No. 15-4339

IN THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

–––––––––––––––––––––––––––––––––––––––––––––

ECM BIOFILMS, INC.,

Petitioner,

v.

FEDERAL TRADE COMMISSION,

Respondent.

–––––––––––––––––––––––––––––––––––––––––––––

On Petition for Review of an Order of the 

Federal Trade Commission

FTC Docket No. 9358

–––––––––––––––––––––––––––––––––––––––––––––

CORRECTED BRIEF OF THE 

FEDERAL TRADE COMMISSION

–––––––––––––––––––––––––––––––––––––––––––––

Of Counsel:

JAMES KOHM

FRANK GORMAN

KATHERINE JOHNSON

FEDERAL TRADE COMMISSION

Washington, D.C. 20580

DAVID C. SHONKA

Acting General Counsel

JOEL MARCUS

Director of Litigation

THEODORE (JACK) METZLER

Attorney

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue N.W.

WASHINGTON, D.C. 20580

(202) 326-3502

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TABLE OF CONTENTS

Table of Authorities................................................................................................. iii

Questions Presented ...................................................................................................1

Introduction................................................................................................................2

Statement of the Case.................................................................................................3

A. The Legal Framework For Deceptive Advertising.............................................3

B. The Commission’s Case Against ECM..............................................................8

1. ECM’s product and its environmental claims................................................8

2. ECM’s purported substantiation. .................................................................12

3. The FTC’s Green Guides and ECM’s revised marketing............................14

C. The FTC’s Complaint And The ALJ’s Decision..............................................16

D. The Commission’s Decision.............................................................................19

1. ECM’s express claims of biodegradability..................................................19

2. ECM’s implied representations....................................................................20

3. ECM’s lack of substantiation.......................................................................24

4. The materiality of ECM’s claims.................................................................25

5. Means and instrumentalities liability...........................................................26

E. The Commission’s Remedial Order. ................................................................26

Standard of Review..................................................................................................28

Summary of the Argument.......................................................................................32

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Argument..................................................................................................................35

I. The Commission Properly Interpreted ECM’s Unqualified 

Biodegradability Claim To Imply A Reasonable Time Frame. .......................37

A. Substantial Evidence Supports The Commission’s Holding 

That “Biodegradable” Implies Decomposition Within A 

Reasonable Time..........................................................................................37

B. ECM’s Counterarguments Are Unavailing..................................................40

1. The Commission correctly applied its Deception 

Statement. ............................................................................................40

2. The Commission properly relied on the Frederick survey..................45

3. The Commission owed no deference to the ALJ. ...............................49

C. There Is No Dispute That ECM’s Claims Were False, 

Unsubstantiated, And Material. ...................................................................50

II. ECM’s First Amendment Argument Ignores The Misleading 

Nature Of Its Claims.........................................................................................51

III. The Agency Proceeding Complied With The APA And Principles 

Of Due Process. ................................................................................................56

A. The FTC Complied With The Administrative Procedure Act.....................56

B. ECM Had Notice Of The Charges Against It..............................................60

C. The Commission Acted Within Its Authority..............................................63

Conclusion ...............................................................................................................63

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TABLE OF AUTHORITIES

CASES

Air Pollution Control Dist. v. EPA, 

739 F.2d 1071 (6th Cir. 1984) ...................................................................... 31, 56

Allis-Chalmers Corp. v. OSHRC, 

542 F.2d 27 (7th Cir. 1976)..................................................................................49

Atlantic Ref. Co. v. FTC, 381 U.S. 357 (1965)................................................. 29, 54

Bates v. State Bar of Ariz., 433 U.S. 350 (1977).....................................................51

Bose Corp. v. Consumers Union, 466 U.S. 485 (1984)...........................................30

Buchanan v. Northland Grp., 

776 F.3d 393 (6th Cir. 2015)............................................................................6, 29

Central Hudson Gas & Elec. Corp. v. Public Serv. 

Comm’n, 447 U.S. 557 (1980)...................................................................... 34, 51

Chao v. Gunite Corp., 

442 F.3d 550 (7th Cir. 2006)................................................................................49

Chrysler Corp. v. FTC, 

561 F.2d 357 (D.C. Cir. 1977)...................................................................... 49, 61

Country Tweeds, Inc. v. FTC, 

326 F.2d 144 (2d Cir. 1964).................................................................................62

Davis v. Ky. Fin. Cos. Ret. Plan, 

887 F.2d 689 (6th Cir. 1989)................................................................................56

Firestone Tire & Rubber Co. v. FTC, 

481 F.2d 246 (6th Cir. 1973)............................................................. 29, 31, 40, 42

FTC v. Brown & Williamson Tobacco Corp., 

778 F.2d 35 (D.C. Cir. 1985).................................................. 5, 30, 36, 37, 44, 51

FTC v. Colgate-Palmolive Co., 380 U.S. 374 (1965)................... 4, 8, 29, 31, 49, 56

FTC v. Direct Mktg. Concepts, Inc., 

624 F.3d 1 (1st Cir. 2010)......................................................................................7

FTC v. E.M.A. Nationwide, Inc., 

767 F.3d 611 (6th Cir. 2014)..................................................................................7

FTC v. Ind. Fed’n of Dentists, 476 U.S. 447 (1986) ...............................................40

FTC v. Nat’l Lead Co., 352 U.S. 419 (1957).............................................................8

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FTC v. Ruberoid Co., 343 U.S. 470 (1952)...............................................................8

FTC v. Winsted Hosiery Co., 258 U.S. 483 (1922) ...................................................4

FTC v. Wyndham Worldwide Corp., 

799 F.3d 236 (3d Cir. 2015).................................................................................62

General Electric Co. v. EPA, 

53 F.3d 1324 (D.C. Cir. 1995).............................................................................61

In re Int’l Harvester Co., 104 F.T.C. 949 (1984)..................................................6, 7

In re Kraft, Inc., 114 F.T.C. 40 (1991) ................................................................4, 42

In re Litton Indus., Inc., 676 F.2d 364 (9th Cir. 1982)..............................................4

In re Novartis Corp., 127 F.T.C. 580 (1999).............................................................5

In re Pfizer Inc., 81 F.T.C. 23 (1972)........................................................................7

In re POM Wonderful, 2013 FTC LEXIS 6 ............................................................42

In re QT, 448 F. Supp. 2d 908 (N.D. Ill. 2006).........................................................7

In re R.M.J., 455 U.S. 191 (1982)..................................................................... 51, 53

In re Stouffer Foods Corp., 118 F.T.C. 746 (1994)........................................ 5, 6, 45

In re Telebrands Corp., 140 F.T.C. 278 (2005)............................................ 5, 40, 42

In re Thompson Med. Co., 104 F.T.C. 648 (1984) ..................................... 37, 42, 44

J.B. Williams Co. v. FTC, 381 F.2d 884 (6th Cir. 1967)........................ 6, 38, 45, 62

Koch v. FTC, 206 F.2d 311 (6th Cir. 1953).............................................. 6, 8, 37, 44

Kraft, Inc. v. FTC, 970 F.2d 311 (7th Cir. 1992)................................ 5, 8, 29, 30, 53

L.G. Balfour Co. v. FTC, 442 F.2d 1 (7th Cir. 1971)..............................................60

Miller v. Comm’r of Soc. Sec., 

811 F.3d 825 (6th Cir. 2016)................................................................................28

Nat’l Bakers Servs., Inc. v. FTC, 

329 F.2d 365 (7th Cir. 1964)..................................................................................5

Novartis Corp. v. FTC, 223 F.3d 783 (D.C. Cir. 2000)...........................................30

Oakland Cty Bd. of Comm’rs v. United States Dep’t of 

Labor, 853 F.2d 439 (6th Cir. 1988)....................................................................31

Ohio v. Ruckelshaus, 776 F.2d 1333 (6th Cir. 1985) ....................................... 31, 56

Pappas v. FCC, 807 F.2d 1019 (D.C. Cir. 1986) ....................................................31

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Peel v. Attorney Registration and Disciplinary Comm’n, 

496 U.S. 91 (1990)...............................................................................................30

POM Wonderful, LLC v. FTC, 

777 F.3d 478 (D.C. Cir. 2015).............................................. 4, 5, 7, 30, 37, 42, 56

ProMedica Health Sys. v. FTC, 

749 F.3d 559 (6th Cir. 2014) ......................................................................... 28, 40

Removatron Int’l Corp. v. FTC, 

884 F.2d 1489 (1st Cir. 1989)................................................................................7

Shields v. Reader’s Digest Ass’n, 

331 F.3d 536 (6th Cir. 2003)......................................................................... 56, 57

Sierra Club v. Slater, 

120 F.3d 623 (6th Cir. 1997)......................................................................... 31, 58

Simeon Mgmt. Corp. v. FTC, 

579 F.2d 1137 (9th Cir. 1978) .........................................................................6, 45

Singer v. Garvey, 208 F.3d 555 (6th Cir. 2000) ......................................................50

Southwest Sunsites, Inc. v. FTC, 

785 F.2d 1431 (9th Cir. 1986) .............................................................................60

State Bd. of Pharmacy v. Va. Citizens Consumer Council, 

Inc., 425 U.S. 748 (1976).....................................................................................52

Telebrands, Inc. v. FTC, 457 F.3d 354 (4th Cir. 2006).......................................8, 29

Thompson Med. Co. v. FTC, 791 F.2d 189 

(D.C. Cir. 1986) ...............................................................................................4, 42

Universal Camera Corp. v. NLRB, 340 U.S. 474 (1951)........................... 28, 29, 49

Waltham Watch Co. v. FTC, 318 F.2d 28 (7th Cir. 1963)...................................4, 26

Zauderer v. Office of Disciplinary Counsel, 

471 U.S. 626 (1985)............................................................................ 5, 29, 44, 51

STATUTES AND REGULATIONS

15 U.S.C. § 45............................................................................................................3

16 C.F.R. § 260.1 .....................................................................................................15

16 C.F.R. § 260.8 .....................................................................................................15

16 C.F.R. § 3.54 ................................................................................................ 33, 49

16 C.F.R. § 4.7 .........................................................................................................17

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16 C.F.R. Part 3........................................................................................................17

5 U.S.C. § 706................................................................................................... 31, 56

FTC, Guides for the Use of Environmental Marketing 

Claims, 61 Fed. Reg. 53311 (Oct. 11, 1996) .......................................................15

OTHER AUTHORITIES

1A L. Altman, Callman’s The Law of Unfair Competition, 

Trademarks and Monopolies § 5.04 (4th ed. 1981)..............................................36

Amy Barrett, Should You Switch To Green Packaging?, 

Inc. Mag. (May 2011).............................................................................................9

FTC Policy Statement on Deception, 103 F.T.C. 174 

(1984)................................................................................ 4, 5, 7, 8, 32, 41, 42, 43

Heartland Institute, Plastics and the Environment, 

Villain or Friend?, http://bit.ly/SPI-Heartland........................................................9

S. Rep. No. 79-752 (1945).......................................................................................49

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STATEMENT REGARDING ORAL ARGUMENT

The FTC believes oral argument may assist the Court in its consideration of 

this appeal and therefore requests oral argument.

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QUESTIONS PRESENTED

ECM Biofilms advertised that its plastic additive product was scientifically

proven to make ordinary plastic “biodegradable.” The Commission found that 

claim was misleading and violated Section 5 of the FTC Act. After a full administrative trial, the Commission reviewed the record and determined that consumers 

interpret “biodegradable” to mean that the plastic completely breaks down within a 

reasonable time after disposal—about five years. Indeed, ECM had touted that time 

frame for biodegradation in its promotional materials to customers. But ECM had 

no scientific proof that its product would cause plastic to biodegrade in any 

reasonable time frame. Without substantiation, its claims were false. The 

Commission ordered ECM to cease and desist from making further biodegradability

claims unless the claims are true, not misleading, and supported by reliable 

scientific evidence. The questions presented are:

1. Whether the Commission reasonably found that consumers interpret a 

claim that plastic is “biodegradable” to mean that it will biodegrade within about 

five years. 

