# Brief Amicus Curiae — Jacob Siegel Co. v. Federal Trade Commission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386405_0072%3A6 ## Record - **Collection:** Supreme Court brief - **Document type:** Brief Amicus Curiae - **Published:** January 1, 1946 - **Citation:** 327 U.S. 608 ## Text Pe DEE 24 17:16 ig , cual 4 “7 a =» | r et mriey [iN THE | 14 J - The Power of the Circuit Court Over Punitive Orders It is not inappropriate at this point to eonsider in con- nection with the problem of the Cireuit Court's power of modification of the Commission's order the power resident in that Court. An enforcement proceeding of the type sought herein by the Commission is comparable to a proceeding in. equity aad in which the principles of equity must be applied. U. S. v. Morgan, 307 U. S. 183, 191 (1939); s Ford Motor Co. v. National Labor Relations Board, 305 U. S. 364, 373 (1938). It has been uniformly stated that the functions of ad. , ministrative orders is remedial and not punitive. / Republic Steel Corp. v. National Labor, Relatious * Board, 311 U. 8. 7 (1940) ;~ Consolidated Edison v. National Labor Relatiousy / Board, 305 U. S. 197. (1938). 7 : It is noteworthy that despite the apparent hard and fastZrule in National Labor Relations cases with respect to the court’s power of review over administrative rem- edies, this Court has applied the above principles t labor eases. Modification of National Labor Relations Board orders has ‘been effected by tke courts in two outstand. ing types of cases. These cases involved (1) re-instate- ment of employees, (2) back-pay to employees. In “both in- stances the court has stressed the principle that affirma- tive action ordered by the Board must be, designed to effectuate the purposes of the Act, and that its orders must be remedial rather than punitive. Recent decisions ot this Court on this ie in which orders were moditic« are: ‘\ Southern "Stdemship Co. v. NLRB, 316 U. : (1942); ‘\ \ _ Go ae to) Republie Steel Corp. vo NLRB, 311 U.S. 7 (1940) ; NLRB vy. Fausteel Metallurgical Corp., 306 U.S 240, 257 (1950). The dissents in the above-eited labor cases pointedly decried the majority’s unjustifiable interference with the ‘““diseretion’? Congress had vested in the administrative agency. The rationale of these. decisions must lie in the rule that while the court may be restricted in its control over the orders of the Labor Board, vet the Board itself ~ is circumscribed in that its Orders must effectuate the purposes of the Act and be remedial rather than punitive in nature. The stated purposes of the Federal Trade Commission Act ‘are to prevent unfair competition and deceptive acts in commerce. These are not accomplished by the destruction. of the business or property ‘of an alleged violator. Its purposes would be effectuated by the femoval of the misimpression or deception to the public. The re- sult sought t6-be~actomplished should be to-protect the ‘publie to the utmost while, at the same time, injuring the charged patty only. insofar as absolutely necessary. Any. other result would be punitive rather than remedial It might well be that the deception, in the instant case, could be removed by a cease and desist 6rder against the petitioner continuing in business. ‘This would, of course, protect the publi¢ fully. On the other hand, the purposes of the Act would not be effectuated. The Act does not en- courage the destruction of a business, trade name or other property right. It does demand the outlawing of unfair | trade practices and deception to the public. In Federal Trade Commission vy, Eastman Kodak Co., 274 U. S. 619 (1927), we find this Court declaring itself on the limits of effectuating the -purposes of the Federal Trade Commission Act by refusing to affirm an order of if 16 the Federal Trade Commission ordering defendant to dis- pose of two plants which were .employed as. part of a scheme to monopolize the film trade. In the case at bar, with the removal of any possible _misinterpretation by the public as to ,‘‘Alpacuna’’ signi- fying a vicuna content, the further elimination of the trade name itself could serve no useful purpose at all to the public. Examination of the order of the Federal Trade Commission in the instant case demonstrates that. the Commission has ied at a punitive rather than a reme- dial ‘result, warranting the court’s review and modifica tion. Petitioner desires to clarify.any misimpression on the part of purchasing public regarding vicuna as one of the