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UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA, 

950 Pennsylvania Avenue, N.W. 

Washington, DC 20530, 

 Plaintiff, 

 v. 

SEARS, ROEBUCK AND CO.; KMART 

CORPORATION; and KMART.COM, 

LLC; corporations, 3333 Beverly Road, 

Hoffman Estates, Illinois 60179, 

 Defendants. 

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Case No. 

STIPULATED JUDGMENT AND ORDER 

FOR CIVIL PENALTIES AND INJUNCTIVE AND OTHER RELIEF 

WHEREAS Plaintiff, the United States of America (“United States”), has commenced 

this action by filing a Complaint for civil penalties and injunctive and other relief, pursuant to 

Sections 5, 13, and 16 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 45, 53, 

and 56, and pursuant to the Textile Fiber Products Identification Act (“Textile Act”), 15 U.S.C. 

§ 70 et seq., and the Rules and Regulations thereunder (“Textile Rules”), 16 C.F.R. § 303 et 

seq.; and 

WHEREAS the United States, the Federal Trade Commission (“FTC” or “Commission”) 

and Defendants Sears, Roebuck and Co.; Kmart Corporation; and Kmart.com, LLC have 

consented to the entry of this Stipulated Judgment and Order for Civil Penalties and Injunctive 

and Other Relief (“Order”) to resolve all matters of dispute between them in this action; 

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NOW, THEREFORE, the Court having considered the parties’ request to enter the Order, 

it is hereby ORDERED, ADJUDGED, and DECREED as follows: 

FINDINGS 

1. This Court has jurisdiction over the subject matter of this case and jurisdiction over all 

parties pursuant to 28 U.S.C. §§ 1331, 1337(a), 1345, and 1355, and 15 U.S.C. 

§§ 45(m)(1)(B), 53(b), and 56(a). 

2. Venue in the District of Columbia is proper under 15 U.S.C. § 53(b) and under 28 U.S.C. 

§§ 1391(b) and (c) and 1395(a). 

3. The Complaint states a claim upon which relief may be granted against Defendants under 

Sections 5(a)(1), 5(m)(1)(B), 13(b), and 16(a) of the FTC Act, 15 U.S.C. §§ 45(a)(1), 

45(m)(1)(B), 53(b), and 56(a), and under the Textile Act, 15 U.S.C. § 70 et seq., and the 

Textile Rules, 16 C.F.R. Part 303. 

4. The alleged acts and practices of Defendants are in or affecting commerce, as defined in 

Section 4 of the FTC Act, 15 U.S.C. § 44. 

5. The Commission sent Defendants a letter dated January 27, 2010, informing Defendants 

that certain acts or practices in connection with the advertising of textile fiber products 

may violate the Textile Act and the Textile Rules and are unfair or deceptive under 

Section 5 of the FTC Act, 15 U.S.C. § 45(a)(1). 

6. Defendants enter into this Order freely and without coercion. Defendants further 

acknowledge that they have read the provisions of this Order and are prepared and able to 

abide by them. 

7. Defendants do not admit any allegations in the Complaint, except for facts necessary to 

establish jurisdiction. This Order is for settlement purposes only and does not constitute 

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an admission by Defendants or a finding of fact that the law has been violated as alleged 

in the Complaint. 

8. The parties agree that this Order resolves all allegations in the Complaint. The parties 

waive all rights to seek appellate review or otherwise challenge or contest the validity of 

this Order. Defendants further waive and release any claims that they may have against 

the United States, the Commission, and any employees, representatives, or agents of 

either that relate to the matter stated herein, including all claims under the Equal Access 

to Justice Act, 28 U.S.C. § 2412, as amended by Pub. L. 104-121, 110 Stat. 847, 863–64 

(1996), and any rights to attorneys’ fees that may arise under said provision of law. 

