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Case 1:19-cv-01620-AT Document 1-5 Filed 04/10/19 Page 1 of 20

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

UNITED STATES OF AMERICA,

Plaintiff,

v.

iSPRING WATER SYSTEMS, LLC,

a limited liability company,

ZHUANGYONG CHEN, a/k/a John Chen,

individually and as an officer of 

iSPRING WATER SYSTEMS, LLC,

and

PEARL CAI, a/k/a Yunzhu Cai, 

individually and as an officer of 

iSPRING WATER SYSTEMS, LLC,

Defendants. 

Case No. ____________

[Proposed] STIPULATED 

ORDER FOR CIVIL 

PENALITIES, PERMANENT 

INJUNCTION, AND OTHER 

RELIEF 

Plaintiff, the United States of America, acting upon notification and on 

behalf of the Federal Trade Commission (“Commission” or “FTC”), filed its 

Complaint for Civil Penalties, Permanent Injunction, and Other Equitable Relief, 

(“Complaint”), pursuant to Sections 5(l) and 16(a)(1) of the Federal Trade 
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Commission Act (“FTC Act”), 15 U.S.C. §§ 45(l) and 56(a)(1). Defendants have

waived service of the summons and the Complaint. Plaintiff and Defendants 

stipulate to the entry of this Stipulated Order for Permanent Injunction and Civil 

Penalty Judgment (“Order”) to resolve all matters in dispute in this action between 

them.

THEREFORE, IT IS ORDERED as follows:

FINDINGS

1. This Court has jurisdiction over this matter.

2. In its Complaint, Plaintiff charges that Defendants violated the FTC 

Decision and Order in FTC Docket No. C-4611 in connection with the promotion 

and offering for sale of imported water filtration systems and parts as of U.S.-

origin. 

3. Defendants admit the allegations in the Complaint are true. 

4. Defendants waive any claim that they may have under the Equal Access to 

Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action through 

the date of this Order, and agree to bear their own costs and attorney fees.

5. Defendants and the Plaintiff waive all rights to appeal or otherwise challenge 

or contest the validity of this Order.

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DEFINITIONS

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

A. “Clear(ly) and conspicuous(ly)” means that a required disclosure is 

difficult to miss (i.e., easily noticeable) and easily understandable by ordinary 

consumers, including in all of the following ways:

1. In any communication that is solely visual or solely audible, the 

disclosure must be made through the same means through which the 

communication is presented. In any communication made through both 

visual and audible means, such as a television advertisement, the disclosure 

must be presented simultaneously in both the visual and audible portions of 

the communication even if the representation requiring the disclosure is 

made in only one means.

2. A visual disclosure, by its size, contrast, location, the length of time it 

appears, and other characteristics, must stand out from any accompanying 

text or other visual elements so that it is easily noticed, read, and understood.

3. An audible disclosure, including by telephone or streaming video, 

must be delivered in a volume, speed, and cadence sufficient for ordinary 

consumers to easily hear and understand it.

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4. In any communication using an interactive electronic medium, such as 

the Internet or software, the disclosure must be unavoidable.

5. On a product label, the disclosure must be presented on the principal 

display panel.

6. The disclosure must use diction and syntax understandable to ordinary 

consumers and must appear in each language in which the representation 

that requires the disclosure appears.

7. The disclosure must comply with these requirements in each medium 

through which it is received, including all electronic devices and face-to-face 

communications.

8. The disclosure must not be contradicted or mitigated by, or 

inconsistent with, anything else in the communication.

9. When the representation or sales practice targets a specific audience, 

such as children, the elderly, or the terminally ill, “ordinary consumers” 

includes reasonable members of that group.

B. “Defendants” means all of the Individual Defendants and the Corporate 

Defendant, individually, collectively, or in any combination.

1. “Corporate Defendant” means iSpring Water Systems, LLC, also 

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doing business as 123filter.com, and its successors and assigns.

2. “Individual Defendants” means Zhuangyong Chen, a/k/a John Chen, 

and Pearl Cai, a/k/a Yunzhu Cai. 

C. “Made in the United States” means any representation, express or implied, 

that a product or service, or a specified component thereof, is of U.S.-origin, 

including, but not limited to, a representation that such product or service is 

“made,” “manufactured,” “built,” “produced,” or “crafted” in the United States or 

in America, or any other U.S.-origin claim.

ORDER

I.

PROHIBITION AGAINST MISREPRESENTATIONS REGARDING U.S. 

