Paul M. Warner
United States Attorney

By:

Utah State Bar Number
Assistant United States Attorney/Lead Counsel
Attorney For United States of America
185 South State Street, Suite 400
Salt Lake City, Utah 84111
(801) 524-5682

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION

 

UNITED STATES OF AMERICA, Plaintiff,

v.

MRS. FIELDS FAMOUS BRANDS, INC.,
MRS. FIELDS' HOLDING COMPANY, INC., and
MRS. FIELDS' ORIGINAL COOKIES, INC., corporations, Defendants.

 

 


Civil Action No.

CONSENT DECREE AND ORDER FOR CIVIL PENALTIES, INJUNCTIVE, AND OTHER RELIEF

WHEREAS plaintiff, the United States of America, has commenced this action by filing the Complaint herein; defendants have waived service of the Summons and Complaint; the parties have been represented by the attorneys whose names appear hereafter; and the parties have agreed to settlement of this action upon the following terms and conditions, without adjudication of any issue of fact or law and without defendants admitting liability for any of the matters alleged in the Complaint or that the facts as alleged in the Complaint, other than the jurisdictional facts, are true;

THEREFORE, on the joint motion of plaintiff and defendants, it is hereby ORDERED, ADJUDGED, and DECREED as follows:

1. This Court has jurisdiction of the subject matter and of the parties.

2. The Complaint states a claim upon which relief may be granted against the defendants under Sections 1303(c) and 1306(d) of the Children's Online Privacy Protection Act of 1998 ("COPPA"), 15 U.S.C.  6501-6506, 6502(c), and 6505(d), and Sections 5(a)(1), 5(m)(1)(A), 13(b), and 16(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. 41-58, 45(a)(1), 45(m)(1)(A), 53(b), and 56(a).

DEFINITIONS

3. For the purposes of this Consent Decree, the term "Rule" means the Federal Trade Commission's Children's Online Privacy Protection Rule, 16 C.F.R. Part 312.

4. For the purposes of this Consent Decree, the terms "child," "collects," "collection," "Commission," "delete," "disclosure," "Internet," "online contact information," "operator," "parent," "person," "personal information," "third party," "verifiable consent," and "website or online service directed to children," are defined as those terms are defined in Section 312.2 of the Rule, 16 C.F.R.  312.2.

INJUNCTION

5. Defendants, their successors and assigns, and their officers, agents, servants, employees and attorneys, and all other persons in active concert or participation with any one or more of them who receive actual notice of this Consent Decree by personal service or otherwise, are hereby enjoined, directly or through any corporation, subsidiary, division, website, or other device, from violating any provision of the Rule. A copy of the current Rule is attached hereto as "Appendix A" and incorporated herein as if fully set forth verbatim.

6. In the event the Rule is hereafter amended or modified, defendants' compliance with that Rule so amended or modified shall not be deemed a violation of this injunction.

CONSUMER EDUCATION REMEDY

7. For a period of five (5) years from the date of entry of this Consent Decree, defendants, and their successors and assigns, in connection with the operation of any website or other online service directed in whole or in part to children, shall place a clear and conspicuous notice (1) within the privacy policy required to be posted on their website(s) by Section 312.4(b) of the Rule, 16 C.F.R.  312.4(b); (2) within the direct notice required to be sent to parents by Section 312.4(c) of the Rule, 16 C.F.R.  312.4(c); and (3) at each location on their website(s) where personal information is collected from children, which states as follows in bold typeface:

NOTICE: Visit www.ftc.gov/kidzprivacy for information from the Federal Trade Commission about protecting children's privacy online.

Where the above notice is posted on a website or delivered via email or other electronic service, it shall be in the form of a hyperlink to www.ftc.gov/kidzprivacy. The Federal Trade Commission may change the hyperlink/URL upon thirty (30) days prior written notice to defendants, their successors or assigns.

CIVIL PENALTY

8. Defendants, and their successors and assigns shall pay to plaintiff a civil penalty, pursuant to Section 5(m)(1)(A) of the Federal Trade Commission Act, 15 U.S.C.  45(m)(1)(A), in the amount of One Hundred Thousand Dollars ($100,000). Defendants are jointly and severally responsible for paying the penalty.

