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    Michigan 2007 enforcement action against Mandatory Poster Agency

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    Michigan 2007 Enforcement Action Against Mandatory Poster Agency

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    Michigan 2007 enforcement action against Mandatory Poster Agency

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    STATE OF MICHIGAN CIRCUIT COURT FOR THE 30th JUDICIAL CIRCUIT INGHAM COUNTY MICHAEL A. COX, Attorney General of the State of Michigan Hon, JUDGE LAURA BAIRD on Behalf of the People of the State of Michigan, No. 07-58 F -CP Plaintiff, ‘The MANDATORY POSTER AGENCY, INC., Doing Business As: MANDATORY POSTER AGENCY, MICHIGAN FOOD SERVICE COMPLIANCE CENTER, MICHIGAN CENTER FOR DISEASE EDUCATION, MICHIGAN CHEMICAL CONTROL CENTER, and MICHIGAN LABOR LAW POSTER SERVICE; THOMAS FATA, Individually, STEVEN FATA, Individually, and JOSEPH FATA, Individually, Jointly and Severally, Defendants. / COMPLAINT FOR PERMANENT INJUNCTION AND OTHER RELIEE PARTIES 1. . MICHAEL A. COX, Attorney General of the State of Michigan, by the undersigned Assistant Attorneys General, brings this action in his official capacity on behalf of the People of the State of Michigan, to secure injunctive and other equitable relief as deemed appropriate by the Court, pursuant to the statutory and common law authority of the Attomey General to act on behalf of the welfare of the citizens of this state, including the initiation of actions on behalf of the people of the State of Michigan; such authority being liberally construed. MCL 14.28, In Re Certified Question From the U. S, District Court For the Eastern District of Michigan County of Wayne v Philip Morris Inc., et al, 465 Mich 537 (2002), Chiropractic Association v Kelley, 79 Mich App 789 (1977), Michigan ex rel Kelley v CR Equipment Sales, Inc,, 898 F Supp 509 (WD Mich, 1995). 2, Defendant Mandatory Poster Agency, Inc., doing business es Mandatory Poster Ageney, is a Michigan corporation with a registered office address of 422 Elmwood, Ste. 14, Lansing, Michigan 48917 that is engaged in trade or commerce in the State of Michigan and elsewhere by the solicitation and sale of workplace posters. Mendatory Poster Agency, Inc. engages in trade or commerce under various other names, including Michigan Food Service Compliance Center, Michigan Center for Disease Education, Michigan Chemical Control Center, Michigan Labor Law Poster Service, Poster Compliance Center, and others. 3. Corporate officers of Mandatory Poster Agency, Inc. are Thomas Fata (President), Steven Fata (Vice President), and Joseph Fata (Secretary and Treasurer). Each of the foregoing individuals are and have been intimately involved in the operation, management and control of Mandatory Poster Agency, with knowledge of the activities hereinafter set forth, and actively promoted the activity by formulating, directing, controlling, and participating in the acts and practices set forth, 4. For purposes of this Complaint, any references to the acts and practices of Mandatory Poster Agency, Inc. and any other name used by Mandatory Poster Agency, Inc., including by not limited to Michigan Food Service Compliance Center and Michigan Center for Disease Education, shall mean that such acts and practices are by and through the acts of said corporation's officers, owners, directors, employees, or other agents, JURISDICTION AND VENUE 5. This action is brought by the Attomey General in the name of the people of the State of Michigen for their use and benefit and is therefore properly brought in the Ingham County Circuit Court; MCL 600.1631, MCL 12.102, MCL 600.715. FACTUAL ALLEGATIONS 6. On October 6, 2000, the Attorney General issued a Notice ef Intended Action (ONIA") alleging, in part, that Defendants committed actionable misrepresentation through deceptive and misleading mil solicitations for the sale of workplace labor law posters. A copy of the NIA is attached as Exhibit 1 and incorporated by reference. 7, The allegations of the NIA were resolved by an Assurance of Discontinuance ("Assurance") signed by Thomas Fata, individually and for Mandatory Poster Agency, Inc., Steven Fata, individually, and Joseph Fata, individually, which was filed with this Court March. 6, 2001. A copy of the Assurance is attached as Exhibit 2 and incorporated by reference. 