UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

UNITED STATES OF AMERICA
Plaintiff

v.

ZORAN LADICORBIC LTD., a corporation
Defendant.

98 Civ. ( )

COMPLAINT

Plaintiff, the United States of America, by its attorney, Mary Jo White, United States Attorney for the Southern District of New York, acting upon notification and authorization to the Attorney General by the Federal Trade Commission ("Commission"), for its complaint alleges that:

1. Plaintiff brings this action under Sections 5(a)(1), 5(m)(1)(A), 9, 13(b) and 16(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 45(a)(1), 45(m)(1)(A), 49, 53(b) and 56(a), to obtain monetary civil penalties and injunctive and other relief for defendant's violations of the Commission's Trade Regulation Rule Concerning the Care Labeling of Textile Wearing Apparel ("Care Labeling Rule"), 16 C.F.R. Part 23, and injunctive relief for violations of the Textile Fiber Products Identification Act, as amended ("Textile Act"), 15 U.S.C. § 70, et seq., and the rules and regulations implementing the Textile Act, 16 C.F.R. Part 303; for violations of the Wool Products Labeling Act of 1939, as amended ("Wool Act"), 15 U.S.C. § 68, et seq., and the rules and regulations implementing the Wool Act, 16 C.F.R. Part 300; and for violations of Section 5(a)(1) of the FTC Act, 15 U.S.C. § 45(a)(1).

JURISDICTION AND VENUE

2. This Court has jurisdiction over this matter under

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

§§ 45(m)(1)(A), 49, 53(b) and 56(a). This action arises under 15 U.S.C. § 45(a)(1).

3. Venue is proper in the Southern District of New York under 15 U.S.C. § 53(b) and 28 U.S.C. §§ 1391(b)-(c) and 1395(a).

DEFENDANT

4. Defendant Zoran Ladicorbic Ltd. is a New York corporation with its office and principal place of business located within the Southern District of New York at 9 Jay Street, New York, New York 10007-1015. Zoran Ladicorbic Ltd. resides and transacts business in the Southern District of New York.

THE CARE LABELING RULE

5. The Care Labeling Rule, promulgated by the Commission on December 9, 1971, was amended by the Commission in 1983 under Section 18 of the FTC Act, 15 U.S.C. § 57a. The amended Rule became effective on January 2, 1984, and has since that date remained in full force and effect.

VIOLATIONS OF THE CARE LABELING RULE

6. At all times during which the acts or practices complained of herein occurred, defendant was engaged in the business of manufacturing textile wearing apparel (as "textile wearing apparel" is defined in Section 423.1 of the Care Labeling Rule, 16 C.F.R. § 423.1), importing textile wearing apparel, and offering for sale and selling such apparel throughout the United States, in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44.

7. In numerous instances in the five years preceding the date of the filing of this complaint, in connection with the sale of textile wearing apparel in or affecting commerce, defendant has failed to attach to such textile wearing apparel a permanent "care label" (as that term is defined in Section 423.1 of the Care Labeling Rule), in violation of Section 423.6(a) of the Care Labeling Rule.

THE TEXTILE ACT AND ITS RULES AND REGULATIONS

8. Section 3 of the Textile Act, 15 U.S.C. § 70a, provides that the misbranding of textile fiber products, and the importation, manufacturing for introduction, introduction, advertising, offering for sale, and sale of misbranded textile fiber products in commerce are unlawful and are unfair and deceptive acts or practices within the meaning of the FTC Act.

9. Section 7(c) of the Textile Act, 15 U.S.C. § 70e, authorizes the Commission to make such rules and regulations as may be necessary and proper for the administration and enforcement of the Textile Act.

10. On June 2, 1959, and at various times since that date, the Commission promulgated rules and regulations that implement the Textile Act. The Textile Act rules cited in this complaint, at Paragraphs 12 and 13, were last amended on August 18, 1988, and have been in full force and effect since that date.

