The Federal Trade Commission has finalized an Order that settles charges that NBTY, NatureSmart, and Rexall Sundown made false and unsupported claims that their Disney and Marvel Heroes line of children’s multivitamins contained a significant amount of DHA (docosahexaenoic acid, an Omega-3 fatty acid) and promoted healthy brain and eye development in children. As part of the settlement in this case, which was first announced in December 2010, NBTY, Inc. and two subsidiaries, NatureSmart LLC and Rexall Sundown, Inc have agreed to pay $2.1 million to provide refunds to consumers who purchased these multivitamins.
Part of the Order is listed below:
The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the Bureau of Consumer Protection proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge the respondents with violations of the Federal Trade Commission Act; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft complaint, a statement that the signing of the agreement is for settlement purposes only and does not constitute an admission by the respondents that the law has been violated as alleged in such complaint, or that any of the facts as alleged in such complaint, other than jurisdictional facts, are true, and waivers and other provisions as required by the Commission’s Rules; and
The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of thirty (30) days for the receipt and consideration of public comments, and having duly considered the comments received from interested persons, now in further conformity with the procedure described in Commission Rule 2.34, 16 C.F.R. § 2.34, the Commission hereby issues its complaint, makes the following jurisdictional findings, and issues the following order:
1. Respondent NBTY, Inc. is a Delaware corporation with its principal place of business
located at 2100 Smithtown Ave., Ronkonkoma, New York 11779.
2. Respondent NatureSmart LLC is a Colorado limited liability company with its principal place of business at 2100 Smithtown Ave., Ronkonkoma, New York 11779.
3. Respondent Rexall Sundown, Inc., also doing business as Sundown, Inc., is a Florida corporation with its principal place of business at 2100 Smithtown Ave., Ronkonkoma, New York 11779.
4. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents and this proceeding is in the public interest.
ORDER DEFINITIONS
For purposes of this order, the following definitions shall apply:
1. Unless otherwise specified, “respondents” means NBTY, Inc., NatureSmart LLC, and Rexall Sundown, Inc., also doing business as Sundown, Inc., and their successors and assigns, and their officers, and each of the above’s agents, servants, representatives, and employees.
2. The “NBTY Products” means, collectively, the children’s multivitamin and mineral chewable tablet products manufactured, promoted, advertised, distributed, and sold by respondents under the names Disney Princess Complete and Marvel Heroes Complete and the following children’s multivitamin and mineral gummy products: Disney Princess Gummies; Disney Pixar Cars Gummies; Disney Winnie the Pooh Gummies; Disney Tigger & Pooh Gummies; Disney Pixar Finding Nemo Gummies; Disney Pixar Wall-E Gummies; Disney Pixar Toy Story Gummies; and Marvel Heroes Gummies.
3. “Commerce” means as defined in Section 4 of the FTC Act, 15 U.S.C. § 44.
4. “Product” means any good that is offered for sale, sold or distributed to the public by respondents, their successors and assigns, under any brand name of respondents, their successors and assigns, or under the brand name of any third party. “Product” also means any product sold or distributed to the public by third parties under any brand name of respondents, or under private labeling agreements with respondents, their successors and assigns. “Product” shall include, but not be limited to, the NBTY Products.
5. “Food” and “drug” mean as defined in Section 15 of the FTC Act, 15 U.S.C. § 55.
6. “DHA” means docosahexaenoic acid, a polyunsaturated Omega-3 fatty acid.
7. The term “including” in this order means “including without limitation.”
8. The terms “and” and “or” in this order shall be construed conjunctively or disjunctively as necessary, to make the applicable phrase or sentence inclusive rather than exclusive.
I.
IT IS ORDERED that respondents, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any Product, in or affecting commerce, shall not misrepresent, expressly or by implication, including through the use of a product name, endorsement, depiction, or illustration, that such Product contains a specific ingredient or a specific numerical amount of any ingredient.
II.
IT IS FURTHER ORDERED that respondents, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any Product, in or affecting commerce, shall not make, expressly or by implication, including through the use of a product name, endorsement, depiction, or illustration, any representation about the health benefits, performance, or efficacy of any Product, including, but not limited to, representations that DHA or any other substantially similar ingredient in such Product promotes brain or eye health, unless the representation is non-misleading, and, at the time of making such representation, respondents possess and rely upon competent and reliable scientific evidence that is sufficient in quality and quantity based on standards generally accepted in the relevant scientific fields, when considered in light of the entire body of relevant and reliable scientific evidence, to substantiate that the representation is true. For purposes of this Part, competent and reliable scientific evidence means tests, analyses, research, or studies that have been conducted and evaluated in an objective manner by qualified persons and are generally accepted in the profession to yield accurate and reliable results.
