040730answerofrespondentdennisgay

FEDERAL TRADE COMMISSION RECEIVED DOCUMENTS JUL 30 2004 SECRETARY Richard D. Burbidge (0492) Jefferson W. Gross (8339) BURBIDGE & MITCHELL 215 South State Street, Suite 920 Salt Lake City, Utah 84111 Telephone: (801) 355-6677 Facsimile: (801) 355-2341 Attorneys for Respondent Dennis Gay ## UNITED STATES OF AMERICA BEFORE THE FEDERAL TRADE COMMISSION | In the Matter of BASIC RESEARCH, LLC, et al. | Docket No. 9318 ALJ: Stephen McGuire | | --- | --- | ### ANSWER OF RESPONDENT DENNIS GAY Pursuant to Rule 3.12 of the Rules of Practice for Adjudicative Proceedings, Respondent Dennis Gay (Mr. Gay) answers the Complaint on file herein as follows: 1. Admits. 2. Admits. 3. Admits. 4. Admits. 5. Admits. 6. Admits the first sentence. Denies all remaining allegations. 7. Denied, except admits the last sentence. 8. Denied, except admits the last sentence. 9. Denied, except admits that Friedlander has performed marketing services for one or more of the Respondents. 10. Denied. 11. Denied, except admits that at different times certain of the Respondents have advertised, distributed and sold products listed in this paragraph. 12. Denied. 13. Admits that at different times Mr. Gay and certain of the Respondents disseminated the advertisements. Denies that Mr. Gay caused any advertisements to be disseminated, in that the term “caused” is inherently vague, subjective, and susceptible to numerous and different interpretations. Denies the remaining allegations. 14. Denied, in that the terms "causes", "rapid", and "visibly obvious" do not appear in Dermalin-APg(tm) advertisements, are not defined in the Complaint, and are inherently vague, subjective, and susceptible to numerous and different interpretations. All remaining allegations are denied. 15. Denied, in that the phrase "reasonable basis" is not defined in the Complaint, is inherently vague, subjective and is subject to no discernible quantitative or qualitative requirements. Additionally, Mr. Gay believes that substantiation exists now and existed for the claims made in the advertisement for Dermalin-Apg. All remaining allegations are denied. inherently vague, and subject to no discernible quantitative or qualitative requirements. Additionally, Mr. Gay believes that substantiation exists now and existed at the time the Tummy Flattening Gel advertisements were made All remaining allegations are denied. 22. Denied, in that the phrase "reasonable basis" is not defined in the Complaint, is inherently vague, and subject to no discernible quantitative or qualitative requirements. Additionally, Mr. Gay believes that substantiation exists now and existed at the time Tummy Flattening Gel advertisements were made All remaining allegations are denied. 23. Denied, in that the terms "causes", "rapid", and "visibly obvious" do not appear in advertisements, are not defined in the Complaint, are inherently vague, subjective, and susceptible to numerous and different interpretations. All remaining allegations are denied. 24. Denied, in that the terms "causes", "rapid", and "visibly obvious" do not appear in advertisements, are not defined in the Complaint, are inherently vague, subjective, and susceptible to numerous and different interpretations. All remaining allegations are denied. 25. Denied, in that the terms "causes", "rapid", and "visibly obvious" do not appear in advertisements, are not defined in the Complaint, are inherently vague, subjective, and susceptible to numerous and different interpretations. All remaining allegations are denied. 26. Denied, in that the terms "causes", "rapid", and "visibly obvious" do not appear in advertisements, are not defined in the Complaint, are inherently vague, subjective, and susceptible to numerous and different interpretations. All remaining allegations are denied. 4 27. Admits that at different times Mr. Gay and certain of the Respondents disseminated the advertisements. Denies that Mr. Gay caused any advertisements to be disseminated, in that the term “caused” is inherently vague, subjective, and susceptible to numerous and different interpretations. Denies the remaining allegations. 28. Denied, in that the terms "causes", and "substantial" do not appear in Leptoprin advertisements, are not defined in the Complaint, and are inherently vague, subjective, and susceptible to numerous and different interpretations. All remaining allegations are denied. 