FEDERAL TRADE COMMISSION v. INNOVATIVE DESIGNS, INC.
MEMORANDUM OPINION re 224 MOTION for Judgment on Partial Findings filed by INNOVATIVE DESIGNS, INC. For the reasons stated in the opinion judgment will be entered in favor of Innovative Designs and against the FTC. An appropriate Judgment Order will follow. Details more fully stated in the opinion. Signed by Judge Nora Barry Fischer on 9/24/20. (cjo)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
FEDERAL TRADE COMMISSION,
INNOVATIVE DESIGNS, INC.,
Civ. A. No. 16-1669
Senior Judge Nora Barry Fischer
This is an action under the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b),
in which the Plaintiff Federal Trade Commission (“FTC”) alleges that Defendant Innovative
Designs, Inc. (“IDI”) violated Section 5(a) of the FTC Act (“Section 5(a)”), 15 U.S.C. § 45(a).
(Docket No. 1 ¶ 1). A non-jury trial was commenced before the undersigned on July 29, 2019 and
July 30, 2019. (Docket Nos. 201-02). At the end of the FTC’s case-in-chief, IDI moved to exclude
or strike the FTC’s only testifying expert, Dr. David Yarbrough, which motion this Court granted.
(Docket Nos. 196; 202 at 7-8; 207-08). IDI now asserts that its FED. R. CIV. P. 52(c) motion should
be granted because the FTC has failed to put forth sufficient expert testimony to prove that IDI’s
representations pertaining to Insultex House Wrap (“Insultex”) were false or lacked a reasonable
basis. (Docket Nos. 224-25). Upon consideration of the trial record, the parties’ submissions, and
based on the following findings of fact and conclusions of law, judgment will be entered in favor
of IDI and against the FTC.
On November 3, 2016, the FTC filed a three-count complaint against IDI. (Docket No. 1).
The Complaint alleges that IDI violated Section 5(a) by: (1) making false and unsubstantiated
performance claims; (2) asserting false establishment claims, and (3) providing the means and
instrumentalities for deceptive acts in advertising, promoting, offering for sale, and selling
Insultex. (Id. ¶¶ 29-33). Specifically, the FTC contends that IDI deceived its customers when it
represented that its 1 mm product had an R-value1 of R-3, its 1.5 mm product had an R-value of
R-6, and using Insultex would result in energy savings. (Id. ¶ 2; Docket Nos. 171; 209). In its
Answer, IDI responded:
Insultex . . . is a unique and state of the art product. IDI has devoted substantial
time, effort[,] and expense to fully vet Insultex . . . , both prior to marketing the
product with the R-value performance claims and subsequent to the initiation of the
instant Complaint, and to obtain R-value testing results from an ISO accredited
laboratory (hereinafter sometimes referred to as the “Laboratory”). Insultex . . . has
undergone rigorous testing and hundreds of tests by the Laboratory employing
differing variables under various conditions. Those certified test results verify that
Insultex . . . does, in fact, possess an R-3 or R-6 rating. IDI has received numerous
unsolicited testimonials from very satisfied customers relating to Insultex. . . .
These specific testimonials substantiate IDI’s assertions that Insultex . . . does, in
fact, deliver superior energy efficiency over products marketed by [its] competitors.
IDI’s promotional materials and marketing statements are the product of, and were
at all times material hereto made in reliance upon, competent and reliable scientific
testing. IDI reasonably relied on those testing results of the Laboratory in
marketing Insultex . . . as possessing R-values of R-3 or R-6 and providing energy
savings for consumers. Neither IDI nor the FTC has ever received a customer
complaint regarding Insultex. . . . Upon information and belief, the FTC initiated
its investigation into Insultex . . . at the instigation of IDI’s competitors.
(Docket No. 7 ¶ 2).
The matter proceeded through discovery2 and motions practice. (Docket Nos. 13; 60).
Recognizing that this case would turn on expert testimony, the parties directed their motions to the
use of experts. (Docket Nos. 60-61; 65). IDI moved to disqualify Dr. Yarbrough arguing that
An insulation product’s R-value is the numeric measure of that product’s ability to restrict heat flow and, thus, to
reduce energy costs — the higher the R-value, the better the product’s insulating ability. (Pretrial Stipulations, Docket
No. 127 ¶ 9); see 70 Fed. Reg. 31258 (May 31, 2005) (emphasis added) (“R-value is the numerical measure of the
ability of an insulation product to restrict the flow of heat and, therefore, to reduce energy costs—the higher the Rvalue, the better the product’s insulating ability”).
The deadline for fact discovery was extended twice for good cause. (Docket Nos. 52; 58). Expert discovery was
also extended for good cause shown. (Docket No. 95).
because IDI had previously contracted with R&D Services to perform testing on Insultex, the FTC
was prohibited from designating him as an expert given his employment relationship with R&D
Services. (Docket No. 65). This Court disagreed finding that Dr. Yarbrough’s prior testing and
his relationship with IDI was not a basis for disqualification, (Docket No. 93 at 18), because “IDI
did not disclose any confidential information to him during this case and his [consultation was]
based entirely on discoverable and publicly-available information.” (Id.) Rather, the prior
relationship was a credibility factor that the Court would “consider when assessing the veracity of
his testimony during the eventual bench trial in this matter.” (Id.)
IDI next sought leave to submit Dr. Anastassios Mavrokefalos’s sur-rebuttal or
supplemental expert report. (Docket No. 99). IDI argued that the report of Dr. Jonathan Malen,
the FTC’s rebuttal expert, not only repeated opinions found in Dr. Yarbrough’s report but also
“introduced subject matter, opinions, theories[,] and calculations not previously raised in the
FTC’s case-in-chief.” (Id.) IDI’s motion was granted, and the Court ordered that any additional
depositions of Dr. Mavrokefalos be completed by September 27, 2018.3 (Docket No. 111).
The Court then issued a Pretrial Order and the matter was set for trial to begin on January
22, 2019.4 (Docket No. 101). The parties filed their respective pretrial statements, witness lists,
designation of deposition excerpts, and pretrial stipulations.5 (Docket Nos. 112-13; 121; 125-28;
This deadline was later extended until October 31, 2018. (Docket No. 119).
This Court granted the FTC’s Amended Motion for a Stay of Trial and Related Deadlines in Light of United States
Government Cessation. (Docket Nos. 150-51). This was the second time this case had to be stayed due to a lapse in
appropriations. (Docket No. 70). After the stay was lifted, the matter was set for trial to begin on July 29, 2019.
(Docket No. 158).
The parties stipulated to:
the admissibility of the expert report and attachments of [Dr.] Yarbrough (J212); the expert rebuttal
reports and attachments of Dr. Yarbrough (J213) and Dr. Jonathan Malen (J214); and the expert
report and attachments of Mr. Scott Baumann (J215). Neither party [agreed] to the substance or the
veracity of the reports.
(Docket No. 186 ¶ 1). The parties also stipulated to the areas of expertise of Drs. Yarbrough and Malen. (Id. ¶ 2).
The parties further stipulated that Dr. Malen was an expert in the fields of heat transfer, mechanical engineering,
143-44; 163; 180; 183-84; 186; 190). In its witness list and amended witness list, the FTC
represented that it would call Dr. Yarbrough and might call Drs. Mavrokefalos and Malen.
(Docket No. 121); (see Docket No. 143) (providing the FTC would call Dr. Mavrokefalos).
Dr. Mavrokefalos was actually one of IDI’s experts at that time. (Docket No. 110).
With respect to Dr. Mavrokefalos, the FTC amended its proffer to read:6
[He] is an Assistant Professor of Mechanical Engineering at the University of
Houston. The FTC will call Dr. Mavrokefalos to testify, via deposition, regarding
opinions contained in his original expert report as well as his [s]ur[-r]ebuttal,
including opinions that are contrary to those held by [IDI’s expert,] Dr. [Donald V.]
Garlotta. Specifically, if called to testify, Dr. Mavrokefalos will testify that the Rvalue of air is not negligible and that where a heat flux transducer is placed within
an ASTM C518 setup does not influence the reported R-value, because the
transducer measures the heat flux within the system itself. Dr. Mavrokefalos also
will testify regarding matters testified to at his October 30, 2018, [sic] deposition,
including that: his prior opinions about the R-value of Insultex were incorrect; the
R-value of Insultex is less than R-1; his opinion that the R-value of Insultex is less
than [R-]1 is based entirely on his own testing; he conducted three additional tests
of Insultex which unequivocally demonstrate the R-value of Insultex is less than R1; he would disagree with any expert opinion that a standard ASTM C518 test
significantly alters the R-values of Insultex, such that the R-values measured and
reported would be below R[-]1; IDI’s thermal resistance testing unit cannot
accurately measure R-value for materials less than R-1; IDI does not have a
reasonable basis to claim an R-value of R-3 or R-6 for Insultex; IDI did not have a
good faith basis to claim R-3 at the time it began marketing Insultex; and other
matters testified to during his October 30, 2018 deposition.
(Docket No. 143).
thermal transport, and experimental measurement of thermal transport. (Id.) No agreement was reached as to
Dr. Mavrokefalos’s areas of expertise. (See id.)