9. Entry of this Order is in the public interest. 

DEFINITIONS 

For the purpose of this Order, the following definitions shall apply: 

A. “Covered product” shall mean any or all of the following products sold by any 

Defendant, unless Defendant does not have an ownership interest in such product 

and prior to the point of purchase clearly and conspicuously informs consumers 

that there is a third-party seller for that product: Any article of wearing apparel, 

costume or accessory, drapery, floor covering, furnishing, bedding, or other 

textile good of a type customarily used in a household, regardless of where used, 

that is made, in whole or in part, of yarn or fabric, or any fiber, yarn, or fabric, 

whether in the finished or unfinished state, used or intended for use in any such 

textile good, which is labeled, advertised, promoted, or offered for sale, expressly 

or by implication, including, but not limited to, through the use of a fiber 

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trademark or other descriptive term or name for a product or product line, as 

bamboo, bamboo fiber, anti-microbial, anti-bacterial, or anti-fungal. 

B. “Defendants” mean “Sears, Roebuck, and Co.”; “Kmart Corporation”; and 

“Kmart.com, LLC”; and their respective subsidiaries, successors, and assigns. 

C. “Fiber trademark” shall mean a word or words used to identify a particular fiber 

sold by a person and to distinguish it from fibers of the same generic class sold by 

others, as defined in 16 C.F.R. § 303.1(r). 

D. “FTC” or “Commission” means the Federal Trade Commission. 

E. “Generic name of any manufactured fiber” shall mean any name for a textile fiber 

established and defined by the Commission pursuant to Section 70e(c) of the 

Textile Act, as set forth in 16 C.F.R. § 303.7. 

F. “Manufactured fiber” shall mean any fiber derived by a process of manufacture 

from any substance which, at any point in the manufacturing process, is not a 

fiber, as defined in 15 U.S.C. § 70(d). 

G. “Required information” shall mean such information as is required to be disclosed 

on labels or invoices and in advertising under the Textile Act, 15 U.S.C. § 70 et 

seq., and under the Textile Rules, 16 C.F.R. Part 303, as defined in 16 C.F.R. 

§ 303.1(e). 

I. PROHIBITION ON VIOLATING THE TEXTILE ACT AND TEXTILE RULES 

IT IS HEREBY ORDERED that Defendants, directly or through any corporation, division, 

or other device, in connection with the manufacturing, labeling, advertising, promotion, offering 

for sale, sale, or distribution of any covered product in or affecting commerce, shall not violate 

any provision of the Textile Act or Textile Rules, including but not limited to: 

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A. Selling, offering for sale, or advertising in commerce any covered product that is 

falsely or deceptively stamped, tagged, labeled, invoiced, advertised, or otherwise 

identified as to the name or amount of constituent fibers contained therein. 

15 U.S.C. §§ 70a, 70b. 

B. Failing to use the recognized generic name of any manufactured fiber in the 

required information in any labels, invoices, or advertising of any covered 

product. 16 C.F.R. §§ 303.6 and 303.7. 

C. Failing to include all required information on labels for any covered product, 

including identifying: 

1. the generic names and percentages by weight of the constituent fibers 

present in the covered product, in amounts of 5 percent or more and in the 

order of predominance, as set forth in 16 C.F.R. § 303.16(a)(1); 

2. the name or registered identification number issued by the Commission of 

the manufacturer or of one or more persons marketing or handling the 

covered product, 16 C.F.R. § 303.16(a)(2); and 

3. the name of the country where such covered product was processed or 

manufactured, as provided for in 16 C.F.R. § 303.33. 

15 U.S.C. § 70b(b), 16 C.F.R. §§ 303.16 and 303.42(a). 

D. Failing to ensure that any fiber trademark or generic name used on the label of, or 

in any advertising for, any covered product: 

1. is not false, deceptive, or misleading as to fiber content; and 

2. does not indicate, directly or indirectly, that the covered product is 

composed wholly or in part of a particular fiber, when such is not the case. 

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16 C.F.R. §§ 303.17(d) and 303.41(d). 

