Petition for Writ of Certiorari — Federal Trade Commission v. Mandel Bros.

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PATO Seat ee

; - ae

oar , INDEX os aed

Opinion below-.- - . -----.-- sivnedadsvedsacbivads Siacee aoe ©

Jurisdiction. AtiieSedendencdsa ee ee aeees Wa a Welw w e be 1

Questions presented. ________-- Scien ceeds shevebdarebas 2

MMR iddh yc. ioc cos ssecorseses PSS PP on ae 2

Statement. _ _. _- ews badens sueae CSM A a Ke eee ew eee 2

The invoicing violations. gecsds i SEA SSS 4

The labeling violations -_-_-__.-...-.-..-.--2-2-2-.- 5

Reasons for granting the-writ-—.--- lassenn ~oeoowe Te

Conchpiiess 2225 522.22020 6 i: Bee gee eeoue Scat

/ Appendices - -- - - - - -- sae: tH jae hecsrou deter aadenecodag 15

; _ EITATIONS eh ere

Cases: | ig

Black v. ‘Magnolie Liquor Co., 355 U. OM 8

De Gorter v. Federul Trede Commission, 244 F.2d270. 10 .

Federal Trade Commission v. Morton Salt Company,

GO Rte btn e as aces sha meennee he |

Federal Trade Commission v. Ruberoid™ Company, 343

1 SR Soin REAR + CER eile RE nat, MN ner 4 gy

Feriton v. Thorley & Co., , [1903] A. C. ORES 10

Knowlton.v. Mooré, 178 U. x. EER ARP Tes id.

Local 167, Int'l Brotherhood of aces v. ‘United

me i bs 4 4

May Department Stores Company v. Nasional i

Relations Board; 326 U. 8. 376___--. =. -- aS 120

National Labor- ‘Rdaiiene Board v. Express Publishing of

Co. , 312 U. MN ccd ated etl hice a wi Ein ates Wao Saicbsne 12°

Siegel Company, Jacob v. Federal Trade Commission, HG:

Oe ee inh te Se canoes ae} we

United States v. American Trucking Ass'ns, 310 U. ry

DE GicaLaend cde chit neh ata onckewwakn 10

White v. + United States, 191 vf S, 565....-.- Riiecaeks 10

@

474233—58——1

Gis SU Sent

- Statutes: :

Fur Products Labeling Act, ' 65. Stat. 175, 15 U. S. C. - Page’

: 26> AML te ceanheheauiwekidnienen 2,7, 10, 11, 13, 24

/ ' Section a oa. be iesea oe ‘emis Sot 7, 24,

ie StS ere alice iy F heenine cacaken tae 10, 24

Sention He)<.s-..2-. 5... ivieowenn cise mimes aan

SF ts POOR BOP) oie dene dnqesesass eeencans tie 3, 25.

ponuwemaretiess “ingen Sepa em ian py ono 4,13) 25

ee BEN. 8 cs cacunwsandnassdeeee 4, 5, 6, 13, 26

.. Section 5(a)...------ Seeeeiaitaeiaitienteee 26

Dee... ..., cwaveunnsdkedecoaeda 3, 4, 27-28

, Wool Products Labeling Act, 15 U.S. C. 68, et seg.:

- Gestion 609)... <2) Sk cic hn nde seube 14

“Miscellaneous: ;

; _ Hearing before the House Committee on Interstate.

ee and ‘Foreign Commerce on H. R, ‘3734, 80th Cong., <

NE Ui iu cce otbeakauochdawahowuteaves 16

S. Rep. No. 78 82d Cong., Ist sess... ...-:2------- 9, 10

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In the Seren Gout of the tad Sues

a : OcTOBER TERM, 1958 — :

PepEray TRADE Comnsissi0%, PETITIONER

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PETITION FOR A WRI 9 OF CERTIORARI TO THE UNITED STATES

er: - AFFEAIA FOR THE SEVENTH OIROUIT |

j

“The Solicitor, General, on ‘be of: the Federal

_ Trade. Commission,: prays that a writ of certiorari 3

issue to review that part of the judgment of the. .

- United States Court of Appeals for the Seventh Cir-

ciit, entered in the above’ eause on April i, 1958,

which modified the Commiission’s 8 cease-and- desist

order.

OPINION BELOW

The opinion of the Court of Appeals (Appendix i )

infra, pp. eaayita is reported : at 254 F. 2d 18.

4 . : e

‘ JURISDICTION

| ‘The ‘udeient of the Court of Appeals moditying:

the Comrhission’s.ordér, and affirming it as modified,

_was entered on April 1, 1958 (Appendix B, infra,

p. 22). The court’s final decree, enforcing the order

as modified, was entered May 8, 1958. The time for

(@) 3

—

—

———==

filing a petition for a writ of certiorari was extended

by Mr. Justice Clark on June 25, 1958 to July 30,

.1958 (Appendix ©, infra, p. 23). ~The jurisdiction. ‘of

this Court is invoked under 28 U. 8. C. 1254 oA (1).

QUESTIONS PRESENTED

1. Whether aaa at the retail level are ‘outside the

, _ Scope of the provisions of the Fur Produets Labeling

'. Aet prohibiting false and. deceptive invoicing. =

~~ ~-9>"Whether the Federal Trade Commission, -in-is-

suing cease-and-desist orders against failure to label.

fur prodiicts properly, is confined to proseribing “the

the precise labeling omissions which it found.

_ STATUTE INVOLVED

_ The’ relevant portions of the Fur Products talk

3 ae Act, 65 Stat. 175, 15 U. & ©. 69, et seq., are set

- forth i in freee infra, pp. 24-28.

