MAMIE KRESSES
LAURA M. SULLIVAN
Federal Trade Commission
600 Pennsylvania Avenue
Washington, D.C. 20580
(202) 326-3327
(202) 326-2445 (facsimile)

THOMAS J. SYTA
Federal Trade Commission
Los Angeles Regional Office
10877 Wilshire Blvd., Suite 700
Los Angeles, CA 90024
(310) 824-3774

ATTORNEYS FOR PLAINTIFF
FEDERAL TRADE COMMISSION

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

FEDERAL TRADE COMMISSION,

Plaintiff,

v.

MET-RX USA, INC., a Nevada corporation, and MET-RX SUBSTRATE TECHNOLOGY, INC., a Nevada corporation, Defendants.

CIVIL NO.

STIPULATED FINAL ORDER FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF

Plaintiff, the Federal Trade Commission ("Commission"), filed a Complaint for a permanent injunction and other equitable relief pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), charging defendants Met-Rx USA, Inc. ("Met-Rx") and Met-Rx Substrate Technology, Inc. ("Substrate Technology") (collectively "defendants") with violations of Sections 5 and 12 of the FTC Act, 15 U.S.C. §§ 45 and 52.

Defendants and the Commission hereby agree to the Courts's entry of this Stipulated Final Order for Permanent Injunction ("Order").

NOW THEREFORE, the defendants and the Commission having requested the Court to enter this Order, IT IS HEREBY ORDERED, ADJUDGED AND DECREED AS FOLLOWS:

FINDINGS

1. This Court has jurisdiction of the subject matter of this action and of all the parties hereto;

2. The Complaint states a claim upon which the Court may grant relief against defendants under Sections 5, 12 and 13(b) of the FTC Act, 15 U.S.C. §§ 45, 52, and 53(b);

3. Venue in this District is proper under 28 U.S.C. § 1391(b) and 15 U.S.C. § 53(b);

4. The acts and practices of the defendants were or are in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44;

5. Defendants have waived all rights to seek judicial review of, or otherwise challenge or contest the validity of, this Order;

6. This action and the relief awarded herein are in addition to, and not in lieu of, other remedies as may be provided by law;

7. Defendants, without admitting or denying the allegations of the Complaint, stipulate and agree to entry of this Order under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b);

8. Entry of this Order is in the public interest.

DEFINITIONS

For the purposes of this Order:

A. "Androgen products" shall mean foods, drugs, dietary supplements, as "food" and "drugs" are defined in Section 15 of the Federal Trade Commission Act, or other products intended for internal or external use that contain any androgen hormone, including but not limited to androstenedione, androstenediol, norandrostenedione, and norandrostenediol, which is either synthetically produced or derived from natural sources.

B. "Ephedra, ephedra extract or ephedrine" shall mean a source of any ephedrine alkaloid, including, but not limited to, ephedrine, pseudoephedrine, norephedrine, norpseudoephedrine, N-methyephedrine, and N-methylpseudoephedrine, either derived from natural sources such as the herb Ephedra sinica (also called Ma-Huang or Chinese Ephedra) or synthetically produced.

C. "Competent and reliable scientific evidence" shall mean tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that has been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results.

D. "Clear(ly) and prominent(ly)" shall mean as follows:

1. In an advertisement communicated through an electronic medium, (such as television, video, radio, and interactive media including the Internet and online services), the disclosure shall be presented simultaneously in both the audio and video portions of the advertisement. Provided, however, that in any advertisement presented solely through video or audio means, the disclosure may be made through the same means in which the ad is presented. The audio disclosure shall be delivered in a volume and cadence sufficient for an ordinary consumer to hear and comprehend it. The video disclosure shall be of a size and shade, and shall appear on the screen for a duration, sufficient for an ordinary consumer to read and comprehend it. In addition to the foregoing, in interactive media the disclosure shall also be unavoidable and shall be presented prior to the consumer incurring any financial obligation.

2. In a print advertisement, promotional material, or instructional manual, the disclosure shall be in a type size and location sufficiently noticeable for an ordinary consumer to read and comprehend it, in print that contrasts with the background against which it appears. In multi-page documents, the disclosure shall appear on the cover page or first page.

