In the Matter of 

ECM BioPJlms, Inc., 

ORIGINAL 

UNITED STATES OF AMERICA 

FEDERAL TRADE COMMISSION 

OFFICE OF ADMINISTRATIVE LAW JUDGES 

DOCKET NO. 9358 

a corporation, also -d/b/a 

Enviroplastics International. 

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Respondent. ) 

PUBLIC 

APR t1 7 2014 

5693~'1 S8:I£WI't 

O.RDER DENYING RESPONDENT'S MOT! ON TO SANCTION COMPLAINT 

COUNSEL FOR VIOLATION OF DISCOVERY RULES 

On March 21 , 2014, RespoJJ.dent ECMBioFilms, Inc. ("Respondent, or '·ECM") filed a 

Motion to Compel and to SanctiOn Complaint Counsel for Violation of Discovery Rules 

("Motion"). Federal Trade Commission ("FTC") Complaint Counsel filed an opposition to the 

Motion on March 27, 2014 ("Opposition").

1 By Ord.er issued March 28, 20 14, Respondent's 

Motion to Compel was granted .in part and denied in part, QUt that Order reserved rulmg on the 

Motion for Sanctions, pursuant to FTC Rules 3.22(e) and 3.38(a), 16 C F.R §§ 3.22(e),, 3.38(a).

2 

On March 27, 2014, Complaint Co1;1nsel filed a Motion to Extend the Word Count Limit 

under Rule 3.22(f) with respect to its Opposition by 000 words, stating that Respondent 

consented to the proposed relief. Complaint Counsef's Motion to Extend the Word Count Limit 

1s GRANTED. 

Complaint Counsel's Opposition contained a request for oral argument on the Motion for 

Sanctions. Because oral argument is not necessary to resolve the Motion, Complaint Counsel"s 

request is DEN lED. 

Having fully reviewed and considered the Motion for Sanctions and the Opposition, the 

exhibits thereto, and all assertions and arguments therein, the Motion is DENIED, as explained 

b'elow. 

1 Complaint Counsel consolidated its Opposition to the instant Motion with its opposition to a separate, unrelated 

Motton for Sanctions, filed by Respondent on March 2 1, 2014. 

2 Pursuant to Rule 3.38(a), an order on a motion to compel must be issued within 3 busmess days, as opposed to 

within 14 dQ.ys for other motions under Rule 3.22, 
I. 

Respondent's Mot10n seeks sanctions in cormection with Complaint Counsel's 

production of:. (1) an article titled, "Biodegrad,ability of Conventional and Bio-Based Plastics 

and Natural Fiber Composites During Composting, Anaerobic Digestion and Long-Term Soil 

Incubation," by Eddie F. Gomez and Frederick C. Michel, Jr., who are associated with Ohio 

State Agricultural Research and. Development Center (the "Ohio State Article'1 or "Article"), 

published on October I, 2013, in a journal enhtled Polymer Degradation and Stabzlity, 98 (20 13) 

2583-2591 ~and (2) a Cl.ra:ft ofthe Article (the "Draft") and various em ails reflecting 

communications between FTC Bureau attorneys and a co-author of the Article 

("Communications"). 

The Article was provi-ded ~o Respondent for the first time on February 19,2014, during 

Complaint Counsel's questioning ofECM's designee, Mr. Sinclair, on the second day ofECM's 

deposition. On March 13, 2014, Complaint Counsel disclosed that on March 12, 2014, 

Complaint Counsel learned that "two FTC attorneys (not repre.sentmg Complaint Counsel)," one 

of whom worked ontbe investigative phase of the cas.e but who has since left the FTC, had, in 

fact, received a draft of the Ohio State Article. See Clarification Regarding Responc;tent's 

Sanctions Motion. March 13, 2014; see generally Order· Granting in Part and Denying in Part 

Respondenfs Motion for Sanctions, March 21 , ;WI 4. On March 17,2014, Complaint Counsel 

served Supplemental Initial Di8closures, identifying the Article authors and the above referenced 

FTC Bu:r.eau attomeys, among other FTC pers.onnel, as persons with knowledge of discoverable 

information. According to the Motion, the Draft and the Communications were provided to 

Respondent between March 14 and March 18, 20 14. 

