobert E. Hirshon, President\\n\\nRobert D. Evans, Director, Governmental Affairs\\nAmerican Bar Association\\n\\n740 Fifteenth Street, NW\\n\\nWashington, DC 20005-1022\\n\\nDear Mr. Hirshon and Mr. Evans:\\n\\nTam writing in response to your correspondence regarding the application of Title We\\nSubtitle A, of the Gramm-Leach-Bliley Act, 15 U.S.C. \\xc2\\xa7\\xc2\\xa7 6801 et seq. (\\xe2\\x80\\x9cGLB Act\\xe2\\x80\\x9d) and the\\nFederal Trade Commission\\xe2\\x80\\x99s Rule, Privacy of Consumer Financial Information, 16 CFR \\xc2\\xa7 313\\n(\\xe2\\x80\\x9cthe Privacy Rule\\xe2\\x80\\x9d), to attorneys at law.\\n\\nYour letters question the appropriateness and utility of applying the GLB Act\\xe2\\x80\\x99s privacy\\nprovisions to attorneys engaged in the practice of law. Specifically, you request that the\\nCommission exempt attorneys at law from the application of the Privacy Rule.\\n\\nWe have carefully considered your concerns, and recognize the issues you have raised\\nregarding the application of the GLB Act to attorneys at law. However, there are significant\\nquestions as to the legal authority of the Commission to grant the exemption you request.\\n\\nAs you know, the GLB Act itself states that entities engaged in \\xe2\\x80\\x9cfinancial activities\\xe2\\x80\\x9d are\\nsubject to the Act. Although the Commission has express authority under the GLB Act to grant\\nexceptions, that authority is limited to providing exceptions to the requirements of Section 502.\\nThe Act does not provide the Commission with express authority to grant exemptions from the\\nother provisions of the GLB Act, including the initial and annual notice provisions. See GLB\\nAct \\xc2\\xa7 504 (b), 15 U.S.C. 6804 (b).\\n\\nSincerely,\\n\\n|G fee,\\n\\nay . Howard Beales\\nDirector\\n\\x0c'","created_timestamp":"April 8, 2002","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/application-title-v-subtitle-g-l-b-act-and-commissions-privacy-rule-attorneys-law\/hirshon-beales020408.pdf"}
{"text":"b'\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/application-title-v-subtitle-g-l-b-act-and-commissions-privacy-rule-attorneys-law\/abaevans010822.pdf"}
{"text":"b'\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/application-title-v-subtitle-g-l-b-act-and-commissions-privacy-rule-attorneys-law\/ababarnett010710.pdf"}
{"text":"b'0\\n\\n\"\\n\\nUNITED STATES OF AMERICA\\n\\n.\\xc2\\xa3ti.~\\n.600\\n~.\\n\\nFEDERAL TRADE COMMISSION\\nPENNSYLVANIA\\n.WASHINGTON,\\n\\nAVENUE, NW\\nD.C. 20580\\n\\nDivision of Enforcement\\nBureau of Consumer Protection\\n\\nNovember2, 2001\\nMr. Daniel J. Schwarz,CFO\\nDeanna Dee Inc.\\n336 South Anderson Street\\nLos Angeles, California 90033\\n\\nDearMr. Schwartz:\\nI am writing in responseto your letter of October 30, 2001, with regard to fabric\\npurchased by your finn for the manufacture of coats. You state that the fabric received by your\\ncompany was labeled to be 50% cashmere,50% wool. You had the fabric tested, and the test\\nreport showed the content to be 58.5% wool, 41.5% cashmere. You asked whether this fabric,\\nand goods to be made from the fabric, can be labeled properly as 50% cashmere, 50% wool.\\nThe deviation described in your letter is not the small amount of variation generally\\nconsidered acceptable for blended fiber products. The Rules and Regulations under the Textile\\nFiber Products Identification Act, 16 C.F.R. \\xc2\\xa7 303.43, allow for a 3% variation for blended fiber\\ntextile products. The Wool Products Labeling Act, 15 U .S.C. \\xc2\\xa7 68 et seq., and rules promulgated\\npursuant to the Act, 16 C.F.R. Part 300, do not specify a tolerance for blended wool products. As\\nyou noted, however, the Wool Act does contain a proviso acknowledging that small deviations\\nmay occur as a result of unavoidable variations in the manufacturing process, despite the exercise\\nof due care. As a result, the Commission has stated that it will apply to blended wool products\\nthe 3% tolerance allowed for other blended textile products. Seethe enclosed copy of our\\nbusiness guide, Threading Your Was Through the-Labeling Requirements Under the Textile and\\n\\nWoolActs.\\nI hope that you will find this analysis helpful. In accordancewith Section 1.3(c) of the\\nCommission\\'s Rules of Practice and Procedure, 16 C.F.R. \\xc2\\xa7 1.3(c), this is a staff opinion only\\nand has not been reviewed or approved by the Commission or by an individual Commissioner.\\nIt is not binding upon the Commission and is given without prejudice to the right of the\\nCommission later to rescind the advice and, when appropriate, to commence an enforcement\\nproceeding. Pursuant to Section 1.4 of the Commission\\'s Rules of Practice and Procedure,\\n16 C.F.R. \\xc2\\xa7 1.4, your request for advice, along with this response,will be placed on the public\\n\\nrecord.\\nSincerely yours,\\n\\n{l~~,e<j ~71e~~~~\\n~..a\/\\n\\nCarol J. Jennings\\n\\nEnc.\\n\\nI\\n\\'-\\n\\n\\x0c10-30-201\\n\\n11 : 45AM\\n\\nFROM FLEURETTE-DEANNA-DEE 323 269 5800\\n\\nP.1\\n\\nDEANNA DEE, INC.\\nManU!QL\\'turer of Ladit:~: Coats\\n\\n336 SouthAndersonStreet\\nLos An,gcles,California 90033\\nTelephone: (323) 269-5600\\nFax: (323) 269-5800\\n\\nOctober 30,2001\\nfederal Trade Commission\\n600 Pennsylvania Ave. NW\\nWashington PC 20580\\nAttn: Ms Carol Jennings\\n\\n.FAXED TO: (202) 326-2558\\n\\nDear Ms. Jennings:\\nRegarding our telephone conversation of this momiug, we wol,lld appreciate your\\ncomments on the following facts:\\nWe are a coat manufacturer and received piece goods labeled 50% Cashmere and 50%\\nWool from the mitl. After having the fabric tested we were informed that the fabric was\\n41.5 % Cashmere an 8.50\/1)\\ndeviation. (Copy of lab the lab test is attached).\\nUpon receiving this inforrritttion we contactedthe mill and they responded by saying it\\nwas not miss labeled. As proof, they sent us a copy of your letter to Mr. Bartmess (Copy\\nenclosed). Since your letter refers to \" the presenceof Small p;ercenta&e of wool\\'> it\\nwould s~emto us that an 8.5% deviation would not fall under this exception nor would it\\nfall under the proviso stated at the top of page 2 of your letter dated October 3, 2001.\\nThat pa,ragraphstated \"that if the deviation of the fiber contents of the wool product from\\npercentagesstated on the stamp, tag, label, or other meansof identification, shall not be\\nmisbranding under this section if the person charged with misbranding proves such\\ndeviation resulted from unavoidable variations in the manufacture and despite the\\nexercisc of due care to make accurate the statementon such,ortarnp,\\ntag, label or other\\nmeans of identification.\"\\n\\n\\x0c10-30-201\\n\\n11 :45AM\\n\\nFROM FLEURETTE-DEANNA-DEE 323 269 b~~~\\n\\n~.L\\n\\nI\\n\\nMs. Caroi Jennings\\nPage 2\\nWe would appreciate your comments as to whether or not an 8.5% deviation would fall\\nunder any of the provisos that the item is not misbranded.\\nPleasemail your reply to me at 336 $0. Anderson St. Los Angeles Ca 90033\\nand as time is an issue, please fax a copy to me in New York at (212) 315-1839, as 1 will\\nbe at that number From November 1 through November 5,2001.\\nThank you in advance for your help with this matter and your speedyreply.\\n\\n.\\n\\nDeanna Dee Inc.\\nBy Daniel J. Schwarz, CPO\\n,\\n\\n\\x0c11 :4.6AM\\nFROM\\n\\n:\\n\\nP~nasonl\\n\\nc\\n\\nFROM FLEURETTE-DEANNA-DEE\\n\\nTRD\/FRX\\n\\nPHONE\\n\\nK.D. Langl~\\n\\nNO.\\n\\n~:\\n\\nfiber Services\\n\\n.A~\\n.~~\\n\\n162\\n\\n323\\nA\\n~\\n\\n269\\n\\n5800\\n\\n-P.3\\n\\n6868\\n\\nt! 4\\n\\nOct\\n\\n28\\n\\n20el\\n\\n07:05PM\\n\\n&~~~.,..t:..t\\n~ 9\\n\\ng- -Q()\\n\\nP.O...7.\\n\\n~\\n\\nRI 0287t\\n\\n.T--=-~-.\\n\\n(\\'111)81\"\\'.\\n\\n~\\n\\nOctober 27, 2UOJ\\n\\nMs. Stcphanie laPedis\\nDeal1n8Dee. Inc.\\n336 South Andcrson Stroot\\nJ..osAng:eles, CA 90033\\n\\n..\\n~.\\n\\nRL\\'port on the QuDntirativc )fiber An81YKisof Finished F.bric\\n\\n,\\nMaterial Submitted\\n_~atchc~\\n\\n.-\\n\\ncolor b]~c:k, 8ubn~iUedon (>ct(\\'Iber22. 2001.\\n\\nI..bur.tor)\\' P~eedun\\n\\n.\\n\\nDye was removed from ute samples with II stripping Itgcnl. Then fjbet~ wcr~ ~ectiOnN\\nwith a fiber cutter W1dInnunted on ft\\'liCft1SCOpe\\nslides. Over t 000 fibof;.; wcrc id~.\\'tific:\\\\1\\nIising light micl\\'OscOPYat a magnificatinn of250.400X. All tosting W&$p0rfonnQ} i)J\\naccordance with te.~tmethod AA TCC 20- J999 &nd AS 1M 0629-95.\\n\\nReluJt~\\n.S\"wat(:Jr\\n# I contains 1 008\/.. ,,\",bIDeR- JIowc~~r it is Qut of sp_~ificat.i()n~ with regard it)\\ncnaT~ehair c()ntent.: it c\\\\)I}tains 9S.6% cu,iJllDCrCd()WI1,4.4% ca~hmerc C()lifSChotir\\n(>30 ~n1), \\'luis e~cccds the AS1\"M f> 2817-91 limit of 3% by wcight, .!bi~ J~vcl ofhuir\\nitl~o caus~~thc saml,le to have a djafl\\'l~ter coe{}icicn1 \\\\)fysriativn of 26_8% v~. the\\nC~:)mncre and C:amel hai\\'llimit of 24%.\\n.\\\\;.\"ufch 1i\/ contains S\"-~% wonl, .1.~8\/Q ~.8bmerr. tracc level (appY\\\\)X,0.5%) silk.\\n\\n;;(\\nSincc:r~J)I}\\'ours\"-\/\\n\\n~L\\n\\n\\'\");1\\n\\n.10-30-201\\n\\n\/\\n\\n:J1.\\n.i-7\\xc2\\xb0.\\',\\n\\nKenneth D, J..ang1cy\\n\\nc-wuII\"8\\n\\'\" FIber\\n.raT... ~\\n\\nP02\\n\\nI\\n\\n.\\n\\n\/.?i\\n\\n\\x0c'","created_timestamp":"October 30, 2001","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/deanna-dee-inc.\/deannadee.pdf"}
{"text":"b'\\x0c\\x0c\\x0c\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/dawson-forte-cashmere\/dawson.pdf"}
{"text":"b\"UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nOffice of the Secretary\\n\\nMay 21, 2001\\n\\nJohn F. Dickey, Esq.\\n\\nE.I. du Pont de Nemours and Company\\nBarley Mill Plaza 25\/2218\\n\\nP.O. Box 80025\\n\\nWilmington, DE 19880-0025\\n\\nRe: Petition of DuPont for a new generic fiber name and definition under the\\nRules and Regulations Under the Textile Fiber Products Identification Act,\\n16 C.F.R. Part 303.\\n\\nDear Mr. Dickey:\\n\\nPursuant to Rule 8 of the Rules and Regulations Under the Textile Fiber Products\\nIdentification Act, 16 C.F.R. \\xc2\\xa7 303.8, the Commission has assigned the designation \\xe2\\x80\\x9cDP 0002\\xe2\\x80\\x9d to\\nDuPont's elastic fiber for temporary use until a final determination can be made as to the merits\\nof the application.\\n\\nThe assignment of this temporary designation should not be construed as indicating that\\nthe Commission will either grant or deny the application or that the Commission has determined\\n\\nthe application to be complete.\\n\\nBy direction of the Commission.\\n\\nDonald S. Clark\\nSecretary\\n\\x0c\"","created_timestamp":"May 21, 2001","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/ftc-response-petition-dupont-new-generic-fiber-name\/dupont.pdf"}
{"text":"b'\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/r.g.barry-company\/rgbarry.pdf"}
{"text":"b'\\x0c\\x0c\\x0c\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/american-textile-co.\/amertextile.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\nFEDERAL TRADE COMMISSION\\n\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nOffice of the Secretary\\n\\nOctober 30, 2000\\n\\nSheila A. Millar, Esq.\\nKeller and Heckman, LLP\\n1001 G Street N.W.\\n\\nSuite 500 West\\nWashington, D.C. 20001\\n\\nRe: Petition of Cargill Dow for a new generic fiber name and definition under\\nthe Rules and Regulations Under the Textile Fiber Products Identification\\nAct, 16 C.F.R. Part 303.\\n\\nDear Ms. Millar:\\n\\nPursuant to Rule 8 of the Rules and Regulations Under the Textile Fiber Products\\nIdentification Act, 16 C.F.R. \\xc2\\xa7 303.8, the Commission has assigned the designation \\xe2\\x80\\x9cCD 0001\\xe2\\x80\\x9d\\nto Cargill Dow\\xe2\\x80\\x99s PLA fiber for temporary use until a final determination can be made as to the\\nmerits of the application.\\n\\nThe assignment of this temporary designation should not be construed as indicating that\\nthe Commission will either grant or deny the application or that the Commission has determined\\nthe application to be complete.\\n\\nBy direction of the Commission.\\n\\n\\xc2\\xa3 eh\\xe2\\x80\\x94\\n\\nDonald S. Clark\\nSecretary\\n\\x0c'","created_timestamp":"October 30, 2000","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/ftc-response-petition-cargill-dow-new-generic-fiber-name\/cargilldowletter.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nDivision of Enforcement\\nBureau of Consumer Protection\\n\\nSeptember 26, 2000\\nMr. Ron Vega\\nDirector of Customs Compliance\\nFruit of the Loom\\nOne Fruit of the Loom Drive\\nP.O. Box 90015\\nBowling Green, KY 42102-9015\\n\\nDear Mr. Vega:\\n\\nThis is in reply to your letter requesting a ruling from the Commission\\xe2\\x80\\x99s Division of\\nEnforcement regarding the application of 16 C.F.R. \\xc2\\xa7 303.28 of the Rules and Regulations Under\\nthe Textile Fiber Products Identification Act. Please be advised that the Federal Trade\\nCommission and its staff do not issue \\xe2\\x80\\x9crulings\\xe2\\x80\\x9d in response to requests for advice. However, the\\nCommission has authorized its staff to respond to requests for advisory opinions when\\nappropriate. See 16 C.F.R. \\xc2\\xa7 1.3.\\n\\nIn your letter, you state that Fruit of the Loom distributes wearing apparel items in\\npolyethylene bags (packages) with a \\xe2\\x80\\x9cflip-top\\xe2\\x80\\x9d opening at one end of each bag. Multiple\\ngarments are folded and packed into these bags in such a manner that the labels bearing the\\ncountry of origin, fiber content, identity of the company, and care instructions are not necessarily\\nvisible to the consumer through the packaging prior to purchase. You supplied staff with\\nsamples of such garments in their bags. This staff opinion pertains to garments sold at retail\\nstores and does not address the packaging of products sold via mail order catalogs or over the\\nInternet.\"\\n\\nIn 1984, Congress amended the Textile and Wool Products Acts to require that a package\\ncontaining a textile product intended for sale to the ultimate consumer bear the information also\\nrequired to appear on the label of the product (i.e., fiber content, country of origin, and identity of\\nmanufacturer or other dealer), unless the package is transparent and allows for a clear reading of\\nthe label information. 15 U.S.C. \\xc2\\xa7\\xc2\\xa7 70b(e) and 68c(c). The Commission implemented the\\nstatutory requirement by adopting 16 C.F.R. \\xc2\\xa7 303.28, which states:\\n\\n| For information about the packaging and labeling of textile products sold via mail\\n\\norder and over the Internet, see the Commission staff opinion letter, dated August 18, 2000, to\\nthe Land\\xe2\\x80\\x99s End company, as posted on the Textile, Wool & Fur page of the Commission\\xe2\\x80\\x99s\\nInternet website.\\n\\x0cMr. Ron Vega, page 2\\n\\nProducts contained in packages.\\n\\nWhen textile products are marketed and delivered in a package which is intended to\\nremain unbroken and intact until after delivery to the ultimate consumer, each textile\\nproduct in the package, except hosiery, and the package shall be labeled with the required\\ninformation. If the package is transparent to the extent it allows for a clear reading of the\\nrequired information on the textile product, the package is not required to be labeled.\\n\\nA similar requirement was adopted for wool products sold in packages. 16 C.F.R. \\xc2\\xa7 300.15.\\nAlso, the Commission\\xe2\\x80\\x99s Care Labeling Rule states that if the product is packaged, displayed, or\\nfolded so that customers cannot see or easily find the label, the care information must also appear\\non the outside of the package or on a hang tag fastened to the product. 16 C.F.R. \\xc2\\xa7 423.6(a).\\n\\nYou ask whether the flip-top polyethylene bags used by Fruit of the Loom for textile\\nproducts sold at retail stores are considered packages \\xe2\\x80\\x9cintended to remain unbroken and intact\\nuntil after delivery to the ultimate consumer,\\xe2\\x80\\x9d and therefore must be labeled in accordance with\\n16 C.F.R. \\xc2\\xa7 303.28. Based on inspection of the sample packages that you provided, it is my\\nopinion that the flip-top bags may easily be opened to inspect the labels on the garments.\\nTherefore, I believe that it is not necessary to repeat the required label information on the bags.\\n\\nYou further inquire whether, pursuant to 16 C.F.R. \\xc2\\xa7 303.16(c), certain \\xe2\\x80\\x9cnon-required\\xe2\\x80\\x9d\\nstatements about country of origin and fiber content may be placed on packages that are not\\ncovered by the marking requirements of section 303.28. Section 303.16(c) of the Rules states\\nthat \\xe2\\x80\\x9c...any non-required information or representations placed on the product shall not minimize,\\ndetract from, or conflict with required information and shall not be false, deceptive, or\\nmisleading.\\xe2\\x80\\x9d In particular, you ask whether statements such as, \\xe2\\x80\\x9cImported articles, see garment\\nfor country of origin\\xe2\\x80\\x9d or \\xe2\\x80\\x9cSee garment for country of origin,\\xe2\\x80\\x9d may be placed on packages\\ncontaining items of varied origin. In general, package statements referring the consumer to\\ngarment labels for origin information would not be misleading or conflict with required\\ninformation. However, under certain circumstances, consumers could be misled concerning\\ncountry of origin of packaged products. This could occur, for example, if multiple items were\\npackaged together so that the label of one of them, stating \\xe2\\x80\\x9cMade in USA,\\xe2\\x80\\x9d could be seen\\nthrough the package, while other labels, obscured by the first item, indicate foreign origin.\\n(Obviously, this situation also could occur if no origin information is placed on the package.)\\n\\nIn addition, you ask whether a package label may indicate that items in the package have\\ndifferent fiber content, provided that it clearly indicates which items are made of each particular\\nfiber or fiber blend. Such label information would be appropriate provided that it is not\\ndeceptive or misleading.\\n\\nI wish to emphasize that care must be taken to avoid deception in each of the situations\\noutlined in your letter. Pursuant to the FTC Act, 15 U.S.C. \\xc2\\xa7 41 et seq., the Commission has\\nbeen directed by Congress to act in the interest of all consumers to prevent deceptive or unfair\\nacts or practices. Under Section 5 of that statute, 15 U.S.C. \\xc2\\xa7 45, the Commission has\\ndetermined that a representation, omission, or practice is deceptive if (1) it is likely to mislead\\n\\x0cMr. Ron Vega, page 3\\n\\nconsumers acting reasonably under the circumstances; and (2) it is material, that is, likely to\\naffect consumers\\' conduct or decisions with respect to the product at issue. For your\\nconvenience, I have enclosed a copy of the Commission\\xe2\\x80\\x99s Policy Statement on Deception.\\n\\nIf you have not already done so, you may wish to obtain a ruling from the United States\\nCustoms Service as to whether poly-bags containing imported products must be marked with the\\ncountry of origin pursuant to the Tariff Act.\\n\\nIn accordance with Section 1.3(c) of the Commission\\'s Rules of Practice and Procedure,\\n16 C.F.R. \\xc2\\xa7 1.3(c), this is a staff opinion only and has not been reviewed or approved by the\\nCommission or by any individual Commissioner, and is given without prejudice to the right of\\nthe Commission later to rescind the advice and, where appropriate, to commence an enforcement\\naction.\\n\\nIn accordance with Section 1.4 of the Commission\\'s Rules of Practice and Procedure, 16\\nC.F.R. \\xc2\\xa7 1.4, your request for advice, along with this response, will be placed on the public\\nrecord.\\n\\nThope this information has been helpful.\\n\\nSincerely,\\n\\n \\n\\nElaine D. Kolish\\nAssociate Director for Enforcement\\n\\nEnclosure\\n\\x0c'","created_timestamp":"September 26, 2000","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/fruit-loom\/fruitofloom.pdf"}
