UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION

 
FEDERAL TRADE COMMISSION,  Plaintiff,

v.

MEDIMAX, INC., a Delaware Corporation; DAVID M. ROTHBART, individually and as an officer and director of Medimax, Inc., Defendants.



Case No. 99-1485-CIV-ORL-99A



STIPULATED FINAL ORDER FOR PERMANENT INJUNCTION
AND
SETTLEMENT OF CLAIMS FOR MONETARY RELIEF

On November 22, 1999, plaintiff, the Federal Trade Commission ("FTC" or "Commission"), commenced this action by filing a Complaint for permanent injunction and other relief pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C.  53(b) against David M. Rothbart, individually and doing business as Medimax, Inc. The Complaint was subsequently amended to name Medimax, Inc., a Delaware corporation, as a defendant.

The Commission and defendants have stipulated to the entry of the following Stipulated Final Order for Permanent Injunction and Settlement of Claims for Monetary Relief ("Order") in settlement of the Commission's complaint against defendants. The Court, being advised in the premises, finds as follows:

FINDINGS

1. In its complaint, the Commission alleged that defendants violated Sections 5(a) and 12 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. 45(a) and 52. The Commission sought both permanent injunctive relief and consumer redress for alleged deceptive acts or practices by defendants in connection with the marketing and sale of tests that purportedly detected the human immunodeficiency virus in human blood.

2. The Commission has the authority under Section 13(b) of the FTC Act, 15 U.S.C. 53(b), to seek the relief it has requested.

3. This Court has jurisdiction over the subject matter of this action and has jurisdiction over defendants. Venue in the Middle District of Florida is proper, and the Complaint states a claim upon which relief may be granted against the defendants under Sections 5(a) and 12 of the FTC Act, as well as Section 13(b).

4. The activities of defendants, as alleged in the Complaint, are in or affecting commerce, as defined in Section 4 of the FTC Act, 15 U.S.C. 44.

5. The Commission and defendants stipulate and agree to this Order, without trial or final adjudication of any issue of fact or law, to settle and resolve all matters in dispute arising from the Complaint to the date of entry of this Order. By entering this stipulation, defendants do not admit or deny any of the allegations set forth in the Complaint, other than jurisdictional facts.

6. Defendants waive all rights to seek judicial review or otherwise challenge or contest the validity of this Order. They also waive any claim that they may have held under the Equal Access to Justice Act, 28 U.S.C. 2412, concerning the prosecution of this action to the date of this Order. Each settling party shall bear its own costs and attorneys' fees.

7. Entry of this Order is in the public interest.

8. Pursuant to Federal Rule of Civil Procedure 65(d), the provisions of this Order are binding upon defendants and their officers, agents, servants, employees, and attorneys, independent contractors, and upon those persons or entities in active concert or participation with defendants who receive actual notice of this Order by personal service or otherwise.

DEFINITIONS

IT IS THEREFORE STIPULATED AND ORDERED, that for the purposes of this Order, the following definitions shall apply:

1. "Defendants" shall refer to the following:

A. Medimax, Inc. ("Medimax"), and its successors or assigns;
 
B. David M. Rothbart ("Rothbart"), an individual; and
 
C. any combination of the foregoing.

2. "Participating associates" shall refer to defendants' officers, agents, servants, employees, attorneys, independent contractors, and those persons or entities in active concert or participation with them who receive actual notice of this Order by personal service or otherwise.

3. "Human immunodeficiency virus" ("HIV") shall refer to all strains of the virus that causes acquired immunodeficiency syndrome ("AIDS"), an infectious disease characterized by immune system failure.

4. "HIV test" shall refer to any product that is advertised, marketed, promoted, offered for sale, distributed or sold with express or implied representations that the product will or may detect the presence of HIV in any human, including the "HIV 1 / 2 Whole Blood Test" and any other substantially similar product.

5. For the purposes of this Order, "device" means "device" as defined in Section 15(d) of the FTC Act, 15 U.S.C. 55(d).

6. The terms "and" and "or" in this Order shall be construed conjunctively or disjunctively as necessary to make the applicable sentence or phrase inclusive rather than exclusive.

