$1.49 Million in Penalties Upheld Against Alpine Industries

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COURTROOM NEWS

Date: 9 November 2003

$1.49 Million in Penalties Upheld Against Air-Cleaning Devices Manufacturer

LEXINGTON, Ky. — A $1.49 million judgment was affirmed against the manufacturer of air- and water-cleaning devices by a federal appeals court, which found that the company violated an earlier order preventing it from making unsubstantiated claims about the abilities of its products to remove substances from the air such as mold spores and chemicals. United States of America, Plaintiff-Appellee, v. Alpine Industries, Inc. and J. Converse, Defendants-Appellants, No. 01-5759 (6th Cir.).According to the Sept. 26 per curiam opinion issued by the 6th Circuit, the language of the order was clear, and the findings of the jury that the manufacturer had violated the order were substantiated by the evidence presented at trial. Therefore, the 6th Circuit upheld the judgment of the U.S. District Court for the Eastern District of Tennessee (No. 97-00509) against the manufacturer.FTC Consent OrderThe manufacturer in this case is Greeneville, Tenn.-based Alpine Industries, Inc., which has said in promotional materials that it is the “world leader in whole-home purification.” According to the 6th Circuit’s opinion, in the early 1990s, the Federal Trade Commission (FTC) conducted an investigation of claims made by Alpine and its President and Chief Executive Officer, J. Converse, in promoting, advertising, and selling Alpine’s air-cleaning machines. The investigation concluded when Alpine agreed to an FTC Consent Order, effective Oct. 2, 1995, which forbade the company from making product claims without the support of competent and reliable scientific evidence, and stipulated that Alpine would no longer represent that its products could eliminate, remove, clear, or clean any indoor air pollutant, in any quantity, from a user’s environment. The order defined “indoor air pollutant” as any one of a long list of substances, including mold, mildew, bacteria, dust, pollen, odors, chemicals, and “any other gaseous or particulate matter found in indoor air.” Alpine also agreed, by signing the order, to cease its representations that ozone is more effective in cleaning or purifying indoor air than other air cleaning methods, and that its ozone air-cleaning machines prevent or provide relief from medical or health-related conditions without creating harmful by products.U.S. District Court JudgmentOn Dec. 30, 1997, the U.S. government sued Alpine, alleging that it violated the conditions of the consent order and requesting injunctive relief, consumer redress, and civil penalties. The case was bifurcated. The liability phase began Nov. 1, 1999, and 14 days later concluded after the jury found that for all but smoke, tobacco smoke, and cigarette smoke, Alpine’s claims about its products were not supported by competent and reliable scientific evidence.The remedy phase was tried by the court in January 2001, and on April 5, 2001, the District Court issued a final judgment against Alpine for $1.49 million in addition to injunctive relief.The District Court’s Judgment prohibited Alpine from claiming that its products can eliminate or clean from indoor air “any pollutant, contaminant, microorganism (including bacteria, viruses, molds and mildew), chemical or particulate, or any specific quantity or amount of any of the foregoing.” The judgment allowed Alpine to represent that its products “can remove ‘visible’ tobacco smoke and some odors (without specifying what odor)” [emphasis original], as long as the manufacturer did not claim that said removal implicates the removal of “any chemical, particulate or microorganism.” Finally, the judgment prohibited Alpine from making health claims about its products, and from claiming that any sensor installed on an Alpine product is capable of controlling the ambient level of ozone in indoor air.Following the judgment, Alpine filed motions to amend and for Judgment Notwithstanding the Verdict or for a new trial. The District Court denied both motions. Appeal to the 6th CircuitAlpine filed a notice of appeal in the 6th Circuit on June 20, 2001, and oral arguments were heard Dec. 4, 2002. The manufacturer argued, first, that the burden was on the government to establish a prima facie case and that the government failed to do so, entitling the manufacturer to a judgment as a matter of law, notwithstanding the jury’s verdict. Alpine asserted that the government did not present sufficient proof that the manufacturer did not possess and rely upon competent and reliable scientific evidence at the time it made representations regarding indoor air pollutants and health benefits.However, the 6th Circuit stated that Alpine “misconstrue[d] the level of proof necessary to establish a prima facie case under these circumstances.” “The government certainly need not have proven that there was no competent or reliable basis upon which Alpine might have rested its claim. If the experts knew of none and information received from Alpine was insufficient to provide such a basis or was deemed unreliable, it was up to Alpine to provide further information that would convince the jury,” the 6th Circuit stated.Expert TestimonyDuring the trial, the government produced experts in the fields of air pollution, ozone chemistry, and the efficacy of air cleaners. These included Dr. Sextro of the Indoor Environment Department in the Environmental Energy Technologies Division at Lawrence Berkeley National Laboratory in Berkeley, Calif.; Dr. Shaughnessy of the University of Tulsa Indoor Air Program in Tulsa, Okla.; Eugene C. Cole, DrPH, Professor of Environmental Health and Infectious Disease at Brigham Young University Department of Health Science in Provo, Utah; and J. Weschler, Ph.D., a professor in the Department of Environmental and Community Medicine at University of Medicine and Dentistry of New Jersey/ Wood Medical School in Piscataway, N.J.Although Alpine contended that these experts focused on tests done on particles in tobacco smoke and did not present evidence on any of the other particulates discussed at trial, the 6th Circuit noted that the government experts explained in their testimony that the results of their tests can be applied to other particulates since they are in the same size range as those found in tobacco smoke. Alpine countered that if the results from the tests on tobacco smoke can be extrapolated to all other particulates within the same size range, there is no evidence to support the jury’s findings against it on the other particulates and microbes in that size range.