|DEBRA A. VALENTINE
DARREN A. BOWIE
DAVID M. NEWMAN
Attorneys for Plaintiff
IN THE UNITED STATES DISTRICT COURT
Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), filed 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), alleging that defendants Sovo Tec Diagnostics, Inc., Ahmad Shirzadi, the President of Sovo Tec Diagnostics, Inc., and Deborah Colby, the General Manager of Sovo Tec Diagnostics, Inc., engaged in deceptive acts or practices and false advertising in violation of Sections 5(a) and 12 of the FTC Act, 15 U.S.C. §§ 45(a) and 52.
The Commission and defendants have stipulated to the entry of this Final Order for Permanent Injunction ("Order") in settlement of the Commission's complaint against defendants. The Court, being advised in the premises, finds as follows:
1. In its complaint, the Commission alleged that defendants violated Sections 5(a) and 12 of the FTC Act, 15 U.S.C. § § 45(a) and 52. The Commission sought permanent injunctive relief 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 case, and jurisdiction over defendants. Venue in the Northern District of California is proper, and the complaint states a claim upon which relief can be granted against the defendants under Sections 5(a), 12, and 13(b) of the FTC Act, 15 U.S.C. §§ 45(a), 52, and 53(b).
4. The activities of defendants as alleged in the Commission's complaint were or 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. 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. Each party to this Order shall bear its own costs and attorneys' fees incurred in connection with this action.
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, attorneys, and all other persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise.
IT IS THEREFORE STIPULATED AND ORDERED, that, for the purposes of this Order, the following definitions shall apply:
A. "Defendants" shall mean:
B. "Participating associates" shall refer to defendants' officers, agents, servants, employees, and all those persons or entities in active concert or participation with defendants who receive actual notice of this Order by personal service or otherwise.
C. "Human immunodeficiency virus" ("HIV") shall refer to all types or strains of the virus that causes acquired immunodeficiency syndrome ("AIDS"), an infectious disease characterized by immune system failure.
D. "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 but not limited to the "HIV 1 / 2 STAT-PAK Ultra Fast" and "HIV 1 / 2 Whole Blood" tests and any other substantially similar product.
E. "Device" shall mean "device" as defined in Section 15(d) of the FTC Act, 15 U.S.C. § 55(d).
F. "Unapproved device" shall mean any device that is not approved by the U.S. Food and Drug Administration ("FDA"), pursuant to the Federal Food, Drug and Cosmetic Act, for sale, distribution, or delivery within the United States.
G. "Competent and reliable scientific evidence" means tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that have been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the professions to yield accurate and reliable results.
H. "Document(s)" or "record(s)" shall refer to
I.. 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.
J. The term "including" shall mean "without limitation."
K. Any requirement that defendants "notify" or "provide" any information or material to the Commission, shall mean that defendants shall send the necessary information or material via first-class mail, costs prepaid, to:
II. PROHIBITED BUSINESS ACTIVITIES
IT IS FURTHER STIPULATED AND 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:
A. Making, or assisting others in making, directly or by implication, any material false or misleading oral or written statement or representation in connection with the advertising, marketing, promotion, offer for sale, distribution, or sale of any HIV test or unapproved device, including misrepresenting, in any manner, directly or by implication, the accuracy or efficacy of any HIV test or unapproved device;
B. Making, or assisting others in making, any representation, in any manner, directly or by implication, regarding the accuracy or efficacy of any HIV test or unapproved device, including any implied representation that such device is fit for its intended use, unless, at the time of making such representation, defendants possess and rely upon competent and reliable scientific evidence that substantiates the representation;
C. Misrepresenting, in any manner, directly or by implication, that the U.S. Food and Drug Administration or any other local, state, regional, national or international government or public health organization has reviewed, evaluated, is affiliated with, or otherwise endorses or supports, any HIV test or unapproved device; and
D. Misrepresenting, in any manner, directly or by implication, any other fact material to a customer's decision to purchase any HIV test or unapproved device.
III. NOTICE TO PAST PURCHASERS
IT IS FURTHER STIPULATED AND ORDERED that, within ten (10) days of entry of this Order, defendants shall send by first class mail the notice set forth in Appendix A to this Order to any person or entity who purchased any of defendants' HIV tests between February 1, 1998 to the date of entry of this Order. A list of all persons or entities that received such notice shall be provided to the Commission pursuant to Section V(D) of this Order.
IV. PRESERVATION OF RECORDS
IT IS FURTHER STIPULATED AND ORDERED that, for a period of five (5) years from the date of entry of this Order, defendants and their participating associates, in connection with defendant Sovo Tec and any business where (1) defendants Shirzadi or Colby is the majority owner or an officer or director 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 unapproved device, are permanently enjoined from failing to create, or have such business create, and from failing to retain for a period of five (5) years following the date of such creation, unless otherwise specified:
A. All documents evidencing or referring to the accuracy or efficacy of any HIV test or unapproved device advertised, marketed, promoted, offered for sale, distributed or sold by defendants, including, but not limited to, all tests, reports, studies, demonstrations, or other evidence that confirm, contradict, qualify, or call into question the accuracy of efficacy of such device;
B. Books, records and accounts, kept in the regular course of business, that, in reasonable detail, accurately and fairly reflect the cost of HIV tests or unapproved devices, and revenues generated;
C. Records accurately reflecting: the name, address, and telephone number of each person employed by defendants, including as an independent contractor who is engaged in the advertising, marketing, promotion, offer for sale, distribution, or sale of any HIV test or unapproved device; 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;
D. 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 defendants has sold, invoiced or shipped any HIV test or unapproved device;
E. Records that reflect, for every customer complaint or refund request relating to any HIV test or unapproved device, 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 defendant or participating associate 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; and
F. Copies of all advertisements, promotional materials, sales scripts, training materials, or other marketing materials utilized relating to any HIV test or unapproved device.
