1

UNITED STATES OF AMERICA

BEFORE THE FEDERAL TRADE COMMISSION

COMMISSIONERS: Lina M. Khan, Chair

Noah Joshua Phillips

Rebecca Kelly Slaughter

Christine S. Wilson

DOCKET NO. 9397

ORDER DENYING FINAL DECISION UNDER RULE 3.12(b)(2) AND DENYING 

SUMMARY DECISION

The Complaint in this case alleges that Health Research Laboratories, LLC (“HRL”), 

Whole Body Supplements, LLC (“WBS”), and their owner Kramer Duhon (collectively, 

“Respondents”) violated the Federal Trade Commission Act by making unsubstantiated health 

claims concerning their Black Garlic Botanicals, BG18, The Ultimate Heart Formula (“UHF”), 

and Neupathic products. Respondents seek a final decision and order under Commission Rule 

3.12(b)(2), 16 C.F.R. § 3.12(b)(2), based on their purported admission of all material facts in the 

Complaint, while Complaint Counsel seek summary decision under Commission Rule 3.24, 16 

C.F.R. § 3.24. We find that significant questions of material fact remain in dispute which make 

the case inappropriate for either a summary decision or a decision under Rule 3.12(b)(2). 

Therefore, this matter will be remanded to the Chief Administrative Law Judge (“ALJ”) for 

additional discovery, evidentiary hearing, and initial decision, consistent with our opinion below. 

Before remanding, however, we will provide opportunity for Complaint Counsel to move to 

amend the Complaint.

In the Matter of

Health Research Laboratories, LLC, 

 a limited liability company,

Whole Body Supplements, LLC,

 a limited liability company, and 

Kramer Duhon, 

 individually and as an officer of 

 Health Research Laboratories, LLC,

 and Whole Body Supplements, LLC.
2

I. PROCEDURAL HISTORY

A. The Complaint

On November 13, 2020, the Commission issued an administrative Complaint charging

HRL, WBS, and Kramer Duhon, individually and as an owner and officer of the aforementioned 

companies, with violating Sections 5(a) and 12 of the FTC Act. The Complaint alleges that

HRL’s and WBS’s advertisements conveyed expressly or by implication, and without 

substantiation, claims that the Black Garlic Botanicals, BG18, and UHF products: (a) prevent or 

reduce the risk of and treat cardiovascular disease, including by lowering blood pressure, 

improving blood flow, reducing cholesterol, or decreasing arterial plaque; (b) prevent or reduce

the risk of and treat atherosclerosis, including by reducing cholesterol or decreasing arterial 

plaque; and (c) cure, treat, or mitigate hypertension, including by decreasing arterial plaque or 

lowering blood pressure. Complaint ¶¶ 14-19. The Complaint also alleges that HRL’s 

advertisements conveyed expressly or by implication, and without substantiation, claims that the 

Neupathic dietary supplement cures, treats, or mitigates diabetic neuropathy, including by 

improving blood circulation, or eliminating or alleviating diabetic nerve pain and discomfort. Id. 

¶¶ 20-21. To support these claims, the Complaint attaches and extensively quotes from 

promotional mailers sent by Respondents to consumer residences. See id. ¶¶ 7, 9, 11, 13. The 

Complaint also includes a Notice of Contemplated Relief, which contains various prohibitions on 

representations, record-keeping and notice requirements, and other fencing-in provisions. Id. at 

14-15.

B. Proceedings before the ALJ

On December 4, 2020, Respondents filed an Answer denying the alleged violations and 

asserting a variety of defenses. On February 12, 2021, Respondents moved for leave to amend 

their Answer to admit all of the material allegations pursuant to Commission Rule 3.12(b)(2), 

which provides:

If the respondent elects not to contest the allegations of fact set forth in the 

complaint, the answer shall consist of a statement that the respondent admits all of 

the material allegations to be true. Such answer shall constitute a waiver of 

hearings as to the facts alleged in the complaint, and together with the complaint 

will provide a record basis on which the Commission shall issue a final decision

containing appropriate findings and conclusions and a final order disposing of the 

proceeding. In such an answer, the respondent may, however, reserve the right to 

submit proposed findings of fact and conclusions of law under § 3.46.

