UNITED STATES DISTRICT COURT
Plaintiffs, the Federal Trade Commission ("FTC" or "Commission"), the State of Florida, the State of Georgia, the Commonwealth of Kentucky, the State of Maryland, the State of New Jersey, the State of North Carolina, the State of Texas, and the Commonwealth of Virginia, by their undersigned attorneys, allege: 1. The FTC brings this action under Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), to secure a permanent injunction, preliminary relief and other equitable relief against defendant for its unfair or deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). 2. The State of Florida, Department of Legal Affairs, Office of Attorney General, brings this action, under the Florida Deceptive and Unfair Trade Practices Act, Chapter 501, Part II, Fla. Stat. (1997), to obtain injunctive and other statutory relief. 3. The State of Georgia, ex rel. Barry W. Reid, Administrator of the Fair Business Practices Act of 1975, by and through its attorney, Thurbert E. Baker, Attorney General, brings this action, under the Georgia Fair Business Practices Act of 1975, Official Code of Georgia Annotated (O.C.G.A.) §§ 10-1-390 et seq., to obtain injunctive relief, civil penalities, consumer restitution, and other relief as the court deems just and equitable. 4. The Commonwealth of Kentucky, Office of Attorney General, brings this action, under the Kentucky Consumer Protection Act, KRS 367.110 et seq., to secure a permanent injunction, preliminary relief and other equitable relief, and civil penalties, against defendant for its unfair or deceptive acts or practices in violation of K.R.S. 367.170. 5. The State of Maryland, Office of Attorney General, brings this action, under the Maryland Consumer Protection Act, Md. Code Ann., Com. Law II §§ 13-301 et seq., to secure a permanent injunction, preliminary relief and other equitable relief, and civil penalties, against defendant for its unfair or deceptive acts or practices in violation of Md. Code Ann., Com. Law II § 13-303. 6. The State of New Jersey, by its Attorney General, brings this action, under the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq., to secure a preliminary and permanent injunction, other equitable relief, civil penalties, costs, and attorneys' fees, against defendant and/or its subsidiaries, affiliates, or other associated companies or corporations, for its or their unfair or deceptive acts or practices in violation of N.J.S.A. 56:8-2. 7. The State of North Carolina, Office of Attorney General, brings this action, under the North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. §§ 75-1.1 et seq., to secure a permanent injunction, preliminary relief and other equitable relief, civil penalties, and attorneys' fees, against defendant for its unfair or deceptive acts or practices in violation of N.C. Gen. Stat. § 75-1.1. 8. The State of Texas, Office of Attorney General, brings this action, under the Texas Deceptive Trade Practices-Consumer Protection Act, Texas Business & Commerce Code §§ 17.41 et seq. ("Deceptive Trade Practices Act" or "DTPA"), to secure a permanent injunction, preliminary relief and other equitable relief, civil penalties, and attorneys' fees, against defendant for its unfair or deceptive acts or practices in violation of §§ 17.46(a) and (b) of the DTPA. This suit is brought by Attorney General Dan Morales, through his Consumer Protection Division, in the public interest under the authority granted him by § 17.47 of the DTPA. 9. The Commonwealth of Virginia, Office of Attorney General, brings this action, under the Virginia Consumer Protection Act, Va. Code Ann. §§ 59.1-196 et seq., to secure a permanent injunction, preliminary relief and other equitable relief, civil penalties and reimbursement of its costs, expenses and attorney's fees, against defendant for its deceptive acts and practices in violation of Va. Code § 59.1-200. JURISDICTION AND VENUE 10. This Court has subject matter jurisdiction over the FTC's claims pursuant to 15 U.S.C. §§ 45(a) and 53(b) and 28 U.S.C. §§ 1331, 1337(a) and 1345, and over the claims of the States of Florida, Georgia, Kentucky, Maryland, New Jersey, North Carolina, Texas, and Virginia, pursuant to 28 U.S.C. § 1367. 11. Venue in the District of Maryland is proper under 15 U.S.C. § 53(b) and 28 U.S.C. § 1391(b) and (c). THE PARTIES 12. Plaintiff, the FTC, is an independent agency of the United States government created by statute, 15 U.S.C. §§ 41 et seq. The Commission enforces Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The Commission may initiate federal district court proceedings to enjoin violations of the FTC Act and to secure such equitable relief as is appropriate in each case. 15 U.S.C. § 53(b). 