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In the Matter of ) ) ECM Biofilms, Inc., ) Docket No PUBLIC DOCUMENT UNITED STATES OF AMERICA BEFORE THE FEDERAL TRADE COMMISSION 09 26 2014 ____________________________________ ) In the Matter of ) ) ECM BioFilms, Inc., ) Docket No. 9358 a corporation, also d/b/a ) Enviroplastics International ) ) COMPLAINT COUNSEL’S AMENDED POST-TRIAL BRIEF1 1 The Amended Post-Trial Brief reflects only non-substantive changes, e.g., typographical errors, pagination and internal citations that were inadvertently omitted. PUBLIC DOCUMENT TABLE OF CONTENTS TABLE OF AUTHORITIES .......................................................................................................... v STATEMENT OF THE CASE ....................................................................................................... 1 STATEMENT OF FACTS ............................................................................................................. 2 I. PLASTICS AND THE ENVIRONMENT .............................................................................. 2 A. Conventional Plastics Do Not Biodegrade. ......................................................................... 2 B. Persistence of Plastic in the Environment. ........................................................................... 3 II. ECM MARKETS ITS “REVOLUTIONARY” ADDITIVE ................................................... 4 A. ECM’s Express Biodegradable Claims: Complete Biodegradation in 9 months to 5 years in a Landfill. ................................................................................................................................ 5 B. ECM’s Modified Qualified Claims: “Some Period Greater than a Year.” ......................... 7 C. ECM’s Unqualified Claims: “Biodegradable” Advertising. ............................................... 9 D. ECM’s Testing Claim: Proven to Work............................................................................ 12 1. ECM’s Testing. .............................................................................................................. 13 2. The Ecological Assessment is Unreliable and Irrelevant. .............................................. 14 a. ASTM D5511 Testing ................................................................................................ 16 3. ECM “Certifies” Performance. ...................................................................................... 17 III. ECM SELLS THE RIGHT TO ADVERTISE THAT ECM PLASTICS ARE BIODEGRADABLE..................................................................................................................... 19 IV. NEITHER ECM NOR ITS CUSTOMERS ARE BIODEGRADATION EXPERTS. ..... 21 A. ECM Lacks Biodegradation Expertise.............................................................................. 22 B. ECM’S Customers Lack Sophistication to Meaningfully Evaluate ECM’s Purported Substantiation. ........................................................................................................................... 23 V. ECM REPEATEDLY IGNORED EVIDENCE THAT ITS ADDITIVE DOES NOT WORK. ......................................................................................................................................... 26 ARGUMENT ................................................................................................................................ 26 I. ECM MADE DECEPTIVE ADVERTISING CLAIMS. ...................................................... 26 A. ECM Disseminated Advertisements Conveying The Claims Alleged In The Complaint. 27 1. ECM Made Express Biodegradable Claims. .................................................................. 28 2. ECM Also Made Implied Biodegradable Claims. ......................................................... 29 a. The Evidence Establishes That Substantial Numbers of Consumers Understand “Biodegradable” Claims to Imply Within One Year. ....................................................... 30 i PUBLIC DOCUMENT i. The Number of Deceived Consumers Vastly Exceeds The Threshold For A “Substantial Minority.” ................................................................................................. 30 ii. The Convergence of All Four Studies Provides Overwhelming Evidence That Substantial Numbers of Consumers Understand “Biodegradable” Claims to Imply Within One Year. .......................................................................................................... 31 iii. Standing Alone, Professor Frederick’s Research Establishes That Substantial Numbers of Consumers Understand “Biodegradable” Claims To Imply Within One Year. .............................................................................................................................. 32 (a) Survey Research Need Not Be Perfect—Only Reasonably Reliable and Probative. .................................................................................................................. 33 (b) Professor Frederick’s Research Is Reasonably Reliable and Probative. ......... 34 (1) Background Regarding Professor Frederick’s GCS Surveys. ......................... 34 (2) Undisputed Evidence Establishes That GCS Is Reasonably Representative of American Consumers. ........................................................................................... 35 (3) Both Parties’ Experts’ Testimony Establishes That Demographic Information About Survey Respondents Is Unnecessary if the Overall Sample Is Representative. ...................................................................................................... 39 (4) ECM Does Not Challenge Professor Frederick’s Questions. ......................... 40 (c) Substantial Numbers of Consumers Understand “Biodegradable” To Mean Within One Year. ...................................................................................................... 41 (d) ECM’s “Some Period Greater Than a Year” Implies Faster Biodegradation to Many Consumers. ..................................................................................................... 42 (e) ECM’s Critiques Are Baseless. ....................................................................... 42 (1) Professor Frederick Correctly Employed a Bright-Line Rule. ........................ 42 (2) ECM’s Other Challenges To Professor Frederick’s Coding Are Baseless. .... 44 (3) A Tiny Number of “Protest” Responses Among 20,000 Responses To Open- Ended Questions Is Irrelevant. .............................................................................. 45 (4) There Is No Credible Evidence of “Disinterest Bias.” .................................... 46 (5) The Absence of “Screening Questions” Is Irrelevant. .................................... 47 iv. Standing Alone, Professor Stewart’s Research Is Sufficient To Establish That Substantial Numbers of Consumers Understand “Biodegradable” To Imply Within One Year. .............................................................................................................................. 48 (a) Dr. Stewart’s Data Establishes That Substantial Numbers of Consumers Understand “Biodegradable” To Mean Within One Year. ....................................... 48 (b) Dr. Stewart’s Data Establishes That Substantial Numbers of Consumers Understand ECM’s “Some Period Greater Than a Year” Qualifier To Mean Within One Year. .................................................................................................................. 49 v. Viewed Together, the APCO and Synovate Studies Establish That Substantial Numbers of Consumers Understand “Biodegradable” To Imply Within One Year. .... 49 ii PUBLIC DOCUMENT vi. ECM Offers No Reasonably Reliable and Probative Contrary Evidence. ............ 51 (a) Dr. Stewart Never Asked the Most Important Question. ................................ 51 (b) Dr. Stewart’s Studies Are Grossly Flawed. ..................................................... 51 (1) Dr. Stewart Designed His Landline Consumer Study To Create Confusion. 51 (2) Dr. Stewart’s Anachronistic Landline Study Was Psychographically and Demographically Unrepresentative. ..................................................................... 53 (3) Dr. Stewart Readily Admitted That His Ten-Customer Survey Is Useless (Otherwise, It Would Support Complaint Counsel). ............................................ 54 II. ECM’S CLAIMS ARE FALSE AND UNSUBSTANTIATED. ........................................... 54 A. ECM’s Express and Implied Claims are False. ................................................................ 55 1. ECM’s Experts Concede ECM’s Biodegradation Claims Are False. ........................... 55 2. Physical Blends Do Not Affect Plastic Recalcitrance. ................................................. 56 3. Tests Show No Biodegradation of ECM Plastic. .......................................................... 59 B. ECM Lacks a Reasonable Basis for its Claims. ................................................................ 61 1. Competent and Reliable Scientific Evidence is the Appropriate Standard of Substantiation for Green Claims. ........................................................................................... 62 a. Pfizer Factors Analysis ............................................................................................. 62 i. The Type of Claim and Products at Issue Demand Biodegradability Claims be Supported by a High Level of Substantiation. .............................................................. 62 ii. The Potential Harm to Consumers of Allowing False Claims is Significant. ...... 63 iii. ECM Does Not Face Substantial Hardship
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