{"text":"b\"UNITED STATES OF AMERICA,\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nDivision of Enforcement\\nBureau of Consumer Protection\\n\\nAugust 18, 2000\\n\\nCarolyn B. Malina\\nImport\/Export Manager\\nLands\\xe2\\x80\\x99 End, Inc.\\n\\n5 Lands\\xe2\\x80\\x99 End Lane\\nDodgeville, WI 53595\\n\\nDear Ms. Malina:\\n\\nThis is in reply to your letter requesting a ruling from the Commission that regulations\\nfound in 16 C.F.R. \\xc2\\xa7\\xc2\\xa7 303.28 and 300.15, concerning the labeling of packages containing textile\\nor wool products, do not apply to products that are sold to consumers via print catalogs and the\\nInternet. Please be advised that the Federal Trade Commission and its staff do not issue\\n\\xe2\\x80\\x9crulings\\xe2\\x80\\x9d in response to requests for advice. However, the Commission has authorized its staff to\\nrespond to requests for advisory opinions where appropriate. See 16 C.F.R. \\xc2\\xa7 1.3.\\n\\nBased on your letter, and telephone conversations with staff, it is my understanding that\\nLands\\xe2\\x80\\x99 End is a direct merchant that sells textile products through mail order catalogs and the\\nInternet. The products are labeled with the disclosures required by the Textile Fiber Products\\nIdentification Act or the Wool Products Labeling Act, as well as the Care Labeling Rule, and\\nsuch information is also set forth in the catalogs and on the Internet web site. You stated that the\\nmajority of the items sold to Lands\\xe2\\x80\\x99 End by its suppliers are shipped to Lands\\xe2\\x80\\x99 End in transparent\\npoly-bags that are taped or heat-sealed. The items are then sold and shipped to Lands\\xe2\\x80\\x99 End\\xe2\\x80\\x99s\\ncustomers in these poly-bags. The product may be folded in such a way that the required\\ninformation on the label is not visible through the bag.\\n\\nIn 1984, Congress amended the Textile and Wool Products Acts to require that a package\\ncontaining a textile product intended for sale to the ultimate consumer bear the information also\\nrequired to appear on the label of the product (i.\\xc2\\xa2., fiber content, country of origin, and identity of\\nmanufacturer or other dealer), unless the package is transparent and allows for a clear reading of\\nthe label information. 15 U.S.C. \\xc2\\xa7\\xc2\\xa7 70b(e) and 68c(c). The Commission implemented the\\nstatutory requirement by adopting 16 C.F.R. \\xc2\\xa7 303.28, which states:\\n\\nProducts contained in packages.\\n\\nWhen textile products are marketed and delivered in a package which is intended to\\nremain unbroken and intact until after delivery to the ultimate consumer, each textile\\nproduct in the package, except hosiery, and the package shall be labeled with the required\\ninformation. If the package is transparent to the extent it allows for a clear reading of the\\nrequired information on the textile product, the package is not required to be labeled.\\n\\x0cMs. Carolyn B. Malina, page 2\\n\\nA similar requirement was adopted for wool products sold in packages. 16 C.F.R. \\xc2\\xa7 300.15.\\n\\nThere appears to be nothing in the record to indicate that the requirement for the labeling\\nof packages applies to mail order transactions. Rather, it appears that the intent of the\\namendments was to ensure that packaged goods provide consumers with the required information\\nprior to sale at the point of purchase. As you noted, at the time the consumer receives the\\nproduct ordered by mail, the purchasing decision has already been made. A label on the\\ndisposable poly-bag in which the product is shipped does not aid the consumer in making the\\npurchasing decision, and does not provide any additional information beyond what is already\\nattached to the product itself. Therefore, Commission staff members in the Division of\\nEnforcement have concluded that the package labeling requirements do not apply to packages\\nused to ship products ordered by mail or telephone or on the Internet.\\n\\nIf you have not already done so, you may wish to obtain a ruling from the United States\\nCustoms Service as to whether poly-bags containing imported products must be marked with the\\ncountry of origin pursuant to the Tariff Act.\\n\\nAs I\\xe2\\x80\\x99m sure you are already aware, mail order -atalogs and other mail crder promotional\\nmaterials, including those disseminated electronically on the Internet, must disclose whether a\\ntextile or wool product was made in the U.S., imported, or both. 16 C.F.R. \\xc2\\xa7\\xc2\\xa7 303.1(u), 303.34,\\n300.1(h), and 300.25a. Catalogs and other written advertisements, including those appearing on\\nthe Internet, must disclose the complete fiber content of a textile product if the descriptive\\ninformation about the product in any way states or implies the presence of a particular fiber or if\\na fiber trademark is used. 16 C.F.R. \\xc2\\xa7 303.40.\\n\\nIn accordance with Section 1.3(c) of the Commission's Rules of Practice and Procedure,\\n16 C.F.R. \\xc2\\xa7 1.3(c), this is a staff opinion only and has not been reviewed or approved by the\\nCommission or by any individual Commissioner, and is given without prejudice to the right of\\nthe Commission later to rescind the advice and, where appropriate, to commence an enforcement\\naction.\\n\\nIn accordance with Section 1.4 of the Commission's Rules of Practice and Procedure, 16\\nCFR. \\xc2\\xa7 1.4, your request for advice, along with this response, will be placed on the public\\nrecord.\\n\\nhope this information has been helpful. Enclosed is a copy of our business guide\\n\\xe2\\x80\\x99 explaining the requirements of the textile and wool labeling rules.\\n\\nSincerely,\\no (anu . Kiln\\n\\nElaine D. Kolish\\nAssociate Director for Enforcement\\nEnclosure\\n\\x0c\"","created_timestamp":"August 18, 2000","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/lands-end-inc.\/landsend.pdf"}
{"text":"b'\\x0c\\x0c\\x0c\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/royal-palm-corporation\/royalpalm.pdf"}
{"text":"b'L.13(Q\\n\\nf1\\'\\n\\nMercedes K. Kelley\\nDivision of Marketing Practices\\n\\nDirect Dial - 202- 326- 3665\\n\\nApril 5 ,\\n\\n1999\\n\\nMr. James O. Pinkerton\\nVice Chairman\\nPennsylvania State Board of Funeral Directors\\n1014 California Avenue\\nPittsburgh, PA 15202\\n\\nDear Mr. Pinkerton:\\n\\nI am writing this letter in response to your request for advisement on the implications of \" The\\nCatholic Funeral Plan \" being offered by the Catholic Cemeteries Association of the Diocese of\\nPittsburgh on the Funeral Rule. The Catholic Funeral Plan is a pre-need plan which aims to\\nprovide customers with a package of funeral goods and services which is not only cost-effcient\\nbut which also ensures a funeral that conforms with Catholic traditions and dictates. The plan is\\nto be marketed by the Catholic Cemeteries Association ofthe Diocese of Pittsburgh and fueral\\nhomes in the Pittsburgh area have been entreated to serve as providers of fueral goods and\\nservices under the Catholic Funeral Plan. Since the plan contemplates providing a full funeral to\\nthe customers, there is concern about how the Funeral Rule fits into this situation.\\n\\nThe following response (except as otherwise noted) is a staff opinion and does not necessarly\\nreflect the views of the Federal Trade Commission or any ofthe Commisioners individually. My\\nremarks are a reflection of the opinions of staff members who are charged with administering the\\nFuneral Rule.\\n\\nThe Federal Trade Commission , in 1985 , published Compliance Guidelines for the Funeral Rule\\nFederal Register.\\nin the\\nVolume 50 , No. 131 , 28062. These Compliance Guidelines were last\\nupdated in August of 1995. These guidelines have a specific provision addressing special groups\\nwho have alternative price lists and the \" you \" referred to is the funeral provider:\\n\\nSome funeral providers enter into agreements with religious groups , bural\\n\\n\\x0csocieties , or memorial societies to arrange fuerals for their members at special\\nprices. You are free to enter into such arrangements , but you must still comply\\nwith the Rule s requirements. You must provide price lists to representatives of\\n\\nMr. James Pinkerton\\n1999\\n\\nApril 5 ,\\n\\nthese groups when they inquire about fueral arrangements on behalf of their\\nmembers. In addition , if an individual group member inquires in-person about\\nfuneral arangements , you must provide the individual with your price lists. Even\\nif a member chooses a package available only to society members , the member\\nmust have the opportunity to look at your price lists. You can either have separate\\nprice lists for qualifyng members or include such prices on your regular price\\nlists.\\n\\nAccordingly, a religious group is free to sell packages of funeral goods and services to thcir\\nmembers under the Funeral Rule. However, the funeral providers who choose to be involved in a\\nprogram , such as the Catholic Funeral Plan , car the burden of making sure that the consumers\\nbrought to them by the religious group get the disclosures required under the Funeral Rule.\\n\\nI hope this clarfication is helpful and if you have any more questions or concerns , please feel\\nfree to contact me.\\n\\nSincerely,\\n\\nMercedes K. Kelley\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-99-1\/opinion99-1.pdf"}
{"text":"b'L-e I+.e\\n\\nRv Ie. Ij. c;k1e\\ni e. NO CClS\\n\\nV ve:\\n\\nUNITED STATES OF AMEJUCA\\n\\nFEDERAL TRAE COMMISSION\\n\\nlc\\n\\n\\\\uJ\\n\\n(W\\\\ \\')\\n\\nt.j3S-\\n\\nWASHINGTON , D. C. 205XO\\n\\nDivision of Marketing Practices\\n\\nLaurie Meehan\\nStaff Attorney\\n\\nDirect Dial\\n\\n(202) 326.3755\\n\\nVIA FACSIMILE AND REGULAR MAIL\\n\\nMay 25 , 1998\\n\\nMichael H. Rasch , Esq.\\nDunn & Rasch , Ltd.\\n3500 Nort Causeway Blvd.\\n\\nSuite 1216\\nExecutive Towers One\\nMetairie , Louisiana 70002\\nDear Mr. Rasch:\\n\\nI apologize for the delay in responding to your inquiry. I appreciate your concern regarding the\\ninteraction of the Federal Trade Commission s Funeral Rule and the state laws of Louisiana.\\nFirst , as a matter of background, an essential purose of the Funeral Rule is to \" ensure that\\nconsumers have access to sufficient information to permit informed purchase decisions , that consumers\\nare not required to purchase items they do not want and are not required by law to purchase and that\\nmisrepresentations are not used to influence consumer purchase decisions. \" Statement of Basis and\\nPurpose, Funeral Industr Practices Trade Regulation Rule , 59 Fed. Reg. at 1593 (January 11 1994)\\n(reprinted ITom the 1982 Statement of Basis and Purose). As you know , the Funeral Rule governs the\\nactivities offuneral providers , who are defined as entities that engage in the sale of both fueral goods\\nand funeral services. In summar, the Funeral Rule: (I) requires funeral directors to provide\\nconsumers with a general price list , a casket price list , an outer bural container price list and an itemized\\nstatement of funeral goods and services selected by the consumer; (2) prohibits misrepresentations\\nregarding embalming, casket or outer bural container requirements , legal and cemetery requirements\\nand protective value claims; (3) prohibits funeral directors ITom requiring the purchase of certain goods\\n\\n\\x0cand services as a condition for purchasing other goods and services; and (4) prohibits embalming\\nwithout prior approval , except in limited circumstances.\\nYou have requested an informal staff advisory opinion regarding the interaction between the\\nrules and regulations of the Louisiana State Board of Embalmers and Funeral Directors and the FTC\\'\\nFuneral Rule.\\n\\nIn reviewing the state law and the rules and regulations of the Louisiana\\nState Board of Embalmers and Funeral Directors does a conflict exist\\nbetween these provisions and the Funeral Rule conceming the retail sale\\nof caskets?\\nThe Louisiana state law and the Louisiana State Board of Embalmers and Funeral Directors\\nrules and regulations state that it is an unlawful practice for any individual or entity that is not a licensed\\nfuneral director to engage in the retail sale of fueral goods , including caskets. In addition , the\\nLouisiana rules and regulations also require that prices of caskets be available in the display room and in\\nthe caskets. The provisions of the Funeral Rule relating to caskets include the provision which prohibits\\ncasket handling fees and specific provisions regarding the Casket Price List.\\nFirst , the Funeral Rule prohibits charging fees , apar ITom the Basic Services fee , other than\\nthose for the goods or services selected by the consumer or the goods and services required to be\\npurchased as a matter of law. This prohibition was specifically directed at the practice of charging\\nconsumers who provided their own caskets a casket handling fee. The Louisiana State Board of\\nEmbalmers and Funeral Directors Rules and Regulations touches on a related issue by limiting retail\\ncasket sales to licensed funeral directors and licensed funeral establishments. The Funeral Rule does\\nnot prohibit ths type of regulation, nor does it demand that retail casket sales be open to entities other\\nthan licensed funeral establishments. Accordingly, there is no direct conflict between the provisions of\\nthe Funeral Rule and the provisions of the Louisiana regulations. This opinion is limited to the\\ninteraction between Louisiana state regulations and the FTC\\' s Funeral Rule. It does not reach the issue\\nof whether the Louisiana regulations are in compliance with other FTC rules , regulations and statutes\\nincluding, but not limited to , those addressing restraint oftTade.\\nTensions exist , however , between the spirit and intention ofthe FTC\\' s Funeral Rule and the\\n\\nLouisiana Regulations. Although the FTC\\'s Funeral Rule does not address what entities may sell\\ncaskets or what entities a consumer may buy a casket ITom , the Funeral Rule does encourage consumer\\nchoice in the area of funeral goods and services , and the Louisiana statute may have the effect of\\nrestrcting a consumer s choice of suppliers of funeral goods or their choice of funeral goods and\\nservICes.\\n\\nDurng one of our conversations , you stated that , in Louisiana, some consumers have purchased\\ncaskets ITom funeral homes other than the one where services were performed and that some\\nconsumers have furnished home made caskets. Because ofthese instances , you stated that the\\n\\n\\x0cLouisiana regulation did not significantly limit consumers \\' choices as they could still purchase caskets\\nITom competing funeral homes or provide home made caskets. It is likely, however , that limiting the\\ntypes of entities that may sell caskets may have the overall effect of reducing the number of casket\\nchoices or choices of suppliers of caskets.\\n\\nFor additional information , I am enclosing a letter to The Honorable Franklin P. Hall ITom the\\nDirector ofthe FTC\\' s Bureau of Competition. The letter addressed a similar issue with respect to\\nproposed legislation in the state of Virginia which sought to limit the sales of pre-need funeral planing.\\nThe Commission authorized the Director to send this letter , which stated , in pertinent par , that\\nThe Commission is concerned with restTictions that allow only licensed\\nfuneral directors to sell pre-need funeral plans , including fueral goods\\nand arrangements for providing funeral services. Such restrictions may\\nharm consumers by preventing the intToduction and development of\\ninnovative forms of competition and lower cost alternatives for fueral\\nproducts and services for which the professional expertise of a funeral\\ndirector is not required. For example , consumers may be hared if\\nowners of cemeteries and manufacturers of fueral goods are\\ncompletely prohibited ITom selling caskets and bural vaults\\n\\nconsumers in Virginia.\\n\\nThus , although the Funeral Rule does not directly address this issue , the Commission has previously\\nexpressed concerns regarding the competitive effects of regulations which restrict the tyes of entities\\nwhich may sell funeral goods.\\nSecond , the Funeral Rule requires fueral providers , defined as entities offering both fueral\\ngoods and fueral services , to either list the retail price of each casket on the General Price List or\\nprepare a separate Casket Price list including the effective date of the list and the retail prices and\\n\\nalternative containers offered. Furher, the Funeral\\nRule requires fueral providers to offer consumers an opportty to review the Casket Price List upon\\na discussion of caskets , but prior to showing consumers caskets. The Louisiana State Board of\\nEmbalmers and Funeral Directors Rules and Regulations, however, simply require that the fueral\\nservice licensee have the prices of caskets available in the display room and in the casket in public view.\\nNote , in order to comply with the FTC\\' s Funeral Rule , fueral providers must provide a casket price\\nlist prior to showing the display room.\\nsuffcient identifyng information for caskets and\\n\\nDoes the Funeral Rule have any specific provisions which allow the\\nanv individual or group?\\nretail sale of caskets by\\nThe FTC\\' s Funeral Rule provisions regarding the sale of caskets are limited to the requirement\\nto provide a Casket Price List , the prohibition against casket handling fees , and the prohibitions against\\n\\n\\x0c,\"\\n\\nmisrepresenting the necessity of or preservative effects of a casket. The Funeral Rule does not address\\nthe retail sale of caskets by a particular individual or group. It neither prohibits nor allows thc retail sale\\n, however, assumes or encourages a competitive\\nof caskets. The prohibition on casket handling fees\\n\\nmarket in the retail sale of caskets.\\nIf the Funeral Rule would not apply to a \" casket store\\n\\n\" is it not proper\\n\\nfor such an entity to comply with all state laws concerning the retail sale\\nof fueral merchandise?\\n\\n, who are defined as entities\\nThe FTC\\'s Funeral Rule governs the activities of funeral providers\\ngoods which are\\nboth the sale of funeral goods and funeral services. Funeral goods are \" \" Funeral\\nthat engage in\\nsold or offered for sale directly to the public for use in connection with ,funeral\\nservices.\\ncremation\\nor other final\\nservices are: (1) services used to care for and prepare bodies for burial\\n\\n, supervise , or conduct the funeral ceremony or final\\ndisposition; and (2) services used to arange\\ncasket store \" engaged solely in retail sale of caskets or even\\ndisposition of human remains. Thus , if a \"\\n\" also engaged in the sale of\\n\\nother fueral goods , the Funeral Rule would not apply unless the \"\\n\\nstore\\n\\nfueral services.\\n\\n, as well as the\\nAs the Compliance Guide states you must comply with all state regulations\\nITom the\\nLouisiana is not exempt\\nFTC Funeral Rule \" unless your state has been granted an exemption.\\ns Funeral Rule and any state\\nFuneral Rule , so fueral providers must comply with both the FTC\\'\\nregulations.\\nfueral provider,\" the\\n\\nWith respect to entities which are not covered within the definition of \"\\nFTC\\' s Funeral Rule does not apply. The regulation ofthose outside this definition or such outside\\nstaff charged\\nentities \\' compliance with any other regulation is simply beyond the scope of opinion ofthe\\nwith enforcement of the Funeral Rule.\\n\\nPlease note that the views expressed in this letter are those of staff only. They have not been\\n, and they are not binding on the Commission.\\nreviewed, approved or adopted by the Commission\\nThey do, however , reflect the opinions of the staff charged with enforcement ofthe Funeral Rule.\\nI hope that you find the above information helpful.\\nhave any additional questions.\\n\\nPlease do not hesitate to contact me if you\\n\\nSincerely,\\n\\nLaurie Meehan\\n\\nFuneral Rule Enforcement Staff\\n\\n\\x0cEnclosure\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-98-1\/opinion98-1.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nDivision of Enforcement\\nBureau of Consumer Protection\\n\\nMarch 27, 1998\\n\\nJohn F. Sterling\\n\\nAssociate General Counsel\\nPillowtex Corporation\\n4111 Mint Way\\n\\nDallas, Texas 75237-1605\\n\\nDear Mr. Sterling:\\n\\nThis is in reply to your letter of February 13, 1998, addressed to Donald S. Clark,\\nSecretary of the Commission, requesting an advisory opinion on behalf of your client, Fieldcrest\\nCannon, Inc., with regard to fiber labeling requirements of the Textile Fiber Products\\nIdentification Act and the rules and regulations thereunder. Your question concerns appropriate\\nlabeling for a cotton towel, or other terry cloth product, consisting of Egyptian (or Pima or\\ncombed\") cotton loops with an upland cotton ground or base. Specifically, you ask whether this\\nproduct may be labeled \"100% Cotton, 100% Egyptian Cotton Loops,\" or whether a more\\ndetailed disclosure is required, such as \"Pile: 100% Egyptian Cotton; Ground: 100% Upland\\nCotton (ground constitutes 60% of fabric and pile 40%).\"\\n\\nStaff members in the Division of Enforcement, Bureau of Consumer Protection, have\\nreviewed the legal analysis set forth in your letter, and are in general agreement with it. If the\\nloops and base of a pile fabric towel are entirely cotton, with the loops composed of 100%\\nEgyptian (or Pima or \"combed\") cotton and the base composed of a different type of cotton, such\\nas Upland cotton, staff believes that a truthful disclosure, such as \"100% Cotton, 100% Egyptian\\nCotton Loops,\" would comply with the fiber identification requirements of the Textile Act and\\nRules. Where both the base and the loops are of the same generic fiber classification, it is staff\\'s\\nopinion that there is no requirement, pursuant to Textile Rule 24 (16 C.F.R. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 303.24), to state\\nthe ratio of the base and loops to the total fabric weight, or to state the different types of fibers\\nused in the base and the loops. Manufacturers may choose to identify the base, for example, by\\nsaying \"100% Cotton, Egyptian Cotton Loops and Upland Cotton Base,\" but such additional\\ndisclosure would not be required. In contrast, if the base and loops were composed of different\\ngeneric fibers, and the manufacturer chose to identify the base and loops separately on the label,\\nthen the full disclosure, with relative weights as set forth in Textile Rule 24, would be required.\\nStaff believes that part of the underlying intent of Textile Rule 24 is to assist consumers in\\ndistinguishing between different generic classifications of fibers, rather than between different\\ntypes of fibers of the same generic classification.\\n\\x0cJohn F. Sterling, Esq., page 2\\n\\nOf course, care must be taken to avoid deception if labeling or advertising makes\\nreference to a premium fiber that is used in only a portion of the textile product. For example,\\nreferences to a premium cotton cannot be used deceptively to imply that the entire product is\\nmade of the premium cotton, if such is not the case. Moreover, a trademark that implies the\\npresence of a premium cotton (such as a trademark that includes a slightly altered form of the\\nwords \"Pima\" or \"Egyptian\") may trigger the need for additional disclosures to avoid a\\nmisleading implication that the product is composed solely of the premium cotton, if such is not\\nthe case. I refer you generally to Sections 303.16, 303.17, 303.18, 303.40, and 303.41 of the\\nTextile Rules. As you may know, the Textile Rules recently were revised by the Commission.\\nFor your convenience, I am enclosing a copy of the revised Rules and the Federal Register notice\\nannouncing the amendments.\\n\\nCommission staff will revise the appropriate section in the FTC leaflet, \"Calling It\\nCotton,\" to reflect more accurately the requirements pertaining to the labeling of pile fabrics. We\\nappreciate your bringing this issue to our attention.\\n\\nAs I am sure you are aware, this staff opinion in no way limits or changes any of the\\nprovisions of the Consent Decree, entered June 6, 1997, in the matter of United States of\\nAmerica v. WestPoint Stevens, Inc., Civ. No. 97-4085, U.S.D.C., Central District of California.\\n\\nIn accordance with Section 1.3(c) of the Commission\\'s Rules of Practice and Procedure\\n(16 C.F.R. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 1.3(c)), this is a staff opinion that has not been reviewed or approved by the\\nCommission or by any individual Commissioner, and is given without prejudice to the right of\\nthe Commission later to rescind the advice and, where appropriate, to commence an enforcement\\naction.\\n\\nIn accordance with Section 1.4 of the Commission\\'s Rules of Practice and Procedure (16\\nC.F.R. \\xe0\\xb8\\xa2\\xe0\\xb8\\x87 1.4), your request for advice, along with this response, will be placed on the public\\nrecord.\\n\\nI hope this has been helpful. If you have any questions, do not hesitate to write to me or\\ncall me at 202-326-3161.\\n\\nVery truly yours,\\nfie 9 ev fay\\n\\nMary K. Engle\\nAssistant Director\\n\\nAttachment\\n\\x0c'","created_timestamp":"March 27, 1998","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/pillowtex-corporation\/pillowtex.pdf"}
