Case: 3:22-cv-01389-JGC Doc #: 1 Filed: 08/05/22 1 of 23. PageID #: 1
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`UNITED STATES DISTRICT COURT
`IN THE NORTHERN DISTRICT OF OHIO
`WESTERN DIVISION
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`UNITED STATES OF AMERICA,
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`Plaintiff,
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`v.
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`AXIS LED GROUP, LLC, a limited liability
`company;
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`ALG-HEALTH LLC, a limited liability company;
`and
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`Case No.
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`
`
`COMPLAINT FOR PERMANENT
`INJUNCTION, CIVIL
`PENALTIES, AND OTHER
`RELIEF
`
`
`
`
`
`ADAM J. HARMON, individually and as an
`officer of AXIS LED GROUP, LLC and
`ALG-HEALTH LLC,
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`
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`Defendants.
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`Plaintiff, the United States of America, acting upon notification and authorization to the
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`Attorney General by the Federal Trade Commission (“FTC” or “Commission”), pursuant to
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`Section 16(a)(1) of the FTC Act, 15 U.S.C. § 56(a)(1), for its Complaint alleges:
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`1.
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`Plaintiff brings this action under Sections 5(m)(1)(A), 13(b), and 19 of the Federal
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`Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 45(m)(1)(A), 53(b), and 57b; the COVID-19
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`Consumer Protection Act of the 2021 Consolidated Appropriations Act (the “COVID-19 Act”),
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`Pub. L. No. 116-260, 134 Stat. 1182, Title XIV, § 1401(b)(1); and Section 323.4 of the Made in
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`USA Labeling Rule (the “MUSA Labeling Rule”), 16 C.F.R. § 323.4, which together authorize
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`the Plaintiff to seek, and the Court to order, permanent injunctive relief, monetary relief, civil
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`penalties, and other relief for the numerous acts and practices of Defendants Axis LED Group,
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`LLC, ALG-Health LLC, and Adam J. Harmon in violation of Sections 5(a) and 12 of the FTC
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`Act, 15 U.S.C. §§ 45(a), 52 and in violation of the Made in USA Labeling Rule, 16 C.F.R. Part
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`323, described herein. These deceptive acts or practices include but are not limited to: (1) the
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`labeling and advertising of certain products containing significant imported content as “Made in
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`USA;” and (2) the making of other false or misleading claims relating to Defendants’ personal
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`protective equipment products and the prevention or mitigation of COVID-19.
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`Jurisdiction and Venue
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`2.
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`This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a),
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`1345, and 1355.
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`3.
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`Venue is proper in this District under 28 U.S.C. §§ 1391(b)(2), (c)(2), and (d),
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`1395(a), and 15 U.S.C. § 53(b).
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`Plaintiff
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`4.
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`This action is brought by the United States of America on behalf of the FTC. The
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`FTC is an independent agency of the United States Government given statutory authority and
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`responsibilities. 15 U.S.C. §§ 41-58. The FTC enforces Sections 5(a) of the FTC Act, 15
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`U.S.C. §§ 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce,
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`and Section 12 of the FTC Act, 15 U.S.C. § 52, which prohibits false advertisements for food,
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`drugs, devices, services, or cosmetics in or affecting commerce. The FTC also enforces the
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`COVID-19 Act, which provides for civil penalties for any person who engages in a deceptive act
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`or practice in or affecting commerce associated with the treatment, cure, prevention, mitigation,
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`or diagnosis of COVID-19 for the duration of the COVID-19 public health emergency. Pub. L.
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`No. 116-260, Title XIV, § 1401(b)(1). The FTC also enforces the MUSA Labeling Rule, which
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`prohibits labeling any product with an unqualified “Made in USA” or equivalent claim unless
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`the final assembly or processing of the product occurs in the United States, all significant
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`processing that goes into the product occurs in the United States, and all or virtually all
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`Case: 3:22-cv-01389-JGC Doc #: 1 Filed: 08/05/22 3 of 23. PageID #: 3
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`ingredients or components of the product are made and sourced in the United States. 16 C.F.R. §
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`323.2.
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`Defendants
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`5.
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`Defendant Axis LED Group, LLC (“Axis”) is an Ohio limited liability company
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`with its principal place of business at 520 West Mulberry Street, Bryan, Ohio 43506. Axis
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`transacts or has transacted business in this District and throughout the United States. At all times
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`relevant to this Complaint, acting alone or in concert with others, Axis has advertised, marketed,
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`distributed, or sold light-emitting diode (“LED”) or personal protective equipment (“PPE”)
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`products to consumers throughout the United States.
