01 03 2014

UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSI 

In the Matter of 

ECM BioFilms, Inc., 

a corporation, also d/b/a 

Enviroplastics International 

) 

) 

) 

) 

) 

) ___________________________) 

Docket No. 9358 

PUBLIC DOCUMENT 

· .. ~ 

COMPLAINT COUNSEL'S OPPOSITION TO RESPONDENT'S 

MOTION FOR PROTECTIVE ORDER AND CROSS-MOTION TO COMPEL 

RESPONDENT TO DISCLOSE CUSTOMER AND DISTRIBUTOR NAMES 

Pursuant to Commission Rules 3.31 and 3.38, Complaint Counsel respectfully requests 

that the Court order Respondent to disclose the identity of its customers and distributors 

immediately. This relief is proper for two reasons. First, customer identities are critical to 

Complaint Counsel's claims and Respondent's defenses. Limiting discovery to a fraction of 

Respondent's customer list will substantially prejudice Complaint Counsel and impair the 

Court's ability to evaluate a meaningful record. Second, Respondent will suffer no significant 

economic hann even if Complaint Counsel contacts every customer. This litigation is no secret 

to Respondent's customers; as ECM CEO Robert Sinclair himself bragged to the pressnotwithstanding the contrary implication in his declaration- he contacted each ECM customer 

about the FTC's allegations. 1 In short, Respondent cannot meet its burden of demonstrating 

potential harm from providing its customer list, and therefore must produce this highly relevant 

material. 

1 See Exhibit 1 to Declaration of Katherine Johnson ("Johnson Decl."), J. Carroll, "CEO 

Says FTC's Claims Denigrate His Firm," Plastic News (Nov. 20, 2013) ("Plastic News Article"), 

at 3. 
PUBLIC DOCUMENT 

BACKGROUND 

A. Claims and Defenses 

As relevant here, the Complaint (Count III) alleges that Respondent provided its 

customers and distributors the means and instrumentalities (i.e., ''biodegradable" logos and 

certificates ofbiodegradability) to deceive end-use consumers. Additionally, Respondent 

contends it supplemented promotional materials with verbal communications that altered the net 

impression of its advertising.2 Furthennore, Respondent asserts that its customers are 

"sophisticated," which makes them more difficult to deceive. 3 Given the means and 

instrumentalities claim, the net impression issue, and the "sophisticated consumer" defense, 

Respondent's communications with its customers-and their understanding of those 

communications-are critical to this case. 

B. ECM's Refusal To Produce Necessary Information 

Notwithstanding the importance of this information and the requirement that ECM 

identify everyone "likely to have discoverable information" relevant to the claims and defenses 

at issue, see Ru1e 3.31(b)(1), ECM's initial disclosure did not identify a single customer. See 

Johnson Decl. Ex. 3, at 1-3 (E-mail string between counsel, Nov. 25, 2013). Despite Complaint 

Counsel's efforts to negotiate, ECM refused to supplement its disclosures. Id. Complaint 

Counsel then served discovery seeking ECM' s customer list, information about orders, and 

Respondent's communications with customers. Again, ECM refused to comply. Id. at 4-7 (Email string between counsel, Dec. 2-3, 2013); see also id. at 8-11 (E-mail string between counsel, 

2 See, e.g., Answer at ,-r 4 ("The FTC is obliged to consider the net impression ofECM's 

promotions as a whole, and that includes the direct discussions and sales presentations with its 

customers .... "); Johnson Decl. Ex. 2, Hrg. Tr. 17:5-7 ("[M]ost of the communications with the 

select group of customers is verbal interaction ... "); id. at 17:10-12("[W]e look at the net 

impression, .... it must include the interactions that are verbal."). 

3 See, e.g., Answer at ,-r 4 ("ECM's actual customer base ... is highly sophisticated ... 

. "); Hrg. Tr. 21:8-10 ("The customer is fully informed of the evidence ... [T]hey're not fools. 

They're sophisticated."); id. at 28 (" ... ECM's manufacture [sic] and distributor customers are 

sophisticated buyers who have a very well [sic] biochemical engineering understanding of the 

additive they buy .... "). 

2 
PUBLIC DOCUMENT 

Dec. 12-13, 2013). In a final effort at compromise, Complaint Counsel offered to notify ECM 

before contacting customers and limit its requests in other respects. Id. at 12-15 (E-mail from 

Katherine Johnson to Respondent's counsel, Dec. 6, 2013). Respondent refused and sought a 

protective order. 

ARGUMENT 

I. The Information Sought Is Necessary to Both Parties' Claims and Defenses. 

For three reasons, access to the full customer list is essential.4 First, the full list is 

necessary to identify customers who passed on ECM's logos and certificates. Complaint 

Counsel may contact a subset of customers either by choosing those likely to have forwarded 

deceptive claims based on business size or type, or by random sampling and extrapolation to the 

full customer population. Alternatively, we may search customer websites, other advertising, or 

locate products at retail stores. 5 Either way, we need the customer list to formulate a strategy, 

and it would be patently unfair to allow ECM to conceal its customers or otherwise dictate how 

Complaint Counsel proceeds. 6 

4 There should be no dispute that customer lists are relevant. See, e.g., Market Dev. 

Corp., No. 9067 C, 1977 FTC LEXIS 76, at *3 (denying motion to quash subpoena for customer 

list); Advanced Tactical Ordnance Sys., LLC v. Real Action Paintball, Inc., No. 1: 12-CV -296, 

2013 U.S. Dist. LEXIS 23797, at *3-4 (N.D. Ind. Feb. 21, 2013) (ordering disclosure of 

customer list, subject to "Attorneys' Eyes Only" order); Joint Tech., Inc. v. Weaver, No. 11-846, 

2013 U.S. Dist. LEXIS 12509, at *17-18 (W.D. Okla. Jan. 30, 2013) (compelling customer list); 

Tama Plastic Indus. v. Pritchett Twine, No. 8:12CV324, 2013 U.S. Dist. LEXIS 9607, *18-19 

(D. Neb. Jan. 24, 2013) (same); Asch/Grossbardt Inc. v. Asher Jewelry Co., No. 02 Civ. 5914, 

2003 U.S. Dist. LEXIS 2837, at *7-9 (S.D.N.Y. Feb. 27, 2003); ABC Rug & Carpet Cleaning 

Serv. v. ABC Rug Cleaners, Inc., No. 08 Civ. 5737,2009 U.S. Dist. LEXIS 2314, at *10-12 

(S.D.N.Y. Jan. 14, 2009) (ordering disclosure of customer list where relevance outweighed risk 

of potential economic harm). 

5 With access to the full customer list, Complaint Counsel may be able to identify ads 

from enough customers that Complaint Counsel need not contact many customers directly. This 

would not only save Complaint Counsel's resources, but also the resources ofECM's customers 

who would otherwise need to comply with subpoenas. Disclosing the customer list is thus an 

effective way to contain litigation costs. 

6 Cf Arlans Agency v. Gossett, No. 93-2395/94-1079, 1995 U.S. App. LEXIS 1175, at *7 

n.3 (6th Cir. Jan. 19, 1995) ("[E]ach party is responsible for his own litigation strategy."). 

Granting ECM a protective order-which offers contact with 10 customers, a mere 3% of the 

customer base-ensures that Complaint Counsel cannot effectively show that ECM provided 

customers the means and instrumentalities to deceive consumers. 

3 
PUBLIC DOCUMENT 

Second, a complete list is necessary to evaluate ECM's claim that its verbal 

communications altered customers' net impression. Neither Complaint Counsel nor the Court 

must accept ECM's self-serving characterizations of these communications. We need discovery 

to uncover the truth through the adversary process. Likewise, Complaint Counsel (and the 

Court) should not be forced to accept ECM's self-serving claim that its communications to all 

customers are the same. Resp. Mem. at 4; Sinclair Decl. ~ 12. The mere fact that ECM's CEO 

says something does not make it true. 

Third, Complaint Counsel needs a complete list to determine which customers-if anyare "sophisticated" and whether ECM' s claims misled them. ECM raised this defense, and to 

evaluate it, Complaint Counsel must take discovery directly from these ostensibly sophisticated 

customers and evaluate their communications with ECM. Moreover, customer sophistication 

may vary depending on the customer's size, what products it makes, what resources it has, and 

many other variables. To ascertain which customers are likely to have the most probative 

information, Complaint Counsel needs the entire list. 

However, rather than comply with its discovery obligations, ECM urges the Court to 

limit Complaint Counsel to contact with only 10 former customers from an unrepresentative list 

of 50 former customers (comprised of customers "who do not have orders pending" and 

excluding "ECM' s top 10 revenue generating clients," Resp. Mem. at 1 ). This represents less 

than 3% ofECM's current and former customers.7 Allowing ECM to restrict Complaint Counsel 

to a cherry-picked subset of its business ensures an incomplete record, whereas ordering ECM to 

comply with basic discovery obligations avoids this problem. Put simply, the Court should not 

permit ECM to flout its discovery obligations and dictate Complaint Counsel's litigation 

strategy. 

7 ECM refused to disclose exact numbers, but indicated that it has approximately 260 

current customers and more than 50 former customers. 

4 
PUBLIC DOCUMENT 

II. ECM Cannot Establish That Disclosing Its Customer List Would Cause Any Harm. 

Respondent must establish that the discovery "is of such marginal relevance that the 

potential harm occasioned by discovery would outweigh the ordinary presumption in favor of 

broad disclosure." Roberson v. Bair, 242 F.R.D. 130, 136 (D.D.C. 2007) (internal quotations 

omitted). Here, the disputed discovery is critical, see supra, and Respondent cannot demonstrate 

potential harm for three reasons. First, Mr. Sinclair already told Respondent's customers about 

this litigation. Second, the Protective Order will keep trade secrets from competitors. Finally, 

Complaint Counsel will meet its obligation to make reasonable discovery accommodations. 8 

A. ECM Will Not Suffer Any Economic Harm. 

ECM's concern about its customers' reaction to Complaint Counsel's inquiries is 

overblown. CEO Robert Sinclair proudly proclaimed he has spoken to each current customer 

about the litigation. See Johnson Decl. Ex. 1, Plastic News Article ("Once his company knew 

the FTC was going to make its complaint, Mr. Sinclair said he spoke to each of the company's 

current customers. 'I told them we were going to fight it, because we believe in what we're 

doing,' he said. 'I think, and time will tell, but I believe every single one of them will stay by 

!:!§.. "') (emphasis added). Mr. Sinclair also issued a press release available on Respondent's 

website and gave several interviews about this litigation. See id. at 4-19 (compilation of news 

articles). 9 

Given Mr. Sinclair's disclosures, a recent decision from the Southern District ofNew 

York is instructive. In Tiffany & Co. v. Costco Wholesale Corp., the Court ordered Costco to 

produce a customer list with each of the names of the 2,500 customers. No. 13 Civ. 1041, 2013 

U.S. Dist. LEXIS 150495, *7 (S.D.N.Y. Oct. 18, 2013) (denying motion for protective order). 

Costco argued that it would suffer "extreme prejudice" resulting in "competitive disadvantage" if 

8 Importantly, having the entire customer list is the only way for us to engage in an 

iterative e-discovery process that will allow us to limit the number of requested customer 

communications and reduce the burden on Respondent. 

9 IfECM's customers are'as sophisticated as ECM claims, they also would be familiar 

with this litigation from the FTC's press release and subsequent media coverage. 

5 
PUBLIC DOCUMENT 

Tiffany were to contact each (or many) of its customers for interviews about Costco' s 

advertising. Id. at *3. The court observed that the specter ofharm to customers and the 

customer-Costco relationship was insufficient to outweigh the relevance of the informationparticularly because Costco's fears were likely overstated: Costco had already notified its 

customers of the litigation. Id. at *5-6. Likewise, disclosing ECM's customer list will not cause 

any hann because Respondent's customers already know about this litigation and that Complaint 

Counsel might contact them. 

Furthermore, not only is ECM's position belied by Mr. Sinclair's own conduct, the notion 

that ECM will lose customers Complaint Counsel contacts is purely speculative. Respondent 

claims that customers Complaint Counsel contacted have "ceased doing business with 

[Respondent]," see Resp. Mem. at 5, but Respondent omits the most salient fact: they stopped 

doing business with ECM because they were the subjects of FTC investigations and accepted 

consent orders prohibiting deceptive biodegradable claims.10 As far as Complaint Counsel is 

aware, none ofECM's current customers are similarly situated. 

Finally, ECM asserts that customers' supposed subpoena-response costs would cause 

"cessation ofbusiness relationships with ECM." Id. at 3. This argument is nonsensical because 

ending business with Respondent will not inoculate customers against subpoenas. Indeed, if 

Respondent's argument had merit, then customer lists would always be exempt from discovery. 

In reality, courts routinely require parties to produce them. See supra at 3 n.4. 

B. The Protective Order Will Protect Any Trade Secrets From Competitors. 

ECM cites a series of irrelevant "trade secret" decisions, but there is "no absolute 

privilege for trade secrets." M-I LLC v. Stelly, 733 F. Supp. 2d 759, 801 (S.D. Tex. 2010) 

(citation omitted); see also Market Dev. Corp., No. 9067 C, 1977 FTC LEXIS 76, *2 (FTC Oct. 

10 See Am. Plastic Manuf, Inc., No. 1223291; MacNeill Eng'g Co., Inc., No. 1223292. 

Respondent asserts that the FTC contacted three of Respondent's customers. Complaint Counsel 

is only aware of contacting two. 

6 
PUBLIC DOCUMENT 

12, 1977) ("There is no privilege against producing ... sensitive business information."). 11 

Obviously, the FTC is not a trade competitor, and the Protective Order ensures that Complaint 

Counsel cannot make Respondent's customer list available to its competitors. Complaint 

Counsel is willing to negotiate reasonable enhanced protections from disclosure if ECM deems it 

necessary. 

C. Complaint Counsel Remain Willing To Cooperate With ECM To Alleviate 

Any Minor Burden. 

As Complaint Counsel has already proposed, if ECM produces its customer list, 

Complaint Counsel will limit its contacts to a subset of customers; give Respondent advance 

notice of such contacts; and negotiate search terms to reduce the number of customer 

communications responsive to discovery requests. However, Complaint Counsel cannot 

coordinate with ECM to make these accommodations until Respondent produces its list. 

CONCLUSION 

For these reasons, Complaint Counsel respectfully asks the Court to order Respondent to 

disclose a complete customer list, and to deny Respondent's motion entirely. 

Dated: December 30,2013 Respectfully submitted, 

Ka rine Johnson (kjohnson3@ftc.gov) 

athan Cohen Gcohen2@ftc.gov) 

Elisa Jillson (ejillson@ftc.gov) 

Federal Trade Commission 

600 Pennsylvania Ave., N.W. M-8102B 

Washington, DC 20580 

Phone: 202-326-2185; -2551; -3001 

Fax: 202-326-2551 

11 The notion that its customer list is a "trade secret" is dubious given Mr. Sinclair's 

casual disclosure of customer names in press photos. See Johnson Decl. Ex. 1, Plastic News 

Article (including photo with a smiling Sinclair posing with several of his customers' products 

(with product names clearly visible)). 