13. Plaintiff State of Florida is one of the fifty sovereign states of the United States. Robert A. Butterworth is the duly elected and qualified Attorney General acting for plaintiff State of Florida, and brings this action in his official capacity under the Florida Deceptive and Unfair Practices Act. This Court has supplemental jurisdiction over plaintiff Florida's claim under 28 U.S.C. § 1367. 14. Plaintiff State of Georgia is one of the fifty sovereign states of the United States. Barry W. Reid is the Administrator of the Fair Business Practices Act of 1975 ("FBPA"), duly appointed to that position pursuant to the provisions of O.C.G.A. § 10-1-395, who is authorized by that Act to seek the relief requested in this Complaint. Thurbert E. Baker is the duly qualified and acting Attorney General of the State of Georgia and brings this action in his official capacity pursuant to O.C.G.A. § 45-15-3(6), on behalf of the State of Georgia, ex rel. Barry W. Reid, Administrator of the FBPA. This Court has supplemental jurisdiction over plaintiff Georgia's claim under 28 U.S.C. § 1367. 15. Plaintiff Commonwealth of Kentucky is one of the fifty sovereign states of the United States. Albert B. Chandler III is the duly elected and qualified Attorney General acting for plaintiff Commonwealth of Kentucky, and brings this action under the Kentucky Consumer Protection Act. This Court has supplemental jurisdiction over plaintiff Kentucky's claim under 28 U.S.C. § 1367. 16. Plaintiff State of Maryland is one of the fifty sovereign states of the United States. J. Joseph Curran, Jr. is the duly elected and qualified Attorney General acting for plaintiff State of Maryland, and brings this action under the Maryland Consumer Protection Act. This Court has supplemental jurisdiction over plaintiff Maryland's claim under 28 U.S.C. § 1367. 17. Plaintiff State of New Jersey is one of the fifty sovereign states of the United States. Peter Verniero is the duly appointed and qualified Attorney General acting for plaintiff State of New Jersey, and brings this action in his official capacity under the New Jersey Consumer Fraud Act. This Court has supplemental jurisdiction over plaintiff New Jersey's claim under 28 U.S.C. § 1367. 18. Plaintiff State of North Carolina is one of the fifty sovereign states of the United States. Michael F. Easley is the duly elected and qualified Attorney General acting for plaintiff State of North Carolina, and brings this action under the North Carolina Unfair and Deceptive Trade Practices Act. This Court has supplemental jurisdiction over plaintiff North Carolina's claim under 28 U.S.C. § 1367. 19. Plaintiff State of Texas is one of the fifty sovereign states of the United States. Dan Morales is the duly elected and qualified Attorney General acting for plaintiff State of Texas, and brings this action by and through his Consumer Protection Division in his official capacity under the Texas Deceptive Trade Practices Act. This Court has supplemental jurisdiction over plaintiff Texas' claim under 28 U.S.C. § 1367. 20. Plaintiff Commonwealth of Virginia is one of the fifty sovereign states of the United States. Mark L. Earley is the duly elected and qualified Attorney General acting for plaintiff Commonwealth of Virginia, and brings this action in his official capacity under the Virginia Consumer Protection Act. This Court has supplemental jurisdiction over Virginia's claim under 28 U.S.C. § 1367. 21. Defendant United Industries Corporation ("United") is a corporation, incorporated in the state of Delaware, whose principal office is located at 8825 Page Avenue, St. Louis, Missouri 63114. United transacts or has transacted business in this district and in each of the plaintiff states. COMMERCE 22. At all times material to this complaint, defendant's course of business, including the acts and practices alleged herein, has been and is in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. DEFENDANT'S BUSINESS PRACTICES 23. United is a manufacturer and distributor of lawn care products. Among the products that United distributes is a termite baiting system called Terminate. Terminate is sold through national home improvement stores such as Home Depot, WalMart and Lowe's, and through regional chains such as Scotty's. United has disseminated or has caused to be disseminated advertisements and promotional materials for Terminate in newspapers and magazines, on television and through point-of-sale materials. These advertisements and promotional materials include, among others, the following statements and depictions:
POINT-OF-SALE BROCHURES
A NEW WAY TO KILL TERMITES