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`6.
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`Defendant ALG-Health LLC (“ALG-Health”) is an Ohio limited liability
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`company with its principal place of business at 520 West Mulberry Street, Bryan, Ohio 43506.
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`ALG-Health transacts or has transacted business in this District and throughout the United
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`States. At all times relevant to this Complaint, acting alone or in concert with others, ALG-
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`Health has advertised, marketed, distributed, or sold LED or PPE products to consumers
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`throughout the United States.
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`7.
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`Defendant Adam J. Harmon (“Harmon”) is the President and Chief Executive
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`Officer of both Axis and ALG-Health. At all times relevant to this Complaint, acting alone or in
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`concert with others, he has formulated, directed, controlled, had the authority to control, or
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`participated in the acts and practices of Axis and ALG-Health, including the acts and practices
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`set forth in this Complaint. Defendant Harmon resided in this District at the time of the matters
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`alleged herein, and, in connection with those matters, transacts, or has transacted, business in
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`this District and throughout the United States.
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`Common Enterprise
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`8.
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`Defendants Axis and ALG-Health (collectively, “ALG” or “Corporate
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`Defendants”) have operated as a common enterprise while engaging in the deceptive acts and
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`practices and other violations of law alleged below. Corporate Defendants have conducted the
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`business practices described below through interrelated companies that have common ownership,
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`officers, managers, business functions, employees, and office locations, and that commingled
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`funds.
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`9.
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`Specifically, at all times relevant to this Complaint, the Corporate Defendants
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`operated under Defendant Harmon’s unified control. Defendant Harmon directed the Corporate
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`Defendants’ business and marketing activities interchangeably through his Axis and ALG-Health
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`email addresses, ordered and received ALG-Health shipments under the Axis name, commingled
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`corporate funds, and housed corporate activities in the same physical space.
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`10.
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`Because these Corporate Defendants have operated as a common enterprise, each
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`of them is liable for the acts and practices alleged below.
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`Commerce
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`11.
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`At all times relevant to this Complaint, Defendants have maintained a substantial
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`course of trade in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act,
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`15 U.S.C. § 44.
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`Defendants’ Business Activities
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`Defendant Harmon formed Axis in Ohio in 2015. Exhibit A.
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`Defendant Harmon filed articles of incorporation for ALG-Health in Ohio in June
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`12.
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`13.
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`2020. Exhibit B.
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`14.
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`As described in Paragraph 9, at all times material to this Complaint, Defendant
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`Harmon served as an officer of the Corporate Defendants, which he operated as a unified entity.
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`15. Defendant Harmon holds sole responsibility for, and has directed publication
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`of, all ALG marketing claims.
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`Defendants have falsely marketed, labeled, and sold wholly imported
`Chinese lighting products, or products containing significant Chinese inputs, as
`Made in the United States.
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`16.
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`Since 2015, ALG has marketed and sold LED lights, tubes, and fixtures to
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`consumers and the United States government.
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`17.
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`In 2016, the Commission received reports that ALG falsely advertised a line of
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`imported LED bulbs called “Patriot Tubes” as Made in the United States (“MUSA”).
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`18.
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`Specifically, ALG blanketed its website and social media with unqualified U.S.-
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`origin claims for these products, stating the Company’s “advances in manufacturing processes
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`and efficiency have finally allowed us to produce USA-made products at competitive prices.”
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`Exhibit C.
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`19.
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`During the FTC’s investigation of these reports, Defendant Harmon admitted
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`Patriot Tubes included significant Chinese components. However, Defendant Harmon claimed
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`Patriot Tubes were assembled in the United States.
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`20.
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`Defendant Harmon asserted Patriot Tubes qualified as “domestic end products”
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`under the Buy American Act, 41 U.S.C. §§ 8301-8305 (“BAA”),1 and produced a letter
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`purportedly confirming this fact. Exhibit D.
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`21.
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`During the 2016 investigation, Defendant Harmon reviewed and acknowledged
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` 1
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` BAA establishes preferences for domestic end products and construction materials in government acquisitions, and
`defines those terms as they are used in that limited context. See 48 CFR § 25.003 (stating that for purposes of BAA,
`“domestic end product[s]” and “domestic construction material[s]” include, among other things, certain manufactured
`products or materials where either the cost of the components mined, produced, or manufactured in the United States
`exceeds 50% of the cost of all components, or the product or material is a commercially available off-the-shelf item).