7. A requirement that any defendant "notify," "transfer," or "provide" any information or material to the Commission, shall mean that the defendant shall send the necessary information or material via first-class mail, costs prepaid, to:

Associate Director for Advertising Practices
Federal Trade Commission
Room S-4002
600 Pennsylvania Ave., N.W.
Washington, DC 20580
Re: FTC v. Medimax, et al., Matter No. 002-3007

ORDER

I. BAN ON CERTAIN ACTIVITIES

IT IS THEREFORE ORDERED ADJUDGED AND DECREED that defendants and their participating associates, directly or indirectly, or acting through any corporation, entity, or person under their control, are permanently enjoined from engaging, participating, or assisting in any manner or capacity whatsoever, in the advertising, marketing, promotion, offering for sale, distribution or sale of any HIV test.

IT IS FURTHER ORDERED that defendants and their participating associates, directly or indirectly, or acting through any corporation, entity, or person under their control, are permanently enjoined from engaging, participating, or assisting in any manner or capacity whatsoever, in the advertising, marketing, promotion, offering for sale, distribution or sale of any device that is not approved by the U.S. Food and Drug Administration ("FDA") pursuant to the Federal Food, Drug and Cosmetic Act.

II. PROHIBITED MISREPRESENTATIONS

IT IS FURTHER ORDERED that defendants and their participating associates, directly or indirectly, or acting through any corporation, entity, or person under their control, are permanently enjoined from making, or assisting others in making, expressly or by implication, any material false or misleading oral or written statement or representation in connection with the advertising, marketing, promotion, offering for sale, distribution or sale of any HIV test or other device, including but not limited to misrepresenting, in any manner, directly or by implication, the efficacy or accuracy of any HIV test or other device.

III. MONETARY RELIEF

IT IS FURTHER ORDERED that:

A. Within ten (10) business days after entry of this Order, Huntington Bank shall transfer to the Commission the sum of FIVE THOUSAND ONE HUNDRED SIXTEEN DOLLARS AND FIFTEEN CENTS ($5116.15) from account number 01603501112 established by defendants and previously frozen by stipulation of the parties and by court order. Upon transfer of said funds, the asset freeze established by the stipulated preliminary injunction in this action shall be released.

B. All funds collected by the Commission pursuant to this Section shall be deposited into an account to be maintained by the Commission or its agent. Upon final disposition of this action, such funds shall be either (1) used to provide consumer redress and any administrative costs associated with providing such redress, or (2) paid to the United States Treasury as equitable disgorgement, if the Commission in its sole discretion deems that consumer redress is impractical. If the Commission in its sole discretion determines that consumer redress is practical, it shall submit a plan for the disbursement of funds to the Court for review and approval.

IV. RECORD KEEPING PROVISIONS

IT IS FURTHER STIPULATED AND ORDERED that, for a period of five (5) years from the date of entry of this Order, defendants, and defendants' participating associates, in connection with defendant Medimax or any business where (1) defendant Rothbart is the majority owner of the business, or directly or indirectly manages or controls the business, and where (2) the business engages in the advertising, marketing, promotion, offering for sale, distribution or sale of any HIV test or other device, are permanently enjoined from failing to have such business create, and from failing to have such business retain for a period of three (3) years following the date of such creation, unless otherwise specified:

A. Books, records and accounts that, in reasonable detail, accurately and fairly reflect the cost of goods or services sold, revenues generated, and the disbursement of such revenues;

B. Records accurately reflecting: the name, address, and telephone number of each person employed in any capacity by such business, including as an independent contractor; that person's job title or position; the date upon which the person commenced work; and the date and reason for the person's termination, if applicable;

C. Records containing the names, addresses, telephone numbers, dollar amounts paid, quantity of items or services purchased, and description of items or services purchased, for all purchasers to whom such business has sold, invoiced or shipped any goods or services;

D. Records that reflect, for every customer complaint or refund request, whether received directly or indirectly or through any third party: (1) the customer's name, address, telephone number and the dollar amount paid by the customer; (2) the written complaint or refund request, if any, and the date of the complaint or refund request; (3) the basis of the complaint, including the name of any salesperson complained against, and the nature and result of any investigation conducted concerning any complaint; (4) each response and the date of the response; (5) any final resolution and the date of the resolution; and (6) in the event of a denial of a refund request, the reason for the denial;

E. Copies of all advertisements, promotional materials, sales scripts, training materials, or other marketing materials utilized; and

F. All documents evidencing or referring to the accuracy or efficacy of any HIV test or other device advertised, marketed, promoted, offered for sale, distributed or sold by such business.