IT IS FURTHER STIPULATED AND ORDERED, in order to monitor compliance with this Order, that:
A. Within five (5) days of the entry of this Order, defendants Shirzadi and Colby shall each notify the Commission of (1) his or her business address; (2) his or her business telephone number(s); (3) the name, address and telephone number of his or her employers; (4) the full names of his or her employer's principals; (5) if applicable, the names of his or her supervisors; and (6) a description of his or her employer's activities, and defendant's duties and responsibilities;
B. For a period of five (5) years from the date of entry of this Order, defendants Shirzadi and Colby shall each notify the Commission within ten (10) business days of any changes in his or her business address(es), or employment involving the advertising, marketing, promotion, offer for sale, distribution, or sale of any HIV test or unapproved device. Notice of changes in employment shall include: (1) the new employer's name, address and telephone number; (2) the full names of the employer's principals; (3) if applicable, the names of defendant's supervisor(s), and (4) a description of the employer's activities, and defendant's duties and responsibilities;
C. 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, agents, and representatives having responsibilities involving the advertising, marketing, promotion, offer for sale, distribution, or sale of any HIV test or unapproved device, 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 ten (10) days after the date of service of this Order, and to 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;
D. 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;
E. For a period of five (5) years from the date of entry of this Order, defendants shall notify the Commission of any proposed change in the structure of defendant Sovo Tec, 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 Sovo Tec about which defendants learn less than thirty (30) days prior to the date such action is to take place, defendants shall notify the Commission as soon as is practicable after learning of such proposed change;
F. For a period of five (5) years from the date of entry of this Order, defendants shall notify the Commission, in writing, of any complaint or refund request defendants receive, whether received directly or indirectly or through any third party, related to the efficacy or accuracy of any HIV test or unapproved device advertised, marketed, promoted, offered for sale, distributed or sold by defendants or their participating associates, directly or indirectly, or acting through any corporation, entity or person under their control. Such notification shall be made, in writing, to the Commission within forty-eight (48) hours of receipt by defendant and shall include, but is not limited to, the following:
If defendants are unable, despite good faith efforts, to provide the Commission with any of the information enumerated in Section V(F)(1-5) within forty-eight (48) hours of receipt by defendants of any such complaint or refund request, defendants shall provide the Commission, in writing, with the reason(s) for their inability to provide the Commission with such information. Defendants shall provide the Commission with any supplemental materials within forty-eight hours after receipt.
G. For a period of five years (5) from the date of entry of this Order, defendants shall permit representatives of the Commission, with three (3) business days of written notice from the Commission:
H. 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:
VI. COOPERATION WITH THE COMMISSION
IT IS FURTHER STIPULATED AND ORDERED that defendants shall, in connection with this action or any subsequent Commission 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
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 Shirzadi, individually and on behalf of defendant Sovo Tec, and defendant Colby, shall each execute and submit to the Commission a truthful sworn statement, in the form shown on Appendix B, that shall acknowledge receipt of this Order.
VIII. RETENTION OF JURISDICTION
IT IS FURTHER STIPULATED AND ORDERED that this Court shall retain jurisdiction of this matter for purposes of construction, modification and enforcement of this Order.
IT IS SO ORDERED this ___ day of _______, 2000.
UNITED STATES DISTRICT JUDGE
[To Be Printed on Defendant's Letterhead]
[NAME AND ADDRESS OF RECIPIENT]
Dear [RECIPIENT'S NAME]:
Sovo Tec Diagnostics, Inc. ("Sovo Tec") has recently entered a settlement agreement with the United States Federal Trade Commission ("FTC") regarding rapid HIV tests purchased by Sovo Tec for export. The FTC alleged that, in some instances, Sovo Tec misrepresented the accuracy of its HIV tests. If you have any questions concerning this matter, please contact [name, phone number and e-mail address of contact].
The settlement agreement was entered by the United States District Court of the Northern District of California [date of entry of the Stipulated Final Order]. This agreement is for settlement purposes only and does not constitute an admission by Sovo Tec of any wrongdoing.
Ahmad Shirzadi, President
IN THE UNITED STATES DISTRICT COURT
[Name of Defendant] being duly sworn, hereby states and affirms as follows:
1. My name is [name of defendant]. 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 ________________.
3. On [date], I received, individually [and for defendant Shirzadi "and on behalf of Sovo Tec Diagnostic Systems, Inc."], a copy of the Stipulated Final Order for Permanent Injunction, 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.
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].