“In sum, Alpine argues that if the results of smoke testing could be extrapolated to all other indoor air particulate at issue, then it would appear that the jury, because it found for Alpine on smoke, had no basis for a finding against Alpine on all the other particulates listed on the jury verdict form. This logic would also extend to the question of microbes and allergens in particulate form and within the relevant size range,” the 6th Circuit explained.However, the 6th Circuit also noted that the District Court determined that the jury had been referring to “visible smoke,” rather than to the particulates in smoke, when it found in favor for Alpine on the smoke removal claims. “Alpine’s reasoning assumes that the jury’s favorable determination on the smoke removal claims reflected an implicit determination that Alpine’s air purifiers effectively removed the particulate elements of smoke, when in fact smoke contains much more than particulate matter,” the 6th Circuit stated. “In fact, Dr. Weschler noted in his testimony at trial that in addition to the particulates present in tobacco smoke, there are ‘thousands of chemicals’ [in visible smoke].” Therefore, according to the 6th Circuit, the jury could have concluded that Alpine adequately substantiated its claims regarding the removal of “visible smoke” even while finding that Alpine did not adequately substantiate its claims concerning particulates.The manufacturer then argued that the government did not address Alpine’s claims that its devices introduce ozone into the air to kill microbes through ionization. However, the 6th Circuit stated that Dr. Cole had testified on this subject, and his testimony formed sufficient evidence to support the jury’s findings of liability.In response to Alpine’s argument that because none of the government experts were medical doctors, toxicologists, or health officials, they were not qualified to testify on the medical and health-related benefits of Alpine’s products, the 6th Circuit stated that the expertise needed under these circumstances was not that of a medical doctor, toxicologist, or health official, but rather “an expert on the removal of indoor air pollutants.”Burden of Proof & Other ClaimsAlpine contended that the District Court improperly shifted the burden of proof during the course of the trial by improperly wording the jury’s special verdict form, resulting in a prejudicial verdict form and preventing a fair trial. However, the 6th Circuit did not agree with Alpine’s argument, finding that the jury instructions “reflect the proper placement of the burden of proof, which starts with the government and moves to Alpine, once the government offers enough evidence to make its prima facie case.”During trial, the government showed some of Alpine’s promotional brochures, videotapes, audio tapes, and training tapes to the jury, and argued that it was necessary only to show these materials to demonstrate that a prohibited claim had been made in them. Alpine countered that the context in which these materials were disseminated should have been considered when determining whether the representations were directed to consumers or to dealers, and that the District Court abused its discretion in precluding testimony relating to the context in which these various representations were made.However, the 6th Circuit agreed with the government’s argument that whether the statement was made to a consumer or to a dealer is immaterial for purposes of the consent order, which unambiguously prohibited Alpine from making representations “in any manner, directly or by implication,” according to the opinion.Alpine argued that the scope of injunctive relief is overinclusive, specifically regarding the exception only for “visible” tobacco smoke and “general” odors. However, the 6th Circuit found the District Court’s reasoning on these issues to be consistent with its interpretation of the jury’s verdict, and also found that Alpine went “too far” when it asserted that it should be allowed to make claims “for the reduction of smoke, tobacco smoke, cigarette smoke, all common indoor air particulates, general and specific odors, and other chemical gases.” The 6th Circuit stated that it found no reason to amend the permanent injunction.Finally, regarding Alpine’s contention that the $1.49 million penalty levied against it was excessive, the 6th Circuit examined the manner in which the penalty amount was determined by the District Court and found it to be acceptable.United States of America, plaintiff-appellee, was represented by Stein of the U.S. Department of Justice, Office of Consumer Litigation, in Washington, D.C., and R. Maier and N. Letter of the U.S. Department of Justice in Washington, D.C.Alpine Industries, Inc., defendant-appellant, was represented by J. Ronnie Greer of Greeneville, Tenn., and A. Erhart and B. of Erhart & Associates in Anoka, Minn. J. Converse, defendant-appellant was represented by J. Ronnie Greer of Greeneville, Tenn.