In its initial offer of proof, the FTC wrote:
[he] is an Assistant Professor of Mechanical Engineering at the University of Houston. The FTC
may call Dr. Mavrokefalos to testify, either live or via deposition, regarding opinions contained in
his original expert report as well as his [s]ur[-r]ebuttal, including opinions that are contrary to those
held by Dr. Garlotta. Specifically, if called to testify, Dr. Mavrokefalos will testify that the R-value
of air is not negligible and that where a heat flux transducer is placed within an ASTM C518 setup
does not influence the reported R[-]value, because the transducer measures the heat flux within the
system itself. Dr. Mavrokefalos’s deposition is scheduled for October 30, 2018. The FTC cannot
determine the full scope of his expected testimony until after that deposition. Should the scope
change, the FTC will amend Dr. Mavrokefalos’s Offer of Proof.
(Docket No. 121).
The FTC’s offer of proof for Dr. Malen read:
[He] is a tenured Professor of Mechanical Engineering at Carnegie Mellon
University,[sic] in Pittsburgh, Pennsylvania. If called to testify, Dr. Malen will
present the opinions contained in his expert report, which rebut IDI’s experts’
expected testimony. Dr. Malen bases his opinions on quantitative predictions
drawn from well-established scientific principles as well as his own expertise in the
relevant field. Specifically, Dr. Malen will testify that IDI’s claims are false and
unsubstantiated because IDI’s testing measured the R-value of Insultex . . . in a
series or assembly with two [¾]-inch air gaps, rather than measuring the R-value
of Insultex . . . alone. Dr. Malen will employ universally accepted heat transfer
principles to demonstrate that the R-value of air is not negligible. Moreover,
Dr. Malen will testify that, pursuant to [the] well-established history of thermal
transport in porous materials, Insultex’s purported composition as a closed cell
evacuated low-density polyethylene cannot account for the product’s claimed Rvalue, as Drs. Mavrokefalos and Garlotta speculate. In addition, Dr. Malen will
testify that ASTM C518 testing did not compress Insultex . . . , as
Drs. Mavrokefalos and Garlotta hypothesized. Further, Dr. Malen will testify that
even if testing compressed the house wrap, such compression would not account
for the difference between IDI’s claimed R-3 and R-6 to actual test results showing
an R-value of no more than R-0.4. Dr. Malen will also testify that no matter the
placement of the heat flux transducer in an ASTM C518 test, the test will measure
whatever air gaps are included in the system, and that the product’s undulations
will add R-value, not subtract it, contrary to IDI’s experts’ expected testimony.
Finally, Dr. Malen will testify that the methodologies that both Dr. Yarbrough and
TA Instruments employed in testing Insultex . . . are generally accepted as reliable
and comport with the R-values he obtained with his predictive methodology.
(Docket No. 121) (emphasis added).
Subsequently the Court entertained motions in limine and objections to trial exhibit
designations, and made rulings on same.. (Docket Nos. 132-33; 135-36; 137; 140; 160-62; 165;
181; 191-92). IDI moved to preclude the FTC from using Dr. Mavrokefalos’s reports and
depositions at trial given that it had withdrawn him as a testifying expert. (Docket No. 135). This
was because Dr. Mavrokefalos remarkably changed his opinion prior to his October deposition.
(Id.; Docket No. 159). The Court denied the motion ruling that the FTC was “permitted to
introduce the relevant portions of his deposition testimony at the upcoming bench trial and/or call
him as a witness, at its expense.” 7 (Docket No. 161) (emphasis added).
The Court likewise denied the FTC’s Daubert challenge to Dr. Garlotta’s expert opinion
finding that the FTC’s argument went to the weight of the testimony, which is properly addressed
through cross-examination at trial. (Docket No. 160). But, the Court did grant the FTC’s motion
to preclude further supplementation of Dr. Garlotta’s report.8 (Docket No. 192).
At the Final Pretrial Conference, the FTC again represented that it would be calling
Dr. Yarbrough as part of its case-in-chief and Dr. Malen on rebuttal.9 (Docket No. 187 at 2). The
FTC requested the opportunity to read certain portions of Dr. Mavrokefalos’s deposition into the
record that it believed the Court should hear prior to Dr. Yarbrough’s testimony. (Pretrial
Conference Transcript 7/23/19 at 121-22). In response,
[t]he Court reiterated its strong preference that it be provided with the relevant
deposition designations instead of them being read into the record given the Court’s
time constraints. [The] FTC agreed to file of record its initial designations of
Dr. Mavrokefalos for the Court’s review in anticipation of Dr. [Yarbrough]’s
(Docket No. 187 at 2). The FTC made clear that in addition to filing the winnowed down portion
of Dr. Mavrokefalos’s deposition, it would be moving for the admission of his deposition
The Court also denied the FTC’s motion to exclude IDI’s evidence and testimony that it acted in good faith. (Docket
No. 162). In addition, it denied the FTC’s motion to exclude the lay witness testimony of Andy Lindus. (Docket Nos.
170; 181). Mr. Lindus has purchased large quantities of Insultex and was going to be called to testify that he purchased
Insultex for reasons other than its represented R-value. (Id.)
In rendering its decision, this Court found “IDI’s delay until July 15, 2019 to seek leave to file Dr. Garlotta’s rebuttal
report disregard[ed] the Court’s expert discovery deadlines and the Federal Rules of Civil Procedure.” (Docket No.
192 at 3). Weighing the Meyers v. Pennypack Woods Home Ownership Association, 559 F.2d 894, 904-03 (3d Cir.
1977), factors, the Court stated that:
The FTC would be prejudiced if Dr. Garlotta’s rebuttal report was allowed to come in;
The prejudice could not be cured given that the trial was only days away;
Reopening discovery would disrupt an orderly and efficient trial;
Dr. Garlotta’s hourly rate was only $100/hour, yet IDI had waited months to seek his opinion; and
IDI would not be prejudiced by the exclusion.
IDI planned to call Dr. Garlotta; Joseph Ricilli, the principal of IDI; Greg Domian, an employee at IDI; and Peter
Tyra and John Richey, two customers. (Pretrial Conference Transcript 7/23/19 at 124-25). The parties took Andy
Lindus’s de bene esse deposition prior to the trial. (Docket No. 201 at 16).
designations as well as the FED. R. CIV. P. 30(b)(6) deposition of Perry Johnson Laboratory
Accreditation, Inc. (“PJLA”) as set forth in its third amended deposition designations. (Pretrial
Conference Transcript 7/23/19 at 118, 122).
Relative to the procedure for moving in the designations, the following discussion
THE COURT: All right. Is there anything else then for the good of the order here
today by way of pretrial? Anything that we’ve missed, Mr. Patterson.
MR. PATTERSON: I have a question, Your Honor on the deposition designations.
When it’s my turn, I’m going to offer certain designations into evidence. I know
you have copies of everything.
THE COURT: I do.
MR. PATTERSON: Do you want me to provide the designations to the court.
THE COURT: We have the designations that have been filed and fortunately for
you, I still have two interns and the interns have been asked to take your
designations and flag the deposition pages, that’s what I’m having them do. We
lose one of the interns on Friday. We still will have one through the course of the
trial. He’s going to be with us until mid[-]August, so that’s what we’re doing so,
you know, you were offering, I guess in a sense to give me the pages and whatnot.
I don’t think you need to do that again.
MR. PATTERSON: Okay.
THE COURT: I should be able to figure it out based on the transcript and page and
line and I have hard copies of all the transcripts. Some of which I already had prior
because of the Daubert challenges and other motions brought here, but for purposes
of this proceeding, we’ll just be looking at what’s flagged, if you will.
But ultimately, this is going to come down to, you know, in effect, a
summary judgment style proceeding because what’s going to happen is, when you
do your findings of fact, I’m going to ask that you point to the record to tell me,
you know, where this is based so we can go back through the transcript, whether
it’s the week long transcript or the individual deposition transcript.
(Id. at 125-26). Before the trial began in accordance with this Court’s instructions, the FTC filed
of record the deposition excerpts of Dr. Mavrokefalos that it had planned to read at trial. (Docket
On July 29, 2019, this Court began what was to be a five-day bench trial. (Docket Nos.
158; 168; 187). In its opening, the FTC stated, “[t]he FTC’s burden in this case, Your Honor, is
to prove by a preponderance of the evidence that IDI’s R-value and energy savings claims are
misleading. . . . And to prove this, the FTC will introduce the testimony of [Dr.] Yarbrough” and
Dr. Mavrokefalos (by means of deposition). (Docket No. 201 at 4, 7). To advance its position,
the FTC explained that it would be introducing expert testimony that ASTM C518 testing was the
“consensus standard” to measure R-value. (Id. at 6).
At the end of its opening, the FTC moved for the admission of exhibits J1 through J242
(subject to the Court’s pretrial rulings at Docket No. 191),10 the joint stipulations found at Docket
Nos. 127 and 186, and the FTC’s third amended designations and counter designations found at
Docket Nos. 183-84 into evidence.11 (Docket Nos. 195-1; 201 at 18). There being no objection,
the Court admitted same. (Docket No. 201 at 19).
The FTC called Dr. Yarbrough to testify that IDI’s R-value claims were false and that
Insultex’s R-value (regardless of thickness) was negligible at best. (Id. at 6-7). After the FTC
rested, IDI moved to exclude or strike Dr. Yarbrough’s testimony. (Docket Nos. 196; 202 at 7-8).