7 
PUBLIC DOCUMENT 

UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

In the Matter of 

ECM BioFilms, Inc., 

a corporation, also d/b/a 

Enviroplastics International 

) 

) 

) 

) 

) 

) 

----------~--------------) 

Docket No. 9358 

[PROPOSED] ORDER DENYING RESPONDENT'S MOTION FOR A PROTECTIVE 

ORDER AND GRANTING COMPLAINT COUNSEL'S CROSS-MOTION TO COMPEL 

RESPONDENT TO DISCLOSE CUSTOMER AND DISTRIBUTOR NAMES 

This matter having come before the Chief Administrative Law Judge on December 12, 

2013, upon a Motion for a Protective Order filed by Respondent ECM BioFilms, Inc. and on 

December 20,2013, upon a Cross-Motion to Compel Respondent to Disclose Customer and 

Distributor Names. 

Having considered the parties' motions and all supporting and opposing submissions, and 

for good cause appearing, it is hereby ORDERED that ECM's Motion for a Protective Order is 

denied and Complaint Counsel's Cross-Motion to Compel Respondent to Disclose Customer and 

Distributor Names is granted. Respondent shall supplement its Mandatory Initial Disclosures 

immediately in compliance with Ru1e 3.31 (b). 

ORDERED: 

D. Michael Chappell 

Chief Administrative Law Judge 

Date: 

8 
PUBLIC DOCUMENT 

CERTIFICATE OF SERVICE 

I hereby certify that on December 30, 2013, I caused a true and correct copy of the 

foregoing Complaint Counsel's Motion to Place Discovery Motions on the Public Record to be 

served as follows: . 

One electronic copy through the FTC E-File system and one electronic courtesy copy to the Office of 

the Secretary: 

DonaldS. Clark, Secretary 

Federal Trade Commission 

600 Pennsylvania Ave., NW, RoomH-113 

Washington, DC 20580 

Email: secretary@ftc.gov. 

One paper and one electronic courtesy copy to the Office of the Administrative Law Judge: 

The Honorable D. Michael Chappell, Administrative Law Judge 

600 Pennsylvania Ave., NW, Room H-110 

Washington, DC 20580 

One electronic copy to Counsel for the Respondent: 

Jonathan W. Emord 

Emord & Associates, P.C. 

11808 Wolf Run Lane 

Clifton, VA 20124 

Email: jemord@emord.com 

Lou Caputo 

Emord & Associates, P.C. 

3210 S. Gilbert Road, Suite 4 

Chandler, AZ 85286 

Email: lcaputo@emord.com 

Peter Arhangelsky 

Emord & Associates, P.C. 

3210 S. Gilbert Road, Suite 4 

Chandler, AZ 85286 

Email: parhangelsky@emord.com 

I further certify that I possess a paper copy of the signed original of the foregoing 

document that is available for review by the parties and the adjudicator. 

Date: December 30,2013 

9 
UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COMMISSION 

In the Matter of 

ECM BioFilms, Inc., 

a corporation, also d/b/a 

Enviroplastics International 

) 

) 

) 

) 

) 

) 

Docket No. 9358 

PUBLIC DOCUMENT 

COMPLAINT COUNSEL'S STATEMENT REGARDING MEET AND CONFER 

PURSUANT TO SCHEDULING ORDER 

The undersigned counsel certifies that Complaint Counsel has met and conferred with 

counsel for Respondent ECM BioFilms, Inc., in a good faith effort to resolve by agreement the 

issues raised by Respondent's Motion for a Protective Order and Complaint Counsel's 

Opposition and Cross-Motion to Compel. On November 25, December 2-3, 12-13, Complaint 

Counsel (Katherine Johnson and Elisa Jillson) and Respondent's Counsel (Jonathan W. Emord, 

Peter A. Arhangelsky, and Lou Caputo) communicated by email about the issues that gave rise to 

these motions. Complaint Counsel (Katherine Johns?n and Elisa Jillson) and Respondent's 

Counsel (Jonathan W. Emord, Peter A. Arhangelsky, and Lou Caputo) communicated by 

telephone on December 5 and 11 (only Arhangelsky for Respondent on December 11). Despite 

the good faith efforts of counsel to confer regarding these discovery issues, Complaint Counsel was 

unable to reach a resolution with Respondent's counsel and we remain at an impasse. 

Dated: December 20,2013 R_7S{lectfu~ly submitted, 

\_yatherine ~~ Johnson 

Complaint Counsel · 

Division ofEnforcement 

Bureau of Consumer Protection 

Federal Trade Commission 

600 Pennsylvania Avenue, NW 

Mail stop M-81 02B 

Washington, DC 20580 

• I 

• I 
UNITED STATES OF AMERICA 

BEFORE THE FEDERAL TRADE COl\t1MISSION 

In the Matter of 

ECM BioFilms, Inc., 

a corporation, also d/b/a 

Enviroplastics International 

) 

) 

) 

) 

) 

) 

Docket No. 9358 

PUBLIC DOCUMENT 

DECLARATION OF KATHERINE JOHNSON IN SUPPORT OF COMPLAINT 

COUNSEL'S OPPOSITION TO RESPONDENT'S MOTION FOR PROTECTIVE 

ORDER AND CROSS-MOTION TO COMPEL RESPONDENT TO DISCLOSE 

CUSTOMER AND DISTRIBUTOR NAMES 

I, Katherine Johnson, declare: 

l. I am over 18 years of age, and I am a citizen ofthe United States, I am employed 

by the Federal Trade Commission ("FTC") as an attorney in the Division of Enforcement in the 

Bureau of Consumer Protection. My work address is 600 Pennsylvania Ave., NW, Mailstop M8102B, Washington, DC 20580. I am an attorney of record in the above-captioned matter, and I 

have personal knowledge ofthe facts set forth herein. 

2. Attached hereto as Exhibit 1, is a true and correct copy of press articles related ~o 

this matter received by me through the FTC's press office. 

3. Attached hereto as Exhibit 2, is a b-ue and correct copy of the final transcript of 

the initial scheduling conference held by this Court on November 21, 2013, that I received from 

the official court reporter. 

4. Attached hereto as Exhibit 3, is a true and correct copy of various em ails between 

Complaint Counsel and Respondent's Counsel. 

I declare under penalty of perjury under the laws of the United States that the foregoing is 

true and cotrect. 

Executed this 20th of December 2013 in Fairfax, VA. 

at obnson ---Complaint Counsel 
Exhibit 1 

PUBLIC DOCUMENT
CEO says FTC's claims degrade his firm

By: Jeremy Carroll

November 20, 2013

PAINESVILLE, OHIO — Saying the 

science is on his side and the 

Federal Trade Commission is "out of 

the loop," the CEO of ECM BioFilms 

Inc. pushed back against allegations 

the company misrepresented the 

biodegradability of its products.

The 16-year-old company believes it 

has properly advertised its 

biodegradable additives, ECM 

MasterBatch Pellets, President and CEO Robert Sinclair said in an interview 

at the firm's headquarters in Painesville.

In a 16-page complaint, the FTC alleges the company has made 

unsubstantiated claims about biodegradability. According to the FTC, the 

product "will not completely break down and decompose into elements 

found in nature within a reasonably short period of time after customary 

disposal."

Before an update to the Green Guides in 2012, ECM BioFilms used 

marketing materials to say the product would break down in landfills in a 

time period between nine months and five years. In October 2012, when 

the Green Guides were updated, the company changed its language, 

putting an asterisk on its marketing materials when using the word 

"biodegradable," pointing to the fact that it will take longer than a year for 

the material to biodegrade in landfills.

"We thought we were the poster boys of following the Green Guides," 

Sinclair said.

The pellets ECM manufactures in Illinois are used in all sorts of products, 

including golf tees, bags, highlighters and water bottles. 

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Normal plastic does not biodegrade because typical bacteria and algae are 

not able to break down the material. 

"Their acids and enzymes can't take these mega molecules and break them 

down far enough. So they need some help, and that's where our stuff 

comes in," Sinclair said. "Instead of the bacteria cell moving on, he hangs 

around for a little bit. And some more bacteria joins in, and all of a sudden 

they start making a biofilm."

That biofilm will eventually break down the plastic, he said. The materials 

break down in aerobic and anaerobic settings, Sinclair said, making 

landfills an acceptable destination for the plastics. During the 

biodegradation, the material gives off gas that is captured at many landfills 

for various uses, including making new resins or fuel.

He said the company went through ASTM 5511 testing that proves the 

product breaks down, but FTC said those tests do not properly replicate 

landfill conditions.

"The test results they provided to us, we believe, don't substantiate the 

claims they are making," said Katherine Johnson of the FTC's Bureau of 

Consumer Protection in a telephone interview. 

"The commission does not believe ASTM 5511 simulates conditions found 

in landfills," Johnson said. "An ASTM 5511 test would not be adequate 

substantiation that a product would biodegrade in a landfill, at least if they 

relied on that protocol alone."

Sinclair said the company had asked what tests FTC would recommend, 

but was not given any options. 

"We'll test to whatever," he said.

Johnson said FTC would look at any tests the company would conduct, but 

does not recommend tests for marketers.

"There are tests out there that could establish that plastic will biodegrade 

or these kinds of treated plastics will biodegrade in landfills," she said.

Sinclair said the objections were raised over how much moisture was used 

in the conducted tests.

"The moisture only affects the rate. It's not affecting the extent of 

biodegradation," he said. "If something is biodegradable, and it's in 

conditions where other things are biodegrading, it's going to biodegrade 

fully. It's just a matter of time."

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EXHIBIT 1 - PAGE 2 PUBLIC DOCUMENT
Link: http://www.plasticsnews.com/article/20131120/NEWS/131129999

Copyright © 1995-2013 Crain Communications Inc. All Rights Reserved.

And that "matter of time" might be key to the whole issue. FTC said the 

product will not break down in a "reasonably short period of time." ECM 

BioFilms thinks its product falls into that time frame, because under 

various conditions, it might take grass more than a year to biodegrade.

According to the new Green Guides, a plastic product can be labeled 

biodegradable if it can fully break down within one year of disposal. That 

restriction is unreasonable, Sinclair said.

"They talk about a reasonable time being a year or less — it's really 

insanity," he said. "The FTC, they're out of the loop. Purposely, they've 

been put out of the loop by interested parties. ... They don't get it. What 

they are doing is, they are basing things on information from the late '80s 

and early '90s. They haven't changed with the times. This technology is all 

different now.

"The truth is, the reason we are going to fight this out is, science is on our 

side," Sinclair said.

Once his company knew the FTC was going to make its complaint, Sinclair 

said he spoke to each of the company's current customers.

"I told them we were going to fight it, because we believe in what we're 

doing," Sinclair said. "I think, and time will tell, but I believe every single 

one of them will stay by us."

About two-thirds of the company's business is in the U.S., CFO Kenneth 

Sullivan said.

"Before they start buying our product, they test," Sullivan said about ECM 

BioFilms' customers. "They are not unsophisticated companies."

ECM BioFilms is challenging the commission's finding and a hearing is set 

for June 18 before an administrative law judge. That ruling could be 

appealed back to the FTC. That group's ruling could then be appealed to a 

federal appeals court.

"Of course we have to expense a huge amount of money. And they know 

that," Sinclair said. "And they've sullied our name. They have all the 

bargaining chips as far as that goes."

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Copyright 2013 Newstex LLC

All Rights Reserved

eWorldWire

October 30, 2013 Wednesday 12:15 AM EST

LENGTH: 609 words

HEADLINE: ECM BioFilms Responds to FTC Complaint: Claims Agency Overlooked Credible Scientific Evidence

and Its Own Rules

BYLINE: ECM BioFilms

BODY:

Oct 30, 2013 (eWorldWire: Delivered by Newstex)

ECM BioFilms Inc. (ECM) today announced that it would defend itself against an administrative complaint filed by

the Federal Trade Commission (FTC) staff against the company. The FTC action alleges that ECM made misleading

claims that plastic products produced utilizing ECM's additive technology are biodegradable after customary disposal

under most conditions including landfills because ECM lacks proof that the product eliminates 100 percent of plastics

within one year of application.

"We disagree with the charge," said ECM President Robert Sinclair. "We have the scientific evidence that plastic

products manufactured with our additives will fully biodegrade in landfills that accept municipal solid waste and in

reasonable periods of time. A reasonable timeframe for landfill biodegradation is not one year, as the FTC changed

their Green Guides to read as of October 1 of last year, but can be as much as decades. Even though we vehemently

disagree with this arbitrary one year limit for landfills, we changed our claims from the unqualified 'biodegradable'

claim to qualified biodegradability claims last year right after the newly revised Green Guides came out. Now the FTC

is going further and is disregarding the consensus scientific view, as expressed in the ASTM Standard Test Methods,

that the results of these tests are reflective of what will occur in real-world landfills."

"The FTC overlooks landfills as an important source of renewable energy," added Sinclair.

In the United States, renewable energy from the capture and use of the landfill gases produced by anaerobic

biodegradation is over eight times as great as all the solar power generated. Manufacturing plants and other institutions

all over the U.S. and the world are using this energy source to replace the energy they would be using from

non-renewable sources. An example of this trend is the GM Orion Assembly Plant near Detroit, Mich., that derives 40

percent of its total energy needs from landfill gas. Furthermore, this practice is promoted through the Environmental

Protection Agency (EPA) in their Landfill Methane Outreach Program (LMOP). If all of the currently

non-biodegradable plastics disposed of in landfills were instead biodegradable by incorporating ECM's additive

technology, the renewable energy yield of these same landfill facilities would increase by over 20 percent.

Page 1

EXHIBIT 1 - PAGE 4 PUBLIC DOCUMENT
An expert in the study of landfills, Dr. Ronald Sahu, performed an independent evaluation of the product and concluded

that "biodegradation of plastics modified by ECM Additive is not only assured, it is unavoidable in municipal landfills."

Dr. Sahu concluded that it is unquestionable that the ECM BioFilms' additive technology allows the microorganisms in

all municipal landfills to biodegrade plastic products' polymer structure, causing a mass loss of plastic material by the

biota's conversion of its hydrocarbons into biogases.

"We are a small, moderately successful company with an exciting product that is the right product at the right time, and

we find ourselves in the crosshairs of an aggressive and arbitrary enforcement action by a regulatory agency that has

somehow overlooked credible scientific evidence, as well as its own rules," Sinclair concluded. "In effect, should the

FTC prevail, consumers and the environment lose."

ECM BioFilms is available online at http://www.ecmbiofilms.com.

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Rules eWorldWire October 30, 2013 Wednesday 12:15 AM EST

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Plastics News

Print Version

November 4, 2013

SECTION: Pg. 1 Vol. 25

LENGTH: 562 words

HEADLINE: ECM BioFilms bucking FTC allegations

BYLINE: Jeremy Carroll

BODY:

The U.S. Federal Trade Commission has taken aim at five plastics companies, alleging they used false or

misleading claims of biodegradability. But one of those companies plans to fight the charges, saying it will win in the

long run.