16 C.F.R. § 3.12(b)(2). 

Complaint Counsel opposed the motion, arguing among other things that 

Respondents’ proposed amendments to the Answer did not conform to the requirements 

of Rule 3.12(b)(2) because Respondents continued to assert defenses that contested

material facts, namely the defenses of mootness and lack of public interest. Complaint 

Counsel’s Opposition to Motion to Amend Answer and Cross Motion to Amend 
3

Complaint at 5 (Feb. 24, 2021). Complaint Counsel also argued that, should the ALJ 

grant Respondents leave to amend the Answer, he should require Respondents to admit 

the allegations on a paragraph-by-paragraph basis and permit discovery on any remaining 

factual issues. Id. at 6-7. Further, Complaint Counsel cross-moved for leave to amend 

the Complaint to add allegations related to the factual issues raised by Respondents’ 

defenses and the scope of relief. Id. at 7. The proposed amendments included, among 

other things, two new paragraphs concerning the lack of substantiation for Respondents’

health claims. See id. Ex. CCX-A ¶¶ 6, 23; see also Respondents’ Response to Cross 

Motion to Amend Complaint at 2-4 (Feb. 26, 2021) (listing Complaint Counsel’s 

proposed new and revised paragraphs). With respect to the scope of relief, Complaint 

Counsel explained that, as they had already informed Respondents, they would be 

seeking to ban Respondents from the supplement industry. Complaint Counsel’s 

Opposition to Motion to Amend Answer and Cross Motion to Amend Complaint at 8 n.3. 

Complaint Counsel stated that they wanted to amend the Complaint to “support the broad

relief Complaint Counsel seeks.” Id. at 7. 

The next day, Respondents submitted a waiver of the defenses of mootness and 

lack of public interest, which Complaint Counsel had identified as raising factual issues. 

Respondents’ Waiver of Affirmative Defenses of Mootness and Lack of Public Interest 

(Feb. 25, 2021). Respondents then argued that, in light of this waiver, there was no need 

for Complaint Counsel to amend the Complaint to add factual allegations concerning

those defenses. See Respondents’ Response to Cross Motion to Amend Complaint at 6. 

As for the proposed factual allegations addressing the appropriate relief, Respondents 

stated that “[t]he scope of relief provided by the FTC Act is a pure question of law, not a 

factual issue that needs to be alleged.” Id. Thus, they asserted, “there are no outstanding 

factual issues that justify the proposed amendments.” Id.

On March 10, 2021, the ALJ granted Respondents leave to amend the Answer 

and, on March 12, 2021, denied Complaint Counsel’s cross-motion to amend the 

Complaint. The ALJ found that Complaint Counsel’s proposed amendments did not add 

new legal theories or allege new or different violations of the FTC Act but would

nonetheless complicate resolution of the case on the merits and “unnecessarily frustrate 

the right to obtain expedited proceedings under Rule 3.12(b)(2)[,]” since Respondents 

had admitted all of the material allegations in the existing Complaint. Order Denying 

Complaint Counsel’s Motion to Amend the Complaint at 5. The ALJ further determined 

that “a paragraph-by-paragraph response to each allegation of the Complaint was not 

contemplated by Rule 3.12(b)(2) and could create ambiguity, when the proposed 

amended answer already expressly admits ‘all material allegations’ of the Complaint.” 

Order Granting Respondents’ Motion for Leave to Amend Answer at 4-5. On the issue 

of discovery, the ALJ held that nothing in Rule 3.12(b)(2) prohibited Complaint Counsel 

from pursuing discovery regarding issues that remained relevant after the amendment of 

the Answer. Id. at 5. Complaint Counsel moved the ALJ to certify his rulings on the 

parties’ motions for interlocutory appeal to the Commission, but the ALJ denied 

certification. See Complaint Counsel’s Motion to Certify Rulings for Interlocutory 

Appeal (Mar. 29, 2021); Order Denying Motion for Interlocutory Appeal (Apr. 2, 2021). 
4

On March 30, 2021, Respondents filed an Amended Answer stating: “Pursuant to 

16 CFR § 3.12(b)(2), Respondents elect not to contest the allegations of fact set forth in 

the complaint. Respondents admit all of the material allegations to be true.” Amended 

Answer at 1. Respondents also reserved the right to submit proposed findings of fact and 

conclusions of law. Id. The sole remaining defense asserted that the FTC’s 

administrative process and structure violates the Constitution. Id. 1-2. 