VIOLATIONS OF THE TEXTILE ACT AND ITS RULES AND REGULATIONS

11. At all times during which the acts or practices complained of herein occurred, defendant has engaged in the importation, introduction, delivery for introduction, manufacture for introduction, offering for sale, and sale in commerce, of textile fiber products as "commerce" and "textile fiber product" are defined in Section 2 of the Textile Act, 15 U.S.C. § 70.

12. In numerous instances in the five years preceding the date of the filing of this complaint, in connection with the offering for sale and sale of textile fiber products in or affecting commerce, defendant has violated the Textile Act and its rules and regulations by offering for sale and selling certain textile fiber products which were misbranded because it did not have affixed thereon or thereto, a stamp, tag, label, or other means of identification showing the following:

a. the generic name and percentage by weight of the constituent fibers present in the product, as required by Section 4(b)(1) of the Textile Act, 15 U.S.C. § 70b(b)(1), and Rules 2(a), 15(a)-(b), and 16(a)(1) of the Textile Rules, 16 C.F.R. §§ 303.2(a), 303.15(a)-(b), and 303.16(a)(1); and

b. the name of the country where the product was manufactured, as required by Section 4(b)(4)-(5) of the Textile Act, 15 U.S.C. §§ 70b(b)(4)-(5), and Rules 2(a), 16(a)(3), and 33 of the Textile Rules, 16 C.F.R. §§ 303.2(a), 303.16(a)(3), and 303.33.

13. In numerous instances in the five years preceding the date of the filing of this complaint, in connection with the offering for sale and sale of textile fiber products in or affecting commerce, defendant has violated the Textile Act and its rules and regulations by offering for sale and selling certain textile fiber products which were misbranded because defendant failed, when the name of the constituent fiber present in the product was included on the labeling of such products in the Italian language, to also include such information in the English language, as required by Rule 4 of the Textile Rules, 16 C.F.R. § 303.4.

THE WOOL ACT AND ITS RULES AND REGULATIONS

14. Section 3 of the Wool Act, 15 U.S.C. § 68a, provides that the misbranding of wool products and the introduction into commerce, or the manufacture for introduction, distribution, offering for sale, and sale of misbranded wool products in commerce are unlawful and are unfair and deceptive acts or practices within the meaning of the FTC Act.

15. Section 6(a) of the Wool Act, 15 U.S.C. § 68d, authorizes the Commission to make such rules and regulations as may be necessary and proper for the administration and enforcement of the Wool Act.

16. On July 15, 1941, the Commission promulgated rules and regulations that implement the Wool Act. These Wool Act rules and regulations were last amended on August 18, 1988 and that amendment became effective September 19, 1988. The Wool Act rules and regulations have remained in full force and effect since that date.

VIOLATIONS OF THE WOOL ACT AND ITS RULES AND REGULATIONS

17. At all times during which the acts or practices complained of herein occurred, defendant has engaged in the introduction, manufacture for introduction, distribution, offering for sale, and sale in commerce, of wool products, as "commerce" and "wool product" are defined in Section 2 of the Wool Act, 15 U.S.C. § 68.

18. In numerous instances in the five years preceding the date of the filing of this complaint, in connection with the offering for sale and sale of wool products in or affecting commerce, defendant has violated the Wool Act and its rules and regulations by offering for sale and selling certain wool products which were misbranded because they did not have affixed thereon or thereto, a stamp, tag, label, or other means of identification showing the following:

a. the generic name and percentage by weight of the constituent fiber present in the product, as required by Sections 4(a)(2)(A) and (a)(4) of the Wool Act, 15 U.S.C. §§ 68b(a)(2)(A) and (a)(4), and Rules 3(a)(1) and 8 of the Wool Rules, 16 C.F.R. §§ 300.3(a)(1) and 300.8; and

b. the name of the country where the product was processed or manufactured, as required by Sections 4(a)(2)(D) of the Wool Act, 15 U.S.C. § 68b(a)(2)(D), and Rules 3(a)(4) and 25a of the Wool Rules, 16 C.F.R. §§ 300.3(a)(4) and 300.25a.