‘STATEMENT -

- \ On October 27, 1955 the Federal Trade ‘Chantisatontens

issued a complaint, charging that respondent, which

; operates a large department store in Chicago, Thi/

_ nois, had .violated the Fur Products Labeling Act

- (App. 2-8).". After full administrative proceedings,

the Commission, adopting the examiner’s findings

(with: minor modifications), found that respondent

had violated the Act as charged, and entered. a cease-

- and-desist order. The principal violations: found were

' misbranding, false and deceptive invoicing, and false

' advertising. ‘The Court-of Appeals modified the order

; *“App. ,. peters. to the appendix to respondent’ brief ig the

Court of oo tig, ot

»

o ‘

“ar two-important 1 aati, and affirmed and ved

_ its other provisions. ‘The court eliminated the pro-

_ hibition against false and deceptive invoicing, on the

ground that the Act does not “invoices given

9, retai customers; and it held that the Prohibitions

- against misbranding were too broad. . :

Section 3. (a) of the Act (15 U. S. C. 69a (a).

product which is misbranded or falsely or deceptively

‘advertised _or_ invoiced *.* *7?; and Section 3 (b)-

(15 U.S. C. 69a (b)) Taakes it unlawful to’sell “any

fur product which is made_in whole or in part of fur

‘which has been shipped and received in commerce,

and which. is misbranded or falsely or deceptively ad- .

vertised oF invoiced * * *.” Section 5 -(b) - (5

af S.C. 69¢ (b)) provides that a fur product or fur

is falsely or deceptively invoieed if the “invoice”

does not show (A) the name of the aninial that pro;

duced the fur; where applicable, (BY that the produet

contains used fur, (C) cpiviaits. bleached, dyed, or

_or substantial part of paws, tails, bellies, or “waste

. fur; (E) the “name and address”’ of the person issu-

_jng such invoice; and (F) the country of. origin of

any imported furs. Section 2 (f) of the Act (15 U.S.C.

69 (f)) defines ‘‘invoice”’ as “a written account, memo-

commercial dealing in fur produets or furs, and “de-

scribes the particulars of any fur products. or furs, ;

transported or delivered to a purchaser, consignee * srg .

makes it unlawful to sell “in commerce * * * any fur”

artificially colored fur, or (D) is composed in whole. :

randum * * * which ‘is. issued: in connection with any 3

4 cae. eae

or any viii person sete is engagec in dealing commer-

- cially in fur products or furs.’’ |

_. Section 4 of the Act (15: U4 8S. C. 69b). vactides

that a fur product i is misbranded if (1) it is “ “falsely

or deceptively labeled * * * or identified,” or (2y

there is not affixed a label setting forth six specific

- categories of information. whigh. are substantially

~ identicat to-those-which Section 5 (b)-requires to be

set forth-in ‘the i invoice (except that Section 4 (2) (B)

_ requires the label to show the name of the person who

_tnanufactures the fur product, rather than the ‘‘name.

and address ” of the person issuing the patent

The Invoicing Violations |

"The Commission found that respondent liad vio-

_- lated: the invoicing provisions of the Act because its

invoices did not show its address and, in several in-

stances, failed. to set forth. the’ correct name of the

animal produeing the fur and did not disclose that

the fur -was. bleached, dyed, or otherwise artifically

colored. -The Commission rejected respondent’s con-

tention that the Act is not applicable to retail invoic-

ing. It stated (App. 147). that “a prime purpose, of

. the Act was .to eliminate deceptive invoicing at the

- consumer level’’; that it has ‘consist r construed .

the statute’s proneribtions against falseind deceptive

» invoicing to extend to invoices or sales slips furnished

by retailers t* the purchasing consumer’’; and ‘that

' respondent’s cont¢htion would “render the Act. in-

effective in a majoraéspect®’ ayes

The Court of Appeals eliminated the prohibitions

relating to invoicing, on the ground that under the

: ; & ° % :

5

dai a sajea_siip given: to a retail cuales not

an “tinvoies’’ (Appéndix A; infra, pp. 19-20). The

court ruled that an invoice “must be something issued in

connection with a commercial dealing to a purchaser -.;

or any other person who is engaged in dealing com- ie

mercially’ ‘in furs, and that, “[u]nder no circum-

. stances is a sales slip given to a customer by the re- :

tailer * * * issued.in cénnection with a commercial |

dealing.’? The .court refused to“consider r the legis- :

lative history of the Act, on the ground that when-

statutory language js “clear apd unambiguous its

legislative history cannot contiee the aaa eral

tion 8 8 87

-_

’. The Labeling Violatigne—

The Commis$ion found: the, talleuine violations of

_ the Act’s labeling requirements: 12 instances of fail-

“ure to label the product with the correct name of the

- animal producing the fur (Section 4 (2) (A)), 15

_ instanees “of failure to disclose that the product was

; bleached, dyed or otherwise artificially colored (Sec-

tion 4 (2) (C)), and 58 instances of failure to show -

the country of origin of imported furs (Section 4 (2)

' (F)). The Commission furtliér found 187 viola-

. tions of its rules which provide additional labeling |

requirements.’ The‘. Commission held (App. 158), —

however, that there was “no ‘evidence that. the labels —

vaffixed to respondent’s fur products were deficient in —

that. they failed to disclose’ that the fur products were —

; *In 9 instances, required’ information was improperly set

forth in abbreviated form; in 59 instances, non-required in-

formation was mingled with required information ; and’ in 119

instances, ‘required — was set forth. in oe

ie

; : Reet : : ae he .

composed of used fur, i: liad atta, Ot sli

rt tails, bellies, or. waste fur, or that they failed to dis-

close respondent's name Sn

_ Althongh the ¢examiiner recommended that the

cease-and-desist order be limited to the three. cate-

py of information found to have been omitted,

the Commission’s order directed respondent to cease

and. desist from “Misbranding fur produets by: * * *

- Failing .to a affix labels to fur prodyets showing”’ the

six categories of information required by Section 4°

(2) (App. 159-160). The Commission stated. (App.