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`FTC guidance and caselaw providing that marketers should not claim products are MUSA unless
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`they can substantiate such products are “all or virtually all” MUSA. Defendant Harmon agreed
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`to market his products consistent with FTC guidance and caselaw going forward.
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`22.
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`On January 18, 2017, FTC staff issued a letter on the public record explaining the
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`investigation into ALG was closed based on Defendant Harmon’s: (1) production of a certificate
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`stating his products qualified as “Domestic End Products” under the BAA; (2) commitment to
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`remove all unqualified MUSA claims from his website; and (3) agreement to qualify “Buy
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`American Act Compliant” claims on any marketing materials not specifically targeted at
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`government purchasers. The letter reiterated guidance and caselaw previously discussed with
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`Defendant Harmon providing that marketers should not make unqualified MUSA claims unless
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`the products advertised are “all or virtually all” MUSA. Exhibit E.
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`23.
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`Since 2017, in numerous instances, Defendants have continued to market Patriot
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`LED products to consumers and the U.S. government as “Assembled in the USA” and “Buy
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`American Act Compliant” including, but not limited to, through the following statements and
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`depictions:
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`Exhibit F, Axis LED Catalogue.
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`24.
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`In truth and in fact, in numerous instances, ALG wholly imports these products
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`from China.
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`25.
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`In numerous instances, ALG employees have peeled “Made in China” stickers off
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`LED products in ALG facilities and replaced them with MUSA labels. Exhibit G, Morlock Decl.
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`at ¶¶ 5-8; see also Exhibit H, Hutson Decl. at ¶ 5 (stating the lighting operation consisted of
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`simply re-boxing Chinese lighting products).
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`26.
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`Since 2015, ALG has supplied hundreds of thousands of lights to consumers and
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`the U.S. government that underwent no manufacturing in the United States, other than occasional
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`quality checks. Exhibit G, Morlock Decl. at ¶ 9.
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`During the COVID-19 pandemic, Defendants falsely marketed, labeled, and sold wholly or
`partially imported Chinese PPE as MUSA, and made other deceptive claims for PPE.
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`27.
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`On January 31, 2020, Health and Human Services Secretary Alex M. Azar II,
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`pursuant to his authority under Section 319 of the Public Health Service Act, declared a public
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`health emergency, which remained in effect throughout the activities detailed below, and
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`beyond. On March 11, 2020, the World Health Organization declared the 2019 novel
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`coronavirus (“COVID-19”) outbreak a global pandemic.2
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`2 See WHO Director-General’s Remarks (March 11, 2020), available at
`https://www.who.int/director-general/speeches/detail/who-director-general-s-opening-remarks-
`at-the-media-briefing-on-covid-19 -- 11-march-2020,
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`28.
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`In early 2020, seeking to capitalize on demand because of the COVID-19
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`pandemic, ALG began selling PPE, including KN95 respirators,3 gloves, and gowns, out of
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`ALG’s facility in Defiance, Ohio.
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`29.
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`30.
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`In March 2020, Defendants began operating as ALG-Health.
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`ALG-Health primarily markets and sells PPE products online, through its own
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`website, alg-health.com, and through www.stockmedicalsuppply.com.
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`31.
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`In late 2020, based on documentation supplied by ALG-Health, the National
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`Institute for Occupational Safety & Health (“NIOSH”)4 certified certain of Defendants’ masks as
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`N95 respirators.
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`32.
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`Starting in 2020, Defendants disseminated or caused to be disseminated,
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`advertisements, packaging, and promotional materials for PPE products, including, but not
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`necessarily limited to, the attached Exhibits I-M:
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`3 A respirator labeled as a KN95 respirator is expected to conform to China’s GB2626 standard.
`4 The Occupational Safety and Health Act of 1970, codified at 29 U.S.C. §§ 651-678, established
`NIOSH as a research agency focused on the study of worker safety and health, and empowering
`employers and workers to create safe and healthy workplaces. NIOSH is part of the U.S. Centers
`for Disease Control and Prevention, in the U.S. Department of Health and Human Services. See
`https://www.cdc.gov/niosh/about/default.html. Among other things, NIOSH approves N95
`respirators using standards promulgated under 42 C.F.R. § 84. NIOSH does not approve KN95
`products, or any other respiratory protective devices certified to international standards.