19. In numerous instances in the five years preceding the date of the filing of this complaint, in connection with the offering for sale and sale of wool products in or affecting commerce, defendant has violated the Wool Act and its rules and regulations by offering for sale and selling certain wool products which were misbranded because defendant failed, when the name of the constituent fiber present in the product was included on the labeling of such wool products in the Italian language, to also include such information in the English language, as required by Rule 7 of the Wool Rules, 16 C.F.R. § 300.7.

UNFAIR OR DECEPTIVE ACTS OR PRACTICES
IN VIOLATION OF THE FTC ACT

20. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), provides that "unfair or deceptive acts or practices in or affecting commerce are hereby declared unlawful."

21. Pursuant to Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), a violation of the Care Labeling Rule constitutes an unfair or deceptive act or practice in violation of Section 5(a)(1) of the FTC Act, 15 U.S.C. § 45(a)(1).

22. Pursuant to Section 3 of the Textile Act, 15 U.S.C. § 70a, a violation of the Textile Act and the rules and regulations promulgated thereunder constitutes an unfair act or practice in violation of Section 5(a)(1) of the FTC Act, 15 U.S.C. § 45(a)(1).

23. Pursuant to Section 3 of the Wool Act, 15 U.S.C. § 68a, a violation of the Wool Act and the rules and regulations promulgated thereunder constitutes an unfair act or practice in violation of Section 5(a)(1) of the FTC Act, 15 U.S.C. § 45(a)(1).

24. By engaging in the acts and practices described in Paragraphs 7, 12, 13, 18, and 19 above, defendant has violated the Care Labeling Rule, the Textile Act and Wool Act, the rules and regulations promulgated under those Acts, and Section 5(a)(1) of the FTC Act, 15 U.S.C. § 45(a)(1).

CIVIL PENALTIES AND INJUNCTION

25. Defendant has violated the Care Labeling Rule as described above with knowledge as set forth in Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. § 45(m)(1)(A).

26. Each sale or attempted sale, during the five years preceding the filing of this complaint, of a garment in which defendant has violated the Care Labeling Rule in the way described above constitutes a separate violation for which plaintiff seeks monetary civil penalties.

27. Section 5(m)(1)(A) of the FTC Act, 15 U.S.C.

§ 45(m)(1)(A), authorizes this Court to award monetary civil penalties of not more than $10,000 for each such violation of the Care Labeling Rule that occurs prior to November 20, 1996. Section 4 of the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. § 2461, as amended, authorizes this Court to award monetary civil penalties of not more than $11,000 for each violation of the Care Labeling Rule that occurs on or after November 20, 1996.

28. Under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), this Court is authorized to issue a permanent injunction against defendant's violation of the FTC Act, as well as such ancillary relief as may be just and proper.

PRAYER FOR RELIEF

WHEREFORE, plaintiff requests that this Court, pursuant to 15 U.S.C. §§ 45(a)(1), 45(m)(1)(A), 49, and 53(b) and the Court's own equity powers:

(1) Enter judgment against defendant and in favor of plaintiff for each violation alleged in this complaint;

(2) Award plaintiff monetary civil penalties from defendant for each violation of the Care Labeling Rule alleged in this complaint;

(3) Enjoin defendant from violating the Care Labeling Rule;

(4) Enjoin defendant from violating the Textile Act and the rules and regulations promulgated thereunder;

(5) Enjoin defendant from violating the Wool Act and the rules and regulations promulgated thereunder;

(6) Order defendant to retain adequate records of the care instructions on each item of textile wearing apparel sold by defendant, adequate records of the reasonable basis for each such care instruction, and other records relating to the adequacy of the care instructions, for a period of three years from the last date on which the item was shipped to a retail store, and also maintain records in accordance with Rule 39 of the Textile Rules, 16 C.F.R. § 303.39, and Rule 31 of the Wool Rules, 16 C.F.R. § 300.31; and

(7) Award plaintiff such additional relief as the Court may deem just and proper.

DATED: New York, New York
July ,  1998