In the Matter of 

UNITED STATES OF AMERICA 

FEDERAL TRADE COMMISSION 

OFFICE OF ADMINISTRATIVE LAW JUDGES 

ECM BioFilms, Inc., 

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DOCKET NO. 9358 

a corporation, also d/b/a 

Enviroplastics International, 

Respondent. 

ORDER GRANTING IN PART AND DENYING IN PART 

COMPLAINT COUNSEL'S MOTION FOR SANCTIONS 

On January 22, 2014, Complaint Counsel filed a Motion for Sanctions Based on 

Respondent's Refusal to Comply with the Court's January 10, 2014 Order ("Motion"). 

Respondent ECM BioFilms, Inc. ("Respondent" or "ECM") filed an opposition to the Motion on 

January 28,2014. As explained below, the Motion is GRANTED IN PART AND DENIED IN 

PART. 

I. 

The Complaint in this case charges that ECM engaged in deceptive trade practices in 

violation of Section 5 of the FTC Act by making false or unsubstantiated representations 

regarding the biodegradability of plastics treated with an additive manufactured by ECM ("ECM 

Additive"). The Complaint alleges, among other things, that Respondent distributes ECM 

Additives to its customers -- independent distributors and plastic products manufacturers 

(collectively, "customers") --located throughout the United States who, in turn, treat plastics 

with ECM Additives and thereafter advertise and sell the treated plastic products to end-users as 

biodegradable. Complaint~ 2. The Complaint further alleges that ECM's representations to its 

customers were passed on to plastics end-users, and therefore, ECM provided its customers with 

.the "means and instrumentalities" to deceive the end-users. Complaint~~ 4, 14, 15. Respondent 

defends against the charge, in part, by asserting that it sells to sophisticated customers who 

would not interpret Respondent's representations in the manner alleged in the Complaint. 

Answer~ 4. 

On January 10, 2014 an Order issued ("January 10 Order") granting Complaint Cotmsel's 

Motion to Compel Respondent to provide a complete customer list in response to Interrogatory 1 

of Complaint Counsel's First Set of Interrogatories to Respondent. That Interrogatory requested: 

Identity, by business name, individual contact, address, and telephone number, 

all customers who have purchased any ECM Additive, including customers who 

purchased any ECM Additive from distributors, in which case, also provide the 
name, address, and telephone number of the distributor from whom the customer 

purchased the ECM Additive. 

The January 10 Order also denied Respondent's Motion for a Protective Order, through 

which Respondent sought to avoid providing customer information requested by, among other 

discovery requests, Interrogatory 2 of Complaint Counsel's First Set of Interrogatories to 

Respondent. That Interrogatory requested: 

For each customer or distributor identified in Interrogatory 1, list ECM's 

revenue per customer or distributor per year. 

Based on the representations and supporting exhibits provided by the parties for the 

instant Motion, the record shows that on January 16, 2014, Respondent provided a list of its 

customers to Complaint Counsel, including the name of each customer, the customer's address 

and telephone number, and the names of the relevant contact persons for each customer. Motion 

CCX-A:1 (hereafter, "Customer List"). Further, on January 20, 2014, Respondent provided 

Complaint Counsel with an itemized listing of yearly revenues generated by individual customer 

numbers. Motion CCX-A:2 (hereafter, "Revenues List"). The Revenues List, however, does not 

identify revenue by customer name, and the Customer List does not contain customer numbers. 

Thus, there is no way to tie the revenues figures disclosed to particular identified customers. 

II. 

Complaint Counsel contends that Respondent violated the January 10 Order by failing to 

provide a list of revenues by customer name. Complaint Counsel argues that Respondent's 

Revenues List is useless because the revenues are tied only to a customer number, and 

Respondent has not provided any way of determining which customer number belongs to which 

customer identified on the Customer List. Complaint Counsel accuses Respondent of 

"gamesmanship" in providing a "useless" list, and requests an order sanctioning Respondent for 

what Complaint Counsel argues is a violation ofthe January 10 Order. Complaint Counsel's 

requested sanctions include: barring ECM from arguing that any sample of information taken 

from ECM' s customers is "unrepresentative"; barring ECM from making "any revenue-related 

argUD;lent" concerning potential remedies; and adjusting Complaint Cotmsel's deadline tmder the 

Scheduling Order for completing fact discovery, to compensate for the asserted delay in 

Respondent's compliance with the January 10 Order. Motion at 5. 