154) that ‘‘[u]nder the Act a fur product is mis-

brended * * * unless it has attached to. it a label set-

ting forth clearly and conspicuously all the data in-—

dicated as. necessary to be included thereon. by Sec- °

tion 4 (2): that, the subsections “do not deal with

_ Separate violations in afid of themselves” (ibid.) ; and

that “in any case in which it is-found that the label-

‘ing * * * requirements * * * have not been fully

~ complied with, the appropriate conclusion: is that the

fur products in connection with which the deficiencies

have occurred have been misbran | * * * and that

the appropriate order to be issued in correction of the

offense is one requiring cessation of the practice,

_ namely, the misbranding * * * by failure te attach

Ps ah a (App. 155). : ens

_ to pn scope of he order evil panty ut ih ae

Tt enjoined respondent. from failing to furnish invoices con-

ipining fin, six. setaanrien of inicepation veanisnd by, Gieghct

‘(App. 160), even though it found (App. 158) that there

Ser “no evidence” "Sik Gondin ak Baan Cismorie Wed tome oe.

- Iated. Since the Court of Appeals held that the part of thé

The Court of Appeals struck from ‘the order the —

prohibitions against the three categories as to which

no violations were found, (Appendix A, infra, pp. 18—

19). Although stating it acvepted the “doctrine that a

- cease and desist order does not have to be limited to eat!

the illegal.practice in the precise form it is. ‘found to :

exist or that those caught violating the Act must.ex-

pect some fencing in,’’-the court-refused to “affirm ~

an order requiring one.to cease and desist from doing !

that which the Commission a sppeitealiy toned it did ae

not do,’’ 2 & eee

. | RRASONS FOR Gn: THE WRIT "

_1In holding that aii ‘given by. retailers of :

fur products ‘to the ultimate consumer are not “‘in-

voices’’ subject to the disclosure requirements. of the

Fur. Products Labeling Act, the court below has .

adopted a construction .of the Act—a clearly errone-.

+ ous. constructions.,we believe—which; unless reversed

by this Court, will seriously frustrate a. ptineipal.

purpose of the Act and substantially limit the pro-

tection against misbranding afforded by Cenerew ¢ bad

purchasers | of fur products.. Bie 3!

Section 3 makes it unlawful (inter alia) to sell

“any fur product which is made in whole or in part

of fur which has been shipped and received in com- 3

theree, and which is * * * falsely or deceptively * * *

invoiced * ** *.’? Section 2.(f) of the Act defines

“invoice”? ag “a Written account, memorandum, list, or

order dealing with the invoicing violations was beyond the

_Commission’s statutory ee it did not reach the ques-"

tion of its scope.

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catalog, ‘whieh is issued in cniniitleas with any com:

" vaercial dealing in fur. products or furs, and describes

_ the particulars of any fur products or furs, trans-

ported or delivered, to a purchaser, consignee, factor,

bailee, correspohde it, or agent, or any other person -

who is engaged in dealing. commercially, in fur prod- |

- -uets or furs.”’ -The court below held that under thit”

definition an\* “invoice” must be. something issued in:

connection with a < commercial dealing to a purchaser

or any other person who is engaged in dealing com-

“mercially”? 3; and that ‘‘[a]n ‘invoice is not brought

down to. the retail level by this ’ section,” . since a-

_ “sales slip given to a customer by a retailer” is not

: ‘issued’ in connection. with a commercial Sealing

(Appendix A, infra, pp. 19-20).

We submit, however, ‘that thé statutory definition of -

“invoice”? does’ cover sales slips at the retail level.

Giving .the words of the definition their ‘ordinary

meaning, the ultimate eénsumer who purchases and

“ wears a fur peoduct is a * “purchaser,” andthe sale

_ to. such a eonsimer is a_ **commercial dealing. -

- Furthermore, the phrase at the end.of the definition,

_ “who is engaged in dealing commercially in fur prod- -

’ uets or furs,’’ does not, in our view, modify and limit

the, word ‘purchaser. ’ ’? -Although the Commission -

_ Yelies prim@rily on the: ‘usual usagg of the statutory

‘ terms, it should also be noted’ that “Twle deal hére

with remedial legislation whose language’ should be

given ‘hospitable scope.’’ Black. v. Magnolia Iaquor

Co., 355 U. 8. 24, 26. Fe a tel cae

ti sany” ile We - “believe ‘that. the oat plainly |

_ erred in holding that the definition of “invoice” is ~. ;

. “élear and” unambiguous’’ as to ‘yreclude resort to -

legislative history.” ‘That - history evidences. Con-

«sumers of furs against-the’ evils, of various false and

| deceptive practices, and: strongly supports the concla-

-sion that the Act’s invoicing provisions are applicable,”

at the retail as well as at. the. siete ‘and

wholesale levels: ° oF |

The ‘Senate Report stated that one of the two pur--

of the bill is “‘[t]o protect consumers and’scrupu-

= lous merchants against deception, and unfair competi-

tion resulting from the misbranding, false or deceptive -

advertising, ‘or false. invoicing of fur products and.

furs * * mar (Ss. Rep. No. 78, 82d.Cong., Ist sess., P-.

oo emphasis added). The report also stated that “fur

- when offered and sold to the’ ‘buying public often has

had its . natural appearance “materially: changed by

processing and dyeing”? (id., p. 2); that it ‘is diffi-

‘cult and generally impossible for the American house-

wife to know what she -is.:buying unless reliable.

factual information is disclosed to counteract the im---

. pression left with her. as & result af’ the deceptive

~ condition of the: particular fur article of wearing ap-

’ parel”” (ibid.) ; and that the prohibitions contained in,

the Act “will effectively check types of advertising,

mvoicing, and labeling which by. implication are: éal- .

