UNITED STATES DISTRICT COURT UNITED STATES OF AMERICA, Plaintiff, v. ALYCE DESIGNS, INC., a corporation, ALYCE HAMM, individually and as an officer of the corporation, and JEAN PAUL HAMM, individually and as an officer of the corporation, Defendants. Civil Action No. COMPLAINT FOR CIVIL PENALTIES, Plaintiff, the United States of America, 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), 16(a) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 45(a)(1), 45(m)(1)(A), 49, 53(b), 56(a) and 57b, to obtain monetary civil penalties, and injunctive and other relief for defendants' violations of the Commission's Trade Regulation Rule Concerning the Care Labeling of Textile Wearing Apparel, 16 C.F.R. Part 423 ("the Care Labeling Rule"). JURISDICTION AND VENUE 2. The 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), 56(a) and 57b. This action arises under 15 U.S.C. § 45(a)(1). 3. Venue in the Northern District of Illinois is proper under 15 U.S.C. § 53(b) and under 28 U.S.C. §§ 1391(b-c) and 1395(a). DEFENDANTS 4. Defendant Alyce Designs, Inc. is an Illinois corporation with its office and principal place of business located within the Northern District of Illinois at 7901 Caldwell Avenue, Morton Grove, Illinois 60053. Alyce Designs, Inc. resides and transacts business in the Northern District of Illinois. 5. Defendant Alyce Hamm is the President of Alyce Designs, Inc. Her business address is the same as that of the corporate defendant. In connection with the matters alleged herein, Alyce Hamm transacts business in the Northern District of Illinois. 6. Individually or in concert with others, defendant Alyce Hamm formulated, directed, and controlled the acts and practices of Alyce Designs, Inc., including the various acts and practices set forth herein. 7. Defendant Jean Paul Hamm is the Vice-President of Alyce Designs, Inc. His business address is the same as that of the corporate defendant. In connection with the matters alleged herein, Jean Paul Hamm transacts business in the Northern District of Illinois. 8. Individually or in concert with others, defendant Jean Paul Hamm formulated, directed, and controlled the acts and practices of Alyce Designs, Inc., including the various acts and practices set forth herein. THE CARE LABELING RULE 9. 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 10. At all times during which the acts or practices complained of herein occurred, defendant Alyce Designs, Inc. was engaged in the business of manufacturing "textile wearing apparel" (as that term is defined in Section 423.1 of the Care Labeling Rule), 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. 11. 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, defendants have affixed to textile wearing apparel a "care label" (as that term is defined in Section 423.1 of the Care Labeling Rule) including, but not limited to, statements such as "Dry Clean Only By Zurcion Method, Nation-wide, 1-800-242-GOWN, guarantee processing." By the use of the above-described, or substantially similar, labels, defendants have failed to state on the care label a regular care procedure needed for the ordinary use of the product, thereby violating Section 423.6(b) of the Care Labeling Rule. In particular, the dry cleaning instruction on the care label does not state at least one type of solvent that may be used, as required by section 423.6(b)(2)(i) of the Care Labeling Rule. 12. 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, by the use of the labels described in Paragraph 11, defendants have failed to warn against any part of the dry cleaning procedure that consumers or drycleaners can reasonably be expected to use that would harm the garments, thereby violating Section 423.6(b)(2)(ii) of the Care Labeling Rule. 13. 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, defendants have failed to possess, prior to sale, a reasonable basis for all care information disclosed to purchasers on the care labels described in Paragraph 11, including any warnings, thereby violating Section 423.6(c) of the Care Labeling Rule. In particular, the defendants have failed to provide reliable evidence that the garments can be adequately cleaned by the Zurcion method of dry cleaning, and have failed to provide reliable evidence that the garments cannot be cleaned by any other method of dry cleaning or by washing. UNFAIR OR DECEPTIVE ACTS OR PRACTICES 14. Section 5(a)(1) of the FTC Act, 15 U.S.C. § 45(a)(1), provides that "unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful." 15. 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). 16. By engaging in the acts and practices described in Paragraphs 11 through 13 above, defendants have violated Section 5(a)(1) of the FTC Act, 15 U.S.C. § 45(a)(1). CIVIL PENALTIES, INJUNCTIVE AND OTHER RELIEF 17. Defendants have 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). 18. Each sale or attempted sale, during the five years preceding the filing of this complaint, of a garment in which defendants have violated the Care Labeling Rule in one or more of the ways described above constitutes a separate violation for which plaintiff seeks monetary civil penalties. 19. 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 the Court to award monetary civil penalties of not more than $11,000 for each such violation of the Care Labeling Rule that occurred after November 20, 1996. 20. Section 19 of the FTC Act, 15 U.S.C. § 57b, authorizes this Court to award such relief as is necessary to redress the injury to consumers or others resulting from defendants' violation of the Care Labeling Rule, including but not limited to public notification respecting the Rule violations. 21. Under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), this Court is authorized to issue a permanent injunction against defendants’ violating the FTC Act, as well as such ancillary relief as may be just and proper. PRAYER WHEREFORE, plaintiff requests that this Court, pursuant to 15 U.S.C. §§ 45(a)(1), 45(m)(1)(A), 49, 53(b) and 57b and the Court's own equity powers:
DATED:
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