24. Through the statements and depictions set forth in Paragraph 23, the use of the name Terminate, and other statements and depictions of similar import and meaning, defendant has represented, expressly or by implication, that:
25. Defendant did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraph 24, at the time the representations were made. Therefore, the making of the representations set forth in Paragraph 24 was, and is, a deceptive practice. 26. In its advertising and promotional material, defendant has represented, expressly or by implication, that use of Terminate requires only that users place bait stakes in the ground around their home and Terminate does the work. In fact, use of Terminate requires inspecting bait stakes every 2-3 months, or more frequently where termite infestation is heavy or suspected; adding additional stakes if termite activity exists; and replacing or removing all stakes every 9 months. Therefore, the making of the representation set forth in this Paragraph was, and is, a deceptive practice. 27. In its advertising and promotional material, defendant has represented, expressly or by implication, that Terminate is a do-it-yourself method of killing termites that damage homes. Defendant has failed to disclose in its advertisements and promotional material that bait stakes do not work against drywood termites, and that professional pest control services are recommended for homes with active infestations or in areas with drywood or Formosan termites. These facts would be material to consumers in their purchase or use of the product. The failure to disclose these facts, in light of the representation made, was, and is, a deceptive practice. COUNT I (By Plaintiff Federal Trade Commission) VIOLATIONS OF SECTION 5 OF THE FTC ACT 28. Defendant's act and practices, as alleged above, constitute deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). COUNT 2 (By Plaintiff State of Florida) VIOLATIONS OF FLORIDA LAW 29. Paragraphs 1 through 27 are incorporated herein by reference. 30. Plaintiff, State of Florida, Department of Legal Affairs, Office of the Attorney General, is the enforcing authority of Florida's Deceptive and Unfair Trade Practices Act, as defined in Chapter 501, Part II, Fla. Stat. (1997), and is authorized to seek injunctive and other statutory and civil relief pursuant to the provisions of this part. 31. The Office of the Attorney General has conducted an investigation and the Attorney General, Robert A. Butterworth, has determined that enforcement action serves the public interest. A copy of that determination is attached hereto as Exhibit "A". 32. Defendant, at all times material hereto, has engaged in "trade or commerce" by advertising, soliciting, offering or distributing a good or service, within the definition of Section 501.203(8), Fla. Stat. (1997). 33. Through the statements set forth in Paragraph 23 and other statements of similar import and meaning, defendant has represented, expressly or by implication that Terminate is warranted to prevent termite infestation, thereby fully protecting the user's home against termite damage, in most or all cases. 34. In truth and in fact, defendant's "guarantee" is not a guarantee of the efficacy of its product, but is rather a money-back-if-not-satisfied offer. Thus consumers who opt to purchase and utilize Terminate, rather than employ conventional termite protection or eradication methods, risk incurring termite infestation and damage in their homes. Upon seeking recourse from defendant, pursuant to its guarantee, such consumers (provided they make their claims within nine months from the time of purchase and comply with several other conditions set forth by defendant) may be eligible merely for a refund of the price of defendant's product. 35. Section 501.204(1), Fla. Stat. (1997), declares unfair methods of competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce unlawful. 36. Defendant's acts and practices, as alleged in Paragraphs 1 through 27 and Paragraphs 32 through 34, were false, misleading, deceptive and unfair and constitute unfair or deceptive acts or practices in the conduct of trade or commerce in violation of Section 501.204(1), Fla. Stat. (1997), and were and are to the injury and prejudice of members of the consuming public. 37. Defendant has actual knowledge, or knowledge fairly implied on the basis of objective circumstances, that its acts, as described above, were and are unfair and deceptive. COUNT 3 (By Plaintiff State of Georgia) VIOLATIONS OF GEORGIA LAW 38. Plaintiff State of Georgia, ex rel. Barry W. Reid, Administrator of the FBPA, incorporates herein by reference Paragraphs 1 through 27. 39. O.C.G.A. § 10-1-393(a) declares unfair or deceptive acts or practices in the conduct of consumer transactions and consumer acts or practices in trade or commerce to be unlawful. 