The next day, on March 31, 2021, Respondents filed a motion asking the ALJ to 

either issue a new scheduling order setting out the deadlines for final briefing or transfer 

the case to the Commission for issuance of a final decision. See generally Expedited 

Motion to Enter New Scheduling Order or, in the Alternative, Transfer Case to the 

Commission. Complaint Counsel opposed the motion because it would terminate 

discovery regarding the appropriate relief, an issue that remained in dispute despite the 

admissions in the Amended Answer. Opposition to Respondents’ Expedited Motion to 

Enter New Scheduling Order or, in the Alternative, Transfer Case to the Commission at 

1-2 (Apr. 9, 2021). Just three days earlier, the ALJ had ordered Respondents to provide 

discovery relating to the appropriate fencing-in relief, including the seriousness and 

deliberateness of Respondents’ conduct. Order Granting Complaint Counsel’s Motions 

to Compel (Apr. 6, 2021). On April 13, 2021, Respondent submitted a stipulation stating 

that “Respondents hereby stipulate and agree that the Initial Decision of the ALJ can 

include whatever ‘fencing in’ relief is permitted by statute and requested in the 

Complaint.” Respondents’ Stipulation as to “Fencing-In” Relief at 1-2. Respondents

also asked the ALJ to reconsider his discovery order, asserting that there was no need for 

additional discovery because they had “admitted all material facts in the Complaint and 

agreed to the ‘fencing in’ relief.” Respondents’ Expedited Motion to Partially 

Reconsider May [sic] 6 Order Granting Complaint Counsel’s Motions to Compel and 

Statement of Impasse at 4 (Apr. 13, 2021).1

 In light of Respondents’ admissions in the 

Amended Answer and concessions on fencing-in relief, the ALJ held that discovery was 

now moot and transferred the case to the Commission for a final decision and order under 

Rule 3.12(b)(2). Order Granting in Part and Denying in Part Respondents’ Motion to 

Enter New Scheduling Order or, in the Alternative, to Transfer the Case to the 

Commission at 5 (Apr. 20, 2021).

C. Proceedings before the Commission

To determine the appropriate next steps following transfer and ascertain whether 

any factual issues remained to be resolved, on May 14, 2021, the Commission directed

the parties to submit filings identifying any additional material facts that they intended to 

assert, listing the decisional issues to which each asserted additional fact related, stating 

whether they disputed the facts identified by the other party, and explaining the basis for 

any such dispute. Order for Further Proceedings before the Commission (May 14, 2021) 

(“Order for Further Proceedings”). The Commission also asked Respondents to clarify 

 1 Respondents also stated that “Respondents have no objection to a blanket prohibition on disseminating or causing 

to be disseminated any advertising or promotional materials for any supplements that makes any representations 

regarding health or disease.” Id. at 7.
5

their position on the items in the Notice of Contemplated Relief, as the Respondents’ 

prior stipulation had been limited to fencing-in relief that would be ordered by the ALJ.

Complaint Counsel’s submission repeated numerous allegations from the 

Complaint, including allegations regarding Respondents’ representations and lack of 

substantiation, and listed a number of additional facts they sought to introduce from 

outside the Complaint relating to the scope of relief. See Complaint Counsel’s Statement 

of Additional Material Facts, Att. A (May 25, 2021). Respondents’ submission did not 

identify any additional facts they intended to introduce and did not indicate a substantive 

dispute with the additional facts submitted by Complaint Counsel. Respondents’ 

Response to Complaint Counsel’s Statement of Additional Material Facts (June 1, 2021). 

Respondents asserted, however, that Complaint Counsel’s recitation of allegations in the 

Complaint was outside the scope of the Commission’s May 14 order, which asked for 

facts other than those expressly alleged in the Complaint, and stated that Respondents

would not be responding to that part of the Complaint Counsel’s submission. Id. at 5-6. 