3. On a product label, the disclosure shall be in a type size and location sufficiently noticeable for an ordinary consumer to read and comprehend it and in print that contrasts with the background against which it appears. Provided, if a disclosure on a bottle label or package label is made in a location other than the principal display panel, the bottle label or package label shall: (i) include the statement, "See important safety warning[s] on [insert disclosure location]," in a type size and location on the principal display panel sufficiently noticeable for an ordinary consumer to read and comprehend it and in print that contrasts with the background against which it appears; and (ii) place the disclosure on the bottle label and, if applicable, the package label, within a border that is a color or shade that contrasts with the background against which it appears. Provided further, that, in a multi-page package insert, the disclosure shall appear on the cover page or first page.

Nothing contrary to, inconsistent with, or in mitigation of the disclosure shall be used in any advertisement or on any label.

E. "Product label" shall mean any label or other written, printed or graphic matter upon any product or accompanying any product, including package labels, bottle labels, and package inserts.

F. "Defendants" shall mean Met-Rx and Substrate Technology corporations, their successors and assigns, and each of the above's officers, agents, servants, employees and attorneys, and all other persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise.

G. "Purchaser for resale" shall mean any purchaser of any of defendants' androgen products, who: (a) is a distributor of, or operates a wholesale or retail business that sells, any such product(s); or (b) orders 20 or more units of any such product(s) in any three (3) month period.

H. "Person" shall mean a natural person, organization or other legal entity, including a partnership, corporation, proprietorship, association, cooperative, or any other group acting together as an entity.

ORDER

I.

IT IS ORDERED that defendants, directly or through any corporation, subsidiary, division, or other device, their officers, agents, servants, employees and attorneys and all other persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise, in connection with the manufacturing, labeling, advertising and promotion, offering for sale, sale or distribution of any androgen product, or any other food, drug, or dietary supplement, as "food" and "drug" are defined in Section 15 of the Federal Trade Commission Act, in or affecting commerce, are hereby permanently restrained and enjoined from representing in any manner, expressly or by implication:

A. that the use of such product is safe;

B. that the use of such product is associated with no or minimal negative side effects; and

C. the comparative or superior safety of such product,

unless at the time the representation is made, defendants possess and rely upon competent and reliable scientific evidence that substantiates the representation.

II.

IT IS FURTHER ORDERED that:

A. In any advertisement, promotional material, or product label for any androgen product that contains any representation about the efficacy, performance or safety of such product, and in any electronic mail communication with a consumer, or any telephone communication with a consumer that is originated by defendants, which contains any representation about the efficacy, performance or safety of any androgen product, defendants, their officers, agents, servants, employees and attorneys, and all persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise, shall make, clearly and prominently, the following disclosure:

WARNING: This product contains steroid hormones that may cause breast enlargement, testicle shrinkage and infertility in males, and increased facial and body hair, voice deepening, and clitoral enlargement in females. Higher doses may increase these risks. If you are at risk for prostate or breast cancer you should not use this product,

unless defendants possess competent and reliable scientific evidence that such product is safe and produces no adverse side effects.

B. Where any advertisement or promotional material, or electronic mail communication with a consumer, or telephone communication with a consumer that is originated by defendants, contains any representation about the efficacy, performance or safety of any androgen product, defendants, their officers, agents, servants, employees and attorneys, and all persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise, shall also make the disclosure specified in Section II A above, clearly and prominently, on the product label(s) of such androgen product, unless defendants possess competent and reliable scientific evidence that such product is safe and produces no adverse side effects.

C. In any product label, promotional material, or advertisement, other than an advertisement specified in Section II(D) below, for any androgen product containing ephedra or ephedrine, and in any electronic mail communication with a consumer about the use of such product, defendants, their officers, agents, servants, employees and attorneys and all persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise, shall make, clearly and prominently, the following disclosure:

WARNING: This product contains ephedrine. Taking more than the recommended serving may result in heart attack, stroke, seizure or death. Consult a health care practitioner prior to use if you have high blood pressure, heart or thyroid disease, diabetes, difficulty urinating, prostate enlargement, or glaucoma, or are using any prescription drugs. Do not use if you are taking a MAO inhibitor or any allergy, asthma, or cold medication containing ephedrine, pseudoephedrine, or phenylpropanolamine. Discontinue use if dizziness, sleeplessness, loss of appetite, or nausea occurs;

unless defendants possess competent and reliable scientific evidence that such product is safe and produces no adverse side effects.