- culated to mislead one as to the habitat of the animal,

- a matter regarded by many consumers as: having con-

siderable bearing on the quality sud character of -

: gressional concern with protecting°the: aitieanbh con: ve

fie

?

10 ~

fuirs’’ (td.,.p. 4). The 2im of Congress to protect

. consumers, -against false invoicing . as well as mis-

branding and false’ advertising is also shown by the.

title of the statute (65 Stat. 175) : “An Act to protect”

consumers, end other's. against misbranding, false ad-.

vertising, and false invoicing of fur. produate and furs”

(emphasis added.)*- * ~

In view of. this clear Congressional pie to pro-

: tect consumers of furs and fur products, it would be

anomalous for Congress to have made, the advertising .

_* and mislabeling prohibitions applicable to retail trans-

> aetions-—as Section. 3 has done (De Gorter v: Federal

Trae Commission, 244 F, 2d 270 (C. A. 9))—and_

. yet to have denied, retail customers the same protec-

. tion against false. i invoicing. The Commission ‘“‘has

nsistently * construed the statute’ s -proscriptions

dinst false and deceptive » invoicing to extend ‘to in-'

voices or sales slips furnished by retailers to. the pur-

_ehasing eonsumer’” (App. 147).° As the Commission -

a, At the hearings on a predecessor bill, (substaptially identi-

cal. with: that’ which became ‘the Fur Products Labeling Act),

there : was extensive discussion of the need for requiring that

j the retail level affirmatively disclose pertinent in-

learing ‘before the House Committee on Inier-

‘state and. ign Commerce*on H. R. 3734, 80th Cones 3d

sess., at pp. 119}.120,-123, and 156-157. 7”

*The title of a statufe may be ccnsidéred in resolving amn-

‘biguity. Knowlton v. "Mbore, 178 U.'S. 41,65; White v.

United States, 191 Be Ss. foe 550; See also Fehton v. 7 hone

& Co., [1908] A. 447 (HL. L.)

‘©This = <idicaspacsenats construction of a statute by the men

charged witli-the responsibility of setting its machinery- iri motion,

‘ of making the parts. work efficiently and sinoothly while they are

yet untried aiid new,’”” is-“erititled to great weight. - v nited

* States ¥. A mérican Trucking am, ' $10 U. 8. B34, 549.-, -

a

“a

pointed oat (tbid.), a contrary construction world:

“defeat the congressional declaration of putpone: and =

render: the Act. ineffective in a major respect.’

The question whetber the Act applies to retail itt,

- ydiging’ is important in its administration’ and en- |

_ foreement.. ‘Sinee.the Act became effective ‘in 1952,

the Commission’ has issued more than 100 complaints

, charging false and deceptive iggoicing at the retail

level; in-addition, there are currently outstanding 94

~ Covinaieaton orders’ relating to retail invoicing, rere A

more than 35 pending administrative |

volving the same activity. = —

. een se hhait ent bia ih oe

mission cease-and-desist orders under ‘the Fur Prod:

‘ucts Labeling Act: may. prohibit only the partisular -

“types of misbranding (and, by the. same reason-

ing, of false invoicing} found to have been committed.

This Court has consistently recognized that the .

) Commisaion has “wide discretion in its choice of a.

remedy deemed adequate to cope with the unlawful -

practices’? disclosed in its proceedings. Jacob. Siegel

‘Company v. ‘Federal Trade Commission, 327. U.S.

608, 611; ‘Federal Trade Commission v: Ruberoid

Company, 343_U. S. 470; ef. Federal Trade Commis-

sion v. Morton Salt Company, 384 U.S. 37, 51-52.)

The Commission is “not limited to: prohibiting the’ .

illégal practice -in_ the. precise form in® which it is

found to have existed in the past.” Federal Trade’

Commission v. Ruberoid Company, supra, at 473; see

also’ May Department Stores Pompany vy. ‘Netional |

Labor. Relations Board, 326 U. S. 376, 390 (footnote ~ -

o

soe at ee |

10, subparagraph 3 ‘(a)). “A cease-and-desist order

may restrain “other like or related unlawful acts”’

(National Labor -Relations Board v. Express Pub-.

; ing Co., 312 U. S, 426, 436), as long as such other

violations: “bear. some résemblance te that. which

*" fhe 2:6, ¢: [respondent] has committed or * * * dan-

ger of their commission in the future is to be antici-

». pated from am course of: *®: conduct ip the past” (id.,

. p.. 437). | oS

Under ees standards, the Commission was fully

| warranted in entering: a cease-and-desist order ,

against all six categories of. misbranding, even though.

it found violations involving ‘only three of. thém:

‘The six: categories!’ are closely interrelated, , and it

is not unjustifiable to assume that one who repeatedly .

commits violations involving sevéral of the categories

is likely, unless restrained, to commit , violations in-_

volving others. For example, a retailer who fre-

quently failed to disclos¢ that fur is bleached or dyed, .