Respondents also raised a number of objections to allowing material facts beyond the 

Complaint. Most notably, Respondents argued that Complaint Counsel’s factual 

assertions must be excluded as irrelevant because only legal issues remained in the case. 

Id. at 12-13. Respondents stated that “[a]ll material facts in the live Complaint have been 

admitted, so it is not necessary to add ‘additional facts’ to prove any of the facts in the 

Complaint.” Id. at 12. Further, they asserted that allowing Complaint Counsel to rely on 

facts outside the Complaint would be inconsistent with Rule 3.12(b)(2) and the 

Commission’s related explanatory statement in the Federal Register. Id. at 13. 

Respondents also clarified, per the Commission’s request, that they have “agree[d] and 

accept[ed]” the remedies in the Notice of Contemplated Relief, subject only to two purely 

legal objections regarding constitutionality and the FTC’s authority to impose affirmative 

remedial requirements. Id. at 7-8. 

In a July 30, 2021 order, the Commission rejected Respondents’ objections to the 

introduction of facts beyond the Complaint. The Commission found that Complaint 

Counsel’s factual assertions regarding the scope of relief were not irrelevant because 

Complaint Counsel had indicated they intended to seek to ban Respondents from the 

supplements industry, and Respondents had not conceded the appropriateness of such a 

ban. Order Directing Parties to Submit Proposed Findings of Fact and Conclusions of 

Law and Providing for Summary Decision Proceedings at 2. The Commission also 

explained that Rule 3.12(b)(2) does not prohibit the Commission from considering facts 

outside the pleadings in rendering a final decision. Id. at 3. The Commission ruled that

any party that wished to rely on facts outside the pleadings could invoke summary 

decision procedures, similar to the process used by federal courts in analogous 

circumstances. Id. at 4. Accordingly, we directed the parties to file their proposed 

findings of fact and conclusions of law and supporting documents as indicated in 

Commission Rule 3.12(b)(2) and, if a party chose to rely on facts outside the Complaint

and found summary decision appropriate, a statement of material facts as to which there 

is no genuine issue for trial and supporting documents, per the Commission’s summary 

decision procedures.
6

The parties filed their initial submissions on August 20, 2021. Respondents’

proposed findings of fact consisted of four short statements summarizing the Complaint

and Respondents’ admissions and concessions. Respondents’ Findings of Fact and 

Conclusions of Law at 2-3. Complaint Counsel, on the other hand, submitted a statement 

of material facts citing the Complaint as well as sources outside the Complaint, with the 

effect of converting their filing into a motion for summary decision. See generally 

Complaint Counsel’s Proposed Findings of Fact, Statement of Material Facts as to Which 

There is No Genuine Issue, and Proposed Conclusions of Law (“Complaint Counsel’s 

Proposed Findings and Statement of Material Facts”). 

On September 10, 2021, Respondents filed their opposition to Complaint 

Counsel’s motion for summary decision. Respondents contested a number of Complaint 

Counsel’s factual statements, including some key propositions that appeared as 

allegations in the Complaint. The disputed allegations included (1) that Respondents’ 

advertisements represented that their products prevented, reduced the risk of, treated, or 

mitigated certain diseases or health concerns, and (2) that those representations were not 

substantiated at the time they were made. Respondents’ Opposition to Summary 

Disposition and Reply Findings of Fact, Conclusions of Law, and Brief at 13-14

(“Opposition to Summary Disposition”) (disputing proposed findings of fact ¶¶ 23, 33, 

34, 42, 43, 50, 59, 67, which cited inter alia Complaint ¶¶ 14-21). Respondents claimed 

that their Amended Answer had not admitted these allegations because they were “in the 

legal counts, not the allegations of fact, of the Complaint.” Id. Respondents also took 

issue with Complaint Counsel’s assertions regarding the intent and deliberateness of any 

violation. Id. at 17-18, Ex. RX1. Respondents sought to submit evidence of their 

compliance with the FTC’s requests and of substantiation of their product claims. Id.

On reply, Complaint Counsel argued that the Commission should disregard 

Respondents’ late factual contentions and issue a final decision based on Respondents’ 

prior admissions and the undisputed facts previously set forth by Complaint Counsel. 