In an announcement of the action, the FTC said ECM BioFilms Inc., American Plastic Manufacturing, Champ,

Clear Choice Housewares Inc. and Carnie Cap Inc. all made unsupported claims that their plastic products were

biodegradable, the agency said. All but ECM BioFilms have agreed to a consent pact.

ECM BioFilms, based in Painesville, Ohio, claims that plastic products made with its additives will biodegrade in

biologically active environments after more than a year. The company uses an asterisk on its marketing materials when

using the word "biodegradable," pointing to the fact that it will take longer than a year for the material to biodegrade in

landfills.

According to FTC's latest Green Guides, a company is allowed to market a product as biodegradable without a

qualifier if the product breaks down in less than a year. FTC does not have guidelines on how to market products with a

qualifier, according to ECM BioFilms.

"We believe fully that we're going to win in the long run," ECM BioFilms President Robert Sinclair said in an

interview.

Page 3

EXHIBIT 1 - PAGE 6 PUBLIC DOCUMENT
He said the company has independent tests proving the products biodegrade in atmospheres that mimic landfills. A

previous notice on its products said they would biodegrade in nine months to five years.

"[The FTC] can't get themselves around it. They are going against the science," Sinclair said.

The FTC alleges that ECM BioFilms is misrepresenting its products with claims that plastics made from the

additives are biodegradable and will completely break down "within a reasonably short period of time," that the plastics

will biodegrade in a landfill and that scientific tests prove the firm's claims.

The complaint says ECM should be prohibited from making the claims.

Two of the other companies named by FTC, Seattle-based American Plastic Manufacturing and Champ (a brand of

MacNeill Engineering Co. Inc. of Marlborough, Mass.) are customers of ECM. American Plastic Manufacturing sold

plastic shopping bags that were marketed as biodegradable and Champ sold plastic golf tees marketed as biodegradable,

according to the FTC.

Clear Choice Housewares of Leominster, Mass., and Carnie Cap of East Moline, Ill., are facing similar allegations.

FTC said Clear Choice Housewares was a customer of another additive manufacturer, Bio-Tec Environmental LLC,

and marketed "biodegradable" plastic food-storage containers. Carnie Cap used an additive manufactured and marketed

by Ecologic for its plastic rebar cap covers that claimed to be "100 percent biodegradable," FTC said.

None of those companies face a financial penalty, but they have agreed to stop using the marketing.

FTC said the action is to ensure compliance with the agency's Green Guides.

"It's no secret that consumers want products that are environmentally friendly, and that companies are trying to

meet that need," said Jessica Rich, director of the FTC Bureau of Consumer Protection, in a statement. "But companies

that don't have evidence to support the environmental claims they make about their products erode consumer confidence

and undermine those companies that are playing by the rules."

FTC has scheduled a June hearing for ECM.

LOAD-DATE: November 7, 2013

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ECM BioFilms bucking FTC allegations Plastics NewsPrint Version November 4, 2013

EXHIBIT 1 - PAGE 7 PUBLIC DOCUMENT
5 of 100 DOCUMENTS

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Crain's Cleveland Business

Print Version

November 25, 2013

SECTION: Pg. 7 Vol. 34

LENGTH: 940 words

HEADLINE: Head of ECM BioFilms says FTC has 'sullied our name';

Company denies that it made unsubstantiated claims about biodegradability of its products

BYLINE: JEREMY CARROLL

BODY:

Saying science is on his side and the Federal Trade Commission is "out of the loop," the CEO of ECM BioFilms

Inc. has pushed back against allegations the company misrepresented the biodegradability of its products.

The 16-year-old company believes it properly has advertised its biodegradable additives, ECM MasterBatch

Pellets, said president and CEO Robert Sinclair in an interview at the company's headquarters in Painesville.

In a 16-page complaint, the FTC alleges ECM BioFilms has made unsubstantiated claims about biodegradability.

According to the FTC, the product "will not completely break down and decompose into elements found in nature

within a reasonably short period of time after customary disposal."

Before an update last year to the FTC's "Green Guides," ECM BioFilms used marketing materials to say the

product would break down in landfills in a time period between nine months and five years. In October 2012, when the

Green Guides were updated, the company changed its language, putting an asterisk on its marketing materials when

using the word "biodegradable," noting that it will take longer than a year for the material to biodegrade in landfills.

"We thought we were the poster boys of following the Green Guides," Mr. Sinclair said.

The pellets ECM BioFilms manufactures in Illinois are used in various products, including golf tees, bags,

highlighters and water bottles.

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EXHIBIT 1 - PAGE 8 PUBLIC DOCUMENT
Normal plastic does not biodegrade because typical bacteria and algae are not able to break down the material.

"Their acids and enzymes can't take these mega molecules and break them down far enough. So they need some

help, and that's where our stuff comes in," Mr. Sinclair said. "Instead of the bacteria cell moving on, he hangs around

for a little bit. And some more bacteria joins in, and all of a sudden they start making a biofilm."

That biofilm eventually will break down the plastic, he said. The materials break down in aerobic and anaerobic

settings, Mr. Sinclair said, making landfills an acceptable destination for the plastics. During the biodegradation, the

material gives off gas that is captured at many landfills for various uses, including making new resins or fuel.

Mr. Sinclair said the company went through ASTM 5511 testing that proves the product breaks down, but the FTC

said those tests do not properly replicate landfill conditions.

"The test results they provided to us, we believe, don't substantiate the claims they are making," said Katherine

Johnson of the FTC's Bureau of Consumer Protection in a telephone interview.

"The commission does not believe ASTM 5511 simulates conditions found in landfills," Ms. Johnson said. "An

ASTM 5511 test would not be adequate substantiation that a product would biodegrade in a landfill, at least if they

relied on that protocol alone."

Test prep

Mr. Sinclair said the company had asked what tests the FTC would recommend, but was not given any options.

"We'll test to whatever," he said.

Ms. Johnson said the FTC would look at any tests the company would conduct, but does not recommend particular

tests.

"There are tests out there that could establish that plastic will biodegrade or these kinds of treated plastics will

biodegrade in landfills," she said.

Mr. Sinclair said objections were raised over how much moisture was used in the conducted tests.

"The moisture only affects the rate. It's not affecting the extent of biodegradation," he said. "If something is

biodegradable, and it's in conditions where other things are biodegrading, it's going to biodegrade fully. It's just a matter

of time."

And that "matter of time" might be key to the whole issue. FTC said the product will not break down in a

"reasonably short period of time." ECM BioFilms thinks its product falls into that time frame, because under various

conditions, it might take grass more than a year to biodegrade.

According to the new Green Guides, a plastic product can be labeled biodegradable if it can fully break down

within one year of disposal. That restriction is unreasonable, Mr. Sinclair said.

"They talk about a reasonable time being a year or less - it's really insanity," he said. "The FTC, they're out of the

loop. Purposely, they've been put out of the loop by interested parties. ... They don't get it. What they are doing is, they

are basing things on information from the late '80s and early '90s. They haven't changed with the times. This technology

is all different now.

"The truth is, the reason we are going to fight this out is, science is on our side," Mr. Sinclair said.

Once his company knew the FTC was going to make its complaint, Mr. Sinclair said he spoke to each of the

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Head of ECM BioFilms says FTC has 'sullied our name'; Company denies that it made unsubstantiated claims about

biodegradability of its products Crain's Cleveland BusinessPrint Version N

EXHIBIT 1 - PAGE 9 PUBLIC DOCUMENT
company's current customers.

"I told them we were going to fight it, because we believe in what we're doing," he said. "I think, and time will tell,

but I believe every single one of them will stay by us."

'All the bargaining chips'

About two-thirds of the company's business is in the United States, said chief financial officer Kenneth Sullivan.

"Before they start buying our product, they test," Mr. Sullivan said about ECM BioFilms' customers. "They are not

unsophisticated companies."

ECM BioFilms is challenging the commission's finding and a hearing is set for June 18, 2014, before an

administrative law judge.

That ruling could be appealed back to the FTC. That group's ruling could then be appealed to a federal appeals

court.

"Of course we have to expense a huge amount of money. And they know that," Mr. Sinclair said. "And they've

sullied our name. They have all the bargaining chips as far as that goes."

Jeremy Carroll is a staff reporter with Plastics News, a sister publication of Crain's Cleveland Business.

LOAD-DATE: November 28, 2013

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Head of ECM BioFilms says FTC has 'sullied our name'; Company denies that it made unsubstantiated claims about

biodegradability of its products Crain's Cleveland BusinessPrint Version N

EXHIBIT 1 - PAGE 10 PUBLIC DOCUMENT
7 of 100 DOCUMENTS

Copyright 2013 Reed Business Information Ltd

All Rights Reserved

ICIS Chemical Business

November 18, 2013

SECTION: MARKET INTELLIGENCE

LENGTH: 1153 words

BYLINE: Joe Kamalick

BODY:

QUOTE: "We do have the scientific evidence that plastic products manufactured with our additives will fully

biodegrade in landfills"

PHOTO CAPTION: FTC probes claims of biodegradability

PHOTO CREDIT: Rex Features

STANDFIRST: Authorities challenge claims that products will decompose in landfill in a short time

The US Federal Trade Commission (FTC) has launched a new wave of enforcement actions against plastics and

additives producers who contend that their products are biodegradable.

In what may prove to be a benchmark case, the FTC has alleged that a plastics and additives producer, ECM

Biofilms, misrepresented its products and additives by claiming that they were biodegradable and would completely

break down within a reasonably short time after disposal.

The commission also alleged that ECM, of Painesville, Ohio, improperly claimed that its plastics are biodegradable

in landfills and that "various scientific tests prove ECM's biodegradability claims".

Lastly, FTC said that by distributing its promotional materials to its customers and distributors, ECM provided

them "with the means to deceive consumers" about the biodegradability of its products.

Page 8

EXHIBIT 1 - PAGE 11 PUBLIC DOCUMENT
"The complaint alleges that these purportedly biodegradable plastics do not in fact biodegrade within a reasonably

short period of time after disposal in a landfill," the FTC said in charging ECM.

In addition, the commission "alleges that ECM has no substantiation to support its claims that its additive makes

plastic biodegradable". But ECM president Robert Sinclair rejected the FTC charges and said his company would

"vigorously defend itself" against the commission's allegations.

"We are bewildered by the charges," Sinclair said. "We do have the scientific evidence that plastic products

manufactured with our additives will fully biodegrade in landfills ... and in reasonable periods of time."

It all comes down to what is considered a "reasonable period".

Sinclair said that he vehemently disagrees with FTC's criteria of just one year for "a reasonable time frame for

landfill biodegradation". Sinclair argues that, based on real-world experience and science, a reasonable period for

landfill degradation could be decades.

Despite that wide difference of opinion on degradation time frames, Sinclair said that ECM adjusted its

biodegradability claims to comply with the revised Green Guides issued last year.

The "Green Guides" are non-obligatory criteria issued in revised form by the FTC in October 2012. The

commission says the guides are designed "to help marketers ensure that the claims they make about the environmental

attributes of their products are truthful and non-deceptive".

But now, said Sinclair, the FTC has moved the goal posts, changing what had been an undetermined "reasonable

time" criteria in the earlier Green Guides to a sharply restrictive one-year standard.

The FTC, he said, "is going further and is disregarding the consensus scientific view, as expressed in the ASTM

Standard Test Methods, that the results of these tests are reflective of what will occur in real-world landfills."

The international American Society for Testing and Materials (ASTM) sets thousands of voluntary consensus

standards to ensure product quality and safety and to enhance consumer confidence.

The commission also targeted two of ECM's customers, American Plastic Manufacturing of Seattle, Washington,

and the Champ Company, located at Marlborough, Massachusetts, alleging that the two firms could not claim that their

plastic end-use products were biodegradable "based on the use of additives sold by ECM".

The FTC also charged two other manufacturers of end-use plastic products - unrelated to ECM - with making

"false and unsubstantiated claims" that additives made their products "quickly biodegradable in landfills" or that they

were "100% biodegradable".

The four firms were charged with "misrepresenting that plastics treated with additives are biodegradable,

biodegradable in a landfill, biodegradable in a certain time frame, or shown to be biodegradable in a landfill or that

various scientific tests prove their biodegradability claims" and that the companies "lacked reliable scientific tests to

back up these claims".

In consent agreements accepted by all four end-use plastic product manufacturers, each firm is barred for 20 years

"from making biodegradability claims unless the representations are true and supported by competent and reliable

scientific evidence". If during the 20-year period of the consent decrees the firms should again cross the FTC's line of

biodegradability, they could face large fines.

"Consistent with the Green Guides, the companies must have evidence that the entire plastic product will

completely decompose into elements found in nature within one year after customary disposal ... before making any

unqualified biodegradable claim", the FTC said.

Page 9

ICIS Chemical Business November 18, 2013

EXHIBIT 1 - PAGE 12 PUBLIC DOCUMENT
Noting that the action against ECM and some of its customers is the first that FTC has launched under the new

Green Guides, FTC attorney Katherine Johnson said that "We are concerned that these false claims of biodegradability

could become more widespread absent the actions that we're taking".

Johnson is the FTC's lead attorney in the case against ECM.

As the enforcement action against EMC and some of its customers shows, manufacturers of end-use plastic

products are equally vulnerable to FTC enforcement actions on biodegradability issues as are additives producers.

"They are as liable as the additives producers," said Johnson. If end-use product manufacturers "pass along

biodegradability claims from the additives manufacturer, they are responsible for ensuring that those claims are

substantiated".

Sinclair is sympathetic to his two customers who signed consent deals with the FTC in the case, saying they had to

sign in order to avoid the costs of litigation.

"Most of our customers are major firms, and they understand that the FTC is jumping into a controversy that they

shouldn't be in, that they, the FTC, are on the wrong side of the science," he said.

Although the four end-use plastic product manufacturers were not fined or otherwise penalised, the FTC's Johnson

said the consent agreement approach is an effective deterrent.

"The deterrence is in these companies' exposure to possible civil penalties if they engage in the same

misrepresentations in the future," she said, adding: "We've found that getting them under a [consent agreement] order is

a good way to effect compliance."

But ECM isn't going along.

Sinclair said his company will contest the FTC charges in administrative proceedings before the commission. An

FTC administrative law judge will hear the case. If that in-house judge rules in favor of the commission, EMC would

have to appeal to the FTC commissioners themselves.

If the commissioners then rule against EMC, the company could at last take the case into federal court for a

first-time hearing outside of the FTC.

It could take years.

LOAD-DATE: November 19, 2013

Page 10

ICIS Chemical Business November 18, 2013

EXHIBIT 1 - PAGE 13 PUBLIC DOCUMENT
9 of 100 DOCUMENTS

Copyright 2013 Reed Business Information Limited

All Rights Reserved

Chemical News & Intelligence

November 7, 2013 Thursday

LENGTH: 1269 words

HEADLINE: INSIGHT: US targets claims of biodegradable in plastics

BODY:

By Joe Kamalick

US is changing criteria for biodegradable plastics WASHINGTON (ICIS)--The US Federal Trade Commission

([1]FTC) has launched a new wave of enforcement actions against plastics and additives producers who contend that

their products are biodegradable.

