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JEROME MILTON, INC. v. FTC

March 12, 1990

JEROME MILTON, INC., and JEROME MILTON SCHULMAN, Plaintiffs,
v.
FEDERAL TRADE COMMISSION, Defendant


Ilana Diamond Rovner, United States District Judge.


The opinion of the court was delivered by: ROVNER

I. INTRODUCTION

 ILANA DIAMOND ROVNER, UNITED STATES DISTRICT JUDGE

 Plaintiff Jerome Milton, Inc., a corporation engaged in the promotion and sale of health care products, and its president, Jerome Milton Schulman, brought this lawsuit to challenge certain conduct by the Federal Trade Commission (the "FTC" or "Commission"). Pending is the FTC's motion for summary judgment on the grounds that there has been no final agency action and, alternatively, that the dispute is not ripe for review. The Court agrees with the FTC that the letter is not final agency action and therefore dismisses the case for want of jurisdiction.

 II. FACTS

 The essential facts relevant to the pending motion are not in dispute. Plaintiffs manufacture and sell a product called Shane toothpaste. On September 24, 1984, the FTC issued an administrative complaint against plaintiffs, alleging that they had violated §§ 5 and 12 of the FTC Act, 15 U.S.C. §§ 45, 52. *fn1" The administrative complaint alleged that plaintiffs unfairly and deceptively represented, directly or by implication, that they had a reasonable basis for the following representations in their advertising of Shane toothpaste:

 
a. the use of Shane will cure, or alleviate the symptoms of, canker sores (recurrent aphthous stomatitis), cold sores (herpes simplex type I lesions), and the gum problems associated with gingivitis and periodontitis;
 
b. Shane is superior to other toothpastes in reducing or eliminating plaque; and
 
c. the use of Shane will lessen the sensitivity of the teeth to hot and cold substances.

 (Complaint, Ex. A at para. 5.)

 In accordance with § 5(b) of the FTC Act, *fn2" the administrative complaint was accompanied by a notice stating that a hearing would be held on November 5, 1984, and that the FTC had reason to believe that an order should issue that plaintiffs cease and desist making the representations at issue,

 
unless at the time of making such representation, respondents possess and rely upon competent and reliable evidence substantiating the representation. For purposes of this order, "competent and reliable evidence" shall mean a test, analysis, research project, or study in which the evidence has been objectively obtained and evaluated by persons qualified to do so, using procedures generally accepted in the relevant profession to yield accurate results.

 (Complaint, Ex. A at 5.)

 After three years of litigation before the FTC which plaintiffs describe as "financially exhaustive" (Complaint, para. 10), and during which plaintiffs voluntarily refrained from advertising Shane toothpaste, plaintiffs entered into settlement negotiations with the FTC. A proposed consent order was agreed to by plaintiffs and counsel for the FTC which contained the precise substantiation language of the order which the FTC had originally sought. On April 9, 1987, the Commission rejected this consent order. *fn3"

 A consent order was eventually reached which the Commission approved on October 26, 1987. Plaintiffs were ordered, in part, to:

 
cease and desist from representing, directly or by implication, that any such [oral hygiene] product:
 
a. cures or alleviates the symptoms of canker sores (recurrent aphthous stomatitis) or cold sores (herpes simplex type I lesions);
 
b. reduces the sensitivity of teeth to hot and cold substances;
 
c. is useful in the diagnosis, cure, mitigation, treatment, or prevention ...

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