Complaint Counsel’s Response to Respondents’ September 10, 2021 Submission at 1 

(Oct. 8, 2021). Complaint Counsel requested that if the Commission determined to 

permit Respondents to withdraw or limit their Rule 3.12(b)(2) admissions, Complaint 

Counsel be given an opportunity to move to amend the Complaint before any remand.

II. ANALYSIS

“An advertisement is deceptive if it contains a representation or omission of fact that is 

likely to mislead a consumer acting reasonably under the circumstances, and that representation 

or omission is material to a consumer’s purchasing decision.” In re POM Wonderful LLC, 2013 

WL 268926, at *18 (FTC Jan. 16, 2013), aff’d sub nom. POM Wonderful, LLC v. FTC, 777 F.3d 

478 (D.C. Cir. 2015); see also, In re California Naturel, Inc., 2016 WL 7228668, at *5 (FTC 

Dec. 5, 2016); FTC Policy Statement on Deception, 103 F.T.C. 174, 175 (1984), appended to 

Cliffdale Assocs., Inc.,103 F.T.C. 110 (1984). Thus, in determining whether an advertisement is 

deceptive, the Commission considers (1) what claims are conveyed in the ad; (2) whether those 

claims are false or misleading; and (3) whether the claims are material. In re Traffic Jam Events,

2021 WL 5124183, at *12 (FTC Oct. 25, 2021); California Naturel, 2016 WL 7228668, at 
7

*5. Misleading claims include those that are not substantiated at the time they are 

disseminated. See, e.g., ECM BioFilms, Inc., 160 F.T.C. 652, 709 (2015) (“Because an objective 

claim about a product’s performance or efficacy carries with it the express or implied 

representation that the advertiser had a reasonable basis to substantiate the claim, failure to have 

a reasonable basis is misleading.”), aff’d sub nom., ECM BioFilms, Inc. v. FTC, 851 F.3d 599

(6th Cir. 2017); FTC Policy Statement Regarding Advertising Substantiation, appended to 

Thompson Med. Co., 104 F.T.C. 648, 839 (1984) (advertisers must “have a reasonable basis for 

advertising claims before they are disseminated”).

Here, the Complaint alleges that Respondents’ advertisements conveyed that Black 

Garlic Botanicals, BG18, and UHF products prevent or reduce the risk of and treat 

cardiovascular disease, prevent or reduce the risk of and treat atherosclerosis, and cure, treat, or 

mitigate hypertension. Complaint ¶¶ 14, 16, and 18. The Complaint also alleges that HRL’s 

advertisements conveyed that Neupathic cures, treats, or mitigates diabetic neuropathy. Id. ¶ 20. 

Further, the Complaint alleges that these claims were not substantiated at the time they were 

made. Id. ¶¶ 15, 17, 19, 21. Respondents now challenge these core allegations of the 

Complaint, while urging that, pursuant to Commission Rule 3.12(b)(2), the Commission enter a 

cease and desist order limited to prohibiting the acts or practices alleged in the Complaint on the 

basis of the Complaint and the Amended Answer.

2 Complaint Counsel have requested a 

summary decision, pursuant to Commission Rule 3.24 and our order dated July 30, 2021, that 

Respondents have engaged in deceptive advertising.

Rule 3.12(b)(2) applies when a respondent “elects not to contest the allegations of fact set 

forth in the complaint.” 16 C.F.R. § 3.12(b)(2). Although Respondents’ Amended Answer 

states that they admit all of the material allegations in the Complaint, Respondents now assert

that allegations regarding what claims were conveyed by the ads and the lack of substantiation 

have not been admitted and are in fact contested. Opposition to Summary Disposition at 13-14. 

The allegations that Respondents made health claims without substantiation are factual and

essential; without them, the Complaint would not state a cause of action. If Respondents do not 

admit these allegations, then they do not admit the material allegations of fact in the Complaint,

and the matter is not appropriate for Rule 3.12(b)(2) disposition.