ingredient fibres in its coats. To do this it has volunteered to add the phrase ‘‘Contains No Vieuna’”’ in a prominent manner and sub-jeining the trade name ‘‘Al- pacuna’’, As a matter of fact, petitioner has already put this into effect and this court’s attention is respectfully called to the labels which are affixed to the petitioner's brief. ) Here, then, is a method for destroying the misimpres- siongand at the same time preserving the trade name. A method which remedies the wrong without needles punishment. Here is a method which effectuates the pur. poses of the Act by removing -the sole alleged deception without depriving the petitioner and Amicus Curiae of the good will in this valuable trade name, built up over a period of years and at great expense. The power of the court to modify the Commission's order, to deal equitably and effectively with the infraction in the instant case, stems from judicial decision and lezis- -lative enactment. The Royal Milling case is clear, Tlie Act gives the court power to modify. ‘‘To modify’? in the Act must mean more than innocuous modification, more than a° mere grammatical or semantic alteration or re:r- 17 rangement of the Commission’s orders. There is no need for the institution of judicial review to fall into disrepute. Appellate judges need not confine themselves to ‘‘passive obedience’? to administrative dictates.* The exercise of conscience and. intelligence in any given situation requires the court to do more than merely stamp its blanket im- -primatur upon any administrative order which comes be- fore it for review. ™ Moreover, there is no reason automatically to apply the restraining rule of the National Labor Relations Board cases to Federal Trade Commission cases. One prominent writer concluding a thesis on judicial supervision over ‘administrative agencies has stated: ‘The approach suggested is a flexible doctrine of judicial review, the extent of which will vary from one agency to another dependent upon the function, exercise and the character of the = in- dividual and social interest involved, and will change in respect to a particular agency as the circumstances change.’ Warner, An Approach to the Extent of Judicial ‘ Supervision Over Administrative Agencies, 28 Geo. L. J. 1042, 1073 (1940). ‘ - One difference between the effect of NLRB orders ban- ning unfair labor practices dnd FTC orders banning ‘the use of trade names is evident. An ‘‘unfair labor practice’’— is an excrescence. It is not part atid parcel of a business. Its employment may lead to additional profits or may satisfy the inexorable whims or prejudices of an employer. But it is not that factor upon which a business is based. It can, therefore, be done away with without affecting the continuation of the business. * See. Roscoe Pound, Administrative Law and the Courts, 24 Boston U. L. Rev. 201 (1944). : | 18 On the other hand, ‘‘Alpacuna’’, the trade name, is a vital part. of the business itself. The two are almost in- separable. It is without economic realization to argue that petitioner’s goods could be sold under another name. The same argument could be offered if the business were con- fiseated and the petitioner told that he still had the name and could therefore start a new business, The banning of a trade name assumes much more of a punitive aspect than would the barring of an unfair labor practice or the ordering of a defendant to deal with a particular union. Consequently, prohibiting the use of.a trade name ini mediately poses the question of ‘‘effectuation of the policy of the Act’’ just as would destruction of the business itself. The court has the right, the duty in fact, to remove the punitive effect of an order and to modify it so that ‘it be- comes remedial. This can be done in the instant case by modifying the order so as to permit the petitioner to use the trade name ‘‘Alpacuna’’ with the qualifying phrase ‘Contains No Vicuna”’ The difference between the two agencies and the stat utes creating them has in other circumstances been recog- nized. ‘International Mine Workers v. Eagle Picher Min. ing & Smelting Co., 325 U.S. 335 (1945); ; American Chain & Cable Co. Inc. vy. Fede - Trade Commission, 142 Fed. (2nd) 909 (C. 4th, 1944). Nor is the difference in court approach to different executive agencies and their powers unusual ,or novel, although it may be the trend of decision, without any spe- cific legislative authority therefor,-to draw all agenc iex into the same circle or orbit.