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`a.
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`“Manufactured in USA”
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`Exhibit I, Composite Exhibit, ALG Health website and social media posts.
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`b.
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`“Made in USA”
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`Exhibit J, Composite Exhibit, ALG Social Media Posts.
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`c.
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`“ALG Health is producing N95 respirators and disposable masks that are
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`100% Made in the USA for our men and women first responders, medical
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`personnel, military, government agency, and humanitarian efforts.”
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`Exhibit K, ALG YouTube Video.
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`d.
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`AN AMERICAN SOLUTION
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`Our manufacturing facility was built in NW Ohio and is completely staffed by American
`workers, making ALG Health one of the very few PPE facilities in America that is 100% Made
`in the USA. We are fully Berry Amendment (10 U.S.C 2533a) compliant and adhere to the laws
`passed by the United States Congress.
`Exhibit L, alg-health.com (webarchive.org capture from Dec. 28, 2020).
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`e.
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`Healthcare customers should “purchase American-made PPE and masks
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`so that our heroic frontline workers do not have their safety put at risk by
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`relying on foreign-made products”; and “imported products are not tested
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`and could be unsafe.” Exhibit M, Composite Exhibit, ALG Social Media
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`Posts.
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`33.
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`In numerous instances, including but not limited to the promotional materials
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`referenced in Paragraph 32, Defendants have represented, expressly or by implication, that their
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`PPE products are all or virtually all made in the United States.
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`34.
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`In numerous instances, including but not limited to the promotional materials
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`referenced in Paragraph 32, Defendants have represented, expressly or by implication, that
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`because they are all or virtually all made in the United States, Defendants’ products are safer or
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`provide superior protection from COVID-19.
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`35.
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`In fact, in numerous instances, the products advertised using the statements
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`described in Paragraph 32 were wholly imported from China. See Exhibit G, Morlock Decl. at
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`¶¶ 24, 33 (“Probably 90% of the masks Mr. Harmon sold were brought in from China as finished
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`masks. Maybe more.”); Exhibit H, Hutson Decl. at ¶¶ 7, 14 (“If I had to guess I would estimate
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`there was a 90%-10% split between the ALG masks that were wholly imported and those that
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`were ‘made’ in Ohio.”); Exhibit N, Feeney Decl. at ¶ 28 (“If I had to guess, I would say probably
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`80% or so of the masks we sold were imported masks.”).
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`36.
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`Indeed, in numerous instances, Defendants received Chinese KN95s, unpacked
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`the completed respirators, stripped off Chinese origin labels, printed ALG and NIOSH labels on
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`the respirators, and then re-boxed the respirators in ALG packaging with MUSA labels. Exhibit
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`G, Morlock Decl. at ¶ 24 (“[H]undreds of thousands of Chinese masks were arriving from Venas.
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`As each shipment arrived, we unpacked the Chinese masks, printed them with the ALG logo and
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`NIOSH markings, and re-boxed them into Patriot Mask packaging with ‘Made in USA’ written
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`on it.”); Exhibit H, Hutson Decl. at ¶ 7 (“I witnessed ALG Health employees putting Chinese
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`respirators in ALG boxes and labeling them as ‘Made in USA.’”).
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`37.
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`In other instances, the products advertised using the statements described in
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`Paragraph 32 undergo some finishing in the United States, but still incorporate all Chinese
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`materials. Exhibit G, Morlock Decl. at ¶ 20 (“From the beginning and at all times, all our masks
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`and mask-making materials came from China.”); Exhibit H, Hutson Decl. at ¶¶ 11-12 (“During
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`my time at ALG, the company had some capacity to make masks on a very small scale, but never
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`enough to cover the orders the company received. To the extent ALG did make some masks in
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`the United States, all the materials used to make the masks were imported from China.”); Exhibit
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`N, Feeney Decl. at ¶ 28 (“Maybe 20% of the masks ALG sold were made in Ohio; all the
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`materials used to make those masks were imported.”).
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`38.
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`Therefore, Defendants’ express or implied representations that its PPE products
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`are all or virtually all made in the United States are false.
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`39.
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`In August 2021, Defendants placed a notice on their website announcing a
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`voluntary stop-sale of all NIOSH-certified products pending resolution of a NIOSH
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`nonconformance investigation. Exhibit O.