9. Based on the sworn representations of defendants Mrs. Fields' Holding Company, Inc. and Mrs. Fields' Original Cookies, Inc. in their Form 10-Qs filed with the United States Securities and Exchange Commission for the quarter ending June 29, 2002, and Defendant Mrs. Fields Famous Brands, Inc.'s Financial Reporting Package for the quarter ending March 30, 2002, defendants shall make the one hundred thousand dollar ($100,000) payment required by Paragraph 8 in four equal installments. Defendants shall, within five (5) days of the date of entry of this Consent Decree, pay the sum of twenty-five thousand dollars ($25,000) by electronic fund transfer in accordance with the instructions provided by the Office of Consumer Litigation, Civil Division, U.S. Department of Justice, Washington, D.C. 20530, for appropriate disposition. Defendants shall make a second payment of twenty-five thousand dollars ($25,000), in the same manner, within three (3) months of the date of entry of this Consent Decree. Defendants shall make a third payment of twenty-five thousand dollars ($25,000), in the same manner, within nine (9) months of signing this Consent Decree. Defendants shall make a fourth payment of twenty-five thousand dollars ($25,000), in the same manner, within thirteen (13) months of the date of entry of this Consent Decree.

10. In the event of any default in payment, which default continues for ten (10) days beyond the due date of payment, the entire unpaid penalty, together with interest, as computed pursuant to 28 U.S.C.  1961, from the date of default to the date of payment, shall immediately become due and payable.

COMPLIANCE

11. Defendants, and their successors and assigns, within five (5) days from the date of entry of this Consent Decree, shall delete all personal information collected from every child through the www.mrsfields.com, www.pretzeltime.com, and www.pretzelmaker.com websites at any time from April 21, 2000, through the date of entry of this Consent Decree.

12. Defendants, and their successors and assigns, within thirty (30) days from the date of entry of this Consent Decree, shall provide a copy of this Consent Decree and the Federal Trade Commission compliance guide entitled How to Comply with the Children's Online Privacy Protection Rule (Nov. 1999) ("compliance guide") (attached hereto as "Appendix B") to each of their current principals, officers, directors, and managers, and to all current employees, agents, representatives, and attorneys having responsibilities related to the operation of any website or online service subject to this Consent Decree, and secure from each such person a signed statement acknowledging receipt of a copy of this Consent Decree and the compliance guide, and shall, within ten (10) days of complying with this paragraph, submit to the Commission a signed statement setting forth the fact and manner of defendants' compliance, including the name and title of each person to whom a copy of the Consent Decree and compliance guide has been provided. For the purposes of complying with this Paragraph, defendants shall be permitted to redact the dollar amount of the civil penalty (set forth in Paragraph 8 above) from the copy of the Consent Decree provided to any such person.

13. For a period of five (5) years from the date of entry of this Consent Decree, defendants, and their successors and assigns, shall provide a copy of this Consent Decree and the compliance guide to each of their future principals, officers, directors, and managers, and to all future employees, agents, representatives, and attorneys having responsibilities related to the operation of any website or online service subject to this Consent Decree, and secure from each such person a signed and dated statement acknowledging receipt of a copy of this Consent Decree and the compliance guide, within thirty (30) days after the person assumes such position or responsibilities. Defendants shall maintain copies of the signed statements, as well as other information regarding the fact and manner of their compliance, including the name and title of each person to whom a copy of the Consent Decree and compliance guide has been provided and, upon request, shall make the statements and other information available to the Federal Trade Commission. For the purposes of complying with this Paragraph, defendants shall be permitted to redact the dollar amount of the civil penalty (set forth in Paragraph 8 above) from the copy of the Consent Decree provided to any such person.

14. Within sixty (60) days from the date of entry of this Consent Decree, and at such other times as the Federal Trade Commission may require, defendants, and their successors and assigns, shall file with the Commission a written report, setting forth in detail the manner and form in which they have complied and are complying with this Consent Decree. This report shall include but not be limited to:

a. a statement setting forth in detail any process by which they collect personal information from children on the Internet, and a copy of each different screen or page requesting such information;
 
b. a copy of each different privacy notice on any of their websites and online services;
 
c. a statement setting forth in detail each place where the privacy notice on any website or online service is located and a copy of each screen or page on which the website collects personal information;
 
d. a copy of each different privacy notice to parents;
 
e. a statement setting forth in detail when and how notices to parents are provided;
 
f. a statement setting forth in detail the methods used to obtain verifiable parental consent prior to any collection, use, and/or disclosure of personal information from children;
 
g. a statement setting forth in detail the means provided for parents to review the personal information collected from their children and to refuse to permit their further use or maintenance;
 
h. a statement setting forth in detail why each type of information collected is reasonably necessary for the provision of the particular related activity; and
 
i. a statement setting forth in detail the procedures used to protect the confidentiality, security, and integrity of personal information collected from children.