{"text":"b'L.( 3\\n\\nUNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON , D. C. 20580\\n\\nDivision of Marketing Practices\\n\\nLaurie Meehan\\nAttorney\\nDirect Dial\\n\\n202- 326- 3755\\n\\nOctober 31 ,\\n\\n1997\\n\\nLisa Carlson\\nExecutive Director\\nFuneral & Memorial Societies of America, Inc.\\nO. Box 10\\nHinesburg, Vermont 05461\\n\\nDear Ms. Carlson:\\nThan you for your letter of October 24 , 1997. I apologize for the fact that you received\\nno response to your July 14 , 1997 correspondence; however , this correspondence was never\\nreceived in this office. I regret any inconvenience that this may have caused. Staff of the FTC is\\nconcerned about fueral industry practices that may be unfair or deceptive , and we appreciate\\nyour efforts to bring such potentially unlawfl practices to our attention.\\n\\nThe practices you describe surounding the \" required identification viewing \" and the\\nadditional storage charges in the event a consumer elects not to identifY a body are certainly\\ndistubing. Staff is especially concerned that in the context of \"required identification viewing,\\nfueral providers may be misrepresenting that there are legal requirements that engender delay,\\nthe necessity to store remains for some period of time , and consequently, additional charges.\\nStaff is unaware of any state law requirement that demands an identification, forms and other\\npaperwork , or , where that identification is not performed , a waiting period of several days , prior\\nto cremation. If there are no state law requirements regarding forms , paperwork or identification\\nof the body for cremation , and a fueral provider is representing that these laws exist , in staff s\\nview, such misrepresentations would likely affect the conduct of a consumer acting reasonably\\nunder the circumstances with respect to a fueral provider s offered goods and services.\\nTherefore , such practices would likely be deceptive , in violation of 9 5 of the FTC Act.\\nMoreover , in staffs view, a provider that makes such misrepresentations would also be in\\nviolation of Section 453.3 (d)(I) of the Funeral Rule , which states that \" it is a deceptive act or\\n\\n\\x0cstate , or local laws , or paricular\\ncemeteries or crematories , require the purchase of any fueral goods or fueral services when\\nsuch is not the case.\\n\\npractice for fueral providers to represent that federal ,\\n\\nFurher , apar from the scenarios described above , you alleged more generally that some\\nconsumers who opt for direct cremation are being charged a fee for a \" required identification\\nviewing. \" Such a fee , if it is non- declinable , may also violate the Funeral Rule. The only\\npermissible non- declinable charges are the basic services fee and , in some instances , fueral\\ngoods and services that are required to be purchased by law. Thus , if a fueral provider charges a\\nconsumer for \"required identification viewing \" of the deceased , and it is neither par of the basic\\nservices fee nor required by law , the unavoidable charge would likely be in violation of Section\\n453.4 (b)(1) of the Funeral Rule. I should note that staff at the FTC is unaware of any state law\\nrequiring that an \"identification\" be purchased as a service or good from a fueral home.\\nIn your letter , you also request that the FTC endorse several statements which you state\\nwere prompted by recent consumer experiences that have been reported to your office. First , I\\ninterpret your request to be a solicitation for a staff opinion as to whether the several statements\\nin your letter comport with the FTC\\' s Funeral Rule. Accordingly, for puroses of clarity, the\\nfollowing reflects a staff opinion regarding whether the statements you proposed in your July 14\\n1997 letter comport with the Funeral Rule and accurately reflect the scope of the Rule.\\n\\nThe first statement is that \"No consumer may be charged for identifYing a deceased. \" As\\ndiscussed above , if a charge for identification of the deceased is non- declinable , and not within\\nthe permissible non- declinable charges , it is likely a violation of the Funeral Rule. Accordingly,\\nunder those circumstances , a consumer should not be charged for identifYing a deceased.\\nHowever, it is possible that fueral providers might offer consumers an opportunty to view a\\ndeceased as a service or good , perhaps akin to the use of facilities and staff for viewing or other\\nservices , prior to cremation. In that scenario , it is possible that a fueral provider may offer an\\noptional use of facilities and staff for viewing a deceased with a charge.\\nSecond , you propose that the FTC endorse the statement that\\n\\nNo consumer may be forced to view a deceased body for \" routine \" identification\\npuroses. If there is any question as to the identity of the deceased , it is the\\nresponsibility of the fueral home to ascertain such before performing services of\\nany kind for which there wil be a charge , including removal.\\n\\nIn staff s view, the issue of identification of a deceased prior to final disposition of the remains is\\nprobably appropriately addressed by state or local regulatory law enforcement authority. In the\\nabsence of material misrepresentations , the provisions of the Funeral Rule simply do not address\\nthe policies , practices and methods that a funeral provider uses to identifY remains. The purose\\nof the Funeral Rule , in par , is to make price information readily available to consumers to enable\\nthem to do comparative shopping for fueral goods and services. In addition, disclosures\\nrequired to appear on the general price list inform consumers that they have the right to purchase\\n\\n\\x0conly those goods and services that they specifically select. The Rule seeks to promote informed\\ndecision-makng so that consumers are able to make fueral arangements that are within their\\nmeans. Furher, the Funeral Rule addresses other unair or deceptive practices in the context of\\npurchasing fueral goods and services. It has not yet been established that the practices or\\npolicies of fueral homes , with respect to requiring an identification, are either unair or\\ndeceptive. I should note , though , that additional facts and circumstances may prove that\\npractices regarding identification are unair or deceptive and , thus , in violation of the Funeral\\nRule and the FTC Act.\\nThird , you request that the FTC endorse the statement that\\n\\nNext-of-kin or other designated person(s) must be permitted private time with the\\nbody of a deceased in order to say their \" goodbyes \" ifthey wish. A mortar may\\nnot require embalming for this purose. A mortar may charge a per-hour or\\nper- day fee for the use of a room in its facilities for this but may not limit the\\namount of time for private visitation.\\n\\nAs with the second statement, above , that you proposed , the issue of \"private time \" with the\\ndeceased is simply outside the scope ofthe Funeral Rule. Again, though, I should note that if the\\ncircumstances surounding a funeral home s practices with respect to allowing or not allowing\\nprivate time \" with the deceased amounted to an unfair or deceptive practice , such practices\\nwould likely violate the Funeral Rule or the FTC Act. Without additional information, however\\nand within the confines of the Funeral Rule , staff at the FTC are unable to endorse the\\naforementioned statement.\\nFinally, please be advised that the views expressed in this letter are those of the FTC\\nstaff. They have not been reviewed , approved or adopted by the Commission, and they are not\\nbinding upon the Commission. However, they do reflect the opinions of those staff members\\ncharged with enforcement of the Funeral Rule.\\n\\nI hope that you will find the above information helpful. We appreciate your interest in\\nthis matter. Please let us know whenever we can be of assistance.\\n\\nSin\\n\\nLaurie M. Meehan\\n\\n\\x0cUND STATE OF AMRICA\\n\\nFEDERA TRAE COMMISSION\\nWASHIGTON , D. C. 20580\\n\\nDivision of Marketing Practices\\nLaurie Meehan\\n\\nAttorney\\nDirect Dial\\n\\n202- 326- 3755\\n\\nOctober 31 ,\\n\\n1997\\n\\nLisa Carlson\\nExecutive Director\\nFuneral & Memorial Societies of America , Inc.\\nO. Box 10\\nHinesburg, Vermont 05461\\n\\nDear Ms. Carlson:\\n\\nno\\n\\nThan you for your letter of October 24 1997. I apologize for the fact that you received\\nresponse to your July 14 , 1997 correspondence; however , ths correspondence was never\\n\\nreceived in ths offce. I regret any inconvenience that ths may have caused. Sta of the FTC is\\nthat may be unai or deceptive , and we appreciate\\nyour efforts to bring such potentially iuawf practices to our attention.\\nconcerned about fueral industr practices\\n\\nThe practices you describe surounding the \"required identification viewig \" and the\\nadditional storage charges in the event a consumer elects not to identifY a body are certaiy\\ndistubing. Sta is especially concerned that in the context of \"required identification viewig,\\nfueral providers may be misrepresenting that there are legal requirements that engender delay,\\nthe necessjty to store remains for some period of time , and consequently, additional charges.\\nStaff is unaware of any state law requiement that demands an identification , forms and other\\npaperwork, or , where that identification is not performed , a waiting period of several days , prior\\nto cremation. If there are no state law requirements regarding forms , paperwork or identification\\nof the body for cremation, and a fueral provider is representing that these laws exist , in stafs\\nview, such misrepresentations would likely affect the conduct of a consumer acting reasonably\\nunder the circumstances with respect to a fueral provider s offered goods and services.\\nTherefore , such practices would likely be deceptive, in violation of 95 of the FTC Act.\\nMoreover , in stafs view, a provider that makes such misrepresentations would also be in\\nviolation of Section 453.3 (d)(l) of the Funeral Rule , which states that \"it is a deceptive act or\\n\\n\\x0cpractice for fueral providers to represent that federal ,\\n\\nstate , or local laws, or paricular\\n\\ncemeteries or crematories , require the purchase of any fueral\\nsuch is not the case.\\n\\ngoods or fueral services\\n\\nwhen\\n\\nFurer, apar from the scenaos described above, you alleged more generally that some\\nconsumers who opt for direct cremation are being charged a fee for a \" required identification\\nviewig. \" Such a fee , if it is non- declinable , may also violate the Funeral Rule. The only\\npermissible non- declinable charges are the basic services fee and , in some instances , fueral\\ngoods and services that are required to be purchased by law. Thus , if a fueral provider charges a\\nconsumer for \"required identification viewing\" of the deceased, and it is neither par of the basic\\nservices fee nor requied by law, the unavoidable charge would likely be in violation of Section\\n453.4 (b)(I) of the Funeral Rule. I should note that staf at the FTC is unaware of any state law\\nrequiring that an \"identification\" be purchased as a service or good from a fueral home.\\nIn\\nyour letter, you also request that the FTC endorse several statements which you state\\nwere prompted by recent consumer experiences that have been reported to your offce. First, I\\ninterpret your request to be a solicitation for a sta opinion as to whether the several statements\\nin your letter comport with the FTC\\' s Funeral Rule. Accordingly, for puroses of clarty, the\\nfollowing reflects a staf opinion regarding whether the statements you proposed in your July 14\\n1997 letter comport with the Funeral Rule and accurately reflect the scope of the Rule.\\n\\nThe first statement is that \"No consumer may be charged for identifYing a deceased. \" As\\ndiscussed above , if a charge for identification of the deceased is non- declinable , and not with\\nthe permssible non- declinable charges, it is likely a violation of the Funeral Rule. Accordingly,\\nunder those circumstaces , a consumer should not be charged for identifYing a deceased.\\nHowever, it is possible that fueral providers might offer consumers an opportty to view a\\ndeceased as a service or good, perhaps ak to the use of facilities and sta for viewing or other\\nservices , prior to cremation. In that scenaro , it is possible that a fueral provider may offer an\\noptional use of facilties and staff for viewing a deceased with a charge.\\nSecond , you propose that the FTC endorse the statement that\\n\\nNo consumer may be forced to view a deceased body for \"routine \" identification\\npuroses. If there is any question as to the identity of the deceased , it is the\\nresponsibility of the fueral home to ascertain such before performg services of\\nany kind for which there will be a charge , including removal.\\n\\nstaffs view, the issue of identification of a deceased prior to final disposition of the remains is\\nIn the\\nabsence of material misrepresentations , the provisions of the Funeral Rule simply do not address\\nthe policies , practices and methods that a fueral provider uses to identifY remains. The purose\\nof the Funeral Rule, in par, is to make price inormation readily available to consumers to enable\\nIn\\n\\nprobably appropriately addressed by state or local regulatory law enforcement authority.\\n\\nthem to do comparative shopping for fueral goods and services. In addition , disclosures\\n\\nrequired to appear on the general price list inorm consumers that they have the right to purchase\\n\\n\\x0conly those goods and services that they specifically select. The Rule seeks to promote inormed\\ndecision-makg so that consumers are able to make fueral arangements that are with their\\nmean s. Furer , the Funeral Rule addresses other unair or deceptive practices in the context of\\npurchasing fueral goods and services. It has not yet been established that the practices or\\npolicies of fueral homes , with respect to requig an identification, are either unai or\\ndeceptive. I should note , though , that additiona facts and circumstaces may prove that\\npractices regarding identification are unai or deceptive and, thus , in violation of the Funeral\\nRule and the FTC Act.\\nThird, you request that the FTC endorse the statement that\\nNext-of-kin or other designated person(s) must be permitted private time with the\\nbody of a deceased in order to say their \"goodbyes \" if they wish. A mortar may\\nnot require embaling for ths purose. A mortar may charge a per- hour or\\nper- day fee for the use of a room in its facilities for this but may not limt the\\namount of tie for private visitation.\\n\\nAs with the second statement, above , that you proposed , the issue of \"private time\" with the\\ndeceased is simply outside the scope of the Funeral Rule. Agai, though, I should note that if the\\ncircumstaces surounding a fueral home s practices with respect to allowig or not allowig\\nprivate time \" with the deceased amounted to an unair or deceptive practice , such practices\\nwould likely violate the Funeral Rule or the FTC Act. Without additional information, however\\nand withn the confnes of the Funeral Rule , sta at the FTC are unable to endorse the\\naforementioned statement.\\nFinally, please be advised that the views expressed in ths letter are those of the FTC\\n\\nstaff. They have not been reviewed , approved or adopted by the Commission , and they are not\\nbinding upon the Commission. However, they do reflect the opinons of those staff members\\ncharged with enforcement of the Funeral Rule.\\nI hope that you will fmd the above information helpful. We appreciate your interest in\\nths matter. Please let us know whenever we can be of assistace.\\n\\nLaure M. Meehan\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-97-4\/opinion97-4.pdf"}
{"text":"b'432UNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON , D. C. 20580\\n\\nDivision of Marketing Practices\\n\\nLaurie Meehan\\nAttorney\\nDirect Dial\\n\\n202- 326- 3755\\n\\nApril 16 ,\\n\\n1997\\n\\nDavid Nixon\\nFuneral Management Service , Inc,\\n\\nO. Box 13320\\nSpringfield , Ilinois 62791- 3320\\nDear Mr. Nixon:\\n\\n1 apologize for the delay in responding to your inquiry. You have raised several issues\\nwith respect fueral homes granting discounts to consumers in the course of offering to sell and\\nselling funeral goods and services. As we discussed in our last conversation, if discounts are\\ngranted as a matter of course to consumers , these discounts should , instead , be the actual prices\\nand included as such on the General Price List. As the FTC publication\\nComplying with the\\nFuneral Rule states\\n\\nThe itemized prices on your General Price List, as well as your\\nCasket Price List and Outer Burial Container Price List\\nshould be accurate and up- to- date. These prices should reflect\\n\\nthe prices that you actually charge your customers.\\nAccordingly, as a general practice , if the cost of any item is discounted for all consumers , the\\ndiscounted prices should be listed as the actual price.\\nIn your letter , you propose four scenarios with respect to discounting services on the basis\\nof whether or not a consumer purchases a casket trom the fueral home. As a general matter, I\\nmust reiterate that the Funeral Rule prohibits charging casket handling fees pursuant to Section\\n453.4(b)(1)(ii) ofthe Funeral Rule. The scenarios you proposed are addressed as follows:\\n\\n\\x0c1. A\\n\\noffers families a discounted price for\\nhis\/her Basic Services of Funeral Director & Stafffee , if the family\\npurchases a casket ftom his\/her fueral business. Families\\nsupplying their own casket are not offered this discount. Is this\\nallowed under the FTC Funeral Rule.\\nfueral director\\n\\nThis practice is impermissible under the Funeral Rule. Funeral homes may charge a nondeclinable Basic Services Fee as a condition for the purchase of other goods and services. When\\nthis fee is included in the price of a casket, the rule requires fueral homes to disclose to\\nconsumers that the \" same fee shall be added to the total cost of your fueral arangements if you\\nprovide the casket.\" Section 453. 2(b)(4)(C)(2). A discounted fee for consumers who purchase\\nthe casket ftom the fueral home would be inconsistent with this section of the rule stating that\\nconsumers who do not purchase a casket ftom the funeral home would have the\\nsame fee added\\nto their arangement. In addition , this discount would , in effect , become a fee assessed to only\\nthose consumers who do not purchase a casket ftom the fueral home , and would equate to a\\ncasket handling fee. Accordingly, this proposal is inconsistent with Section 453. 2(b)(4)(C)(2)\\nand is potentially violative of Section 453.4(b )(1\\n\\n)(ii).\\n\\n2. A\\n\\nfuneral director offers families a discounted price for all\\nhis\/her service fees (Basic Services of Funeral Director & Staff\\nEmbalming, Other Preparation of the Body, etc. ), if the family\\npurchases a casket ftom his\/her funeral business. Families\\nsupplying their own caskets are not offered this discount. Is this\\nallowed under the FTC Funeral Rule.\\nAgain , this scenario is not allowable under the Funeral Rule. The same issues arise with\\nrespect to scenario number one. First, if the Basic Services fee was included in the price ofthe\\ncasket , the required disclosure concerning the \" same \" fee as mentioned above would be\\ninconsistent with the fueral home s practice of assessing a \" different\" fee to consumers\\nproviding their own caskets. Second , discounting fees on the basis of the purchase of a casket\\nhas the effect of charging fees to those consumers who do not purchase caskets ftom the funeral\\nhome. Consistent with previous staff opinions on this subject, fueral homes are permitted to\\n\\noffer fueral packages which offer a discount to all consumers. Strcturing discounts to\\nexplicitly burden consumers who purchase a casket outside of the fueral home or discourage\\nconsumers ftom purchasing a casket from outside the funeral home, while benefitting only those\\nconsumers who purchase a casket ftom the fueral home effectively amounts to a casket\\nhandling fee that is prohibited by the Funeral Rule.\\n\\n3. A\\n\\noffers families a discounted price for all\\nhis\/her service fees (except the Basic Services of Funeral Director\\n& Staff), if the family purchases a casket ftom his\/her fueral\\nbusiness. Families supplying their own casket are not offered this\\nfueral director\\n\\n\\x0cdiscount. Is this allowed under the FTC Funeral Rule.\\nThis is allowable under the FTC Funeral Rule. Although we are certainly concerned\\nabout the premise of a proposed discount when it is structued in a way to monetarly burden\\nconsumers who supply their own casket or discourage consumers ftom supplying their own\\ncasket , fueral homes may encourage consumers to purchase a casket ftom their organization by\\noffering discounts on services or items except for a non- declinable Basic Services Fee.\\n\\n4.\\n\\nAllowing that a fueral director is permitted to offer a\\ndiscounted price in one of the thee prior examples , I believe that\\nhe\/she can enter either the itemized prices on the Statement of\\nFuneral Goods & Services Selected or a single package total price\\nwith a check mark on all the service items included in that package\\npnce.\\n\\nIf a fueral home offers a package of goods and services that complies with the Funeral\\nRule , it may list the goods and services included in the package together with the package price.\\nSee Complying with the Funeral Rule , page 24.\\n1 hope that you find this information helpful. Please note that the views expressed in this\\nletter are those of staff only. The have not been reviewed , approved or adopted by the\\nCommission , and they are not binding on the Commission, They do , however, reflect the\\nopinions of the staff charged with enforcement of the Funeral Rule.\\n\\nSincerely,\\n\\nLaurie Meehan\\nFuneral Rule Enforcement Staff\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-97-3\/opinion97-3.pdf"}