The case is also not appropriate for summary decision under Rule 3.24, which provides 

standards analogous to those for motions for summary judgment under Federal Rule of Civil 

Procedure 56. See In re McWane, Inc. & Star Pipe Prods., Ltd., 2012 WL 4101793, at *5 (FTC 

Sept. 14, 2012); In re Polygram Holding, Inc., 2002 WL 31433923, at *1 (FTC Feb. 26, 2002). 

A party moving for summary decision must show that “there is no genuine issue as to any 

material fact” and that it is “entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); 16 

C.F.R. § 3.24(a)(2). 

 2 Opposition to Summary Disposition at 31. Alternatively, Respondents request in one clause of a single sentence in 

the concluding paragraph of their Opposition to Summary Disposition that the Commission dismiss the Complaint. 

Id. Prior to that, Respondents had steadfastly maintained that the Commission should issue a final decision under 

Rule 3.12(b)(2). See, e.g., Respondents’ Response to Complaint Counsel’s Statement of Additional Material Facts

at 16 (June 1, 2021) (“Respondents respectfully request that the Commission issue a cease and desist order based on 

the facts alleged in the November 13, 2020 Complaint”). The case was transferred to the Commission based on 

Respondents’ admissions under Rule 3.12(b)(2), and Respondents have not filed a motion to dismiss. Under these 

circumstances, consideration of dismissal is not appropriate. 
8

Complaint Counsel urge us to disregard Respondents’ late-claimed factual disputes and

issue a final decision based on Respondents’ admissions in the Amended Answer and 

concessions in other filings. While there may be some justification for Complaint Counsel’s 

arguments, we find it more appropriate to accept Respondents’ current, clear statements that they 

dispute the material allegations at issue, and we will allow them an opportunity to contest the 

disputed issues. Respondents are now asserting that they have not admitted a lack of 

substantiation, thereby depriving Complaint Counsel of their asserted proof that substantiation 

was absent3 and precluding summary decision on the central issue of substantiation. Although

we might be able to ascertain the claims conveyed by Respondents’ advertisements from 

materials in the summary decision record, we are concerned that, as a result of Respondents’ 

perceived admissions, the issue has not yet been squarely joined. We find it preferable to make 

the determination of what claims were conveyed after thorough briefing, without the overlay of 

the purported admissions. Accordingly, we will remand this proceeding to the ALJ for discovery

and trial. 

We are, however, deeply troubled by Respondents’ counsel’s gamesmanship and tactics. 

Their misleading assertions to the ALJ and the Commission regarding the scope and effect of 

Respondents’ Amended Answer have delayed the case by months and have wasted many hours 

of attorney time and agency resources. Time and again, Respondents claimed that there was no 

factual dispute and no need for further fact development because all material facts in the 

Complaint had been admitted. Respondents opposed Complaint Counsel’s motion to amend the 

Complaint, which would have included among other things two new paragraphs regarding the

lack of substantiation for Respondents’ health claims,

4 on grounds that “Respondents have 

admitted all material facts in the Complaint” and “none of the new facts are necessary to obtain a 

cease-and-desist order.” Respondents’ Response to Cross Motion to Amend Complaint at 8-9; 

see also id. at 6 (“[T]here are no outstanding factual issues that justify the proposed 

amendments”). They argued that, in light of their admissions, discovery was not only 

unnecessary but would be “manifestly unjust.” Respondents’ Expedited Motion to Partially 

Reconsider May [sic] 6 Order Granting Complaint Counsel’s Motions to Compel and Statement 

of Impasse at 4 (Apr. 13, 2021). When the Commission specifically instructed Respondents to 

identify any factual assertions in dispute, Respondents not only failed to indicate that they 

disputed any of Complaint Counsel’s factual assertions but reiterated that all material allegations 

in the Complaint had been admitted and, on that basis, argued that factual assertions beyond the 

Complaint were irrelevant. See Respondents’ Response to Complaint Counsel’s Statement of 

Additional Material Facts at 12 (“All material facts in the live Complaint have been admitted, so 

it is not necessary to add ‘additional facts’ to prove any of the facts in the Complaint.”); id. at 4 

(“[T]he only ‘live’ factual issues in this case are the facts in the November 13, 2020 

Complaint—all of which have been admitted[.]”). 