The Court stopped the trial, took the matter under advisement, ordered an expedited transcript,
permitted supplemental briefing, and set the matter for argument. (Docket Nos. 197; 202 at 1624). Additionally, because the FTC argued that the objections IDI raised in its motion to strike
Although the FTC represented that it would bring two rolls of Insultex with counsel to trial, the FTC never supplied
J205j and J205k to the Court. See (Docket No. 201 at 19).
IDI contends that while the FTC entered into evidence Docket Nos. 183 and 184, it failed to move for the admission
of the applicable deposition transcripts. (Docket No. 225 at 2 n.2). While this Court agrees that the FTC failed to do
so per this Court’s instructions at the Final Pretrial Conference, even considering said transcripts, the FTC’s claims
fail. See Late v. United States, Civ. A. No. 1:13-CV-0756, 2016 WL 8787120, at *2 n.1 (M.D. Pa. Nov. 10, 2016)
(stating a trial record can be reopened for clerical oversight). As mentioned at the Final Pretrial Conference, the Court
was provided copies of the deposition transcripts prior to trial. (Pretrial Conference Transcript 7/23/19 at 118, 122,
were discussed in Dr. Yarbrough’s rebuttal deposition, this Court ordered production of the
deposition transcripts and requested copies of the scientific sources that Dr. Yarbrough relied on
in forming his opinion. (Docket Nos. 198-200; 202 at 22; 203-04). After careful consideration of
the evidence and the parties’ arguments, the Court ultimately granted IDI’s motion finding that
Dr. Yarbrough’s testimony was not reliable, failed to fit the case, and was not credible. (Docket
No. 218). In reaching its decision, the Court wrote,
[t]he [ASTM] C518 Standards are incorporated by reference in the FTC’s R-value
Rule and as such, are the prevailing standard in the industry. 16 C.F.R. §
460.5(e)(1)(ii); (Docket No. 201 at 33, 79). The Standards caution, however, that
“[s]tandardization of this test method is not intended to restrict in any way the future
development of improved or new methods or procedures by research workers.” (J1
§ 1.11; J2 § 1.11). Nonetheless, pursuant to In re Zoloft (Sertraline Hydrochloride)
Products Liability Litigation, any nonstandard techniques, i.e., ones that deviate
from the R-value Rule or the [ASTM] C518 Standards, need to be well explained.
858 F.3d at 797 (3d Cir. 2017) (citing Paoli II, 35 F.3d at 758).
(Id. at 20-21).12
Following this Court’s ruling, IDI moved for judgment under FED. R. CIV. P. 52(c).
(Docket Nos. 224-25). The FTC filed a response in opposition, (Docket No. 227), to which IDI
replied, (Docket No. 228). Before argument on IDI’s motion, the FTC provided the Court with
copies of the exhibits it planned to use at the May 1, 2020 Telephonic Hearing. (Docket No. 230).
Neither party requested supplemental briefing and the transcript was filed on May 27, 2020. (Id.)
The matter is now ripe for disposition.
Rule 52 of the Federal Rules of Civil Procedure reads:
(a) Findings and Conclusions.
(1) In General. In an action tried on the facts without a jury or with an advisory
Captured is only a portion of this Court’s decision. The memorandum opinion can be found at Docket No. 218
and Dr. Yarbrough’s testimony at Docket Nos. 201-02.
This Court has jurisdiction pursuant to 15 U.S.C. § 45 and 28 U.S.C. §§ 1331, 1337(a), and 1345.
jury, the court must find the facts specially and state its conclusions of law
separately. The findings and conclusions may be stated on the record after the close
of the evidence or may appear in an opinion or a memorandum of decision filed by
the court. Judgment must be entered under Rule 58. . . .
(c) Judgment on Partial Findings. If a party has been fully heard on an issue
during a nonjury trial and the court finds against the party on that issue, the court
may enter judgment against the party on a claim or defense that, under the
controlling law, can be maintained or defeated only with a favorable finding on that
issue. . . . A judgment on partial findings must be supported by findings of fact and
conclusions of law as required by Rule 52(a).
FED. R. CIV. P. 52(a), (c) (emphasis added). As such, this Court’s decision must “be supported by
subordinate factual findings.” Fagal v. Marywood Univ., Civ. A. No. 3:14-02404, 2018 WL
1993790, at *1 (M.D. Pa. 2018), aff’d, 786 F. App’x 353 (3d Cir. 2019) (internal citation omitted).
In considering whether to grant judgment under Rule 52(c), the district court applies the
same standard of proof, weighs the evidence, and assesses witness credibility14 as it would at the
conclusion of the bench trial. DLJ Mortgage Capital, Inc. v. Sheridan, -- F.3d --, 2020 WL
5638667, at *9 (3d Cir. Sept. 22, 2020) (quoting EBC, Inc. v. Clark Bldg. Sys., Inc., 618 F.3d 253,
A sister court in this Circuit recently wrote,
When making credibility determinations regarding the testimony of witnesses, a district court
considers factors including variations in demeanor and tone of voice, . . . basis of knowledge, outside
influence, bias, and extent to which testimony is self-serving, . . . evidentiary support for testimony,
. . . and whether testimony is coherent, plausible, and internally consistent.
Finneman v. SEPTA, 308 F. Supp. 3d 855, 858 (E.D. Pa. 2018) (internal citations and quotations omitted). Similarly,
the Third Circuit’s Model Jury Instructions guides:
[i]n weighing this opinion testimony, you may consider [his/her] qualifications, the reasons for
[his/her] opinions, and the reliability of the information supporting those opinions, as well as the
factors I have previously mentioned for weighing the testimony of any other witness. The opinion
of [name of witness] should receive whatever weight and credit, if any, you think appropriate, given
all the other evidence in the case.
In deciding whether to accept or rely upon the opinion of [name of witness], you may
consider any bias that [name of witness] may have, including any bias that may arise from evidence
that [name of witness] has been or will be paid for reviewing the case and testifying [or from
evidence that [name of witness] testifies regularly and makes a large portion of [his/her] income
from testifying in court].
Third Circuit Model Civil Jury Instruction 2.2 (updated October 2017).
272 (3d Cir. 2010)). Thus, the Court does not “view the evidence through a particular lens,” id.
(quoting EBC, Inc., 618 F.3d at 272-73), “draw any special inferences in the nonmovant’s favor[,
or] concern itself with whether the nonmovant has made out a prima facie case,”15 Giant Eagle,
Inc. v. Federal Insurance Co., 884 F. Supp. 979, 982 (W.D. Pa. 1995) (citing 9A Charles A. Wright
and Arthur R. Miller, Federal Practice and Procedure: Civil § 2573.1). Instead, the Court must
assess the credibility of witnesses to determine whether the FTC has “demonstrated a factual and
legal right to relief by a preponderance of the evidence.” Parker v. Long Beach Mortg. Co., 534
F. Supp. 2d 528, 535-36 (E.D. Pa. 2008) (citing Rego v. ARC Water Treatment Co. of Pa., 181
F.3d 396, 399-400 (3d Cir. 1999)) (“[i]n cases in which a district court enters a judgment under
Rule 52(c), the district court can resolve disputed factual questions”).
The United States Court of Appeals for the Third Circuit recently wrote the following about
granting a Rule 52(c) motion:
We have explained that any party may make a Rule 52(c) motion, and the court
may grant such motion, at any time during a bench trial, so long as the party against
whom judgment is to be rendered has been fully heard with respect to an issue
essential to that party’s case. But that a party be fully heard does not mean that a
party must be allowed to introduce every shred of evidence that a party wishes,
without regard to the probative value of that evidence. As a result, the court need
not wait until that party rests its case-in-chief to enter judgment pursuant to Rule
52(c). In this respect, it is within the discretion of the trial court to enter a judgment
on partial findings even though a party has represented that it can adduce further
evidence, if under the circumstances, the court determines that the evidence will
have little or no probative value. In addition, even if the district court believes
judgment in favor of the moving party would be appropriate, it remains within the
district court’s discretion to wait until the non-movant has presented her case or all
probative evidence is admitted before entering judgment.
DLJ Mort. Capital, Inc., 2020 WL 5638667, at *5 (internal citations and quotations omitted).
With these standards in mind, the Court makes these findings of fact and conclusions of
“The rule’s objective is to ‘conserve[ ] time and resources by making it unnecessary for the court to hear evidence
on additional facts when the result would not be different even if those additional facts were established.’” EBC, Inc.,
618 F.3d at 272 (quoting 9 James Wm. Moore et al., Moore’s Federal Practice § 52.50(2) (3d ed. 2010)).
law pursuant to Rule 52 of the Federal Rules of Civil Procedure. FED. R. CIV. P. 52.
FINDINGS OF FACT16
Background about IDI and the History of Insultex
IDI is a Delaware corporation with a principal place of business in Pittsburgh,
Pennsylvania. (Pretrial Stipulations, Docket No. 127 ¶ 1). It was founded in 2002. (Id. ¶ 2). It
has three full-time employees: Joseph Riccelli, Joseph Riccelli Jr., and Greg Domian. (Id. ¶ 3).
Joseph Riccelli is IDI’s founder and CEO. (Id.) He oversees the corporation’s day-to-day
operations. (Id.) Greg Domian is responsible for sales. (Id.) Joseph Riccelli Jr. monitors and
ships the inventory. (Id.)