2. Whether the Commission’s findings or its remedial order violate the First 

Amendment.

3. Whether the Commission’s order violates the Administrative Procedure 

Act or denies ECM due process. 

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INTRODUCTION

As consumers become more environmentally conscious they increasingly 

want biodegradable products, and the idea of biodegradable plastic is particularly

appealing. In landfills, where most household waste is disposed, plastic bottles and 

bags can take millennia or more to decompose. ECM Biofilms offered plastic 

manufacturers what sounded like the perfect way to satisfy that consumer demand: 

an additive that allegedly turns landfill-clogging plastic into “biodegradable” plastic 

that will break down in landfills. At first, ECM claimed complete biodegradability 

without reference to any time period. Responding to customers’ desire to know how 

long biodegradation would take, ECM soon specified that complete breakdown

would happen in nine months to five years. Later, it changed its claim to say 

biodegradation would take “some period greater than a year.” ECM assured 

customers that all of its claims were supported by rigorous science. 

In the proceeding under review, the FTC determined that the claims were 

untrue. ECM now concedes both that its products do not cause plastics to completely 

biodegrade in nine months to five years (or any other specific time period) and that 

it lacked any scientific proof of that claim. ECM challenges, however, the FTC’s 

finding that its “unqualified biodegradability” claim—the contention that its 

additive would make plastic biodegradable with no time frame specified—implied 

that biodegradation would occur within a reasonable period of about five years. In 

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its brief, ECM doubles down on its misrepresentations to its customers, arguing 

that consumers’ understanding of “biodegradable” is irrelevant as long as scientists 

agree that ECM plastic is “intrinsically biodegradable.” 

As we show below, that is not the law. Consumer interpretation, not 

scientific understanding of technical language, is paramount in determining the 

meaning of an advertisement. The record firmly supports the FTC’s finding that 

consumers read the word “biodegradable” to imply a time frame for decomposition. 

That reading makes sense because given enough time everything will biodegrade;

labeling a product “biodegradable” means nothing unless it conveys some time 

period within which the product will decompose. Two consumer surveys prove 

both that consumers read the term to have a time element and that they view that 

time period to be five years or less. Indeed, when its customers wanted to know 

how long plastic would take to decompose if they used the product, ECM itself 

came up with “nine months to five years.”

STATEMENT OF THE CASE

A. The Legal Framework For Deceptive Advertising.

Section 5 of the FTC Act prohibits the use of deceptive acts and practices in 

commerce; the Commission is “empowered and directed to prevent such practices.” 

15 U.S.C. § 45(a). Companies can be liable under Section 5 not only if they 

deceive consumers directly, but also when they “put into the hands of others the 

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means by which they may mislead the public.” Waltham Watch Co. v. FTC, 318 

F.2d 28, 32 (7th Cir. 1963); In re Litton Indus., Inc., 676 F.2d 364 (9th Cir. 1982);

FTC v. Winsted Hosiery Co., 258 U.S. 483, 493-494 (1922).

Congress gave the FTC “an influential role” in interpreting Section 5 

because the Commission “is often in a better position than are courts to determine 

when a practice is ‘deceptive’ within the meaning of the Act.” FTC v. ColgatePalmolive Co., 380 U.S. 374, 385 (1965). To determine whether a representation is 

deceptive, the Commission “engages in a three-step inquiry, considering: (i) what 

claims are conveyed in the ad, (ii) whether those claims are false, misleading, or 

unsubstantiated, and (iii) whether the claims are material to prospective consumers.” 

POM Wonderful, LLC v. FTC, 777 F.3d 478, 490 (D.C. Cir. 2015). 

Claims conveyed can be either express or implied. Express claims are made 

directly; implied claims are all other “messages an ad can reasonably be interpreted 

as containing.” In re Kraft, Inc., 114 F.T.C. 40, aff’d 970 F.2d 311 (7th Cir. 1992). 

A claim can be implied even if it is not the only possible interpretation of an 

advertisement. Thompson Med. Co. v. FTC, 791 F.2d 189, 197 (D.C. Cir. 1986). 

And an interpretation can be reasonable even if it is not shared by all or even a 

majority of consumers, or by “particularly sophisticated” consumers. FTC Policy 

Statement on Deception, 103 F.T.C. 174, 177 n.20 (1984) (“Deception Statement”). 

Thus, the Commission has long held that a claim is implied so long as “at least a 

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significant minority of reasonable consumers would likely interpret the ad to assert 

the claim.” POM, 777 F.3d at 490 (internal quotation marks omitted); Deception 

Statement, 103 F.T.C. at 177 n.20 (“A material practice that misleads a significant 

minority of reasonable consumers is deceptive.”).

The Commission may examine materials beyond the ads themselves to 

determine what claims have been made, including consumer surveys, expert 

opinions, and evidence that the company intended to convey a given message. 

Kraft, Inc. v. FTC, 970 F.2d 311, 318 (7th Cir. 1992); In re Telebrands Corp., 140 

F.T.C. 278, 307 (2005); In re Novartis Corp., 127 F.T.C. 580, 683 (1999). The 

Commission particularly values surveys as evidence of how consumers perceive 

representations. Kraft, 970 F.2d at 318; Nat’l Bakers Servs., Inc. v. FTC, 329 F.2d 

365, 367 (7th Cir. 1964); In re Stouffer Foods Corp., 118 F.T.C. 746, 804 (1994).

A company’s representations are not necessarily limited to the “technical 

meaning” of the terms used in an advertisement. “[I]n situations involving 

‘technical . . . terms,’ it may become reasonable to assume that members of the 

public may be ‘unaware of the . . . meanings of such terms’ and that ‘substantial 

numbers’ might be misled.” FTC v. Brown & Williamson Tobacco Corp., 778 F.2d 

35, 41 (D.C. Cir. 1985) (quoting Zauderer v. Office of Disciplinary Counsel, 471 

U.S. 626, 652 (1985)). Thus, even if the words of an advertisement are “technically 

true,” that alone “does not prevent their being framed so as to mislead or deceive.” 

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Koch v. FTC, 206 F.2d 311, 317 (6th Cir. 1953). Furthermore, the Commission 

may find an advertisement to imply a claim where consumers’ understanding of 

the ad is based in part on their preexisting beliefs, even if the advertiser did not 

create those beliefs. Stouffer Foods, 118 F.T.C. at 810 n.31 (“[R]espondents may 

be held liable for dissemination of ads that capitalize on preexisting consumer 

beliefs.”). 

A claim need not be overtly false. “[E]ven a true statement may be banned 

for creating a misleading impression.” Buchanan v. Northland Grp., 776 F.3d 393, 

396 (6th Cir. 2015). Half-truths can deceive by omission, and even silence can 

deceive where the circumstances leave a false impression in place. In re Int’l 

Harvester Co., 104 F.T.C. 949, 1984 FTC LEXIS 2, at *240-241 (1984). An 

advertiser’s obligation to dispel a misimpression can arise even when consumers’ 

understanding of an advertisement “is attributable in part to factors other than the 

advertisement itself.” Simeon Mgmt. Corp. v. FTC, 579 F.2d 1137, 1146 (9th Cir. 

1978). And that a belief is based in part on such information “does not preclude the 

advertisement from being deceptive”; the advertiser must include information to 

dispel the viewer’s false impression or ignorance. Id., see also J.B. Williams Co. v. 

FTC, 381 F.2d 884, 889-890 (6th Cir. 1967) (ads for Geritol misleading for failing 

to disclose that for most people tiredness is not caused by iron deficiency). Thus, 

sellers may be required to correct consumers’ misimpressions even if they did not 

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directly create, or only partially created, the misimpression. Int’l Harvester, 104 

F.T.C. 949, 1984 FTC LEXIS 2, at *278 & n.14.

Once the Commission has discerned the claims conveyed by a representation, 

it turns to the second step of its analysis: whether the claims are false or misleading,

or lack support. POM, 777 F.3d at 490; Deception Statement, 103 F.T.C. at 175

n.5. The level of substantiation required depends on the kind of claim. If the 

advertiser claims that a product has a particular quality—an “efficacy” claim—the 

FTC determines the appropriate level by analyzing the factors listed in In re Pfizer 

Inc., 81 F.T.C. 23 (1972). If the claim is that a product’s quality is scientifically 

proven—an “establishment claim”—the advertiser must have “well-controlled 

scientific studies” that the relevant scientific community would view as sufficient 

to support the claims. Removatron Int’l Corp. v. FTC, 884 F.2d 1489, 1498 (1st 

Cir. 1989); POM, 777 F.3d at 491. In either case, the advertiser has the burden to 

substantiate its claims. E.g., In re QT, 448 F. Supp. 2d 908, 959 (N.D. Ill. 2006). 

Claims that lack a reasonable basis are deceptive as a matter of law. FTC v. Direct 

Mktg. Concepts, Inc., 624 F.3d 1, 8 (1st Cir. 2010).

At the third step, the Commission considers whether a claim is material; that 

is, “likely to affect a consumer’s decision to buy a product or service.” FTC v. 

E.M.A. Nationwide, Inc., 767 F.3d 611, 631 (6th Cir. 2014); POM, 777 F.3d at 

490. Because promotional materials are ordinarily meant to influence purchasers, 

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the Commission presumes the materiality of express claims, intentionally implied 

claims, and claims that pertain to a product’s “central characteristics.” Deception 

Statement, 103 F.T.C. at 182; Colgate-Palmolive, 380 U.S. at 392; accord Kraft, 

970 F.2d at 322-323. 

If an advertisement is deceptive, the FTC has “wide discretion” in crafting a 

remedy to prevent further violations. Colgate-Palmolive, 380 U.S. at 392; 

Telebrands, Inc. v. FTC, 457 F.3d 354, 358 (4th Cir. 2006); Koch, 206 F.2d at 320. 

The Commission is “not limited to prohibiting the illegal practice in the precise 

form in which it has been found to have existed in the past.” FTC v. Ruberoid Co., 

343 U.S. 470, 473 (1952). “Having been caught violating the Act, the respondents 

‘must expect some fencing in.’” Colgate-Palmolive, 380 U.S. at 395, quoting FTC 

v. Nat’l Lead Co., 352 U.S. 419, 431 (1957). 

B. The Commission’s Case Against ECM.

1. ECM’s product and its environmental claims. 

About 16 million tons of garbage in the United States are deposited in landfills every year. App. 42.1

Plastic disposed of in landfills is a particular concern 

because it can persist in the environment for 10,000 years or more. App. 43, 123. 

Thus, plastic is “often labeled a villain by environmental activists.” Heartland 

 1

“App.” refers to the appendix filed by ECM; “S.A.” refers to the Supplemental 

Appendix filed by the Commission; and “ALJ ¶__” refers to the ALJ’s numbered 

findings. 

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Institute, Plastics and the Environment, Villain or Friend?, http://bit.ly/SPIHeartland. Because of its extensive use in packaging, particularly for single-use 

products, plastic products are “criticized because they do not biodegrade and 

because they are manufactured from nonrenewable resources.” Id. Plastic manufacturers thus are concerned that their customers will turn away from their products 

in favor of “greener” alternatives. See Amy Barrett, Should You Switch To Green 

Packaging?, Inc. Mag. (May 2011), http://bit.ly/Inc-SwitchToGreen; App. 42-43, 

175 (ALJ ¶¶ 196, 205, 1503). 

These manufacturers are ECM’s customers. They make various plastic 

products—shampoo bottles, blister packs, shipping materials, grocery bags, etc.—

and sell them for ultimate use by consumers. ECM offers these manufacturers a 

seemingly magic solution to worries that their downstream customers will choose 

more environmentally friendly materials: Just add ECM’s product to ordinary 

plastic and it becomes biodegradable. App. 39, 43, 174 (ALJ ¶¶ 156-158, 200-201, 

205, 1497, 1500). No special equipment is required, and the plastic will otherwise 

perform exactly as it would have without the additive. E.g., App. 46 (ALJ ¶¶ 232-

234); 407-408. What’s more, ECM pitches, manufacturers can tell customers that 

their plastic products are biodegradable and assuage environmental concerns by 

labeling plastic products “biodegradable” and using ECM’s “tree logo.” App. 408; 

S.A. 475.