8. Defendants have been subject of legal action and/or investigation by multiple states regarding their labor law poster solicitations, which made similar allegations of wrongdoing as the Attomey General's October 6, 2000, NIA; e.g., creating the false impression that the company is, or is affliated with, a government agency, using official-looking seals and logos on advertising materials, threatening criminal and civil penalties for failure to display proper posters, and others, 9. Despite prior legal actions by Michigan and other states, Defendants continue to employ the same misleading and deceptive tactics, inducing consumers into paying $19.95 each for posters which are available to employers for free through government agencies or can be created independently by the individual employer. 10, Commencing on or about July 2006, the Michigan Attomey General and Department of Agriculture received numerous oral and written complaints regacding direct mail Solicitations for sale of "Approved Hand Washing Posters" from "Michigan Food Service Compliance Center" (hereafler, "MFSCC") and "Michigan Center for Disease Education" (hereafter, "MCDE"), including complaints from local health departments whose staff have been contacted by solicitation recipients expressing concern of their possible violation of law and imposition of fines caused by the mailing. W ‘Copies of the solicitations are attached at Exhibit 3 (MFSCC) and Exhibit 4 (MCDE) and are incorporated by reference herein, 12. Like solicitations have or are being sent to consumers in numerous other states, including but not limited to Alaska, Colorado, Kansas, Missouri, Montana, Iésho, Illinois, Indiana, Towa, Nebraska, North Carolina, North Dakota, and Washington. In those states, Defendants change the name of "Michigan Food Service Compliance Center" to insert the name of the state to which solicitations are being mailed. 13. Like the prior workplace labor law poster solicitations, the current hand washing poster solicitations, by design and content, create the impression that the company is or is affiliated with a government agency or non-profit, or has governmental authorization or approval, including the use of a business name and acronym which implies a state entity, official-looking seal arid logo, and threatening criminal and civil penalties for failure to display proper posters, 14, At the top of the solicitation is a seal identifying the sender as the "Michigan Food Service Compliance Centes", or *Michigan Center For Disease Education.” There are no such state agoncies or centers, 15. Under the heading "Advisory To All Food Licensees" the MFSCC solicitation (Exhibit 3) claims that: State and Federal codes have recently been amended to include @ new hand washing posting requirement. Bifective immediately all Food Service Establishments will be required to post al] hand washing facilities a poster reminding FOOD SERVICE EMPLOYEES to regularly wash their hands Posters must also meet the exact specifications and procedures presented in section 2-301.12 of the code and should not be self made, Investigations will be conducted by your local inspector Any Food Service Establishment found to be in violation of State and Fedora! law by willfully failing to post approved hand washing posters may be subject to fines up to $2800... Therefore to achieve. compliance with State and Federal hand washing poster requirements, please respond to the order form below ot call the MESCC at 1-800-870-2669. You should comply today. Thank you for your continued cooperation, (All emphasis in original.) ‘Under the heading "State and Federal Food Code", the solicitation references sections 2- 301.12 and 6-301.14 as support for the above referenced requirements. 16. Under the heading "Advisory To All Businesses!" the MCDE solicitation (Exhibit 4) claims that: Due to recent world wide epidemic of the Avien Bird Flu the Michigan Center for Disease Education has decided to issue a new hand washing posting advisory. Effective immediately all Businesses are advised to post at all sinks and all public and private lavatories. It also applies to all workers regardless if they are a paid employee or not, including owners and operators. Posters should also meet the exact specifications and procedures presented in Title 21 Section 2-301.12 of the US Code of Federal Regulations and should not be self-made. Research has shown thet communicable disease are most often spread by accidentally ingesting infected people's bodily secretions including FECES, BLOOD, URINE, MUCOUS and SALIVA . . . The only effective means of achieving hand washing compliance is through the posting of multiple notices at all hand washing facilities! Therefore, to achieve compliance with the MCDE'S new hhand washing posting advertisement, please respond to the order form below or call 1-800-208-1458. You should comply today. Thank you for your continued cooperation, (All emphasis in original.) 