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Financial Services Law Insights and Observations

District court: FTC allegations fail due to lack of credible experts

Courts FTC FTC Act

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On September 24, the U.S. District Court for the Western District of Pennsylvania entered an order granting a Pennsylvania-based home insulation manufacturer’s motion under Fed. R. Civ. P. 52(c). The insulation manufacturer was accused of violating the FTC Act by making misrepresentations regarding the performance of its home insulation product. In particular, the FTC “challenge[d] the veracity” of the company’s “R-value” claims about the performance of its house insulation product. In the order, the court ruled that the FTC “offered no reliable or credible expert testimony.” The court explained that “[w]hen the FTC challenges the veracity of a corporation’s R-value and energy saving claims, expert testimony is required,” and emphasized that the FTC has the burden of proving that a company’s “purported substantiation is inadequate.” The FTC’s two expert witnesses, the court determined, were not credible and did not express “a reasonable degree of scientific certainty.” The court further ruled that the FTC failed to demonstrate by a preponderance of evidence that the company’s substantiation lacked a reasonable basis. As a result of the order, judgment will be entered in favor of the defendant and against the FTC.