V. MONITORING

IT IS FURTHER STIPULATED AND ORDERED, in order to monitor compliance with this Order, that:

A. For a period of five (5) years from the date of entry of this Order, defendants shall deliver a copy of this Order to all current and future principals, officers, directors, and managers, and to all current and future employees (whether designated as employees, consultants, independent contractors or otherwise), agents, and representatives having responsibilities with respect to the advertising, marketing, promotion, offering for sale, distribution or sale of any HIV test or other device, and shall secure from each such person a signed and dated statement acknowledging receipt of the Order. Defendants shall deliver this Order to such current personnel within ten (10) days after the date of service of this Order, and to such future personnel within ten (10) days after the person assumes such position or responsibilities. Defendants shall maintain, and upon reasonable notice make available to representatives of the Commission, the original signed and dated acknowledgments of the receipt of the Order.

B. Sixty days (60) days after the date of entry of this Order, defendants shall provide a written report to the Commission, signed under penalty of perjury, detailing their past and present efforts to comply with this Order.

C. For a period of five (5) years from the date of entry of this Order, defendant Medimax shall notify the Commission of any proposed change in its structure, such as dissolution, assignment, sale, merger, creation or dissolution of subsidiaries, proposed filing of a bankruptcy petition, or change in the business or corporate name or address, or any other change that may affect compliance obligations arising out of this Order, thirty (30) days prior to the effective date of any proposed change; provided, however, that, with respect to any proposed change in the business entity about which defendant Medimax learns less than thirty (30) days prior to the date such action is to take place, defendant Medimax shall notify the Commission as soon as is practicable after learning of such proposed change.

D. For a period of five (5) years from the date of entry of this Order, defendants shall permit representatives of the Commission, within forty-eight (48) hours of receipt of written notice from the Commission:

(1) access during normal business hours to any office, or facility storing documents, of any business owned, managed, or controlled in whole or in part by defendants, to inspect and copy all documents belonging to such business relating in any way to the advertising, marketing, promotion, offering for sale, distribution or sale of any HIV test or other device; and shall permit Commission representatives to remove documents relating in any way to the advertising, marketing, promotion, offering for sale, distribution or sale of any HIV test or other device for a period not to exceed five business days so that the documents may be inspected, inventoried, and copied; provided that defendants may copy documents before they are removed by the Commission;
 
(2) refrain from interfering with any duly authorized representatives of the Commission interviewing their employers, employees (whether designated as employees, consultants, independent contractors or otherwise), agents, or representatives, about any matter relating in any way to the advertising, marketing, promotion, offering for sale, distribution or sale of any HIV test or other device; and
 
(3) upon reasonable written request by any duly authorized representative of the Commission, submit written reports (under oath, if requested), and produce documents, on forty-eight hours notice, relating in any way to the advertising, marketing, promotion, offering for sale, distribution or sale of any HIV test or other device.

E. The Commission is authorized to monitor the compliance of defendants with this Order by all lawful means, including but not limited to the following means:

(1) The Commission is authorized, without further leave of court, to obtain discovery from any person or entity in the manner provided by Chapter V of the Federal Rules of Civil Procedure, Fed. R. Civ. P. 26-37, including the use of compulsory process pursuant to Fed. R. Civ. P. 45, for the purpose of monitoring and investigating the compliance of defendants with this Order;
 
(2) The Commission is authorized to use representatives posing as customers and suppliers to defendants, to defendants' agents, representatives and employees (whether designated as employees, consultants, independent contractors or otherwise), or to any other entity owned, managed or controlled in whole or in part by defendants, without the necessity of identification or prior notice; and
 
(3) Nothing in this Order shall limit the Commission's lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. 49, 57b-1, to investigate whether defendants have violated any provision of this Order or Section 5 or 12 of the FTC Act, 15 U.S.C. 45, 52.

VI. COOPERATION WITH THE COMMISSION

IT IS FURTHER STIPULATED AND ORDERED that defendants shall, in connection with this action or any subsequent investigations related to or associated with the transactions or the occurrences that are the subject of the Commission's Complaint, cooperate in good faith with the Commission and appear at such places and times as the Commission shall reasonably request, after written notice to defendants or their counsel of record, for interviews, conferences, pretrial discovery, review of documents, and for such other matters as may be reasonably requested by the Commission. If requested in writing by the Commission, defendants shall appear and provide truthful testimony in any trial, deposition, or other proceeding related to or associated with the transactions or the occurrences that are the subject of the Complaint, without the service of a subpoena.

VII. ACKNOWLEDGMENT OF RECEIPT OF ORDER BY DEFENDANTS

IT IS FURTHER STIPULATED AND ORDERED that, within five (5) business days after receipt by defendants of this Order as entered by the Court, defendant Rothbart, individually and on behalf of defendant Medimax, Inc., shall execute and submit to the Commission a truthful sworn statement, in the form shown on Appendix A, that shall acknowledge receipt of this Order.