17. A press release issued by the Michigan Department of Community Health warning Michigan businesses of the misleading solicitations is attached at Exhibit 5 18. Defendants are not a goverment agency or non-profit entity, and are not affiliated with a government agency or non-profit entity in any way. 19, Michigan food laws and Federal Food Codes have not recently been amended to include # requirement for the posting of hand washing posters. 20. Michigan law does not contain specific requirements for hand washing posters or prohibit posting of selmade hand washing posters, No fines, license suspension, license revocation or civil or criminal liability actions will result from the failure of a food establishment to post such a hand washing poster. 21 Defendants have received notice of the Attorney General's intent to seek entry of a Consent Judgment as a result of the aforementioned acts and violation of the March 6, 2001 Assurance of Discontinuance, COUNT ONE 22, Plaintiff repeats and incorporates by reference thé allegations of paragraphs | through 21 as though fully set forth. 23. The conduct described above is intended to deceive and mislead the public and the business community and constitutes actionable misrepresentation. The elements of fraudulent misrepresentation are: (1) a material representation; (2) the representation was false; (3) the defendant knew or should have know the représeitation was false; (4) the Defendant made the representation with the intention that it be relied upon; (5) the Plaintiff relied on the misrepresentation and suffered damages as a result. Novak v Nationwide Mutual Insurance Co, 235 Mich App 675, 688 (1999), Fraudulent omission silent fraud) occurs when a defendant has a duty to disclose information and fails to do 80. Hord y Environmental Research Institute of Michigan (After Remand), 463 Mich 399, 412 (2000). 24, Defendants have made material false representations, expressly or by implication as follows: a, Defendants’ Michigan Food Service Compliance Center (MFSCC) solicitation represents that "State and Federal food codes have recently been amended to include a new hand washing posting requirement" when, in fact, the Michigan Food Law and Federal Food Code were enacted and adopted in 2000 and 1999, respectively, and have not been amended since. Defendants! MFSCC solicitation represents that "Effective immediately all Food Service Establishments will be required to post at all hand washing facilities a poster reminding FOOD SERVICE EMPLOYEES to regularly ‘wash their hands," when, in fac, the referenced posting requirement is not of immediate, recent implementation, but has been in effect since 2000. Defendants! solicitations represent that "Posters must (or, as to MCDE, should") meet the exact specifications and procedures presented in section 2-310.12 of the code and should not be self-made." ‘The federal 1999 Food Code, as adopted by the Michigan Food Law of 2000, does not require any exact signage specifications or prohibit signs thet are self- made, Section 2-301.12 of the 1999 Food Code addresses the procedure for hand drying, Defendants! MFSCC solicitations represent that "Investigations will be conducted by your local inspectors. Any Food Service Establishment found to be in violation of State or Federal law by willfully failing to post approved hand washings (sic) posters may be subject to fines up to $2500 and suspension of revocation of license, as well as possible civil liability actions." No precedence exists for the leveling of such sanctions, Defendants’ MPSCC solicitations represent that "..to achieve compliance with State and Federal hand washing posting requirements, please respond to the order form below or call the MFSCC at 1-800-870-2669. You should comply today." In fact, the Michigan Food Law of 2000 does not require food service establishments to purchase hand washing signage and signs arc available free through government agencies or each establishment may make their own signs to post. Defendants! MFSCC solicitations represent and purportedly quote a section 8-81.10 of the State and Federal Food Codes, stating that "A person who violates a provision of this code shall be guilty of a misdemeanor, punishable by: (1) a fine of not more that (sic) 2500 dollars, or by imprisonment not exceeding one year or both the fine and imprisonment...Bach day on which a violation occurs is a separable violation under this section." There is no section 8.811,10 in the Federal Food Code or Micitigan Food Law of 2000, nor do the cited penalties appear in any other sections of the same, & Defendants’ solicitations misrepresent, directly or by implication, thet Defendants, or the contents of their communication, have governmental approval, authority, or other connection, by meens including but not limited to: i (2) stating that their posters are "approved" (2) using officia!