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ECM’s biodegradability claims have shifted over time. App. 342, 407-411; 

S.A. 550. Initially, ECM claimed that its product would cause ordinary plastics to 

biodegrade completely in a landfill without specifying a time frame—although it 

told customers that their plastic products would biodegrade as if they were organic 

material, like sticks or other small pieces of wood. S.A. 487-488, 489, 491; App.

46-47 (ALJ ¶¶ 232-237, 239). But ECM’s customers wanted to know how long 

biodegradation would take. App. 43; S.A. 494-495. Downstream consumers 

demanded environmentally friendly products, and one that degrades in three years 

is better than one that does so in three hundred (or three thousand). App. 43, 48-49,

174-175 (ALJ ¶¶ 205, 245-246, 1498, 1501-1506); S.A. 550-551. Responding to 

that demand, ECM quickly altered its marketing campaign to specify that its product

would cause plastic products to completely biodegrade in a landfill within 

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“9 months to 5 years.” App. 48-49, 342, 407-408; S.A. 550. That statement 

appeared on ECM’s marketing materials and throughout its website. App. 48-49, 

52, 407-408 (ALJ ¶¶ 245, 265); S.A. 473-474. ECM provided its customers with 

materials they could use to market their products as biodegradable, including the 

tree logo shown above, emblazoned “ECM Biodegradable.” E.g., App. 411; S.A. 

475. 

ECM also assured customers that its biodegradability claims were supported 

by scientific evidence. App. 48, 52 (ALJ ¶¶ 245, 265); S.A. 473-474. It even gave 

them a certificate to prove it. App. 407, 409. The “Certificate of Biodegradability” 

asserted that plastics manufactured with ECM’s additive “have been tested by 

independent laboratories in accordance with standard test methods” approved by 

standardization bodies “to determine the rate and extent of biodegradation.” App. 

407. The certificate lists several specific test standards and concludes that given the 

“results of these tests,” “plastic products manufactured with ECM additives can be 

marketed as biodegradable and safe for the environment.” Id. The certificate 

likewise pronounces that it “may be used by [the customer] to validate its claims to 

the biodegradability and environmental safety of plastic products” that use ECM’s 

additive. Id.

ECM’s customers conveyed ECM’s biodegradability claims—including the 

claim of complete biodegradation in nine months to five years—to their own 

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customers. App. 56-58, 411-412, (ALJ ¶¶ 286-289). They also placed ECM’s 

“Biodegradable” tree logo and other claims on their plastic products. App. 56-57, 

411-412 (ALJ ¶¶ 286-292). At ECM’s encouragement, its customers used the 

“Certificate of Biodegradability” to validate their own claims and passed the 

certificate on to their downstream customers. App. 53, 59, 190, 194 (ALJ ¶¶ 266-

270, 305). In many instances, ECM reviewed and approved its customers’ claims 

that their products would biodegrade in nine months to five years. App. 43 (ALJ 

¶¶ 297-300). Millions of plastic products containing ECM’s claims—grocery bags, 

plastic bottles, shampoo bottles, packaging materials, etc.—reached consumers. 

App. 56-58 (ALJ ¶¶ 285-286, 289, 300, 301). Those consumers were presented 

with claims like this one:

App. 411.

2. ECM’s purported substantiation.

Contrary to its claims, ECM did not have scientific proof that adding its 

product to ordinary plastic would cause it to become “biodegradable” or to 

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biodegrade in a landfill within nine months to five years. App. 342. ECM’s 

purported substantiation relied on tests that employed one of the test protocols 

listed on its certificate; namely, the D5511 protocol issued by the American 

Society for Testing and Materials. App. 379-381; see App. 429-435. 

The protocol specifies the standards for running a “gas evolution” test 

designed to determine whether a material is capable of biodegradation under 

controlled, accelerated, anaerobic conditions.2

App. 429-435. The material to be 

tested is first placed in a sealed container with a biologically active “inoculum”; 

the mixture is then heated and moisture is added to encourage the biological 

processes involved in biodegradation. App. 378, 431. The protocol next directs an 

assessment of whether the microorganisms produced methane, indicating that 

biodegradation has occurred. App. 378, 431-432. The percentage of biodegradation 

is calculated by comparing the volume of methane produced during the test to the 

theoretical maximum that could be produced based on the chemical structure of the 

test material and the inoculum. App. 432. The percentage can then be compared to 

results obtained from control samples that undergo the same test procedure except 

with materials known to be biodegradable or non-biodegradable. App. 378-379; 

432.

 2

In this context, “biodegradation” generally describes a biological process in 

which microoganisms use the carbon in organic material as a food source. App. 

378. 

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14

ECM told its customers that the “results of these tests” show that “plastic 

products manufactured with ECM additives can be marketed as biodegradable,”

without qualification. App. 407, 409. The tests showed no such thing. The D5511 

protocol is expressly not intended to support unqualified marketing claims that a 

material is biodegradable. Compare App. 407 with App. 429; see also App. 44. It 

specifically directs that results “shall not be used for unqualified ‘biodegradable’ 

claims.” App. 429. Nor can the results support a claim of complete biodegradation: 

“results shall not be extrapolated past the actual duration of the test.” Id.; App. 383, 

432. Moreover, the test is designed to simulate conditions in facilities that actively 

treat municipal solid waste—not ordinary landfills. App. 379, 429. Thus, no matter 

what the results of testing plastics made with ECM’s additive showed, they were 

incapable of substantiating its unqualified claims of biodegradability (in general or 

in a landfill). And ECM did not even assert that the testing could substantiate a 

claim of biodegradation within five years or less.

3. The FTC’s Green Guides and ECM’s revised marketing.

In response to the increase in marketing that ascribes environmental benefits 

to various consumer products, in 1992 the FTC issued “Green Guides” to help 

marketers avoid making misleading environmental claims. The Guides are not 

binding rules, but as the name implies, they are intended to provide general 

guidance to marketers and the public about the FTC’s view on specific environ-

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15

mental claims. 16 C.F.R. § 260.1. Accordingly, advertising is not necessarily 

unlawful if it is inconsistent with the Guides. Id. But the Commission may determine to bring an enforcement action against marketers making such claims, in 

which case the Commission must prove that the claims violate Section 5 of the 

FTC Act. Id.

The 1996 version of the Green Guides advised that unqualified claims of 

“biodegradability” should be made only if the marketer has scientific evidence that 

the product will biodegrade in a “reasonably short period of time.” FTC, Guides 

for the Use of Environmental Marketing Claims, 61 Fed. Reg. 53311, 53318 (Oct. 

11, 1996). In the current version (released in 2012), the Commission clarified that 

it would consider unqualified biodegradability claims deceptive unless the product 

had been shown to completely biodegrade within one year of customary disposal. 

16 C.F.R. § 260.8(c). The Guides advise that for items customarily disposed of in 

landfills, any unqualified claim is deceptive because landfills “do not present 

conditions in which complete degradation will occur within one year.” Id.

Before the 2012 revision, ECM could not substantiate either its unqualified 

claim of biodegradability or its specific claim of complete biodegradation within 

nine months to five years. In an attempt to evade the spirit of the revised guidance

while conforming to its letter, ECM changed some of its marketing messages after 

2012 to add a disclaimer that its products would biodegrade in “some period 

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16

greater than a year.” (Emphasis added). App. 49-50; 409-410; 193-194. Even so, 

ECM continued to claim biodegradation within nine months to five years on its 

website, continued using sales brochures that contained the claim, and continued to 

tell its customers through individual communications that the “window of biodegradation” was nine months to five years. App. 51 (ALJ ¶ 259), 343-344; S.A. 

476-478, 479-480, 481-482, 484-485. ECM kept making the claim until January 

2014, well after the proceedings in this case were underway.3

See id.

C. The FTC’s Complaint And The ALJ’s Decision.

In an administrative complaint, the FTC charged ECM with violating 

Section 5 of the FTC Act by falsely representing: (1) that plastics made with its 

additive are biodegradable, that is, that they “will completely break down and 

decompose into elements found in nature within a reasonably short period of time 

after customary disposal”; (2) that its products would render traditional plastics 

biodegradable in a landfill; (3) that the plastics would completely biodegrade 

within nine months to five years; and (4) that scientific tests proved these claims. 

App. 449-450. The complaint also charged ECM with giving its customers 

marketing materials containing its false claims, thereby providing the means and 

 3

Indeed, a recent search showed that some ECM customers still claim that ECM 

plastics will biodegrade in nine months to five years. E.g., http://www.sanbornweb

designs.com/going-green-packaging.asp; http://azurepac.com/biodegradable-bags2 (both visited April 20, 2016).

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instrumentalities for the commission of deceptive acts in violation of Section 5. 

App. 450.

An administrative law judge conducted a three-week trial, during which the 

parties presented more than 1,760 exhibits and the live or deposition testimony of 20 

witnesses.4

ECM made no effort to defend the truth of its “nine months to five 

years” claim, nor did it attempt to show that its products render traditional plastics 

biodegradable in any given period of time.5

App. 88-89, 245-246. Instead, its 

principal defense was that the word “biodegradable” refers only to a process of 

decomposition and does not suggest any particular time period. It contended that 

its claims were not misleading because its additive makes ordinary plastic

“intrinsically biodegradable” as proven by scientific tests. App. 293. ECM argued 

that its “nine months to five years” claim was not material because its customers 

cared only about “intrinsic” biodegradability. App. 301-302, 305. 

The ALJ found that ECM falsely represented that plastics manufactured with 

its additive would fully degrade in a landfill within nine months to five years and 

 4

The Commission’s administrative enforcement actions are prosecuted before an 

administrative law judge or the Commission itself under Part 3 of the Commission’s 

regulations, 16 C.F.R. Part 3 et seq. While an adjudicative matter is pending, either 

before an ALJ or the Commission, the Commission sits in an adjudicative capacity 

and ex parte contact is forbidden between a Commissioner or the ALJ and the FTC 

employees prosecuting the action (known as “complaint counsel”). 16 C.F.R. § 4.7. 

5

One of ECM’s experts did suggest that by extrapolation, plastics manufactured 

with its additive might biodegrade in 30 years or perhaps 100 years. App. 104, 246. 

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that tests proved this to be true. App. 304. The ALJ concluded that ECM’s claims 

were material to both ECM’s direct customers and downstream customers. App. 

159, 291. The ALJ further found that ECM provided its customers with the “means 

and instrumentalities” to deceive others by distributing marketing materials with 

the deceptive claims. App. 21, 307-309. 

The ALJ did not decide whether consumers would interpret an unqualified 

biodegradable claim to mean that the plastic would completely biodegrade within a 

reasonable time after disposal, nor what that period might be. Instead, focusing on 

the 2012 revision to the Green Guides, the ALJ looked only to whether ECM’s 

claims conveyed that the treated plastics would biodegrade in less than a year. 

App. 346; see also App. 47, 195-198. The ALJ found that complaint counsel’s 

consumer survey evidence did not establish that claim. The ALJ further found that 

consumers could not logically understand “some period greater than a year” to 

mean breakdown in less than a year. App. 197-199. 

The ALJ also viewed the evidence as insufficient to show that ECM’s 

unqualified claim of biodegradability was false; i.e., that ECM’s product doesn’t 

work. App. 197, 299. To reach this conclusion, the ALJ credited ECM’s theory 

that its unqualified claim of “biodegradability” means no more than that the 

product is capable of biodegrading or is “intrinsically biodegradable.” App. 199. In 

the ALJ’s view, the term “biodegradable” has only a “scientific” meaning, which 

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“does not require completion or impose a time restraint.” App. 22. Indeed, the ALJ 

determined that even traditional plastics are “intrinsically biodegradable” because 

they will break down eventually. App. 124 (ALJ ¶¶ 899, 901). With that understanding of the term “biodegradable,” the ALJ concluded that ECM’s testing 

evidence was sufficient to support an unqualified claim that its product makes

plastic “biodegradable” or that it accelerates the biodegradation of conventional 

plastics. App. 125 (ALJ ¶ 917), 299. 