E. Failing to ensure that any non-required information or representations used on the 

label of, or in the advertising for, any covered product: 

1. do not interfere with, minimize, detract from, or conflict with required 

information; 

2. do not include any names, terms, or representations prohibited by the 

Textile Act or Textile Rules; and 

3. are not false, deceptive, or misleading. 

16 C.F.R. §§ 303.16(c) and 303.42(b). 

F. Where a covered product is advertised in such manner as to require disclosure of 

the information required by the Textile Act and Textile Rules, failing to include 

all parts of the required information in immediate conjunction with each other in 

legible and conspicuous type or lettering of equal size and prominence. 

16 C.F.R. §§ 303.40 and 303.42(a). 

G. Where a fiber trademark is used in advertising a covered product, failing: 

1. to include the generic name of the fiber contained in such covered product 

in immediate proximity to and in conjunction with such fiber trademark; 

and 

2. to include a full disclosure of the fiber content information required by the 

Textile Act and Textile Rules in at least one instance in any such 

advertisement. 

16 C.F.R. § 303.41. 

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H. Failing to ensure that any words, coined words, symbols or depictions used in the 

labeling or advertising of a covered product which: 

1. constitute or imply the name or designation of a fiber; 

2. are phonetically similar to the name or designation of a fiber; or 

3. are only a slight variation of spelling from the name or designation of a 

fiber 

are not used in such a manner as to represent or imply that such fiber is present in 

the covered product, unless such fiber is actually present in that product. 

16 C.F.R. § 303.18. 

I. Failing to maintain for at least three (3) years required records for any covered 

products manufactured by Defendant, including records showing the fiber 

content. 15 U.S.C. § 70d(b); 16 C.F.R. § 303.39. 

Provided, further, that nothing in this Order shall prohibit any Defendant from 

complying with the Textile Act and Textile Rules by establishing that it received and maintained 

in good faith a guaranty, which complies fully with Section 70h of the Textile Act, 15 U.S.C. 

§ 70h, and with Sections 303.36–303.38 of the Textile Rules, 16 C.F.R. §§ 303.36–303.38, that 

such covered product is not misbranded or falsely invoiced. A guaranty shall not be received or 

maintained in good faith after the Defendant knows or should have known that products covered 

by the guaranty are or likely may be mislabeled or deceptively advertised, including after being 

notified by the Commission that such products are or likely may be mislabeled or deceptively 

advertised. 

Provided, further, that if it is not legally possible to obtain a guaranty at the time any 

Defendant takes an ownership interest in a covered product, and (1) Defendant does not 

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embellish or misrepresent claims provided by the manufacturer about a covered product, and (2) 

the covered product is not sold by Defendant as a private label product, then Defendant shall 

only be liable for a violation of this Section if it knew or should have known that the marketing 

or sale of the covered product would violate this Section. 

Provided, further, that in the event the Textile Act or Textile Rules are amended or 

modified, nothing in this Section shall impose upon Defendants obligations that go beyond what 

is required under the amended or modified version of the Textile Act or Textile Rules. 

II. SETTLEMENT PAYMENT 

IT IS FURTHER ORDERED that Defendants will jointly pay $475,000 to the Treasurer 

of the United States. 

A. Within five (5) days of entry of this Order, Defendants shall transfer payment in 

the form of an electronic fund transfer in accordance with the procedures 

specified by: Consumer Protection Branch, Civil Division, U.S. Department of 

Justice, Washington, DC 20530. 

B. In the event of any default in payment, which default continues for ten (10) days 

beyond the due date of payment, the entire unpaid amount, together with interest, 

as computed pursuant to 21 U.S.C. § 1961 from the date of default to the date of 

payment, shall immediately become due and payable. 

C. Defendants shall cooperate fully with the United States and the Commission and 

their agents in all attempts to collect the amount due pursuant to this Paragraph if 

Defendants fail to pay fully the amount due at the time specified herein. In such 

an event, Defendants agree to provide the United States and the Commission with 

their federal and state tax returns for the preceding two (2) years and to complete 

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standard financial disclosure forms fully and accurately within ten (10) business 

days of receiving a request from United States or the Commission to do so. 