-looking seals and logos, and company names and acronyms that suggest governmental affiliation; () referencing possible criminal or civil penalties or other governmental actions that may be imposed by failing to purchase Defendants’ product; (4) referencing "compliance" needs that may be fulfilled through purchase; (5) use of purported business identification numbers; (©) assertions of authority to issue advisories applicable to all businesses; (7) use of envelopes referencing enclosure of important information; (8) failing to disclose (MCDF) or disclose clearly and conspicuously (MFSCC) that Defendants are not a government agency and do not have eontracts with government agencies to supply posters to the public; and (9) implying that that Defendants (MCDE) conduct public education services, 25. Defendants knew the above representations were false or made the representations with reckless disregard for their truth or falsity. 26, Defendants intend solicitation recipients to rely on the misrepresentations. 27. Recipients of the solicitations have relied on Defendants’ misrepresentations, with the result that recipients purchased and paid for the posters offered by Defendants, COUNT TWO 28, Plaintiff repeats end incorporates herein by reference paragraphs | through 27 as though fully set forth 29, The conduct set forth above is in violation of the Compliance Measures of the March 6, 2001 Assurance of Discontinuance. 30, _A violation of any requirement of the Assurance shall entitle the Attorney General to seek and obtain a Consent Judgment from the Ingham County Circuit Court naming Mandatory Poster Agency, Inc, and Steven Fata, Thomas Fata, and Joseph Fata, each individually, as Defendants, PRAYER FOR RELIEF ‘Wherefore, Plaintiff respectfully requests that this Honorable Court enter an Order: A Permanently enjoining the Defendants from deceptive practices in the solicitation and sale of workplace posters, including but not limited to: (1) Using a company name in any workplace poster solicitation which includes words or terms that have # tendency to mislead recipients to believe that the solicitation is from a government agency, « company contracting with a government agency, or entity engaged in an educational or other non- commercial activity; (2) Using any solicitation materials that have the tendency or capacity to mislead the public that the poster solicitation is from a goverament agency, a company contracting with a government agency, or entity engaged in an educational or other non-commercial activity; (3) Using any solicitation materials that represent, directly or by implication, that posters must be purchased from Defendants to comply with eny law or that failure or delay in response may result in negative consequences, legal or otherwise, including but not limited ta the use of numbered notices (i.e. "2" Notice, ete.); (4) Using any solicitation that includes & misrepresentation of material fact, including but not limited to the legal requirements of workplace postings, possible penalties or governmental action for failure to comply with workplace postings, and existence of new or recently imposed requirements attendant to workplace postings; and (5) Failing, in any solicitation, to clearly and conspicuously disclose that Defendants are not a government agency or affiliated with a government agency and that similar posters may be available free of charge from other sources, including govemnmental agencies. B. Requiring Defendants to pay full restitution to ali Michigan purchasers of hand washing posters; C. Requiring Defendants to pay enforcement costs for the prosecution of this action; and D, _ Providing such other and further selief as justice and equity may require. Respectfully submitted; MICHABL A. COX ATTORNEY GENERAL Dateds_ SLI. ve le Ze kip paces 8 sof ‘Hassan (P67620) Assistant Auomeys General Consumer Protection Division P.O, Box 30213 Lansing, MI 48909 S17) 335-0855 'AGonsumerPricesoatUse geal Filing Cabinet ger! Manor Pte Compiaint DOC 10 ox DHYQweeeT STATE OF MICHIGAN COURT FOR THE 30ih JUDICIAL CIRCUIT INGHAM COUNTY oReurr MICHAEL A. COX, Attorney General of the State of Michigan, 7 on Behalf ofthe People of the State of Michigan, posh Hon, owen 7 Plaintiff, CaseNo, 01" B89’ v ‘The MANDATORY POSTER AGENCY, INC, doing bnsinoss as: MANDATORY POSTER AGENCY, MICHIGAN FOOD SERVICE COMPLIANCE