In what may prove to be a benchmark case, the [2]FTC has alleged that a plastics and additives producer, [3]ECM

Biofilms, misrepresented its products and additives by claiming that they were biodegradable and would completely

break down within a reasonably short time after disposal.

The commission also alleged that ECM, of Painesville, Ohio, improperly claimed that its plastics are biodegradable

in landfills and that "various scientific tests prove ECM's biodegradability claims".

Lastly, FTC said that by distributing its promotional materials to its customers and distributors, ECM provided

them "with the means to deceive consumers" about the biodegradability of its products.

"The complaint alleges that these purportedly biodegradable plastics do not in fact biodegrade within a reasonably

short period of time after disposal in a landfill," the FTC said in charging ECM.

In addition, the commission "alleges that ECM has no substantiation to support its claims that its additive makes

plastic biodegradable".

But ECM president Robert Sinclair rejected the FTC charges and said his company would "vigorously defend

itself" against the commission's allegations.

"We are bewildered by the charges," Sinclair said.

"We do have the scientific evidence that plastic products manufactured with our additives will fully biodegrade in

landfills ... and in reasonable periods of time," Sinclair said.

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EXHIBIT 1 - PAGE 14 PUBLIC DOCUMENT
It all comes down to what is considered a "reasonable period".

Sinclair said that he vehemently disagrees with FTC's criteria of just one year for "a reasonable time frame for

landfill biodegradation". Sinclair argues that, based on real-world experience and science, a reasonable period for

landfill degradation could be decades.

Despite that wide difference of opinion on degradation time frames, Sinclair said that ECM adjusted its

biodegradability claims to comply with the revised Green Guides issued last year.

The "[4]Green Guides" are non-obligatory criteria issued in revised form by the FTC in October 2012. The

commission says the guides are designed "to help marketers ensure that the claims they make about the environmental

attributes of their products are truthful and non-deceptive".

But now, said Sinclair, the FTC has moved the goal posts, changing what had been an undetermined "reasonable

time" criteria in the earlier Green Guides to a sharply restrictive one-year standard.

The FTC, he said, "is going further and is disregarding the consensus scientific view, as expressed in the ASTM

Standard Test Methods, that the results of these tests are reflective of what will occur in real-world landfills."

The international American Society for Testing and Materials ([5]ASTM) sets thousands of voluntary consensus

standards to ensure product quality and safety and to enhance consumer confidence.

The commission also targeted two of ECM's customers, American Plastic Manufacturing of Seattle, Washington,

and the Champ Company, located at Marlborough, Massachusetts, alleging that the two firms could not claim that their

plastic end-use products were biodegradable "based on the use of additives sold by ECM".

The FTC also charged two other manufacturers of end-use plastic products - unrelated to ECM - with making

"false and unsubstantiated claims" that additives made their products "quickly biodegradable in landfills" or that they

were "100% biodegradable".

The four firms were charged with "misrepresenting that plastics treated with additives are biodegradable,

biodegradable in a landfill, biodegradable in a certain time frame, or shown to be biodegradable in a landfill or that

various scientific tests prove their biodegradability claims" and that the companies "lacked reliable scientific tests to

back up these claims".

In consent agreements accepted by all four end-use plastic product manufacturers, each firm is barred for 20 years

"from making biodegradability claims unless the representations are true and supported by competent and reliable

scientific evidence".

If during the 20-year period of the consent decrees the firms should again cross the FTC's line of biodegradability,

they could face large fines.

"Consistent with the Green Guides, the companies must have evidence that the entire plastic product will

completely decompose into elements found in nature within one year after customary disposal ... before making any

unqualified biodegradable claim", the FTC said.

Noting that the action against ECM and some of its customers is the first that FTC has launched under the new

Green Guides, FTC attorney Katherine Johnson said that "We are concerned that these false claims of biodegradability

could become more widespread absent the actions that we're taking".

Johnson is the FTC's lead attorney in the case against ECM.

As the enforcement action against EMC and some of its customers shows, manufacturers of end-use plastic

Page 12

INSIGHT: US targets claims of biodegradable in plastics Chemical News & Intelligence November 7, 2013 Thursday

EXHIBIT 1 - PAGE 15 PUBLIC DOCUMENT
products are equally vulnerable to FTC enforcement actions on biodegradability issues as are additives producers.

"They are as liable as the additives producers," said Johnson. If end-use product manufacturers "pass along

biodegradability claims from the additives manufacturer, they are responsible for ensuring that those claims are

substantiated".

Sinclair is sympathetic to his two customers who signed consent deals with the FTC in the case, saying they had to

sign in order to avoid the costs of litigation.

He said the FTC case against EMC has not had broad effect on his customers.

"We keep our customers informed, and we told them that this was in the works," he said, adding that "as far as we

know, there's no customers that we've lost."

"Most of our customers are major firms, and they understand that the FTC is jumping into a controversy that they

shouldn't be in, that they, the FTC, are on the wrong side of the science," he said.

Although the four end-use plastic product manufacturers were not fined or otherwise penalised, the FTC's Johnson

said the consent agreement approach is an effective deterrent.

"The deterrence is in these companies' exposure to possible civil penalties if they engage in the same

misrepresentations in the future," she said, adding: "We've found that getting them under a [consent agreement] order is

a good way to effect compliance."

But ECM isn't going along.

Sinclair said his company will contest the FTC charges in administrative proceedings before the commission. An

FTC administrative law judge will hear the case. If that in-house judge rules in favour of the commission, EMC would

have to appeal to the FTC commissioners themselves.

If the commissioners then rule against EMC, the company could at last take the case into federal court for a

first-time hearing outside of the FTC.

It could take years.

"We are prepared to go the distance," Sinclair said. "They are so wrong, they are on the wrong side of the science.

So we got to go to court, yes."

Paul Hodges studies key influences shaping the chemical industry in [6]Chemicals and the Economy Bookmark

John Richardson and Malini Hariharan's [7]Asian Chemical Connections blog

References

1. http://www.ftc.gov/ 2. http://www.ftc.gov/opa/2013/10/greenactions.shtm 3. http://www.ecmbiofilms.com/ 4.

http://www.ftc.gov/os/2012/10/greenguidessummary.pdf 5. http://www.astm.org/ABOUT/overview.html 6.

http://www.icis.com/blogs/chemicals-and-the-economy/ 7. http://www.icis.com/blogs/asian-chemical-connections/

LOAD-DATE: November 8, 2013

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EXHIBIT 1 - PAGE 16 PUBLIC DOCUMENT
10 of 100 DOCUMENTS

Copyright 2013 Plain Dealer Publishing Co.

All Rights Reserved

Plain Dealer (Cleveland, OH)

October 30, 2013 Wednesday

SECTION: A; Pg. 012

LENGTH: 344 words

HEADLINE: Company fights FTC over 'green' complaint

BODY:

A Painesville company and the Federal Trade Commission are battling over the company's claims that its

additives make plastic biodegradable.

The FTC announced Tuesday that it had filed an administrative complaint against ECM BioFilms, which sells

additives to plastics manufacturers. The agency claims the additives don't break down plastics fast enough to meet its

guidelines for eco-friendly claims.

"We are fighting this completely," said Bob Sinclair, ECM's president, who said the agency has abandoned science

for folklore. "They're just substituting their ideas for the scientific community's."

The FTC last fall changed its Green Guides, which warn marketers about the kinds of broad "eco-friendly" claims

the agency could consider to be deceptive.

The updated guides say that for a company to claim a product is biodegradable, it must either prove the product will

break down into natural elements within a year or specifically qualify its claims.

At the time of the change, the agency cautioned companies against making biodegradability claims for items

destined for landfills or recycling facilities, because those disposal methods could add to the time it takes for a product

to break down.

"We feel we are following the Green Guides," Sinclair said, noting that the company changed its claims when the

guides went into effect to reflect a range of years that it might take for products to break down, depending on the

environment.

He said he hoped to rally others to join the fight against the FTC's interpretation of the guides. "This is a new

industry. ... The consent orders they want us to sign would put us out of business."

The FTC said it had simultaneously filed administrative complaints against plastic-bag maker American Plastic

Page 14

EXHIBIT 1 - PAGE 17 PUBLIC DOCUMENT
Manufacturing; golf-tee maker Champ; Clear Choice, which makes reusable food containers; and Carnie Cap Inc.,

which makes what it claimed were biodegradable rebar cap covers.

The FTC also announced that AJM Packaging Corp. had agreed to a consent order to substantiate claims it makes

for its paper plates, cups and napkins.

GRAPHIC: Garbage is seen at Cleveland's Ridge Road waste transfer station, Thursday, June 14, 2012. Mayor Frank

Jackson wants to build a waste-to-energy plant at this site. In this area, recyclables are processed and trash is prepared

for shipment to landfills. (Marvin Fong / The Plain Dealer)

LOAD-DATE: October 31, 2013

Page 15

Company fights FTC over 'green' complaint Plain Dealer (Cleveland, OH) October 30, 2013 Wednesday

EXHIBIT 1 - PAGE 18 PUBLIC DOCUMENT
Exhibit 2 

PUBLIC DOCUMENT
1

1 FEDERAL TRADE COMMISSION

 2 

3 In the Matter of )

4 ECM BioFilms, Inc., )

5 a corporation, also d/b/a ) Docket No. 9358

6 Enviroplastics International, )

7 Respondent. )

8 ------------------------------) 

 9 

10 November 21, 2013

11 2:06 p.m.

12 INITIAL PREHEARING CONFERENCE

13 

14 

15 BEFORE THE HONORABLE D. MICHAEL CHAPPELL

16 Chief Administrative Law Judge

17 Federal Trade Commission

18 600 Pennsylvania Avenue, N.W.

19 Washington, D.C.

20 

21 

22 Reported by: Josett F. Whalen, RMR-CRR

23 

24 

25 

PUBLIC DOCUMENT
2

1 APPEARANCES:

 2 

3 ON BEHALF OF THE FEDERAL TRADE COMMISSION:

4 KATHERINE JOHNSON, ESQ.

5 ELISA K. JILLSON, ESQ.

6 Federal Trade Commission

7 Bureau of Consumer Protection

8 Division of Enforcement

9 600 Pennsylvania Avenue, N.W.

10 Washington, D.C. 20580-0000

11 (202) 326-2185

12 kjohnson3@ftc.gov

13 

14 ON BEHALF OF RESPONDENT:

15 JONATHAN W. EMORD, ESQ.

16 Emord & Associates, P.C.

17 1050 17th Street, N.W.

18 Suite 600

19 Washington, D.C. 20036

20 (202) 466-6937

21 jemord@emord.com

22 

23 

24 

25 

PUBLIC DOCUMENT
3

1 P R O C E E D I N G S

2 - - - - - 

3 JUDGE CHAPPELL: Call to order Docket 9358,

4 In Re ECM BioFilms, Inc.

5 I'll start with the appearances of the parties,

6 government first.

7 MS. JOHNSON: At the podium, Your Honor?

8 JUDGE CHAPPELL: You can either move here or

9 just stand and speak into the microphone.

10 MS. JOHNSON: Good afternoon, Your Honor.

11 Katherine Johnson for complaint counsel.

12 MS. JILLSON: And Elisa Jillson for complaint

13 counsel.

14 JUDGE CHAPPELL: And for respondent?

15 MR. EMORD: Jonathan Emord on behalf --

16 JUDGE CHAPPELL: You need to speak to address 

17 the court or I don't hear you.

18 MR. EMORD: I'm sorry, Your Honor?

19 JUDGE CHAPPELL: You need to stand when you

20 speak to address the court.

21 MR. EMORD: All right.

22 Jonathan Emord on behalf of respondent's

23 counsel.

24 JUDGE CHAPPELL: Thank you.

25 Our office will e-mail courtesy copies of

PUBLIC DOCUMENT
4

1 orders to the parties, and these will be courtesy

2 copies. Official service is made by the

3 Office of the Secretary.

4 I'll need each party to designate no more than

5 two individuals to receive communications from the

6 OALJ, so I'll need you to send an e-mail to

7 oalj@ftc.gov to inform us of the e-mail addresses of

8 the two individuals you want to designate to receive

9 communications from my office.

10 The scheduling order in the case was e-mailed to

11 the parties. I see that there are no revisions

12 suggested or modifications. Is that correct?

13 MR. EMORD: That is correct, Your Honor.

14 MS. JOHNSON: Yes, Your Honor.

15 JUDGE CHAPPELL: Okay. The order will be

16 issued, pursuant to the rules, no later than Monday.

17 The trial is limited in time, and pursuant to

18 rule 3.41(b), we're limited to no more than 210 hours.

19 I'll need the parties to come up with a system or a

20 mechanism to keep track of time.

21 Let's talk about settlement discussions.

22 Who wants to give me a status?

23 MS. JOHNSON: I will, Your Honor,

24 Katherine Johnson for complaint counsel.

25 We've -- we've had settlement discussions over

PUBLIC DOCUMENT
5

1 the -- before this case even began. We did have our

2 mandatory meeting prior to this scheduling conference.

3 We've talked about it. The parties are not in agreement

4 over settlement.

5 JUDGE CHAPPELL: Not in agreement over what

6 "a short period of time" means?

7 MS. JOHNSON: We didn't discuss it to that level

8 of detail, Your Honor.

9 JUDGE CHAPPELL: You didn't get that far. Okay.

10 Thank you.

11 Anything to add to that?

12 MR. EMORD: I just would concur.

13 JUDGE CHAPPELL: Okay. At this time I'll allow

14 each side to make a presentation or overview of their

15 case, limited to 15 minutes.

16 Because this hearing is open to the public, to

17 the extent there is any confidential information

18 involved, I don't want you to reveal it at this

19 hearing.

20 I'll start with the government. Go ahead,

21 whenever you're ready.

22 MS. JOHNSON: Thank you, Your Honor.

23 Your Honor, this is a simple and

24 straightforward case. ECM makes express and implied

25 claims about its additives that are untrue and

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1 unsubstantiated.

2 ECM's violations of the FTC Act are clear, and

3 the remedies that we seek in this case are warranted.

4 Your Honor, ECM would like you to think that

5 this case is about the First Amendment, but as the

6 Supreme Court stated in Central Hudson, there is no

7 First Amendment protection for deceptive commercial

8 speech.

9 So what are ECM's claims and why are they

10 deceptive?

11 By and large, ECM's claims are express. ECM

12 made two slightly different express claims over time.

13 The first one was prior to October 2012. ECM

14 claimed that plastics treated with the ECM additive will

15 completely biodegrade in nearly all landfills in a

16 period of time of nine months to five years.

17 After the release of the FTC's revised

18 Green Guides, ECM modified its claim to state that

19 plastics treated with the ECM additive would completely

20 biodegrade in most landfills in some period of time

21 greater than a year.