Defendants further authorize the United States and the Commission to verify all 

information provided on their financial disclosure forms with appropriate third 

parties, including but not limited to financial institutions. 

D. In accordance with 31 U.S.C. § 7701, Defendants are hereby required, unless they 

have done so already, to furnish to The United States and the Commission, their 

taxpayer identification numbers (employer identification numbers), which shall be 

used for purposes of collecting and reporting on any delinquent amount arising 

out of Defendants’ relationship with the government. 

E. Defendants relinquish all dominion, control, and title to the funds paid to the 

fullest extent permitted by law. Defendants shall make no claim to or demand for 

return of the funds, directly or indirectly, through counsel or otherwise. 

F. Proceedings instituted under this Paragraph are in addition to, and not in lieu of, 

any other civil or criminal remedies that may be provided by law, including any 

other proceedings the Commission may initiate to enforce this Order. 

III. COMPLIANCE MONITORING 

IT IS FURTHER ORDERED that, for the purpose of monitoring and investigating 

compliance with any provision of this Order: 

A. Within thirty (30) days of receipt of written notice from a representative of the 

United States or the Commission, or else within such other period as the parties 

may agree, Defendants shall submit additional written reports, which are true and 

accurate and sworn to under penalty of perjury; produce documents for inspection 

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and copying; appear for deposition; and provide entry during normal business 

hours to any business location in Defendants’ possession or direct or indirect 

control to inspect the business operation; 

B. In addition, the United States and the Commission are authorized to use all other 

lawful means, including but not limited to: 

1. obtaining discovery from any person, without further leave of court, using 

the procedures prescribed by Fed. R. Civ. P. 30, 31, 33, 34, 36, 45, and 69; 

and 

2. having their representatives pose as consumers and suppliers to 

Defendants, their employees, or any other entity managed or controlled in 

whole or in part by Defendants, without the necessity of identification or 

prior notice; and 

C. Defendants shall permit representatives of the United States and the Commission 

to interview any employer, consultant, independent contractor, representative, 

agent, or employee who has agreed to such an interview, relating in any way to 

any conduct subject to this Order. The person interviewed may have counsel 

present. 

Provided however, that nothing in this Order shall limit the United States’ or the 

Commission’s lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 

15 U.S.C. §§ 49, 57b-1, to obtain any documentary material, tangible things, testimony, or 

information relevant to unfair or deceptive acts or practices in or affecting commerce (within the 

meaning of 15 U.S.C. § 45(a)(1)). 

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IV. COMPLIANCE REPORTING 

IT IS FURTHER ORDERED that, in order that compliance with the provisions of this 

Order may be monitored: 

A. For a period of five (5) years from the date of entry of this Order, each Defendant 

shall notify the Commission of any changes in structure of the respective 

Defendant or any business entity that Defendant directly or indirectly controls, or 

has an ownership interest in, that may affect compliance obligations arising under 

this Order, including but not limited to: incorporation or other organization; a 

dissolution, assignment, sale, merger, or other action; or a change in the business 

name or address, at least thirty (30) days prior to such change, provided that, with 

respect to any such change in the business entity about which Defendant learns 

less than thirty (30) days prior to the date such action is to take place, Defendant 

shall notify the Commission as soon as is practicable after obtaining such 

knowledge. 

B. One hundred eighty (180) days after the date of entry of this Order, each 

Defendant shall provide a written report to the FTC, which is true and accurate 

and sworn to under penalty of perjury, setting forth in detail the manner and form 

in which it has complied and is complying with this Order. This report shall 

include, but not be limited to: 

1. A copy of each acknowledgment of receipt of this Order, obtained 

pursuant to the Section titled “Distribution of Order;” and 

2. Any other changes required to be reported under Subsection A of this 

Section. 

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C. Each Defendant shall notify the Commission of the filing of a bankruptcy petition 

by such Defendant within fifteen (15) days of filing. 