CENTER, axid MICHIGAN CENTER FOR DISBASE EDUCATION, ‘THE NATIONAL MANDATORY POSTER AGENCY, AND THOMAS PATA, Individually, STEVEN FATA, Individuelly, and JOSEPH FATA, Individually, Jointly and Severely, Defendants, STIPULATED FINAL JUDGMENT and ORDER FOR PERMANENT INJUNCTION Issued this_4_day of. 2007, in the City of Lansing, Ingham County, Michigan. PRESENT: Honorable beaun Boi’ Inghtmn Coizty Cinonit inde ‘The Parties, Plaintiff Michael A, Cox, Attorney General ofthe State of Michigan, on behalf of the People ofthe State of Michigns, and Defeudants Tae Mandatory Poster Agency, Ine doing business as Mandatory Poster Agency, Michigan Food Service Compliance Center, Michigan Center for Disease Education, and The Netional Mandatory Poster Agency, and ‘Thomas Fata, Steven Feta, and Joseph Fata, cach indiviually, have agreed to entry of this Final Judgment and Order for Permanent Injunction to resolve all matters of dispute between them ‘with respect tothe claims elleged in the Complaint filed by Plaintiff, In stipulating tothe entry of this Final Judgment and Order for Permanent Injunction, the mutual objective of the parties is to resolve, with finality and without tial, adjudication, or appeal of any issue of factor law, the claims alloged in the Complaint; Defendants having accepted service thereof through their counsel, David R. Brake; Knaggs, Harter, Brake & Schneider, P.C, Stipulation to this final Judginent and Order for Pemianent Injunction is neither an admission of liability nor an adesission of any factual allegation of the Complaint. NOW THEREFORE, the parties having requested the Court to enter this Final Judgment and Order, {7 IS HEREBY ORDERED, ADJUDGED, AND DECREED as follows: 1. Jurisdiction 1, This Court has jurisdiction of the subject matter of this ease and of the parties hereto, 2. Venue is proper as to all parties in the 30 Judicial Cirouit Court, Ingham County, Michigan, Ul, Parties Bound 3, Except as oterwise specifically provided, the provisions of the Final Judgment shall apply to and be binding upon The Mandatory Poster Agency, Inc, Steven Fata, individnaly, Thomas Fata, individually, and Joseph Fata, individually, whether acting with or through any agents, employees, representatives, successors, assigns, or other person, or through aay other subsidiery, corporation, assumed name or other business name or entity, including ‘without limitation, Mandatory Poster Agency, Michigan Food Service Compliance Center, Michigan Center for Disesse Education, The Nationel Mandatory Poster Agenoy, Michigan Chemical Control Center, The Michigan Labor Law Poster Agency, The Labor Law Poster Service, and Poster Complignee Center, 4, Defendants consent to entry of this Fine] Judgment and waive eny right of appeal, ‘1. Definitions ‘As used in this Final Judgment end Onder for Permanent Injunction 5. "Clear and Conspicuons" (including “clearly and conspicuously") means a statement thet is readily understandable and jresénted in such font, siz, color, contrast and Jocetion, compered to the other information with which it is presented, that it is readily apparent to and noticeable by the person to whom it is directed. A statement may not contradict or be inconsistent with any ofher information with which itis presented, Ifa statement is necessary to prevent other information frown being misleading or deceptive, then the staternoat mast be presented in proximity to that other information, in a manner that is realy noticeable, readable, and understandable, and it must not be obscured in any manner. 6. "CPD" means the Michigen Department of Atfomey General, Consumer Protection Division, 7. "Defendants" means The Mandatory Poster Agency, lnc. Mandstory Poster Agency, Michigan Food Service Complience Center, Michigan Center for Disease Education, ‘The National Mandstory Poster Ageney, Michigan Chemical Control Center, Steven Fata, individually, Thomas Fata, individually, and Joseph Fata, individually; whether acting with or through eny principals, agents, employees, representatives, successors or assigns, subsidiary, affiliete, corporation, or other business name or entity, including but uot limited to The Michigan, Labor L.aw Poster Service end Poster Compliance Center 8, "Final Judgment” means this Stipulated Final Judgment and Order for Permanent Anjuction, 9, "Representing" (including represent) means stating, orally or in writing, directly ‘ndireetly, in substance or effect, and whether by affirmative statement, implication, or omission, TY, Iniunet sions 10. . Yh connection with the advertising, promotion, offering for sale, sale or

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