VIII. RIGHT TO REOPEN

IT IS FURTHER STIPULATED AND ORDERED THAT the Commission's agreement to this Order is expressly premised upon the truthfulness, accuracy, and completeness of defendants' financial information as represented in defendant Rothbart's deposition testimony of December 1, 1999 and defendants' sworn statements, which contain material information relied upon by the Commission in negotiating and agreeing to the terms of this Order. If upon motion by the Commission, this Court finds that the above-referenced statements and deposition testimony of defendants failed to disclose any material asset, materially misrepresented the value of any asset, materially misrepresented or failed to disclose the extent of HIV test sales by defendants, or made any other material misrepresentation or omission, the Commission may request that this Order be reopened for the sole purpose of modifying the terms specified in Section III; provided however that in all other respects this Order shall remain in full force and effect unless otherwise ordered by the Court and that defendants have no right to contest any of the allegations in the Commission's complaint in this matter in any proceedings brought pursuant to this Section; and provided further, that proceedings instituted under this Section would be in addition to, and not in lieu of, any other civil or criminal remedies as may be provided by law, including any other proceedings the Commission may initiate to enforce this Order.

IX. RETENTION OF JURISDICTION

IT IS FURTHER STIPULATED AND ORDERED that this Court shall retain jurisdiction over this matter for purposes of the construction, modification and enforcement of this Order.

SO STIPULATED:
DATED:

DARREN A. BOWIE
KAREN JAGIELSKI
Federal Trade Commission
600 Pennsylvania Ave., N.W., Room S-4002
Washington, DC 20580
(202) 326-2018, -2509 (telephone)
(202) 326-3259 (facsimile)

DONNA A. BUCELLA
United States Attorney

By: ANITA M. CREAM

Assistant United States Attorney
80 North Hughey Avenue
Orlando, FL 32801
(407) 648-7500 (telephone)
(407) 648-7643 (facsimile)

Attorneys for Plaintiff
Federal Trade Commission

DATED:

DAVID M. ROTHBART, individually and on behalf of Medimax, Inc.

DATED:

HARLAN L. PAUL
Florida Bar No. 284955
James, Zimmerman, Paul & Huddleston, LLP
431 East New York Avenue
P.O. Box 208
DeLand, FL 32721-0208
(904) 734-1200 (telephone)
(904) 734-1295 (facsimile)

Attorney for David M. Rothbart and Medimax, Inc


IT IS SO ORDERED, this day of , 2000 .

UNITED STATES DISTRICT JUDGE

APPENDIX A

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION

 
FEDERAL TRADE COMMISSION, Plaintiff,

v.

MEDIMAX, INC., a Delaware Corporation; DAVID M. ROTHBART, individually and as an officer and director of Medimax, Inc., Defendants.




Case No. 99-1485-CIV-ORL-99A




AFFIDAVIT OF DAVID M. ROTHBART

David M. Rothbart, being duly sworn, hereby states and affirms as follows:

1. My name is David M. Rothbart. I am a defendant in the above-captioned civil action. I am a citizen of the United States and am over the age of eighteen. I have personal knowledge of the facts set forth in this Affidavit, and if called as a witness, I could and would competently testify as to the matter stated herein.

2. My current business address is ________________________. My current business telephone number is ________________. My current residential address is ________________. My current residential telephone number is _____________.

3. On [date], I received, individually and on behalf of Medimax, Inc., a copy of the Stipulated Final Order for Permanent Injunction and Settlement of Claims for Monetary Relief, which was signed by the Honorable [name of Judge] and entered by the Court on [date of entry of Order]. A true and correct copy of the Order that I received is appended to this Affidavit.

4. I affirm and attest to the truthfulness, accuracy and completeness of the financial statements that I submitted to the Federal Trade Commission on or about December 1, 1999, and my deposition testimony in this action on or about December 1, 1999.

I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct. Executed on [date], at [city and state].

______________________________
David M. Rothbart, individually and
on behalf of Medimax, Inc

BEFORE ME this day personally appeared David M. Rothbart, who being first duly sworn, deposes and says that he has read and understands the foregoing statement and that he has executed the same for the purposes contained therein.

SUBSCRIBED AND SWORN to before me this _____ day of _________, 2000, by David M. Rothbart. He is personally known to me or has presented (state identification) as identification.

PRINT NAME

NOTARY PUBLIC,

STATE OF

Commission Number

My Commission Expires:

Affix Seal