22 Both of these claims are false and

23 unsubstantiated.

24 Further, with its logos and certificates, ECM

25 passed along express and implied claims through its

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1 customers and its distributors to end-use consumers that

2 were also false and unsubstantiated.

3 JUDGE CHAPPELL: Did you say that the new claim

4 said some period of time greater than one year?

5 MS. JOHNSON: Yes, Your Honor.

6 JUDGE CHAPPELL: And you said that's false?

7 MS. JOHNSON: Yes, Your Honor.

8 The -- it's false because they continued to make

9 express claims throughout their entire Web site that

10 still said the nine-month-to-five-year claim, and it's

11 false because things don't require -- I mean, if you're

12 talking, you know, things -- all things at all time will

13 eventually biodegrade, that's correct, so --

14 JUDGE CHAPPELL: So greater than one year can be

15 a long time.

16 MS. JOHNSON: It could be, but it would be a

17 meaningless claim if it didn't mean anything -- didn't

18 mean about a year.

19 JUDGE CHAPPELL: I also saw a phrase throughout

20 the complaint "a short period of time."

21 How do you define "a short period of time"?

22 MS. JOHNSON: Well, we don't need to define

23 "a short period of time here," Your Honor, because ECM

24 made express claims of nine months to five years, so

25 just focused on the claims, the express claims that ECM

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1 made --

2 JUDGE CHAPPELL: Well, you need to answer my

3 question.

4 MS. JOHNSON: Oh, sure.

5 JUDGE CHAPPELL: What do you think "a short

6 period of time" means?

7 MS. JOHNSON: Me personally or the government?

8 Your Honor, the short, you know --

9 JUDGE CHAPPELL: No. You're speaking for

10 complaint counsel.

11 MS. JOHNSON: Yes, yes. Yes, Your Honor.

12 So if you're talking about the language "in a

13 reasonable period of time," that language in the --

14 there's some guidance in the Green Guides that says

15 consumers would understand that to mean a period of

16 time of one year -- of about one year for an unqualified

17 claim.

18 So if ECM's claims were that its product is --

19 you know, once added to a plastic makes the plastic

20 biodegradable, then -- and that claim gets passed down

21 to consumers, consumers can reasonably interpret that to

22 mean in one year in a landfill.

23 JUDGE CHAPPELL: Okay. If I understood you

24 earlier, it's your position that whatever period of time

25 is necessary is not an issue in the case, since you said

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1 you don't need to prove it?

2 MS. JOHNSON: To prove?

3 Can you repeat the question, Your Honor. I'm

4 sorry.

5 JUDGE CHAPPELL: I asked you how do you define

6 "a short period of time" and you said you don't need to

7 prove that.

8 MS. JOHNSON: For purposes of the claims that

9 ECM is making that we're challenging, the express

10 claims, we will not need to prove because they -- these

11 claims are express. They expressly say nine months to a

12 year.

13 JUDGE CHAPPELL: So we don't need to have any

14 evidence on these consumer surveys you referred to where

15 consumers seem to think it means a year or less?

16 MS. JOHNSON: To the extent that our

17 allegations are that ECM made implied claims, these

18 unqualified biodegradable claims, through its logos and

19 certificates that it passed down from its distributors

20 to end-use consumers, then it's -- at the very least,

21 they intended to convey the express claims that they

22 were making on their Web site, and if they -- or they

23 also -- or excuse me -- and they also could -- could

24 have -- excuse me -- those claims could reasonably have

25 been interpreted by consumers, which was the ultimate

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1 intended audience, to mean one year or less, then we

2 will put on extrinsic evidence about that.

3 JUDGE CHAPPELL: All right. Go ahead.

4 MS. JOHNSON: So as I was saying, Your Honor,

5 ECM in its answer admits that the claim -- admits its

6 claim that plastics treated with its additive will

7 completely biodegrade in landfills. ECM's marketing

8 materials, its brochures, its fliers, its Web site,

9 repeatedly make express claims that this process will

10 happen in nine months to five years.

11 As an example, of these express claims that ECM

12 has on its Web site, I'm going to read a direct quote

13 from ECM's marketing materials:

14 "Plastic products made with our additives will

15 break down in approximately nine months to five years in

16 nearly all landfills."

17 And another quote from its marketing materials:

18 "The time frame of between nine months to five

19 years will give a good general idea for most

20 conditions."

21 These claims leave little room for ambiguity or

22 interpretation. Even after ECM revised its claim on its

23 Web site to state that plastics treated with its

24 additive would take some period of time greater than a

25 year, this nine-month-to-five-year language remained

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1 unaltered throughout its Web site.

2 JUDGE CHAPPELL: So you're saying that it

3 wouldn't biodegrade in five years?

4 MS. JOHNSON: Yes, Your Honor.

5 JUDGE CHAPPELL: All right.

6 MS. JOHNSON: So why are these claims deceptive?

7 There are two reasons. ECM's are false, and ECM's

8 claims are not supported by competent and reliable

9 scientific evidence.

10 For the falsity, there are two reasons why these

11 claims are false. First has to do with the blending

12 process that ECM uses. The process of physically

13 blending the additive in with a conventional plastic

14 doesn't change the underlying chemical characteristics

15 of the conventional plastic.

16 JUDGE CHAPPELL: Let's hold on a second.

17 What competent and reliable scientific evidence

18 does the government say is required?

19 MS. JOHNSON: They would need to have testing

20 that was appropriate and would substantiate the kinds

21 of claims that they're making. They're making claims

22 of complete biodegradation. They need to have tests

23 that show either, you know, complete, full

24 biodegradation of the tested sample, or they could have

25 a test that could run up to 90 percent perhaps.

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1 I mean, there are the science -- the testimony

2 that we'll put on through our expert will explain that

3 there are ways to substantiate these kinds of claims.

4 Or they could make qualified claims that fit the kinds

5 of testing that's out there for this, you know, to test

6 these kinds of additives.

7 JUDGE CHAPPELL: All right.

8 MS. JOHNSON: So we will put on testimony from

9 a leading expert in plastics engineering who also has a

10 specialty in biodegradable polymers, and he will

11 explain that it normally takes hundreds of thousands of

12 years for conventional plastics to biodegrade and that

13 the reason for this just has to do with chemical

14 characteristics of plastics, conventional plastics.

15 And the expert will further explain that the

16 blending process that ECM employs is a physical blend

17 of the additive with the conventional plastics. It's

18 still 99 percent conventional plastic that's inherently

19 nonbiodegradable, and he'll explain that there's nothing

20 about the process that ECM uses that would change the

21 chemical characteristics of the conventional plastic to

22 make it more susceptible to biodegradation after adding

23 the 1 percent additive.

24 So he'll explain that there's nothing about

25 ECM's process that would reduce the normal thousands of

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1 years or hundreds of thousands of years that it would

2 take a conventional plastic to biodegrade, to reduce

3 that period to just a mere five years.

4 So the other reason why these claims are false

5 is that things just don't biodegrade very quickly in

6 landfills. And we are going to put on testimony from a

7 leading expert in landfill management and design. He's

8 highly respected in his field.

9 And he's going to explain that there are two

10 factors that affect the rates of biodegradation, the

11 presence of oxygen and the presence of moisture.

12 And he'll explain that landfills are generally

13 anaerobic environments that lack oxygen and that

14 biodegradation that takes place in anaerobic conditions

15 naturally takes place slower and much more slowly than

16 it would take place in the presence of oxygen.

17 So, for instance, something that would

18 decompose fully or biodegrade fully in a compost

19 environment that's oxygen rich in a few months could

20 take as long as years to decades to fully biodegrade in

21 a landfill.

22 The expert will also explain why moisture

23 affects the rate of biodegradation and that the

24 operational requirements of landfills today restrict

25 the amount of liquid infiltration and the amount of

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1 moisture that can get into -- that could be added to

2 landfills and that by restricting infiltration of liquid

3 and the addition of liquid into landfills further slows

4 down the biodegradation process.

5 So by and large, landfills in the United States

6 have conditions that naturally slow down

7 biodegradation -- the rate of biodegradation.

8 And our expert, our landfill expert, will also

9 explain that these dry anaerobic conditions are not an

10 antiquated view of landfills but apply to most

11 landfills in the United States today.

12 So ECM's claim that plastics treated with their

13 additives will fully biodegrade in less than five years

14 in a landfill is tantamount to saying that it will

15 biodegrade faster than most organics will in a landfill,

16 and that claim is simply false.

17 In addition to the claims being false, the

18 claims are unsubstantiated, for two reasons. ECM didn't

19 use tests that were designed to support their claims,

20 and the data that they have from the testing that they

21 did conduct is invalid and can't support any reliable

22 conclusions.

23 So for the first point, the tests were not

24 designed to support their claims, the expert testimony

25 that we'll present will explain that the scientific

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1 consensus is that the test methods that ECM used cannot

2 support claims of complete or full biodegradation, and

3 it cannot support claims of biodegradation in

4 landfills.

5 Even -- second, even if these tests could

6 support those claims, the tests were performed so

7 shoddily, so poorly that any of the data coming out of

8 those tests just can't be trusted. It's unreliable, and

9 so any of the results that we see just don't prove

10 anything.

11 Your Honor, as I stated in the beginning, this

12 case is straightforward. ECM makes remarkable claims

13 that it can take conventional plastics that would

14 normally take hundreds to thousands of years to fully

15 biodegrade and turn these plastics into plastics that

16 will biodegrade completely in five years in a landfill.

17 If these claims were true, it would be truly

18 revolutionary. It would revolutionize the plastics

19 industry. It would be a boon to environmentally

20 conscious consumers. But these claims simply are not

21 true, and quite frankly, they fly in the face of

22 scientific consensus, and they're unsubstantiated.

23 These claims clearly violate the FTC Act, and we

24 are entitled to the relief that we are seeking here.

25 Thank you, Your Honor.

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1 JUDGE CHAPPELL: Go ahead.

2 MR. EMORD: Thank you, Your Honor.

3 A brief background of who the client is here and

4 who the respondent is.

5 Respondent ECM BioFilms, Enviroplastics

6 International, was founded in 1988 following its

7 owners' discovery of an additive that causes plastics

8 in biologically active environments to be attractive to

9 colonies of microorganisms whose acidic by-products and

10 enzymatic activity cause plastics to degrade.

11 JUDGE CHAPPELL: Are these products intended for

12 use anywhere other than a landfill?

13 MR. EMORD: They can be used anywhere that is in

14 an external environment and they can cause plastics to

15 degrade.

16 The principal aspect of this --

17 JUDGE CHAPPELL: Is there a target market for

18 the product?

19 MR. EMORD: Plastics manufacturers.

20 The government misconstrues who our target is

21 and who we advertise to. We advertise exclusively to a

22 very sophisticated market of plastic manufacturers and

23 distributors to plastics manufacturers.

24 JUDGE CHAPPELL: All right. Just so I'm clear,

25 because I'm coming in here with no idea of this other

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1 than what I've read in pleadings, this is a product --

2 these pellets, for example, go into the hopper before

3 the plastic is extruded and manufactured. It's not

4 something you add in a pile of plastic that's going to a

5 landfill.

6 MR. EMORD: No. It is -- the product is given

7 to the plastics manufacturer. We're not the plastics

8 manufacturer.

9 The plastics manufacturer incorporates the

10 product in a 1 percent load or more of the product into

11 the -- 99 parts plastic, one part additive. It is

12 equally diffused throughout the product, throughout the

13 plastic. And it is then indefinitely used in the

14 marketplace for whatever. By the time it gets to a

15 landfill or other biologically active environment, it

16 then causes degradation.

17 The degradation occurs in anaerobic

18 environments. The product is designed to work in

19 anaerobic environments, not aerobic. It doesn't depend

20 on thermal degradation. It doesn't depend upon

21 photodegradation from the sun. It actually works

22 underneath in the landfill, and it hastens the

23 degradation of the plastic.

24 JUDGE CHAPPELL: If there's no oxygen, what is

25 the catalyst?

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1 MR. EMORD: The catalyst is this enzymatic

2 activity which takes place because of the kinds of

3 anaerobic organisms that are attracted to this specific

4 ingredient, which I won't describe for reasons, trade

5 secret reasons. But that ingredient induces the

6 creation of these colonies.

7 It also does not depend upon the induction to

8 take place on a surface of the plastic per se. It can

9 happen on the sides. It can happen underneath. It

10 doesn't -- because it's evenly distributed throughout.

11 And these plastic manufacturers that are buying

12 this are very savvy. They are not the public.

13 JUDGE CHAPPELL: Let me ask you, what are the

14 typical uses? Are you aware are those, for example,

15 garbage bags or Tupperware bowls? What's a typical use

16 of it?

17 MR. EMORD: Well, you can use it in any kind of

18 plastic. The thing is, depending upon the thickness

19 and the variety of plastic, that determines the

20 relative level of degradation. Thick -- large, thick

21 plastics will degrade slower. Thin plastics will

22 degrade faster. And it is all dependent upon the

23 level, degree, quality and quantity of plastic.

24 Furthermore, in the Web site for this company

25 and overtly in their representations to their

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1 clients -- which, by the way, most of the communication

2 with this select group of customers is verbal

3 interaction and it's almost constant. The manufacturer

4 is interacting with the company. The company is

5 interacting with the manufacturers. And that is the

6 principal -- you know, if we look at the net impression,

7 the overall net impression, it must include the

8 interactions that are verbal.

9 JUDGE CHAPPELL: But you're aware the Web site

10 is available to anybody; right?

11 MR. EMORD: The Web site anybody can go to.

12 JUDGE CHAPPELL: Anybody can click on that --

13 MR. EMORD: Sure.

14 JUDGE CHAPPELL: -- and then they can get some

15 idea in their head and go to Target, Kohl's, and say,

16 Look, this might have that in there and --

17 MR. EMORD: There would be a very big disconnect

18 because it's not promoted to consumers at all, so a

19 consumer buying a product in a store would not know that

20 it is an ECM ingredient-containing plastic. They just

21 wouldn't know.

22 JUDGE CHAPPELL: Although there might be a

23 biodegradation claim on a box of Hefty trash bags.

24 MR. EMORD: But that wouldn't be ECM's claim.

25 That would be a third-party claim.

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1 As far as the product is concerned, the

2 additive-infused plastics, when they're in contact with

3 other biodegrading organic material, such as exists in

4 biodigesters and landfills, become a catalyst for the

5 breakdown of long hydrocarbon chains present in

6 petrochemical plastics.

7 And as I said, the mechanism is not

8 photodegradation. It's not thermal degradation. It's

9 dependent upon the enzymatic and acidic transformation

10 of plastic polycarbons.

11 And the -- one of the remarkable things about

12 this -- and this is fully consistent -- the process is

13 recognized and encouraged by the Environmental

14 Protection Agency in EPA regulation. You can see EPA

15 Landfill Methane Outreach Program.

16 One of the things that is extraordinary about

17 this, quickly, is that the by-products of this process

18 include the production of methane gas, and so this

19 leads landfills to be able to engage in renewable

20 energy production.

