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© 2002 Brian F. Schreurs
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JONATHAN COWEN
EDWIN RODRIGUEZ
Federal Trade Commission
600 Pennsylvania Ave., NW
Washington, D.C. 20580
202-326-2533; 3147
202-326-2558 fax

Attorneys for Plaintiff

___________________________________
                                   )
FEDERAL TRADE COMMISSION,          )
                                   )
               Plaintiff,          ) CIVIL ACTION
                                   ) NO.
           v.                      )
                                   )
                                   )
SPEEDWAY MOTORSPORTS, INC., and    ) COMPLAINT FOR
OIL-CHEM RESEARCH CORP.,           ) PERMANENT INJUNCTION
                                   ) AND OTHER
                                   ) EQUITABLE RELIEF
                                   )
               Defendants.         )
___________________________________)

Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), by its undersigned attorneys, allege:

1. The FTC brings this action under Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), to secure a permanent injunction and other equitable relief against defendants for their deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).

2. This Court has subject matter jurisdiction over this matter pursuant to 15 U.S.C. §§ 45(a), 52, and 53(b) and 28 U.S.C. §§ 1331, 1337(a) and 1345. Venue in this district is proper under 15 U.S.C. § 53(b) and 28 U.S.C. § 1391(b) and (c).

3. Plaintiff, the FTC, is an independent agency of the United States government created by statute, 15 U.S.C. §§ 41-58. The FTC enforces Section 5(a)of the FTC Act, 15 U.S.C. § 45(a), that prohibits, among other things, deceptive acts or practices, in or affecting commerce. The FTC may initiate federal district court proceedings to enjoin violations of the FTC Act and to secure such equitable relief as is appropriate in each case. 15 U.S.C. § 53(b).

4. Defendant Speedway Motorsports, Inc. ("Speedway"), is a Delaware corporation. Its principal place of business is U.S. Highway 29 North, Concord, North Carolina 28026. Speedway is engaged in the operation of racing tracks and in the marketing and sale of zMax brand motor vehicle lubricant or fluid additive. Speedway transacts business in the Middle District of North Carolina.

5. Defendant Oil-Chem Research Corp. (“Oil-Chem”) is a wholly-owned subsidiary of Speedway incorporated in Illinois. Its principal place of business is 6800 W. 73 rd Street, Bedford Park, Illinois 60638. Oil-Chem manufactures zMax brand motor vehicle lubricant or fluid additive and, together with Speedway, markets and sells it. Oil-Chem transacts business in the Middle District of North Carolina.

6. At all times material to this complaint, Defendants’ course of business, including the acts and practices alleged herein, has been and is in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44.

7. Since at least May 1999, and continuing thereafter, Defendants have maintained a substantial course of trade in the offer and sale of the zMax Power System (“zMax”) -- a package of three clear, beaker-shaped bottles of zMax brand aftermarket motor vehicle lubricant labeled “Oil Formula,” “Fuel Formula,” and “Transmission Formula.” The liquid in each bottle is itself clear but tinged a different color for each “formula.” Each of the three “formulas” consists of 100% mineral oil with no active chemical additives.

8. Since May of 1999, Defendants have marketed zMax through a program-length television advertisement (“infomercial”) broadcast on cable and local television stations nationwide at least 13,000 times. zMax has also been marketed through Speedway and Oil-Chem’s Internet website (www.gozmax.com) and through various printed promotional materials.

9. The zMax infomercial features a host/narrator and numerous consumer endorsers, as well as expert and racing endorsers. Accompanying this complaint is a separately-bound set of four exhibits. Exhibit 1 is a copy of a videotape of the zMax infomercial and Exhibit 2 is a transcript of the infomercial. The infomercial includes, among others, the following statements or depictions:

1. “[CAPTION: 27% INCREASE IN GAS MILEAGE!]
   [CAPTION: YOUR RESULTS WILL VARY]
   UNIDENTIFIED MALE: I was averaging about 22 miles to the gallon on the highway. I installed the Z-MAX, and so I jumped right up to about 28 miles per gallon.” Exh. 2 at 3.
2. “[CAPTION: 29% INCREASE IN GAS MILEAGE!]
   UNIDENTIFIED MALE: It paid for itself ten times over for me.” Exh. 2 at 3.
3. “[CAPTION: 23% INCREASE IN GAS MILEAGE!]
   UNIDENTIFIED FEMALE: Z-MAX saved me a whole lot of money.” Exh. 2 at 4.
4. “[CAPTION: YOUR RESULTS WILL VARY]
   [CAPTION: 29% INCREASE IN GAS MILEAGE!]
   JORDAN ADAMS BOSTON, MA: I was really excited when I put the Z-MAX in my fuel tank because I keep meticulous records about my mileage. Over the last three years, I’ve had my Legend and I’ve consistently come in somewhere between 16 miles and 18 miles per gallon. After I put the Z-MAX in, in the city, I was getting 22 miles per gallon. That made me very happy.” Exh. 2 at 7.
5. “[CAPTION: 34% INCREASE CITY!]
   [CAPTION: 35% INCREASE HWY!]
   RON NICOLAL SECAUCUS, NJ: I’m very meticulous about how I maintain my vehicle . . . and I kept very accurate records about the mileage. And there was such a dramatic increase with the use of the Z-MAX, that I went from 13 to 17-1/2 miles per gallon in the city and 17 highway to 23 highway. That was just astounding.” Exh. 2 at 8.
6. “NARRATOR: Those folks know Z-MAX works. I know Z-MAX works. But here’s the indisputable, independent laboratory test that proves Z-MAX works. These are CRC L38 test results. Now, this test is accepted by the entire automotive industry as gospel.
   LEE HOLMAN HOLMAN MOODY RACING LEGENDARY ENGINE BUILDERS: The L38 test, the way they run it, is done with a standard engine. And it measures not only the horsepower and the fuel efficiency and the use of fuel and the amount of oil and blow-by that you get on the engine, but it also allows you to check very accurately the wear on the valves, the wear on the piston rings, as well as the carbon buildup. And that’s what impressed me on the L38 test. With this product, you find that it makes a difference. [BAR CHART DEPICTS Z-MAX INCREASING ‘PERFORMANCE’ AND ‘FUEL EFFICIENCY,’ DECREASING ‘WEAR’] This engine ran better, will run longer, has less wear; its astounding what the report says it will do.
   NARRATOR: Z-MAX with LinKite had the scientific CRC L38 proof; it takes your car to the max.” Exh. 2 at 8-9.
7. “NARRATOR: And Z-MAX guarantees a minimum of 10 percent gas mileage increase.” Exh. 2 at 1.
8. “NARRATOR: Now, don’t forget, your 10 percent increase in gas mileage is guaranteed minimum. Lots of cars do even better. With the 10 percent fuel mileage increase alone, Z-MAX is an incredible deal.” Exh. 2 at 11.
9. “DAVE BARBEE PRECISION TUNE AUTO CARE: When you use Z-MAX in the engine, you can see reduced wear in the valve guide area, less carbon deposit, which is going to result in a better, cleaner running engine, more performance, more power, and a longer engine life as the result of less deposit buildup.” Exh. 2 at 19.
10. “ANNOUNCER: [Z-MAX] Micro lubrication reduces friction giving you increased gas mileage. [CAPTION: INCREASE GAS MILEAGE!] Z-MAX lowers engine temperature so your car runs cooler. [CAPTION: COOLER ENGINE! LASTS LONGER!] And ZMAX keeps the metal wet and protected virtually eliminating dry start-up damage even in cold weather. [CAPTION: ELIMINATE DRY START DAMAGE!]” Exh. 2 at 20-21, 30-31.

10. Exhibit 3 is a copy of Defendants’ Internet website (www.gozmax.com.) from approximately May 2000. This Internet website includes, among others, the following statements:

• zMAX with LinKite has the scientific, CRC L38 proof it takes your car to the MAX!
  . . . .
• Smaller zMax molecules soak into the pores of the metal where they clean out carbon, varnish and other deposits that make your engine run hotter. zMax dissolves carbon and tunes your combustion chamber. You get improved gas mileage, reduced emissions, and more power.
  . . . .
• The benefits were enormous -- increased horsepower, decreased fuel consumption, lower operating temperatures, less wear, improved compression and it drastically reduced corrosion and rusting.
  . . . .
• [zMax] Micro-lubricating molecules give you a cleaner, more powerful engine, 10% improved fuel mileage, and fewer repair bills.
  . . . .
• zMAX provides peace of mind for you by helping to take care of important things in your engine that you can’t see. Some of these items include:
  
  • Damaging rust and corrosion
  • Dry-Start damage
  • High temperatures, carbon build-up and premature failures.

11. Exhibit 4 is a copy of a zMax promotional flyer published by the Defendants. This flyer includes, among others, the following statements:

Why zMAX Works

Cuts carbon build-up on valve stems 66%
Lowers wear on valve stems 66%
Lowers wear on piston skirts 60%
Reduces blow-by leakage 17.7%
Increases combustion efficiency 9.25%
Lowers fuel consumption 8.5%
Results of an independent CRC L-38 test.

12. The infomercial and (www.gozmax.com) website offer zMax for $39.95 plus $7.95 in shipping and handling charges. zMax is also sold nationally at discount and automotive specialty stores at a suggested retail price of $39.95.