40. Defendant has violated Georgia's Fair Business Practices Act of 1975, O.C.G.A. §§ 10-1-390 et seq., by engaging in unfair, false, misleading, and/or deceptive acts or practices as set out in Paragraphs 1 through 27 herein.COUNT 4 (By Plaintiff Commonwealth of Kentucky) VIOLATIONS OF KENTUCKY LAW 41. Plaintiff Commonwealth of Kentucky re-alleges Paragraphs 1 through 27 of this Complaint and incorporates them herein. 42. Defendant has violated the Kentucky Consumer Protection Act, K.R.S. 367.110 et seq., by engaging in unfair, false, misleading or deceptive acts or practices as set out in Paragraphs 1 through 27 herein. COUNT 5 (By Plaintiff State of Maryland) VIOLATIONS OF MARYLAND LAW 43. Plaintiff State of Maryland re-alleges Paragraphs 1 through 26 of this Complaint and incorporates them herein. 44. In its advertising and promotional material, defendant has represented, expressly or by implication, that Terminate is a do-it-yourself method of killing termites that damage homes. Defendant has failed to disclose in its advertisements and promotional material that professional pest control services are recommended for homes with active infestations. This fact would be material to consumers in their purchase or use of the product. The failure to disclose this fact, in light of the representation made, was, and is, a deceptive practice. 45. Defendant has violated the Maryland Consumer Protection Act, Md. Code Ann., Com. Law II § 13-303, by engaging in unfair or deceptive trade practices in the sale or offer for sale of consumer goods, as alleged in Paragraphs 1 through 26 and Paragraph 44 herein, including:
COUNT 6 (By Plaintiff State of New Jersey) VIOLATIONS OF NEW JERSEY LAW 46. Plaintiff State of New Jersey repeats and realleges Paragraphs 1 through 26 and Paragraphs 33, 34, and 44 and incorporates them herein by reference. 47. Defendant's advertisements and sales acts and practices, as alleged in Paragraphs 1 through 26 and Paragraphs 33, 34, and 44, violate § 2 of the New Jersey Consumer Fraud Act N.J.S.A. 56:8-2, which declares to be an unlawful practice the "act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing[] concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby . . . ."COUNT 7 (By Plaintiff State of North Carolina) VIOLATIONS OF NORTH CAROLINA LAW 48. Plaintiff State of North Carolina incorporates herein by reference Paragraphs 1 through 27. 49. North Carolina General Statute §75-1.1(a) declares unlawful all unfair and deceptive acts or practices in or affecting commerce. 50. Defendant's acts and practices as alleged in Paragraphs 1 through 27 were false, misleading, deceptive and unfair to homeowners in North Carolina, and therefore violate the North Carolina Unfair and Deceptive Trade Practices Act. 51. Defendant has actual knowledge, or knowledge fairly implied on the basis of objective circumstances, that its acts, as described above, were unfair and deceptive. COUNT 8 (By Plaintiff State of Texas) VIOLATIONS OF TEXAS LAW 52. The State of Texas re-alleges the preceding Paragraphs 1 through 27 of this Complaint, and incorporates them herein. 53. Plaintiff, State of Texas, further alleges that Defendant has violated the Texas Deceptive Trade Practices Act ("DTPA"), Texas Business & Commerce Code §§ 17.41 et seq., by engaging in false, misleading and deceptive acts and practices declared unlawful in § 17.46(a) and (b) of the DTPA. Such acts include:
COUNT 9 (By Plaintiff Commonwealth of Virginia) VIOLATIONS OF VIRGINIA LAW 54. Plaintiff Commonwealth of Virginia realleges and incorporates herein by reference Paragraphs 1 through 23, Paragraph 24 except for clause (a), and Paragraphs 25 and 27. 55. Prior to the commencement of this action, the Plaintiff gave the Defendant written notice that these proceedings were contemplated and a reasonable opportunity to appear before the Office of the Virginia Attorney General to demonstrate that no violations of the Virginia Consumer Protection Act had occurred, or to execute an Assurance of Voluntary Compliance pursuant to § 59.1-203 of the Virginia Consumer Protection Act. As of the time of this filing, Defendant has failed to adequately explain that no violations have occurred and has failed to execute an appropriate Assurance of Voluntary Compliance. 56. Defendant, at all times material hereto, has been engaged as a "supplier" of "goods" in connection with "consumer transactions," as those terms are defined in § 59.1-198 of the Virginia Consumer Protection Act. 57. Defendant has violated theVirginia Consumer Protection Act, Va. Code § 59.1-200, by engaging in deceptive acts and practices in connection with consumer transactions, including:
58. Defendant willfully did the acts described in violation of the Virginia Consumer Protection Act. CONSUMER INJURY 59. As a result of defendant's unlawful acts or practices, consumers throughout the United States and in each of the plaintiff states have suffered and continue to suffer monetary loss. In addition, consumers who purchase and rely on Terminate, as a stand-alone treatment, may suffer significant termite damage to their homes. Defendant has been unjustly enriched as a result of its unlawful practices. Absent injunctive relief by this Court, the defendant is likely to continue to injure consumers, reap unjust enrichment, and harm the public interest. THIS COURT'S POWER TO GRANT RELIEF 60. This Court is empowered by Section 13(b) of the FTC Act to grant injunctive and other ancillary relief, including consumer redress, disgorgement, and restitution to prevent and remedy any violations of any provision of law enforced by the Commission. 61. Pursuant to 28 U.S.C. § 1367, this Court has supplemental jurisdiction to allow plaintiff, the State of Florida, to enforce its state law claims under the Florida Deceptive and Unfair Trade Practices Act, Chapter 501, Part II, Fla. Stat. (1995) and Chapter 812, Fla. Stat. (1995), against defendant in this Court. 62. Pursuant to 28 U.S.C. § 1367, this Court has supplemental jurisdiction to allow plaintiff, the State of Georgia, to enforce its state law claims under Georgia's Fair Business Practices Act of 1975, O.C.G.A. §§ 10-1-390 et seq., against defendant in this Court. 63. Pursuant to 28 U.S.C. § 1367, this Court has supplemental jurisdiction to allow plaintiff, the Commonwealth of Kentucky, to enforce its state law claims under the Kentucky Consumer Protection Act, K.R.S. 367.110 et seq., against defendant in this Court. 64. Pursuant to 28 U.S.C. § 1367, this Court has supplemental jurisdiction to allow plaintiff, the State of Maryland, to enforce its state law claims under the Maryland Consumer Protection Act, Md. Code Ann., Com. Law II §§ 13-101 et seq., against defendant in this Court. 65. Pursuant to 28 U.S.C. § 1367, this Court has supplemental jurisdiction to allow plaintiff, the State of New Jersey, to enforce its state law claims under the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq., against defendant in this Court. 66. Pursuant to 28 U.S.C. § 1367, this Court has supplemental jurisdiction to allow plaintiff, the State of North Carolina, to enforce its state law claims under the North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. §§ 75-1.1 et seq., against defendant in this Court. 67. Pursuant to 28 U.S.C. § 1367, this Court has supplemental jurisdiction to allow plaintiff, the State of Texas, to enforce its state law claims under the Texas Deceptive Trade Practices Act, Texas Business & Commerce Code §§ 17.41 et seq., against Defendant in this Court. 68. Pursuant to 28 U.S.C. § 1367, this Court has supplemental jurisdiction to allow plaintiff, the Commonwealth of Virginia, to enforce its state law claims under the Virginia Consumer Protection Act, Va. Code Ann. §§ 59.1-196 et seq., against defendant in this Court. PRAYER FOR RELIEF WHEREFORE plaintiff Federal Trade Commission pursuant to Section 13(b) of the FTC Act, 15 U.S.C.§ 53(b) and the Court's own equitable powers, plaintiff State of Florida pursuant to the Florida Deceptive and Unfair Practices Act and the Court's own equitable powers, plaintiff State of Georgia pursuant to the Georgia Fair Business Practices Act of 1975 and the Court's own equitable powers, plaintiff Commonwealth of Kentucky pursuant to the Kentucky Consumer Protection Act and the Court's own equitable powers, plaintiff State of Maryland pursuant to the Maryland Consumer Protection Act and the Court's own equitable powers, plaintiff State of New Jersey pursuant to the New Jersey Consumer Fraud Act and the Court's own equitable powers, plaintiff State of North Carolina pursuant to the North Carolina Unfair and Deceptive Trade Practices Act and the Court's own equitable powers, plaintiff State of Texas pursuant to the Texas Deceptive Trade Practices Act and the Court's own equitable powers, and plaintiff Commonwealth of Virginia pursuant to the Virginia Consumer Protection Act and the Court's own equitable powers, request that this Court:
Respectfully submitted, DEBRA A. VALENTINE _______________________ ROBERT A. BUTTERWORTH _______________________ THURBERT E. BAKER _______________________ ALBERT B. CHANDLER III _____________________ J. JOSEPH CURRAN, JR. ________________________ [Local counsel for all plaintiffs] PETER VERNIERO _______________________ MICHAEL F. EASLEY _______________________ DAN MORALES ______________________ MARK L. EARLEY _______________________ Date: _____________________ |