* * See: Stern, Review of Findings of Administrators, Judges am! Juries: A Comparative’ Analysis, 58 Harvard Law Review 70); McFarland, Judicial. Control of the F. T. C. and the Interstate Commerce Commission (1933); F. 7. C. v. Curtis Publishing C: 260 U. S. 568 (1923). Ry ee 19 In view of the vast difference between the two agen- cies and their legislative history and the judicial treat- ment between the policies giving rise to their establish- menf, and the possible effects of their decrees upon busi- ness, and in view of the previous recognition by this and other courts of such distinctions, there exists no reason to:contlude that, because the Cireuit Court may be with- out power to modify an order of the National Labor Rela- tions Board which is supported by substantial evidence, no such power exists with respect to orders of the Federal Trade Commission. In fact, it is clear and the Circuit Court so states, that the findings of faet made by the Commission can be translated effectively and equitably through a modified order giving consideration to the busi- ness interests of the respondent without in any sense being in derogation of the public interest. No Contradiction by Qualifying Language The Commission's argument that qualifying language cannot be used to contradict a trade name) has no merit here.’ The word ‘* Alpacuna’’ being meaningless* its con- *It is the contention of the Commission that the “cuna” por- tion of “Alpacuna” signifies a vicuna content. As a matter of fact, the tincontradicted evidence as to the derivation of the name “Alpa- _cuna” shows that the proper suffix is “una” and not “cuna’. Even assuming the Commission's theory, “cuna” has no English mean- ing except to indicate a member of an obscure Indian tribe (Trial Examiner’s Report, lla). At the most it creates the impression of a soft fibre (R. 377a, 378a, 425a, 426a, 433a, 558a). It has been administratively declared that the “cuna” type trade name is “ar-. bitrary and“meaningless.” (See remarks of Ass’t. Commissioner of Patents in New York Knitting Mills, Incorporation v. Gotham Kuit- ting Mills, Incorporated, 37 U. S. Patent Quarterly, p. 459 (1938) ; New York Kuitting. Mills, Incorporated v. Rosenna Knitted Sports- wear, 37 U. S. Patent Quarterly, p. 460 (1938).) Cf. remarks of witness Richardson (R. 472a) who said that “una” in “Alpacuna”™ Was as meaningless as “ena” in Wheatena. ry } wv 20 tradiction would have to be meaningless. Herein lies: the distinction between the case at bar and Federal Trad. Commission v. Algoma Lumber Co., 291 U. S. 67 (1954). In the latter case, the word at issue was ‘‘white’’, a word of definite meaning. In our ease, ** Alpacuna’’, lacking any meaning cannot be contradicted by a phrase which does have meaning. Further, even if there were to be attributed some mean- ing to the name ‘‘Alpacuna’’ as a combination of alpaca and vicuna, the explanatory phrase would still be proper. It has been established in Federal Trade Commission cases that if the trade name is not \per se false, but is rather partially true and partially deceptive, qualifying language may be used to erase any possible deception. Royal Mailing Company vy. Federal Trade Cowm- mission, 288 U. S. 212 (1933); Federal Trade Commission vy. Army & Navy Trading Co., 88 F. (2d) 776 (App. D. C. 1937). In Federal Trade Commission v. Army & Navy Trad- ing Co., supra, the court, distinguishing such cases as the Royal Miliing Co., Good Grape, Casoff and Fluegelman cases from the matter at issue in that case, pointed out that iw the former group of cases the selection of qualifying words effective to eliminate deception was feasible because the names involved made separate and distinet representa- tions in respect of the origin and characteristics of sing! products, some of which-were true and some untrue. The court stated: ‘‘Therefore, qualifying words could be chosen which would eliminate any deceptive represents tions and leave standing the truthful ones alone.” In the instant case, the sole portion of the name ‘* Alpa- euna’’ which-is allegedly deceptive is the ‘‘cuna’’. suffix: s Certainly, any possibie misinpression can quickly be elim- inated by proper qualifying words, removing the alleged - deceptive portion and leaying that which is admittedly truthful. The Commission’s Order is Not Justified by the Evidence Entirely apart from any question of control over the remedy by the court, as such, sfaieus Curiae respectfully submits that the order in the instant case should have been modified beeause it goes’ beyond the findings of tact and substantial evidence in the case. | — Paragraph Nine of the Commission’s findings contains the basis for the Commission's present order; ‘*The Commission, therefore, find that the name ‘Alpacuna’ is misleading and deceptive to a: sub- stantial portion of the purchasing publie i that it represents or implies to such persons that respond- ent’s coats contain material which they ‘do not in fact contain.’’ (Italics ours.) (R. 652a.) That portion of the Commission’s order which is in issue on this rehearing prohibits: “Using the word ‘Alpacuna’ or any other word | which in whole or in part is indicative of ‘vicuna’ to designate or describe respondent's coats; * * .°"" (R. 655a). The order transcends the findings of fact and the sub- stantial evidence in the record in that it completely bars the use of ‘‘ Alpacuna’’, whereas the evidence below mere- ly shows that ‘‘Alpacuna’”’ standing alone is allegedly de- ceptive to a substantial portion of the purchasing public. In facet, the record is even more narrowly restrictive and 8 affirmatively demonstrates through the Commission’s own witnesses that a statement or explanation to the public that ‘‘vicuna’’ is not contained in the garments completely remove’ any possible misapprehension. ‘An order pro- hibiting the use of ‘‘Alpacuna’’ unless accompanied by qualifying phrase clearly indicating a lack of vicuna cou- tent would thus conform both to the findings: of fact and to the evidence in the case. A striking example of the type of evidence adduced at the hearing sustaining the above contention appears in the testimony of Robert L. Cohen, a Commission witness, on cross-examination : ‘*A. And I would judge from that that it is al- paca and vicuna hair, with a cotton backing. Q. Until you read the next sentence. Read tha‘ ' sentence. A. ‘Alpacuna’ is a registered trade nanie and is composed of alpaca, wool, and mohair pile on cotton backing. . Q. That is a perfectly clear destription of what is in the coat? A. That is right. Q. And it does not contain vicuna? A. That is right. -Q. So that no one reading that phieataninet would have any doult as to What was in that over: coat. A. That is trup.’’ (R7 214a.) With regard to the record affirmatively showing no de. ception if proper qualification is made, we also respect- fully refer the court to the testimony of Commission’< witnesses Muchmore (R. 170a), Ballenger (R. 173a), Wes! (R. 18la), Hardy (R. 184a), Ford (R. 255-6a), Test UR. 266-267a). | It is clear that the evidence below rested at the point that ‘‘Alpacuna”’ if wnerplained was allegedly deceptiv: 25 to a substantial portion of the purchasing public. It is also evident that the record is without substantial evi- dence, in fact without any evidence at all, that ‘‘Alpa- cuna’’, when properly modified, is not deceptive. It is equally clear that the qualifying language ‘Contains No Vicuna’’, as offered herein, would completely eradicate guy misapprehension of the consumer and any deception to the public. It is, therefore, respectfully submitted that entirely apart from any considerations as to the power of the court over the remedy, as such, the order in this case should. have been modified in order to.conform to the findings of fact and the substantial evidence in the record. As it stands now that order is not based in substantial evidence. The order should, at the very least have been modified so that it reads that the petitioner is prohibited from: “Using the word ‘Alpacuna’ or any other word which in whole or in part is indicative of the word ‘vieuna’, without proper qualification indicating the absence of vicuna.”’ Accompanying the trade.name with the phrase **Con- tains No Vicuna”’ would clearly dispel any possible in- ference of vicuna content. In this manner, due regard for the public, on the one hand, and consideration for the preservation of a valuable property right, on the other hand, would both be satisfied. This, we submit, is the only type of order which could be properly entered in -this case in view of the present state of the record. 8 24 eo 0 a CONCLUSION The Petition for the Writ of Certiorari should be granted. Respectfully submitted, Seymour M. KL tery, Atttorney for Amicus Curiar. MarsHALL, Bratrer, Setigson & KLery,. ‘of Counsel. Marvin J. Buiock, on the Brief. (8073) a --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386405_0072%3A6. Public record. Not legal advice.