IDI was established to manufacture and sell cold weather gear and clothing. (J57-J61).
However, once the company realized how popular its products were, it began to consider other
possible uses for its technology. (Id.) It sent samples to Vartest Laboratory, Inc. to determine if
the material had an R-value. (Id.) IDI then contacted Randolph Loew, the owner and sole
employee of Satesa Corporation, about the possibility of making a house wrap.
Stipulations, Docket No. 127 ¶ 4). The result was Insultex, which is made of three components: a
film, a webbing for drainage, and foam. (Id. ¶ 6).
House wraps are added just inside the external walls of a house or building during
construction, and they function as a weather-resistant barrier. (Id. ¶ 5). Their purpose is twofold:
(1) to prevent rain from penetrating; and (2) to allow water vapor from inside the house to escape
so that moisture does not accumulate inside the walls. (Id.)
These findings are made upon consideration of the evidence offered at trial. (See Docket Nos. 190; 195-1; 201-02).
As previously noted, “[i]n a bench trial, it is the province of the judge sitting as the trier-of-fact to evaluate the
credibility of witnesses and weigh the evidence.” Wesley v. Grigorievna, Civ. A. No. 16-1004, 2016 WL 4493691, at
*8 n.8 (W.D. Pa. Aug. 26, 2016) (citing Brisbin v. Superior Valve Co., 398 F.3d 279, 288 (3d Cir. 2005)).
IDI’s Testing of Insultex
The parties agree that standard ASTM C518 testing conducted on a single layer of R-3
rated Insultex has never returned an R-value of R-3. (Pretrial Stipulations, Docket No. 127 ¶ 35).
Similarly, a standard ASTM C518 test conducted on a single layer of R-6 rated Insultex has never
returned an R-value of R-6. (Id. ¶ 36). To this end, Intertek Laboratory found Insultex had an Rvalue of less than R-0.2 in April 2009. (Id. ¶ 37; J17). Vartest Laboratory, Inc., in August 2009,
reported an R-value of less than R-0.3. (Pretrial Stipulations, Docket No. 127 ¶ 37).
In 2010, IDI approached BRC Laboratory, Inc. (“BRC”) and Robert Manni to conduct
testing on Insultex. (Id. ¶ 24). At the time, BRC was not accredited to conduct ASTM C518
testing. (Id. ¶ 25). From 2010 until 2013, BRC borrowed a thermal resistance testing unit from
Federal Fabrics Fibers, Inc. (“FFF”) for its measurements. (Id. ¶¶ 26-27).
Believing that FFF’s apparatus was producing inaccurate results, IDI paid BRC to build a
thermal resistance testing unit to conduct “modified” ASTM C518 testing. (Id. ¶ 27). This new
testing device had ¾-inch air gaps built into the hot and cold sides of the unit.17 (Id.) In 2015,
once the apparatus was completed, PJLA inspected it and accredited BRC to use it for ASTM
C518 testing. (Id. ¶ 33).
PJLA provides “third party accreditation services” to laboratories. (PJLA Dep. Tr. 21:1822:1). When it accredits a laboratory, PJLA ensures that the laboratory is competent to calibrate
and perform the testing methods that it will be using. (Id. at 22:2-25:12). As a result, it can only
accredit businesses in fields that it has the qualifications to do so. (Id. at 30:1-30:10). Once an
entity is accredited, PJLA “go[es] in once per year” to ensure that it is acting in compliance with
The thermal resistance testing unit operates using software developed by Vincent Calio. (Pretrial Stipulations,
Docket No. 127 ¶ 28). Vincent Calio works for a company called Custom Systems and Controls, Inc., which IDI
retained on or about May 2015. (Id.)
the accreditation. (Id. at 23:7-24:10). To confirm compliance, corporations maintain and follow
a series of policies and procedures. (Id. at 24:11-24:20). Laboratories desire to be accredited
because it allows them to represent to end users that they are competent to perform specific testing.
(Id. at 22:10-23:6). It is important to note that PJLA is only an accreditation company. (Id. at
196:6-196:14). It does not certify testing results. (Id.)
Douglas Berg, PJLA’s program manager, was part of the executive committee that made
the final accreditation decision when it came to BRC. (Id. at 42:1-42:17). RK Varma, a
subcontractor, was responsible for the initial assessment, and Michael Kramer assisted in “signing
off on the corrective action responses for BRC.” (Id. at 42:1-42:17, 48:20-48:25). RK Varma first
visited BRC in September 2014. (Id. at 81:16-82:8). He is a retired engineer and previously served
as a chief engineer working mostly with thermal-generation companies on building energy
efficiency. (Id. at 49:1-49:14). He is very familiar with thermal transfer, heat transfer, and
measuring conductivity and resistivity despite not having overwhelming experience in ASTM
C518 testing. (Id. at 49:23-50:8). Douglas Berg was responsible for its reassessment.18 (Id. at
PJLA issued BRC’s accreditation in 2015 and a corrective certificate to include “ASTM
C518 modified” in August that same year. (Id. at 139:21-139:23, 144:24-147:5). In accrediting
BRC for modified testing, PJLA testified that it understood its accreditation to mean that BRC
could make “some modifications” to the testing. (Id. at 146:6-147:3). For example, BRC might
use sandwiching, layering, and things of that nature. (Id. at 149:19-150:8). Despite visiting BRC
on at least three occasions, PJLA was unaware that BRC was using air gaps in its testing. (Id. at
157:1-157:21). This is because PJLA’s representative never actually observed any testing. (Id. at
This is the only accreditation for ASTM C518 testing that PJLA has done. (PJLA Dep. Tr. 59:11-59:21).
118:4-19:19, 122:4-122:14). Despite this fact, PJLA was unwilling to agree with the FTC that
using air gaps would be an inappropriate method under its accreditation. (Id. at 155:15-157:10).
BRC performed numerous tests on Insultex from 2010 until 2016 and consistently found
that the R-value of the product was R-3 or R-6 depending on the thickness. (J4-J13; J21-25; J29J34). After every test, BRC provided IDI with Certificates of Analysis. (Docket No. 127 ¶ 30; J4J13; J23-J27). Every certificate reported the results of testing that used ¾-inch air gaps bounding
each side of the Insultex sample. (Pretrial Stipulations, Docket No. 127 ¶ 30). Yet, the certificates
reported that BRC complied with ASTM Guidelines. (J4-J13; J23-J27).
The Advertisements at Issue and the FTC’s Discovery of Same
IDI stated that in making the following claims about Insultex, it relied on BRC’s results,
customer testimonials, and the first-hand knowledge that it learned from selling cold weather
products and clothing. (Pretrial Stipulations, Docket No. 127 ¶ 29). In its marketing materials,
IDI described Insultex as “THE THINNEST INSULATED HOUSE WRAP WITH AN RVALUE.” (J74). Beginning in 2011, IDI began claiming that Insultex had an R-value of R-3.
(Pretrial Stipulations, Docket No. 127 ¶ 10). Three years later, IDI started marketing Insultex
with an R-value of R-6. (Id. ¶ 12). It further represented that Insultex would result in energy
savings.19 (Id. ¶¶ 14, 22).
IDI also distributed marketing materials and information about Insultex to its sales
representatives who, in turn, gave the same to their customers and the public.20 (Id. ¶ 17; J74).
IDI’s brochures repeat its claims that Insultex is the thinnest insulated house wrap with an R-value
and that its product has an R-value of R-3 or R-6 depending on thickness. (J74 at 2; J138). They
IDI has not commissioned any studies to confirm its energy savings claims; instead, it has relied on the general
scientific principle that R-value correlates to energy savings. (Pretrial Stipulations, Docket No. 127 ¶ 14).
Installation instructions are provided with the house wrap when it is purchased. (Id. ¶ 15). They are given to
independent builders, dealers, installers, and building supply stores. (Id. ¶ 16).
further declare that these results are supported by ASTM C518 testing. (J74 at 3). Included as
part of these materials are BRC’s Certificates of Analysis.21 (Pretrial Stipulations, Docket No.
127 ¶ 31). IDI posted these same claims on its publicly accessible website from October 7, 2010
through October 2016. (Pretrial Stipulations, Docket No. 127 ¶ 18; J72).
Insultex retails for $279 for a 5’x100’ roll of its R-6 product, and $223.52 for the same size
roll of its R-3 product, or $0.56 and $0.45 per square foot, respectively. (Pretrial Stipulations,
Docket No. 127 ¶ 20). In contrast, other widely available house wraps that do not claim an Rvalue retail between $0.06 and $0.24 per square foot. (Id.) IDI’s gross sales of Insultex totaled
$1,305,566.50 through August 29, 2018.22 (Id. ¶ 21).
Neither the FTC nor IDI received consumer complaints about Insultex. (Id. ¶ 38). The
FTC only learned of a potential Section 5(a) violation through one of IDI’s competitors, KimberlyClark Global Sales, LLC. (J16).
Deposition Testimony of Dr. Mavrokefalos23
Now that Dr. Yarbrough’s testimony had been stricken, the only expert that the FTC relied
on in its case-in-chief was Dr. Mavrokefalos whose testimony was introduced by means of
deposition. (Docket Nos. 183, 190). Despite the parties stipulating to Dr. Yarbrough’s and
Dr. Malen’s qualifications, they were unwilling to do so as to Dr. Mavrokefalos. (See Docket No.