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`40.
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`Despite this notice, Defendants continued to market their products as MUSA, and
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`NIOSH-certified N95s,5 and sell them to consumers. Exhibit G, Morlock Decl. at ¶¶ 50-53
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`5 NIOSH recorded the NIOSH stylized logo with and without text, as well as the certification
`marks N95, N99, N100, P95, P100, and the term “NIOSH-approved,” with the U.S. Patent and
`Trademark Office. NIOSH permits manufacturers to use these certification marks only if they
`are NIOSH-approval holders because of their products satisfying the NIOSH’s regulatory
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`(“Eventually, in summer 2021, NIOSH ordered us to stop selling. Mr. Harmon buried a
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`disclaimer on his website about the stop sale, but would tell people on the phone who asked
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`about it that it was not a big deal . . . Mr. Harmon never stopped selling masks; he told us the
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`stop-sale only applied to ALG Health and he could continue to sell masks through Axis LED.”);
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`Exhibit N, Feeney Decl. at ¶ 36 (“Despite the August 2021 NIOSH stop-sale, Mr. Harmon
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`continued to sell respirators with NIOSH markings.”).
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`41.
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`In January 2022, NIOSH published a notice on the cdc.gov website stating ALG
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`voluntarily rescinded all NIOSH respirator approvals and ALG respirators bearing the referenced
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`approval numbers could no longer be manufactured, assembled, sold, or distributed. Exhibit P.6
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`42.
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`Despite this notice, Defendants continued to market certain of the identified
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`products as MUSA and NIOSH-certified N95s, and sell these products to consumers. Exhibit Q,
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`Images of ALG Respirators Purchased February 2022; Exhibit R, ALG Instagram Feed (Feb. 3,
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`2022); Exhibit S, ALG Specification Sheet (Jan. 27, 2022).
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`43.
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`Based on the facts and violations of law alleged in this Complaint, Plaintiff has
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`reason to believe that Defendants are violating or are about to violate laws enforced by the
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`Commission because, among other things, Defendants have engaged in their unlawful acts and
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`practices repeatedly over at least a five-year period, Defendants have engaged in their
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`unlawful acts and practices willfully and knowingly, and Defendants have continued their
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`unlawful activities despite a previous FTC investigation, and investigations by other federal
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`government agencies.
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`standards set forth in 42 C.F.R. Part 84. See
`https://www.cdc.gov/niosh/npptl/usernotices/counterfeitResp.html.
`6 See also NIOSH Respiratory Protective Device Information (Jan. 11, 2022),
`https://www.cdc.gov/niosh/npptl/resources/pressrel/letters/respprotect/CA-2022-1042.html.
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`The Individual Defendant’s Knowledge
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`44.
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`At all times relevant to this Complaint, Defendant Harmon had sole responsibility
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`for creating, developing, approving, implementing, overseeing, or ensuring compliance with
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`company policies and procedures.
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`45.
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`At all times relevant to this Complaint, Defendant Harmon had sole responsibility
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`for and control and decision-making authority over product marketing and labeling, including
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`U.S.-origin claims.
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`46.
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`In 2016, Defendant Harmon acknowledged he was aware of and understood FTC
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`guidance and caselaw providing that marketers must not make unqualified MUSA claims unless
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`the advertised products are all or virtually all MUSA.
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`47.
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`As described in Paragraphs 21-22, in 2016, Defendant Harmon specifically
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`agreed, among other things, to market his products consistent with the FTC guidance and
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`caselaw providing that marketers must not make unqualified MUSA claims unless the advertised
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`products are all or virtually all MUSA in order to resolve an FTC investigation into allegations
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`he deceptively marketed his products.
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`48.
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`In 2017, Defendant Harmon acknowledged receipt of a letter from FTC staff
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`reiterating the FTC guidance and caselaw referenced in Paragraph 47, and Defendant Harmon’s
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`agreement to market his products consistent with such guidance.
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`49.
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`At all times relevant to this Complaint, Defendant Harmon was aware that ALG
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`products incorporated significant imported content and, in many cases, were wholly imported.
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`50.
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`Indeed, Defendant Harmon’s name and contact information appears on
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`commercial invoices for imported, completed masks. Exhibit N, Feeney Decl. at pp. 8-11.
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`51.