ORIGIN CLAIMS

IT IS ORDERED that Defendants, Defendants’ officers, agents, employees, 

and attorneys, and all other persons in active concert or participation with any of 

them, who receive actual notice of this Order, whether acting directly or indirectly, 

in connection with promoting or offering for sale any water filtration system or 

associated parts or accessories, or any other product or service, must not make any 

representation, expressly or by implication, that a product or service is Made in the 

United States unless:

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A. The final assembly or processing of the product occurs in the United States, 

all significant processing that goes into the product occurs in the United States, and 

all or virtually all ingredients or components of the product are made and sourced 

in the United States; or 

B. A Clear and Conspicuous qualification appears immediately adjacent to the 

representation that accurately conveys the extent to which the product contains 

foreign parts, ingredients or components, and/or processing; or

C. For a claim that a product is assembled in the United States, the product is 

last substantially transformed in the United States, the product’s principal assembly 

takes place in the United States, and United States assembly operations are 

substantial.

II.

PROHIBITION AGAINST DECEPTIVE CLAIMS, INCLUDING FALSE 

AND/OR UNSUBSTANTIATED CLAIMS

IT IS FURTHER ORDERED that Defendants, Defendants’ officers, 

agents, employees, and attorneys, and all other persons in active concert or 

participation with any of them, who receive actual notice of this Order, whether 

acting directly or indirectly, in connection with promoting or offering for sale any 

product or service, are permanently restrained and enjoined from making any 

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representation, expressly or by implication, about the country of origin of any 

product or service unless the representation is non-misleading, and, at the time 

such representation is made, Defendants possess and rely upon a reasonable basis 

for the representation.

III.

 MONETARY JUDGMENT FOR CIVIL PENALTY

IT IS FURTHER ORDERED that: 

A. Judgment in the amount of One Hundred Ten Thousand Dollars ($110,000) 

is entered in favor of Plaintiff against Defendants, jointly and severally, as a civil 

penalty.

B. Defendants are ordered to pay to Plaintiff, by making payment to the 

Treasurer of the United States, One Hundred Ten Thousand Dollars ($110,000). 

Such payment must be made within 7 days of entry of this Order by electronic fund 

transfer in accordance with instructions previously provided by a representative of 

Plaintiff.

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IV. 

ADDITIONAL MONETARY PROVISIONS

IT IS FURTHER ORDERED that: 

A. Defendants relinquish dominion and all legal and equitable right, title, and 

interest in all assets transferred pursuant to this Order and may not seek the return 

of any assets.

B. The facts alleged in the Complaint will be taken as true, without further 

proof, in any subsequent civil litigation by or on behalf of the Commission, 

including in a proceeding to enforce its rights to any payment or monetary 

judgment pursuant to this Order. 

C. Defendants agree that the judgment represents a civil penalty owed to the 

government of the United States, is not compensation for actual pecuniary loss, 

and, therefore, as to the Individual Defendants, it is not subject to discharge under 

the Bankruptcy Code pursuant to 11 U.S.C. § 523(a)(7).

D. Corporate Defendant acknowledges that its Taxpayer Identification Number 

(Employer Identification Number), which Corporate Defendant must submit to the 

Commission, may be used for collecting and reporting on any delinquent amount 

arising out of this Order, in accordance with 31 U.S.C. §7701.

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V.

NOTICE TO CONSUMERS

IT IS FURTHER ORDERED that, within 30 days of entry of this Order,

Defendants must notify customers as follows: 

A. Defendants must identify all consumers who purchased iSpring products on 

or after March 10, 2018 and through July 15, 2018 (“eligible customers”). Such 

eligible customers, and their contact information, must be identified to the extent 

such information is in Defendants’ possession, custody or control, including from 

third parties such as resellers.

B. Defendants must notify all identified eligible customers by mailing or 

emailing each a notice. The letter or email must be in the form shown in 

Attachment A. 

C. Defendants must report on their notification program under penalty of 

perjury: 

1. Defendants must submit a report within 37 days of entry of this Order

summarizing their compliance to date.

2. If a representative of the Commission requests any information 

regarding the program, including any of the underlying customer data, 

Defendants must submit it within 10 days of the request.

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3. Failure to provide required notices or any requested information will 

be treated as a continuing failure to obey this Order.

VI. 

ORDER ACKNOWLEDGMENTS

IT IS FURTHER ORDERED that Defendants obtain acknowledgments of 

receipt of this Order:

A. Each Defendant, within 7 days of entry of this Order, must submit to the 

Commission an acknowledgment of receipt of this Order sworn under penalty of 

perjury. 

B. For 5 years after entry of this Order, each Individual Defendant for any 

business that such Defendant, individually or collectively with any other 

Defendants, is the majority owner or controls directly or indirectly, and the 

Corporate Defendant, must deliver a copy of this Order to: (1) all principals, 

officers, directors, and LLC managers and members; (2) all employees having 

managerial responsibilities for conduct related to the subject matter of the Order

and all agents and representatives who participate in conduct related to the subject 

matter of the Order; and (3) any business entity resulting from any change in 

structure as set forth in the Section titled Compliance Reporting. Delivery must 

occur within 7 days of entry of this Order for current personnel. For all others, 

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delivery must occur before they assume their responsibilities.