{"text":"b'L.121\\nUNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON , D. C.\\n\\n20580\\n\\nDivision of Marketing Practices\\nLaurie Meehan\\nAttorney\\nDirect Dial\\n\\n202- 326- 3755\\n\\nVIA FACSIMLE AN U. S. MAL\\nMarch 20 ,\\n\\n1997\\n\\nDavid Parridge\\nMeredyth P. Parridge\\nRegulatory Support Servces , Inc.\\n2608 Duffy Cour\\nRichmond , VA 23233\\nDear Mr. Parridge:\\n\\nI apologize for the delay in responding to your inquiries. You have requested staff\\nopinions or clarifications on the following matters: 1) whether a statement regarding exposure\\nincidents complies with the Funeral Rule; 2) whether prices on separate price lists may differ\\nonly with respect to \" unique \" items offered on a paricular list; 3) whether package prices based\\non items unique to a paricular nationality may be offered only to those persons of that\\nnationality; 4) confirmation that funeral homes may charge a fee for a translator; and 5)\\nconfirmation that the General Price List and Statement of Goods and Service , with their specific\\ndisclosures , should be supplied to the customer in English.\\nFirst , you have inquired as to whether the inclusion of the following statement on a\\nStatement of Goods and Services complies with the Funeral Rule:\\nIn the event of an exposure incident , as defined under applicable OSHA\\nregulations , involving blood or other potentially infectious materials !Tom the\\ndecedent and a member of the funeral home staff, the funeral home is hereby\\ngranted permission to test appropriate samples !Tom the decedent for evidence of\\ninfection with Human Immunodeficiency Virus (HI), hepatitis B virus (HBV),\\nand hepatitis C virus (HCV) and to use the results of such testing for furter\\n\\n\\x0cevaluation and management of the exposure incident , including disclosure of the\\ntest results to the exposed staff member.\\n\\nThe Funeral Rule requires that funeral providers give consumers accurate , itemized price lists\\nmake disclosures regarding certain funeral goods and service and prohibits funeral providers\\nfrom making certain misrepresentations regarding fueral goods and services. The Funeral Rule\\ndoes not address exposure incidents or the permissible methods for dealing with such incidents.\\nThus , we can neither express approval nor disapproval of the proposed exposure incident\\nstatement.\\nSecond , you raised several issues in your letter regarding different General Price Lists.\\nThe Funeral Rule requires that funeral providers produce a General Price List to consumers that\\ncontains an itemized price list and certain disclosures at the beginning of any discussion\\nregarding funeral arrangements. 16 C.F. R. 9453. 2(4). Under certain circumstances , funeral\\nproviders may offer alternative price lists for special groups. Specifically, funeral providers may\\n\\noffer a different General Price List for funeral goods and services for an infant. Furter , a funeral\\nprovider may enter agreements with religious groups or bural societies to provide funerals at a\\ndiscounted price. However , even these alternative price lists must provide all items and\\ndisclosures as required on the General Price List. I have enclosed a copy of the FTC publication\\nComplving with the Funeral Rule , which discusses the issue of alternative price lists on page 18.\\nYour letter questions whether prices must be identical on a General Price List given to al1\\ncustomers versus a General Price List given to customers who are members of a specific group.\\nIf you propose offering different General Price Lists for different ethnic groups , based on the\\ninclusion of services which are appropriate for different groups , the prices for \" like \" items would\\nneed to be consistent. Therefore , items that are \" unique \" to particular services may be included\\n\\non a paricular price list , but the prices for the required itemized goods and services must remain\\nthe same. If you are offering discounted prices to a particular group, the prices need not be\\nidentical Further , the discounts that you offer to members of groups may include items unique\\nto that group or items common to al1 funeral services that you offer.\\n\\nThird , you requested clarfication with respect to offering discounted packages to Asian\\ncustomers. Under the Funeral Rule , you may offer certain discounted packages to members of\\n\\ngroups that you have entered into arangements with. Note: if these discount prices are provided\\nto the large m ority of your customers , the discount prices would be the actual prices and , thus\\nthe General Price List provided to al1 customers should reflect that. As I mentioned above , I\\nhave enclosed the FTC publication\\nComplving with the Funeral Rule which addresses the issue\\nof discounted prices on page 13. If the package or discount is par of a special arangement with\\nan Asian group, you may provide discounted services , but the price list for those services must\\nstil1 comport with the requirements of the General Price List. Furher , the FTC expresses no\\nopinion regarding the legality or propriety of offering separate prices for different ethnic groups\\nunder state or federal laws that address discrimination based upon race or national origin , but that\\nare not enforced by the FTC. The opinions expressed in this letter are confined solely to the\\napplication of the Funeral Rule to the issues raised.\\n\\n\\x0cFourth , you requested that staff confirm the statement that a fee for a translator is allowed\\nunder the Funeral Rule. The FTC does not regulate the prices charged by funeral providers. The\\npurpose of the Funeral Rule is to make price information readily available to consumers and to\\nenable them to do comparative shopping for funeral goods and services. Thus , the services of a\\ntranslator , if so required , may be subject to a fee or charge by the funeral home under the Funeral\\nRule. An itemized disclosure on the GPL regarding the fees or charges for translators , however\\nwould be appropriate.\\n\\nFinally, you requested written confirmation that the required disclosures on the General\\nPrice List should be provided in English due to the Rule requirement of specific wording of the\\ndisclosures. The Funeral Rule provides for several specifically worded disclosures. Given the\\n\\ndifficulty that you raise of translating these terms verbatim into a different language , staff\\nrecommends providing the General Price List and Itemized Statement of Funeral Goods and\\nServices in English to comport with the specific disclosures of the Funeral Rule. If you wish\\nyou may also disclose them in other languages , as long as the English disclosures are provided as\\nwell.\\nFTC staff are pleased to hear of the high compliance rate you observed in Virginia.\\n\\nPlease be advised that the views expressed in this letter are those of the FTC staff. They\\nhave not been reviewed, approved or adopted by the Commission , and they are not binding upon\\nthe Commission. However , they do reflect the opinions of those staff members charged with\\nenforcement of the Funeral Rule.\\n\\nI apologize again for the delay in responding to your inquiry.\\n\\nSincerely,\\n\\nLaurie Meehan\\nFuneral Rule Enforcement Staff\\n\\nEnclosure\\n\\n\\x0cUNITED STATE OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON , D. C. 20580\\n\\nDivision of Marketing Practices\\n\\nLaurie Meehan\\nAttorney\\nDirect Dial\\n\\n202-326- 3755\\n\\nDecember 5 1996\\n\\nH. Stephen Hars , Jr,\\nAlston & Bird\\nOne Atlantic Center\\n1201 Peachtree Street\\nAtlanta, Georgia 30309- 3424\\nDear Mr. Haris:\\n\\nI am wrting in response to your request that Federal Trade Commission (\"FTC\" or\\nCommission ) staff review your client\\' s proposed business plan as it relates to the FTC\\'\\nFuneral Rule, 16 C, F.R Par 453, Specifically, you asked for a staff opinion addressing the\\nfollowing issues: 1\\n\\nwhether, by virtue of its provision of services , your\\nclient would be considered a \" fueral provider \" as\\nthat term is defined in 16 C. F.R 9 453. 1(i);\\nwhether, and the extent , if any, to which the Funeral\\nRule , 16 C. R. Par 453 is applicable to the\\nproposed services to be offered by your client; and\\n\\nwhether, and the extent , if any, to which the\\nCommission would regard any aspect of your\\nclient\\'s services to violate the Funeral Rule.\\nAt the outset , it is useful to note that an essential purose of the Funeral Rule is to\\nensure that consumers have access to sufficient information to permit informed purchase\\ndecisions , that consumers are not required to purchase items they do not want and are not\\n\\nInitially you requested a Commission opinion, but later, by letter dated October 3\\n1996 you amended your request and now seek a staff opinion.\\n\\n\\x0crequired by law to purchase and that misrepresentations are not used to infuence consumer\\npurchase decisions, \" Statement of Basis and Purose , Funeral Industry Practices Trade\\nRegulation Rule , 59 Fed. Reg. at 1593 (Januar 11 , 1994) (reprinted from the 1982 Statement of\\nBasis and Purose), To a large extent, our conclusion must be driven by this essential purose of\\nthe Rule.\\nIn\\nimplementing your client\\'s plan , we would urge that the client also keep this\\nuppermost in his or her mind.\\n\\nIs your client a \" fueral\\n\\nprovider \"\\n\\nwithn the term as defined by the Funeral Rule?\\n\\nFirst , the Funeral Rule defines a \" funeral provider\" as \" any person , parnership or\\ncorporation that sells or offers to sell fueral goods and fueral services to the public. \" 16 C. F .\\n9 453.l(i). The Rule fuher states that \\'\\'\\' fueral goods \\' are the goods which are sold or offered\\nfor sale directly to the public in for use in connection with fueral services. \" 16 C.\\n9453.l(h). \" Funeral services \" are defined as \" any services which may be used to: (1) care for\\nand prepare the deceased human bodies for bural , cremation or other final disposition; and (2)\\narange , supervise or conduct the fueral ceremony or the final disposition of deceased human\\nbodies, \" 16 C, F.R 9 453.10).\\nAs set forth in your letter dated July 31 , 1996 , your client intends to offer , in par\\n(e)\\n\\nto enter into agreements with fueral providers\\n(which , by entering into such agreements will\\nbecotne members of the Company s \" network\"\\nobligating those fueral providers to provide the\\nfollowing information and packages to the\\nCompany and\/or the Company s customers , where\\nrequested by any such customer:\\n(I)\\n\\ninformation specifically requested by any customer\\nincluding: (A) the general price list of any network\\nmembers \\' fueral goods and services; and (B) the complete\\nprice lists of an caskets and vaults offered by any network\\nmember; and\\n\\n(ii)\\n\\n(f)\\n\\nfueral packages (at discounted prices where discounts can\\nbe negotiated) and\/or discounts on some or all ofthe goods\\nand services on the providers \\' general price lists; and\\n\\nto obtain on behalf of the consumer, at the time of death , from\\nreputable fueral providers, at a discounted price where such can\\nbe obtained , the specific fueral-related goods and services\\nselected by the consumer (including any discount applicable to any\\npackage selected), or the alternatives chosen by the consumer\\nfamily at the time of death , in lieu of those selected by the\\nconsumer;\\n\\n\\x0c(g)\\n\\nwhere requested by the consumer, to provide varous services at\\nthe time of death , including contacting the selected fueral\\ndirector, informing the fueral director of the selections made by\\nthe decedent , making other arangements such as travel\\narangements , flower delivery, lunches and lodging;\\n\\nAlthough several ofthe proposed offerings of your client may be within the definition of \" fueral\\nservices \" under the Funeral Rule , nothing in your cOITespondence indicates that your client win\\nsell or offer to sell \" fueral goods. \" Thus , because the Funeral Rule defines a fueral provider as\\nand fueral services , your client , operating as\\nan entity sellng or offering to sell \" fueral goods\\ndescribed in your letter, would not be considered a \" fueral provider \" as that teIT is defined in\\n16 C,\\n\\nR. 9 453.1 (i) (emphasis added),\\n\\nII.\\n\\nIs the Funeral Rule applicable to your client\\'s proposed service?\\n\\nTo address your second question , we begin by noting that the Funeral Rule requires\\nmake certain required disclosures , avoid\\nmisrepresentations , and\/or comply with preventive requirements. 16 C, R. 9 453. et seq\\nfueral providers to provide accurate price infoITation ,\\n\\nEven though your client, under the facts described in your letter, is not technically\\ncovered by the Funeral Rule, some of the proposed services raise issues with respect to the\\ndisclosures required under the Funeral Rule. For example , your client proposes to infoIT \" the\\nconsumer of his or her rights under the Funeral Rule, including the right for the consumer at any\\ntime (and the right of the consumer s family) to obtain wrtten general price lists of all goods and\\nservices of any fueral home , including, but not limited to , the individual prices on such general\\nprice list of all component goods and services of any package which the consumer may have\\nselected. \" The Compliance Guide states , however , that \" (fueral providers) must offer any\\nin addition to and not in place of the required itemized prices. See 16 C.\\npackage fuerals\\n2(b)(6).\\nYour\\nclient\\'s proposed service implies that consumers may select packages and\\n9 453.\\nthen , upon request, receive itemized pricing. Even though your client intends to negotiate on\\nbehalf of consumers with fueral providers for discounted packages, it is importt that\\nconsumers receive the itemized price list along with any package price list for the services and\\ngoods, Furher, in the context of your client\\'s role as an agent for a consumer , your client must\\nrelay all Funeral Rule disclosures, approvals and\/or preventive requirements to the consumer.\\n, and to the extent to which, your client serves as an agent for any fueral provider in\\nthe network of providers , your client would be directly responsible for providing consumers the\\nnecessar disclosures and price lists for that fueral provider and complying with all other\\nrequirements under the Funeral Rule.\\n\\nThis does not mean that your client would not be within the general jursdiction of\\nthe FTC under Section 5(a) of the FTC Act, 15 U, C, 9 45 (a), to tae\\n\\naction against persons\\n\\nengaging in unfair or deceptive acts or practices in or affecting commerce.\\n\\n\\x0cII.\\n\\nDo any of your client\\'s proposed services violate the Funeral Rule?\\n\\nA general review of the services that your client proposes to offer , as described in your\\nletter, does not reveal any practice that would clearly violate the Rule. However , your client.\\nproposes to provide consumers with a wide range of information and services regarding fueral\\n\\ngoods and services , and because the proposal is broad and generally states that it will comply\\n\\nwith the Funeral Rule , we are unable to deteITine at this time whether any of your client\\'s\\nactivities will , in practice , violate the disclosure requirements of the Funeral Rule, Once your\\nclient actually offers these services and provides infoITation to consumers , the Commission\\nwould be better able to deteITine whether your client\\'s proposed plan , as implemented , violates\\nthe Funeral Rule in any respect.\\n\\nPlease be advised that the views expressed in this letter are those ofthe FTC staff, They\\nhave not been reviewed , approved or adopted by the Commission, and they are not binding upon\\nthe Commission, However , they do reflect the opinions of those staff members charged with\\nenforcement of the Funeral Rule.\\n\\nSincerely yours\\n\\nLaure Meehan\\nFuneral Rule Enforcement Staff\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-97-1\/opinion97-1.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nDivision of Marketing Practices\\n\\nLaurie Meehan\\nAttorney\\n\\nDirect Dial\\n202-326-3755\\n\\nVIA FACSIMILE A J.S. MAIL\\n\\nJanuary 14, 1997\\n\\nWilliam T. Steele, Jr.\\nFamily Funeral Services and\\nCasket Gallery\\n\\n207 Burns Lane, S.E.\\nWinter Haven, FL 33884\\n\\nDear Mr. Steele:\\n\\nThank you for your letter of December 4, 1996. I apologize for any delay in responding.\\nIn your letter, you request a staff opinion on whether it is a violation of the Funeral Rule for a\\nfuneral director, in circumstances where a person or family purchases a casket from a third party\\ncasket seller, to refuse to accept delivery of a casket sent directly from a casket manufacturer.\\n\\nUnder Section 453.4(b)(1) of the Funeral Rule, a funeral provider cannot condition the\\nfurnishing of any funeral goods or services upon the purchase of any other funeral good or\\nservice (except as required by law or otherwise permitted by the Rule). Ifa funeral home refuses\\ndelivery of a casket in order to condition the furnishing of funeral arrangements upon the\\npurchase of a casket, it is in violation of Section 453.4 (b)(1). However, your letter fails to state\\nthe alleged basis for the funeral home\\xe2\\x80\\x99s refusal to accept delivery of the casket. Note, though,\\nprevious staff opinions state that unreasonable burdens placed on a consumer\\xe2\\x80\\x99s choice of casket\\nmay be tantamount to a violation of Section 453.4(b)(1).\\n\\nI hope that this information is helpful towards resolving your problem. In addition, I\\n\\nhave enclosed a. copy of the FTC publication Complying with the Funeral Rule to provide you\\nwith assistance.\\n\\x0cPlease be advised that the views expressed in this letter are those of the FTC staff. They\\nhave not been reviewed, approved or adopted by the Commission, and they are not binding upon\\nthe Commission. However, they do reflect the opinions of those staff members charged with\\n\\nenforcement of the Funeral Rule.\\n\\n  \\n\\nFuneral Rule Enforcement Staff\\n\\nEnclosure\\n\\x0c'","created_timestamp":"January 14, 1997","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/opinion-97-1\/opinion_97-1.pdf"}