D. The Commission’s Decision.

ECM and complaint counsel cross-appealed to the full Commission. In such 

proceedings, the Commission reviews the ALJ decision de novo. App. 347. 

1. ECM’s express claims of biodegradability.

ECM did not defend its claims that plastics manufactured with its additive 

would biodegrade in nine months to five years and that scientific testing proved as 

much. Instead, ECM renewed its contention that the claims were not material. App. 

392. ECM defended its unqualified use of the term “biodegradable” as referring 

only to “intrinsic” biodegradability, by which it meant that the material is capable 

of being broken down by biological processes without reference to any particular 

time period. ECM argued that the results of tests using the D5511 protocol prove this 

“intrinsic biodegradability.” 

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2. ECM’s implied representations.

The Commission determined that its evaluation of ECM’s unqualified 

biodegradability claim would not be limited to whether ECM’s claims implied 

decomposition in less than a year. “The Complaint reads more broadly,” alleging 

that ECM’s unqualified claim conveys complete biodegradation “within a reasonably short period of time.” App. 352. Moreover, complaint counsel had identified 

the claim as one to five years throughout the administrative proceeding. Id.

The Commission found that both ECM’s unqualified biodegradability claim 

and its claim that plastics manufactured with its additive would biodegrade “in 

some period greater than a year” imply complete breakdown in a landfill within a 

reasonably short period of time, that is, within five years of disposal. App. 353. 

The Commission rejected ECM’s argument “that the word ‘biodegradable’ means, 

in the context of consumer advertising, only that the product is ‘intrinsically’ 

biodegradable, with no time element.” App. 352. ECM’s interpretation “would 

render the term meaningless,” because “nearly all substances, including conventional 

plastics, will biodegrade if given enough time—even if that time period might be 

thousands or millions of years.” Id. Moreover, the “scientific” understanding of the 

term “tells us nothing about consumers’ understanding.” App. 352-353. If ECM 

were correct that “consumers interpret biodegradability claims . . . without infer-

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21

ring a rate,” then they effectively “ascribe no meaning whatsoever to the word 

‘biodegradable.’” App. 353. That interpretation “is not plausible on its face.” Id.

The Commission thus found that ECM’s use of the term “biodegradable” 

implied that products made with its additive would break down within a reasonable 

period of time. App. 354. Indeed, the central feature of ECM’s additive is a claim 

about time—its purported ability to speed up biodegradation in plastic products, 

and “ECM’s customers were interested in just how fast their products could 

degrade” if they used ECM’s product. Id. ECM itself recognized the importance of 

time to decomposition. It asked that customers pledge to use its additive in at least 

the recommended proportion, for otherwise ECM’s reputation could be damaged 

when products “fail to biodegrade with[in] a reasonable period of time.” Id., S.A.

496. 

The Commission next found that the consumer survey evidence in the record 

establishes that “reasonable consumers expect that plastic products labeled ‘biodegradable’ will decompose within a reasonably short period of time” of about five 

years. App. 353. The parties had submitted four surveys. The Commission rejected 

two of them as unreliable and credited the two others. It gave particular weight to 

the survey conducted by complaint counsel’s expert, Dr. Frederick.

Dr. Frederick used Google Consumer Surveys, a service that polls internet 

users by presenting them with a single survey question in a pop-up box, which they 

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must answer to view content on particular websites. App. 354-355. The survey 

asked respondents one of 60 different questions about biodegradability claims in 

general and plastic products in particular and collected a total of nearly 29,000 

responses. App. 355-356, 358 n.23. The results showed that:

• Between 40% and 76% of consumers expected plastic products labeled 

“biodegradable” to break down within five years;

• Large majorities of consumers responding to the survey (between 77% 

and 85%) would feel misled if a plastic product labeled biodegradable 

did not biodegrade in five years; and 

• Adding ECM’s “biodegradable” logo to a plastic product increased the 

proportion of consumers who believed that product would decompose 

within five years by more than 30%. For example, 35% more consumers 

estimated that a Tupperware container would biodegrade in five years or 

less; for a plastic bag, the increase was 32%. 

App. 358-359; S.A. 501-503; 560-562. Moreover, the survey showed that that the 

appearance of ECM’s tree logo on a plastic product caused consumers to believe 

that it would break down in five years or less. App. 356; S.A. 504-506. Far more 

people shown a plastic container bearing the tree logo believed it would decompose

in five years or less (56 percent) than people shown the container without the logo 

(21 percent). S.A. 504, 506. As discussed in further detail below, the Commission 

thoroughly examined and rejected ECM’s numerous objections to Dr. Frederick’s 

survey. App. 356-363.

The Commission also credited the results of a survey proffered by ECM. 

The Commission found Dr. Stewart’s survey confirms that at least a significant 

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minority of reasonable consumers believe that an item labeled biodegradable will 

decompose within five years. App. 363. Using different methodology than Dr. 

Frederick, Dr. Stewart’s survey showed that 64% of those who responded with a 

number and a unit when asked how long something biodegradable would take to 

decompose answered with times of five years or less. App 365; S.A. 528, 531, 567. 

Even if the answers that did not provide a number and unit of time are included in 

the denominator (which the Commission found unreasonable because it assumes 

that all those respondents would have given a time frame longer than five years) 

the answers of five years or less still represented 23% of all responses. App. 365; 

S.A. 531, 567-568.6

In keeping with the survey results, the Commission found that consumers 

reasonably interpret “biodegradable” to imply breakdown in five years. App. 356-

357. “It makes sense that consumers read some time period into the word 

‘biodegradable,’ because otherwise the term ceases to have any significance.” App. 

356. Moreover, the implication that “biodegradable” means five years “is not 

‘outlandish’ or indicative that the respondents are unreasonable outliers.” Id. Even 

 6

The Commission found that ECM’s claim of biodegradability in “some period 

more than a year” also implied a reasonable period. App. 372-376. ECM’s 

customers were unlikely to understand “some period more than a year” to mean 

any period greater than a year, whether 366 days, 1 million years, or more. App. 

373-374. Rather, the very mention of “one year” creates an “anchoring” effect that 

skews numerical estimates towards the stated value. Id.

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if consumers are mistaken about how quickly materials actually biodegrade, that 

does not make their interpretation of the term unreasonable. Whether a product will 

biodegrade and how long it takes to do so are not matters that consumers can 

reasonably verify on their own. App. 357.

7

3. ECM’s lack of substantiation.

The Commission concluded that ECM lacked substantiation for its implied 

claims that plastics manufactured with its additive will biodegrade in landfills 

within five years. App. 376-378. The Commission found that the ALJ rulings ECM 

did not appeal, together with the consensus opinion of the parties’ experts, showed 

that ECM lacked substantiation for the claim that its products will biodegrade in a 

landfill within a reasonable time of five years after disposal. App. 377-378. It 

therefore had no need to determine the requisite level of substantiation required to 

evaluate whether ECM’s evidence was sufficient.

The ALJ had found that ECM lacked substantiation for the express claim 

that its products would biodegrade within nine months to five years. Experts on 

 7

Commissioner Ohlhausen dissented from the finding that extrinsic evidence 

showed that consumers would understand ECM’s unqualified claims to mean that 

its plastics would break down within a reasonable period (whether one year or 

five), believing the survey evidence insufficient. App. 414-416. Commissioner 

Ohlhausen also would have held that under the Deception Statement, the Commission cannot properly determine that an advertisement interpretation is 

reasonable solely because a “significant minority” of consumers hold that 

interpretation. App. 422.

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both sides had also testified that plastics manufactured with ECM’s products would 

not biodegrade in a landfill within five years. App. 377-378, citing App. 103-104 

(ALJ ¶¶ 698-702); S.A. 520, 538. ECM did not contest the ALJ’s finding. It 

followed directly from ECM’s conceded lack of substantiation for the express 

claim that ECM also lacked substantiation for the identical implied claim. App. 

377. To further confirm its finding that ECM’s claims were unsubstantiated, the 

Commission examined ECM’s substantiation evidence in detail. App. 378-390.

4. The materiality of ECM’s claims.

Turning to the third step of the deception analysis, the Commission found 

that ECM’s biodegradability claims were material. App. 390-391. The Commission

explained that it presumes the materiality of claims that involve a product’s 

“central characteristics.” App. 390. The claims here qualified because the central 

feature of ECM’s product is its purported ability to hasten biodegradation. In 

addition, the claims all were either “express claims” or intentionally made implied 

claims—categories that are also presumptively material. Id.

The Commission affirmed the ALJ’s finding that the claims were material 

even apart from the presumption. App. 391-392. The ALJ correctly found “no 

dispute” that ECM’s customers buy its additive “because they want to provide 

‘biodegradable’ plastics to meet their customers’ demand for such products.” App. 

392, quoting App. 175, 300 (ALJ ¶¶ 1503-1507). ECM’s customers demonstrated 

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the importance of ECM’s claims to their buying decisions by regularly asking 

ECM about the time it would take their plastic to degrade. App. 392-393. The 

Commission rejected as inconsistent with the record ECM’s contention that its 

customers cared only about “intrinsic” biodegradability. App. 392. Had that been 

the case, ECM would not have made deceptive claims about how quickly its 

products would biodegrade. App. 392-393.

5. Means and instrumentalities liability.

Finally, the Commission affirmed the ALJ’s finding that ECM had violated 

Section 5 by providing its customers with marketing materials containing its 

misleading claims, which were “the means by which they may mislead the public.” 

App. 394-395, quoting Waltham Watch, 318 F.2d at 32. ECM encouraged the 

customers to use the materials in their own advertising, and the customers did so. 

App. 395. 

E. The Commission’s Remedial Order.

Because ECM’s violations were serious, repeated, and deliberate, the 

Commission imposed fencing-in relief to prevent the company from engaging in 

future deceptive practices. App. 403-404. ECM’s deceptive conduct persisted for 

years, and the company adopted the express “nine months to five years” claim 

even though it knew it could not substantiate the claim. App. 404. The company 

adopted the “some period greater than a year” language in a “calculated choice” to 

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“literally conform[]” to the Green Guides while conveying “essentially the same 

deceptive implied claim.” Id. And ECM knew or should have known that it was 

misusing the results of its D5511 testing, given the express instructions laid out in 

the protocol itself. App. 404-405.

The Commission thus ordered ECM to refrain from making unqualified 

claims that any plastic product is biodegradable unless it has scientific evidence that 

the entire item will completely decompose within five years of customary disposal. 

App. 3-4. The Commission explained that the limitation on unqualified claims “is 

necessary to prevent deception of reasonable consumers” who understand an 

unqualified claim of biodegradability to mean that a plastic product will biodegrade

within five years of disposal. App. 403.

The order permits ECM to make qualified claims that plastic products are 

biodegradable if it has competent scientific evidence to support the claim, so long 

as ECM includes the time to complete decomposition or the rate and extent of 

decomposition. If the product will not decompose by a customary method of 

disposal, ECM must supply information about the type of non-customary disposal 

method and its availability where the product is sold. App. 3-5, 403. ECM may 

promote the benefits of its products to the extent they are scientifically proven, but 

it must disclose that the rate and extent of decomposition does not mean that the 

plastic will continue to decompose. App. 4, 403. 

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As fencing-in relief—to prevent ECM from attempting to work around the 

its specific provisions—the order prohibits ECM from making representations that 

any products, packages, or services provide any environmental benefit unless the 

claim is true, not misleading, and properly substantiated. App. 4, 403-404. To 

address ECM’s “means and instrumentalities” violations, the order prohibits the 

company from providing materials containing false or misleading environmental 

claims to others. Lastly, the order prohibits ECM from misrepresenting scientific 

tests or research and the results of testing protocols. That restriction would prevent 

ECM from misusing scientific tests the way it misused the results of its D5511 test.

App. 405.