29. Denied, in that the phrase "reasonable basis" is not defined in the Complaint, is inherently vague, and subject to no discernible quantitative or qualitative requirements. Additionally, Mr. Gay believes that substantiation exists now and existed at the time Leptoprin advertisements were made. All remaining allegations are denied. 30. Denied, in that the phrase "reasonable basis" is not defined in the Complaint, is inherently vague, and subject to no discernible quantitative or qualitative requirements. Additionally, Mr. Gay believes that substantiation exists now and existed at the time Leptoprin advertisements were made. All remaining allegations are denied. 31. Denied, in that the terms "causes", and "substantial" do not appear in Leptoprin advertisements, are not defined in the Complaint, and are inherently vague, subjective, and susceptible to numerous and different interpretations. All remaining allegations are denied. 32. Denied, in that the terms "causes", and "substantial" do not appear in Leptoprin advertisements, are not defined in the Complaint, and are inherently vague, subjective, and 5 susceptible to numerous and different interpretations. All remaining allegations are denied. 33. Denied, in that the terms "causes", and "substantial" do not appear in Anorex advertisements, are not defined in the Complaint, and are inherently vague, subjective, and susceptible to numerous and different interpretations. All remaining allegations are denied. 34. Denied, in that the phrase "reasonable basis" is not defined in the Complaint, is inherently vague, and subject to no discernible quantitative or qualitative requirements. Additionally, Mr. Gay believes that substantiation exists now and existed at the time Anorex advertisements were made. All remaining allegations are denied. 35. Denied, in that the phrase "reasonable basis" is not defined in the Complaint, is inherently vague, and subject to no discernible quantitative or qualitative requirements. Additionally, Mr. Gay believes that substantiation exists now and existed at the time Anorex advertisements were made. All remaining allegations are denied. 36. Admits that at different times Mr. Gay and certain of the Respondents disseminated the advertisements. Denies that Mr. Gay caused any advertisements to be disseminated, in that the term "caused" is inherently vague, subjective, and susceptible to numerous and different interpretations. Denies the remaining allegations. 37. Denied, in that the terms "causes", and "substantial" do not appear in Pedialean advertisements, are not defined in the Complaint, and are inherently vague, subjective, and susceptible to numerous and different interpretations. All remaining allegations are denied. 38. Denied, in that the phrase "reasonable basis" is not defined in the Complaint, is 6 inherently vague, and subject to no discernible quantitative or qualitative requirements. Additionally, Mr. Gay believes that substantiation exists now and existed at the time Pedialean advertisements were made. All remaining allegations are denied. 39. Denied, in that the phrase "reasonable basis" is not defined in the Complaint, is inherently vague, and subject to no discernible quantitative or qualitative requirements. Additionally, Mr. Gay believes that substantiation exists now and existed at the time Pedialean advertisements were made. All remaining allegations are denied. 40. Denied, in that the terms "causes", and "substantial" do not appear in Pedialean advertisements, are not defined in the Complaint, and are inherently vague, subjective, and susceptible to numerous and different interpretations. All remaining allegations are denied. 41. Denied, in that the terms "causes", and "substantial" do not appear in Pedialean advertisements, are not defined in the Complaint, and are inherently vague, subjective, and susceptible to numerous and different interpretations. All remaining allegations are denied. 42. Denied. 43. Denied, except admits the first sentence. 