{"text":"b'UNITED STATES OF AMERICA\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n \\n\\nDivision of Marketing Practices\\n\\nLaurie Meehan\\nAttorney\\n\\nDirect Dial\\n202-326-3755\\n\\nVIA FACSIMILE AND U.S. MAIL\\n\\nJanuary 14, 1997\\n\\nRonald A. Hast\\n\\nAbbott & Hast Publications\\n4 Saint Lucia Place\\nTiburon, CA 94920-1028\\n\\nDear Mr. Hast:\\n\\nThank you for your letter of December 20, 1996. I apologize for any delay in responding.\\nIn your letter, you request a staff opinion on whether it is a violation of the Funeral Rule for a\\nfuneral director, in circumstances where a person or family purchases a casket from a third party\\ncasket seller, to require that the person or family be present upon casket delivery. Your letter\\nindicates that the purpose of the presence of the family would be \"to confirm appropriate model,\\ncolor and condition.\" During our conversation on December 19, 1996, you referenced the\\nCalifornia law which prohibits use of a casket that has previously been a receptacle for a dead\\nhuman body as relevant to a staff opinion on this matter.\\n\\nThe issue of whether, in circumstances involving the purchase of a casket from a third\\nparty seller, a funeral director may require a family or person\\xe2\\x80\\x99s presence upon delivery of the\\ncasket was addressed by FTC staff in 1988. FTC staff opined that the because the Funeral Rule\\nprohibited conditioning funeral goods or services upon the purchase or any other funeral good or\\nservice, a funeral provider could not place unreasonable burdens on consumers that were\\ntantamount to conditioning funeral arrangements upon the purchase of other funeral goods. 16\\nC.F.R. 453.4(b6)(1) Accordingly, FTC staff determined that requiring a family\\xe2\\x80\\x99s presence for a\\ndelivery of a third party casket, when a family has expressed a desire not to be present at\\ndelivery, was an unreasonable burden on a consumer\\xe2\\x80\\x99s choice to purchase a casket from a third\\nparty seller.\\n\\x0cCalifornia state law prohibits the use of a casket that has previously been used as a\\nreceptacle for a human body. Cal. Bus. & Prof. Code \\xc2\\xa7 7702 (Deering 1984). Nothing in\\nSection 7702 prevents a funeral home or director from requiring a family to inspect the casket\\nprior to placing human remains in the casket. The timing of the inspection, however, need not be\\nat delivery. It is staff\\'s opinion that the concerns with respect to the Funeral Rule, California law\\nand the delivery of caskets from third party sellers may easily be met through inspection at a\\nmutually convenient time for the funeral home and the family. Further, such an inspection would\\nnot be an unreasonable burden on the consumer\\xe2\\x80\\x99s choice of casket and services. Accordingly,\\nthe staff opinion remains that requiring the presence of a person or family at delivery of a third\\nparty casket is an unreasonable burden on a consumer\\xe2\\x80\\x99s choice of funeral goods and services.\\n\\nPlease be advised that the views expressed in this letter are those of the FTC staff. They\\nhave not been reviewed, approved or adopted by the Commission, and they are not binding upon\\nthe Commission. However, they do reflect the opinions of those staff members charged with\\nenforcement of the Funeral Rule.\\n\\n  \\n\\nurie Meehan\\nuneral Rule Enforcement Staff\\n\\x0c'","created_timestamp":"January 14, 1997","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/opinion-97-2\/opinion_97-2.pdf"}
{"text":"b',\"\\n\\n\"l23\\nUKITED STATES or AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON , D. C. 20580\\n\\nJanuary 19 ,\\n\\n1996\\n\\nRepresentative Lucien A. DiMeo\\nOne Hundred and Third District\\n531 Wintergreen Avenue\\n\\nHarnden , CT 06514\\nDear Representative DiMeo:\\n\\nThank you for your lettcr dated January 5 , 1996 , concerning your proposed legislation on\\npre-nced insurance in the upcoming session of the Connecticut General Assembly, to bettcr\\nprotect thc consumcr. In your letter , you proposed an escrow agreement made betwccn thc\\nfuncral home and the escrow agent; expanding the languagc in the statement of funeral goods and\\nservices seleetcd , required by the Commission s Funeral Rule , 16 e.F. R. Part 453; and a trust\\ndocument between the funeral home and the consumer. You requested my opinion as to the two\\nproposed doeumcnts , which you enclosed. You also requested my opinion as to whether there\\nean be changes made to the statement of goods and services , and if I fecl this is the best way to\\nprotect the consumer.\\n\\nThe Commission is charged with enforcement of the Federal Trade Commission Act , 15\\n41\\n(\"FTC Act ), which prohibits unfair and deceptive acts and practices , as well\\ne.\\nas with enforcement of trade regulation rules enacted pursuant thereto , such as the Funcral Rule.\\nAs to the two documents you enclosed , I can express no opinion on thcm , since they concern the\\nbusiness of insurance , and the Funeral Rule expressly states that \" this Rule shall not apply to the\\nbusiness of insurance or to acts in the conduct thereof.\" 16 e.F. R.\\n453. 8 (c). Furthermore\\nunder the McCarran- Ferguson Act , 15 U. C.\\nlOll , the FTC Act does not apply to the business\\nof insurance or to acts in the conduct thereof. 15 u.se.\\n1013(3)(a).\\nAs to your suggestion about expanding the language or making other changes in the\\nstatement offuneral goods and services selected , it is unlikely that the Commission would make\\nany such changes soon. The Funeral Rule underwent a comprehensive review beginning in\\n\\n1988 , and culminating in a revised version of the Rule which became effective July 19 , 1994.\\nThis time frame suggests the cumbersome nature of rulemaking and rule review proccdures\\n\\nwhich we must follow.\\n\\nHowever , additions to the statement of funeral goods and services selected could be made\\nvoluntarily by funeral providers, or by state requirement , without violating the Funeral Rule.\\nThe Rule allows funeral providers to give persons any other price information , in any format , in\\naddition to that required by the casket , outer burial container , and general price lists so long as\\nthe statement required (of funeral goods and services selected) . .. is given when required by the\\nrule.\" 16 e.F. R.\\n453. 2(b)(6). In addition , the procedure for state exemptions from the Funeral\\n\\n\\x0cRule implies that a state could enact any requirement which applies to any transaction to which\\nthe Funeral Rule applies , that \" affords an overall level of protection to consumers which is as\\nR. ~ 453. 9(b). I have\\ngreat as , or greatcr than , the protection atIorded by this rule.\" 16 C,\\nenclosed a copy of our compliance guidelines , including the Rule and sample forms , for your\\nreVIew,\\n\\nPlease be advised that the views expressed in this letter are those of the FTC staff. They\\nhave not been reviewed , approved or adopted by the Commission , and they are not binding upon\\nthe Commission. However , they do reilect the opinions of those staff members charged witb\\nenforcement of the Funeral Rule. I hope that this information is helpfil1 to you.\\n\\ntl flw\\nThomas A. Cohn\\nFuneral Rule Enforcement StatI\\nEnclosure: 8\/95 Funeral Rule Guide\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-96-1\/opinion96-1.pdf"}
{"text":"b'\\'\\'22UNITED STATE OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON . D. C. 20580\\n\\nDivision of\\n\\nMarketing Practices\\nMary S. Feinstein\\nAttorney\\nDirect Dial:\\n12021 326- 3064\\n\\nDecember 14, 1995\\nK. Wayne Bishop\\n\\nPresident\\n\\nChapel Hill Funeral Home\\n542 West 52nd Street\\n\\nAnniston, AL 36206\\nRe:\\n\\nCharges for the Basic Services of Funeral Director and Staff\\n\\nDear Mr. Bishop:\\n\\nThis letter is in response to your letter of December 13,\\nyou seek staff\\' s opinion regarding whether\\nthe fee for the basic services of the funeral director and staff\\nmay be charged to every person who arranges a funeral at your\\nfuneral home. The answer to this question depends upon whether\\nyour general price list (\" GPL\") delineates a fee for the basic\\n\\n1995. In that letter ,\\n\\nservices of the funeral director and staff.\\n\\nThe Funeral Rule requires that a funeral provider itemize\\nprices for 16 funeral goods and services, if a funeral provider\\noffers those goods and services to customers.\\nSee Complying with\\nthe Funeral Rule, June 1994 , at 13. The prices on the GPL must\\nbe accurate and up- to- date, and they should reflect the prices\\nthat you actually charge customers.\\nId.\\nAmong those 16 items\\nis the fee for the basic services of the funeral director and\\nstaff. 16 C. R. !i 453. 2(b) (4) (iii) (C). If your funeral home\\nGPL has a fee for the basic services of funeral director and\\nstaff , then you may charge such a fee to all customers. The only\\nexception to this Rule provision is when a customer selects any\\nof four \" minimal services, i. e. , forwarding of remains,\\nreceiving remains , direct cremation , or an immediate burial. The\\nprices for these four minimal services must include any fee for\\nthe basic services of funeral director and staff.\\n\\nId.\\n\\nat 14.\\n\\nThe fee for basic services of funeral director and staff is the\\nonly nondeclinable fee allowed under the Funeral Rule.\\n\\nOf course , you may offer discounts under special\\ncircumstances, such as arrangements for friends, relatives, or to\\nfamilies who cannot otherwise afford your services. However , you\\nshould not inflate the prices on your price lists in order to\\n\\n\\x0coffer all or most of your customers a discount. In that case,\\nthe discounted price would be the accurate price and should be\\nreflected on the GPL. To reiterate, absent special circumstances\\nwarranting a discount, you should charge the same nondeclinable\\nbasic services fee to all customers, unless they choose a\\nminimal service \" for which the basic service fee is already\\n\\nincluded.\\n\\nI hope that this information is helpful to you. Please be\\nadvised that the views expressed here are those of FTC staff.\\nThey have not been reviewed, approved or adopted by the\\nCommission, and they are not binding upon the Commission.\\nHowever , they do reflect the opinion of those staff charged with\\nenforcement of the Funeral Rule.\\n\\nere1\\n\\nFeinstein ,\\n\\nEsq.\\n\\n1 Rule Enforcement Staff\\n\\n\\x0c'","created_timestamp":"December 14, 1995","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-95-5\/opinion95-5.pdf"}
{"text":"b'Re:\\nin\\n\\n8\\n\\nUNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON, D.C. 20580\\n\\n..\\n\\nDivision of\\nMarketing Practices\\nMary S. Feinstein\\nAttorney\\nDirect Dial:\\n(202) 326-3064\\n\\nAugust\\n\\n15,\\n\\n1995\\n\\nScott R. McCray\\nGeneral Counsel\\nVanguard America Co\\nP.O. Box 10223\\nRaleigh,\\nNC\\n27605-0223\\nVanguard\\'s\\n\\nTrust\\n\\n100 Marketing\\n\\nProgram\\n\\nD~ar Mr. McCray:\\nabout\\nletter\\n\\nThis letter\\nVanguard\\'s\\nprovides\\n\\nis in response to your letter\\nof July 24,\\nTrust 100 Marketing Program.\\nI hope that\\nan answer to the question\\nyou posed.\\n\\n1995\\nthis\\n\\n1.\\nMay your company, acting as a sales agent for several\\nfuneral\\nproviders,\\nuse one generic\\ngeneral\\nprice\\nlist\\n(\"GPL\")\\nthe sale of funeral\\ngoods and services?\\nIf your company is acting as an agent for funeral\\nproviders,\\nand is offering\\nfor sale funeral\\ngoods and services,\\nit must\\nprovide\\na GPL (and other price lists\\nto the extent\\nthat they are\\nrequired)\\nthat meets the Funeral Rule\\'s requirements.\\nEach\\nfuneral\\nprovider\\nwho agrees to be bound by the prices\\non such GPL\\nshould list\\nits name, address and telephone\\nnumber on the GPL\\neven if one GPL is used.\\n.Q.\\xe0\\xb8\\xa2\\xe0\\xb8\\x87.\\xe0\\xb8\\xa2\\xe0\\xb8\\x87.16 C.F.R.\\n\\xe0\\xb8\\xa2\\xe0\\xb8\\x87 453.2(b)\\n(4) (i) (C).\\nAs\\nnoted\\nin your letter,\\nconsumers\\nmust be allowed\\nto itemize\\nthe\\nfuneral\\ngoods and services\\nselected.\\n\\nI hope that this resolves\\nthis question.\\nPlease be advised\\ntnat the views expressed here are those of FTC staff.\\nThey have\\nnot been reviewed,\\napproved or adopted by the Commission,\\nand\\nthey are not binding\\nupon the Commission.\\nHowever, they do\\nreflect\\nthe opinion of those staff\\ncharged with enforcement\\nof\\nthe Funeral Rule.\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-95-4\/opinion95-4.pdf"}
{"text":"b'.,\\nLtZO\\nUNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON , D, C, 20580\\n\\nDivision of\\n\\nMarketing Practices\\nThomas A. Cohn\\n\\nAttorney\\n\\nJuly 18,\\n\\n1995\\n\\nGeorge W. Lemke\\n\\nExecuti ve Director\\nCasket & Funeral Supply Association of America\\n708 Church Street\\nEvanston, IL 60201\\n\\nRe:\\n\\nStaff Opinion Regarding Refusal to Sell Caskets Only\\n\\nDear Mr, Lemke:\\n\\nThis office has received your recent request for an advisory\\nletter , you ask whether a funeral director must\\nsell a casket to a consumer al though he or she has no intent to\\nhave services conducted by the funeral home and it is not the\\npractice of the funeral home to sell caskets only or advertise\\ncaskets for sale independent of funeral services. Let me begin\\nby setting forth the Rule provisions relevant to your inquiry.\\n\\nopinion, In your\\n\\nSection 453. 4 (b) (2) (ii) of the Funeral Rule states:\\n\\nA funeral provider shall not violate this section by\\nfailing to comply with a request for a combination of\\ngoods or services which would be impossible\\nimpractical , or excessively burdensome to provide.\\nSection 453. 4(b) (1) (i) of\\n\\nthe Funeral Rule states:\\n\\nIn selling or offering to sell funeral goods or funeral\\nit is an unfair or deceptive act or practice\\nfor a funeral provider to condition the furnishing of\\nany funeral good or funeral service to a person\\narranging a funeral upon the purchase of any other\\nfuneral good or funeral service, except as required by\\nlaw or as otherwise permitted by this part\\n\\nservices ,\\n\\nFinally, Rule Section 453, 1 (i) defines a \"funeral provider\"\\nperson, partnership or corporation that sells or offers\\nto sell funeral goods and funeral services to the public \" and\\nRule Section 453. 1 (p) defines the\" services of funeral director\\nand staff\" as \" the basic services\\nthat are furnished by a\\nfuneral provider in arranging any funeral\\n\\nas \" any\\n\\nStaff interprets these definitions to mean that the Rule is\\nbased upon an understanding that funeral providers are persons\\n\\n\\x0cGeorge W, Lemke\\nPage 2\\n\\nJuly 18,\\n\\n1995\\n\\nwho furnish funeral arrangements, and not persons who simply sell\\na particular good or service as a separate sales transaction,\\nTherefore , it is impractical , in our opinion , for a business\\noperation thus defined to be required to function as something\\nelse , such as a casket seller,\\nWe do not believe it to be the Commission s intention to\\nrequire a funeral provider to sell an isolated good or service\\nthat is not to be used in conjunction with a funeral arranged by\\nthat funeral provider, The Statement of Basis and Purpose for\\nthe original Funeral Rule supports this view. There the\\nCommission stated that it:\\nwould not consider it a violation of section\\n\\n453. (b)\\n\\nfor a funeral provider to refuse doing business with a\\nconsumer who said\\' we have our own casket\\ntransportation , flowers, etc., but wish to use your\\nviewing facilities for two hours next Monday.\\nThe\\nCommission wishes to stress, however , that this\\nprovision does not give funeral providers the option to\\nreject arrangements which are practical to provide but\\nwhich do not comport with the provider s judgment of\\nwhat is appropriate under the circumstances.\\n47 FR 42260 , 42282 (Sept 24, 1982), fn. 230. Thus , in adopting\\nthe Rule , the Commission merely sought to ensure that package\\npricing was not the only option for consumers making funeral\\narrangements, and that such consumers could choose and purchase\\nonly what they desired for such arrangements.\\n\\nHowever, if a consumer asked the funeral home to make\\nfuneral arrangements , and the funeral home stated that a casket\\ncould only be furnished if the requestor purchased other funeral\\ngoods or services, such a response would violate the Rule \\' s anti\\ntying provision , Section 453. 4 (b) (1) (i). For those consumers\\nmaking funeral arrangements, the Rule \\' s anti tying provision\\nprotects them from having to purchase unwanted goods or services,\\nas a condition for receiving the items they do want.\\n\\nTherefore, the Rule does not require funeral providers to\\nsell a casket or any other item separately to anyone upon demand.\\nThe Rule does require funeral providers to allow persons\\narranging a funeral the freedom to choose and pay for only the\\ngoods and services they desire for the funeral.\\nAs you know , the Federal Trade Commission has amended the\\nFuneral Rule , and the changes became effective on July 19, 1994.\\nThe enclosed Guidelines explain the Rule s requirements and\\nanswer many basic questions about how to comply with the revised\\nRule. The Guidelines also offer sample price lists and a sample\\n\\n\\x0c--\/\\n\\nW.\\n\\nGeorge\\n\\nLemke~~ July 18 , 1995\\n\\nPage 3\\n\\nstatement of goods and services selected to assist you in\\nbringing your forms into compliance with the revised Rule.\\nFinally, please be advised that the views expressed in this\\nletter are those of the FTC staff. They have not been reviewed,\\napproved or adopted by the Commission , and they are not binding\\nupon the Commission. However, they do reflect the opinions of\\nthose staff members charged with enforcement of the Funeral Rule.\\nI hope that this information is helpful to you.\\nSincerely,\\n\\n(t;;1\/f1\/v\\n\\nThomas A. Cohn\\nFuneral Rule Enforcement Staff\\n\\nEnclosure:\\n\\n6\/94 Funeral Rule Guide\\n\\n\\x0c'","created_timestamp":"July 19, 1994","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-95-3\/opinion95-3.pdf"}
{"text":"b'O(D\\n\\nI\\n\\n-\\n\\n-\\n\\n(DH\\n0\\nO\\n\\n-\\n\\n(D(D\\n\\n(P\\n\\nH-\\n\\nOH-\\n\\nH-OH(D\\n\\nh(D\\nHFt\\n\\n(D\\n\\n<(Dr\\n\\nO(DQ\\nH-H\\n\\n0\\n\\nH-H-\\n\\n(P\\n\\n\\xe2\\x80\\xa2\\n\\n(DO\\n\\n(DHoH(D\\n\\n0\\n\\na\\n\\n-\\n\\n(DH\\n\\nQ\\n\\n(I)\\n\\nO(D\\n\\nQ\\n\\nW\\n\\n0\\n\\nID\\n\\n-\\n\\n(P\\n\\nrt\\n\\nH\\n\\nH-\\n\\n0\\n\\nHH\\n\\n0\\n\\nH\\n\\nH-\\n\\nH-(D\\n\\n(D\\n\\n(D\\n\\n3w\\nOH-\\n\\n(DO\\n\\nI\\n\\nHO\\n\\nHH.\\n(D:\\nWWO\\n(D\\nH-\\n\\n(D\\n0\\n\\nH\\xe2\\x80\\xa2\\n(D\\nH(D\\nHOt(DH\\nHH(D\\n\\n(D(DQ(D\\n\\nH\\xe2\\x80\\xa2\\n\\nI\\n\\n(DO\\n\\n(D\\n\\nH-\\n\\nQH-\\n\\nI\\n\\n0\\n\\n(Do\\n\\nHH-H.\\n\\nW\\n\\n(D\\nO\\n\\nOQ\\n\\n(DO\\n\\n(D\\n\\nH\\n0\\nH\\nO\\nHH0H\\n\\nH-\\n\\nOH\\n\\n(D\\n0\\nE\\n-\\n\\nw\\n\\nH(D\\nHb(D(DH\\n(D\\nHH-Q\\nHfl\\n(DH\\n0\\n(D\\nO\\n(DWQ(D\\n(D\\n(D\\n(D\\n(D\\n)H-HH(DH\\n\\nOH\\xe2\\x80\\xa2(DH.\\n(DO<\\nO(DWH-Q\\n\\nHQO(D\\n\\n(D\\n\\nHHHQ(D(D\\n(D<H\\nHO\\n(D\\nO\\n\\nzH\\nQ(D\\nH-H\\nQH\\n\\nW\\n\\nQH-.\\n(DHH\\nH(DMW\\nD\\nl(\\nf\\n(D\\n\\n(D\\n\\nQ-,\\n\\nC,,\\n\\n0\\n\\n\\xe2\\x80\\x94\\xe2\\x80\\x94\\n\\n:\\n\\nrj\\n\\n(0\\nCi)\\n\\n(I)\\n\\nH\\n(Ci\\n\\n(P\\nCi)\\n\\nH\\n11\\n(0\\nH\\nH\\n\\nC-fl\\n\\nCD\\n\\nH\\n\\nM\\n0\\n\\n0\\ncm\\n\\nfr\\n\\nz\\n\\nC\\n\\nfr\\n\\nC)\\n\\nC-)\\n\\nC\\n\\n\\xe2\\x80\\x98-I\\n\\nz\\nDl\\n\\no\\n\\n\\xe2\\x80\\xa2<()\\n\\n0\\n\\nC.)\\n\\nc)\\n\\n\\xe2\\x80\\x94\\n\\nE>Z\\n\\n00\\n\\nOHU)\\n(Dt\\xe2\\x80\\x99\\n\\nCf)H\\n\\nDpi\\n\\nOlD OH\\n\\nFt0H\\n\\nDi(D\\nFt\\n\\nFt\\nFt\\n\\nH(j\\n0\\nH- < (p\\n\\n-,\\n\\nDi\\n\\nH\\n(0\\n\\n,1\\nDi\\nH\\n\\nhi)\\n\\n(P\\n\\nFt\\nFt\\n\\n..\\n\\n(P\\n\\na\\nO\\n\\nCl)\\n\\n(P\\nDi\\n\\no\\n\\n>3)\\n\\n\\x0cH-\\n\\nID\\n\\nTj(D\\n\\nID\\n\\nID\\n\\n-\\n\\nIDQ(D\\n\\nID ID rt\\n\\nbC,)\\xc3\\xa7\\nIDD.\\n\\n-\\n\\nPJ\\n\\nID\\n\\npi\\n\\nID\\n\\n0\\n\\nID\\n\\nHpj\\n\\n(DIDrr\\n\\nC)\\n\\nID ID\\n\\nID\\n\\nctH1\\n\\n0\\n\\nH.FiuMID\\nID\\n\\n1-f-\\n\\nIDi\\nIDfl..\\n\\n(Q\\n\\nIDQ\\n\\nQo\\n\\nID\\n\\nID rtQ\\n\\n)IIDH1\\n\\nOQ\\n\\n)\\nPJ\\nIDIDj-(pC PID\\n\\n-\\n\\nID\\n\\n(p ID\\nC)p<\\n\\nID\\n\\nIDH(p(p\\n\\nIDC)\\n1\\n\\nID IDQ ID\\nIQ ID\\nC)\\nID\\nHIDPiQ\\n\\n0\\n\\n5 C) ID ID\\n\\nH(DIDIDH.\\nH\\nH-C)\\nC)IDHID\\nID\\n\\xe2\\x80\\x98ZC)\\nID\\np,\\n<\\nQ\\nIDID(D\\nH\\n)\\nIDC\\n0\\n\\nIDHirjQ\\nIDID\\xc3\\xa7-frh\\nC)\\nIDIDC)0(D\\nID\\nD\\n0I\\n)\\njC\\n0brt\\nQ\\n)\\n,QC\\nIDID\\xc3\\xa7-rQ\\n0ID\\n\\nC)\\n\\nID\\nIDQ-C)cx\\nPJrrH.QQ\\n\\nID\\n\\no.\\n\\nrt\\nID <\\nIDHIDF\\nr\\nr\\n((D\\nPID\\xc3\\xa7tpj\\n.rt\\nrt\\nC)\\nIDHIDIDH\\n\\no\\n\\nID\\n\\n0\\n\\nIDrrC)\\nID\\n\\nrt IDIQ\\n\\n(DH-rtQ\\n\\n(DC) ID ID I LDC) (p\\n\\nO 0 1(D cthhrrID 0\\n1 HH\\nM 0\\n\\n(D\\n\\n0\\n\\nH-HC)ID\\n\\nH\\xe2\\x80\\xa2H-\\n\\nH-ID\\n\\nQ\\noo<wH\\nw\\n1\\nIDID<H\\n\\nID\\nID(D.\\n\\nID\\n\\nH-\\n\\nH-\\n\\n0\\n\\n(DC)\\nH-H1HC)\\nID H1ID ID ID 0\\n\\nID\\n\\nD\\nH-IDQH1(\\n\\n(DC)\\n\\nUi\\n\\n.\\n\\nH1\\n\\nID\\n\\nHC)ID\\n)IDID\\nHoC\\nD\\n0IDC)(\\nQ0C)\\nID\\nIDH\\n0\\nIDID\\nIDID\\nID\\n0ID\\no\\n\\nC)\\n\\n(D\\nID\\nID\\nD\\nHC)HC)(\\nID\\n(D\\n0\\nID\\nH-ID C)\\n\\nIDIDID\\n\\n-\\n\\nIDIDH1ID\\nID\\n(DID\\n\\nH-C)\\n)\\nIDC)C)wC\\n\\nH\\n(DM0\\n\\n\\xe2\\x80\\xa2\\n\\nC)ID\\n\\nIDIDH\\nID\\n<C)\\n\\xe2\\x80\\x98\\nID\\nID\\n..\\nH\\nH\\nD\\nID\\nID\\n-I\\nID\\nH\\nID<\\n<C)C). H-H1\\n)H\\nH(DoC\\n\\nID 0\\n\\nH1(p\\n\\n-\\n\\nID\\n\\nH-C)(D\\n\\n(D\\n\\nH-H-HC)(D\\nIDID C)IDIDSoID\\nIDH1\\nwIDoH\\nD\\n)I\\nC\\n<\\n(D\\nH1H(D\\n\\nOO\\n0ID\\n\\nC)\\n\\nID(DH.\\n\\nID(p\\nC)\\n\\nH-\\n\\nO0HID\\n\\n-\\n\\nH1\\n\\n0\\n\\n.\\n\\nID\\n\\nID\\n\\nH-ID\\n\\nID\\n\\nID\\n\\n<\\n\\nID\\n\\n0HOID\\n\\nIDQ\\n\\n0\\n\\nH-\\n\\n0\\n(p\\nID\\nIDID\\n0\\nID\\nH<H-(D\\nH-.\\n\\nID\\n\\nHH\\nH-0 ID ID\\n0\\nHH1H3ID\\nH-ID\\n\\nID ID C)\\nIDQ(D\\n\\nID\\n\\n(p\\n\\n0\\nID\\n\\xe2\\x80\\xa2Hj(DID\\n\\nC)IDH\\nC)H-\\n\\nIDID(D\\n\\nH-H1\\n\\nID\\n\\nID\\nH-H-(D\\nID\\n\\nID\\n\\nC)H1\\nIDH-IDHID\\n\\nID\\n\\nIDH1H\\nID\\n\\nID Q\\n\\nIDQ\\n\\nH1\\nIDH-Ui\\nIDHH1\\n\\nID\\n0ID\\n\\nID\\n\\nID\\nIDHoID\\nH-0.\\n\\nIDID\\n\\nID\\n\\nIDID\\n\\nID(DH1ID\\n\\n)\\nIDHC\\nIDIDQ\\n\\nH-(D(D\\n\\n-\\n\\n(D(D\\n\\n(DID\\nHIDHIDC)\\nH--\\n\\nH-\\n\\nIDH.\\n0\\nIDC)IDID\\n<H\\n0\\nID\\n\\nID\\n\\nID\\nID\\nIDIDID\\n(D\\n\\n(DC)\\n\\nH-\\n\\nID\\nQ\\nH-W\\n\\xe2\\x80\\x9dIDH\\n0\\n(DC)\\n(D\\nIDC)IDQ\\nID(D\\nD\\n(\\nD\\n(\\nH-ID\\n\\nHIDIDH\\n\\nID\\n\\nID\\nH1\\nH\\n\\nC)j\\n\\nIDIDIDC)ID\\n\\nIDQ (D\\nID\\n\\n-\\n\\nID\\n\\nH-\\n\\nID\\n\\nIDH1\\n\\nH\\n\\nID\\n\\nID\\n\\nID\\n\\nIDID\\n\\nH-\\n\\nH\\n\\nIDH-\\n\\n0\\n\\n-\\n\\nIDH\\n\\nIDIDID\\n\\nID IDQ\\n\\nH1\\nH-H-\\n\\nIDH\\n\\n(DID\\n\\nC)ID\\nOIDH\\n0\\nIDID\\n0\\n\\nID\\n\\nC)\\n\\nID\\n\\nIDQ\\n\\nID\\n\\nIDIDID\\n\\n-\\n\\nIDID\\n\\nIDID.\\n\\nID\\n\\nID(D\\n\\nIDH1H\\nH-\\n\\nW\\n\\nID\\n\\nIDIDIDH\\n\\n0ID\\n0\\nH-H\\n\\nC)\\n\\nCD\\n\\nLQ\\n\\nID\\n\\nID\\n\\nID\\n\\nUi H\\n\\n0\\n\\nf- H\\n\\nOI\\n\\nC)Ci\\nC)\\n0\\n\\n\\x0cIHJ\\n\\n-<\\n\\nI\\xe2\\x80\\x94\\xe2\\x80\\x99\\n\\n4 c-I-\\n\\nH-H-C)\\n0\\niJCD1O\\nCDHCDc1-C)\\nOClClYCD\\nH,HHCDi\\nCD\\nCD\\n\\nOCDCl[-\\n\\nCl\\n\\nCD\\n\\nH\\nC)\\nCD\\n\\n(Dfr\\n\\nCD\\nClCD\\n\\nCDIC)\\n\\nCDCD\\nU)\\n\\nc-t\\n\\n(Dc-I\\n\\nZj\\n\\nH-HCDCD\\nC)\\n\\nCD\\n\\n\\xe2\\x80\\xa2\\n\\nCl\\n\\nc-r<\\n\\nc-I-Cl\\n\\nCDI-\\n\\nOEH-\\n\\nil\\n\\n(DO\\nD1h\\nH-CPU)\\nCDHJc-I-CD\\nc-I-CDH-J\\ncn\\nI- 0 CD c-I- U)\\n3CD\\nCDCDCI)\\n\\xe2\\x80\\x98i\\nCD1Pl<\\nHiH-O\\nCDF-\\xe2\\x80\\x99ClCDCDCi\\ni-CD\\npiC)c-tICD\\nF-c-tO\\nCD\\n(Dc-I-CDCl\\nic-t\\xe2\\x80\\x99-<\\n><Q\\nH\\n(1\\nCDCDct\\nI-CDCDH\\nCD\\nOCDiCDO\\nCDI\\n\\nO\\n\\nDl\\nCD\\n\\nDl\\n\\nCD\\n\\nOM\\n\\n(Dc-I-\\n\\nDi\\n\\nOHC\\n4\\nD\\n\\nflc-I-fr\\n\\nOOCD\\nt3-<\\n\\ni\\n\\n(D\\n\\nO\\n\\nc-I-\\n\\n---\\n\\n-\\n\\nCD\\n\\nF-\\n\\n<\\nN)\\n.\\n\\nCD\\nt\\n\\n1CDF-\\n\\nI-<ctH,(DCD\\nEJhh\\nC)\\nc-Ic-t\\n(D1CD\\n\\nOCD\\n\\nH,<c-tP1\\n\\nCl)\\nc-IDi\\nH,\\nH,\\n\\nCD\\n\\nC)\\nCD\\n\\n[\\n\\nH,\\n0\\n\\ntri\\n\\n(DO\\n\\nH\\n\\nI-DJ\\nP1 Cl)\\n\\nON\\nCD\\n\\nc-I\\n\\nc-I-\\n\\nI\\xe2\\x80\\x94HCD\\ni-3U)CDU)\\n\\n(DO\\n\\nH-O(D\\nc-I-Jc-t\\n\\nH-0CDU)PJ\\n\\nPi\\nCfl\\niHCD\\nCPU)\\n\\n0(1-\\n\\nOI\\n\\nCDC)CD\\n\\n0\\n\\n0\\n\\nw\\n\\nCD\\n\\nDi\\n\\nCD\\n\\nP1\\n\\nU1H-\\n\\ncOF-DF-\\n\\n-H\\n\\n0\\n\\nC)CC)\\n\\nO<\\n\\nZDi.\\nYC)\\n\\nc-tM,E\\n\\nCDCD\\n(DCD1\\nCD\\nic-I-I\\xe2\\x80\\x94\\n\\nOCDH(Q\\nCDCD\\nCDHc-I-CD\\nCDcic-t\\nCDQ0CD\\n\\nCDOCDF-O\\n-riCDi\\nc-t\\nDi\\n-hctI-c-tc-t\\nJOCD\\n(DhCDHI\\nCD\\nC)\\nCD\\nflQ.CDCD\\n\\n\\x0c'","created_timestamp":null,"downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-95-2\/opinion95-2.pdf"}