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`Despite this knowledge, Defendant Harmon repeatedly asserted in marketing
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`materials and on labels that such products were all or virtually all and, in some cases, 100%
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`MUSA.
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`52. Moreover, Defendant Harmon repeatedly published articles and marketing
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`materials stating or implying ALG products were safer or otherwise superior to imported
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`products.
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`Violations of the FTC Act
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`53.
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`Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits “unfair or deceptive
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`acts or practices in or affecting commerce.”
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`54.
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`Misrepresentations or deceptive omissions of material fact constitute deceptive
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`acts or practices prohibited by Section 5(a) of the FTC Act.
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`55.
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`Section 12 of the FTC Act, 15 U.S.C. § 52, prohibits the dissemination of any
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`false advertisement in or affecting commerce for the purpose of inducing, or which is likely to
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`induce, the purchase of food, drugs, devices, services, or cosmetics. For purposes of Section 12,
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`facemasks sold by Defendants are “devices” as defined in Section 15(d) of the FTC Act, 15
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`U.S.C. § 55(d).
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`56.
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`Enacted on December 27, 2020, the COVID-19 Act provides for civil penalties
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`for any person who engages in a deceptive act or practice in or affecting commerce in violation
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`of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), that is associated with the treatment, cure,
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`prevention, mitigation, or diagnosis of COVID-19 during the public health emergency declared
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`on January 31, 2020, pursuant to Section 319 of the Public Health Service Act. Pub. L. No. 116-
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`260, Title XIV, § 1401(b)(1).
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`57.
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`The COVID-19 Act provides that “[a] violation of subsection (b) shall be treated
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`as a violation of a rule defining an unfair or deceptive act or practice as described under Section
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`18(a)(1)(B) of the [FTC] Act,” 15 U.S.C. § 57a(a)(1)(B).
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`58.
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`Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. § 45(m)(1)(A), as implemented
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`by 16 C.F.R. § 1.98(d), authorizes this Court to award monetary civil penalties of up to $46,517
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`for each violation of Section 5(a) of the FTC Act pursuant to the COVID-19 Act.
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`Count I
`FTC Act Violation – MUSA Claims for LED Products
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`59.
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`In numerous instances since 2016, in connection with the advertising, marketing,
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`promotion, offering for sale, or sale of LED lights, Defendants have represented, directly or
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`indirectly, expressly or by implication, that their goods are all or virtually all made in the United
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`States, or assembled in the United States.
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`60.
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`In truth and in fact, in numerous instances, Defendants’ LED products are wholly
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`imported, or incorporate significant imported materials or subcomponents.
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`61.
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`Therefore, Defendants’ representations as set forth in Paragraph 59 are false,
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`misleading, or unsubstantiated, and constitute deceptive acts or practices in violation of Section
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`5(a) of the FTC Act, 15 U.S.C. § 45(a).
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`Count II
`FTC Act Violation – MUSA Claims for PPE Products
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`62.
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`In numerous instances since 2020, in connection with the advertising, marketing,
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`promotion, offering for sale, or sale of PPE, Defendants have represented, directly or indirectly,
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`expressly or by implication, that their goods are all or virtually all made in the United States.
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`63.
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`On or after December 27, 2020, Defendants made the representations set forth in
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`Paragraph 62, which are associated with the treatment, cure, prevention, mitigation, or diagnosis
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`of COVID-19.
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`64.
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`In truth and in fact, in numerous instances, Defendants’ PPE products are wholly
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`imported, or incorporate significant imported materials or subcomponents.
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`65.
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`Therefore, Defendants’ representations as set forth in Paragraphs 62-63 are false,
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`misleading, or unsubstantiated, and constitute deceptive acts or practices in violation of Sections
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`5(a) and 12 of the FTC Act, 15 U.S.C. §§ 45(a), 52.
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`66.
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`Defendants committed the violations set forth in Paragraphs 62-64 with the
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`knowledge required by Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. § 45(m)(1)(A).
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`Count III
`FTC Act Violation – Other False or Deceptive Claims for PPE Products
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`67.
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`In numerous instances since 2020, in connection with the advertising, marketing,
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`promotion, offering for sale, or sale of PPE, Defendants have represented, directly or indirectly,
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`expressly or by implication, that:
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`a.
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`Because they are all or virtually all made in the United States, Defendants’
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`PPE products are safer or provide superior protection from COVID-19
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`than imported products; and
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`b.