186). So, the Court makes the following findings as to his background and experience.
He has a Ph.D. in mechanical engineering from the University of Texas and is an assistant
professor at the University of Houston. (J232 at 1-3). His research is directed at “address[ing]
It bears mentioning that the brochures contain several other claims about Insultex including that it is water, air, and
UV resistant and is permeable, durable, and translucent. (J138 at 5). The FTC has not challenged these claims. (See
Docket No. 1).
This is the most up-to-date information available to the Court.
The materials Dr. Mavrokefalos considered, including his CV, notes, and the images of the infrared testing, have
been admitted into evidence. (J230-J234). His expert reports were not introduced. (Docket No. 195-1). But, IDI had
planned to move for the admission of Dr. Mavrokefalos’s initial report during its case-in-chief. (Docket No. 191).
global challenges in energy and sustainability.” (Id. at 3). At the time of his April 2018 deposition,
he had twelve years of experience working in the field of heat transfer. (4/16/18 Mavro Dep. Tr.
The Court now turns to Dr. Mavrokefalos’s testimony found at Docket Nos. 183 and 190.24
Dr. Mavrokefalos began by stating that he knew that the FTC had sued IDI for false marketing.
(4/16/18 Mavro Dep. Tr. 35:22-36:2, 36:5-36:23). When asked about his knowledge of IDI’s
representations related to Insultex, he responded that he was aware that IDI claimed that it had a
product with an R-value of R-6 and a second with an R-value of R-3. (Id. at 36:8-36:16). He
continued that “if Insultex has a high R-value, then that means it has high insulating capabilities,
which translates to energy savings for a consumer if he uses their[sic] product in their[sic] home.”
Dr. Mavrokefalos explained that he had seen BRC’s heat flow meter and built into the
device were ¾-inch air gaps. (Docket No. 190 at 44; 4/16/18 Mavro Dep. Tr. 45:4-45:9). As a
result, it was his opinion that BRC’s heat flux transducer incorporated the value of the air gaps
into every reading; thereby, distorting the R-value results. (Docket No. 190 at 44; 10/30/18 Mavro
Dep. Tr. 74:17-75:21). Dr. Mavrokefalos hypothesized that these air gaps had some impact on the
apparatus’s ability to accurately measure a material’s R-value.25 (10/30/18 Mavro Dep. Tr. 34:7-
In its response in opposition, the FTC relies on portions of Dr. Mavrokefalos’s depositions which were never
designated. (Docket No. 227). In addition, the Court has not considered the FTC’s counter-designations as IDI has
not yet moved for the admission of its own designations. (Docket Nos. 201-02); see FED. R. CIV. P. 26(a)(3)(A) (this
rule contemplates parties designating deposition testimony that they intend to offer at trial so that opposing counsel
may file objections and counter-designations thereto); FED. R. EVID. 106 (“If a party introduces all or part of a writing
or recorded statement, an adverse party may require the introduction, at that time, of any other part--or any other
writing or recorded statement--that in fairness ought to be considered at the same time”); Blue Cross & Blue Shield of
N.J., Inc. v. Philip Morris, Inc., 199 F.R.D. 487, 488-89 (E.D. N.Y. 2001) (permitting the plaintiff to play for the jury
portions of depositions recorded on videocassettes during its case-in-chief without also presenting the counterdesignations of the defendant due to the volume and complexity of the material depicted in same). Accordingly, the
Court will not consider the FTC’s counter-designations.
Although the FTC represents that Dr. Mavrokefalos testified that the R-value of the air gaps was greater than R-1,
that portion of his deposition testimony was not designated. (Docket Nos. 183; 190; 227 at 7).
He also had the opportunity to review BRC’s testing results and had questions about 3040% of them. (Docket No. 190 at 17; 10/30/18 Mavro Dep. Tr. 179:9-180:6). He was particularly
concerned that BRC had not allocated sufficient time for temperature stabilization and that the heat
flux transducer data reflected excessive scattering. (Id.) Dr. Mavrokefalos did not articulate the
effect those issues had on the results other than to suggest that BRC should have accounted for
them. (Docket No. 190 at 17-18; 10/30/18 Mavro Dep. Tr. 181:19-183:3).
Although Dr. Mavrokefalos once believed that Insultex had the R-values it advertised, he
now opined that such was no longer the case. (Docket No. 190 at 7-8; 10/30/18 Mavro Dep. Tr.
18:4-18:12, 21:11-22:4). The following exchange occurred at Dr. Mavrokefalos’s October 30,
Q. And you were going to offer [an] opinion on how scientifically accurate the Rvalues are -- were or are.
Q. You were going to offer an opinion about -- that the R-value of the 5-millimeter
Insultex foam is R-3?
Q. And you were going to offer an opinion that the R-value of the 1-millimenter
Insultex foam was R-6?
(Docket No. 190 at 7; 10/30/18 Mavro Dep. Tr. 18:4-18:12).26 Later, he stated that he now
believed with a reasonable degree of scientific certainty that Insultex (the foam and woven layer)
had an R-value less than R-1, whatever the thickness. (Docket No. 190 at 6, 40; 10/30/18 Mavro
Dep. Tr. 79:11-79:21). He hypothesized that although Insultex’s woven layer added at least as
The products here were 1.0 and 1.5 millimeters. (Id. at 5).
much to the product’s insulation capacity as the foam, together they would still not create a product
with an R-value greater than R-1. (10/30/18 Mavro Dep. Tr. 79:18-80:16).
After reviewing the FTC’s experts’ reports, Dr. Mavrokefalos decided to conduct a further
investigation into Insultex’s claims. (Docket No. 190 at 10; 10/30/18 Mavro Dep. Tr. 27:6-28:7).
He did so first by asking whether BRC’s equipment needed to be re-calibrated. (Docket No. 190
at 10; 10/30/18 Mavro Dep. Tr. 27:9-28:7). He requested that BRC test various reference materials
including a copper plate to determine whether its results were consistent with those of his
laboratory. (Docket No. 190 at 10-12; 10/30/18 Mavro Dep. Tr. 29:7-29:20, 30:2-33:10). After
comparing the results, he concluded that BRC’s apparatus was not always reliable, especially
where the material had an R-value less than R-1. (Docket No. 190 at 13; 10/30/18 Mavro Dep. Tr.
Second, Dr. Mavrokefalos conducted three tests — Laser Flash, Fin Equation, and Infrared
Imaging. (Docket No. 190). He decided to perform three different tests because there were errors
associated with each of them. (10/30/18 Mavro Dep. Tr. 108:11-109:12). He did not explain what
those errors could be. (Docket Nos. 183; 190). For the first test, he borrowed a laser flash system
from a colleague. (Docket No. 190 at 20; 10/30/18 Mavro Dep. Tr. 37:15-37:21). Prior to
performing the test, he had to be trained on the equipment by one of his colleague’s students
because this was his first time using this method. (10/30/18 Mavro Dep. Tr. 38:12-38:17).
According to Dr. Mavrokefalos, “[a] laser flash system is an apparatus that measures the
thermal diffusivity of [a] material,” and “‘thermal diffusivity’ is the ratio of thermal conductivity
over density and – specific density.” (Docket No. 190 at 20; 10/30/18 Mavro Dep. Tr. 37:22-38:2)
From the thermal diffusivity of a material, an expert can derive the product’s R-value. (Docket
No. 190 at 21). To perform this test, “a light source is shined on one side of the sample, which
causes the temperature to rise on one side of -- the sample” and “the apparatus measures the
temperature [on] the other side of the material as a function of time.” (10/30/18 Mavro Dep. Tr.
Despite this being the first time that he employed this test, Dr. Mavrokefalos believed that
his results were within 0.1 of the actual R-value. (Docket No. 190 at 22; 10/30/18 Mavro Dep. Tr.
at 54:23-55:7). He determined that the foam of the R-10 sample had an R-value of 0.08.27 (Docket
No. 190 at 22; 10/30/18 Mavro Dep. Tr. 54:13-54:22). He then found that the R-6 sample (foam
only) had an R-value of 0.1, and the R-3 sample (foam and woven nylon) had an R-value of 0.164.
(10/30/18 Mavro Dep. Tr. 56:7-57:10, 57:12-58:13). When the tests were performed using black
tape, Insultex’s R-values were still less than R-1. 28 (Id. at 60:7-62:6).
The second test Dr. Mavrokefalos conducted involved placing two samples across two
heaters, one of which was the foam from the R-6 sample and the other was a reference sample.
(Docket No. 190 at 26-27; 10/30/18 Mavro Dep. Tr. 66:5-66:10). After mapping the microthermocouples across the length of the sample, Dr. Mavrokefalos used the Fin Equation to
calculate its R-value. (10/30/18 Mavro Dep. Tr. 66:11-66:22, 72:5-72:24). He concluded that “the
thermal conductivity of the R-6 [material was] approximately half of the thermal conductivity of
the Amazon sample” making Insultex’s true R-value approximately 0.6. (Docket No. 190 at 2930; 10/30/18 Mavro Dep. Tr. 73:3-73:23). Like the first test, Dr. Mavrokefalos had never used
this method before. (Docket No. 190 at 27; 10/30/18 Mavro Dep. Tr. 67:1-67:6). That said, he
had taught the theory behind it in an undergraduate course. (Id.) And, he suggested it was a
“standard textbook undergraduate method.” (Docket No. 190 at 27; 10/30/18 Mavro Dep. Tr.