13. The CRC L38 test protocol, referenced in zMax advertisements, including, but not limited to, Exhibits 1 through 4, is a laboratory engine test protocol that has been accepted as an automotive industry standard only for purposes of measuring the bearing corrosion performance of motor oils. In February/March 1997, an independent laboratory performed two modified CRC L38 tests on behalf of Defendants -- one test on motor oil alone and the other on the same motor oil treated with zMax. In these tests, motor oil treated with zMax produced more than twice as much bearing corrosion than the motor oil alone (185.7 milligrams of bearing weight loss for the treated oil versus 74.1 milligrams for the untreated oil).

14. zMax advertisements, including, but not limited to Exhibits 1 through 4, falsely portray the two CRC L38 test reports as a single report prepared by an independent testing laboratory. Defendants have created a fabricated independent testing laboratory “report” (which has a cover sheet from the testing laboratory and bears its letterhead on every written page) that edits out the bearing corrosion results and all other data that show a detriment from the use of zMax in the treated versus untreated motor oil CRC L38 tests. This fabricated report is shown in the infomercial, and the “official laboratory results” -- similarly edited to remove data showing a detriment from the use of zMax -- are reproduced on the zMax website.

15. Through the use of representations, testimonials, and statements contained in zMax advertisements, including, but not limited to, Exhibits 1 through 4, Defendants have represented, expressly or by implication, that zMax:

1. increases gas mileage;
2. increases gas mileage by a minimum of 10%;
3. reduces engine wear;
4. reduces or eliminates engine wear at startup;
5. reduces engine corrosion;
6. extends engine life; and
7. reduces emissions.

16. Defendants did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraph 15 above, at the time the representations were made.

17. Therefore, the representations set forth in Paragraph 15 above were, and are, a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).

18. Through the use of representations, testimonials, and statements contained in zMax advertisements, including, but not limited to, Exhibits 1 through 4, Defendants have represented, expressly or by implication, that the results of an industry-standard CRC L38 test conducted on zMax prove that zMax:

1. increases gas mileage;
2. reduces engine wear;
3. extends engine life;
4. lowers fuel consumption by 8.5%;
5. lowers wear on valve stems by 66%;
6. lowers wear on piston skirts by 60%; and
7. cuts carbon build-up on valve stems by 66%.

19. In truth and in fact, the results of an industry-standard CRC L38 test conducted on zMax do not prove that zMax:

1. increases gas mileage;
2. reduces engine wear;
3. extends engine life;
4. lowers fuel consumption by 8.5%;
5. lowers wear on valve stems by 66%;
6. lowers wear on piston skirts by 60%; and
7. cuts carbon build-up on valve stems by 66%.

20. Therefore, the representations set forth in Paragraph 18 above were, and are, false and misleading and constitute a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).

21. Through the use of representations, testimonials, and statements contained in zMax advertisements, including, but not limited to, Exhibits 1 through 4, Defendants have represented, expressly or by implication, that testimonials or endorsements from consumers appearing in the zMax advertisements reflect:

1. the actual and current opinions, findings, beliefs,and/or experiences of those consumers; and
2. the typical or ordinary experience of members of the public who use the product.

22. Defendants did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraph 21 above, at the time the representations were made.

23. Therefore, the representations set forth in Paragraph 21 above were, and are, a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).

24. Consumers throughout the United States have suffered and continue to suffer substantial monetary loss as a result of Defendants’ unlawful acts or practices. In addition, Defendants have been unjustly enriched as a result of their unlawful practices. Absent injunctive relief by this Court, Defendants are likely to continue to injure consumers, reap unjust enrichment, and harm the public interest.

25. Section 13(b) of the FTC Act empowers this Court to issue injunctive and other relief against violations of the FTC Act and, in the exercise of its equitable jurisdiction, to award redress to remedy the injury to consumers, to order disgorgement of monies resulting from Defendants' unlawful acts or practices, and to order other ancillary equitable relief.

WHEREFORE, Plaintiff requests that this Court:

1. Preliminarily and permanently enjoin Defendants from violating Section 5 of the FTC Act, as alleged herein, in connection with the advertising of products for use in motor vehicles, as well as other products and services; and
2. Award such equitable relief as the Court finds necessary to redress injury to consumers resulting from Defendants’ violations of the FTC Act, including, but not limited to, rescission of contracts, the refund of monies paid, and the disgorgement of ill-gotten gains; and
3. Award plaintiff such additional equitable relief as the Court may determine to be just and proper.

Respectfully submitted,
Debra A. Valentine
General Counsel

_______________________
JONATHAN COWEN
EDWIN RODRIGUEZ
Federal Trade Commission
600 Pennsylvania Ave., NW
Washington, D.C. 20580
202-326-2533; 3147
202-326-2558 fax
Attorneys for Plaintiff
Federal Trade Commission

Date: ____________