| WILLIAM E. KOVACIC General Counsel JANET M. EVANS LOCAL COUNSEL Attorneys for Plaintiff, UNITED STATES DISTRICT COURT FEDERAL TRADE COMMISSION, Plaintiff, v. LIVERITE PRODUCTS, INC., CORINNE JACOBSON, individually and as an officer of Liverite Products, Inc., STEVEN JACOBSON, individually and as an officer of Liverite Products, Inc., SHERI GRANT, individually and d/b/a DIGIPRO and HEALTHY LIFE MARKETING, and JAMES GRANT, individually and d/b/a DIGIPRO, and HEALTHY LIFE MARKETING, Defendants. Civil No. STIPULATED FINAL ORDER FOR PERMANENT INJUNCTION AND SETTLEMENT OF CLAIMS FOR MONETARY RELIEF Plaintiff, the Federal Trade Commission ("FTC" or "Commission") filed a Complaint for permanent injunction and other relief against Liverite Products, Inc., Corinne Jacobson, Steven Jacobson, Sheri Grant and James Grant, pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b). Defendants deny the allegations in the Complaint, except jurisdictional facts, but are willing to agree to the entry of the following Stipulated Final Order for Permanent Injunction and Settlement of Claims for Monetary Relief ("Order"). The Commission and defendants have stipulated to the entry of the following Order in settlement of the Commission's Complaint against defendants. The Court, being advised in the premises, finds: FINDINGS 1. This Court has jurisdiction over the subject matter of this case and jurisdiction over all parties. Venue in the Central District of California is proper. 2. The Complaint states a claim upon which relief can be granted, and the Commission has the authority to seek the relief it has requested. 3. The activities of defendants are in or affecting commerce, as defined in 15 U.S.C. § 44. 4. Defendants waive all rights to seek judicial review or otherwise challenge or contest the validity of this Order. Defendants 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. 5. This action and the relief awarded herein are in addition to, and not in lieu of, other remedies as may be provided by law. 6. Each 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 all other persons or entities in active concern or participation with them, who receive actual notice of this Order by personal service or otherwise. DEFINITIONS For purposes of this Order, the following definitions shall apply: 1. Unless otherwise specified, "defendants" shall mean:
2. "The Liverite products" shall mean "Liverite the Ultimate Liver Aid," "Liverite 3 in 1 for Women," "Liverite 3 in 1 for Men," and "Liverite Sports" and any substantially similar product containing extract of animal liver. 3. "Competent and reliable scientific evidence" shall mean tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that has been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results. 4. "Clearly and conspicuously" shall mean as follows:
5. In the case of advertisements disseminated by means of an interactive electronic medium such as the Internet or online services, "in close proximity" shall mean on the same webpage, online service page, or other electronic page, and proximate to the triggering representation, and shall not include disclosures accessed or displayed through hyperlinks, pop-ups, interstitials or other means. 6. "Metatags" shall mean any word or words embedded in the source code of an Internet Web site that may be used by an Internet search engine in indexing websites for the purpose of selecting sites in response to an Internet user's search request. 7. "Food" and "drug" shall mean "food" and "drug" as defined in Section 15 of the FTC Act, 15 U.S.C. Section 55(b)-(c). 8. "Commerce" shall mean as defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. Section 44. 9. "Endorsement" shall mean as defined in 16 C.F.R. § 255.0(b). 10. "Employment" shall mean any affiliation with any business, non-profit, or government entity, including the performance of services as an officer, owner, manager, supervisor, employee, consultant, or independent contractor; and "Employer" shall mean any and all individuals or entities for whom any defendant performs services as an employee, consultant, or independent contractor. 11. A requirement that any defendant "notify the Commission" shall mean that the defendant shall send the necessary information via first-class mail, costs prepaid, to the Associate Director for Advertising Practices, Federal Trade Commission, 600 Pennsylvania Ave., N.W., Washington, D.C. 20580. Attn: FTC v. Liverite Products, Inc. et al., (C.D. Cal.). 12. The term "including" in this Order shall mean "without limitation." 13. 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. CONDUCT PROHIBITIONS I. IT IS HEREBY ORDERED that defendants, directly or through any corporation, subsidiary, division, or other device, and their officers, agents, servants, employees and all persons or entities in active concert or participation with them who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of the Liverite products or any other food, drug, or dietary supplement in or affecting commerce, shall not make any representation, in any manner, including by means of metatags, expressly or by implication, that such product:
unless, at the time it is made, defendants possess and rely upon competent and reliable scientific evidence that substantiates the representation. II. IT IS FURTHER ORDERED that defendants, directly or through any corporation, subsidiary, division, or other device, and their officers, agents, servants, employees and all persons or entities in active concert or participation with them who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any food, drug, or dietary supplement in or affecting commerce, shall not make any representation, in any manner, including by means of metatags, expressly or by implication, regarding the ability of such product to treat, cure, alleviate the symptoms of, prevent, or reduce the risk of developing any disease or disorder, unless, at the time the representation is made, defendants possess and rely upon competent and reliable scientific evidence that substantiates the representation. III. IT IS FURTHER ORDERED that defendants, directly or through any corporation, subsidiary, division, or other device, and their officers, agents, servants, employees and all persons or entities in active concert or participation with them