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`Defendants sell NIOSH-certified, U.S.-origin N95 respirators.
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`68.
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`On or after December 27, 2020, Defendants made the representations set forth in
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`Paragraph 67, which are associated with the treatment, cure, prevention, mitigation, or diagnosis
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`of COVID-19.
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`69.
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`In truth and in fact, in numerous instances, because Defendants’ PPE products are
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`wholly imported, or incorporate significant imported materials or subcomponents, Defendants’
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`PPE products are not safer nor do they provide superior protection from COVID-19 than
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`imported products.
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`70.
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`In truth and in fact, Defendants do not sell NIOSH-certified, U.S.-origin N95
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`respirators.
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`71.
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`Therefore, Defendants’ representations as set forth in Paragraphs 67-68 are false,
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`misleading, or unsubstantiated, and constitute deceptive acts or practices in violation of Sections
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`5(a) and 12 of the FTC Act, 15 U.S.C. §§ 45(a), 52.
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`72.
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`Defendants committed the violations set forth in Paragraphs 67-69 with the
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`knowledge required by Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. § 45(m)(1)(A).
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`Violations of the MUSA Labeling Rule
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`73.
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`Effective August 13, 2021, the MUSA Labeling Rule, 16 C.F.R. Part 323,
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`prohibits marketers from labeling products as “Made in USA” unless: (1) the final assembly or
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`processing of the product occurs in the United States; (2) all significant processing that goes into
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`the product occurs in the United States; and (3) all or virtually all ingredients or components of
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`the product are made and sourced in the United States. 16 C.F.R. § 323.2.
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`74.
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`The MUSA Labeling Rule also provides that to the extent any mail order catalog
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`or mail order promotional material includes a seal, mark, tag, or stamp labeling a product “Made
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`in USA,” such label must comply with the requirements of 16 C.F.R. §323.2. 16 C.F.R. § 323.3.
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`75.
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`For purposes of the MUSA Labeling Rule, “Made in USA” is defined as “any
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`unqualified representation, express or implied, that a product or service, or a specified
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`component thereof, is of U.S. origin, including, but not limited to, a representation that such
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`product or service is ‘made,’ ‘manufactured,’ ‘built,’ ‘produced,’ ‘created,’ or ‘crafted’ in the
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`United States or in America, or any other unqualified U.S.-origin claim.” 16 C.F.R. § 323.1.
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`76.
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`A violation of the MUSA Labeling Rule constitutes an unfair or deceptive act or
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`practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. §45(a). 15 U.S.C. § 57a(d)(3) and
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`16 C.F.R. § 323.4.
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`77.
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`Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. § 45(m)(1)(A), as implemented
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`by 16 C.F.R. § 1.98(d), authorizes this Court to award monetary civil penalties of up to
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`$46,517 for each violation of the MUSA Labeling Rule.
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`Count IV
`MUSA Labeling Rule Violations
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`78.
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`In numerous instances since August 13, 2021, Defendants have placed MUSA
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`labels on products containing significant imported components.
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`79.
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`In numerous instances since August 13, 2021, Defendants have included images
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`of the labels on products described in Paragraph 78, as well as stylized seals labeling such
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`products MUSA, in mail order promotional material, including on the alg-health.com website
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`and social media platforms.
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`80.
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`Defendants applied the labels described in Paragraphs 78-79 to products
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`containing ingredients or components that are not all or virtually all made and sourced in the
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`United States.
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`81.
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`Defendants’ practices as alleged in Paragraphs 78-80 violate the MUSA Labeling
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`Rule, 16 C.F.R. §§ 323.2, 323.3, and therefore are unfair or deceptive acts or practices in
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`violation of Section 5 of the FTC Act, 15 U.S.C. § 45(a).
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`82.
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`Defendants committed the violations set forth in Paragraphs 78-80 with the
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`knowledge required by Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. § 45(m)(1)(A).
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`Consumer Injury
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`83.
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`Consumers are suffering, have suffered, and will continue to suffer substantial
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`injury as a result of Defendants’ violations of the FTC Act and the MUSA Labeling Rule.
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`Absent injunctive relief by this Court, Defendants are likely to continue to injure consumers and
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`harm the public interest.
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`Prayer for Relief
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`Wherefore, Plaintiff requests that the Court:
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`A.
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`Enter a permanent injunction to prevent future violations of the FTC Act and the
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`MUSA Labeling Rule