C. From each individual or entity to which a Defendant delivered a copy of this 

Order, that Defendant must obtain, within 30 days, a signed and dated 

acknowledgment of receipt of this Order.

VII.

COMPLIANCE REPORTING

IT IS FURTHER ORDERED that Defendants make timely submissions to 

the Commission:

A. One year after entry of this Order, each Defendant must submit a compliance 

report, sworn under penalty of perjury. 

1. Each Defendant must: (a) identify the primary physical, postal, and 

email address and telephone number, as designated points of contact, which 

representatives of the Commission and Plaintiff may use to communicate 

with Defendant; (b) identify all of that Defendant’s businesses by all of their 

names, telephone numbers, and physical, postal, email, and Internet 

addresses; (c) describe the activities of each business, including the goods 

and services offered, the means of advertising, marketing, and sales, and the

involvement of any other Defendant (which Individual Defendants must 

describe if they know or should know due to their own involvement); (d) 

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describe in detail whether and how that Defendant is in compliance with 

each Section of this Order; and (e) provide a copy of each Order 

Acknowledgment obtained pursuant to this Order, unless previously 

submitted to the Commission. 

2. Additionally, each Individual Defendant must: (a) identify all 

telephone numbers and all physical, postal, email and Internet addresses, 

including all residences; (b) identify all business activities, including any 

business for which such Defendant performs services whether as an 

employee or otherwise and any entity in which such Defendant has any 

ownership interest; and (c) describe in detail such Defendant’s involvement 

in each such business, including title, role, responsibilities, participation, 

authority, control, and any ownership.

B. For 20 years after entry of this Order, each Defendant must submit a 

compliance notice, sworn under penalty of perjury, within 14 days of any change 

in the following: 

1. Each Defendant must report any change in: (a) any designated point 

of contact; or (b) the structure of any Corporate Defendant or any entity that 

Defendant has any ownership interest in or controls directly or indirectly that 

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may affect compliance obligations arising under this Order, including: 

creation, merger, sale, or dissolution of the entity or any subsidiary, parent, 

or affiliate that engages in any acts or practices subject to this Order.

2. Additionally, each Individual Defendant must report any change in: 

(a) name, including aliases or fictitious name, or residence address; or (b) 

title or role in any business activity, including any business for which such 

Defendant performs services whether as an employee or otherwise and any 

entity in which such Defendant has any ownership interest, and identify the 

name, physical address, and any Internet address of the business or entity.

C. Each Defendant must submit to the Commission notice of the filing of any 

bankruptcy petition, insolvency proceeding, or similar proceeding by or against 

such Defendant within 14 days of its filing.

D. Any submission to the Commission required by this Order to be sworn under 

penalty of perjury must be true and accurate and comply with 28 U.S.C. § 1746, 

such as by concluding: “I declare under penalty of perjury under the laws of the 

United States of America that the foregoing is true and correct. Executed on: 

_____” and supplying the date, signatory’s full name, title (if applicable), and 

signature.

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E. Unless otherwise directed by a Commission representative in writing, all 

submissions to the Commission pursuant to this Order must be emailed to 

DEbrief@ftc.gov or sent by overnight courier (not the U.S. Postal Service) to: 

Associate Director for Enforcement, Bureau of Consumer Protection, Federal 

Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. 

The subject line must begin: United States v. iSpring Water Systems, LLC. 

VIII.

RECORDKEEPING

IT IS FURTHER ORDERED that Defendants must create certain records for 

20 years after entry of the Order, and retain each such record for 5 years. 

Specifically, Corporate Defendant and each Individual Defendant for any business 

that such Defendant, individually or collectively with any other Defendants, is a 

majority owner or controls directly or indirectly, must create and retain the 

following records:

A. Accounting records showing the revenues from all goods or services sold;

B. Personnel records showing, for each person providing services, whether as 

an employee or otherwise, that person’s: name; addresses; telephone numbers; 

job title or position; dates of service; and (if applicable) the reason for termination;

C. Records of all consumer complaints and refund requests, whether received 

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directly or indirectly, such as through a third party, and any response;

D. All records necessary to demonstrate full compliance with each provision of 

this Order, including all submissions to the Commission; and

E. A copy of each unique advertisement or other marketing material making a 

representation subject to this Order. 

IX. 