‘as respondent did, may reasonably be expected also

to fail to disclose that the product includes used or.

other undesirable types of fur. The Commission

. found &that respondent had committed 85 statutory

violations involving. three of | the labeling require-

ments, and~also 187 violations ‘of Cominission*regula-

tions. In the circumstances, a prohibition which -

also includes the. three .other labeling requirements

-¢annot. be said to have “no reasonable relation to the

unlawful ‘practices found to exist. ” “Stégel case,

_ gupra, p: 613. See also Loeal 162, Int'l Br nerhans

of Teamsters v. United isi sand U. 8..293.

os

"The fact that Congress, in defining ‘misbrandef?” in:

Section 4 of the Act, ‘specified six categories of re-

quired information does not curtail the -Commission’s. e

“wide discretion” to choose “‘a remedy deemed ade- -

quate to cope with the unlawful] practices” (Siegel 2

_ case, supra, p. 61 —a discretion which, as we have’

shown (supra, p. 12); authorizes the proscription of “Te-

‘lated unlawful acts.’”’ The offense which Section 3 .

; condemns is - “‘misbranding’’ and, as the Commission

stated. (App. 154), ‘‘[u]nder the Act, a fur product |

"is misbranded * * * unless it has attached to it a

label setting forth clearly and. conspicuously all the

: (date indicated as necessary to be included. thereon by

ion 4 (2).” The. six specified categories of* ze-

quired .information, therefore, “do not deal with

separate violations in and of themselves, nor do they

recognize or. excuse misbrandirig * * *,in varying.

degrees”’; they merely amplify the statutory command

that there be “attach[ed] to a fur garment an adequate 5

_label. *_ * * #9) (App-454).

The decision below, if allowed to stand, would

handicap the ‘Commission in- enforcing not only’

the Fur Products Labeling Act but also- the Wool

.-Products Labeling: Act (enacted in 1940), . For, Ricco 8

the: _Commission pointed ‘out (App. 156), if it were

limited to requiring disclosure’ Gilly of the particular

Aategories of information that had not been given, new —

"Proceedings would have to be instituted to deal with

- ‘subsequent omissions not theretofore resorted to but

Preird violative of the ‘public policy expressed in

the ct naaneth In order to avoid such “taltiplieity

_ + of the cases” -(ibid.). It has also “generally” fol-

_ lowed the same practice with respect to orders under

4

bf détions,” the Commission's Everd established

poiley” under the Wool Products Labeling Act-has

‘been to include in its orders “prohibitions against

. Pailute to Aisclosé on iabels all elements of informa-

tion required-by that subsection [Section 4 (2), 15 -

U. 8. C. 68b]. even though failure to disclose some

eleménts of information were not involved in vatious

the For Act directed. against ee and false

Invoicing a ers 3

3 comctiarom — :

‘for the ee reasons, it is Sabbaiully sub-

mitted that this petition for a writ of. certiorari

should be granted. © :

: ne Lee Rian, )

. Solicitor General.

‘Victor R. HANSEN, ee

Assistant Attorney Genorid.

: oeedan _ Danret M. Farmpman,

iam. - - Egwest L, Foux, TT, ©

ee rat : arene:

Eart W. KINTNER, -

General Counsel, ‘*

Jaume E. CorKey,; .

Assistant ‘General Counsel, :

Federal Trade sore cereal

: APPENDIX A_ ante

- era 1 Trade Commission Docket bit)

er THE Usms. Stare, Cour of Koma roa THe a

i

No. 12198 September es 1967—Tasnary Session

i Pai 1958 —

wai ‘Brornens, Ise, A Conrotumtoy, PETITIONER

,e a. ‘ v. s : ;

Froera. TRADE Comaassion, RESPONDENT ,

oN PENTION 10 Sef ARIE AN ONDER OF THE FEDERAL

Dre ci rc APRIL 1, 1958 —

Before’ Det Chief Judge, Scunacxsama and

——— Circuit Judges. :

° Parkinson, Circuit Judge. The petitioner,

del Brothers, Inc., is a Delaware corporation. It

‘owns and operates a large department store in Chi-

cago, Illinois with annual sales - of approximately

$32,000,000. . It has two fur departments, one on the

fifth floor and the other in the basement. Cae

: The petitioner is here seeking to set aside a cease

and desist order entered July 5, 1957 under the Fur

Products Labeling’ Act, Title 15 U.:8. ©. A. § 69.

et seq: by the respondent Federal Trade Commission.

There : are five contested issues. Ҥ

(15)

: Sa,

e

s their departments and that most of thé furs that are’

— the petitioner is inapposite in that Bunte Brothers’ -

‘ = oO 16, ee

“% _ The first is whether the petidonar’ 8 activities con-'

stitute interstate commerce subject to the jurisdiction’ |

of the Federal Trade Commission. — =

., The parties stipulated that furs and fur produets ;

sold by petitioner were shipped . ‘to and received by it

from outside the State of Mlinois. Petitioner’s fur

_ department ma testified that ' they went to New

York City -ten or twelve times a year to buy furs for .

sold in the petitioner’s store ure bought there. There

was also evidence that the petitioner advertised in

the Chicago Tribune, the Chicago Sun-Times and the

Chicago American, all of which, as stipulated by the -

_ parties, liave interstate circulation and that furs were _

sold to non-residents of Illinois and sent to an out.

of state address. The witness Hill, manager of peti-

_tioner’s fifth floor fur department, testified that-Com-

mission’s Exhibit 12, a sales slip, had no Illinois sales

tax thereon and therefore:the goods would have to be ©

delivered outside the State of [llinois. Commission’s

Exhibits 19 and 20 also show similar sales to residents

‘of Indiana upon which no Illinois sales tax ‘had been

charged. Accordingly there was ample evidence in

the record from which the Commission could find that —

the petitioner was engaged in.interstate commerce. .

DeGofter v. Federal Trade Commission, 9. Cir., 1957,

244 F. 2d 270. The case of Federal Trade Commis-—

sion v. Bunte Brothers, 1941, 312 U. 8S. 349 cited by ©

‘ gales were-made exclusively i in Illinois, se

_ The second issue is whether the Commission’s Rule

44 under the Act is a valid exercise of the authority.