Now, in a responsive brief following their own request for a final decision under Rule 

3.12(b)(2), Respondents claim that their Amended Answer did not actually admit the 

 3 See Complaint Counsel’s Proposed Findings and Statement of Material Facts ¶¶ 33, 42, 50, 67 (relying solely on 

the Amended Answer to demonstrate that substantiation was absent).

4 See Complaint Counsel’s Opposition to Motion to Amend Answer and Cross Motion to Amend Complaint, Ex. 

CCX-A ¶¶ 6, 23.
9

Complaint’s paramount allegations – those that allege that Respondents made unsubstantiated 

health claims. See Opposition to Summary Disposition at 13-14. Respondents claim that the

Amended Answer did not admit these allegations because they were “included in the legal 

counts, not the allegations of fact, of the Complaint.” Id. at 13 (emphasis omitted). The 

suggestion that any text under the heading of “Count” is by definition “legal” and not factual is 

patently erroneous. Indeed, federal courts have specifically required counts to contain 

allegations of fact. See, e.g., Samuels v. WMC Mortg., LLC, No. 620CV1441ORL37LRH, 2021 

WL 3054836, at *2 (M.D. Fla. Feb. 2, 2021) (“[E]ach count must contain allegations showing 

the factual basis for that particular count.”); Menard v. Miami-Dade Cty., No. 19-21268-CIV, 

2019 WL 4247627, at *3 (S.D. Fla. Sept. 6, 2019) (Count must include “specific factual

allegations to support the particular claim asserted in that count”); George Shapiro v. Suga, No. 

CV164068ESMAH, 2016 WL 3951379, at *2 (D.N.J. July 21, 2016) (“[A] properly pleaded 

complaint must contain, under each count . . . the specific factual allegations that would permit 

the court to draw the reasonable inference that the identified defendant or defendants are liable 

for that cause of action.”); Swift v. Pandey, No. CIV.A. 13-649 JLL, 2013 WL 3336768, at *3 

(D.N.J. July 2, 2013) (“Although there may be circumstances in which it is appropriate to 

incorporate certain allegations by reference, there is no question that each count of a properly 

pled complaint must contain: (a) its own cause of action against a clearly identified defendant(s), 

and (b) those particular factual allegations that would allow the court to draw the reasonable 

inference that the defendant is liable for that cause of action.”). Thus, the sole explanation now 

offered in limiting the reach of Respondents’ admissions is unsustainable. 

In light of Respondents’ repeated misrepresentations regarding their positions and 

intentions, the ALJ should consider on remand whether Respondents’ counsel should be 

suspended or barred from participating in this proceeding under Commission Rule 3.42(d), 16 

C.F.R. § 3.42(d), for dilatory and obstructionist conduct. 

Before remanding the case, however, we will address Complaint Counsel’s request to 

amend the Complaint. See Complaint Counsel’s Response to Respondents’ September 10, 2021 

Submission at 20. Complaint Counsel previously moved the ALJ to amend the Complaint to add 

factual allegations, but the ALJ, despite finding that the amendments sought did not add new 

legal theories or allege new or different violations of the FTC Act, denied the motion and the

request for certification for interlocutory appeal in reliance on Respondents’ admissions and 

invocation of Rule 3.12(b)(2). Since Respondents contest factual allegations in the Complaint, 

however, Rule 3.12(b)(2) is inapplicable. Moreover, Respondents have argued that the

Complaint does not provide sufficient notice of the relief sought. Accordingly, we will provide 

an opportunity for Complaint Counsel to move to amend the Complaint, including the Notice of 

Contemplated Relief.

5

Accordingly, 

IT IS HEREBY ORDERED that Complaint Counsel may file with the Commission a 

motion to amend the Complaint by no later than December 1, 2021; and

 5 We note, however, that the appropriate remedy is determined by the unlawful practices actually found to exist, not 

by the allegations of the complaint. Zale Corp., 77 F.T.C. 1635, 1636 (1970).
10

IT IS FURTHER ORDERED that, within ten days after service of a motion filed 

pursuant to the preceding ordering paragraph, Respondents may file a response to the motion.

By the Commission.

April J. Tabor

Secretary

SEAL:

ISSUED: November 19, 2021