STANDARD OF REVIEW

1. The Court “review[s] the Commission’s legal conclusions de novo, 

and its factual findings under the substantial-evidence standard.” ProMedica 

Health Sys. v. FTC, 749 F.3d 559, 564 (6th Cir. 2014). Substantial evidence requires 

“more than a mere scintilla” but “less than a preponderance” of the evidence. Miller 

v. Comm’r of Soc. Sec., 811 F.3d 825, 833 (6th Cir. 2016). A reviewing court must 

accept the Commission’s findings if they are supported by evidence that a “reasonable mind might accept as adequate to support a conclusion.” Promedica, 749 F.3d 

at 564, quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951).

“Commission findings are well-suited to deferential review because they may 

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require resolution of ‘exceedingly complex and technical fact issues.’” Kraft, 970 

F.2d at 317, quoting Zauderer, 471 U.S. at 645. 

The deferential standard applies to the Commission’s findings of fact and to 

reasonable inferences it draws from the facts. Colgate-Palmolive, 380 U.S. at 386. 

It applies as well to findings that a company’s advertising conveys particular 

claims and that the claims are material, false, misleading or unsubstantiated. E.g., 

Firestone Tire & Rubber Co. v. FTC, 481 F.2d 246, 248-249, 251 (6th Cir. 1973). 

This is because the Commission is often “in a better position than are courts to 

determine when a practice is ‘deceptive’ within the meaning of the [Federal Trade 

Commission] Act.” Buchanan, 776 F.3d at 398, quoting Colgate-Palmolive, 380 

U.S. at 385. The substantial evidence standard “is not modified in any way” when 

the FTC disagrees with its administrative law judge. Universal Camera, 340 U.S. 

at 496. 

Review of a Commission cease and desist order is likewise deferential. A 

Court reviewing the Commission’s choice of remedy for violations of the FTC Act 

will “interfere with the remedy selected by the FTC ‘only where there is no 

reasonable relation between the remedy and the violation.’” Telebrands, 457 F.3d 

at 358, quoting Atlantic Ref. Co. v. FTC, 381 U.S. 357, 377 (1965).

2. The FTC’s interpretation of an advertisement to determine what 

claims it makes is also reviewed under the deferential substantial evidence 

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standard. Brown & Williamson, 778 F.2d at 42 n.3; Kraft, 970 F.2d at 316-318.

ECM argues that the Court should apply de novo review (Br. 45-46), suggesting 

that this result follows from the Supreme Court’s decisions in Bose Corp. v. 

Consumers Union, 466 U.S. 485 (1984), and Peel v. Attorney Registration and 

Disciplinary Comm’n, 496 U.S. 91 (1990). Courts have repeatedly rejected that 

argument. The D.C. Circuit observed that “Bose itself suggests that commercial 

speech might not merit the same approach as set out therein for libel cases.” Brown 

& Williamson, 778 F.2d at 42 n.3. The court concluded that Bose “does not change 

the standard of review in deceptive advertising cases.” Id.; see also POM, 777 F.3d 

at 499; Novartis Corp. v. FTC, 223 F.3d 783, 787 n.3 (D.C. Cir. 2000). The 

Seventh Circuit similarly distinguished the review of “an individualized FTC cease 

and desist order, prohibiting a particular set of deceptive ads” from the circumstances in Peel, which involved “a prophylactic regulation applicable to all lawyers, 

completely prohibiting an entire category of potentially misleading commercial 

speech.” Kraft, 970 F.2d at 317. This case, like Kraft, involves an individualized 

cease and desist order.

ECM attempts to distinguish Kraft with the non sequitur argument that the 

Court need not defer to the Commission’s findings because it lacks expertise in the 

science of biodegradation. Br. 47. This argument fails to distinguish Kraft’s rejection

of a de novo standard for individual FTC cease and desist orders. 970 F.2d at 317. 

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Moreover, the relevant expertise here involves how consumers interpret marketing 

messages. On that question “the Commission’s judgment is to be given great 

weight by reviewing courts.” Firestone, 481 F.2d at 249, quoting ColgatePalmolive, 380 U.S. at 385. 

3. An agency’s adjudicative decision may be disturbed under the 

Administrative Procedure Act only if it is arbitrary, capricious, an abuse of 

discretion, or otherwise not in accordance with law. 5 U.S.C. § 706(2)(A). “The 

‘arbitrary or capricious’ standard of review is a deferential one which presumes 

that an agency’s actions are valid.” Air Pollution Control Dist. v. EPA, 739 F.2d 

1071, 1083 (6th Cir. 1984). Thus, the Court is “required to uphold [agency] 

decisions supported by a ‘rational basis.’” Ohio v. Ruckelshaus, 776 F.2d 1333, 

1339 (6th Cir. 1985). The Court will find an abuse of discretion “only if there is no 

evidence to support the [agency’s] decision, or if it is based on an improper 

understanding of the law.” Oakland Cty Bd. of Comm’rs v. United States Dep’t of 

Labor, 853 F.2d 439, 442 (6th Cir. 1988), quoting Pappas v. FCC, 807 F.2d 1019, 

1023 (D.C. Cir. 1986) (internal brackets omitted). Moreover, this Court “applies a 

harmless-error rule to APA cases, such that a mistake that has no bearing on the 

ultimate decision or causes no prejudice shall not be the basis for reversing an 

agency’s determination.” Sierra Club v. Slater, 120 F.3d 623, 637 (6th Cir. 1997); 

see 5 U.S.C. 706 (court must take “due account of the rule of prejudicial error”). 

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SUMMARY OF THE ARGUMENT

1. Substantial evidence supports the Commission’s finding that ECM’s 

unqualified use of the term “biodegradable” implies that plastic made with its 

additive will decompose within a reasonable time period. On its face, the word 

necessarily conveys a time frame; otherwise, it would be meaningless. And ECM 

intended to convey a reasonable time—it expressly told customers for years that 

plastics made with its products would decompose in nine months to five years. Two 

surveys, one of them tendered by ECM itself, confirm that consumers, sometimes 

large majorities of them, understood ECM’s unqualified biodegradable claim to 

convey decomposition within a reasonable time of five years or less. 

The Commission properly applied its own Deception Statement, which states 

plainly that an advertisement “that misleads a significant minority of reasonable 

consumers is deceptive.” 103 F.T.C. at 177 n.20. The Deception Statement thus 

makes clear that a majority of consumers need not hold a given interpretation of an 

ad before that reading may be considered reasonable. The Commission has often 

found deception based on significant minority views. 

The Commission was not required to reject the reasonable interpretation of 

ECM’s advertising claims held by substantial numbers of consumers because those 

views are “unscientific” or “uninformed.” Environmental scientists may believe 

that the word “biodegradable” refers only to a process of decomposition that 

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occurs at some point, with no time element. But the relevant inquiry under the FTC 

Act is how consumers interpret an advertising claim. And the record is clear that 

consumers read the term to convey decomposition within a reasonable time period.

The Commission properly relied on the Frederick survey. It carefully 

examined and rejected all of ECM’s challenges to the survey, and its explanations 

were sound. Indeed, the results of the Frederick survey are consistent with the 

Stewart survey, tendered by ECM itself. 

The Commission was not required to defer to the ALJ’s findings. The 

agency’s review of the record is de novo, and its authority encompasses all of the 

ALJ’s authority. 16 C.F.R. § 3.54. That level of review applies equally to 

determining the reliability of an expert witness. Such a determination turns on the 

quality of the expert’s conclusions and data, not on his testimonial “credibility” on 

the witness stand.

2. ECM’s First Amendment assumes away the deceptive nature of its 

advertising claims by relying on the fiction that its product really has been proven 

make ordinary plastic “biodegradable.” To accept that fiction means throwing out 

the Commission’s findings, limiting “biodegradable” to meaningless “intrinsic” 

biodegradability, and using ECM’s dubious test data to prove what the test itself 

says it cannot prove. The constitutional claim, in other words, can succeed only if 

ECM can show that its advertisements were not false and misleading. Misleading 

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commercial speech enjoys no constitutional protection. Central Hudson Gas & 

Elec. Corp. v. Public Serv. Comm’n, 447 U.S. 557, 566 (1980). Because ECM 

cannot show that the Commission misinterpreted its advertisement, the First 

Amendment claim thus founders at the outset.

ECM cannot salvage its First Amendment argument on the theory that its 

advertisements are only “potentially misleading” and not “inherently misleading.” 

By conveying a false impression about the degradability of plastics, ECM’s claims 

were actually misleading. And the distinction ECM relies on—between 

“inherently” and “potentially” misleading—applies only to regulations that 

prospectively ban all messages conveying particular information. It does not apply 

to an individualized cease and desist order that remedies one company’s past 

deceptive conduct. In any event, ECM is free to advertise its product with 

appropriate and non-misleading qualifiers.

3. The Commission complied with the Administrative Procedure Act. ECM 

asserts that the Commission erred when it found that ECM’s product may not work 

at all. Even if ECM were correct, any error would be harmless because no evidence

in the record substantiated ECM’s claim that its product causes biodegradation 

within five years. In any event, the Commission’s discussion of the efficacy of 

ECM’s product was supported by substantial evidence.

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The same reasoning defeats ECM’s claim that the Commission erred in 

analyzing the requisite degree of substantiation. Both sides agreed that ECM 

needed to show competent and reliable scientific evidence. Thus, even if the 

Commission misapplied one of the factors for reaching that determination, it had 

no effect on the outcome and any error was harmless. 

Finally, the Commission provided ECM notice of the charges against it. with 

due process. The administrative complaint charged ECM with falsely claiming that

its products rendered plastics biodegradable “within a reasonably short period of 

time after customary disposal.” In pleadings and during the trial, complaint counsel 

specified that “reasonable period” meant within five years. And the complaint also 

charged ECM with making the false express claim that its product led to complete 

breakdown within nine months to five years. ECM therefore knew the nature of the 

claims against it.

ARGUMENT

ECM concedes that it violated the FTC Act when it told its customers that its 

product would make ordinary plastics biodegrade within nine months to five years. 

ECM also concedes that it gave its customers the means to convey that false claim 

to their own customers. ECM challenges only the Commission’s reading of ECM’s 

unqualified “biodegradable” claim as an implicit message to consumers that plastics 

made with ECM’s product would break down in some reasonable time.

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ECM argues that the Court must apply a “scientific” definition of the word 

“biodegradable” and hold that the term can refer only to the literal act of biodegradation, without implying any particular period of time. On that theory, if plastics 

made with ECM’s product degrade in ten thousand years—or ten million—they 

may be truthfully advertised as “biodegradable.” But the pertinent question is not 

how scientists understand a word, but how consumers understand it, for “the only 

true measure of deceptiveness” is “the public’s impression.” Brown & Williamson, 

778 F.2d at 39-40, quoting 1A L. Altman, Callman’s The Law of Unfair 

Competition, Trademarks and Monopolies § 5.04, at 5-32 (4th ed. 1981). The 

Commission determined that to consumers, “biodegradable” implies breakdown 

within a reasonable time period, about five years or less. Consumers would 

therefore be misled if they purchased a product labeled “biodegradable” that would 

not decompose for millennia. 

As we show below, substantial evidence supported the Commission’s 

determination that consumers interpret “biodegradable” to mean that plastic made 

with ECM’s product will biodegrade within a reasonable time after disposal. 

Consumer surveys demonstrate that consumers read the term that way and ECM 

intended to convey that impression when it made the claim. Indeed, because 

everything degrades at some point, ECM’s interpretation of “biodegradable” would 

effectively strip the term of meaning, whereas the FTC’s interpretation does not.

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Because “biodegradable” implies a reasonable time to decomposition and ECM 

lacked any proof that its product has that effect, the Commission’s remedial relief

applies only to misleading speech and is thus consistent with the First Amendment. 

I. THE COMMISSION PROPERLY INTERPRETED ECM’S UNQUALIFIED 

BIODEGRADABILITY CLAIM TO IMPLY AREASONABLE TIME FRAME.

The core of ECM’s case is that “biodegradable” has only one meaning: the 

literal, “intrinsic” ability to biodegrade, without regard to how long it takes to do so. 

The bulk of its arguments flow from that central premise. But the premise is false.

A. Substantial Evidence Supports The Commission’s Holding That 

“Biodegradable” Implies Decomposition Within A Reasonable 

Time. 

