Aquaforest TIFF Junction Evaluation

Iv.

Because Respondent has not wrongfully withheld discovery and for the above stated
reasons, Complaint Counsel’s Motion is DENIED.

ORDERED: Dmec
D. Michael Chappelf” ‘
Chief Administrative Law Judge

Date: July 18, 2014


UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION
OFFICE OF ADMINISTRATIVE LAW JUDGES

In the Matter of
ECM BioFilms, Inc., DOCKET NO. 9358
a corporation, also d/b/a
Enviroplastics International,
Respondent.

eee HY

ORDER DENYING COMPLAINT COUNSEL’S MOTION
TO COMPEL DISCOVERY WITHHELD BY DR. DAVID STEWART

I.

On July 9, 2014, Federal Trade Commission (“FTC”) Complaint Counsel filed a Motion
to Compel Respondent ECM BioFilms, Inc. (“Respondent” or “ECM”) to supplement its
responses to document requests issued by Complaint Counsel in November 2013 regarding
ECM’s “sophisticated customer” defense. Respondent filed its opposition on July 11, 2014
(“Opposition”). Having considered the Motion, the Opposition, and all arguments and assertions
therein, the Motion is DENIED, as explained below.

Il.

The Complaint in this case charges that ECM engaged in deceptive trade practices in
violation of Section 5 of the FTC Act by making false or unsubstantiated representations
regarding the biodegradability of plastics treated with an additive manufactured by ECM (“ECM
Additive”). The Complaint alleges, among other things, that Respondent distributes ECM
Additives to its customers — independent distributors and plastic products manufacturers
(collectively, “customers” — located throughout the United States who, in turn, treat plastics
with ECM Additives and thereafter advertise and sell the treated plastic products to end-users as
biodegradable. Complaint { 2. The Complaint further alleges that ECM’s representations to its
customers were passed on to plastics end-users, and therefore, ECM provided its customers with
the “means and instrumentalities” to deceive the end-users. Complaint ff] 4, 14, 15. Respondent
defends against the charge, in part, by asserting that it sells to sophisticated customers who
would not interpret Respondent’s representations in the manner alleged in the Complaint.
Answer J} 4.


Aquaforest TIFF Junction Evaluation

Complaint Counsel states that Respondent engaged Dr. David Stewart to opine regarding
how ECM’s customers understand biodegradation. Complaint Counsel further states that, at his
deposition, Dr. Stewart testified that he conducted a ‘manufacturers’ pilot study” for ECM and
that, to facilitate this study, ECM provided Dr. Stewart with a list of customers for interviewers
working for Dr. Stewart to contact. Complaint Counsel states that ECM and Dr. Stewart did not
provide the list of customers who were interviewed to Complaint Counsel and that although
ECM and Dr. Stewart provided a report of the pilot study results, because the results identify
survey respondents by number and Complaint Counsel has no way to correlate the numbers on
the results with ECM’s list of potential survey respondents, Complaint Counsel cannot determine
which companies or persons on the list were interviewed or provided which responses.
Complaint Counsel seeks to compel ECM to produce information “sufficient to establish which
ECM customers provided which interview responses to Dr. Stewart’s researchers.” Motion at 6.!

Respondent states that: it retained Dr. Stewart to provide expert testimony concerning,
inter alia, public perception of “biodegradable” claims in the marketplace; Dr. Stewart designed
a pilot study that involved a telephone survey of plastics companies; ECM provided Dr. Stewart
with a list of 150 former and current customers; Dr. Stewart hired a third party, California
Survey Research Services, Inc. (“CSRS”) to perform the survey; CSRS selected a random group
of businesses from the list of 150 companies that Dr. Stewart had provided to CSRS; and CSRS
recorded responses for ten survey respondents. Respondent further states: “neither Dr. Stewart
nor ECM [was] given the names of the study participants that CSRS contacted. Responses were
blinded by CSRS, and given to Dr. Stewart with codes instead of names.” Opposition at 4
(citations omitted). Thus, Respondent argues, ECM never possessed the specific names of the
survey participants and there is no evidence that Dr. Stewart relied on the customer names in any
capacity when forming his opinions in this case, or that the names were relevant to Dr. Stewart’s
analysis.

iil.