44. Denied. ### AFFIRMATIVE DEFENSES First Amendment: Free Speech The Commissions Complaint abridges Mr. Gay's rights under the First Amendment to the United States Constitution in that the Complaint seeks to punish and prohibit protected 7 commercial speech through the use of ad hoc and non-defined terms and advertising substantiation standards that lack any measurable degree of definiteness. The Complaint further violates Mr. Gay's First Amendment rights in that the instant administrative proceeding is premised upon so called "implied" representations that are not obvious from the express language of the advertisements, but which the Federal Trade Commission has inferred from the advertisements without the benefit of extrinsic evidence. ### Fifth Amendment: Procedural and Substantive Due Process The Commission's Complaint, as alleged, abridges Mr. Gay's rights under the Fifth Amendment to the United States Constitution in that the Complaint seeks to punish and prohibit protected commercial speech through the use of ad hoc and non-defined terms and advertising substantiation standards that lack any measurable degree of definiteness. ### Arbitrary and Capricious Agency Action The Complaint and administrative enforcement action in this cause constitutes arbitrary and capricious agency action under 5 United States Code, Section 701, in that the Federal Trade Commission's action against Mr. Gay seeks to punish and prohibit protected commercial speech through the use of ad hoc and non-defined terms and advertising substantiation standards that lack any measurable degree of definiteness. ### Laches The Federal Trade Commission purposely delayed this action in order to time its administrative Complaint with a parallel Congressional investigation and hearing. To the extent 8 that the Commission had a “reason to believe” that Mr. Gay had violated Sections 5(a) and 12 of the Federal Trade Commission Act, the Commission possessed the predicate evidence supporting said determination years before it chose to commence this action in coordination with a parallel proceeding by a Congressional Committee. The Commission and or its staff delayed this cause for political purposes and, in doing so, caused Mr. Gay to lose the benefit of testimony from third party witnesses and otherwise caused his defense in this action to become stale. ### DEMAND FOR ATTORNEYS’ FEES Mr. Gay reserves all claims for attorneys= fees and costs he may have the right to obtain under Recovery of Awards Under the Equal Access to Justice Act in Commission Proceedings, 5 U.S.C. 504 and 5 U.S.C. 553(b). // // // 9 DATED this 30th day of July, 2004. BURBIDGE & MITCHELL Richard D. Burbidge Attorneys for Respondent Dennis Gay # CERTIFICATE OF SERVICE I hereby certify that on this 30th day of July, 2004, I caused to be filed and served the Answer and Grounds of Defense of Respondent Dennis Gay as follows: (1) an original and two paper copies filed by hand delivery and one electronic copy in PDF format filed by electronic mail to: Donald S. Clark, Secretary Federal Trade Commission 600 Pennsylvania Avenue, N.W., Room H-159 Washington, D.C. 20580 Email: secretary@ftc.gov (2) one paper copy served by hand delivery to: The Honorable Steven J. McGuire Administrative Law Judge Federal Trade Commission 600 Pennsylvania Avenue, N.W., Room H-112 Washington, D.C. 20580 (3) one paper copy by first class U.S. mail and one electronic copy in PDF format by electronic mail to: Laureen Kapin Walter C. Gross Joshua S. Millard Robin F. Richardson Laura Schneider Federal Trade Commission 600 Pennsylvania Avenue, N.W., Suite NJ-2122 Washington, D.C. 20580 email: lkapin@ftc.gov (4) one paper copy by first class U.S. mail to: Elaine D. Kolish Associate Director, Enforcement Federal Trade Commission 601 New Jersey Avenue, N.W. Washington, D.C. 20001 DC: 1500728-1 Ronald F. Price PETERS SCOFIELD PRICE 310 Broadway Centre Salt Lake City, UT 84111 Counsel for Respondent Daniel B. Mowrey Lanny A. Breuer Jay A. Smith COVINGTON & BURLING 1201 Pennsylvania Avenue, N.W. Washington, D.C. 20004 Counsel for Respondent Basic Research, L.L.C. Mitchell K. Friedlander c/o Compliance Department 5742 West Harold Gatty Drive Salt Lake City, UT 84116 Jeffrey D. Feldman FELDMAN GALE Miami Center, 19th Floor 201 South Biscayne Blvd. Miami, Florida 33131-4332 Counsel for Respondent A.G. Waterhouse, L.L.C., Klein-Becker USA, L.L.C., Nutrasport, L.L.C., Sovage Dermalogic Laboratories, L.L.C., and Ban, L.L.C. I further certify that the electronic copies sent to the Secretary of the Commission are true and correct copies of the paper originals, and that paper copies with original signatures are being filed with the Secretary of the Commission on the same day by other means. DATED this 30th day of July, 2004. BURBIDGE & MITCHELL Richard D. Burbidge Richard D. Burbidge Attorneys for Respondent Dennis Gay