A company’s marketing communicates a given message “if consumers 

acting reasonably under the circumstances would interpret the advertisement to 

contain that message.” POM, 777 F.3d at 490, quoting In re Thompson Med. Co., 

104 F.T.C. 648, 788 (1984). Even if the words of an advertisement are “technically 

true,” that alone “does not prevent their being framed so as to mislead or deceive.” 

Koch, 206 F.2d at 317. Because consumers may not realize the nuances of technical 

interpretation, “the only true measure of deceptiveness” is consumer understanding. 

Brown & Williamson, 778 F.2d at 39-40.

The record firmly supports the Commission’s determination that consumers 

interpret the term “biodegradable” to mean capable of biodegrading within a

reasonable time of five years or less after disposal. To begin with, on its face the 

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word necessarily conveys a time element when used to market products to consumers. 

Testimony established that everything biodegrades over some time period. App. 352. 

Thus, if ECM were correct that “biodegradable” must mean only “intrinsically” biodegradable, without regard to time, then all matter is biodegradable and the term is 

empty. Id. The Commission reasonably held that this interpretation is “not plausible

on its face.” Id. “It is the Commission’s function to find these facts and a court 

should not disturb its determination unless the finding is arbitrary or clearly wrong.”

J.B. Williams, 381 F.2d at 889. The Commission’s facial reading of the claim was 

plainly reasonable.

The message that “biodegradable” means decomposition in some time frame 

wasn’t just facially reasonable; the record showed that ECM intended to convey 

that message to its customers. See App. 354, 391. “The core attribute of the ECM 

Additive was purportedly to speed up the biodegradation process of plastic 

products.” App. 354 (emphasis added). ECM thus made plastic manufacturers 

promise to use at least one percent of its additive in their plastics lest ECM’s 

reputation suffer injury when products “fail to biodegrade within a reasonable 

period of time.” Id.; S.A. 496. ECM also knew that end users desired plastics that 

decomposed in short order. Its president testified that it changed its marketing pitch 

to tout (falsely) complete breakdown within “nine months to five years” and “some 

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period greater than one year” because customers “were interested in having some 

idea of a time period.” App. 342; see App. 407, S.A. 473-474. 

Survey evidence both ratified the Commission’s facial analysis of the meaning 

of “biodegradable” and established the time period within which consumers expect 

biodegradable materials to decompose. The Frederick survey of 29,000 consumers, 

tendered by complaint counsel, “provides evidence that a majority of consumers 

expect biodegradation to occur within five years.” App. 354. Specifically, the 

survey showed that up to 91 percent of respondents believed that any product 

labeled “biodegradable” should decompose within 5 years. App. 355. As many as 

76 percent of respondents believed that plastic products labeled biodegradable 

would decompose in that time frame, and as many as 85 percent would feel misled 

if such a plastic did not biodegrade within 5 years. Id.; App. 358-359; S.A. 560-

562. And the survey showed that adding ECM’s logo (which says “biodegradable”)

to a plastic product caused the number of respondents estimating that a product 

would biodegrade in five years or less to reliably increase by more than 30 percent. 

App. 356; S.A. 503-506. 

The Stewart survey, tendered by ECM itself, confirmed that “at least a 

significant minority of reasonable consumers believe that an item labeled 

‘biodegradable’ will decompose within five years.” App. 363. When asked how 

long it should take a “biodegradable” product to break down, 23 percent of all

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respondents to that question volunteered a period of five years or less. App. 365; 

S.A. 528, 567. Fully 64 percent of respondents who suggested a specific time 

frame (despite the question, not all did) answered five years or less. See id.

The evidence thus showed that at least a substantial minority—and perhaps 

even a sizable majority—of consumers reasonably interpret “biodegradable” to 

convey a time frame for decomposition of about five years or less. That evidence 

easily satisfies the substantial evidence test because it far exceeds the “scintilla” 

threshold, and a “reasonable mind” would readily accept it as “adequate to support

[the FTC’s] conclusion.” ProMedica, 749 F.3d at 564; FTC v. Ind. Fed’n of 

Dentists, 476 U.S. 447, 454 (1986). Indeed, this Court has affirmed findings of 

deception when 15 percent of consumers were misled by an advertisement—and 

suggested it would do so for as few as 10 percent. Firestone, 481 F.2d at 249; see

also Telebrands, 140 F.T.C. at 325, aff’d 457 F.3d 354 (10.5 to 17.3 percent “was 

sufficient to conclude that the challenged claims were communicated”).

B. ECM’s Counterarguments Are Unavailing. 

1. The Commission correctly applied its Deception Statement.

ECM contends that the Commission misapplied its own policy statement on 

deception by finding that consumers’ understanding of its unqualified “biodegradeable” claim was reasonable “only because a ‘significant minority’ of consumers 

supposedly shared that interpretation.” Br. 63-64, 69-71. According to ECM, an ad 

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interpretation is reasonable if it is held by a majority of consumers, as allegedly 

shown by the Deception Statement’s description of cases where the Commission 

looked to the “average listener,” “general populace,” or “typical buyer.” Br. 70; see 

also App. 421-422 (Commissioner Ohlhausen’s dissent); Deception Statement, 103

F.T.C. at 179-180. ECM argues that deception of a “significant minority” matters 

only as an exception to the general majority rule, and that it comes into play only 

after the Commission has found a particular interpretation of an ad to be reasonable.

In that situation, ECM says, an advertiser may not escape liability by showing that 

only a significant minority of consumers holds that view. Br. 70. The exception 

does not properly apply here, ECM asserts, because the consumers who believe 

“biodegradable” means a plastic product will break down within five years are 

unreasonable, “misguided,” “uninformed,” or “unscientific.” Br. 63-64, 70.

This argument ignores what the Deception Statement actually says, misstates 

the Commission’s holding, and unfairly labels the consumers who responded to the 

Franklin and Stewart surveys.

To begin with, the Deception Statement does not lay out a rule that the 

Commission will find a claim reasonable if it is held by a majority and will 

consider the view of a “significant minority” only as an exception to that rule. The 

Deception Statement makes clear that an interpretation can be reasonable “even 

though it is not shared by a majority of consumers” and that “[a] material practice 

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that misleads a significant minority of reasonable consumers is deceptive.” 103 

F.T.C. at 177 n.20 (emphasis added). The Deception Statement does not describe 

that approach as an “exception,” and both the Commission and the courts have 

long found deception when a significant minority is misled. See, e.g., POM, 777 

F.3d at 499-500; Thompson Med., 791 F.2d at 197; Firestone, 481 F.2d at 249 (10 

to 15 percent sufficient to support finding of deception). Indeed, we are not aware 

of any case in which the Commission has described “significant minority” as an 

“exception.” Cf. In re POM Wonderful, 2013 FTC LEXIS 6, 20-21; In re Kraft, 

114 F.T.C. at 122; In re Telebrands, 140 F.T.C. at 291. 

Built into the “significant minority” standard is the requirement that the 

consumers’ interpretation of an advertisement be “reasonable.” In other words, they 

must be “average listeners” or “typical buyers.” 103 F.T.C. at 177-178 & n.20. 

ECM is thus incorrect to equate those phrases with a majority; not all average 

listeners or typical buyers will interpret an ad the same way. As the Deception 

Statement acknowledges, “a seller’s representation” can “convey[] more than one 

meaning to reasonable consumers.” 103 F.T.C. at 180 (emphasis added). In 

Thompson Medical, for example, the Commission found that an interpretation was 

reasonable where it misled “at least one group of average listeners.” 104 F.T.C. at 

808 (emphasis added); see also Kraft, 114 F.T.C. 40 (“Each interpretation is 

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reasonable as long as the subset of consumers making it is representative of the 

group of consumers to whom the ad is addressed.”).

The Deception Statement contrasts reasonable interpretations held by a 

significant minority of representative consumers with claims that are “unreasonably misunderstood by an insignificant and unrepresentative segment” of the 

audience. 103 F.T.C. at 165. That description does not apply here because the 

Commission held that consumers who understand “biodegradable” to imply a 

reasonable time period were acting reasonably. App. 356. Specifically, the Commission found that “biodegradable” on its face “conveys some time element” and 

that consumers can reasonably understand it to include a reasonable time for 

decomposition, whereas ECM’s opposite reading would strip the word of meaning. 

App. 353, 356. That finding fatally undercuts ECM’s contention that the Commission interpreted “biodegradable” as it did “only because a ‘significant minority’ of 

consumers supposedly shared that interpretation.” Br. 71. In fact, the Commission 

faithfully applied the approach set forth in the Deception Statement. 

Indeed, it was not only a “significant minority” of consumers that interpreted

“biodegradable” to convey a reasonable period of time for breakdown. The survey 

data showed that the majority of the broad group of survey respondents interpreted 

the term in that way. App. 355-356. Even under ECM’s reading of the Deception 

Statement, that majority of consumers represents the view of the “general 

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populace.” And the survey respondents were “ordinary members of the public” 

who were representative of “reasonable consumers.” App. 357, quoting Thompson 

Med., 104 F.T.C. at 810.

ECM cannot escape the convincing evidence of consumer interpretation of 

“biodegradable” by attacking those who understand the term to imply a reasonable 

time period as “misguided,” “uninformed,” or “unscientific.” Br. 63-64.8

As the 

Commission pointed out, “scientific and popular understandings are known to vary 

on occasion,” and this is one of them. App. 353, quoting Thompson Med., 104 

F.T.C. at 809 n.33. Thus, even if ECM’s use of “biodegradable” were “technically 

true” that does not prevent it from being deceptive to reasonable consumers. Koch, 

206 F.2d at 317. When “technical terms” are at issue, it is reasonable to assume 

that the public may be unaware of their meaning and that “substantial numbers 

might be misled.” Brown & Williamson, 778 F.2d at 41, quoting Zauderer, 471 

U.S. at 653. 

 8

In fact, ECM’s contention that “gas evolution tests” prove its product to render 

plastics “biodegradable” within the scientific meaning of the term, Br. 17-19, 25-

30, 50-55, is false. As the FTC explained, all of ECM’s studies were based on the 

ASTM D5511 test protocol, which carefully limits how results of the test may be 

reported. See App. 342-343; 429-435. The protocol makes clear that “claims of 

performance shall be limited to the numerical result obtained in the test and not be 

used for unqualified ‘biodegradable’ claims.” App. 383, 429. The test simply is not 

designed to prove that plastic manufactured with ECM’s additive (or any other 

material) is unqualifiedly “biodegradable.” 

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That is true even if consumer interpretation of an ad rests on incorrect 

preexisting beliefs. If the advertiser has remained silent to capitalize on such 

beliefs—as ECM seemingly did here—it has violated the FTC Act. In re Stouffer 

Foods, 118 F.T.C. at 810 n.31. It makes no difference if the belief is “attributable 

in part to factors other than the advertisement itself”; the advertisement is still 

deceptive. Simeon, 579 F.2d at 1146. The “failure to disclose” facts necessary to 

dispel such an incorrect belief “is false and misleading.” J.B. Williams Co., 381 

F.2d at 889.

2. The Commission properly relied on the Frederick survey.

Lacking a valid argument that the Commission misapplied the Deception

Statement, ECM attacks the evidence that consumers were deceived. It argues that 

the Commission improperly relied on Dr. Frederick’s survey because it was methodologically flawed. Br. 63-68. 

As an initial matter, ECM’s claim that the Commission accepted Dr. 

Frederick’s survey “without reasoned explanation” (Br. 66), ignores the Commission’s lengthy analysis of each complaint ECM leveled against the survey. App. 

357-363. The Commission explained that Dr. Frederick properly defined a relevant 

population for the survey (App. 358-359); that his questions were appropriate, 

reliable, and free from bias (App. 359-360); and that he had properly analyzed the 

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data (App. 360-361). ECM’s drive-by attack on Dr. Frederick’s survey fails to rebut 

or even acknowledge that detailed discussion. 