The R-10 sample is not a subject of the instant litigation.
It is unclear from the Court’s limited record why black tape was used.
The third study he performed involved the use of an infrared camera. (Docket No. 190 at
32). Although he testified that the test was “widely used,” he noted:
You have to do a lot of calibration to get actual quantifiable numbers. But since I
did this test by asking basically a favor from my colleague – because it’s not my
infrared camera. . . [,] I didn’t want to spend too much time in calibrating everything
and getting hard, quantifiable numbers; but it was – it is good enough to make a
(Id.; 10/30/18 Mavro Dep. Tr. 82:17-83:4, 103:24-104:5) (emphasis added).
For this test,
Dr. Mavrokefalos placed two samples on a heater, one being a reference sample and the other
being Insultex. (10/30/18 Mavro Dep. Tr. 84:1-84:25). On top of each sample, he placed a silicon
wafer. (Id. at 87:1-87:25). He did this so that he would not have to adjust for the emissivity of
same in order to find the “temperature difference between those two.” (Id.) He suggested that this
technique was “widely known and accepted.” (Id.) Using this test, he concluded that the R-value
of the R-6 sample was below the R-value of the calibration sample, meaning it was less than R-1.
(Docket No. 190 at 33; 10/30/18 Mavro Dep. Tr. at 88:4-88:5, 96:8-96:24). Dr. Mavrokefalos
testified that he had used this method twice before and had communicated the results to IDI.
(10/30/18 Mavro Dep. Tr. 84:1-84:18, 109:13-109:15).
In concluding that Insultex had R-values of less than R-3 and R-6, Dr. Mavrokefalos relied
only on his own testing. (Id. at 112:23-115:5). Based on the R-values he found, Dr. Mavrokefalos
would not expect IDI’s consumers to see any tangible energy savings. (Docket No. 190 at 41;
10/30/18 Mavro Dep. Tr. 185:12-186:3). Although he did acknowledge that it is accepted in the
scientific community that the higher the R-value, the higher the expected energy savings. (Docket
No. 190 at 41; 10/30/18 Mavro Dep. Tr. 184:25-185:11). He stated that he held his opinions to a
reasonable degree of scientific certainty and used methods that other experts in his field would use
to determine the thermal properties of a material. (10/30/18 Mavro Dep. Tr. 115:11-115:25).
Dr. Mavrokefalos opined that IDI had a reasonable basis for its R-value representations prior to
his testing. (Id. at 116:1-116:23, 121:12-121:20). That said, later in his testimony, after being
presented with additional evidence, he changed his mind and suggested that IDI never had a
reasonable basis for making its claims. (Id. at 154:9-154:14, 155:5-155:24). Finally, he testified
it was concerning that the data on BRC’s Certificates of Analysis pertaining to Insultex did not
change from year to year. (Id. at 192:21-194:3).
CONCLUSIONS OF LAW
Although both parties agree that Dr. Malen is a rebuttal expert and his opinion cannot be
considered at this juncture, they devote much of their briefing to his expert opinions and his bases
for same. (Docket No. 227 at 21-24). Consequently, the Court must first address this issue before
turning to the merits of the FTC’s Section 5(a) claim.
Whether the Court should consider the proffered testimony of Dr. Malen, the FTC’s
As set forth at length in Section III of this Memorandum Opinion, judgment can be entered
against a party if that party was “‘fully heard’ with respect to an issue essential to that party’s
case.” DLJ Mort. Capital, Inc., 2020 WL 5638667, at *5 (quoting EBC, Inc., 618 F.3d at 271).
Having rested its case, the FTC has been fully heard on each of the three counts that it has brought
against IDI. See EBC, Inc., 618 F.3d at 274 n.23 (providing “[h]aving rested its case, State Steel
was heard fully on its two remaining causes of action. State Steel’s tactical decision to permit the
admission of A & M’s exhibits without objection, and its failure to adduce additional testimony
enabling it to challenge that evidence, cannot be ascribed as the failure of the District Court to
ensure that it had been ‘fully heard’”).
The FTC opted not to call Dr. Malen as part of its case-in-chief and has repeatedly
represented that it would only call him on rebuttal.29 (Docket Nos. 121; 187 at 2; 194; 201-02). It
stated such in both witness lists, at the Final Pretrial Conference, and in its opening statement.
(Id.) After the FTC rested, IDI immediately moved for partial judgment before putting on any
evidence. (Docket No. 202). Because IDI never called Dr. Garlotta and Dr. Yarbrough was
eliminated as FTC’s expert, there is no expert testimony in the record that Dr. Malen can rebut.
See Peals v. Terre Haute Police Dept., 535 F.3d 621, 630 (7th Cir. 2008) (“The proper function of
rebuttal evidence is to contradict, impeach[,] or defuse the impact of the evidence offered by an
adverse party”) (internal citation and quotation omitted); FTC v. IDI, Civ. A. No. 16-1669, 2018
WL 3611510, at *3 (W.D. Pa. July 27, 2018) (citing Wonderland Nurserygoods Co. v. Thorley
Indus., LLC, Civ. A. No. 12-196, 2014 WL 695549, at *3 (W.D. Pa. Jan. 23, 2014) (Unlike expert
testimony used as part of a party’s case-in-chief, the function and scope of an expert’s testimony
on rebuttal is limited. It must “explain, repel, counteract[,] or disprove the evidence of the adverse
party”). Accordingly, this Court cannot consider Dr. Malen’s expert opinion. Moreover, as stated
in this Court’s memorandum opinion on IDI’s motion to strike, the FTC has proffered no basis to
reopen its case-in-chief. (Docket No. 218 at 28-30).
The Court now turns to the substantive issues raised by the parties. (See Docket Nos. 1;
Whether, as set forth in the Complaint, IDI violated Section 5(a) in connection with
the advertising, promotion, offering for sale, or sale of Insultex?
The FTC asserts that IDI deceived its customers by making false and unsubstantiated
claims when it advertised Insultex as having R-values of R-3 and R-6, represented that it had
To be clear, the Federal Rules contemplate the use of expert testimony on rebuttal. FED. R. CIV. P. 26(a)(2)(D)(ii)
(permitting expert testimony “intended solely to contradict or rebut evidence on the same subject matter identified by
another party”); see also FED. R. EVID. 611. The decision whether to allow rebuttal evidence lies within the discretion
of the trial judge. IDI, 2018 WL 3611510, at *2.
testing to prove these results, and stated that using Insultex would result in energy savings to
consumers. (Docket Nos. 171 at 5; 189 at 1; 201 at 3). Section 5(a) of the FTC Act prohibits
“[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or
practices in or affecting commerce.” 15 U.S.C. § 45(a)(1). To prevail on its claims, the FTC must
prove by a preponderance of the evidence that: “(1) there was a representation; (2) the
representation was likely to mislead consumers acting reasonably under the circumstances; and
(3) the representation was material.” FTC v. Click4Support, LLC, Civ. A. No. 15-5777, 2015 WL
7067760, at *4 (E.D. Pa. Nov. 10, 2015) (quoting FTC v. NHS Svs., Inc., 936 F. Supp. 2d 520, 531
(E.D. Pa. 2013)).
The parties agree that the first and third elements are satisfied. (Docket Nos. 227 at 2;
228). Indeed, the parties stipulated that IDI represented that Insultex has either an R-3 or an R-6,
depending on the thickness of the product; it had testing to substantiate those results; and using its
product would lead to energy savings. (Pretrial Stipulations, Docket No. 127 ¶¶ 7, 10-14; Docket
No. 227 at 3); see POM Wonderful, LLC v. FTC, 777 F.3d 478, 490 (D.C. Cir. 2015) (an
advertisement conveys a representation where consumers acting reasonably under the
circumstances would interpret the advertisement to contain that message). The parties also agree
that because IDI made explicit claims about Insultex, its representations about its products’ Rvalue and energy savings are presumed to be material to the consumer’s purchasing decision.
(Docket Nos. 227-28); FTC v. NHS Sys., Inc., 936 F. Supp. 2d 520, 531 (E.D. Pa. 2013) (internal
quotation and citation omitted) (a representation is material “if it contains information that is
important to a consumer’s purchasing decision,” and “[e]xplicit claims or deliberately-made
implicit claims are presumed to be material”). The parties disagree as to whether the second
element is met. (Docket No. 227 at 3).
To satisfy its burden on the second element, the FTC must prove by a preponderance of
the evidence that IDI’s representations are misleading. FTC v. Tashman, 318 F.3d 1273, 1277
(11th Cir. 2003). Actual deception is not required nor is the intent to deceive. NHS Sys., Inc., 936
F. Supp. 2d at 531; FTC v. Millennium Telecard, Inc., Civ. A. No. 11-2579, 2011 WL 2745963, at
*3 (D.N.J. July 12, 2011). Rather, the FTC must demonstrate that IDI’s claims were misleading
using either the “falsity” or “reasonable basis” theories. Am. Home Prod. Corp. v. FTC, 695 F.2d
681, 693 (3d Cir. 1982); FTC v. Dutchman Enters., LLC, Civ. A. No. 09-14, 2009 WL 10698040,
at *3 (D.N.J. Feb. 11, 2009). The Court next addresses whether IDI’s claims were misleading
under the falsity theory.