{"text":"b'L. I 8\\'\\nUNITED STATES OF AMERCA\\n\\nFEER TRE COMMSSION\\nWASHINGTON , D. C. 20580\\n\\nDivision of\\n\\nMarketing Practices\\nMary\\n\\nS.\\n\\nFei nstei n\\n\\nAttorney\\nDirect Dial:\\n12021 326- 3064\\n\\nMarch 6, 1995\\n\\nLavelle S. Jesse\\nAssistant Vice President\\n\\nFederated Funeral Directors\\n\\nO. Box 19244\\nSpringfield, IL\\n\\nRe:\\n\\nof America\\n\\n62794 - 9244\\n\\nOpinion Letter\\n\\nDear Mr. Jesse:\\nThis letter is in response to your inquiry dated\\nFebruary 24, 1995 about pre-need funeral pricing. For the sake\\nof clarity, I will address your questions in the order in which\\nthey were posed.\\n\\nIn the factual scenarios you described, three funeral homes\\nagree to have one general price list (hereafter described as\\nconsolidated GPL\" ). Under Scenario 1, these homes would offer\\nto consumers funeral goods and services on a pre-need basis where\\nthe prices for those goods and services would not be fixed at the\\ntime of the execution of the pre-need contract. Under scenario\\n2, the same three funeral homes would offer consumers funeral\\ngoods and services on a pre-need basis, but the prices for these\\nitems would be fixed at the time of execution of the pre-need\\n\\ncontract.\\n\\nQuestion 1 - - Would this agreement between these homes\\nviolate any antitrust laws?\\nAs I mentioned to you in our previous telephone conversation\\non this topic, you should direct this question to the FTC\\'\\nBureau of Competition staff.\\n\\nQuestion 2 - - Would the consolidated GPL used by the three\\nfuneral homes violate the Funeral Rule?\\n\\nNo.\\n\\nThe Funeral Rule requires that a funeral provider give\\nto inquiring persons, for retention , a GPL describing the funeral\\ngoods and services offered by the funeral provider. The Rule\\n\\n\\x0cMr. Lavelle S. Jesse - -\\n\\nPage 2\\n\\nMarch 6, 1995\\n\\nit.\\n\\n16 C.\\nrequires that the GPL have an effective date on\\n453. 2(b) (4). I would only caution that if this GPL\\' s prices\\nare not \"fixed\" on the pre- need contract, the pre-need contract\\nmust be explicitly clear on this point. The consumer should be\\non notice if the pre-need contract\\' s prices are not fixed at the\\ntime of execution of the pre-need contract. Any deception\\nconcerning whether or not the prices on the pre-need contract are\\nfixed may be a violation of Section 5 of the FTC Act, even though\\nit may not be a violation of the Funeral Rule, per se.\\n\\nQuestion 3 - - May there be a variance between the prices\\ndelineated on each individual funeral home s GPL and the\\nconsolidated GPL?\\nYes. The Funeral Rule only requires that a funeral provider\\ngives a GPL with price information on it for certain items, if\\noffered for sale. The Rule does not address what price can be\\nAgain, this issue should also be addressed by our\\nCompetition Bureau staff.\\n\\ncharged.\\n\\nI hope that this information is helpful to you. Please be\\nadvised that the views expressed here are those of FTC staff.\\nThey have not been reviewed, approved or adopted by the\\nCommission, and they are not binding upon the Commission.\\nHowever, they do reflect the opinion of those staff charged with\\nenforcement of the Funeral Rule.\\n\\nSinCerel\\n\\n\\x0c'","created_timestamp":"March 6, 1995","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-95-1\/opinion95-1.pdf"}
{"text":"b'ACCREDITING COMMISSION ON CAREER SCHOOLS\\n977\\n\\nRe:\\n\\n977\\n\\nAdvisory Opinion\\n\\nThe proposal to adopt and enforce certain accrediting\\nstandards on tuition and fees would not violate antitrust\\nlaws. [Accrediting Commission on Career Schools and\\nColleges of Technology, P944015]\\nJanuary 19, 1995\\n\\nDear Mr. Pelesh:\\nThis letter responds to your request on behalf of the Accrediting\\nCommission on Career Schools and Colleges of Technology for an\\nadvisory opinion on the permissible means, under the antitrust laws,\\nof adopting and enforcing an accrediting standard on tuition and fees,\\nas the Higher Education Amendments of 1992 require. You have\\nproposed three possible standards by which your organization might\\nassess tuition and fees, and asked us to provide guidance on the\\npermissibility of each.\\nOn the basis of information you provided, the Commission has no\\npresent objection to an accreditation program along the lines of your\\nthird proposal, but believes your first and second proposals raise\\nsubstantial antitrust concerns.\\nI. BACKGROUND OF THE REQUEST\\n\\nAccording to the request for advisory opinion, the Accrediting\\nCommission on Career Schools and Colleges of Technology\\n(\"ACCSCT\") is a private, nonprofit organization that adopts and\\nenforces standards for accrediting and evaluating educational\\ninstitutions with trade and technical objectives. The United States\\nDepartment of Education (\"DOE\" or \"Department\") recognizes\\nACCSCT under the Higher Education Act of 1965 as a reliable\\nauthority on the quality of its accredited institutions, education and\\ntrammg. To participate in federal student financial assistance\\nprograms, a post-secondary institution of higher education must\\nmaintain accreditation from a recognized organization such as\\nACCSCT. ACCSCT is a membership organization, composed of the\\naccredited schools. Five of its eleven Commissioners have no\\naffiliation with any of the schools accredited by ACCSCT, while six\\nare owners or executives of accredited schools.\\n\\n\\x0c978\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\nAdvisory Opinion\\n\\n119 F.T.C.\\n\\nIn 1992, Congress re-authorized the student financial assistance\\nprograms of the Higher Education Act with the Higher Education\\nAmendments of 1992. Through this re-authorization, Congress\\nspecified in great detail the requirements that accrediting agencies\\nlike ACCSCT must meet in order to receive DOE recognition. One\\nrequirement is that their accrediting standards assess the institutional\\n\"program length and tuition and fees in relation to the subject matters\\ntaught and the objectives of the degrees or credentials offered.\" 20\\nU.S.C. 1099b(a)(5). ACCSCT will be eligible for re-recognition in\\nFall of 1995, at which time DOE expects it to have adopted new\\naccreditation standards on tuition and fees.\\nThe Department of Education\\'s Notice of Proposed Rulemaking\\n(\"NPRM\") included a commentary in which the Department proposed\\nthat accrediting organizations use one of three ratios comparing\\ntuition to expected earnings to determine whether tuition and fees are\\nexcessive. DOE stated that it could recognize an accrediting agency\\neven if its standards departed from these proposals, but that the\\nagency would bear the burden of justifying different standards. 59\\nFed. Reg. at 22,273. The DOE rules implementing the statutory\\nrequirements for accrediting standards repeat the statutory provisions,\\nwithout including the ratios in the NPRM commentary. 34 CFR\\n602.26(b)(7); 59 Fed. Reg. 22,250, 22,260 (April 29, 1994).\\nII. EFFECT OF THE 1992 HIGHER EDUCATION AMENDMENTS\\n\\nACCSCT has raised the possibility that Congress impliedly\\nexempted educational accrediting bodies from the antitrust laws when\\nit required them to adopt a standard assessing tuition and fees in order\\nto be recognized by DOE. It is well-established, however, that,\\nwhere antitrust immunity is not express, it is disfavored and to be\\nimplied only where \"necessary to make the ... [a]ct work, and even\\nthen only to the minimum extent necessary.\" Silver v. New York\\nStock Exchange, 373 U.S. 341,357 (1963); see also United States v.\\nPhiladelphia National Bank, 374 U.S. 321, 348 (1963); Georgia v.\\nPennsylvania Railroad Co., 324 U.S. 439, 456-57 (1945). Indeed,\\nexcept for industries in which Congress has committed pricing to\\nagency regulation rather than to normal market forces, see e.g.,\\nKeogh v. Chicago & Northwestern Railroad, 260 U.S. 156 (1922)\\n(Interstate Commerce Commission rates), the courts have found\\n\\n\\x0cACCREDITING COMMISSION ON CAREER SCHOOLS\\n977\\n\\n979\\n\\nAdvisory Opinion\\n\\nimplied repeal very rarely and then only under extremely limited\\ncircumstances.\\nThe courts have found an implied repeal where Congress has\\nestablished a substantial regulatory scheme and there is a clear\\nrepugnancy between that scheme and the application of the antitrust\\nlaws to the conduct in question. Gordon v. New York Stock\\nExchange, 422 U.S. 659 (1975) (statute provided for Securities and\\nExchange Commission review of exchange\\'s self-regulation of\\ncommission rates so that application of antitrust laws conflicted with\\nSEC\\'s vigorous supervision of such rates); United States v. National\\nAssociation of Security Dealers, 422 U.S. 694 (1975) (finding price\\xc2\\xad\\nfixing on inter-dealer sales of mutual fund shares immune because of\\nconflict between antitrust laws and regulatory scheme:, Congress had\\ngiven agency power over such sales and agency had accepted practice\\nover long period); Rehagen v. Amateur Basketball Association of the\\nU.S., 884 F.2d 524, 529 (10th Cir. 1989) (court found an implied\\nrepeal in rejecting the claim that the antitrust laws prohibited an\\namateur athlete\\'s exclusion from defendant Association; Amateur\\nSports Act required the establishment of gatekeeping, governance\\norganizations to determine amateur eligibility); see also Thill v. New\\nYork Stock Exchange, 433 F.2d 264 (7th Cir. 1970) (remanding for\\ndetermination whether restriction on sharing commissions was\\nnecessary to meet the goals of the Securities Exchange Act).\\nAbsent a clear repugnancy between the antitrust: laws and the\\nregulatory scheme, however, the courts have rejected the implied\\nrepeal claim. Strobl v. New York Mercantile Exchange, 768 F.2d 22\\n(2d Cir. 1985), cert. denied sub nom. Simplot v. Strobl, 474 U.S.\\n1006 (1985) (no implied repeal because no conflict between antitrust\\nlaws and Commodities Futures Trading Commission\\'s oversight);\\nTyphoon Car Wash, Inc. v. Mobil Oil Corp., 770 F.2d 1085 (Temp.\\nErner. Ct. App. 1985), cert. denied, 474 U.S. 981 (1985) (Robinson\\xc2\\xad\\nPatman Act not preempted by regulations promulgated under the\\nEmergency Petroleum Allocation Act because no conflict between\\nstatutes); Huron Valley Hospital v. City of Pontiac, 666 F.2d 1029\\n(6th Cir. 1981) (no implied repeal where no direct conflict between\\nantitrust laws and National Health Planning Act); Essential\\nCommunications Systems v. AT&T, 610 F.2d 1114 (3d Cir. 1979) (no\\nimplied repeal because no conflict between antitrust laws and Federal\\nCommunication Commission\\'s regulatory activities).\\n\\n\\x0c980\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\nAdvisory Opinion\\n\\n119 F.T.C.\\n\\nThe courts have refused to imply a repeal when the regulatory\\nscheme did not protect consumer interests by supervising the\\nchallenged conduct. In rejecting a claim that the securities regulatory\\nscheme conflicted with the antitrust laws and thus implied antitrust\\nimmunity, the Supreme Court noted that:\\nBy providing no agency check on exchange behavior in particular cases,\\nCongress left the regulatory scheme subject to \"the influences of* * * [improper\\ncollective action] over which the Commission has no authority .... \" .... Since\\nthe antitrust laws serve, among other things, to protect competitive freedom ... it\\nfollows that the antitrust laws are peculiarly appropriate as a check on the\\nanticompetitive acts of exchanges .... Should review of exchange self-regulation\\nbe provided through a vehicle other than the antitrust laws, a different case as to\\nantitrust exemption would be presented.\\n\\nSilver, 373 U.S. at 357 (no implied exemption because exchange\\'s\\nrule that excluded non-members from access to exchange without a\\nhearing not necessary to make securities act work), quoting Georgia\\nv. Pennsylvania Railroad Co., 324 U.S. at 460.\\nThe Commission believes the 1992 Higher Education Act\\namendments do not impliedly repeal the antitrust laws as they apply\\nto the technical school industry. Congress has not authorized the\\nDepartment of Education to supervise or review accrediting agency\\nself-policing of tuition and fees. The most persuasive argument for\\nan implied repeal is that Congress, in requiring that accrediting\\nagencies have a standard for assessing tuition, intended for them to\\nexclude any school with a tuition that is unreasonable in light of\\nexpected earnings. Indeed, the tuition assessment standard seems\\nsuperficially similar to the eligibility standard at issue in the Behagen\\ncase. There, the Amateur Sports Act authorized the U.S. Olympic\\nCommittee to recognize and monitor a governance organization in\\neach sport to determine amateur eligibility and provide a mechanism\\nto assure compliance with the Act. 884 F.2d at 528. In dismissing a\\ngroup boycott claim against a governance organization for its refusal\\nto reinstate an athlete\\'s amateur status, the Tenth Circuit held that the\\ndefendant Association\\'s \"actions iq this case were clearly within the\\nscope of activity directed by Congress, and were necessary to\\nimplement Congress\\' intent with regard to the governance of amateur\\nathletics.\" Id. at 527. The court noted that the Association\\'s\\n\"monolithic control exerted ... over its amateur sport is a direct\\nresult of the congressional intent expressed in the Amateur Sports\\n\\n\\x0cACCREDITING COMMISSION ON CAREER SCHOOLS\\n977\\n\\n981\\n\\nAdvisory Opinion\\n\\nAct.\" Id. at 528. The court added that the Association \"could not be\\nauthorized under the Act unless it maintained exactly that degree of\\ncontrol over its sport that Behagen here alleges as an antitrust\\nviolation.\" Id. at 529.\\nUnlike Behagen, the 1992 Higher Education Act Amendments do\\nnot require accrediting agencies to fix tuition levels; they merely\\nrequire that accrediting agencies have a standard for assessing tuition\\nas one of many standards for determining accreditation. (ACCSCT\\'s\\nsubmission of a less restrictive accreditation standard, requiring only\\ndisclosure, indicates that setting tuition levels is not necessary to\\nachieve the statute\\'s mandate to curb school loan abuse. Indeed, as\\nnoted above, the Department stated that it would recognize an\\naccrediting agency even if its standards departed from DOE\\'s\\nsuggested tuition-to-expected-earnings ratios.) Thus, there is no\\nbroad or inherent conflict between the antitrust laws and the\\nregulatory regime. Cf Rehagen, 884 F.2d at 529 (\"Behagen\\ncomplains of exactly that action which the Act directs\"); see also\\nGordon, 422 U.S. at 692 (Stewart, J., concurring) (\"The Court has\\nnever held, and does not hold today, that the antitrust laws are\\ninapplicable to anticompetitive conduct simply because a federal\\nagency has jurisdiction over the activities of one or more of the\\ndefendants\").\\nIII. ANALYSIS OF ACCSCT\\'S PROPOSED STANDARDS\\n\\nA. First Proposed Standard\\n\\nUnder ACCSCT\\'s first proposed standard, ACCSCT would\\ndetermine whether the tuition and fees charged by its accredited\\nschools are too high and enforce this standard by withdrawing\\naccreditation. The standard might use one of the following three\\nmeasures to cap tuition at a certain level: (1) a percentage of\\nannualized minimum wage, (2) a percentage of graduates\\' earnings\\nfor their first year of employment, or (3) a percentage of average\\nannualized wages. ACCSCT believes that adopting this standard\\nwould require it to collect tuition data from its members, define\\nacceptable tuition limits, and enforce its standard by potentially\\nwithdrawing accreditation. Thus, ACCSCT members would in effect\\nbe agreeing to charge no more than the ACCSCT standard would\\nallow.\\n\\n\\x0c982\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\nAdvisory Opinion\\n\\n119 F.T.C.\\n\\nAs ACCSCT recognizes, such a standard, like any system for\\ncollective competitor regulation of prices, raises grave antitrust\\nconcerns. Arizona v. Maricopa County Medical Society, 457 U.S.\\n332 ( 1982) (maximum price fixing is per se illegal); Kiefer-Stewart\\nCo. v. Joseph E. Seagram & Sons, 340 U.S. 211 (1951) (maximum\\nprice fixing is per se illegal); McLean County Chiropractic\\nAssociation, 59 Fed. Reg. 22163 (April 29, 1994) (consent order\\nsettling FTC charges that chiropractor association members fixed\\nmaximum prices); see also American Medical Association (FTC\\nAdvisory Opinion, February 14, 1994) (adopting fee peer review\\nprogram with disciplinary sanctions would present serious antitrust\\nconcerns, because it would allow competitors to set the maximum\\nfees of their rivals) (\"AMA Opinion\").\\nEven under a rule of reason approach similar to the Third\\nCircuit\\'s approach in United States v. Brown University, 5 F.3d 658\\n(3d Cir. 1993), ACCSCT\\'s first proposal would pose significant\\nantitrust risks. An accrediting criterion based an tuition and fee level\\nwould be inherently suspect because it sets prices and impedes the\\nordinary functioning of the free market. Brown University, 5 F.3d at\\n674; see generally Massachusetts Board of Registration in\\nOptometry, 110 FTC 549 (1988).\\nFurther, the only efficiency justification that ACCSCT could\\ncoffer would be that the standard \"protects\" consumers, because\\nunfettered competition over tuition levels is unwise or dangerous.\\nThe Courts have consistently rejected this argument as \"nothing less\\nthan a frontal assault on the basic policy of the Sherman Act.\"\\nNational Society of Professional Engineers v. United States, 435 U.S.\\n679,695 (1978); see also FTC v. Indiana Federation of Dentists, 476\\nU.S. 447, 463 (1986); Brown University, 5 F.3d at 676-77.\\nMoreover, even if consumer protection justified regulation of tuition\\nlevels, the first proposed standard is not reasonably necessary to\\nachieve this objective. Courts often rule that such overbroad\\nrestraints are unreasonable and in violation of the antitrust laws. See\\nBrown University, 5 F.3d at 678-79; Bhan v. NME Hospitals, 929\\nF.2d 1404,.1413 (9th Cir. 1991); Fleer Corp. v. Topps Chewing Gum,\\n658 F.2d 139, 151-52 n.18 (3d Cir. 1981). The fact that ACCSCT\\nhas proffered less restrictive alternatives that it believes can achieve\\nthe statutory goal of assessing tuition and fees for trade school\\nconsumers indicates that the proposed standard is not reasonably\\nnecessary.\\n\\n\\x0cACCREDITING COMMISSION ON CAREER SCHOOLS\\n977\\n\\n983\\n\\nAdvisory Opinion\\n\\nB. Second Proposed Standard\\nUnder the second proposed standard, ACCSCT would collect and\\nanalyze tuition information from accredited schools to compare the\\ntuition charged for a given program at a particular school with that\\ncharged for similar programs and schools. Any tuition in the\\nninetieth percentile or above of similar programs would trigger\\nrequirements that the school explain why its tuition was so high and\\nprovide this information to students and prospective students.\\nThis approach appears to be less restrictive than the first,\\nprimarily because, rather than denying accreditation, it would require\\nthat a school disclose and justify its relative tuition. Nonetheless,\\nbecause it targets for attention institutions charging prices of a certain\\ntop percentage or level, the standard may have the same effect as the\\nfirst proposed standard. Hence there is a substantial danger that\\nimplementation of this standard may violate the antitrust laws. See\\nMaricopa, 457 U.S. at 332.