21 And you'll see from the evidence in this case

22 that that renewable energy production actually is

23 taking place and that the product, when tested,

24 establishes that it actually does produce methane

25 by-products, when the product is tested under the

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1 American Society for Testing and Materials standard, the

2 only standard that exists.

3 JUDGE CHAPPELL: What does methane production

4 have to do with the degradation claim?

5 MR. EMORD: As the polycarbons degrade, one of

6 the by-products of the enzymatic interaction with the

7 polycarbons is the production of methane gas. And it

8 is an extraordinary thing. It actually is the case

9 that you can measure the production of the methane gas,

10 so if you were to take an active and a control --

11 JUDGE CHAPPELL: So the methane gas presence is

12 a marker that it's working?

13 MR. EMORD: It is. It is a marker that it's

14 working.

15 And the standards, you know, it's -- they don't

16 mention any standards, the government doesn't. And the

17 standards exist. And we have the American Society for

18 Testing and Materials that has come up with several

19 standards, and this product was tested under them,

20 D5209 -- and I could go on and on with the numbers. I

21 don't think that you probably care to hear that now.

22 But there were 12 studies and reports done

23 testing ECM's additive and finished plastics products

24 under anaerobic, aerobic, and composting conditions and

25 also electron microscopy of plastics showing visual

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1 signs of biodegradation and biota formation.

2 Well, contrary to the staff's complaint, ECM

3 tells customers that it does not guarantee particular

4 time periods or rates of biodegradation.

5 JUDGE CHAPPELL: Are you taking issue with some

6 of the Web page captures, some of the advertisements

7 that are in the complaint?

8 MR. EMORD: They exist, but they're not in full

9 context. We do not have a net impression because, for

10 example, just to give you an example, what they don't

11 cite here that's on the ECM Web site, under Life

12 Expectancy of Products Manufactured with ECM

13 MasterBatch Pellets, is this statement, for example:

14 "Biodegradation is a natural process that

15 occurs around the world but at various speeds due to

16 various conditions. Plastics with ECM's additive

17 behave like sticks, branches or trunks of trees. Due

18 to this fact, we do not guarantee any particular time

19 because the time depends on the same factors that the

20 biodegradation of woods and most other organic materials

21 on earth depend."

22 JUDGE CHAPPELL: But are you referring by

23 asterisk to that disclaimer where the claims are made?

24 MR. EMORD: That's right.

25 JUDGE CHAPPELL: Right where I see --

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1 MR. EMORD: Directly after that statement comes

2 the point that she's mentioning, directly after that

3 statement.

4 And furthermore, again, the net impression,

5 there's this interaction with the customer, and as the

6 evidence will show, the customer is fully informed. No

7 one is deceived here. The customer is fully informed

8 of the evidence.

9 And it is explained to them that, look -- and

10 they're not fools. They're sophisticated. They know

11 that, hey, look, a landfill in one location in the

12 United States where conditions are certain are going to

13 be different from a landfill that's in another location

14 in the United States. They're going to understand that

15 within a landfill, degrees, levels, rates of

16 biodegradation differ within the landfill itself.

17 There is -- the extraordinary thing is, the

18 ordering paragraph 1(A), the ordering paragraph

19 subsection, specifically prospectively puts a cease and

20 desist order on this client that says, Hey, you cannot

21 say that there's biodegradation unless it's within a

22 year. Or they can say alternatively, you could say

23 that I suppose, if I read this correctly, provided that

24 you reveal the exact rate of biodegradation or that the

25 biodegradation occurs in a certain manner by a specific

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1 rate.

2 And the point here is that this is impossible.

3 It is impossible for anyone in the world to give that

4 specificity. You can't pinpoint it because the

5 environment is so extraordinarily diverse and the

6 conditions are so diverse.

7 So when this company communicates with its

8 customers, with those who purchase the product and use

9 the product, this is transparent. They know that, and

10 they also know from us we are not guaranteeing

11 degradation in any specific landfill or other site with

12 any specific rate.

13 Now, in ideal conditions or in the best

14 landfill sites or in certain parts of a landfill site,

15 then this ideal model of between nine months and five

16 years could apply. But that's not what the message is

17 to the actual customer.

18 JUDGE CHAPPELL: Let's talk about the customer.

19 MR. EMORD: All right. 

20 JUDGE CHAPPELL: How does -- let's talk about

21 the supply chain.

22 How does someone buy this product?

23 MR. EMORD: Say I'm a plastics manufacturer,

24 and I'm interested in finding a product that can

25 improve the biodegradation of my plastics for a number

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1 of reasons, but that's my interest. I'll look over the

2 whole market. I'll probably -- because I'm a plastics

3 manufacturer, I probably will myself test different

4 varieties.

5 JUDGE CHAPPELL: That's not really what I'm

6 getting at.

7 MR. EMORD: All right.

8 JUDGE CHAPPELL: Is it only available through

9 the company?

10 MR. EMORD: Through the company and through

11 distributors that sell to plastics manufacturers.

12 JUDGE CHAPPELL: So if I'm a consumer -- and I

13 don't know anything about your Web site. I've seen the

14 complaint. But can I make an order and put it on a

15 credit card from the Web site?

16 MR. EMORD: No. Huh-uh. Consumers can't buy

17 this. No way.

18 JUDGE CHAPPELL: So you're telling me you have

19 controlled distribution.

20 MR. EMORD: Absolutely. We don't sell to

21 consumers. A consumer couldn't use it. It can only be

22 used if it's put in plastic during the manufacturing

23 process. Unless you have a manufacturing plant in your

24 house. Then you're not a consumer really. You're a

25 plastics manufacturer.

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1 JUDGE CHAPPELL: Are there biodegradation claims

2 in the contract, in the sales contract?

3 MR. EMORD: Good question. I don't know,

4 Your Honor. I would have to check for you.

5 JUDGE CHAPPELL: But it's a target audience.

6 It's controlled.

7 MR. EMORD: Yes.

8 JUDGE CHAPPELL: But you don't know if the

9 distributors are doing a background check; you don't

10 know if it's someone making meth in a trailer out in the

11 desert or someone who is actually manufacturing plastic

12 products.

13 MR. EMORD: Oh, yes, we do. There's a lot of

14 interaction between the customer and the company. This

15 is a complicated thing.

16 JUDGE CHAPPELL: So every customer is vetted

17 before there's a sale.

18 MR. EMORD: Every customer is vetted. And

19 orders are huge. I mean, orders are not small. When

20 orders are placed, they're in huge quantitative amounts.

21 The typical individual could never afford to purchase

22 this stuff, couldn't happen.

23 I mean, you know, Bill Gates could, but he

24 probably would be too smart. He'd say, Hey, I've got a

25 plastics manufacturing plant.

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1 But anyway, when all the evidence is in,

2 Your Honor, the record will show that ECM's

3 representations, in context, the overall net impression

4 is truthful and support supported by more than a

5 reasonable basis.

6 The record will show that ECM's customers are

7 not deceived but are edified by ECM, made well aware of

8 all the material facts.

9 The record will lay a clear foundation for the

10 conclusion that ECM at all times possessed a reasonable

11 basis for its advertising representations, which

12 representations, when viewed in context rather than the

13 selective excerpting, are truthful in every material

14 aspect.

15 Without first establishing that a generally

16 accepted scientific standard of measure exists other

17 than those offered by the American Society for

18 Testing and Materials biodegradation, as is required

19 by Removatron and other cases -- that's a

20 1989 First Circuit case -- the staff is demanding a

21 level of substantiation far in excess of the scientific

22 standards required and accepted for biodegradation in

23 this industry, a level of substantiation that causes

24 suppression of truthful, nonmisleading representations

25 protected by the First Amendment against government

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1 inhibition and suppression.

2 The representations ECM makes to its

3 sophisticated manufacturer and distributor customers are

4 indispensable not only for the survival of this company

5 but also for the continuing achievement of reductions in

6 plastics pollution, major environmental policy objective

7 for this nation.

8 In the complaint paragraph 1, the staff

9 misconstrues its First Amendment obligation to rely on

10 reasonable claim qualifications, as is required by

11 Pearson v. Shalala and its progeny. Instead, the

12 relief it calls for would compel prospective reliance on

13 unreasonably restrictive and misleading qualifications,

14 qualifications unreflective of the supportive science

15 and without regard to the sophistication of the

16 manufacturer customers of the product, causing

17 suppression of truthful commercial information and,

18 indeed, inducing a misunderstanding and false impression

19 by ECM's manufacturer customers.

20 In particular, not to the exclusion of other

21 objections, but complaint ordering paragraph 1(A) would

22 prospectively prohibit ECM from making any statement in

23 promotion that its product biodegrades unless complete

24 biodegradation would occur within one year or it

25 identifies a precise time and rate that achieves the

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1 biodegradation completely.

2 Those restrictions are patently unreasonable and

3 speech suppressive in light of the fact that ECM

4 explains to its customers three specific things, among

5 others: that its product may not cause complete

6 decomposition into elements within one year; that the

7 time for complete decomposition into elements cannot be

8 calculated because it depends on multiple variables,

9 including the activity of microorganisms, varying

10 environmental conditions, that differ from location to

11 location and landfill to landfill and the nature, mass

12 and composition of each unique plastic product

13 manufactured; and that complete decomposition of the

14 plastics infused with at least 1 percent load of ECM's

15 additive will occur, albeit precisely when that occurs

16 is dependent upon exogenous factors in the environment.

17 It is literally impossible to satisfy what the

18 staff is demanding in its cease and desist order. Even

19 were ECM to do the entirely impracticable and

20 unaffordable job of testing each of its products over

21 many years in every landfill nationwide, that would not

22 suffice, because conditions vary based on the locations

23 of the plastics within individual landfills. 

24 Consequently, no set rate or set time of complete

25 decomposition could ever be established.

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1 In short, rather than rid the market of falsity

2 through disclosure of information, the order the staff

3 seeks will replace disclosure with the suppression of

4 information indispensable to informed choice and will

5 cause the suppression of constitutionally protected

6 commercial speech.

7 It also limits ECM to communication of false

8 information to its customers, namely that the ECM

9 additive will not continue to decompose when the

10 evidence reveals that it will.

11 When the representations made by ECM are viewed

12 in context, FTC's complaint proves to be false in at

13 least five respects.

14 First, ECM does not guarantee that complete

15 degradation will occur in every landfill environment

16 within a precise number of months or years. Instead,

17 ECM explains that its product biodegrades plastics at

18 variable rates, depending on the environmental

19 conditions present, but all plastics infused with at

20 least 1 percent load of the ECM additive will completely

21 biodegrade in any biologically active environment over

22 time. In context and from the overall net impression,

23 ECM's promotions are truthful and nonmisleading in every

24 material respect.

25 Second, contrary to FTC's statement in its

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1 complaint, ECM does not sell its product to end-use

2 consumers, as we discussed.

3 Third, ECM's manufacturer and distributor

4 customers are sophisticated buyers who have a very

5 well-developed biochemical engineering understanding of

6 the additive they buy and the plastics life cycles in

7 general. Those sophisticated purchasers are more likely

8 to understand the scientific facts and have a realistic

9 impression of plastics biodegradation.

10 Fourth, ECM's representation that its product

11 causes plastics to degrade is backed by testing

12 performed in accordance with the generally accepted

13 testing methods, indeed the only testing methods

14 generally accepted in the scientific community and the

15 industry.

16 You can always pontificate about the need for

17 more evidence. The question is whether there's a

18 reasonable basis. And there is ample evidence to

19 support the conclusion that there is a reasonable

20 basis.

21 Finally, you will hear from well-qualified

22 experts who will testify at the hearing that the

23 testing methods and results used to assess the

24 effectiveness of ECM's additive are indeed

25 scientifically sound and reliable. Indeed, they will

PUBLIC DOCUMENT
32

1 testify of their professional opinion that plastics

2 infused with at least 1 percent load of the ECM additive

3 biodegrade completely in all biologically active

4 landfills.

5 Thank you, Your Honor.

6 JUDGE CHAPPELL: Ms. Johnson, what's your

7 position on who the customers are?

8 MS. JOHNSON: Your Honor, our position is that

9 its customers -- that -- I don't disagree with what

10 Mr. Emord said, that they do -- ECM does sell its

11 plastic additive directly to plastics manufacturers. It

12 either does it directly or through its distributors.

13 But ECM provides these distributors and its

14 customers marketing materials, logos, and certificates

15 of biodegradability that are intended to validate these

16 claims of biodegradability and to be passed down to

17 end-use consumers.

18 And the customers can use the logo, the ECM logo

19 that says "ECM biodegradable," and put it in their

20 advertisement of their own plastic products that

21 incorporate these additives, you know -- and for

22 instance, in one of the consent agreements that we

23 filed, there was an exhibit attached showing a capture

24 of a Web site that contained an ECM logo with

25 "biodegradable" and another one that contained a

PUBLIC DOCUMENT
33

1 certificate of biodegradability, so clearly the

2 customers of ECM use and rely on these materials that

3 ECM provides them to communicate these claims to

4 consumers.

5 And consumers can then use the logos and

6 information that it's an ECM additive and go back to

7 ECM's Web site and see what kinds of claims ECM is

8 communicating.

9 And as far as Mr. Emord's point that the claims

10 that we've taken are out of context, we attached the

11 entire Web site, and you'll see in the context of all of

12 the --

13 JUDGE CHAPPELL: No, no, I didn't ask for

14 rebuttal of everything, just the one point.

15 MS. JOHNSON: Okay. Yes, Your Honor.

16 JUDGE CHAPPELL: Anything further?

17 MR. EMORD: I would just point out that we have

18 no control, influence or decisional authority over any

19 advertising done by a third party. The third parties,

20 people who purchase the product, are on their own. If

21 they wish to make a representation, it's their dollar.

22 The FTC, if it doesn't like it, should go over after

23 them. We're not responsible for it. We have no

24 contractual power over them regarding it. We don't have

25 any contractual --

PUBLIC DOCUMENT
34

1 JUDGE CHAPPELL: You don't know if they're going

2 after them or not; right?

3 MR. EMORD: Pardon me?

4 JUDGE CHAPPELL: You don't know if they're going

5 after them.

6 MR. EMORD: I always suspect.

7 JUDGE CHAPPELL: Anything further?

8 MS. JOHNSON: Not unless you'd like me to

9 present rebuttal on some of the things that Mr. Emord

10 said.

11 JUDGE CHAPPELL: No.

12 Anything further?

13 MR. EMORD: No, Your Honor.

14 JUDGE CHAPPELL: All right. Hearing nothing

15 further, until our next session, we are adjourned.

16 (Whereupon, the foregoing initial prehearing

17 conference was concluded at 2:45 p.m.)

18 

19 

20 

21 

22 

23 

24 

25 

PUBLIC DOCUMENT
35

1 C E R T I F I C A T I O N O F R E P O R T E R

 2 

3 DOCKET/FILE NUMBER: 9358

4 CASE TITLE: ECM BioFilms, Inc.

5 HEARING DATE: November 21, 2013

 6 

7 I HEREBY CERTIFY that the transcript contained

8 herein is a full and accurate transcript of the notes

9 taken by me at the hearing on the above cause before the

10 FEDERAL TRADE COMMISSION to the best of my knowledge and

11 belief.