‘delegated to the Commission. — .

Section 8 (a) (1). (b) of. ‘the Act aniheslann the

Commission to prescribe, inter. alia, such rules and

regulations as may be necessary and proper. for pur-

=

ee ~— : : a : 17 Re

"poses of: the administration and enforeement.of the

. Act. - rely

_ Section 5.(a) (5y provides: , , :

Bebidas okie Aa a tae athe

or fur shall’be considered to be falsely or de-

' eeptively advertised if any adverti ra

which is intended to aid, promote, or assist di- —

rectly ef indirectly in the sale or offering ‘for

sale.of such fur product or fur * * * contains —

any form of misrepresehtation or deception, di-

rectly or by: implication, with. respect to maak

fur product or fur; * * *.” ' |

“We agree with the Ninth Cireuit in DeGorter hin

S - said, “the intention was to reach all misrepresenta-

tions in advertising, including those relating to prices.

and value. If any doubt exists about :the matter the

- clause under consideration indicates the intention to

_ include them. The Commissiori was right i in so ‘inter-

- preting the statute and ‘acted within its powers in.

promulgating the rule under discussion.” ‘ \

. The Commission found that certain fur produets

sold by the ‘petitioner for $244 were the same.ones _

_ advertised in the Chicago Tribune on October 2, 1954

as “Usually $299: to $399” the net effeet of which was’.

to mislead and deceive purchasers as to the amount

_ of savings to be realized. ‘We believe that finding i is

supported by. substantial evidence. Mandel called its

manager of the fifth floor fur department as a wit-

ness but made no attempt to prove these garments

were usually sold at $299 to $399. ° Petitioner’s con-——.

tention that the issue. here» is not the regular and

"usual price of the specific: ‘garments ‘sold _by Mandel

’ but the regular and usual price of similar or com- |

parable garments fails inasmuch as the customer —

would make no such distinction. - Moreover, there is _

- no evidence in this record that the regylar and usual —

es ee

ee

—

0 ae

ner 18 aye

ee ‘pric of similar or compirable eit was $209 to

. $399.

_: The third issue is whetilt tis’ déidcivb ‘a6 to: lubel-

‘ing, invoicing, advertising and record-keeping is such

@s to warrant and support the Commission’s cease ”

. and desist order.

‘What we have held as to advertising is dispositive

. “of that question. The evidence of Mandei’s fur salon.

‘manager’ that Mandel had no definite records show-

af ing the garments tliat had been sold at the advertised

price gives adequate support to the order of the Com--

mission as to inadequate record-keeping. —

‘ As to the labeling the Hearing Examiner found —

that Mandel had not violated subdivisions (B), ¢D)

and (E) of §4 (2) of the Act and his cease and |

desist order did not include these subdivisions. The -

Comraissioén, on appeal, specifically found that there |

was no evidence as to violations of these same sub- ©

divisions but did include them in its cease and desist ©

order. The Supreme Court in its opinion in Federal

Trade Commission v. Ruberoid Co., 1952, 343 U. 8.

470, 473-held. that, “the Commission isnot limited

. a prokibiting the illegal practice in ‘the precise form |

in. which it is found to have existed in the past”’

> and also in Federal Trade Commission v. National

| Lead'Co,, 1957, 352 U. 8, 419, 431 ‘‘that those caught

| violating the "Act must expect some fencing in.’ .

However, here the-Commissidn specifically found, that

- | there was no evidence of any violation of subdivisions

_ (B), (D) and (E) of §4 (2). We-find no difficulty

. in subscribing to the doctrine that a cease and desist

order does not have to be limited-to the illegal prac-

tice in thé precise form it is’ found to exist or that

_. .-these caught violating the Act must. expect, some f fene-

+ ang in but we cannot affirm | an order requiring one to~

cease wd desist from. ro that which the Cotmmis-

_sion specifically found it did not do. ?

.*-The petitioner concedes that it has. violated subdivi-

sions (A), (C) and. (F). of §4 (2) and Rules 4 and.

nn ge

29 promulgated under §8 (a) (2) (b). Ht attempts

to excuse its violations-upon the ground that they are .

technical and trivial. “If such an excuse were valid

__the enforcement of the ‘Act would be ‘Trhaelly impos-

‘sible. In,this wefind no merit. -

The Commission contends that when Meat failed

to place certain information upon the sales slip given

to the consumer that constituted a violation of §3

(b). of the Act. Petitioner argues that a sales slip

is not an “invoice’’ within the meaning of the. Act: ©

The. word “‘invoice’’ -has an accepted meaning in the |

“commercial world, It is a written account or itemized _

statement of merchandise shipped or sent to a pur-

_ chaser or consignee with the quantity, value or prices

and charges set, forth. . However, the Fur Products

Labeling Act defines the term and we must. took to Soe

‘that definition for its meaning. © |

Section 2.(f) of the Act defines ‘<invoice” as:

‘a written account, memorandum, ior. .

- catalog, which is issued in connection with umny —

* commercial dealing in fur products or furs, and

describes the particulars of any fur. products or

_ furs transported or delivered to a purchaser,

# © © op any other person who is engaged in

dealing commercially in fur products or a -

(Qur emphasis.)

’ Phis statutory definition is plain and ‘anambiguoua

and to come within its terms an “invoice’’: must be;

something issued in connection with a commercial —

_ déaling to a purchaser or any other person who is ~

z engaged inr-dealing commercially. ‘Under ino. cireum-

"stances is a sales slip given to a customer by a re-

a

tailer a written decount, memorandum, List, or catalog”

issued in connection with a commercial dealing. An

| invoice is not brought down to the retail level by this

‘The respondent attenipite to buttress its position

with. excerpts from hearings before a. congressional

committee. However, when the language. used in a-

statute-is clear and unambiguous its legislative his-

@e «x

‘tory cannot ¢ontrol the interpretation as “such aids .