\\nIn evaluating the reasonableness of the standard, the Commission\\nwould find the following factors particularly relevant. First, targeting\\nwould identify high tuition schools, opening them up to pressure to\\nconform. Indeed, that appears to be the very purpose of the standard.\\nSecond, the Commission in reviewing association fee peer review\\nprograms has emphasized the increased potential for antitrust\\nproblems where participation is mandatory. See AMA Opinion, at 6;\\nIowa Dental Association, 99 FTC 648 (1982) (advising association\\nnot to discipline members who refuse to use peer review process or\\naccept its guidance). Here, the mandatory nature of ACCSCT\\'s\\nproposed standard compounds the antitrust concerns.\\nThird, the potential for antitrust concern is reduced when peer\\nreview programs involve mediation of specific fee disputes. A peer\\nreview program based on tuition or fees runs a more serious antitrust\\nrisk when it involves review of all schools\\' tuition levels, particularly\\nin the form of a systematic exchange of data and identification of\\nschools with high tuition. See Iowa Dental Association, 99 FTC at\\n649 (\"Competition will be best protected if all concerned parties view\\nfee peer review as a means of mediating specific fee disputes, rather\\nthan a process for the collective sanctioning of fee levels or particular\\npractices\").\\nFinally, as discussed above, the antitrust laws do not condone a\\nrestraint that is not reasonably necessary to achieve its stated\\n\\n\\x0c984\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\nAdvisory Opinion\\n\\n119F.T.C.\\n\\nprocompetitive objective. See Brown University, 5 F.3d at 678-79;\\nFleer Corp., 658 F.2d at 151-52 n.18. Thus, the availability of a less\\nrestrictive plan (ACCSCT\\'s third proposed standard) suggests that its\\nsecond proposed standard would fail to meet this test.\\nC. Third Proposed Standard\\n\\nAs a third alternative for assessing tuition and fees, ACCSCT\\nproposes a standard requiring schools to inform students in the\\ncatalog, enrollment agreement, and other publications that they may\\nobtain information about tuition charges for comparable programs\\nfrom ACCSCT. ACCSCT would collect tuition information from\\naccredited schools and make it available to students who could use\\nthe information to compare the cost of similar programs at other\\ninstitutions.\\nBased upon the information ACCSCT has provided, there appears\\nto be little cause for concern that the information exchange\\ncontemplated by ACCSCT will have any anticompetitive effects.\\nThe school tuition information ACCSCT proposes to collect already\\nis widely available and easily accessible to the industry, alleviating\\nthe concern that members would use the exchange to set prices. Cf\\nUnited States v. Container Corp of America, 393 U.S. 333, 335\\n( 1969) (striking down exchange among competitors of information\\nthat \"was not available from another source\"); Cement Manufacturers\\nProtective Association v. United States, 268 U.S. 588, 605 (1925)\\n(when information is publicly available, court will not infer purpose\\nto fix prices).\\nThe procompetitive effects of increasing consumers\\' access to\\ninformation about relative trade school tuition levels could outweigh\\nany potential anticompetitive concerns raised by the collection of\\ntuition data. See Maple Flooring Manufacturers Association v.\\nUnited States, 268 U.S. 563 (1925) (association survey of members\\'\\nprices held not unlawful under rule of reason). To the extent\\nACCSCT\\'s proposal wi\\\\l provide information useful to trade school\\nconsumers, it is likely to promote competition. See AMA Opinion, at\\n3. Indeed, ACCSCT could require other disclosures, e.g., how the\\ntuition level compares to graduates\\' earnings for their first year of\\nemployment, as a condition of accreditation without injuring\\nconsumers or violating the antitrust laws.\\n\\n\\x0cACCREDITING COMMISSION ON CAREER SCHOOLS\\n977\\n\\n985\\n\\nAdvisory Opinion\\n\\nThus, insofar as ACCSCT merely collects tuition information and\\ndisseminates that information to students, it would not be likely to\\nrun into any antitrust risks. ACCSCT, however, could violate the\\nantitrust laws if it combined its data collection activities with any sort\\nof coercion or admonishment of its members to adhere to certain\\ntuition levels. See Maple Flooring Manufacturers Association, 268\\nU.S. at 563; cf. American Column & Lumber Co. v. United States,\\n257 U.S. 377 (1921).\\nIV. CONCLUSION\\n\\nAccordingly, the Commission does not presently object to\\nACCSCT\\'s third proposed standard to assess tuition, insofar as it calls\\nfor ACCSCT merely to collect and disseminate tuition information.\\nThe Commission believes that the first and second proposals, because\\nthey involve ACCSCT acting against members due to their tuition\\nlevels, may involve a significant risk of violating the antitrust laws.\\nThis advisory opinion, like all those that the Commission issues,\\nis limited to the proposed conduct that your request describes. It does\\nnot constitute approval for specific aspects of the proposal that may\\nbecome the subject of litigation before the Commission or any court,\\nsince application of the proposal in particular situations may injure\\ncompetition and consumers and violate the Federal Trade\\nCommission Act. The Commission reserves the right to reconsider\\nthe questions involved, and with notice to the requesting parties in\\naccordance with Section l.3(b) of the Commission\\'s Rules of\\nPractice, to rescind or revoke its opinion in the event that\\nimplementation of the third proposal results in significant\\nanticompetitive effects, should the purposes of the proposal be found\\nnot to be legitimate, or should the public interest so require.\\n\\n\\x0c986\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\nAdvisory Opinion\\n\\n119F.T.C.\\n\\nLetter of Request\\nAugust 4, 1994\\nDear Mr. Clark:\\nOn behalf of the Accrediting Commission of Career Schools and\\nColleges of Technology (\"ACCSCT\" or the \"Commission\"), I hereby\\nrequest an advisory opinion on the permissibility under the antitrust\\nlaws of ACCSCT\\'s adoption and enforcement of an accrediting\\nstandard on tuition and fees. In order to ensure that this request is\\nconsidered by the Department or agency with appropriate\\njurisdiction, we nave also filed a request for a business review letter\\non the same subject with the Antitrust Division of the Department of\\nJustice. We respectfully ask that the FTC and Antitrust Division\\ncoordinate a response to these requests.\\nDescription of ACCSCT. The Commission is a private nonprofit\\norganization with exclusively educational purposes. It adopts and\\napplies standards for the accreditation and evaluation of educational\\ninstitutions with trade and technical objectives. The Commission is\\nrecognized by the U.S. Department of Education under the Higher\\nEducation Act of 1965 an a reliable authority as to the quality of\\neducation and training offered by its accredited institutions. (Pub. L.\\nNo. 89-329, 79 Stat. 1219, codified as amended in scatterecfsections\\nof 20 U.S.C.). As a result of this recognition, accreditation by the\\nCommission, together with licensure by a state and certification by\\nthe Department, make a post-secondary institution of higher\\neducation eligible to participate in the student financial assistance\\nprograms authorized by the Act. (20 U.S.C. 1088). The Commission\\ncurrently accredits approximately 950 schools located in all 50 states,\\nthe District of Columbia and Puerto Rico. These schools educate and\\ntrain 450,000 students and employ 16,000 instructors.\\nThe Commission is a membership corporation. The\\nCommissioners serve as the board of directors; five of the\\nCommissioners are public members (i.e., they have no affiliation with\\nany of the schools accredited by the Commission), and six of the\\nCommissioners are school members (i.e., they are owners or\\nexecutives of accredited schools). The members of the corporation\\nare the accredited schools; membership status is coterminous with\\naccreditation. Further, the rights of the members are restricted: They\\n\\n\\x0cACCREDITING COMMISSION ON CAREER SCHOOLS\\n977\\n\\n987\\n\\nAdvisory Opinion\\n\\nelect the school-affiliated Commissioners and two of five members\\nof a nominating committee, receive various informational reports,\\nand approve (but may not initiate) amendments to the articles of\\nincorporation and bylaws, mergers and other fundamental\\ntransactions, and dues and assessments. The Commission is\\nunaffiliated with any trade association. It has applied for tax-exempt\\nstatus under Section 501(c) (3) of the Internal Revenue Code.\\nHigher Education Amendments of 1992. In 1992, Congress\\nreauthorized the student financial assistance programs of the Higher\\nEducation Act by enacting the Higher Education Amendments of\\n1992. (Pub. L. No. 102-325, 106 Stat. 448, codified in scattered\\nSections of 20 U.S.C.). This reauthorization formally provided for\\na \"Program Integrity Triad\" of accrediting agencies, the states and the\\nDepartment of Education to control access to the student financial\\nassistance programs. Although such a Triad effectively had existed\\nprior to the 1992 reauthorization, abusive practices of some\\ninstitutions of higher education impelled Congress to specify in\\ngreater detail the gatekeeping responsibilities of each leg of this\\nTriad.\\nThus, the statute specifies numerous requirements that accrediting\\nagencies like the Commission must meet in order to be recognized by\\nthe Department of Education. One of these requirements is that an\\nagency\\'s accrediting standards must assess 12 areas, including\\n\"program length and tuition and fees in relation to the subject matters\\ntaught and the objectives of the degrees or credentials offered.\" (20\\nU.S.C. 1099b(a)(5)).\\nThe Department of Education has now completed the rulemaking\\nto implement the statutory requirements for the recognition of\\naccrediting agencies. In regard to accrediting standards, the\\nregulations simply repeat the statutory provisions. (34 CFR\\n602.26(b)(7); 59 Fed. Reg. 22,250, 22,260 (April 29, 1994)). In the\\ncommentary accompanying the regulations, the Department noted\\nthat its original proposals, which elaborated on the statute, had\\nprompted substantial adverse comment.\\nNonetheless, the\\nDepartment\\'s commentary stated that those proposals provided a\\n\"sound framework\" for an assessment of the 12 areas, and\\nsummarized them. The summary for program length and tuition and\\nfees was as follows:\\n\\n\\x0c988\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\nAdvisory Opinion\\n\\n119F.T.C.\\n\\nAn accrediting agency\\'s standard for assessing this area should generally\\naddress the appropriateness of an institution\\'s program length and tuition and fees,\\ntaking into account such factors as program objectives and content, the types and\\nlocations of instructional delivery, the knowledge and skills necessary for students\\nto reach competence in the field being taught, and generally accepted practices in\\nhigher education.\\n\\n(Id. at 22,273).\\nThe Notice of Proposed Rulemaking (\"NPRM\") more extensively\\naddressed how to judge the \"appropriateness\" of tuition and fees. It\\nspecified that, in developing a standard for tuition and fees, an\\naccrediting agency should take into account the factors quoted above\\nand \"[f]or any pre-baccalaureate vocational education program,\\nconsideration of the remuneration that can reasonably be expected by\\nstudents who complete the program.\" (59 Fed. Reg. 3,578, 3,597\\n(January 24, 1994)). In the commentary accompanying the proposed\\nregulations, the Department explained that the basis for this proposal\\nwas its concern that tuition and fees for pre-baccalaureate vocational\\neducation programs may be \"excessive.\" (Id. at 3,586). The\\ncommentary also suggested three possible approaches under which\\nannualized tuition and fees for a program could not exceed: ( 1) a\\npercentage of the annualized minimum wage; (2) a percentage of\\ngraduates\\' earnings for their first year of employment; and (3) a\\npercentage of average annualized wages. (Id. at 3,587). The NPRM\\nprovided no specifics on these various maximum percentage levels.\\nAlthough the Department stated that an agency could still be\\nrecognized even if its standards departed from the original proposals,\\nit also stated that the agency would bear a burden of justifying the\\nappropriateness of different standards. (59 Fed. Reg. at 22,273).\\nDevelopment of ACCSCT Standard. In order to comply with the\\nstatutory and regulatory requirements described above, ACCSCT will\\nhave to adopt and apply an accrediting standard that assesses tuition\\nand fees. It has created a committee of Commissioners to study the\\nissue and develop a proposal. In addition to the inherent difficulty of\\nthe task, the Commission is concerned that any standard it adopts not\\nbe violative of the antitrust laws.\\nAs explained above, the Commission is a private body consisting\\nin substantial part of school-affiliated Commissioners who could be\\nviewed as competitors.\\nFurther, the Commission is legally\\nclassifiable as a form of association, although it is not a trade\\nassociation in the conventional sense that seeks to advocate and\\n\\n\\x0cACCREDITING COMMISSION ON CAREER SCHOOLS\\n977\\n\\n989\\n\\nAdvisory Opinion\\n\\nadvance the interests of its members. (See Parsons College v. North\\nCentral Ass\\'n. of Colleges and Sch., 271 F. Supp. 65, 70 (N.D. Ill.\\n1967); Transport Careers v. National Home Study Council, 646 F.\\nSupp. 1474 (N.D. Ind. 1986)). Thus, the Commission would appear\\nto be a combination subject to Section 1 of the Sherman Act. ( 15\\nU.S.C. 1).\\nAssociation activities which limit or set maximum prices are\\nvulnerable to attack as price-fixing. (Arizona v. Maricopa County\\nMedical Soc., 457 U.S. 332 (1982); McLean County Chiropractic\\nAss \\'n., 5 Trade Reg. Rep. (CCH) <][23, 524 (FfC Consent Order to\\nCease and Desist Complaint, Dkt-3491, April 7, 1994)). The\\nnonprofit and educational nature of the Commission does not\\nnecessarily exempt it from such antitrust liability. (See United States\\nv. Brown University, 5 F.3d 658 (3d Cir. 1993) (colleges and\\nuniversities not immune from antitrust laws for price-fixing);\\nGoldfarb v. Virginia State Bar, 421 U.S. 773 (1975) (no \"learned\\nprofessions\" exemption); American Soc. of Mechanical Engineers,\\nInc. v. Hydro\/eve! Corp., 456 U.S. 556 (1982) (nonprofit nature of\\norganization does not shield it from antitrust liability)). Moreover,\\npaternalistic aims, such as protection of students, which unduly\\nrestrict competition are not a defense to such liability. (See National\\nSoc. of Professional Engineers v. United States, 435 U.S. 679 (1978);\\nFederal Trade Commission v. Indiana Federation of Dentists, 476\\nU.S. 447 (1986)).\\nOf particular importance to this request, the FTC recently issued\\nan advisory opinion which found violative of the antitrust laws a\\nphysician fee review program proposed by the American Medical\\nAssociation and state and local medical societies which provided for\\nthe imposition of disciplinary sanctions for \"fee gouging\" or fees that\\nwere deemed by peer review panels to be \"excessive.\" (American\\nMedical Ass\\'n., 5 Trade Reg. Rep. (CCH) <][ 23,602 at 23,284-87,\\n(FfC Advisory Opinion, Feb. 14, 1994 ). In contrast, the FfC found\\npermissible sanctions for abusive conduct in connection with fees,\\nsuch as misrepresentation, deception, or the exertion of undue\\ninfluence. (Id. at 23,284). Private, non-binding advice on fee levels,\\nnot based upon benchmarking of fees, and requirements, for\\ndisclosure of fee-related information were also found to be\\npermissible. (Id. at 23,283; accord, Iowa Dental Ass \\'n., 99 FfC 648\\n(FfC Advisory Opinion, April 3, 1982)).\\n\\n\\x0c990\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\nAdvisory Opinion\\n\\n119 F.T.C.\\n\\nIn view of the regulations promulgated by the Department of\\nEducation, the Commission appears to be obliged to consider\\nadoption of an accrediting standard under which it would determine\\nwhether the tuition and fees charged by its accredited schools are too\\nhigh and enforce this standard potentially by withdrawing\\naccreditation. Such a standard might use one or more of the three\\napproaches suggested in the NPRM with tuition capped at a\\nYet, such action by the\\npercentage of expected earnings.\\nCommission could be viewed as price fixing under the antitrust laws\\nsince the Commission is arguably a combination which would be\\nlimiting the pricing discretion of competitors.\\nIt might be argued that Congress impliedly exempted accrediting\\nbodies like the Commission from the antitrust laws when it\\nconditioned recognition of accrediting agencies upon the adoption of\\na standard for the assessment of tuition and fees. (See Behagen v.\\nAmateur Basketball Ass\\'n of the United States, 884 F.2d 524 (10th\\nCir. 1989) (private governing board for amateur basketball exempt\\nwhen it set and enforced player qualifications pursuant to Amateur\\nSports Act)). However, this is an uncertain basis for actions which\\ncould have extremely severe consequences. Congress did not speak\\ndirectly to the issue, and such exemptions are disfavored. (Silver v.\\nNew York Stock Exchange, 373 U.S. 341,357 (1963)).\\nThe Third Circuit\\'s holding in Brown University indicates that\\nthe rule of reason would be applied to evaluate a tuition and fees\\nstandard. Under the rule of reason, it might be argued that the\\nstandard is designed not to inhibit competition but to protect students\\nwho lack the knowledge and sophistication to make informed\\nchoices. However, such a paternalistic justification was rejected by\\nthe Supreme Court in National Society of Professional Engineers and\\nIndiana Federation of Dentists. Further, less restrictive means may\\nbe available to achieve the pro-competitive aims of correcting\\ninformation deficiencies in the market. (See Brown University,\\nsupra).\\nAlternatively, the Commission might collect tuition information\\nfrom its accredited schools and analyze this information to determine\\nhow the tuition charged for a given program at a particular school\\ncompares to similar programs and schools. If the tuition were in the\\ntop tenth percentile of all similar programs, for example, the\\nCommission might then require the school to explain why its tuition\\nwas so high and to provide this information to students and\\n\\n\\x0cACCREDITING COMMISSION ON CAREER SCHOOLS\\n977\\n\\n991\\n\\nAdvisory Opinion\\n\\nprospective students. Under this approach, the school would retain\\nits pricing discretion and remain free to charge the tuition that it\\nwished. A standard establishing this procedure would provide\\nstudents with useful information on which to base a decision to attend\\nan institution and improve the functioning of the market.\\nEven this approach may present difficulties under the antitrust\\nlaws. In its advisory opinions on the fee review proposals in\\nAmerican Medical Ass\\'n. and Iowa Dental Ass\\'n., the FTC cautioned\\nthat the associations should not systematically collect fee data,\\ndevelop any explicit or implicit \"benchmarking\" scheme, or publicly\\ndisclose their review of particular fees. The alternative approach\\ndescribed above could be viewed as inconsistent with these\\nconditions. The heart of the accrediting standard would be the\\nsystematic collection of tuition data and the disclosure to students of\\ninformation comparing and explaining the school\\'s tuition in relation\\nto other schools. Since schools may wish to avoid this disclosure\\nbecause it could inhibit students\\' decisions to attend, the standard\\ncould be regarded as an implicit form of benchmarking, with the\\nbenchmark as the range of tuition levels where disclosure would not\\nbe mandated by the Commission.\\nA final possibility would be an accrediting standard which\\nrequired schools to inform students in the catalog, enrollment\\nagreement and other publications that they may obtain information\\nabout tuition charges for comparable programs from the Commission.\\nThe Commission would again collect tuition information from\\naccredited schools about their programs, and assemble this\\ninformation in a data base. Students could access this information to\\ndetermine the cost of similar programs at other institutions. The data\\nbase might also contain other information useful to consumer choice,\\nsuch as geographic location, size of the institution, and other\\nprograms and services offered at the school.\\nThis approach would avoid any benchmarking of acceptable\\ntuition levels. Schools would retain full discretion to price their\\nservices. The accrediting standard would be formulated to address\\ndirectly the underlying problem of lack of consumer information by\\nproviding students with the data necessary to make informed choices.\\nBy assembling, categorizing and providing context to the data, the\\ncommission would still meet the requirements of the Higher\\nEducation Amendments of 1992. since it would be \"assessing\" the\\ntuition and fees of schools. The Antitrust Division recently released\\n\\n\\x0c992\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\n119F.T.C.\\n\\nAdvisory Opinion\\n\\na business review letter stating that a similar type of fee survey\\nshould not be subject to challenge under the antitrust laws. (Trade\\nRegulation Reports (CCH), No. 322 at 3 (July 6, 1994)).\\nRequest for Guidance. The Commission respectfully requests\\nguidance on the permissibility under the antitrust laws of the\\napproaches to an accrediting standard on tuition and fees outlined\\nabove. The Commission will in the near future begin the process to\\nrenew its recognition by the Department of Education. As part of that\\nprocess, the Commission will have to demonstrate its compliance\\nwith the statutory and regulatory recognition criteria, including the\\nrequirement for a standard to assess tuition and fees. Your review of\\nthe approaches under consideration by the Commission will be of\\nsubstantial assistance as it seeks to continue to demonstrate that it is\\na reliable authority as to the quality of the education and training\\noffered by its accredited institutions. Accordingly, we respectfully\\nurge expedited consideration of this request.\\nSincerely,\\nMark L. Pelesh\\nCounsel to ACCSCT\\n\\n\\x0c'","created_timestamp":"January 19, 1995","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/advisory-opinion-concluding-proposal-adopt-enforce-certain-accrediting-standards-tuition-fees-would\/letter_to_accrediting_commission_on_career_schools_and_colleges_of_technology_-_decisions_volume_119.pdf"}