15. For a period of five (5) years from the date of entry of this Consent Decree, defendants, and their successors and assigns, shall maintain and make available to the Federal Trade Commission for inspection and copying within seven (7) days of the date of receipt of a written request, a print or electronic copy in HTML format of all documents demonstrating compliance with the terms and provisions of this Consent Decree, including, but not limited to, a sample copy of every different information collection form, Web page, or screen, and a sample copy of each different document containing any representation regarding defendants' collection, use, and disclosure practices pertaining to personal information of a child. Each web page copy shall be accompanied by the URL of the Web page where the material was posted online. Electronic copies shall include all text and graphics files, audio scripts, and other computer files used in presenting information on the Internet. Provided, however, that defendants shall not be required by this paragraph to retain a document for longer than two (2) years after the document is created; or retain a print or electronic copy of any amended web page or screen to the extent that the amendment does not affect defendants' compliance obligations under this Consent Decree.

16. For a period of ten (10) years from the date of entry of this Consent Decree, defendants, and their successors and assigns, shall notify the Commission at least thirty (30) days prior to any change in their business that may affect compliance obligations arising under this Consent Decree, including, but not limited to, any merger, incorporation, dissolution, assignment, sale or other action that would result in the emergence of a successor corporation; the creation or dissolution of a subsidiary, parent, or affiliate; 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 defendants, their successors and assigns, learn less than thirty (30) days prior to the date such action is to take place, they shall notify the Commission as soon as is practicable after obtaining such knowledge.

17. Defendants are hereby required, in accordance with 31 U.S.C.  7701, to furnish to the Federal Trade Commission each of their taxpayer identifying numbers (social security number or employer identification number), which shall be used for purposes of collecting and reporting on any delinquent amount arising out of their relationship with the government.

18. All reports, submissions, and notices required by Paragraphs 12 - 17 of this Consent Decree shall be sent by certified mail to:

Regional Director
Western Region-San Francisco
Federal Trade Commission
901 Market Street, Suite 570
San Francisco, CA 94103
Attention: United States v. Mrs. Fields' Famous Brands, Inc., et al

CONTINUING JURISDICTION

19. This Court shall retain jurisdiction of this matter for the purposes of enabling any of the parties to this Consent Decree to apply to the Court at any time for such further orders or directives as may be necessary or appropriate for the interpretation or modification of this Consent Decree, for the enforcement of compliance therewith, or for the punishment of violations thereof.

JUDGMENT IS THEREFORE ENTERED in favor of plaintiff and against defendants, pursuant to all the terms and conditions recited above.

Dated this __________ day of _______________, 2002.

UNITED STATES DISTRICT JUDGE

The parties, by their counsel, hereby consent to the terms and conditions of the Consent Decree as set forth above and consent to the entry thereof. Defendants waive any rights that may arise under the Equal Access to Justice Act, 28 U.S.C. 2412, concerning the investigation and prosecution of this action.

FOR THE UNITED STATES OF AMERICA:

ROBERT D. MCCALLUM, JR.
Assistant Attorney General
Civil Division
U.S. Department of Justice

PAUL M. WARNER
United States Attorney

____________________________________
Asistant United States Attorney/Lead Counsel
Attorney For United States of America
185 South State Street, Suite 400
Salt Lake City, Utah 84111
(801) 524-5682

EUGENE M. THIROLF
Director
Office of Consumer Litigation

____________________________________
Attorney
Office of Consumer Litigation
Civil Division
U.S. Department of Justice
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530-0001
(202) xxx-xxxx (voice)
(202) xxx-xxxx (fax)

FOR THE FEDERAL TRADE COMMISSION:

________________________________
JEFFREY KLURFELD
Regional Director
Western Region
Federal Trade Commission

____________________________________
LAURA FREMONT
KERRY O'BRIEN
Attorneys
Western Region-San Francisco
Federal Trade Commission
901 Market Street, Suite 570
San Francisco, CA 94103
(415) 848-5100

FOR THE DEFENDANTS:

MRS. FIELDS FAMOUS BRANDS, INC.,
MRS. FIELDS' HOLDING COMPANY, INC., and
MRS. FIELDS' ORIGINAL COOKIES, INC..

____________________________________
MICHAEL WARD
General Counsel
2855 East Cottonwood Parkway, Suite 400
Salt Lake City, Utah 84121

________________________________
STUART D. LEVI
Skadden, Arps, Slate, Meagher & Flom
Attorneys for Defendants