Provided, however, that defendants shall be in compliance with the product label requirements of Sections II (A), (B), and (C) above, if : (1) within twenty-one (21) days of the date of the Commission's acceptance of this Order, the required disclosure is made clearly and prominently on the outermost product label of each such androgen product; and (2) within ninety (90) days after the date of entry of this Order, the required disclosure is made clearly and prominently on all product labels, as product label is defined by this Order. The product label requirements of Sections II (A), (B), and (C) above shall not apply to products that are shipped to consumers or purchasers for resale before the dates specified in (1) above, for the labeling on the outermost product label, and (2) above, for all product labels.

D. In any television or radio advertisement, or telephone communication with a consumer that is originated by defendants, about any androgen product containing ephedra or ephedrine, defendants, their officers, agents, servants, employees and attorneys and all persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise, shall make, clearly and prominently, the following disclosure:

WARNING: This product contains ephedrine which can have dangerous effects on the central nervous system and heart and could result in serious injury. Risk of injury increases with dose;

unless defendants possess competent and reliable scientific evidence that such product is safe and produces no adverse side effects.

Provided, however, that in the event the Food and Drug Administration issues a final rule requiring a warning on the labeling of products containing ephedrine alkaloids, defendants may substitute that warning for the disclosures required under Sections II (C) and (D) above.

III.

IT IS FURTHER ORDERED that defendants, directly or through any corporation, subsidiary, division, or other device, their officers, agents, servants, employees and attorneys and all other persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise, are hereby permanently restrained and enjoined from:

A. Failing to take reasonable steps sufficient to monitor and ensure that all employees and agents engaged in sales, order verification, or other customer service functions with regard to defendants' androgen products comply with Sections I and II of this Order. Such steps shall include adequate monitoring of all advertisements, promotions, sales presentations, and other oral or written communication with customers regarding such products. Defendants, at a minimum, shall:

1. conduct periodic monitoring of representations concerning androgen products made by persons engaged in sales or other customer service functions, including representations made orally or through electronic communication;

2. conduct periodic monitoring of representations made about androgen products on all Internet websites operated and maintained by defendants;and

3. establish a procedure for receiving, maintaining and responding to consumer complaints.

B. Failing to terminate any employee or agent who engages in any conduct prohibited by Sections I and II of this Order once defendants know or should know that such person is or has been engaged in such conduct.

IV.

IT IS FURTHER ORDERED that defendants, directly or through any corporation, subsidiary, division, or other device, their officers, agents, servants, employees and attorneys and all other persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise, are hereby permanently restrained and enjoined from:

A. For a period of three (3) years following the entry of this Order, failing to send a copy of the notice attached hereto (Attachment A) by first class certified mail, return receipt requested, to any purchaser for resale of any androgen product.

B. Failing to institute a reasonable program of surveillance adequate to reveal whether any of defendants' purchasers for resale are: (1) disseminating advertisements or promotional materials that contain any representation about defendants' androgen products or androgen products generally that is prohibited by Section I of this Order; or (2) disseminating advertisements or promotional materials or distributing defendants' androgen products without the advertising and labeling disclosures required pursuant to Section II of this Order.

C. Failing to terminate all sales of androgen products to any purchaser for resale who is engaged in: (1) disseminating advertisements or promotional materials that contain any representation about defendants' androgen products or androgen products generally that is prohibited by Section I of this Order; or (2) disseminating advertisements or promotional materials or distributing defendants' androgen products without the advertising and labeling disclosures required pursuant to Section II of this Order, once defendants know or should know that the purchaser for resale is or has been engaged in such conduct.

V.

Nothing in this Order shall prohibit defendants from making any representation for any drug that is permitted in labeling for such drug under any tentative final or final standard promulgated by the Food and Drug Administration, or under any new drug application approved by the Food and Drug Administration. Nor shall it prohibit defendants from making any representation for any product that is specifically permitted in labeling for such product by regulations promulgated by the Food and Drug Administration pursuant to the Nutrition Labeling and Education Act of 1990.