{"text":"b'\/)\/\\'\\nJf) 1-\\n\\nUNITED STATES OF AMERICA\\n\\nFEDERAL TRADE COMMISSION\\nWASHINGTON , D, C, 20580\\n\\nDivision of\\n\\nMarketing Practices\\n\\nOctober 3, 1994\\n\\nChan Tysor ,\\n\\nPresident\\n\\nCelestis, Inc,\\n3731 Purdue\\n\\nHouston ,\\n\\nTX 77005\\n\\nDear Mr. Tysor:\\nYour letter to attorney Mary Feinstein of September 19, 1994\\nrequests an opinion as to whether or not the Funeral Rule, 16\\nR. Part 453 , would be applicable to the business activities\\nof Celestis , Inc. Ms. Feinstein and I are staff attorneys\\nassigned to Funeral Rule enforcement. In your letter , you state\\nthat Celestis will offer the service of launching human cremains\\nCelestis will have no contact with deceased human\\nbodies and will not offer cremation services. A person s local\\nfuneral service provider would cremate the body and send the\\ncremains to Celestis, which would reduce all or a portion of the\\ncremains through its reduction process and then encapsulate the\\ncremains in an individual capsule and launch them into space.\\n\\ninto space.\\n\\nThe Funeral Rule only applies to \"funeral providers, \" which\\nthe Rule defines as those who sell or offer to sell both funeral\\ngoods and funeral services to the public. \"Funeral goods \" are\\nthose sold or offered directly to the public for use in\\nconnection with funeral services. and \"funeral services\" are any\\nservices which may be used to: (1) care for and prepare deceased\\nhuman bodies for burial, cremation or other final disposition;\\nand (2) arrange , supervise or conduct the funeral ceremony or the\\nfinal disposition of deceased human bodies. 16 C. R. S 453.\\nA copy of the Funeral Rule is enclosed for your future reference.\\n\\nBased on the information provided in your letter and the\\ndefinitions cited above, the Funeral Rule does not apply to the\\nservices to be offered by Celestis, Inc. Please be advised that\\nthe views expressed in this letter are those of the FTC staff.\\nThey have not been reviewed, approved, or adopted by the\\nCommission, and they are not binding upon the Commission.\\nHowever , they do reflect the opinions of those staff members\\ncharged with enforcement of the Funeral Rule.\\n\\nVery; truly youq:: ,.\\n\\ng;l\/r14( U \/?! 11\/r\/\\nTomas A. Cohn\\n\\nAttorney\\nEnclosure\\n\\n\\x0c'","created_timestamp":"October 3, 1994","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/sites\/default\/files\/documents\/advisory_opinions\/opinion-94-1\/opinion94-1.pdf"}
{"text":"b'{\\nI\\n\\nDue to insufficient information supplied by respondent SCM\\nCorporation, Commission was unable to determine whether proposed interlocking directorate would violate provisions of Final Order entered against SCM. (92 F.T.C. 416\\n(1978)) [Kraftco Corporation, et al., Dkt. 9035]\\nJune 18, 1984\\nDear Mr. Willis:\\nThis is in response to your request for advice as to whether Dr.\\nRichard R. West may serve simultaneously on the boards of directors\\nof SCM Corporation (\"SCM\") and Bohemia, Inc. (\"Bohemia\") without\\nviolating the prohibition against interlocking directorates contained\\nin the Commission\\'s order in Docket No. 9035 (\"the order\") [92 F.T.C.\\n416 (1978)]. This request was made on behalf of SCM, which became\\nsubject to the Commission\\'s order on October 6, 1980 [14 C.D. 23 (612\\nF.2d 707 (1980), cert. denied, 449 U.S. 821 (1980)].\\nAccording to your request, Dr. West is presently a member of the\\nSCM board and would like to rejoin the Bohemia board, provided that\\nhis simultaneous service on the two boards would not violate the\\norder. Your request involves a product overlap that occurs between\\nSCM\\'s subsidiary, Allied Paper, Incorporated (\"Allied\") and Bohemia;\\nhowever, there is no direct product overlap between the two parent\\ncompanies, SCM and Bohemia. You advise that Dr. West is not a\\ndirector of Allied and that he is not involved with Allied\\'s operating\\npolicies.\\nYour request states that Allied owns and operates a lumber mill in\\nJackson, Alabama which sells lumber products, primarily to customers in the Southeast, under the \"M.W. Smith Lumber Company\"\\n(\"M.W. Smith\") trade name. For the fiscal year ended June 30, 1982,\\nthe total sales of Allied and its subsidiaries were $288 million including $6.9 million total sales of all forms of lumber. You state that\\nBohemia and M.W. Smith both sell lumber products in 18 states. The\\ntotal annual sales of lumber products in the 18 states is $5.2 million\\nfor Bohemia and $4.1 million for M.W. Smith. Bohemia and M.W.\\nSmith each have sales of $100,000 or more of lumber products only\\nin two states, Louisiana and Oregon and neither company is aware of\\nany instance in which they have sold products to the same customers.\\nThe total sales of Bohemia and M.W. Smith combined account for less\\nthan 1 % of all sales included under SIC Code No. 2421 - Sawmills &\\nPlaning Mills, General. You state that the only information which the\\nSCM board sees with respect to M.W. Smith \"would be a sales and a\\nprofit line in the annual budget and in long range plans.\"\\nWe believe that the order in Docket No. 9035 would be applicable\\nby its terms to this interlock. Paragraph I of the order prohibits SCM\\n\\n,,,\\xc2\\xb7\\n\\n\\xe2\\x80\\xa2ii-\\xc2\\xb7\\n\\n\\x0c718\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\n\\nfrom having a common director with any corporation which competes\\nwith SCM in the production or sale of any product or service. The\\norder does not contain any de minimis exception.\\nNor can we say that any of the other possible grounds for exception\\nare applicable here. The Commission has considered whether the\\nDocket No. 9035 order is applicable to situations where the prospective interlock is between parent companies but the competition occurs\\nbetween one parent and the subsidiary of the other parent. As stated\\nabove, the order prohibits SCM from having a director interlock with\\nKraft or with any other corporation (other than a subsidiary, parent,\\nor sister ofSCM) which competes with SCM in the production or sale\\nof any product or service. The order thus contains a specific exemption for interlocks arising solely between SCM and its subsidiaries,\\nand it does not provide any exemption for the activities of subsidiaries\\nin other contexts. The Commission concludes that no such exemption\\nwas intended and that the language of the order is broad enough to\\nencompass the prospective interlock described in your request.\\nThe Commission has likewise considered whether it is appropriate\\nto impute Allied\\'s activities to SCM for the purpose of determining\\norder coverage. In this connection, the Commission\\'s opinion in BorgWarner Corporation, Docket No. 9120 (Slip Opinion, June 3, 1983) [101\\nF.T.C. 863 at 919], discussed the question of when it was appropriate\\nto impute a subsidiary\\'s activities to a parent corporation for Section\\n8 purposes. The Commission stated that the relevant inquiry under\\nSection 8\\nis whether the parent company should be regarded as a \"competitor\" of the subsidiary\\'s\\ncompetitors, and whether an\\xc2\\xb7 interlocked director is so placed as to be able to exercise\\ncontrol or even to substantially influence decisionmaking at the director level so as to\\ndampen competitive relationships between divided corporate interests. The common\\nlaw \"control\" inquiry is relevant insofar as it is an indication of the likelihood of\\ncollusion and anticompetitive transfer of information among competitors.\\n\\nThe staff invited you to supply detailed information on the control\\nand other factors deemed relevant by the Commission in Borg- Warner\\nas they relate to the relationship between SCM and M.W. Smith, but\\nyou did not do so, with the exception of stating that SCM knows \"of\\nno communication whatsoever between M.W. Smith (or Allied) and\\nBohemia.\" Accordingly, based on the limited information that you\\nhave supplied, the Commission is unable to determine that it would\\nbe inappropriate in this instance to impute Allied\\'s activities to SCM\\nfor the purpose of determining order coverage.\\nIn the light of the fact that the information supplied in your request\\nis insufficient to resolve the question of whether Allied\\'s activities\\nshould be imputed to SCM, the Commission is unable to determine\\n\\n\\x0cwhether the simultaneous service of Dr. West on the boards of SCM\\nand Bohemia would violate Paragraph I of the order.\\nBy direction of the Commission.\\n\\nLetter of Request\\nFebruary 15, 1983\\nDear Mr. Feinberg:\\nThis is a request made on behalf of respondent, SCM Corporation\\n(\"SCM\"), for your determination that the simultaneous service of Dr.\\nRichard R. West on the boards of directors of SCM and Bohemia, Inc.\\n(\"Bohemia\") would not violate the Order in the above matter.\\nDr. West became a member of the Board of Directors of SCM in\\nDece~ber, 1982. He had previously been a member of the Board of\\nDirectors of Bohemia, but he resigned from that position pending\\nresolution of the question which we are raising in this letter. If you\\ndetermine that Dr. West\\'s simultaneous service on the boards ofSCM\\nand Bohemia would not violate the Order, Dr. West intends to rejoin\\nthe Bohemia board.\\nDr. West is the Dean of the Amos Tuck School of Business Administration, Dartmouth College. He is a director of The Dorsey Corporation (a manufacturer of cargo trailers and plastic containers), Liberty\\nCommunications Inc. (a cable TV and TV broadcasting company),\\nVornado, Inc. (a real estate holding company), and several investment\\ncompanies.\\nBohemia has its principal office in Eugene, Oregon and is engaged\\nin the manufacture and sale of a variety of forest products, including\\nlumber, plywood, veneer, particleboard and laminated beams, in marine construction and in the production of rock, gravel and aggregates. For the fiscal year ended April 30, 1982, Bohemia had total\\nsales of $155 million; of those sales $65 million were sales of lumber.\\nSCM has its principal office in New York, New York and had total\\nsales for the fiscal year ended June 30, 1982 of $1.9 billion. As you\\nknow, the company\\'s major businesses are chemicals, coatings and\\nresins, paper products, foods, and typewriters and appliances.\\nSCM owns Allied Paper, Incorporated, a Delaware corporation (\"Allied\"), with its principal office in Kalamazoo, Michigan. Allied\\'s operations include a paper mill located in Jackson, Alabama. In\\nconjunction with its paper mill, Allied owns and operates a lumber\\nmill, also located in Jackson, Alabama; the lumber mill sells lumber\\nproducts, mainly to customers in the Southeast, under the \"M.W.\\nSmith Lumber Company\" trade name (\"M.W. Smith\"). For the fiscal\\nyear ended June 30, 1982, the total sales of Allied and its subsidiaries\\nwere $288 million, including $6.9 million total sales of all forms of\\nlumber.\\n\\n\\x0c720\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\n\\nThe lumber products of Bohemia and M.W~ Smith are all included\\nunder SIC Code No. 2421 - Sawmills & Planing Mills, General. This\\nproduct line is dominated by such industry giants as Weyerhaeuser\\nCo. Inc., Louisiana-Pacific Corp., Georgia-Pacific Corp., St. Regis\\nPaper Co. Inc., Boise Cascade Corp. and many others. Bohemia\\'s market share of this category is approximately one-half of 1% and M.W.\\nSmith\\'s share is infinitesimal.\\nThere are 18 states in which Bohemia and M.W. Smith both sell at\\nleast some quantity of lumber products. (See attached list.) The total\\nannual sales oflumber products sold in those 18 states is $4.1 million\\nfor M.W. Smith and approximately $5.2 million for Bohemia (annualizing the six-months sales of the California mills-see footnote to\\nattached list). You will note that the list shows only two states (Louisiana and Oregon) in which Bohemia and M.W. Smith each have sales\\nof $100,000 or more of lumber products.\\nOf M.W. Smith\\'s lumber sales, approximately 46% are to \"office\\nwholesalers\" (non-stocking); 25% are to \"yard wholesalers\" (stocking); and the balance are direct sales to retailers or manufacturers.\\nOf Bohemia\\'s lumber sales, less than 15% are to office wholesalers;\\nand most of Bohemia\\'s sales are to yard wholesalers, contractors and\\nretailers.\\nM.W. Smith and Bohemia have each checked with their sales personnel, and none knew of any direct competition between the two\\ncompanies, that is, instances in which both companies were competing for the business of the same customer. It is, of course, possible that,\\nunknown to the present sales personnel of the two companies, they\\nhave sold some product or products to the same customers. Even here\\nthere is not likely to be any substantial competition in view of the fact\\nthat the sales were quite small in each state and the principal channels of distribution employed by the two companies differ.\\nDr. West does not serve on the board of the SCM subsidiary, Allied.\\nNor in his capacity as a director of SCM would he be involved with\\nthe operating policies of Allied or M.W. Smith.\\nAlthough both Bohemia and M. W. Smith market some of the same\\nproducts, they market in only 18 states in common, the sales volume\\nis minimal in each state and one markets principally to office wholesalers while only 15% of the other\\'s sales are to such customers.\\nFurther, the sawmills and planing mills category is so large that even\\nthe combined share of Bohemia and M.W. Smith is miniscule.\\nIn these circumstances, we do not believe that either the Act or the\\nOrder were intended to bar Dr. West\\'s service on the boards of SCM\\nand Bohemia.\\nWe respectfully request that you indicate that you have no objection to service by Dr. West on the board of directors of Bohemia.\\n\\n\\x0cThank you for your early consideration of this request.\\nSincerely,\\nIsl William E. Willis\\nSales of Board (\\'\\'B\"), Standard\\nDimension (\"D\"), Industrial (\"I\"), Saps (\\'\\'S\"),\\nFlooring (\"F\"), Sidings (\"Si\"), Prime (\"P\"),\\nWolmanized Lumber (\"W\") Products by\\nBohemia, Inc., (FY ended 4\/30\/82)*\\nand M.W. Smith Lumber Co. (FY ended 6\/30\/82)\\nM.W. Smith\\n\\nBohemia\\nState\\n\\n$000\\'s\\n\\nProd.\\n\\n$000\\'s\\n\\nProd.\\n\\n2,340\\n\\n8,0,1,\\nS,F,Si,\\nP,W\\n\\nAL\\n\\n70\\n\\n8,0\\n\\nFL\\n\\n100\\n\\nD\\n\\n90\\n\\n8,0,1,\\nF,Si\\n\\nD\\n\\nGA\\n\\n30\\n\\n8,0\\n\\n170\\n\\nIL\\n\\n50\\n\\n8,F\\n\\n30\\n\\n8,F,W\\n\\nKY\\n\\n10\\n\\nB\\n\\n290\\n\\n8,0,1,\\nF,Si,W\\n\\nLA\\n\\n470\\n\\n8,0\\n\\n100\\n\\n8,0,1,\\nSi,W\\n\\nMD\\n\\n20\\n\\n8\\n\\n10\\n\\n8,Si\\n\\nMl\\n\\n110\\n\\nD\\n\\n10\\n\\n0,1\\n\\nMN\\n\\n190\\n\\n8\\n\\n10\\n\\n8\\n\\nMO\\n\\n160\\n\\n8,0\\n\\n70\\n\\n8,0,1\\n8,0,1\\n\\nNC\\nNY\\n\\n70\\n\\n8\\n\\n100\\n\\n30\\n\\nD\\n\\n20\\n\\n8,0,1\\n\\nOH\\n\\n20\\n\\nD\\n\\n140\\n\\nB,O,I,\\nF,W\\n\\nOR\\n\\n2,120\\n\\n8,0\\n\\n180\\n\\nB,D,F\\n\\nPA\\n\\n20\\n\\nD\\n\\nTN\\n\\n30\\n\\n8,0\\n\\n430\\n\\nTX\\n\\n950\\n\\n8,0,1\\n\\n50\\n\\n8,0,1\\n\\nVA\\n\\n30\\n\\nD\\n\\n40\\n\\nO,I,S\\n\\n5\\n\\nD\\n8,O,F,\\nSi\\n\\n\\xe2\\x80\\xa2 Sales for Bohemia in these states are based on annual sales for Oregon mills (representing 80% of all sales)\\nand six-months sales for California mills.\\n\\n\\x0c722\\n\\nFEDERAL TRADE COMMISSION DECISIONS\\n\\nSecond Letter of Request\\nAugust 26, 1983\\nDear Mr. Feinberg:\\nIn connection with our pending request on behalf of SCM Corporation (\"SCM\") for your determination that the service of Dr. Richard\\nR. West on the Boards of Directors of SCM and Bohemia, Inc. is not\\nin violation of the Order entered in the above Docket, I would like to\\ncall your particular attention to the recent decision of the Commission In the Matter ofBorg- Warner Corporation, et al., Docket No. 9120.\\n[101 F.T.C. 863 (1983)]\\nThe Borg-Warnerdecision confirms, I believe, that in view of all of\\nthe circumstances the service of Dr. West on the Boards of the two\\ncompanies would neither violate the law nor the outstanding Order.\\nThe Commission clearly articulated in Borg-Warner:\"A parent corporation is not a competitor of another corporation merely because its\\nsubsidiary is. (citing cases)\" (at p. 16), and further declared: \"The\\nrelevant inquiry under Section 8 is ... whether an interlocked director is so placed as to be able to exercise control or even to substantially\\ninfluence decision making at the director level so as to dampen competitive relationships between divided corporate interests\" (at p. 18).\\nThe Board of Directors of SCM is not involved in and does not\\nparticipate in the operation and policies of the M.W. Smith Lumber\\nCompany, an operating group which is a part of SCM\\'s subsidiary,\\nAllied Paper, Incorporated. As we have previously disclosed to you,\\nM.W. Smith\\'s sales are a small fraction of 1 % of SCM\\'s total sales.\\nM.W. Smith\\'s sales are in a sense generated as a by-product of Allied\\'s\\nprincipal business, the manufacture of pulp and paper products; thus,\\nthe M.W. Smith Lumber Company is located near Allied\\'s Jackson,\\nAlabama pulp and paper mill and was acquired by SCM, in 1981,\\nmainly as an adjunct to the pulp mill because it provided a local\\nsource of wood chips, timber and timber cutting rights.\\nThe monthly and annual financial operating reports which are\\npresented to the SCM Board of Directors include data as to each of\\nSCM\\'s divisions with some breakouts for operating groups; but there\\nare no such breakouts for the small M.W. Smith operations. The only\\nsuch information which the Board sees with respect to M.W. Smith\\nwould be a sales and a profits line in the annual budget and in long\\nrange plans.\\nIn the case ofSCM and M.W. Smith we have a relationship which\\nis even more remote than the Commission faced in Borg- Warnerinasmuch as the SCM subsidiary, Allied, is essentially a pulp and paper\\nproducer and only this small group in Jackson, Alabama, representing about 2% of Allied\\'s sales, is engaged in activities which could be\\ncompetitive with Portland, Oregon-based Bohemia, Inc ..\\n\\n\\x0cIn fact, of course, as indicated\\xc2\\xb7 in our prior submission, neither the\\nBohemia management nor the M.W. Smith management consider the\\nother company to be a competitor, and neither management knew of\\nany specific instances in which any of their products were sold in\\ncompetition with the products of the other company.\\nUnlike the situation in Borg-Warner, we know of no communications whatsoever between M.W. Smith (or Allied) and Bohemia.\\nThe Commission in Borg-Warner placed great emphasis upon the\\npurposes of Section 8, noting that interlocking directorates were seen\\nby Congress as \"likely to facilitate collusion\" (p. 25) \"and anti-competitive transfer ofinformation among competitors\" (at p. 18). It is the\\npossibility of such \"collusion\", the Commission declared, that renders\\nthe \"control\" inquiry relevant.\\nThe absence ofSCM Board involvement in the M.W. Smith activities, the fact that M.W. Smith itself is merely part of a larger subsidiary of SCM and the fact that M.W. Smith\\'s sales are tiny in\\ncomparison both to the total sales ofSCM and of its subsidiary Allied,\\nrender non-existent the risk of collusion which underlies the purpose\\nof Section 8 of the Clayton Act and the Order which has been rendered\\nin this proceeding. Furthermore, when one realizes that the total\\nshare of the lumber market enjoyed by Bohemia and M.W. Smith\\ntogether does not reach 1 %, and that in fact the companies are not\\neven aware of any competition between them, any fear of collusion is\\nbeyond belief.\\nWe renew our pending request that you indicate no objection to the\\nservice of Dr. West on the Board of Directors of Bohemia, Inc.\\nSincerely,\\n\\nIs\/ William E. Willis\\n\\n\\x0c'","created_timestamp":"June 18, 1984","downloaded_timestamp":"10-18-2021","url":"https:\/\/www.ftc.gov\/system\/files\/documents\/advisory_opinions\/advisory-opinion-whether-proposed-interlocking-directorate-would-violate-provisions-final-order\/letter_concerning_interlocking_directorate_-_decisions_volume_103_6-18-94.pdf"}