Respondent denies violating the January 10 Order. Respondent states that, although the 

Order denied Respondent's Motion for a Protective Order, including with respect to 

Interrogatory 2, Complaint Counsel did not request an order compelling Respondent to respond 

to that Interrogatory. Rather, Respondent notes, Complaint Counsel only requested an order 

compelling production of the Customer List, which Respondent has provided. Therefore, 

Respondent argues, because the January 10 Onl~::r uiu nul compel production of a list of revenues 

by customer name, there is no valid basis for imposing sanctions under Rule 3.38 for 

Respondent's failure to produce such a list. Respondent does not deny that the Revenues List 

fails to identify revenues by customer name, but contends that it is not obligated to create such a 

document for Complaint Counsel. Moreover, Respondent contends, under the January 10 Order, 

revenues are only relevant to damages and to "help identify customer-specific claims or the 

frequency of communication with customers." Opposition at 6. As to the latter purpose, 

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Respondent asserts, it has offered to produce a database of employee summaries of customer 

communications. 

Finally, Respondent argues that the sanctions requested by Complaint Counsel are 

inappropriate because Complaint Counsel has reneged on a promise to "identify any subset of 

customers ... that would lessen ECM' s burden" and because the requested sanctions are 

disproportionate to the discovery dispute presented. Opposition at 6. 

III. 

A. 

Rule 3.3 8(b ), upon which Complaint Counsel relies, provides: "If a party ... fails to 

comply with any discovery obligation imposed by these rules, upon motion by the aggrieved 

party, the Administrative Law Judge ... may take such action in regard thereto as is just, 

including but not limited to" an order striking a pleading; directing that a matter be admitted or 

subjected to an adverse inference; or prohibiting certain objections to evidence; among other 

sanctions. 16 C.F .R. § 3.3 8(b ). Contrary to the arguments of both parties, nothing in the 

language of Rule 3.38(b) requires, as a prerequisite to ordering relief, that a party violate a court 

order. Rather, as set forth above, it must be shown only that the party failed to comply "with any 

discovery obligation imposed by [the] rules." !d. 

Prior to 2009, Rule 3.3 8(b) read in pertinent part: "If a party or an officer or agent of a 

party fails to comply with ... an order including, but not limited to, an order for the taking of a 

deposition, the production of documents, or the answering of interrogatories, or requests for 

admissions, or an order of the Administrative Law Judge ... , the Administrative Law Judge ... 

may take such action in regard thereto as is just" including the sanctions described above. 

However, as part of the 2009 Rule revisions, the Commission revised Rule 3.38(b) to remove the 

requirement of showing violation ofajudicial order. Proposed Rule Amendments; Request for 

Public Comment, 73 Fed. Reg. 58832, 58839 (Oct. 7, 2008). Cases cited by the parties for the 

proposition that 3.3 8(b) sanctions cannot be imposed absent violation of a court order were 

decided under the former Rule 3.38(b) and do not govern the instant Motion. See, e.g., In re 

Polypore Jnt'l, Inc., No. 9327 (filed September 10, 2008), 2009 FTC LEXIS 92, at *5-6 (May 1, 

2009 ). 1 Accordingly, based on applicable law, whether or not the January 10 Order 

affirmatively directed Respondent to answer Complaint Counsel's Interrogatory 2 by disclosing 

revenues for each customer identified on the Customer List is not determinative. Rather, the 

issue is whether Respondent has failed to comply with a "discovery obligation" to answer 

Interrogatory 2. 

Rule 3.35(a)(2), regarding interrogatories to parties, states in pertinent part: "Each 

interrogatory shall be answered separately nnd fully in writing um.lc.:r oath, unless il is objected to 

... in which event the reasons for objection shall be stated in lieu of an answer. . . . The party 

upon whom the interrogatories have been served shall serve a copy of the answers, and 

objections, if any, within 30 days after the service of the interrogatories." 16 C.F.R. § 3.35(a)(2). 

1 Respondent cites In re OSF Healthcare Systems, 2012 WL 665030 (Feb. 22, 2012); however, the cited document is 

the brief of a party, not an order of an Administrative Law Judge or of the Commission, and therefore does not 

constitute legal authority. 

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Respondent objected to Interrogatory 2, and, by filing its Motion for Protective Order, 

Respondent sought to avoid providing information in response Interrogatory 2. Although 

Respondent argued that revenue information for each customer was confidential and not 

relevant, the January 10 Order rejected those arguments as without merit. The Order stated: 

"Respondent has failed to meet its burden of demonstrating that the requested discovery should 

be barred as not relevant [and] ... confidentiality ... is no bar to disclosing" the requested 

revenue information. January 10 Order at 7. The Order concluded that "Respondent has failed 

to demonstrate that ECM's revenues by customer should not be disclosed in discovery." January 

10 Order at 8. Thus, while the January 10 Order did not specifically order Respondent to answer 

Interrogatory 2, the Order clearly determined that Respondent is obligated to answer 

Interrogatory 2, by holding that the information sought by the Interrogatory was properly within 

the scope of discovery and by denying the requested protective order. Respondent's attempt in 

its Opposition to the instant Motion to "relitigate" the discoverability of customer-related 

revenue information is rejected. 