The FTC argues that IDI’s R-value claims are false because:30
IDI never disclosed that its R-values could only be achieved with two ¾-inch
Dr. Mavrokefalos’s testing further supports the FTC’s position;
BRC’s machine cannot reliably measure R-value results; and
IDI admitted in a pretrial stipulation that it did not have the substantiation it
claimed it did.
(Docket Nos. 171; 227). To prevail under the falsity theory, the FTC must establish that the
express or implied claims in IDI’s advertisement are false. See FTC v. Alcoholism Cure Corp.,
Case No. 3:10–cv–266–J–34JBT, 2011 WL 13137951, at *26 (M.D. Fla. Sept. 16, 2011). A claim
of product effectiveness is “false” where evidence developed under accepted standards of scientific
research demonstrates that the product does not work as represented. FTC v. Pantron I Corp., 33
F.3d 1088, 1097 (9th Cir. 1994) (emphasis added). When the FTC challenges the veracity of a
In its Pretrial Brief, the FTC also asserted: (1) ASTM C518 testing is the widely accepted industry standard for
measuring R-value in home insulation; (2) Dr. Yarbrough’s testing using same proves Insultex’s R-values are 1000%
lower than claimed; and (3) other laboratories found similarly. (Docket No. 171). For the interest of completeness,
this Court has addressed the arguments raised both in the FTC’s response in opposition and in its pretrial briefing.
(See Docket Nos. 171, 189).
corporation’s R-value and energy saving claims, expert testimony is required. See United States
v. Sumpolec, 811 F. Supp. 2d 1349, 1354 (M.D. Pa. 2011) (granting the FTC’s motion for summary
judgment because the defendant proffered no expert evidence to refute the FTC’s expert’s report).
In this Court’s estimation, the FTC has not met its burden under the falsity theory given
that there is no reliable or credible evidence in the record demonstrating that IDI’s claims are false.
The FTC called two experts during the trial, Dr. Yarbrough and Dr. Mavrokefalos. (Docket Nos.
180; 190; 194; 201-02). This Court has already stricken the FTC’s key expert finding that
Dr. Yarbrough’s testimony was not reliable, did not fit the case, was not expressed to a reasonable
degree of scientific certainty, and was not credible.
(Docket No. 218 at 15-28).
Dr. Mavrokefalos’s testimony fails for many of the same reasons. See In re Unisys Savings Plan
Litig., 173 F.3d 145, 158 (3d Cir. 1999) (explaining “[w]hen the role of the gatekeeper to admit or
exclude evidence (the judge) and the role of the factfinder to assess and weigh the evidence that
was admitted (the jury) are one and the same, the judge who becomes the factfinder as well as the
gatekeeper must be given great deference by this Court, and, as we note below, should not be
required to waste judicial time”); Wesley, 2016 WL 4493691, at *8 n.8.
The Court now revisits Dr. Mavrokefalos’s testimony.
First, like Dr. Yarbrough,
Dr. Mavrokefalos relied on non-standard tests. See (Docket No. 218 at 22). In its opening
statement, the FTC asserted that ASTM C518 testing was the standard par excellence for finding
a material’s R-value. (Docket No. 201 at 6). This Court agreed, writing that:
The [ASTM] C518 Standards are incorporated by reference in the FTC’s R-value
Rule and as such, are the prevailing standard in the industry. 16 C.F.R. §
460.5(e)(1)(ii); (Docket No. 201 at 33, 79). The Standards caution, however, that
“[s]tandardization of this test method is not intended to restrict in any way the future
development of improved or new methods or procedures by research workers.” (J1
§ 1.11; J2 § 1.11). Nonetheless, pursuant to In re Zoloft (Sertraline Hydrochloride)
Products Liability Litigation, any nonstandard techniques, i.e., ones that deviate
from the R-value Rule or the [ASTM] C518 Standards, need to be well explained.
858 F.3d at 797 (3d Cir. 2017) (citing Paoli II, 35 F.3d at 758).
(Docket No. 218 at 20-21). Yet, none of the tests that Dr. Mavrokefalos conducted utilized a C518
testing apparatus, and he fails to explain why that is the case. (Docket No. 190). Guided by its
previous ruling, this Court gives his testimony no weight. See Ass’n of N.J. Rifle & Pistol Clubs
Inc. v. Att’y Gen. N.J., --F.3d--, 2020 WL 5200683, at *6 n. 9 (3d Cir. Sept. 1, 2020) (quoting
Hayman Cash Register Co. v. Sarokin, 669 F.2d 162, 165 (3d Cir. 1982)) (explaining that “[u]nder
the law of the case doctrine, once an issue is decided, it will not be relitigated in the same case,
except in unusual circumstances”).
Second, Dr. Mavrokefalos’s expert opinion is simply not reliable. He testified that he had
almost no experience running any of the three tests he employed. (Docket No. 190 at 27; 10/30/18
Mavro Dep. Tr. 38:12-38:17, 67:1-67:6, 84:1-84:18, 109:13-109:15). He also admitted that he
was less concerned about device calibration as he was only trying to determine the relative R-value
of Insultex. (Docket No. 190 at 32; 10/30/18 Mavro Dep. Tr. 82:17-83:4, 103:24-104:5). In
addition, despite conducting three separate tests because he was concerned about the accuracy of
his results, Dr. Mavrokefalos never explained what the known errors were associated with each
test or how they impacted his results. (Docket Nos. 183; 190). Further, he only provided the
known or potential rate of error for one of his tests, the Laser Flash test. (Docket No. 190 at 22;
10/30/18 Mavro Dep. Tr. 54:13-54:22). Although he opined that he was using standard techniques
found in the scientific community, he did not state whether they were typically used to calculate
R-value, what the standards for each test were, whether he complied with same, whether his
techniques had been subjected to peer review, and the non-judicial uses to which each method has
been put. (Docket Nos. 183; 190). He also never opined as to whether his qualifications and
experience rendered him proficient to perform each technique. (Id.) Given that he had to be
trained on how to perform the Laser Flash test and had never or almost never performed the
remaining tests, the Court questions whether he was. (Docket No. 190 at 27; 10/30/18 Mavro Dep.
Tr. 38:12-38:17, 67:1-67:6, 84:1-84:18, 109:13-109:15). For these reasons as well, the Court
cannot find that Dr. Mavrokefalos had reasonable grounds for his opinion. See UGI Sunbury LLC
v. A Permanent Easement for 1.7575 Acres, 949 F.3d 825, 834 (3d Cir. 2020) (finding expert
reports unreliable where “they lack any suggestion that the ‘damaged goods theory’ has been
subject to peer review or enjoys general acceptance. Nor do they contain any analysis of a known
or potential rate of error. Or any standards controlling the theory’s application”); Schneider ex rel.
Estate of Schneider, 320 F. 3d 396, 404 (3d Cir. 2013) (providing testimony is reliable where it is
“based on the ‘methods and procedures of science’ rather than on ‘subjective belief or unsupported
speculation;’ the expert must have ‘good grounds’ for his on her belief”).
Third, not all of Dr. Mavrokefalos’s testing was performed on the advertised product.
Insultex consists of a film, a webbing for drainage, and foam. (Pretrial Stipulations, Docket No.
127 ¶ 6). At least two of his tests, the Laser Flash Test and the Fin Equation, were conducted on
only one or two of the components of Insultex. (Docket No. 190 at 26-27; 10/30/18 Mavro Dep.
Tr. 56:7-57:10, 57:12-58:13; 65:5-65:10). Based on same, Dr. Mavrokefalos stated that he did not
believe that Insultex had an R-value of R-1 but he was only opining about the foam and the woven
layer. (Docket No. 190 at 6, 40; 10/30/18 Mavro Dep. Tr. 79:11-79:21). Thus, it appears that an
evidentiary link is missing between Dr. Mavrokefalos’s testing and what the FTC seeks to have
the Court find as false. See Pineda v. Ford Motor Co., 520 F.3d 237, 249 (3d Cir. 2008); Pantron
I Corp., 33 F.3d at 1097.
Fourth, despite the FTC representing that Dr. Mavrokefalos performed testing on the
various products presently before the Court, he not only described a sample with an R-value of R-
10 but he also seemed unaware that the FTC mischaracterized the thickness of IDI’s R-3 and R-6
(Docket No. 190 at 7, 22; 10/30/18 Mavro Dep. Tr. 18:4-18:12, 54:13-54:22).
Curiously, despite these gaffes, there is no errata sheet attached to his deposition.31 (Docket Nos.
183; 190). It is likewise noteworthy that the FTC had the option of calling Dr. Mavrokefalos at
trial to correct some of the gaps in his testimony but chose not to do so. (See Docket No. 161).
For each of these reasons, the Court rejects his opinions.
The Court further finds that Dr. Mavrokefalos’s testimony is not credible. As stated, he
was previously IDI’s expert. (Docket No. 110). He initially took the position that IDI had the Rvalues it claimed. (Id.) Despite being IDI’s paid expert, Dr. Mavrokefalos only began to
investigate IDI’s claims after being confronted with the FTC’s rebuttal experts’ reports a year later.
