Memorandum — Masiello v. United States

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NA ah ak eee RRR 18 872

ad Boe aed mOHECL RODLK mR, (CLERK

No. 71-1092

on the Supreme swe of the ited Sie |

_OcroBer Tee, 1971

Svar OFrice: Bijan ‘COMPANY, ET AL., PETITIONERS

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FEperaL TRADE Comission

_ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPRALS FOR THE SECOND CIRCUIT

MEMORANDUM FOR THE FEDERAL TRADE O(MISSION

'». IN OPPOSITION.

ERWIN N. GRISWOLD,

Solicitor General,

Department of Justice,

Washington, D.C. 20530.

RONALD M. DIETRICH, ° i bE RZ: ©

General Counsel,

Federdl Trade Commission, :

Washington, D.c. ;

ie gn the Supreme Gourt af the United Siti mn

~ OCTOBER TERM, 1971

- No. 71-1092

Star Orrice Suppty Company, ET AL., PETITIONERS

= 3

Feperan ‘Trape Comission

ON PETITION FOR A Ww RIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

|

MEMORANDUM FOR THE FEDERAL TRADE COMMISSION

IN ‘OPPOSITION -— ‘

1. The Federal ° Trade Chaciieiion found that peti-

tioners, Star Office Supply C ompany and its president,

Henry Pinkwater, had engaged in unfair, false. mis-

leading and deceptive practices in the sale of office

supplies in violation of Section 5 of the Federal Trade

Commission Act, 15 U.S.C. 45, and entéred a ten para- .

graph cease-and-desist order (Pet, App. A 2, A 110-A -

112). The court of appeals affirmed from Se Leneh

~ without opinion (Pet. 5).

The evidence showed that petitioners solicited orders

for office supplies by telephoning ‘ ‘prospective pur-.

‘chasers and misrepresenting the nature of their busi-

(1)

463-190—72

‘

Cae IN ew UG aE

eS

- ness and their affiliations. Petitioners’ jobber-salesmen’

would frequently claim that they had. been recom-

mended by another official of the prospect’s firm; that

‘they were attempting to liquidate a relative’s station-

ery firm, and knew nothing of the business; and that

they Were affiliated with organizations such as Radio

Free Europe. None of these assertions was true. See

-e.g., Pet. App. A 45-A 46, A 58-A 59, A ob-A 61,

A 66-A 67.

There was also consider ‘able vitienee that petition-

ers deliberately shipped more merchandise to pur-

chasers than had been ordered (see, ¢.g., Pet. App. A

50, A 51, A 53, A 56-A 57, A 66,-A 70-A 71, A 75,

‘A 88). Frequently, the price of goods would be billed

at a higher amount than the purchaser had been led to

expect (see e.g., App. A 55-A 56, A 83). Merchandise

sold this way was often returned, but frequently a por-

tion of the order would be inadvertently used, or re-

tained, and paid for by the customer (App. A 51, A

53, A 56, A 57, A 60, A 73).

The Commission’s order (App. A 110-A 112) di-

rected petitioners to cease and desist such misrepre-_

sentations; to furnish purchasers with pre-shipment

written notification as to the type, quantity and price

of the supplies to be shipped (para. 7); not to deviate

from the pre-shipment written notification unless upon

express authorization of the purchaser (para. 8); and

not te thwart cancellation of any orders obtained in

violation of the cease and desist-order (para. 9).

2. Petitioners do not question the Commission’s

finding that their sales practices were unfair and de-

.

ND SALTS LMR ERR OR EN 5 UR e te et oat AF ONAL ly ed PAREN NECTAR GRC bit NS wehbe MEDS! Mian 8 ag

1 Ay tance ae on LAN ENR RIS =

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ceptive in violation of Section 5 of the k ederal Trade

Commission Act; they contend only that paragraph 7

- of the order, requiring pre-shipment notification, was

‘improper (Pet. 2).-As this Court has repeatedly held,

the Commission has broad authority to determine the

type of order ‘‘necessary to cope with the unfair prac- |

tices found.” Federal Trade Commission v. Colgate-.

Palmolive Co., 380 U.S. 374, 392; Federal Trade

(fommission v. Ruberoid Co., 343 +8. 470, 473. Unless

the remedy selected “has no reasonable relation to the

unlawful practices found to exist,’ the courts ‘will

not interfere.’ Jacob Sicgel Co..v. Federal Trad

Commission, 327 U.S. 608, 613.

The remedy chosen here is r asonably related to

petitioners’ practice of shipping larger qui: untities of

merchandise than were ordered. As the Commission

explained (Pet. App. A 8-A 9), pre-shipment notifi-

cation will give customers ‘the opportunity to inform

petitioners of any variations between what was or-

dered and what petitioners intend to ship, and thus

protect customers against excess shi} vient or increased

prices. Indeed petitioners’ continued argument. in

ak of “*[S]chlock’ pressure metliods of competitive

selling” as “part of the enterprise energies in these

fields of American business * * *** (Pet. 9, emphasis

‘in original) demonstrates the Commission’s wisdom

in requiring a prophylactic vimele rather than a

‘mere order to desist.

Contrary to petitioners’ assertion (Pet. 6), t

Confmission’ s remedy here is not unique. The Fa

mission has frequently required violators of Section 5

j

7)

4

to take affirmative steps before making a sale to en-

sure that their customers are aware of the seller's

_ obligations; such orders have uniformly been upheld

by the courts. See, ¢.g., All-State Industrics of North

Carolina, Inc. v. Federal Trade Commission, 423 F. 2d

423 (C.A.°4), certiorari denied, 400 U.S. 828; Port-

wood v. Federal Trade Commission, 418 F. 24 419

(C.A. 10); § & S Pharmaceutical Co. v. Federal

Trade Commission, 408 F. 2d 487 (C.A. 5).

3. Petitioners allege that paragraph 7 is aAfrastic

remedy which will destroy their. business “‘within a

very short time” (Pet. 8). Even assuming that pre-

if need be, those businesses “‘which persist in prac- - .—

ticing them.”’ Slough v. Federal Trade Commission,

396 F. 2d 870, 872 (C.A. 5).

However, if the conditign proves too onerous peti-

apply the Commission for relief. If that

relief is denied, “must remember that

those caught violating the Act must expect some fene-—

in.” Federal Trade Commission v. National Lead

Co., 352. U.S. 419, 431. |

' Petitioners have used a quite similar proredure

(Pet A 99-4 9).

ET

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For the foregoing reasons the petition for a writ

of certiorari should be denied. |

Respectfully submitted.

. Enwis N. Griswow, |

n Solicitor General. ~ ;

Rowaty M. Dreraicn,

General Counsel, ©

Federal Trade Commission.

Aprit 1972.