VI.

IT IS FURTHER ORDERED that defendants Met-Rx and Substrate Technology, and their successors and assigns, shall, for five (5) years after the last date of dissemination of any representation covered by this Order, maintain and upon request make available to the Federal Trade Commission for inspection and copying:

A. All advertisements and promotional materials containing the representation;

B. All materials that were relied upon in disseminating the representation; and

C. All tests, reports, studies, surveys, demonstrations, or other evidence in their possession or control that contradict, qualify, or call into question the representation or the basis relied upon for the representation, including complaints and other communications with consumers or with governmental or consumer protection organizations.

VII.

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, defendants Met-Rx and Substrate Technology, and their successors and assigns, shall deliver a copy of this Order to all current and future principals, officers, directors, and managers, and to all current and future employees, agents, and representatives having responsibilities with respect to the subject matter of this Order, and shall secure from each such person a signed and dated statement acknowledging receipt of the Order. Defendants shall deliver this Order to current personnel within thirty (30) days after the date of service of this Order, and to future personnel within thirty (30) days after the person assumes such position or responsibilities. Defendants shall maintain, and upon reasonable notice make available to representatives of the Commission, the original signed and dated acknowledgments of the receipt of the Order.

VIII.

IT IS FURTHER ORDERED that for a period of five (5) years from the date of entry of this Order, defendants Met-Rx and Substrate Technology, and their successors and assigns shall notify the Commission at least thirty (30) days prior to any change in the corporation that may affect compliance obligations arising under this Order, including but not limited to a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor corporation; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this order; the proposed filing of a bankruptcy petition; or a change in the corporate name or address. Provided, however, that with respect to any proposed change in the corporation about which defendants learn less than thirty (30) days prior to the date such action is to take place, defendants shall notify the Commission as soon as is practicable after obtaining such knowledge. All notices required by this Section shall be sent by certified mail to the Associate Director, Division of Advertising Practices, Bureau of Consumer Protection, Federal Trade Commission, 601 Pennsylvania Avenue, Washington, D.C. 20580.

IX.

IT IS FURTHER ORDERED that within sixty (60) days after the date of entry of this Order, defendants shall provide a written report to the Commission, sworn under penalty of perjury, setting forth in detail the manner and form in which defendants have complied and are complying with this Order. Upon written request by a representative of the Commission, defendants shall submit additional written reports, sworn under penalty of perjury, and produce documents on fifteen (15) days notice with respect to any conduct subject to this Order. All notices required by this Section shall be sent by certified mail to the Associate Director, Division of Advertising Practices, Bureau of Consumer Protection, Federal Trade Commission, 601 Pennsylvania Avenue, Washington, D.C. 20580.

X.

IT IS FURTHER ORDERED that the Commission is authorized to monitor the compliance of defendants with this Order by all lawful means, including, but not limited to, the following means:

A. The Commission is authorized, without further leave of court, to obtain discovery from any person in the manner provided by Chapter V of the Federal Rules of Civil Procedure, Fed. R. Civ. P. 26-37, including, but not limited to, the use of compulsory process pursuant to Fed. R. Civ. P. 45, for the purpose of monitoring and investigating the compliance of defendants with this Order.

B. Nothing in this Order shall limit 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, to investigate whether defendants have violated any provision of this Order or Sections 5 or 12 of the FTC Act, 15 U.S.C. §§ 45, 55.

XI.

Defendants Met-Rx and Substrate Technology waive any claim that any of them may have held under the Equal Access to Justice Act, 28 U.S.C. § 2412, amended Pub. L. 104-121, 110 Stat. 847, 863-64 (1996), concerning the prosecution of this action to the date of this Order.

XII.

Each party to the Order shall bear its own costs and attorney's fees incurred in connection with this action.

XIII.

IT IS FURTHER ORDERED that the Court retains jurisdiction of this matter.

XIV.

The parties hereby stipulate and agree, without further notice to any of them, to entry of the foregoing Order.

STIPULATED AND AGREED TO BY:

IT IS SO ORDERED:

Dated:
United States District Judge