(Docket No. 190 at 10; 10/30/18 Mavro Dep. Tr. 27:6-28:7). Prior to this, he never considered
that BRC’s testing apparatus might be problematic, looked carefully at the results he had been
given, or conducted his own testing. See (Docket No. 190); see Finneman v. SEPTA, 308 F. Supp.
3d 855, 858 (E.D. Pa. 2018) (internal citations and quotations omitted). Thus, the Court finds his
testimony unworthy of belief.
In arguing that it has met its burden under Rule 52(c), the FTC also relies on other
laboratory testing found in the record. (Docket Nos. 171; 227 at 4-5). However, without expert
testimony, these results can only be considered for purposes of notice to IDI per this Court’s prior
ruling at the Final Pretrial Conference. (Docket Nos. 218; 201). In its Memorandum Opinion on
IDI’s motion to strike, this Court wrote:
As this Court insinuated to counsel at the [Final] Pretrial Conference, the problem
with the test reports of other laboratories being used substantively is that nothing is
known about the operator, the device calibration, the operator’s methodology, the
An errata sheet allows a deponent to correct testimony that was misstated during a deposition. See EBC, Inc. 618
F.3d at 270-71. The review of a transcript and correction thereof is particularly important where the testimony is
technical in nature like in the case sub judice. See id.
operator’s knowledge of the [ASTM] C518 Standards or thermal principles, the
error rates, how the results were obtained, etc. (Pretrial Conference Transcript
7/23/19 at 25). Consequently, the Court cannot consider everything contained in
these reports “lock, stock[,] and barrel.” (Id.) In response to the Court’s concerns
at the [Final] Pretrial Conference, the FTC assured the Court that, “[w]e are going
to have Dr. Yarbrough walk the [C]ourt through [the] standard [ASTM] C518 test
and you’ll be able to, based on the actual report, see whether they followed the
method or not.” (Id.) The problem now is that the parties dispute whether the FTC
(Docket No. 218 at 17). Accordingly, the Court cannot consider these laboratory results for their
asserted truth. (See id.)
Finally, to the extent that the FTC argues that IDI’s claims are false because it did not have
certain testing results, the FTC has not proffered any expert testimony to show BRC’s testing did
not conform with the ASTM C518 Standards. (Docket Nos. 171; 227; 230). The Standards permit
innovation; thus, IDI’s pretrial stipulations are not dispositive on this issue. (Docket No. 218 at
20-21). Adding credence to IDI’s argument that air gaps comport with the accepted standards of
the scientific community, PJLA was unwilling to agree that the use of this technique was
inconsistent with its accreditation. (PJLA Dep. Tr. 155:15-157:10). Because the FTC has not
established by a preponderance of the evidence that IDI’s R-values were false, it cannot
demonstrate that its energy savings claims are false as it has not put forth any independent evidence
regarding same. Therefore, the Court finds that the FTC has failed to meet its burden under the
The FTC next asserts that IDI’s claims lacked a reasonable basis because IDI has not
proffered sufficient scientific evidence to satisfy an expert in the relevant field that its claims are
true. (Docket No. 227 at 4). In support of its argument, the FTC references the following:32
Dr. Mavrokefalos’s testimony that BRC’s apparatus yields unreliable R-value
In its pretrial briefing, the FTC also relied on the testimony of Dr. Yarbrough. (Docket Nos. 171; 189).
IDI knew BRC was not accredited to conduct ASTM C518 testing when it hired
In 2010, 2011, 2012, and “through at least 2013,” BRC tested Insultex on a unit
that “was not built for C518;”
BRC provided IDI with test results on “Certificates of Analysis” to use as
substantiation. “Every Certificate of Analysis reported results of testing
conducted using ¾-inch air gaps;”
It “spent approximately $300,000 to build a thermal resistance testing unit to
conduct ‘modified’ ASTM C518 testing;”
The “modified method” always employed ¾-inch air gaps; and
IDI’s energy savings claims are unsubstantiated because Insultex has a nominal Rvalue and IDI cannot rely on costumer testimonials to meet its burden.
(Id. at 5-6).
To prevail under a “reasonable basis” or “substantiation” theory, the FTC must show that
IDI lacked a reasonable basis for making the assertions in its advertisement. See POM Wonderful,
LLC, 777 F.3d at 490. Said another way, IDI must possess the level of proof that it claimed in its
advertisement. See FTC v. QT, Inc., 448 F. Supp. 2d 908, 959 (N.D. Ill. 2006). There are two
types of reasonable basis claims: establishment and non-establishment claims. Id.; see POM
Wonderful, 777 F.3d at 491; Letter to FTC, 2015 WL 6396129, at *30 (FTC 2015). Establishment
claims are those claims made where the advertiser states that the product is superior based on
scientific testing while non-establishment or efficacy claims do not profess to be based on
empirical proof. QT, Inc., 448 F. Supp. 2d at 959. At issue, are establishment claims. (See Docket
No. 171 at 15) (“IDI’s R-value claims per se convey that it has scientific proof because R-value
can only be established by testing”).
“When the FTC brings an action based on the theory that advertising is deceptive because
the advertisers lacked a reasonable basis for their claims, the FTC must: (1) demonstrate ‘what
evidence would in fact establish such a claim in the relevant scientific community’; and
(2) ‘compare . . . the advertisers’ substantiation evidence to that required by the scientific
community to see if the claims have been established.’” Alcoholism Cure Corp., 2011 WL
13137951, at *26 (quoting FTC v. Direct Mktg. Concepts, Inc., 624 F.3d 1, 8 (1st Cir. 2010)). The
Commission “‘determines what evidence would in fact establish such a claim in the relevant
scientific community’ and ‘then compares the advertisers’ substantiation evidence to that required
by the scientific community.’” POM Wonderful, LLC, 777 F.3d at 490-91 (quoting Removatron
Intern. Corp. v. FTC., 884 F.2d 1489, 1498 (1st Cir. 1989)). Reasonable basis is an objective
standard that calls for the court to evaluate whether IDI had sufficient scientific evidence to satisfy
an expert in the relevant field that the claim is true. See, e.g., FTC v. Lights of Am., Inc., No.
SACV10–01333 JVS (MLGx), 2013 WL 5230681, at *11, *20 (C.D. Cal. Sept. 17, 2013).
IDI has the burden of putting forth the substantiation it relied on to support its product
claims, but the FTC has the burden of proving that IDI’s purported substantiation is inadequate.
See Alcoholism Cure Corp., 2011 WL 13137951, at *26. The FTC improperly attempts to shift
the burden. See id. The FTC has argued at length that IDI’s testing lacks a reasonable basis
because using ¾-inch air spaces is a nonstandard technique. (Docket No. 171; 227).
addressed in the preceding section and incorporated herein, it has offered no reliable or credible
expert testimony to support its claims. As already stated, the other testing results in the record
cannot be used for their truth. (Docket Nos. 201; 218).
Moreover, the fact that IDI disagreed with earlier results and commissioned BRC to create
a “state-of-the-art” apparatus does not mean that IDI lacked a reasonable basis. After all, BRC
was an accredited laboratory and PJLA, to date, still has not suggested that BRC’s methodology
was inconsistent with the accreditation. (PJLA Dep. Tr. 155:15-157:10).
The FTC’s argument as to IDI’s energy savings claims fails for the same reasons. (Docket
Nos. 171; 227). In the Federal Register it states that a high R-value leads to energy savings. See
70 Fed. Reg. 31258 (2005) (emphasis added) (R-value is the numerical measure of the ability of
an insulation product to restrict the flow of heat and, therefore, to reduce energy costs—the higher
the R-value, the better the product’s insulating ability). Because the FTC has not rebutted IDI’s
substantiation representations concerning its R-value, it cannot now demonstrate IDI lacked
substantiation for its energy saving claims. Thus, the Court finds that the FTC has failed to
demonstrate by a preponderance of the evidence that the substantiation IDI had lacked a reasonable
Means and Instrumentalities
The FTC has only mentioned its means and instrumentalities claim in passing. (Docket
No. 227 at 5). The law is clear “those who put into the hands of others the means by which they
may mislead the public, are themselves guilty of a violation of Section 5[(a)].” See FTC v. FiveStar Auto Club, Inc., 97 F. Supp. 2d 502, 530 (S.D. N.Y. 2000) (internal citation and quotation
omitted); see FTC v. Winsted Hoisery Co., 258 U.S. 483, 494 (1922) (a person who furnishes
another with the means of consummating a fraud is liable under the FTC Act); Regina Corp. v.
FTC, 322 F.2d 765, 768 (3d Cir. 1963). Because the FTC failed to put forth sufficient evidence to
establish that IDI’s representations were misleading, the FTC’s means and instrumentalities claim
relating to IDI’s promotional materials must similarly fail. See FTC v. NorVergence, Civ. A. No.
04–5414(DRD), 2005 WL 3754864 (D. N.J. July 22, 2005).
For these reasons, judgment will be entered in favor of the IDI and against the FTC.
An appropriate Judgment Order will follow.
/s Nora Barry Fischer
Nora Barry Fischer
Senior United States District Judge
Dated: September 24, 2020
cc/ecf: All counsel of record
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