Moreover, Dr. Stewart’s survey—which ECM itself says “met all the 

hallmarks for good survey practice” (Br. 67)—supports the same conclusion, 

showing that between 23 and 65 percent of respondents expect something labeled 

biodegradable to break down within five years. App. 363-365. The Stewart survey 

alone is substantial evidence sufficient to support the Commission’s findings, and 

more so when added to the Commission’s facial rejection of ECM’s argument that 

“biodegradable” suggests only “intrinsic biodegradability.” 

In any event, all of ECM’s substantive criticisms of the Frederick survey 

lack merit. ECM first complains that the Frederick survey lacked reliable demographic data. Br. 24. But the Commission explained the relevant population was 

broadly defined as “American consumers,” and that data gathered through Google 

Surveys are reliable in light of Google’s “dynamic imputation algorithms” that 

ensure the “demographic representativeness of each sample survey.” App. 358. The 

overall demographic reliability is further safeguarded by the large pool of 29,000 

survey respondents. App. 358-359. As Dr. Frederick testified, “any moderately 

large sample” in Google Surveys “is highly likely to be demographically representative,” and smaller but still considerable subsets are likely to be representative 

as well. App. 359 & n.24. 

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ECM also argues that Dr. Frederick improperly disregarded a large number 

of responses and included “nonsensical answers” supporting complaint counsel’s 

case. Br. 66; see also Br. 23-24. For questions seeking an estimate of the time for 

decomposition, Dr. Frederick omitted answers that lacked either a number or unit

of time or that were otherwise unresponsive (e.g., “7,” “years,” or “I don’t know”).

See App. 360-361 & n.27. ECM claims this “skewed the results” (Br. 24), but as

the Commission explained, there is no reason to believe that respondents whose 

answers were omitted would systematically interpret ECM’s representations 

differently from those that did.9

In fact, even if Dr. Frederick had counted all of the 

excluded responses as if they answered with a period longer than five years, the 

survey would still show that adding a “biodegradable” logo causes at least 31 to 36

percent more consumers to estimate that a plastic bottle or container would 

decompose within five years. App. 361-362. Similarly, while complaining that Dr. 

Frederick improperly coded allegedly “nonsensical” answers in the Commission’s 

favor, ECM has not shown there was any effect on the result, and Dr. Frederick 

testified that there was no such effect. See Br. 66-67; S.A. 546-547.

 9

Dr. Frederick testified that the distribution of the responses that provided only a 

number was consistent with that of the responses that provided both a number and 

a unit of time. S.A. 543-544. ECM’s expert agreed that according to the academic 

literature, the distribution of responses does not change substantially when 

participants are prevented from answering “I don’t know.” S.A. 553. 

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ECM also argues that the format of the Google survey resulted in “disinterest

bias” because the survey questions appeared as an obstacle to the respondents’ 

access to internet content. Br. 23-24, 66-67. But ECM fails to confront the 

Commission’s finding that nothing in the record suggested that such bias has any 

greater effect than it does with other survey methods (such as the telephone calls 

employed in Dr. Stewart’s survey), or that it caused Frederick’s results to skew 

against ECM. App. 360. 

ECM argues that Dr. Frederick and those assisting him were not “blinded” 

because they knew the identity of the client and the hoped-for result. Br. 24, 67. 

But ECM fails (as it did before the Commission) to identify any evidence that this 

affected the results of the survey. App. 362. In fact, the argument conflicts with 

ECM’s complaint about the “bright line rule” regarding which answers to include. 

That rule prevented coders from injecting bias through their interpretation of 

ambiguous answers. App. 361.

ECM argues that these supposed defects collectively show that the Commission disregarded the criteria for survey validity described in the Manual for Complex

Litigation. Br. 65. As shown above, this is incorrect. ECM had access to all of Dr. 

Frederick’s underlying data, which was “both transparent and reasonable.” App. 

361. Had there been any skewing effect from the alleged defects in Dr. Frederick’s 

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methodology, it would have been easily found. ECM’s failure to identify any such 

effect indicates that there was nothing to find.

3. The Commission owed no deference to the ALJ.

ECM is also wrong that the Commission erred by failing to defer to the 

ALJ’s findings on Dr. Frederick’s “credibility.” Br. 74-79. An agency is “not 

bound by [an ALJ’s] credibility determinations, as long as its findings are 

supported by substantial evidence.” Allis-Chalmers Corp. v. OSHRC, 542 F.2d 27, 

30 (7th Cir. 1976). Rather, “[w]here the Commission reverses an ALJ, it is the 

Commission’s order alone that is reviewed.” Chao v. Gunite Corp., 442 F.3d 550, 

556 (7th Cir. 2006). Indeed, FTC regulations specify that on appeal from an ALJ’s 

initial decision, the agency exercises “all the powers which it could have exercised 

if it had made the initial decision.” 16 C.F.R. 3.54; Chrysler Corp. v. FTC, 561 

F.2d 357, 362 (D.C. Cir. 1977). 

Moreover, the purported credibility determination at issue here concerns an 

assessment of experts’ opinions and survey evidence of consumer perception, the 

very type of assessment that calls for the Commission’s expertise. E.g., ColgatePalmolive, 380 U.S. at 385. It does not involve “the determination of credibility of 

witnesses as shown by their demeanor or conduct at the hearing.” Universal 

Camera, 340 U.S. at 496, quoting S. Rep. No. 79-752 at 24 (1945). This Court has 

made clear that the conclusions an ALJ draws from the evidence are distinct from 

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“credibility determinations” based on observing the witness’s demeanor. Singer v. 

Garvey, 208 F.3d 555, 558-559 (2000). Here, the ALJ’s findings came from his 

evaluation of the experts’ opinions, not from observation of the experts’ demeanor. 

The Commission was thus correct that it is “well situated to give de novo review to 

the experts’ opposing opinions and to draw our own assessments thereof.” App. 

361.

C. There Is No Dispute That ECM’s Claims Were False, 

Unsubstantiated, And Material.

Substantial evidence also supports the Commission’s findings that ECM’s 

claims were false and unsubstantiated—findings that ECM does not appeal. As 

explained above (supra p. 24), the Commission’s finding of falsity followed from 

ECM’s failure to appeal the ALJ’s finding that its “nine months to five years” claim 

lacked substantiation. The finding is also supported by the unanimous testimony of 

all scientific experts that ECM’s products do not cause plastics to decompose 

within five years. App. 377-378. ECM concedes this point, asserting that nothing

completely decomposes within five years. Br. 59. Substantial evidence likewise 

supports—and ECM has not appealed—the Commission’s finding that its claims 

were presumptively material. See supra p. 25.

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II. ECM’S FIRST AMENDMENTARGUMENT IGNORES THE MISLEADING 

NATURE OF ITS CLAIMS

ECM devotes much of its brief to its argument that the Commission’s order 

restricting ECM’s future use of the term “biodegradable” violates the First 

Amendment. The gist of the claim is that by restricting the unqualified use of the 

word, the FTC has prevented ECM from disseminating “truthful” information 

about its product. But as discussed above, the FTC concluded that ECM’s unqualified biodegradable claim was false and unsupported. That conclusion alone is a 

complete answer to the First Amendment challenge.

“For commercial speech to come within [the First Amendment], it at least 

must concern lawful activity and not be misleading.” Central Hudson, 447 U.S. at 

566.

10 “[M]isleading advertising does not serve, and, in fact, disserves, th[e]

interest” of “consumers and society . . . in the free flow of commercial information.” 

Brown & Williamson, 778 F.2d at 43 (internal quotation marks omitted).

Misleading speech therefore enjoys no First Amendment protection. Because 

ECM’s unqualified claim that its product rendered plastics biodegradable was 

misleading to consumers, the claim is not entitled to constitutional protection.

 10 Accord Zauderer, 471 U.S. at 638 (“The States and the Federal Government are 

free to prevent the dissemination of commercial speech that is false, deceptive, or 

misleading.”); In re R.M.J., 455 U.S. 191, 203 (1982) (“Misleading advertising 

may be prohibited entirely.”); Bates v. State Bar of Ariz., 433 U.S. 350, 383 (1977)

(“Advertising that is false, deceptive, or misleading of course is subject to 

restraint.”).

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ECM cannot escape this bar to its First Amendment claim on the ground 

that, under a particular interpretation of the word “biodegradable,” its claims are 

literally true. Br. 50-55. The category of unprotected misleading speech includes 

not only “actually false” statements, but also statements that are literally true but 

are nonetheless misleading. The First Amendment poses “no obstacle” to the 

prohibition of commercial speech that “is not provably false, or even wholly false, 

but only deceptive and misleading,” because the government should ensure that 

“the stream of commercial information flow[s] cleanly as well as freely.” Va. State 

Bd. of Pharmacy v. Va. Citizens Consumer Council, Inc., 425 U.S. 748, 771-772 

(1976). Here, for the reasons set forth above, the pertinent “stream of commercial 

information” is the promotional material directed at ECM’s customers and 

ultimately consumers, as they would reasonably understand the term “biodegradable” in that context. It is of no moment that environmental scientists may understand that term differently.

Nor may ECM bring itself within the ambit of the First Amendment by 

claiming that its use of “biodegradable” is “only potentially misleading,” rather 

than “inherently misleading.” Br. 56. When assessing the constitutionality of 

speech regulations that prospectively ban all messages conveying particular 

information, Courts describe commercial speech as only “potentially misleading” if 

the information can be “presented in a way that is not deceptive,” such as through 

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effective “disclaimers or explanation.” R.M.J., 455 U.S. at 203. An “absolute 

prohibition” on conveying such information in any and all forms is subject to 

constitutional challenge under Central Hudson. Id.

That principle does not apply here. ECM’s claim that its product is proven to 

render ordinary plastic “biodegradable” is not merely “potentially misleading,” it is 

actually misleading and has been found so by the agency charged with ferreting out 

and stopping such deception. Furthermore, the Commission’s order does not prophylactically ban defined types of future commercial messages regardless of how 

they are worded and whether or not they are combined with effective disclaimers. It 

restrains one company from making particular representations that have been 

found to be false and misleading and allows truthful claims that have adequate 

support. A “prophylactic regulation . . . completely prohibiting an entire category 

of potentially misleading commercial speech” is constitutionally distinct from “an 

individualized FTC cease and desist order.” Kraft, 970 F.2d at 317. 

ECM criticizes the substantiation requirements in the Commission’s order 

because they allegedly amount to a “de-facto ban on the word ‘biodegradable,’” 

are “uniquely suppressive,” violate ECM’s “right to say truthful things,” constitute 

“censorship” and an “absolute prior restraint,” and prohibit “truthful information 

that ECM Plastics are ‘biodegradable.’” That hyperbole is not warranted. The 

Commission correctly rejected the contention that its order “prohibits all 

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biodegradable claims.” To the contrary, “products offered to consumers in the 

marketplace can include descriptions such as ‘3% biodegradable in 90 days,’ 

provided that the descriptions are truthful and are accompanied by warnings 

making it clear that the test results do not support extrapolations.” App. 396. In 

other words, ECM can convey accurate and truthful information about biodegradability to its customers—a long walk from “total censorship.”

The Commission was not constitutionally required to adopt ECM’s preferred 

advertising qualifier—that there is no known rate of biodegradation. Id. As the 

agency correctly explained, that qualifier “is inadequate” to dispel “the misleading 

impression” that plastic manufactured with ECM’s product “will completely 

biodegrade in landfills within a reasonably short period of time.” Id. The qualifier 

“addresses neither the rate nor extent of biodegradation.” Id. Having found ECM in 

violation of the FTC Act, the Commission’s tailored remedial order addressing 

ECM’s misrepresentations easily satisfies the requirement that there be a “reasonable relation between the remedy and the violation.” Atlantic Ref. Co., 381 U.S. at 

377. 

The order’s requirement that ECM refrain from claiming that a product will 

“continue to decompose” beyond the period for which it is tested is likewise tailored 

to remedy ECM’s deceptive conduct in this case. ECM falsely claimed that the 

results of tests performed with the D5511 protocol prove that products manufactured

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with its additive are unqualifiedly “biodegradable”—indeed, that they will 

completely biodegrade in a landfill—contrary to the protocol’s express admonitions

that it may not be used to support such claims. ECM continues to press that claim 

in its brief. The requirement that ECM refrain from misrepresenting the extent to 

which scientific tests substantiate its claims directly addresses this conduct.