Respondent argues that Complaint Counsel wrongfully withheld tlie Article, the Draft, 

and the Communications from Respondent, and requests sa.nctions under FTC Rule 3.38(b ), as 

follows: (1) censure of Complaint Counsel.•and referral to D.C. Bar Courtsel, Board of 

Professional Responsibility; (2) compel Complaint Counsel to perform a diligent search of all 

FTC files and prod:ute all documents responsive to Respondent's Requests for Production, and 

certify that production is complete; (3) exclude the Article from evidence, and preclude 

Complaint Counsel from relying on ~he Articie at the trial ofthis matter; (4) ••summarily deny, 

Complaint Counsel's March 28, 2014 Motion for Certification and to revise discovery deadlines 

and hearing date; and (5) extend ECM's fact discovery deadline by at least 30 days for the 

limited purpose of pursuing additional discovery from Mr. Michel, Ohio State University and 

others involved in the Article, including, but not limited to FTC personnel a.nd Complaint 

Counsel. Motion at 2-3. · 

Complaint Counsel denies that it intentionally withheld any information from 

Respondent. Complaint Counsel asserts that it had no knowledge of the Draft or the Bureau's 

relationsh1p with Mr. Michel prior to March 12, 2014, and further argues that It was justified in 

failing to have such knowledge because, Complaint Counsel asserts: (1) the Bureau attorneys 

communicating with Mr. Michel, and who received. the Draft, did so in connection with retaining 

Mr. Michel as a consultant for two "entirely unrelated investigations"; and (2) the Draft was not 

used in the i.n;vestigation ot prosecution of the ECM matter. Accordingly, Complaint Counsel 

argues, it fulfilled its duty to search for responstve documents, as limited by FTC Ruie 

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3.31(c)(2). Complaint Counsel further asserts that it acted diligently to provide, via production 

in discovery, the materials at issue upon learning ofthe previous contact with Mr. Michel by 

other Bureau attorneys. At most, Complaint Counsel argues, the late production was inadvertent 

and does not warrant Respondent's requested sanctions. Opposition at 5-6. 

ll. 

The records submitted in connectiOn wxth the Motion ;md Opposition show that on 

November 2, 2012, Mr. Michel forwarded the Draft to FTC attorney Wilshire, an attorney in the 

Bureau of Consumer Protection, then with the Division ofEnforcem.ent. CX-C-1; RX C-2; 

DeclaratiOn ofMatthew Wilshire, CX-A ("Wilshire Decl.") ~ 2. From September 2012 until 

January 6, 2014, when he moved into the Bureau's Division of Financial Practices, Mr. Wilshir~ 

was the lead attorney on two envir.onmental marketmg matters (Down to Earth Designs, Inc., 

("gDiapers")) and another, non-public, investigation (the "Other Matters"). Wilshire Dec!. ~1 3, 

4. The Draft was received in connection with the attorneys' evaluation of Mr. Michel's 

credentials to be a consultmg expert on the Other Matters. RX C-1. Mr. Wilshire worked on the 

Other Matters with FTC attorney Pessolano, also in the Bureau of Consumer Protection, Dxvxs1on 

of Enforcement, but who left the FTC in February 2013. RX C-1; RX-K; DeclaratiOn of 

Kathleen Pessolano, CX-C (''Pessolano Decl.'') ~ 4. Mr. Wilshire forwarded the Draft to Ms. 

Pessolano on November 16, 2012,. Pessolano Decl.'U2. 

On .December 3, 2012, at the recommendation of attorneys Wilshire and Pessolano (RX 

I-2), the fTC retained Mr. Michel as a consulting expert in connection w1th the Other Matters. 

Wilshire Decl. 'if 4; RX-1. Mr. Michel proceeded to consult on the Other Matters through at least 

September 2013. RX-K. 