who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of the Liverite products in or affecting commerce, are permanently restrained and enjoined from making any representation that such product is "the ultimate liver aid," or any substantially similar representation, unless, at the time the representation is made, defendants possess and rely upon competent and reliable scientific evidence that substantiates the representation. IV. IT IS FURTHER ORDERED that defendants, directly or through any corporation, subsidiary, division, or other device, and their officers, agents, servants, employees and all persons or entities in active concert or participation with them who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any food, drug, or dietary supplement in or affecting commerce, shall not misrepresent, in any manner, including by means of metatags, expressly or by implication, the existence, contents, validity, results, conclusions, or interpretations of any test, study, or research. V. IT IS FURTHER ORDERED that defendants, directly or through any corporation, subsidiary, division, or other device, and their officers, agents, servants, employees and all persons or entities in active concert or participation with them who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any food, drug, or dietary supplement in or affecting commerce, shall not represent, in any manner, including by means of metatags, expressly or by implication, that the experience represented by any user testimonial or endorsement of the product represents the typical or ordinary experience of members of the public who use the product, unless:
VI. Nothing in this order shall prohibit defendants from making any representation for any drug that is permitted in labeling for such drug under any tentative final or final standard promulgated by the Food and Drug Administration, or under any new drug application approved by the Food and Drug Administration. Nothing in this order shall prohibit respondents from making any representation for 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. MONETARY RELIEF VII. IT IS FURTHER ORDERED that:
RECORD KEEPING VIII. IT IS FURTHER ORDERED that defendants, for a period of five (5) years after the last date of dissemination of any representation covered by this Order, shall maintain and upon request make available to the Commission for inspection and copying:
MONITORING IX. IT IS FURTHER ORDERED that defendants shall deliver a copy of this Order to each of defendants' current and future principals, officers, directors, and managers, and to all current and future employees, agents, and representatives having sales, advertising, or policy 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. Defendants 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. Defendants shall maintain and upon request make available to the Commission for inspection and copying each such signed and dated statement. X. IT IS FURTHER ORDERED that defendant LPI 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 a 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 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 LPI learns less than thirty (30) days prior to the date such action is to take place, it shall notify the Commission as soon as is practicable after obtaining such knowledge. XI. IT IS FURTHER ORDERED that defendants Corinne Jacobson, Steven Jacobson, Sheri Grant, and James Grant, within five (5) business days of entry of this Order, shall notify the Commission of (1) their respective residence addresses and mailing addresses; (2) their respective telephone numbers; (3) the name, address, and telephone numbers of their respective employers; (4) the full names of their respective employers' principals; (5) if applicable, the names of their respective supervisors, and (6) a description of their respective employers' activities, and the defendants' respective duties and responsibilities. XII. IT IS FURTHER ORDERED that defendants Corinne Jacobson, Steven Jacobson, Sheri Grant, and James Grant, for a period of five (5) years after the date of service of this Order, shall notify the Commission of any changes in their respective residence or mailing addresses or employment status. Notice of changes in employment status shall include, for each respective defendant: (1) the new employer's name, address and telephone number; (2) if applicable, the full names of his or her supervisors and the people to whom he or she reports; and, (3) a description of the employer's activities, and the defendant's duties and responsibilities. XIII. IT IS FURTHER ORDERED that defendants shall, within sixty (60) calendar days after the date of entry of this Order, and at such other times as the Commission may require, file with the Commission a report, in writing, setting forth in detail the manner and form in which they have complied with this Order. XIV. IT IS FURTHER ORDERED that 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:
RIGHT TO REOPEN XV. IT IS FURTHER STIPULATED AND ORDERED that, within fifteen days after entry of this Order, defendants Corinne Jacobson and Steven Jacobson each shall submit to the Commission a truthful sworn statement, in the form shown on Appendix B, that shall acknowledge receipt of this Order and shall reaffirm and attest to the truth, accuracy and completeness of the financial statements previously submitted to the Commission. The Commission's agreement to this Order is expressly premised on the truthfulness, accuracy and completeness of such financial statements. If, upon motion by the Commission, the Court finds that the such financial statement contains any material misrepresentation or omission, the Commission may request that this Order be reopened to allow the Commission to modify the monetary liability of the defendants; provided, however, that in all other respect this Order shall remain in full force and effect unless otherwise ordered by the Court; and, provided further, that proceedings instituted under this provision 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 that the Commission may initiate to enforce this Order. For purposes of this Paragraph XV, defendants waive any right to contest any of the allegations in the Complaint. ACKNOWLEDGMENT OF RECEIPT OF ORDER XVI. IT IS FURTHER ORDERED that within five (5) business days from the date of entry of this Order, defendants Corinne Jacobson and Steven Jacobson each shall submit to the Commission a truthful sworn statement, in the form shown on Appendix B, that shall acknowledge receipt of this Order. Within five (5) business days from the date of entry of this Order, defendants Sheri Grant and James Grant each shall submit to the Commission a truthful sworn statement, in the form shown on Appendix C, that shall acknowledge receipt of this Order. RETENTION OF JURISDICTION XVII. IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order. SO STIPULATED:
IT SO ORDERED DATED: _____________________________________ APPENDIX A Promissory Note Date: Fifty Thousand Dollars FOR VALUE RECEIVED, the undersigned, Corinne Jacobson and Steven Jacobson, jointly and severally, promise to pay to the Federal Trade Commission together with its assigns ("Holder") at such place as the Holder may designate in writing, in lawful money of the United States of America, the principal sum of Fifty Thousand Dollars ($50,000.00). This Note shall be paid in ten installments as follows: (1) within 30 days of the date of entry of the Stipulated Final Order and Settlement of Claims for Monetary Relief ("the Order"), defendants Corinne Jacobson and Steven Jacobson, jointly and severally, shall pay Five Thousand Dollars ($5,000.00). Thereafter, Corinne Jacobson and Steven Jacobson, jointly and severally, shall pay another Five Thousand Dollar ($5,000.00) installment before the end of each 30 day period that follows the previous installment's due date, until nine additional installments and the balance of Forty-Five Thousand Dollars ($45,000.00) have been paid within 300 days after entry of the Order. In the event of any default on any obligation to make payment under this Note, 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 the payment is due, the entire unpaid amount shall immediately become due and payable. The Maker and any endorser or guarantor hereof shall have the right to prepay this Note at any time in whole or in part without premium or penalty. The Maker and any endorsers waive presentment, notice of dishonor and protest; and agree that any extension of the time of payment of all or any part of this Note may be made before, at, or after maturity by agreement with the Holder without notice to and without releasing the liability of any other party to this Note. This Note is secured by the residence of Corinne and Steven Jacobson, located at 50 Via Burrone, Newport Coast, California 92657, subject only to the pre-existing security interest in favor of Washington Mutual, filed of record in the public records of the County of Orange, California, or to any subsequent security interest created as a result of the refinance of the current mortgage held by Washington Mutual, so long as the principal amount refinanced is no greater than the principal amount of the mortgage with Washington Mutual. WITNESS the following signatures and seals: ____________________________________ ____________________________________ APPENDIX B UNITED STATES DISTRICT COURT FEDERAL TRADE COMMISSION, Plaintiff, v. LIVERITE PRODUCTS, INC., et al. Defendants. Civil No. AFFIDAVIT OF [DEFENDANT CORINNE JACOBSON OR STEVEN JACOBSON] [Defendant], being duly sworn, hereby states and affirms: 1. My name is ____________________. I am a citizen of the United States and am over the age of eighteen. I have personal knowledge of the matters discussed in this declaration, and if called as a witness, I could and would competently testify as to the matters stated herein. I am a defendant in the above captioned action. 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 a copy of the Stipulated Final Order and Settlement of Claims for Monetary Relief, which was signed by the Honorable ___________, United States District Court Judge for the Central District of California. A true and correct copy of the Order that I received is appended to this Affidavit. 4. I reaffirm and attest to the truthfulness, accuracy and completeness of the financial statements that I submitted to the Federal Trade Commission on or about __________. I hereby declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on (date) __________, at (city, state) __________, __________.
STATE OF __________ BEFORE ME this day personally appeared ________________________, who being first duly sworn, deposes and says that s/he has read and understands the foregoing statement and that s/he has executed the same for the purposes contained therein. SUBSCRIBED AND SWORN TO before me this ______day of ____________, 2001 by __________________________________________. S/he is personally known to me or has presented (state identification) ________________________________ as identification.
Commission Number UNITED STATES DISTRICT COURT FEDERAL TRADE COMMISSION, Plaintiff, v. LIVERITE PRODUCTS, INC., et al. Defendants. Civil No. AFFIDAVIT OF [DEFENDANT SHERI GRANT OR JAMES GRANT] [Defendant], being duly sworn, hereby states and affirms: 1. My name is ____________________. I am a citizen of the United States and am over the age of eighteen. I have personal knowledge of the matters discussed in this declaration, and if called as a witness, I could and would competently testify as to the matters stated herein. I am a defendant in the above captioned action. 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 a copy of the Stipulated Final Order and Settlement of Claims for Monetary Relief, which was signed by the Honorable ___________, United States District Court Judge for the Central District of California. A true and correct copy of the Order that I received is appended to this Affidavit. I hereby declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on (date) __________, at (city, state) __________, __________.
STATE OF __________ BEFORE ME this day personally appeared ________________________, who being first duly sworn, deposes and says that s/he has read and understands the foregoing statement and that s/he has executed the same for the purposes contained therein. SUBSCRIBED AND SWORN TO before me this ______day of ____________, 2001 by __________________________________________. S/he is personally known to me or has presented (state identification) ________________________________ as identification.
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