D. For the purposes of this Order, Defendants shall, unless otherwise directed by the 

Commission’s authorized representatives, send by overnight courier (not the U.S. 

Postal Service) all reports and notifications to the Commission that are required 

by this Order to: 

Associate Director for Enforcement 

Bureau of Consumer Protection 

Federal Trade Commission 

600 Pennsylvania Avenue, N.W. 

Washington, DC 20580 

RE: United States v. Sears, Roebuck and Co., et al., Case No. ______ 

Provided that, in lieu of overnight courier, any Defendant may send such reports 

or notifications by first-class mail, but only if that Defendant contemporaneously 

sends an electronic version of such report or notification to the Commission at 

Debrief@ftc.gov. 

E. For purposes of the compliance reporting and monitoring required by this Order, 

the United States and the Commission are authorized to communicate directly 

with the Defendants. 

V. RECORDKEEPING 

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of 

this Order, Defendants, in connection with the marketing and/or sale of covered products, are 

hereby restrained and enjoined from failing to create and retain the following records: 

A. Accounting records that reflect the cost of goods or services sold, revenues 

generated, and the disbursement of such revenues; 

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B. Personnel records for each person employed by Defendant as a manager having 

responsibilities for Defendant’s marketing or sale of textile products accurately 

reflecting that person’s: name, address, and telephone number; job title or 

position; date upon which the person commenced work; and the date and reason 

for the person’s termination, if applicable; 

C. Customer files containing the names, addresses, phone numbers, dollar amounts 

paid, quantity of items or services purchased, and description of items or services 

purchased, to the extent such information is obtained in the ordinary course of 

business; and 

D. All records and documents necessary to demonstrate full compliance with each 

provision of this Order, including but not limited to, copies of acknowledgments 

of receipt of this Order required by the Sections titled “Distribution of Order” and 

“Acknowledgment of Receipt of Order” and all reports submitted to the FTC 

pursuant to the Section titled “Compliance Reporting.” 

VI. DISTRIBUTION OF ORDER 

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of 

this Order, each Defendant shall deliver copies of the Order to (1) all of its managers having 

responsibilities for Defendant’s marketing or sale of textile products; and (2) any business entity 

resulting from any change in structure set forth in Subsection A of the Section titled 

“Compliance Reporting.” For current personnel, delivery shall be within thirty (30) days of 

service of this Order upon Defendant. For new personnel, delivery shall occur within thirty (30) 

days after the person assumes his or her responsibilities. For any business entity resulting from 

any change in structure set forth in Subsection A of the Section titled “Compliance Reporting,” 

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delivery shall be at least ten (10) days prior to the change in structure. Defendant must secure a 

signed and dated statement acknowledging receipt of the Order, within thirty (30) days of 

delivery, from all persons receiving a copy of the Order pursuant to this Section. 

VII. ACKNOWLEDGMENT OF RECEIPT OF ORDER 

IT IS FURTHER ORDERED that each Defendant within five (5) business days of receipt 

of this Order as entered by the Court, must submit to the Commission a truthful sworn statement 

acknowledging receipt of this Order. 

VIII. RETENTION OF JURISDICTION 

IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for 

purposes of construction, modification, and enforcement of this Order. 

SO ORDERED this ____ day of ___________, 2012. 

____________________________________ 

UNITED STATES DISTRICT JUDGE 

United States District Court 

 

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FOR THE PLAINTIFF

UNITED STATES OF AMERICA:

STUARTF. DELERY

Principal Deputy Assistant Attorney General

MAAME EWUSI-MENSAH FRIMPONG

Deputy Assistant Attorney General

MICHAEL S. BLUME

Director

ç;}Q~

SHANNON L. PEDERSEN

Ore. BarNo. 102073

.Trial Attorney

Consumer Protection Branch

Department of Justice, Civil Division

P.O. Box 386

Washington, DC 20044

202- 532-4490, shannon. I.pedersen@usdoj.gov

202-514-8742 (fax)

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