III.
IT IS FURTHER ORDERED that nothing in this order shall prohibit respondents from making any representation for:
A. Any drug that is permitted in labeling for such drug under any tentative or final standard promulgated by the Food and Drug Administration, or under any new drug application approved by the Food and Drug Administration; and
B. Any product that is specifically permitted in labeling for such product by regulations promulgated by the Food and Drug Administration pursuant to the Nutrition Labeling and Education Act of 1990.
IV.
IT IS FURTHER ORDERED that within five (5) days from the date of service of this order, respondents, jointly and severally, shall pay to the Commission by electronic funds transfer the sum of two million, one hundred thousand dollars ($2,100,000) in accordance with instructions provided by the Commission.
A. In the event of default on any obligation to make payment under this order, interest, computed pursuant to 28 U.S.C. § 1961(a), shall accrue from the date of default to the date of payment. In the event such default continues for ten (10) calendar days beyond the date that payment is due, the entire amount shall immediately become due and payable. Respondents shall be jointly and severally liable for all payments required by this Subpart and any interest on such payments.
B. All funds paid to the Commission pursuant to this order shall be deposited into an account administered by the Commission or its agents to be used for equitable relief, including, but not limited to, consumer redress, including restitution, and any attendant expenses for the administration of such equitable relief. In the event that direct redress to consumers (which shall be the first priority for dispersing the funds set forth above) is wholly or partially impracticable or funds remain after the redress to consumers is completed, the Commission may apply any remaining funds for such other equitable relief (including consumer information remedies) as it determines to be reasonably related to respondents’ practices alleged in the complaint. Any funds not used for such equitable relief shall be deposited in the United States Treasury as disgorgement. Respondents shall have no right to challenge the Commission’s choice of remedies under this Part. Respondents shall be notified as to how the funds are distributed, but shall have no right to contest the manner of distribution chosen by the Commission. No portion of any payment under this Part herein shall be deemed a payment of any fine, penalty, or punitive assessment.
C. Respondents relinquish all dominion, control, and title to the funds paid pursuant to this Part to the fullest extent permitted by law. Respondents shall make no claim to or demand for the return of the funds, directly or indirectly, through counsel or otherwise. In the event of bankruptcy of any respondent, respondents acknowledge that the funds paid are not part of the debtor’s estate, nor does the estate have any claim or interest therein.
D. Respondents agree that the facts as alleged in the complaint filed in this action shall be taken as true without further proof in any bankruptcy case or subsequent civil litigation pursued by the Commission to enforce its rights to any payment under this Part, including, but not limited to, a nondischargeability complaint in any bankruptcy case.
E. Proceedings instituted under this Part are in addition to, and not in lieu of, any other civil or criminal remedies that may be provided by law, including any other proceedings the Commission may initiate to enforce this order.
V.
IT IS FURTHER ORDERED that respondents, and their successors and assigns, shall, for five (5) years after the last date of dissemination of any representation covered by this order, maintain and upon reasonable notice make available to the Federal Trade Commission for inspection and copying:
A. All advertisements and promotional materials containing the representation;
B. All materials that were relied upon in disseminating the representation; and
C. All tests, reports, studies, surveys, demonstrations, or other evidence in their possession or control that contradict, qualify, or call into question the representation, or the basis relied upon for the representation, including complaints and other communications with consumers or with governmental or consumer protection organizations.
VI.
IT IS FURTHER ORDERED that respondents, and their successors and assigns, shall deliver a copy of this order to all current and future principals, officers, directors, and other employees having more than a de minimis responsibility with respect to the subject matter of this order, and shall secure from each such person a signed and dated statement acknowledging receipt of the order. Respondents shall deliver this order to current personnel within thirty (30) days after the date of service of this order, and to future personnel within thirty (30) days after the person assumes such position or responsibilities.
VII.
IT IS FURTHER ORDERED that each respondent, and its successors and assigns, shall notify the Commission at least thirty (30) days prior to any change in the corporation that may affect compliance obligations arising under this order, including, but not limited to, dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor corporation; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this order; the proposed filing or filing of a bankruptcy petition; or a change in the corporate name or address. Provided, however, that, with respect to any proposed change in the corporation about which respondents learn less than thirty (30) days prior to the date such action is to take place, each respondent, and its successors and assigns, shall notify the
Commission as soon as is practicable after obtaining such knowledge.