Mr. Wilshire states that he was not involved in the investigation ofECM. Wilshire Decl. 

if 5. Mr. Wilshire further states that his only participation in this litigation with ECM is through 

certain recent couununications between Mr. Wilshire and Mr. Michel regarding ECM's 

subpoena to Mr. Michel, which are the subject ofECM's March 25, 2014 Motion for Sanctions 

for alleged unauthorized mterference with third party d1scov.ery. See id. Tlf 5-6, 8. Ms. 

P~ssolano was involved in the pre-Complaint mvesttgation of Respondent. working with 

Complaint Counsel Johnson, but Ms .. Pessolano left the FTC in February 2013, approximately 

eight months before the Complaint in this case was issued. See Clarification Regarding 

Respondent's Sanctions Motion. March 13, 2014; see also RX-I-1; PessolanoDecl. 'li 1; CX-B, 

Declaration ofKatherine Johnson ("Johnson Decl.") "1!2. 

Complaint Counsel states that none of the attorneys who have entered an appearance in 

this Htigation were aware ofthe Article or any version thereof prior to February 14, 2014, and 

that, prior to February 14, 2014, neither the Article or any versi-on thereof was collected or 

reviewed by anyone who has entered an appearance as Complaint Counsel. Johnson Decl. ljf4f 3, 

4. Furthet, Complaint Counsel states that it first learned of prior FTC contact with Mr. Michel 

on March 12, 2014. ld. 'if 5. 

When she resigned from the FTC in February 2013 1 Ms. Pessolano made a copy of 

emails that she sent and received regarding the ECM investigation and advised Complaint 

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Counsel Johnson where to find them. Pessolano Decl. ~ 4. She also provided Complaint 

Counsel Johnson with paper files {rom the ECM investigation. Jd. Complaint Counsel Johnson 

ack:n0wledges that Ms. Pessolano's emails and paper files regarding the ECM investigation were 

provided to her, and that she searched these materials for responsive infonnation, in connection 

with. Complaint Counsel's mandatory Initi~l Disclosures and Respondent's First Request for 

Production ofD0cuments. Jo.hnson Decl. i( 7. Complaint Counsel acknowledges: that it did not 

search Mr Wilshire's files, but states that it was because Mr. Wilshxre had no involvement with 

the ECM matter. !d. 9]' 8. 

111. 

FTC Rule 3.38.(b) states: 

(b) If a party or an officer or agent of a party fails to comply with any discovery 

obligation .imposed by these rules, upon motion by the aggrieved party, tbe 

Administrative Law Judge or the Commission, or both, may take such action in 

regard thereto as is just, i.nc;)uding but not limite:Q to the following: 

(1) Order that any answer be amended to comply with the request, subpoena, or 

order~ 

(2) Order that the matter be admitted or that the admissiop., testimony, documents, 

or other evidence would have been adverse to. the party; 

(3) Rule that for the purposes of the proceeding the matter or matters concerning 

whtch the order or subpoena was issued be taken as established adversely to the 

party; 

(4) Rule that the.party may not introduce i.nto evidence or otherwise rely, in 

support of any cl~m or defense, upon testimony by such party, officer, agent, 

exp~rt~ or fact witness, or the documents or other evidence, or upon any other 

improperly withheld or undisclosed materials, infonnation, witnesses, or other· 

discovery; 

(5) Rule that the party may not be heard to object to introduction and us.e of 

secondary evi~ence to show what the withheld admission, teshmony, documents, 

or other evidence would have shown~ 

(6) Rule that a pleading, or part of a pleading, or a motion or other submission by 

the party, concerning which the.order or subpoena was issued, be stricken, or that 

a decision of the proceeding be rendered against the party, or both. 

16 C.F.R. § 3.38(b). Sanctions may be imposed for failing to comply with a discovery obligation 

where the failure to c-Omply was L·unjustified and the sanction imposed 'is reasonable in light of 

the material withheld and the purposes of Rule 3.3 8(b ). '., In re lnternationu.l Telephone & 

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Telegraph Corp., 1984 WL 565367 at **127 (July 25, 1984 (quoting Grand Union, 1983 FTC 

LEXIS 61 at *595)). 