B. 

Having concluded that Respondent had an obligation under the discovery rules to answer 

Interrogatory 2, the issue becomes whether Respondent has failed to comply with that obligation. 

It appears from the record presented on the Motion that, rather than answering Interrogatory 2 in 

a narrative format, Respondent opted instead to produce a document that reports ECM's 

revenues by customer number only. See Motion CCX-A:2. Rule 3.35(c) permits substitution of 

documents as response to an interrogatory, as follows: 

(c) Option to produce records. Where the answer to an interrogatory may be 

derived or ascertained from the records of the party upon whom the interrogatory 

has been served or from an examination, audit, or inspection of such records, or 

from a compilation, abstract, or summary based thereon, and the burden of 

deriving or ascertaining the answer is substantially the same for the party serving 

the interrogatory as for the party served, it is a sufficient answer to such 

interrogatory to specify the records from which the answer may be derived or 

ascertained and to afford to the party serving the interrogatory reasonable 

opportunity to examine, audit or inspect such records and to make copies, 

compilations, abstracts or summaries. The specification shall include sufficient 

detail to permit the interrogating party to identify readily the individual 

documents from which the answer may be ascertained 

16 C.F.R. § 3.35(c) (emphasis added). 

The document provided by Respondent does not sufficiently answer Interrogatory 2. 

Interrogatory 2 clearly directs Respondent to set forth, for each customer identified on its 

Customer List, the yearly revenues generated per customer per year. Respondent does not deny 

that the Revenues List provided to Complaint Counsel identifies customers only hy numher, hut 

contends that "a document that supplies information tying each revenue generated to a named 

customer" does not exist and that it is not "obliged to create such a document." Opposition at 5. 

Pursuant to Rule 3.35(a)(2), Respondent is required to answer Interrogatory 2 fully. If a 

party chooses to provide documents in lieu of a narrative answer, as Respondent chose here, such 

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response is sufficient only where the answer "may be derived or ascertained from" the 

documents provided. 16 C.P.R.§ 3.35(c). In the instant case, it is not possible to derive the 

customer name from the Revenues List, and the Customer List provided does not identify 

customers by number. Thus, neither the Revenues List alone, nor the Revenues List in 

combination with the Customer List, is sufficient to derive the "revenue per customer ... per 

year" "[f]or each customer ... identified" on the Customer List, as requested in Interrogatory 2. 

Respondent's assertion that it need not create a responsive document for Complaint Counsel is a 

"red herring" that fails to address the issue. Respondent is not required to produce any 

documents to respond to an Interrogatory; however, if Respondent chooses to do so, the 

documents must be sufficient to answer the Interrogatory. Because here the Revenues List fails 

to meet this requirement, Respondent remains obligated to answer Interrogatory 2. 

c. 

Complaint Counsel has demonstrated that Respondent failed to fulfill its obligation to 

answer fully Complaint Counsel's Interrogatory 2. To this extent, Complaint Counsel's Motion 

is GRANTED. It does not follow, however, that Complaint Counsel's requested sanctions must 

be entered. Rather, Rule 3.38(b) grants the Administrative Law Judge the discretion to take 

whatever action in regard Respondent's failure "as is just ... " 16 C.F .R. § 3.3 8(b ). The Motion 

fails to demonstrate that Complaint Counsel's requested sanctions, at this stage of the 

proceedings, would be just. To this extent, Complaint Counsel's Motion is DENIED. Based on 

the present record, a just order requires Respondent to promptly remedy its failure to fully 

answer Interrogatory 2, as detailed below. 

IV. 

For all the foregoing reasons, Complaint Counsel's Motion is GRANTED IN PART and 

it is hereby ORDERED that Respondent shall provide a complete answer to Complaint 

Counsel's Interrogatory 2 no later than February 10, 2014, including without limitation, yearly 

revenues tied to customer names. If Respondent opts to produce records, the production must 

comply fully with Rule 3.35(c) so as to answer Interrogatory 2 fully, including without 

limitation, providing yearly revenues tied to customer names. Complaint Counsel's Motion is 

otherwise DENIED. 

ORDERED: 

Date: February 4, 2014 

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