‘are only admissible to solve doubt and not to create

it.”” Railroad Gommission of Wisconsin v. Chicago,

Burlington & Quincy. Railroad Company, -1922, 257

U. 8. 563, 589. “In proper cases, such reports are

. given consideration in determining the meaning of a

statute, but only where that meaning is doubtful.

They cannot be resorted to for the purpose of con-

struing a statute contrary to the natural import of

"its terms.” United States v. Shreveport Grain &

Elevator Co., 1932, 287. U. S. 77, 83.. There is no

doubt ‘as. to thie meaning of “invoice” as defined by |

the statute. It is clearly not a sales slip at so re-

tailer-customer level.’

We agree with the Goeunsiacion that a limiting

clause is to -be restrained to the last antecedent unless

the subject requires.a different construction. If the

last antecedent were ‘“‘any person” instead of ‘“‘any

. other person’’ the word “purchaser’’ might not be

limited to one engaged in dealing commercially: in fur

products or furs. However, when the statute says

purchaser or any other person: who is so engaged the

limitation clearly applies to purchaser. No other

meaning is possible particularly when “invoice” is

also defined by the Act as something which is issued

in. connection with any commercial dealing in fur

aise or furs. : ;

=e .

The fourth i issue is whether the Cinmanionionterine ora

g found that there was no evidence of certain violations, Ms\

properly included prohibition of those violations in its

"cease and desist. order. As the order must be modi-

" fied and those portions deleted therefrom pursuant to

our determination of the third issue consideration. of *

3 this issue is no longer necessary. sy

The fifth issue is whether the Coinitiisidon: properly

imposed its cease ahd desist order on. Mandel’s of-\

ficers, representatives, agents and. employees when \

. only Mandel itself was named in the complaint.

The petitioner is:a corporation. A corporation can

act only through its agents. This rule of law is so :

_ elementary that citation of authezities is — _

required. sehr

We did hold in R. J. Reynolds Tobacep Co. v. Fed-

eral Trade Commission, 7 Cir., 1951, 192 F. 2d 535,

546 that @he Commission was without authority to in- —

clude Officers, agents; representatives and employees

in its cease and desist order. We did make a dis-

tinetion in Anchor Serum Company v. Federal Trade

Commission, 7 Cir., 1954, 217 F. 2d 867, 874. We

have given careful consideration to the question and

havé come to the conclusion that we were in error in

Reynolds, - Accordingly so much of our decision

therein as pertains to this question is overruled.

We hold that the Commission did have the power >

to include in its cease and, desist order Mandel’s .of- ,

fice~s, tepresentatives, agents and employees. ; |

: The cease and desist order here under: review is

hereby ordered :modified by deleting therefrom sub-

divisions (b), (d) and (e) of subsection 1 of A and

all of B. ; |

The order as 8 movie i is AvriaMen. : SL ae

_ APPENDIX B. , °

‘3 Untrep Srares Cover oF APPEALS

Fon 1 THE Seventa Crroyrt

‘Curcaco 10, ILi1Now, - |

| Tuesday; April 1, 1958.

Before ‘eee F. Brax Durry, Chief Jydge; Hon.

Exmer J. ScHNACKENBERG, Circuit et tec WwW.

Lrmn PARKINSON, Circuit Judge. ~ ae

No. 12128

Manpvei Brorners, INC., A GORPORATION, PETITIONER

FEDERAL TRADE peer aaprONDEN?

omonnnemel

=

PETITION TO SET ASIDE AN ORDER OF THE ‘FEDERAL ‘TRADE |

COMMISSION |

‘This cause came on to be heard or Gervais ‘to

review and’.set aside an order of the Federal Trade

Commission, and the transcript of record

' Federal Frade Comuaniqaion, and was’ 7

sel.

On consideantion whereof, it - ‘is ‘onde

\.. judged: by. this Court that the cease and desist order

\ here under review be modified by deleting therefrom

‘subdivisions (b), (dy,-and (e) of subsection 1 of A

and all of B, and the ‘said order as modified is

(2) ee

am. °°.

, APPENDIX "esheets

_ Scrmcn Covnr of rae Use Sats

Cre! 2 Tea, 1967

' ORDEB EXTENDING mT to Pus HerrION FOR WRIT OF °

Upon consideration of the application of counsel for —

petitioner, yen:

_. It ts ordered that the time for filing petition. for °

writ of ‘certiorari in the above-entitled cause be, and -

the same is. hereby, extended: to’ and praising J ruly

: 30th, 1986.

/s/. Tom’C. rasa ie

camepaie raetios of the Supreme Court

, of the United States.

wie this 25th day of June 1966

(28) .

: saan p

The Ray Products iseias’ Act, 6 Stat. 175, 15

“Uv. 8. C. 69, et $e: provides in pertinent sane as.

follows: is

SECTION 2. As used in this/Act—’

ic + aaa *

(f) The term “invoice” means.a written ac-

. count, memorandum, list, or catalog, wliich is

_ issued in connection. with any commercial deal-

. ing in fur products or furs, ‘and describes the

particulars of any fur products or furs, tratis-

. ported or delivered to a purchaser, gp gt

_ factor, bailee, correspondent, or agent, or

other _person who is engaged in’ dealing San

- mercially in fur products or furs: [15 U. S.C.

OP DAES pipes a

SKOTION Gita: (ate

- > (a) The introduction, or eco for in-

troduction, into commerce, or the sale, adver-

=, tising or offering for sale in commerce, or the.