Respondent has tailed to demonstrate that, contrary to the sworn declarations submitted, 

Complaint Counsel was aware of the Article prior to February 14, 2014, or of the Draft or the 

Communications w1th Mr. Michel prior to March 12,2014. Further, nothing in the 

Communications supports a finding that Complcrint Counsel had such knowledge. Thus, it 

cannot be concluded that Complaint Counsel knowingly withheld these materials when 

responding to Respondent's discovery requests in this case, as argued by Respondent. 

Moreover, FTC Rule 3.31 ( c )(2) provides limits on Complaint Counsei' s obligations with 

respect to searching for responsive documents, as follows: "(2) Limitations. Complaint counsel 

need only search for materials that were collected or reviewed in the course of the investigation 

of the matter or prosecution of the case and that are in the possession, custody or control of the 

Bure;ms or Offices of the Commission that investigated the matter, including the Bureau of 

Econom.ics." L6 C.F.R. § 3.3l(c)(2). Although Complaint Counsel's discovery obligations 

clearly are not limited to the attorneys who have entered an appearance in this htigation, as 

implied by Complaint Counsel, 1t does not appear that a search, within the parameters of FTC 

Rute 3.31 ( c )(2), would have uncovered the Article, the Draft, or the Communications, because 

these matenals were not collected or reviewed for the instant matter, but for the Other Matters. 

Even ifit is arguable that a more diligent search on Complaint Counsel's part would have 

uncover«d the Draft and the Communications at an earlier time in tlus litigation, given the 

limited search for documents authorized by Rule 3.3l(c)(2), Complaint Counsel's failure to 

conduct a more diligent search would not warrant sanctiOns under Rule 3.38(b), including the 

extreme sanction ofcensure and referral to D.C. Bar Coun:Sel, as requested by Respondent. 

Accordingly, this requested sanction is DENIED. 

Respondent's request to compel Complaint Counsel to perform a :i l~ent search of all 

FfC files and produce all documents responsive to Respondent's Requests for Product~on, and 

certify that production is complete, was resolved by the Order of March 28; 2014, granting, .irt 

part, Respondent's Motion to Compel. The relief granted therein is sufficient, and therefore, the 

requested sanction is DENIED AS MOOT. 

Respondent's request to "summarily deny" Complaint Counsel's Motion for Certification 

and to revise discovery deadlines and hearing date, is also DENIEb AS MOOT because such 

Motion was granted, m part, by Order issued Aprill, 2014. See Order Granting in ·Part and 

Denying in .Part Motion to Certify Scheduling Issues to Commission and Request for Interim 

Relief Similarly, the Revised Scheduling Order issued on April!, 2014 extended the April.3, 

2014 discovery deadline in this case to May 8, 2014, thereby rendering moot Respondent's 

request for a 30-day extension in order to obtain addttional discovery regarding the Article, 

Because additional time has been added to the discovery calendar i11 this case, this requested 

sanctiOn is also DENIED AS MOOT.3 

3 This holding is not to be construed as a ruling on the propriety of any particular discovery request that Respondent 

has issued or may issue with respect to Mr. Michel or the Article. 

5 
Respondent's request t.o ex~Iude the Article from evidence, as a sanction for Complaint 

Counsel's failure to produce the Artie!¢ to Respondent until February 19, 2014 was previously 

denied by the Order ofMarch 21,2014. Respondent's instant Motion fails to qewonstrate 

sufficient facts to justify reversing the Order of March 21, 2014, and ordering exclusion of the 

Arb:cle from evidence as a sanction. A more reasonable and just rel1).edy IS to provide 

Respondent with additional time to .conduct discovery on the Art cle~ which reifefhas been 

provided pursuant to the Revised Scheduling Order issued April I, 2014. Se.e 16 C.F,R. 

§ 3.38(c) (sanctions shol,l].d be "sufficient to compensate for withheld ... evidence"). 

AccordiJ;l.gly, Respondent's request to exclude the Article, as a sanction for Complaint Counsel's 

timing iri providing the Article, is DENIED. This holding is not to be construed as a ruling on 

the admissibility of the Article as evidence in th1s m.a:tter. 

ORDERED: -r-... . . :U l -~ M ClnilV\ ~: ___ _ D. Michel Chappell 

Chief Administrative Law Judge 

Date: April 7, 2014 

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