COMPLIANCE MONITORING

IT IS FURTHER ORDERED that, for the purpose of monitoring 

Defendants’ compliance with this Order and any failure to transfer any assets as 

required by this Order:

A. Within 14 days of receipt of a written request from a representative of the 

Commission or Plaintiff, each Defendant must: submit additional compliance 

reports or other requested information, which must be sworn under penalty of 

perjury; appear for depositions; and produce documents for inspection and 

copying. The Commission and Plaintiff are also authorized to obtain discovery, 

without further leave of court, using any of the procedures prescribed by Federal 

Rules of Civil Procedure 29, 30 (including telephonic depositions), 31, 33, 34, 36, 

45, and 69.

B. For matters concerning this Order, the Commission and Plaintiff are 

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authorized to communicate directly with each Defendant. Defendant must permit 

representatives of the Commission and Plaintiff to interview any employee or other 

person affiliated with any Defendant who has agreed to such an interview. The

person interviewed may have counsel present.

C. The Commission and Plaintiff may use all other lawful means, including 

posing, through its representatives as consumers, suppliers, or other individuals or 

entities, to Defendants or any individual or entity affiliated with Defendants, 

without the necessity of identification or prior notice. Nothing in this Order limits 

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.

X. 

RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that this Court retains jurisdiction of this 

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

SO ORDERED this day of , 2019. 

_______________________________ 

UNITED STATES DISTRICT JUDGE

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SO STIPULATED AND AGREED:

FOR PLAINTIFF THE UNITED 

STATES OF AMERICA:

JOSEPH H. HUNT

Assistant Attorney General

Civil Division

JAMES M. BURNHAM

Deputy Assistant Attorney General

GUSTAV W. EYLER

Acting Director

/s/ Kendrack D. Lewis

KENDRACK D. LEWIS

Trial Attorney

Consumer Protection Branch

U.S. Department of Justice

P.O. Box 386

Washington, DC 20044

Tel: 202-353-3881

Email: kendrack.lewis@usdoj.gov

LOCAL COUNSEL:

BYUNG J. PAK

United States Attorney

 

AKASH DESAI

Assistant U.S. Attorney

Georgia Bar No. 338124

600 U.S. Courthouse 

75 Ted Turner Drive SW

Atlanta, Georgia 30303

Telephone: 404-581-6364

Facsimile: 404-581-6181

 

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FOR THE FEDERAL TRADE COMMISSION:

JAMES A. KOHM

Associate Director for Enforcement

LAURA KOSS

Assistant Director for Enforcement

/s/ Julia S. Ensor

JULIA SOLOMON ENSOR

Attorney

Federal Trade Commission

Division of Enforcement

600 Pennsylvania Ave. NW

Mail Stop CC-9528

Washington, DC 20580

Tel: 202-326-2377

Fax: 202-326-3197

Email: jensor@ftc.gov

Case 1:19-cv-01620-AT Document 1-5 Filed 04/10/19 Page 18 of 20
FOR DEFENDANTS iSPRING WATER SYSTEMS, LLC; ZHUANGYONG 

CHEN, A/KIA JOHN CHEN; AND PEARL CAI, A/KIA YUNZHU CAI: 

STEPHEN VAUGHN, ESQ. 

Morris, Manning & Martin, LLP 

1600 Atlanta Financial Center 

3343 Peachtree Road, NE 

Atlanta, GA 30326 

Tel: 404-364-7422 

Fax: 404-365-9532 

Email: svaughn@mmmlaw.com 

COUNSEL FOR iSPRING WATER SYSTEMS, LLC 

Date: '3 / 2, i, / "M\ '\.

ZHUANGYONG CHEN, JOHN CHEN 

INDIVIDUALLY 

A/KIA 

AND AS AN OFFICER OF 

iSPRING WATER SYSTEMS, LLC 

PEARL CAI, A YUNZHU CAI 

 19 

Date: 

INDIVIDUALLY 

A/Kl 

AND AS AN OFFICER OF 

iSPRING WATER SYSTEMS, LLC 

Date: ----

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ATTACHMENT A: NOTIFICATION LETTER OR EMAIL

The notification letter or email must be in the following form, from an authorized 

iSpring address or email address and containing an iSpring signature line with the 

sender’s full contact information:

Subject: iSpring Water Filtration System

Dear <Name of customer>:

Our records show that you bought a water filtration system from iSpring 

Water Systems, LLC. We are writing to tell you that the Federal Trade 

Commission, the nation’s consumer protection agency, has sued us for false 

advertising. According to the FTC, we made misleading claims that our water 

filtration systems were made in the United States. 

To settle the FTC’s lawsuit, we are contacting our customers to tell them 

that our water filtration systems are imported.

If you have questions about this lawsuit, visit https://www.ftc.gov/

enforcement/cases-proceedings/172-3033/ispring-water-systems. For more 

information about “Made in the United States” advertising, visit 

https://www.ftc.gov/tips-advice/business-center/advertising-and- marketing/madein-usa.

Sincerely,

Pearl Cai

[iSpring signature block]

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