Dr, Stewart is a testifying expert. Therefore, the dispositive issue is whether or not
Respondent, in complying with expert discovery requirements, is required to identify each
survey participant contacted by CSRS and which identified participant gave which response.
The Commission’s rule governing expert discovery requires the parties to provide expert reports
to the opposing party, signed by the expert, and containing a complete statement of all opinions
to be expressed and the basis and reasons therefor; the data, materials, or other information
considered by the witness in forming the opinions; and any exhibits to be used as a summary of

"In addition, Complaint Counsel asserts that two of its document requests, issued in November 2013, seeking
documents relating to consumer perception of biodegradability and to Respondent’s contention that its customers or
purchasers are sophisticated purchasers, cover the information at issue and that Respondent has a duty to supplement
its responses in a timely manner. Complaint Counsel argues that Respondent has no basis for refusing to disclose
the requested information. Specifically, Complaint Counsel asserts that Rule 3.37(a) applies to all materials in
ECM’s “possession, custody, or control,” and that ECM can request the responsive information from Dr. Stewart.
Complaint Counsel further asserts that there is no privilege protecting the names of the survey respondents from
disclosure. However, as explained herein, these arguments are not dispositive to the dispute at issue and thus need
not and will not be addressed.

2


Aquaforest TIFF Junction Evaluation

or support for the opinions. 16 C.F.R. § 3.31A(c). In addition, pursuant to the Scheduling Order
agreed to by the parties and entered in this case:

The parties are required to comply with Rule 3.31A and with the following: ...
At the time an expert report is produced, the producing party shall provide to the
other party all documents and other written materials relied upon by the expert in
formulating an opinion in this case. Unless otherwise agreed by the parties, the
experts’ notes and drafts of expert reports need not be produced. Likewise,
communications between experts and with counsel or consultants need not be
produced unless relied upon by the expert in formulating an opinion in this case.

Scheduling Order J19(b) (emphasis added).

Addressing the scope of expert discovery in In re Dura Lube Corp., 1999 FTC LEXIS
254 (Dec. 15, 1999), it was held that “all documents reviewed, consulted, or examined by the
expert in connection with forming his or her opinion on the subject on which he or she is
expected to testify, regardless of the source of the document” must be produced. Jd. at *7. “The
seope of discovery is not limited to documents relied on by the expert in support of his or her
opinions, but extends to documents considered but rejected by the testifying expert in reaching
those opinions.” Jd. (citation omitted). “Any document considered by an expert in forming an
opinion, whether or not such document constitutes work product or is privileged, is
discoverable.” Jd. **7-8 (citations omitted).

Respondent has provided to Complaint Counsel the list of 150 companies that ECM
provided to Dr. Stewart. Respondent has also provided to Complaint Counsel the survey
responses generated by the manufacturers’ pilot study. Motion at 3. The dispute at issue is
whether Respondent is further required to provide Complaint Counsel with the names of the ten
individual companies that provided each of the responses obtained by CSRS at Dr. Stewart’s
direction. Applying the foregoing authorities, the dispositive question in resolving this dispute is
whether Dr. Stewart considered or relied upon the identities of the individuals who provided
responses to the CSRS survey in formulating any opinion in this case.

In his deposition, in response to a question from Complaint Counsel asking for additional
information to enable Complaint Counsel to figure out who CSRS contacted, Dr. Stewart
testified that he did not know the identity of the specific survey respondents. RX-A:1 Deposition
of Dr. Stewart, at 272-274. If Dr. Stewart did not have the names of the specific survey
respondents, he could not have considered or relied upon them in formulating any opinion in this
case. Moreover, even if Dr. Stewart did know the identity of the individuals, Dr. Stewart would
not be required to disclose those identities unless he relied upon the identity of those individuals
in formulating his expert report in this case or any opinions therein. In re Dura Lube Corp.,
1999 FTC LEXIS 254, at *7. Because Complaint Counsel has failed to demonstrate that Dr.
Stewart considered the identities of the pilot study survey respondents (as opposed to the
responses themselves), there is no basis for concluding that such identities are discoverable.