12 

13 DATED: NOVEMBER 22, 2013

14 

15 

16 JOSETT F. WHALEN, RMR

17 

18 

19 C E R T I F I C A T I O N O F P R O O F R E A D E R

20 

21 I HEREBY CERTIFY that I proofread the transcript

22 for accuracy in spelling, hyphenation, punctuation and

23 format.

24 

25 ELIZABETH M. FARRELL

PUBLIC DOCUMENT
Exhibit 3

PUBLIC DOCUMENT
From: Jonathan Emord

To: Johnson, Katherine; Lou Caputo; Jillson, Elisa

Cc: Peter Arhangelsky

Subject: RE: Respondent Initial Disclosures

Date: Monday, November 25, 2013 2:21:44 PM

ECM has a total of 6 employees. We reiterate that the four listed in your Appendix A are the only

company employees possessed of discoverable information. It is the purpose of formal discovery to

adduce the extent of discoverable information, which may bring to light others possessed of

information you or we think appropriately discoverable, but of initial disclosures to reveal those

presently known likely to possess discoverable information in relation to the complaint, proposed

relief, and defenses, not in relation to speculation as to what may be our, or your, legal theories or

positions. Initial disclosures are not a substitute for formal discovery. The company confirms those

four are the only ones known by its executives to possess discoverable information as of this date. 

Best,

Jonathan W. Emord | Emord & Associates, P.C. | 11808 Wolf Run Lane | Clifton, VA 20124

Firm: (202) 466-6937 | Direct: (703) 543-8292 | Facsimile: (202) 466-6938 | www.emord.com

Notice of Confidential Communication: This email contains content protected from disclosure by

the attorney-client privilege and the work product doctrine. If you are not the intended recipient,

please inform the sender and delete the email.

From: Johnson, Katherine [mailto:kjohnson3@ftc.gov] 

Sent: Monday, November 25, 2013 11:05 AM

To: Jonathan Emord; Lou Caputo; Jillson, Elisa

Cc: Peter Arhangelsky

Subject: RE: Respondent Initial Disclosures

No, I don’t. So your position is that those are the only people at ECM that have discoverable

information? I just want to be sure I’m understanding your position correctly. We only listed the

people we know of, but certainly there’s additional sales staff, distributors, and even customers, that

have discoverable information. You gave a whole presentation on how the customers are informed

to great detail about the product, certainly we’re entitled to know who is disseminating that

information to the customers, and who the customers are.

_________________________________________

Katherine E. Johnson, Attorney

Division of Enforcement

Bureau of Consumer Protection

Federal Trade Commission

600 Pennsylvania Avenue, NW

Mail stop M-8102B

Washington, DC 20580

Direct Dial: (202) 326-2185

Fax: (202) 326-2558

Email: kjohnson3@ftc.gov

From: Jonathan Emord [mailto:JEmord@emord.com]

Sent: Monday, November 25, 2013 1:00 PM

To: Johnson, Katherine; Lou Caputo; Jillson, Elisa

PUBLIC DOCUMENT EXHIBIT 3 - PAGE 1
Cc: Peter Arhangelsky

Subject: RE: Respondent Initial Disclosures

Hi Katherine—The names, addresses, phone numbers, and counsel of the current and former

employees are precisely the same as you have listed on your disclosure as Appendix A. Do you really

want us to type that same information and send it to you?

Jonathan W. Emord | Emord & Associates, P.C. | 11808 Wolf Run Lane | Clifton, VA 20124

Firm: (202) 466-6937 | Direct: (703) 543-8292 | Facsimile: (202) 466-6938 | www.emord.com

Notice of Confidential Communication: This email contains content protected from disclosure by

the attorney-client privilege and the work product doctrine. If you are not the intended recipient,

please inform the sender and delete the email.

From: Johnson, Katherine [mailto:kjohnson3@ftc.gov]

Sent: Monday, November 25, 2013 10:56 AM

To: Lou Caputo; Jillson, Elisa

Cc: Jonathan Emord; Peter Arhangelsky

Subject: RE: Respondent Initial Disclosures

Lou, this fails to meet Respondent’s obligation to provide the names, and if known, the address and

telephone number of each individual. We are in no position to know which of ECM’s current and

former employees have discoverable information and listing them by category is not enough. Please

amend your disclosures to include this information as is required under the Rules.

_________________________________________

Katherine E. Johnson, Attorney

Division of Enforcement

Bureau of Consumer Protection

Federal Trade Commission

600 Pennsylvania Avenue, NW

Mail stop M-8102B

Washington, DC 20580

Direct Dial: (202) 326-2185

Fax: (202) 326-2558

Email: kjohnson3@ftc.gov

From: Lou Caputo [mailto:LCaputo@emord.com]

Sent: Monday, November 25, 2013 12:40 PM

To: Johnson, Katherine; Jillson, Elisa

Cc: Jonathan Emord; Peter Arhangelsky

Subject: Respondent Initial Disclosures

Hi Katherine,

Please find attached Respondent’s Initial Disclosures.

Best,

PUBLIC DOCUMENT EXHIBIT 3 - PAGE 2
Lou

Lou Caputo | EMORD & ASSOCIATES, P.C. | 3210 S. Gilbert Rd., Ste 4 | Chandler, AZ 85286 Firm: (602)

388-8901 | Facsimile: (602) 393-4361 | www.emord.com

NOTICE: This is a confidential communication intended for the recipient listed above. The content of this communication

is protected from disclosure by the attorney-client privilege and the work product doctrine. If you are not the intended

recipient, you should treat this communication as strictly confidential and provide it to the person intended. Duplication or

distribution of this communication is prohibited by the sender. If this communication has been sent to you in error, please

notify the sender and then immediately destroy the document.

PUBLIC DOCUMENT EXHIBIT 3 - PAGE 3
From: Johnson, Katherine

To: "Peter Arhangelsky"

Cc: Jillson, Elisa; Jonathan Emord; Lou Caputo

Subject: RE: In the Matter of ECM BioFilms, Inc., Dkt. No. 9358: Depositions

Date: Tuesday, December 03, 2013 3:19:00 PM

Peter: 

We agree with your assessment that the Scheduling Order compels electronic service only, so

now that the Court has finally entered the order, there is no need to waive hardcopy service

because it is not required.

Complaint Counsel does not agree, however, that the discovery requests are overbroad,

cumulative, or duplicative. Each of these requests “may be reasonably expected to yield

information relevant to the allegations of the complaint, to the proposed relief, or to the

defenses” of ECM. Rule 3.31(c)(1). The discovery sought is essential to Complaint Counsel’s

ability to respond to ECM’s sophisticated-customer defense. The requests are not duplicative

and Complaint Counsel has no other way of gathering this information.

• Specifically, ECM has put at issue the identity of its customers and distributors – whether

they are “sophisticated” purchasers. To assess the validity of this argument, Complaint

Counsel need to know who all of ECM’s customers are (Rog 1) and how significant their

business is (Rog 2). In addition, the revenue generated from deceptive advertising (Rog

2) is relevant to the proposed relief.

• ECM has argued that it provided its customers with information about its additive

(verbally and in other communications) apart from the information found in ECM’s

promotional materials. To assess the validity of this argument regarding verbal

communications, Complaint Counsel need to know what this verbal information consists

of (Rog 5) and who has knowledge of such communications (Rog 6). To assess the validity

of this argument regarding other communications, Complaint Counsel need to see ECM’s

communications with customers and distributors regarding the additive.

We are not proposing, nor do we intend, to talk to all of ECM’s customers. But which ones we

do talk to must be of our own choosing based on criteria that we have decided is defensible and

relevant. That being said, we would agree to (1) keep the customer list and related information

confidential and non-public; (2) limit the number of customers we communicate with after

determining a relevant sample size based on the entire customer list; and (3) limit the look back

period to January 1, 2008. This covers the period of the investigation (see FTC access letter). 

Complaint Counsel also agrees to the following search terms (and any variations thereof) to

identify relevant documents:

• Biodegradable, degradable

• Anaerobic, aerobic

• ASTM, ISO

• Analysis, test, study, examination, assessment

PUBLIC DOCUMENT EXHIBIT 3 - PAGE 4
• Claim, advertisement, promotion, marketing

• Bacteria, microorganism, biofilm, biota, or fungi,

• Landfill, municipal solid waste, MSW, biodigester, bioreactor, compost

• Such other terms to which counsel reasonably agree: years, months, time, “some period,”

Green Guides, sophisticated, D5511, D5526, rate, extent, method, extrapolate, polymer,

microtech research

Thursday at 4 p.m. Eastern is fine for a meet and confer.

_________________________________________

Katherine E. Johnson, Attorney

Division of Enforcement

Bureau of Consumer Protection

Federal Trade Commission

600 Pennsylvania Avenue, NW

Mail stop M-8102B

Washington, DC 20580

Direct Dial: (202) 326-2185

Fax: (202) 326-2558

Email: kjohnson3@ftc.gov

From: Peter Arhangelsky [mailto:PArhangelsky@emord.com] 

Sent: Monday, December 02, 2013 6:10 PM

To: Johnson, Katherine

Cc: Jillson, Elisa; Jonathan Emord; Lou Caputo

Subject: RE: In the Matter of ECM BioFilms, Inc., Dkt. No. 9358: Depositions

Hi Katherine:

We will confer with our client concerning deposition dates. Please note that ECM’s owner, Bob

Sullivan, is out of the office through Wednesday with limited access to email. We would like to

schedule a teleconference to confer on several discovery points, and we suggest this Thursday at

4PM Eastern. Please let us know if you are available then. We should have a window for depositions

identified by then.

I have also attached Respondent’s First Set of Interrogatories. Please inform us if you will waive

hardcopy service. For future discovery exchanges, we interpret Judge Chappell’s scheduling order

(page 4, paragraph 2) to effect a standing waiver of hardcopy service under Rule 4.4(b). If you share

that understanding, we will henceforth accept discovery files through PDF service exclusively.

Finally, we would like to discuss the scope of your Interrogatories Nos. 1, 2, 5, and 6, and Document

Request No. 13, to the extent you seek information concerning ECM customers generally. ECM has

many customers. Probing each customer for relevant information is an overbroad request, and one

likely to burden ECM’s business significantly. ECM has grounds to object under Rule 3.31(c), and

because the requests would require disclosure of sensitive business information of little relevance

to this action. Because we think the end result will yield cumulative or duplicative information, we

would propose a limited disclosure that accommodates the interests of both parties and avoids the

need for motions. ECM is prepared to disclose the information you requested for 26 of its

PUBLIC DOCUMENT EXHIBIT 3 - PAGE 5
significant customers (from within the past 4 years), which represents a representative sampling of

roughly ten percent of its total active customer base over that time period. Without waiving

privileges and other objections, ECM would provide email correspondence between ECM and 5 of

those customers over the relevant time period (4 years). Emails and written correspondence would

be produced from relevant information over the relevant time period as determined through

keyword searches, including the following search terms (includes all derivatives):

• Biodegradable

• ASTM, ISO

• Analysis, test, study

• Claim, advertisement, promotion

• Bacteria, microorganism, biofilm, biota, or fungi,

• Landfill, municipal solid waste, MSW, biodigester, bioreactor

• Such other terms to which counsel reasonably agree

We think that production would assure you that the universe of remaining information does not

differ substantially and, so, additional requests are redundant. Please let us know if you would

accept such a proposal in place of the broad discovery requests currently in place, which seek

information unlimited in scope (temporally and substantively). 

Thank you,

Peter

Peter A. Arhangelsky, Esq. | EMORD & ASSOCIATES, P.C. | 3210 S. Gilbert Rd., Ste 4 | Chandler, AZ

85286

Firm: (602) 388-8899 | Direct: (602) 334-4416 | Facsimile: (602) 393-4361 | www.emord.com

NOTICE: This is a confidential communication intended for the recipient listed above. The content of this

communication is protected from disclosure by the attorney-client privilege and the work product doctrine. If

you are not the intended recipient, you should treat this communication as strictly confidential and provide it to

the person intended. Duplication or distribution of this communication is prohibited by the sender. If this

communication has been sent to you in error, please notify the sender and then immediately destroy the

document.

From: Johnson, Katherine [mailto:kjohnson3@ftc.gov]

Sent: Monday, December 02, 2013 8:08 AM

To: Jonathan Emord; Lou Caputo; Peter Arhangelsky

Cc: Jillson, Elisa

Subject: In the Matter of ECM BioFilms, Inc., Dkt. No. 9358: Depositions

Jonathan:

We’d like to notice depositions for the folks at ECM that we identified in our Initial Disclosures, as

well as ECM itself. We will send along the topics for ECM with the notice, but we would like to firm

up a week sometime at the end of February or beginning of March for the depositions. We wanted

to reach out to you to see availability and preference for location. We have offices in Cleveland that

PUBLIC DOCUMENT EXHIBIT 3 - PAGE 6
are available to us. Or, if your client is willing, we could hold them here in DC. Please let me know

by COB tomorrow what your client’s preference is. 

Thanks,

Katherine

_________________________________________

Katherine E. Johnson, Attorney

Division of Enforcement

Bureau of Consumer Protection

Federal Trade Commission

600 Pennsylvania Avenue, NW

Mail stop M-8102B

Washington, DC 20580

Direct Dial: (202) 326-2185

Fax: (202) 326-2558

Email: kjohnson3@ftc.gov

PUBLIC DOCUMENT EXHIBIT 3 - PAGE 7
From: Peter Arhangelsky

To: Johnson, Katherine

Cc: Jillson, Elisa; Jonathan Emord; Lou Caputo

Subject: FW: In the Matter of ECM BioFilms, Inc., Dkt. No. 9358: Deficiencies in ECM"s Response to Complaint Counsel"s

First Set of RFAs and Initial Disclosures

Date: Friday, December 13, 2013 1:39:59 PM

Attachments: Delivery delayedRE In the Matter of ECM BioFilms Inc. Dkt. No. 9358 Deficiencies in ECM"s Response to

Complaint Counsel"s First Set of RFAs and Initial Disclosures.msg

From: Peter Arhangelsky 

Sent: Thursday, December 12, 2013 5:14 PM

To: 'Johnson, Katherine'

Cc: Jillson, Elisa; Cohen, Jonathan; Jonathan Emord; Lou Caputo

Subject: RE: In the Matter of ECM BioFilms, Inc., Dkt. No. 9358: Deficiencies in ECM's Response to

Complaint Counsel's First Set of RFAs and Initial Disclosures

Hi Katherine,

Thank you again for your time yesterday. Concerning the RFA responses, we intend to carefully

consider each of your points and issue a prompt response. If we find a revised response will clarify

our objections or correct any misunderstanding, we will issue that revision expeditiously. Please

allow us to respond by Monday close of business (Dec. 16). 