ECM is also incorrect to suggest that “[n]o company can make an unquailfied biodegradable claim absent the FTC’s required disclaimers.” Br. 58. The order 

was entered against ECM to remedy its violations of Section 5 of the FTC Act. It 

does not apply to any other company. ECM’s suggestion that companies cannot 

even claim that a banana peel is biodegradable without testing it for ten years (Br. 

59-60) similarly overreads the order, which applies only to ECM’s representations 

about the biodegradability of “any plastic product or package.” App. 4. Thus, ECM 

may not claim without qualification that a plastic banana is biodegradable, and 

rightly so.

Finally, ECM has not shown that the FTC violated the Constitution by 

“demand[ing] proof” of the time to decomposition that is “scientifically impossible” 

to obtain. Br. 39.11 The impossibility of proving a misleading advertising claim 

does not give the advertiser constitutional carte blanche to make it. For example, 

 11 The amicus brief filed by Dr. Stephen Grossman addresses this point. ECM 

offered Dr. Grossman as a surrebuttal expert before the ALJ, who excluded his 

testimony as “outside the scope of fair rebuttal.” App. 402.

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even if there were no scientific way to prove that pomegranate juice prevents 

prostate cancer, that wouldn’t mean a dietary supplement manufacturer can 

advertise it as such a cure. See POM, 777 F.3d at 478. ECM has failed to come to 

grips with the misleading message that consumers understand from its unqualified 

biodegradability claim. If a claim cannot be conveyed without deception, that 

claim should not be made at all—the answer is not that the claim “must survive at 

all costs.” Colgate-Palmolive, 380 U.S. at 390.

III. THE AGENCY PROCEEDING COMPLIED WITH THE APAAND 

PRINCIPLES OF DUE PROCESS.

A. The FTC Complied With The Administrative Procedure Act.

ECM claims that various aspects of the Commission’s order are arbitrary 

and capricious under the Administrative Procedure Act, 5 U.S.C. § 706. This 

standard “is the least demanding form of judicial review of administrative action.” 

Shields v. Reader’s Digest Ass’n, 331 F.3d 536, 541 (6th Cir. 2003), quoting Davis 

v. Ky. Fin. Cos. Ret. Plan, 887 F.2d 689, 693 (6th Cir. 1989). The Court “presumes 

that an agency’s actions are valid,” Air Pollution Control Dist. v. EPA, 739 F.2d 

1071, 1083 (6th Cir. 1984), and will uphold decisions that are “supported by a 

‘rational basis.’” Ohio v. Ruckelshaus, 776 F.2d 1333, 1339 (6th Cir. 1985). In 

brief, “[w]hen it is possible to offer a reasoned explanation, based on the evidence, 

for a particular outcome, that outcome is not arbitrary or capricious.” Shields, 331 

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F.3d at 541. ECM fails to show that any part of the Commission’s decision falls 

short of this undemanding standard. 

ECM’s brief couches its objections to the Commission’s decision in APA 

terms by liberally applying the “arbitrary and capricious” label throughout. Many 

of those arguments have already been addressed. We have shown that the Commission’s decision meets the substantial evidence standard; those same reasons show, 

a fortiori, that the Commission’s decision is not arbitrary and capricious. In the 

separate APA section of its brief, ECM raises two principal additional claims. Both 

lack merit because any error (and there was none) would have been harmless.

ECM challenges the Commission’s finding that “it is as likely that the ECM 

Additive has no meaningful effect on the biodegradation of plastics as that it does.” 

Br. 74, 50-55; App. 386. According to ECM, the Commission improperly considered the scientific evidence of efficacy and drew an erroneous conclusion that the 

record was in equipoise.

Even if that claim were correct, it states—at best—a case of harmless error. 

The Commission made the finding challenged by ECM in the course of determining 

whether ECM had scientific support for its claim of biodegradability. There was no 

dispute before the agency—and there is no dispute before this Court—that ECM 

cannot show that its product causes decomposition within five years (or any other 

reasonably short time frame). Notably, ECM does not challenge the Commission’s 

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finding that “[n]one of the [scientific] tests even purports to demonstrate complete 

biodegradation in landfills within five years.” App. 386. Thus, even if the Commission should have deferred to the ALJ’s findings, or should have analyzed the 

scientific evidence differently, those findings could not have shown the unqualified 

biodegradability claim to be true, and the claim would still have violated the FTC 

Act. Under the harmless error rule, “a mistake that has no bearing on the ultimate 

decision . . . shall not be the basis for reversing an agency’s determination.” Sierra 

Club, 120 F.3d at 637.

ECM’s argument fails in any event. It rests mainly on the contention that the 

Commission disagreed with the ALJ in selecting the scientific evidence on which 

to rely. But as explained above (p. 49), the Commission reviews ALJ decisions de 

novo and is not bound by the ALJ’s findings. ECM does not seriously contend that 

the evidence the Commission relied on fails to support its judgment. 

ECM also argues that the FTC misapplied the Pfizer factors. As discussed 

above (p. 7), the Commission applies Pfizer to determine the amount and type of 

substantiation required justify a claim. According to ECM, in applying the factors, 

the Commission “cited nothing from the record” but drew conclusions “in direct 

conflict with record evidence.” Br. 80.

ECM waived any objection to the required level of substantiation. As the 

ALJ said, “the parties agree that, applying the Pfizer factors, the appropriate level 

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of substantiation for Respondent’s claims is ‘competent and reliable scientific 

evidence.’” App. 252, 382. ECM does not argue for a different level of substantiation on appeal.

Even if ECM could show any error in the Pfizer analysis, it was harmless. 

The point of the test is to determine how much substantiation is required to prove 

an advertised claim. But ECM had no substantiation at all for its claims that its 

product would cause complete biodegradation in five years. It therefore did not 

matter whether the FTC properly applied Pfizer; the outcome—that ECM violated 

the FTC Act—would have been the same under any analysis. 

In any event, ECM fails to show any error in the Commission’s analysis.

ECM complains that the Commission found that consumers were induced into 

paying higher prices for allegedly biodegradable plastics even though many of 

ECM’s end products are plastic bags that are given away free of charge. The 

finding was correct as a matter of simple economic logic. ECM’s product cost the 

bag manufacturer something and that cost plainly would have been reflected in the 

cost of the bags. Even if there is no direct charge to the consumer who uses a bag, 

its cost will be passed through to the consumer indirectly through the price of 

goods. 

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B. ECM Had Notice Of The Charges Against It. 

ECM asserts that it was denied due process because the Commission 

provided inadequate notice of the charges against it. The administrative complaint 

charged that ECM falsely claimed its products rendered plastics biodegradable 

“within a reasonably short period of time after customary disposal,” without specifying a particular time period. App. 449. ECM claims that it had no notice that 

“reasonably short period of time” meant five years, and not the one year suggested 

in the 2012 version of the Green Guides (see p. 15, supra), and by complaint 

counsel in some courtroom proceedings. Br. 86-89. As a result, ECM contends, it 

had no “opportunity to rebut the Commission’s finding that the unqualified 

biodegradable claim implies complete decomposition within five years, as opposed 

to one year.” Br. 88. ECM was not denied due process. 

“The purpose of the administrative complaint is to give the responding party 

notice of the charges against him.” L.G. Balfour Co. v. FTC, 442 F.2d 1, 19 (7th 

Cir. 1971). When an agency’s finding varies from the complaint, there is no due

process violation so long as the party “understood the issue and was afforded full 

opportunity to justify his conduct.” Southwest Sunsites, Inc. v. FTC, 785 F.2d 

1431, 1435 (9th Cir. 1986) (internal quotation marks omitted). Here, ECM had 

both notice of the charge that it falsely claimed its products would render plastics 

biodegradable within five years and the full opportunity to defend against that 

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charge. ECM was provided adequate notice that complaint counsel interpreted a 

“reasonable time” as a range of one to five years because complaint counsel said 

so, both in pleadings and during the trial. App. 352 (collecting instances). Moreover, the complaint also charged ECM with making the false express claim that its 

products would render plastics fully degradable in nine months to five years. App. 

443-444, 449. ECM therefore suffered no prejudice when the Commission 

interpreted “reasonable time” to mean five years. 

ECM’s due process claim gets no support from United States v. Chrysler 

Corp., 158 F.3d 1350, 1354 (D.C. Cir. 1998), or General Electric Co. v. EPA, 53 

F.3d 1324, 1328 (D.C. Cir. 1995). See Br. 87-88. Both cases involved penalties 

imposed on companies for the violation of an ambiguous administrative rule that 

the agency interpreted in the first instance. In those circumstances, the companies 

were entitled to fair notice of the regulatory requirements to which they were to be 

held. But this case has neither of the two elements crucial to those decisions. First, 

the Commission’s order simply restrains ECM from further violations of the FTC 

Act; it does not impose a fine or other direct monetary penalty. Indeed, in General 

Electric the court recognized that “[h]ad EPA merely required GE to comply with 

its interpretation, this case would be over.” 53 F.3d at 1328. Second, ECM was not 

held liable for violating a new interpretation of an existing regulation. ECM 

contends the Commission varied from the revised Green Guides’ suggestion that a 

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reasonable time for an unqualified claim of biodegradability is complete 

decomposition within a year. Br. 59-60. But the Green Guides are only guides, not 

binding regulations. ECM was held liable for violating Section 5 of the FTC Act, 

which by its own terms provides constitutionally adequate notice of its requirements. E.g., FTC v. Wyndham Worldwide Corp., 799 F.3d 236, 255-256 (3d Cir. 

2015).

Courts have long rejected claims “that the complaint filed by the Commission was inadequate to apprise [defendants] of the Commission’s disapproval of 

the particular trade practices that the proof and findings ultimately developed.” 

E.g., Country Tweeds, Inc. v. FTC, 326 F.2d 144, 148 (2d Cir. 1964). For example, 

in J.B. Williams, this Court rejected a claim that a company was not given proper 

notice of the specific implied claim the Commission found to be false and 

misleading. 381 F.2d at 887-888. The claim was not charged in the complaint and 

was initially disclaimed by a government attorney. But because the issue was 

extensively discussed during the trial and was related to other issues in the case, 

this Court rejected the argument that the company did not receive proper notice. Id.

at 888. The Court should reject ECM’s due process claim for similar reasons. As in 

J.B. Williams, the record does not show that ECM “was unfairly prejudiced by [the 

FTC’s] finding,” and there was no significant “variance between the complaint and 

the Order.” Id.

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C. The Commission Acted Within Its Authority.

Finally, ECM argues that the Commission’s order is ultra vires because it 

impinges on the EPA’s authority to manage solid waste disposal. Br. 82-84. ECM 

contends that the Commission’s order could change market incentives to make 

certain kinds of plastics, leading to changes to the makeup of landfills and ultimately 

frustrating the EPA’s authority. The convoluted and fanciful scenario is speculative,

frivolous, and unsupported by any evidence in the record.

CONCLUSION

The Commission’s order should be affirmed.

Respectfully submitted,

DAVID C. SHONKA

Acting General Counsel

JOEL MARCUS

Director of Litigation

May 5, 2016 /s/ Theodore (Jack) Metzler

THEODORE (JACK) METZLER

Attorney

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

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CERTIFICATE OF COMPLIANCE

I certify that the foregoing brief complies with the Clerk’s March 1, 2016 

order in this case setting a 17,000-word limit on the parties’ principal briefs in that 

it contains 14,413 words.

May 5, 2016 /s/ Theodore (Jack) Metzler

Theodore (Jack) Metzler

Attorney 

Federal Trade Commission

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

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CERTIFICATE OF SERVICE

I hereby certify that on May 5, 2014 I filed and served the foregoing with the 

Court’s appellate CM-ECF system. I certify that all participants in the case are 

registered CM/ECF users and that service will be accomplished by the CM/ECF 

system.

May 5, 2016 /s/ Theodore (Jack) Metzler

Theodore (Jack) Metzler

Attorney 

Federal Trade Commission

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

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