IN THE UNITED STATES DISTRICT COURT UNITED STATES OF AMERICA, Plaintiff v. THE ORIGINAL HONEY BAKED HAM COMPANY OF GEORGIA, INC. Defendant. Civil Action No. _______________ 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), 13(b) and 16(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 45(a)(1), 45(m)(1)(A), 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 Sale of Mail or Telephone Order Merchandise (the "Rule"), 16 C.F.R. Part 435. 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), 53(b) and 56(a). This action arises under 15 U.S.C. § 45(a)(1). 3. Venue in the Northern District of Georgia is proper under 15 U.S.C. § 53(b) and under 28 U.S.C. §§ 1391(b-c) and 1395(a). DEFENDANT 4. Defendant The Original Honey Baked Ham Company of Georgia, Inc. is a Georgia corporation with its principal place of business located within the Northern District of Georgia at 5445 Triangle Parkway, Suite 400, Norcross, GA 30092. Defendant transacts business in the Northern District of Georgia. DEFENDANT'S COURSE OF CONDUCT 5. Defendant was incorporated in 1974 and has done business continuously since then. Defendant is one of five businesses that offer for sale and sell by mail and telephone Honey Baked branded cured hams and turkeys, cheeses, desserts and miscellaneous packaged foods or food related items to consumer and business customers throughout the United States. Defendant sells merchandise to customers in fifteen Southeastern and Midwest States at retail outlets, and by mail, telephone, facsimile and via an Internet website found at www.HoneyBaked.com. The majority of defendant's mail or telephone sales are for delivery during the Thanksgiving/Christmas/New Year holidays. 6. In soliciting mail or telephone orders, including facsimile or Internet orders, defendant represents that it ships merchandise just in time to reach the customer on or immediately before the date the customer specifies when ordering. If customers request shipment right away, defendant represents that orders received by Monday noon will be shipped in time to arrive at the consumer's door via UPS ground that Thursday or Friday; goods ordered later in the week will arrive early the following week unless the consumer agrees to faster carrier service. 7. In 1999 defendant contracted with an outside vendor to provide certain call center, customer service and systems services, including but not limited to, order processing, inventory management data processing and related warehousing and management functions. 8. During the 1999 Thanksgiving/Christmas/New Year holiday period, allegedly as a result of the failure of the vendor's computer system, defendant in numerous instances failed to ship mail or telephone orders for merchandise within the time defendant promised to ship. In many of these delayed shipment situations, defendant failed to notify consumers of the delay within the promised shipment time and thereafter failed to provide, automatically and without prior request, refunds to consumers for their delayed orders. THE RULE 9. The Rule was promulgated by the Commission on October 22, 1975, under the FTC Act, 15 U.S.C. § 41 et seq. and became effective February 2, 1976. On September 21, 1993, the Rule was amended under Section 18 of the FTC Act, 15 U.S.C. § 57a, and the amendments took effect on March 1, 1994. The Rule applies to orders placed by telephone, facsimile transmission or on the Internet. VIOLATIONS OF THE RULE 10. At all times material hereto, defendant has engaged in the mail or telephone order sale of merchandise in commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. 11. In numerous instances, after having solicited mail orders and telephone orders for merchandise and received "properly completed orders," as that term is defined in Section 435.2(d) of the Rule, 16 C.F.R. § 435.2(d), and having been unable to ship some or all of the ordered merchandise to the buyer within the Rule's applicable time, as set forth in Section 435.1(a)(1) of the Rule, 16 C.F.R. § 435.1(a)(1) (the "applicable time"), defendant has:
12. 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." 13. Pursuant to Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), a violation of the 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). CIVIL PENALTIES AND INJUNCTION 14. Civil penalties are proper under Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. § 45(m)(1)(A). 15. Each sale or attempted sale in which defendant has violated the Rule in one or more of the ways described above constitutes a separate violation for which plaintiff seeks monetary civil penalties. 16. Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. § 45(m)(1)(A), as modified by Section 4 of the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. § 2461, and Section 1.98(d) of the FTC's Rules of Practice, 16 C.F.R. § 1.98(d), authorizes this Court to award monetary civil penalties of not more than $11,000 for each such violation of the Rule. 17. 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 violating the FTC Act. PRAYER WHEREFORE, plaintiff requests this Court, pursuant to 15 U.S.C. §§ 45(a)(1), 45(m)(1)(A), 53(b) and 57b, and to the Court's own equitable powers to:
DATED: FOR THE UNITED STATES OF AMERICA: DAVID W. OGDEN United States Attorney By: Assistant U.S. Attorney EUGENE M. THIROLF By: Attorney OF COUNSEL: ELAINE D. KOLISH HEATHER A. HIPPSLEY JOEL N. BREWER |