We disagree that ECM has displayed any “pattern of inadequate discovery responses.” ECM has a

well-founded objection to the production of its customer names and information. We disagree that

ECM was under any obligation under Rule 3.31(b)(1) to disclose that information, particularly given

the concerns we have with the overbroad and burdensome scope of discovery. This issue is subject

to a legal dispute. We asked you to provide a formal discovery request, in part, to preserve the

record for a suitable objection, should that become necessary. Rule 3.31(b)(1) does not somehow

vitiate the protections in paragraph (c)(2), or compel the production of information subject to

privilege or objection.

Similarly, ECM’s identification of employee names was not deficient. All of the relevant names were

in your initial disclosures. We could have simply retyped that information. However ECM has only

six employees, and the overwhelming majority of relevant information is in the control or

possession of Robert Sinclair (President) and Ken Sullivan (CFO). Given the contents of your initial

disclosures, ECM’s employee information seemed to fall squarely within Section 3.31(c)(2)(ii). 

I need to update you with ECM’s position concerning disclosure of its complete customer list. In our

call yesterday, we had discussed whether ECM would agree to disclose its entire list of customers

(inactive and active), subject to an eventual agreement as to the number of customers you would

contact directly. We understand that you seek the entire customer list in exchange for that

limitation (which would be negotiated later). Given the imminent risk of irreparable harm, and the

remaining gap between the parties’ proposed limitations, ECM cannot release its entire customer

list in response to your discovery requests. Because the complete customer list was a condition

precedent to further negotiations on this point, I think we will be unable to reach an agreement

here. ECM will bring this matter before the ALJ in a motion for a protective order. 

PUBLIC DOCUMENT EXHIBIT 3 - PAGE 8
Please let us know if you would like to discuss.

Best,

Peter

Peter A. Arhangelsky, Esq. | EMORD & ASSOCIATES, P.C. | 3210 S. Gilbert Rd., Ste 4 | Chandler, AZ

85286

Firm: (602) 388-8899 | Direct: (602) 334-4416 | Facsimile: (602) 393-4361 | www.emord.com

NOTICE: This is a confidential communication intended for the recipient listed above. The content of this

communication is protected from disclosure by the attorney-client privilege and the work product doctrine. If

you are not the intended recipient, you should treat this communication as strictly confidential and provide it to

the person intended. Duplication or distribution of this communication is prohibited by the sender. If this

communication has been sent to you in error, please notify the sender and then immediately destroy the

document.

From: Johnson, Katherine [mailto:kjohnson3@ftc.gov]

Sent: Thursday, December 12, 2013 2:58 PM

To: Jonathan Emord; Lou Caputo; Peter Arhangelsky

Cc: Jillson, Elisa; Cohen, Jonathan

Subject: In the Matter of ECM BioFilms, Inc., Dkt. No. 9358: Deficiencies in ECM's Response to

Complaint Counsel's First Set of RFAs and Initial Disclosures

All:

I am writing to follow up on our conversation yesterday with Peter regarding the customer list and

other discovery issues.

As I mentioned briefly in our call yesterday, we have some concerns with ECM’s responses to our

Requests for Admissions. Specifically, several of ECM’s responses either (1) do not appear to include

good faith partial denials or qualifications; and/or (2) do not fairly meet the substance of the

requested admission. These deficiencies violate Rule 3.32(b); we request that you remedy them

immediately. Below are descriptions of deficiencies in four of ECM’s Responses to Complaint

Counsel’s Requests for Admission.

Responses to RFAs 4 and 5: We requested that ECM admit that a certificate (RFA 4) and a

logo (RFA 5) are representative of those ECM provided to at least some of its customers. ECM’s

denial of each request is inconsistent with ECM’s representations to us during the investigation. In

our August 30, 2011 access letter (“Access Letter,” see attached), we requested all materials

(including promotional and marketing materials) made available to its customers and

distributors. See Access Letter, Request 5. In response, ECM provided the documents that we

identified in our Requests for Admission as CX-000001 and CX-000002, thereby representing to

Commission staff that these documents represented all such materials ECM made available to its

customers and distributors. See ECM Response dated Sept. 26, 2011. ECM’s responses to RFAs 4

and 5 thus create a discrepancy which ECM has a good faith obligation to dispel through a partial

PUBLIC DOCUMENT EXHIBIT 3 - PAGE 9
denial or qualification. 

Response to RFA 6: We requested that ECM admit that the documents identified as ECMFTC-000001 – 000241 constitute all of the scientific studies and tests that ECM submitted in

response to the Access Letter. ECM denied the request, stating that there are documents that

substantiate its claims other than those ECM supplied. This response does not fairly meet the

substance of the requested admission. The RFA does not ask whether there are other

substantiation materials that support ECM’s claim. Rather, it merely requests an admission that the

identified documents are all the tests and studies that ECM submitted to the FTC in response to the

Access Letter. 

Response to Authentication RFA 3: We requested that ECM authenticate the information

contained its website. ECM’s denial is contrary to information ECM provided us during our

investigation and to ECM’s own answer to the complaint. In our Access Letter, we asked ECM to

“[p]rovide copies of each different ECM advertisement . . . that represents . . . that ECM Additives

initiate, promote, or enhance biodegradation of plastic.” See Access Letter Request 4. ECM

responded, in part, by identifying numerous pages from its website, www.ecmbiofilms.com. See

ECM Response dated Sept. 26, 2011. In its answer to the complaint, ECM admitted that “it

advertises and promotes the ECM Product through its website at www.ecmbiofilms.com . . . .” 

These dual representations (via the 2011 letter and the answer) that the ECM website contains

promotional materials cannot be reconciled that ECM’s contention in its Response to Authentication

RFA 3 that the information contained on the ECM website “was not for promotional reasons, but

instead for informational and/or educational purposes” only. 

We are particularly concerned about the deficiencies in ECM’s Responses to Complaint Counsel’s

Requests for Admission because they appear to continue a pattern of inadequate discovery

responses that began with ECM’s initial disclosures. We brought the deficiencies in ECM’s initial

disclosures to your attention in our November 25, 2013 email and we reiterate them here:

Customer Names: Rule 3.31(b)(1) provides that “respondent’s counsel shall . . . provide . . .

(1) The name, and, if known, the address and telephone number of each individual likely to have

discoverable information relevant to the allegations of the Commission’s complaint, to the proposed

relief, or to the defenses of the respondent.” (emphasis added). In ECM’s answer and in its

statement to the court during the initial scheduling conference, ECM repeatedly asserted that its

customers are sophisticated plastic manufacturers and distributors, and that ECM made qualifying

claims to these sophisticated customers. ECM thus made clear that the identity and sophistication

of its customers are central to ECM defenses. ECM is therefore required to identify its customers as

individuals “likely to have discoverable information relevant . . . to the defenses of respondent.”

Employee Names: Similarly, ECM was required to divulge the name of all of its employees.

ECM in fact did not disclose a single employee name; it merely stated that Complaint Counsel had

identified all persons with “direct knowledge of all discoverable information,” and that “[o]ther

individuals may exist who possess information that is redundant of that possessed by [the

employees Complaint Counsel identified.]“

PUBLIC DOCUMENT EXHIBIT 3 - PAGE 10
Please respond via email stating whether you intend to cure these deficiencies. Please let us know if

you would like to arrange a time for another meet and confer to discuss the deficiencies in ECM’s

discovery responses. As to the customer name issue that we discussed yesterday and that we again

highlight in this email, we look forward to hearing from you by COB today, as Peter indicated.

Sincerely,

Katherine

_________________________________________

Katherine E. Johnson, Attorney

Division of Enforcement

Bureau of Consumer Protection

Federal Trade Commission

600 Pennsylvania Avenue, NW

Mail stop M-8102B

Washington, DC 20580

Direct Dial: (202) 326-2185

Fax: (202) 326-2558

Email: kjohnson3@ftc.gov

PUBLIC DOCUMENT EXHIBIT 3 - PAGE 11
From: Johnson, Katherine

To: "Peter Arhangelsky"

Cc: Jillson, Elisa; Jonathan Emord; Lou Caputo

Subject: RE: In the Matter of ECM BioFilms, Inc., Dkt. No. 9358: Depositions

Date: Friday, December 06, 2013 4:17:00 PM

Peter and Lou:

As promised, I am following up on our conversation from yesterday regarding the scope of our

discovery requests. ECM appears to be concerned that allowing the FTC to contact its customers

could be disruptive to its business. You propose to alleviate this potential problem by having your

client select which of its customers it will disclose to us. This is not acceptable for all the reasons I

expressed yesterday and in my prior email. We need and are entitled to the entire customer list

with the revenue information that we asked for. ECM has no legal grounds to object to the request

for the customer list, particularly in light of the affirmative defenses it has raised. 

However, in light of ECM’s concerns and to quickly resolve this issue, we would agree to:

1. limit the initial number to no more than 50 customers, provided however, that we reserve the

right to contact additional customers as and if necessary (this was suggested by Jonathan);

and

2. provide ECM the names of the 50 customers that we select from the list prior to contacting

them. We would also agree to limit our document requests 13 and 14, and interrogatory

request numbers 1 and 2 to those current customers that we contact and those you

independently decide to contact or may call to testify. 

Obviously, our requests reach former and potential customers (including distributors) as well. I am

taking from ECM’s concern that the identity of former and potential customers/distributors will be

provided to us, as well as the communications and other information that we requested. Although

we agreed to limit the time period of the review until January 1, 2008, this limitation would not

apply to any communications or information related to the following companies: Proctor & Gamble,

Kimberly Clark, K-Mart, Pepsi, Dole Foods, and Nike.

In order for this process to work, ECM must supply the customer list immediately. This is an

iterative process. We need time to select the sample, provide the names, and give ECM sufficient

time to pull the email and other communications before the response deadline. Please let me know

whether this approach is acceptable by the end of business Monday. 

Also, this email serves to confirm in writing the other prior agreements we have in place to (1)

exclude all communications between Complaint Counsel and Kelly Drye in connection with the prior

investigation; and (2) refrain from producing a privilege log, unless and until a specific claim of

privilege or protection is challenged.

Katherine

_________________________________________

Katherine E. Johnson, Attorney

Division of Enforcement

PUBLIC DOCUMENT EXHIBIT 3 - PAGE 12
Bureau of Consumer Protection

Federal Trade Commission

600 Pennsylvania Avenue, NW

Mail stop M-8102B

Washington, DC 20580

Direct Dial: (202) 326-2185

Fax: (202) 326-2558

Email: kjohnson3@ftc.gov

From: Peter Arhangelsky [mailto:PArhangelsky@emord.com] 

Sent: Monday, December 02, 2013 6:10 PM

To: Johnson, Katherine

Cc: Jillson, Elisa; Jonathan Emord; Lou Caputo

Subject: RE: In the Matter of ECM BioFilms, Inc., Dkt. No. 9358: Depositions

Hi Katherine:

We will confer with our client concerning deposition dates. Please note that ECM’s owner, Bob

Sullivan, is out of the office through Wednesday with limited access to email. We would like to

schedule a teleconference to confer on several discovery points, and we suggest this Thursday at

4PM Eastern. Please let us know if you are available then. We should have a window for depositions

identified by then.

I have also attached Respondent’s First Set of Interrogatories. Please inform us if you will waive

hardcopy service. For future discovery exchanges, we interpret Judge Chappell’s scheduling order

(page 4, paragraph 2) to effect a standing waiver of hardcopy service under Rule 4.4(b). If you share

that understanding, we will henceforth accept discovery files through PDF service exclusively.

Finally, we would like to discuss the scope of your Interrogatories Nos. 1, 2, 5, and 6, and Document

Request No. 13, to the extent you seek information concerning ECM customers generally. ECM has

many customers. Probing each customer for relevant information is an overbroad request, and one

likely to burden ECM’s business significantly. ECM has grounds to object under Rule 3.31(c), and

because the requests would require disclosure of sensitive business information of little relevance

to this action. Because we think the end result will yield cumulative or duplicative information, we

would propose a limited disclosure that accommodates the interests of both parties and avoids the

need for motions. ECM is prepared to disclose the information you requested for 26 of its

significant customers (from within the past 4 years), which represents a representative sampling of

roughly ten percent of its total active customer base over that time period. Without waiving

privileges and other objections, ECM would provide email correspondence between ECM and 5 of

those customers over the relevant time period (4 years). Emails and written correspondence would

be produced from relevant information over the relevant time period as determined through

keyword searches, including the following search terms (includes all derivatives):

• Biodegradable

• ASTM, ISO

• Analysis, test, study

• Claim, advertisement, promotion

• Bacteria, microorganism, biofilm, biota, or fungi,

• Landfill, municipal solid waste, MSW, biodigester, bioreactor

PUBLIC DOCUMENT EXHIBIT 3 - PAGE 13
• Such other terms to which counsel reasonably agree

We think that production would assure you that the universe of remaining information does not

differ substantially and, so, additional requests are redundant. Please let us know if you would

accept such a proposal in place of the broad discovery requests currently in place, which seek

information unlimited in scope (temporally and substantively). 

Thank you,

Peter

Peter A. Arhangelsky, Esq. | EMORD & ASSOCIATES, P.C. | 3210 S. Gilbert Rd., Ste 4 | Chandler, AZ

85286

Firm: (602) 388-8899 | Direct: (602) 334-4416 | Facsimile: (602) 393-4361 | www.emord.com

NOTICE: This is a confidential communication intended for the recipient listed above. The content of this

communication is protected from disclosure by the attorney-client privilege and the work product doctrine. If

you are not the intended recipient, you should treat this communication as strictly confidential and provide it to

the person intended. Duplication or distribution of this communication is prohibited by the sender. If this

communication has been sent to you in error, please notify the sender and then immediately destroy the

document.

From: Johnson, Katherine [mailto:kjohnson3@ftc.gov]

Sent: Monday, December 02, 2013 8:08 AM

To: Jonathan Emord; Lou Caputo; Peter Arhangelsky

Cc: Jillson, Elisa

Subject: In the Matter of ECM BioFilms, Inc., Dkt. No. 9358: Depositions

Jonathan:

We’d like to notice depositions for the folks at ECM that we identified in our Initial Disclosures, as

well as ECM itself. We will send along the topics for ECM with the notice, but we would like to firm

up a week sometime at the end of February or beginning of March for the depositions. We wanted

to reach out to you to see availability and preference for location. We have offices in Cleveland that

are available to us. Or, if your client is willing, we could hold them here in DC. Please let me know

by COB tomorrow what your client’s preference is. 

Thanks,

Katherine

_________________________________________

Katherine E. Johnson, Attorney

Division of Enforcement

Bureau of Consumer Protection

Federal Trade Commission

600 Pennsylvania Avenue, NW

Mail stop M-8102B

Washington, DC 20580

Direct Dial: (202) 326-2185

Fax: (202) 326-2558

PUBLIC DOCUMENT EXHIBIT 3 - PAGE 14
Email: kjohnson3@ftc.gov

PUBLIC DOCUMENT EXHIBIT 3 - PAGE 15