' transportation or. distribution in. commerce, of

any fur product which is misbranded ‘or falsely

or deceptively advertised or invoiced, within.

the meaning of this Act c~ the rules and regu-

lations prescribed: under section 8 (b), ‘is un-~

lawful and shalhbe an unfair. method of competi- |

tion, and an unfair and deceptive act or practice,

in commerce under the Hederal: Trade Commis-

sion et

(24)

_ (b) “The maiuifacture for sale,’sale, advertis-

‘ing, offering for -sale,. transportation of” dis-

tribution, of any fur product which is made

: a aD a : 25 : Res. papa y PT IE Ree ST CU

in whole or in part of fur which has been.

shipped and received in commerce, and: which —

is aisteabed or falsely or deceptively. adver-

“tised or invoicedywithin thé meaning of this Act.

or the rules and regulations prescribed under ~~

_ section 8 (b), is unlawful and,shall be an unfair a5

" méthod of eompetition, and an unfair and decep-

tive act or practice, in commerce under the Fed-

eral Trade Commission Act. :

(ce) The introduction into: eeu or. the °

‘gale; advertising or offering for sale in com-

merce, or the transportation or distribution in -

commerce, of any fur whith is falsely or decep-"

tively advertised or falsely or deceptively ing

voiced, within the méaning of this, Actor the

rules and regulations prescribed uaeder section |

8 ¢b) is unlawful and‘shall be an unfair method) *.

of. competition, and an unfair and deceptive act —

or practice; in commerce under the Federal Trade—

— Act. [15 U.58. C. 69a]

ae 5 ae ea f _*

2 scent ee

For the purposes - af this Act, a fur shisitack

shall be considered fo be misbranded— —

(1) if it is falsely or deceptively labeled or

‘ otherwise falsely or deceptively identified, or’ ~

# the label contains any form of misrepresen-

tation .or. deception, directly or by implication,

with respect to such fur product; —-

(2) if-there is not affixed to the fur product © :

a label ‘showing in words and age ee

‘. © legible—

« ie ps ; . E ; 26.

iy (A) the name or nanies (as “get forth i in the.

eee _ Pur Products Name Guide) of the animal or

eo _ animats that produced the fur, and such quali- _

' fying statement as,may be required, —

NE to section'7 (6) of this Act; “Fegay

-(B) that the fur product cqntains or is-com-

pre nei of used. fur, when such-is the fact; j

aim Dali, that the fur product contains or is com-.

., + .+-posed of bleached, dyed, or otherwise artifi-

# ' -@iaHy colored fur, when such is the fact; ~ |

_ “(D) that the. fur product is composed i

whole or in substantial part. of. paws, tails,

bellies, or waste fur, ‘when' such is the fact; A

(E). the name, or other identification issued

<> and registeréd. by the Commission, of one or :

— _. more of the: persons who manufacture such .

“s fur produet for introduction into commerce, .

% . introduce it into commeree, sell it in commerce,

* advertise. or offer it fér sale -in commerce, or -

_ transport or distribute it in commeree ; eae

(F) the name of the country of-origin of any

imported furs used in the fur product;

(3) if the label required by paragraph (2)

(A) of this section sets forfh the name or names ‘

of any animal or animals other. than the

_ or names provided for i in “nh paragraph. ft

‘y U.S, C-69bj . ;

Section 5: ‘

(a) For the. purposes of this Act, a fur prod-

-- ‘yet or fur shall be considered to be falsely or de-

f ceptively advertised if any advertisement, repre-

| “sentation, public announcement, or notice which

(we is intended to aid, promote, or assist directly or

indirectly in: the sale or offering tay sale of such

fur product or fur—

(1) does not: show the name or names (as set

"forth i in the, Pur Prod” ote, Name Guide) of the,

ae . 's es

ye

&

Ws Sarg

y

?

ies:

°

Sy ‘6 bas : % oF . P eo *

; ‘ H > . 7 .?

ee em |

Y . .

animal or animals that produced the fur, and

25d such qualifying statement as -may be required

pursuant to sectién 7 (e) of this Act; :

(2) does not show that the fur is used fur oF

that thé fur product — used. ™. when :

such is the fact;

(3) does not show that ir’ Sek: Yootat: ox. oF oe

fur’ is bleachéd, dyed, or otherwise’ ereeeialiy es,

" eolored fur whien stich ig the fact ; oe

(4) does not ‘Show. ‘that the fur product is‘

. gompased in-whole or. in ‘substantial part: of

: paws, tails, bellies, ‘or waste fur, when such is.

' the fact; :

(5) contains the name or names of any ani- |

: ‘mal or animals other than the name or names |

s _ specified in paragraph: (1) of this subsection,

‘or contains any form of misrepresentation or

"e - deception, directly oF by. implication, with re- -

7 mens tosuch fur product or fur;

(6). does not ‘show the name of the oanteey

a origin. of - any imported furs or those con-

tained in a fur product. ©

(b) For the purposes of this Act; a fur widen

or fur shall be eongidered to.be falsely lecep- .

’ tively invoiced ; A

(1) if sueli fur product or, for i 18 not coast ;

to show—.. .-

-{A) the name, or names (as set forth in in the

Fur Products Name Guide) of the animal or

animals that produced the fur, and suth quali-

fying statement as‘may be required pursuant

to section 7 (¢) of this Act;

* (BY thajathe fur product contains or is com-

iy ‘posed of uSed fur, when ‘such is the fact;

-(C) that the fur product contains or is com- |

posed of bleached, dyed, or otherwise anata

. @olored far; when such is the fact; : ase S

wv

.

ei .

‘suing such invoice ;

-. nanfes of any animal or animals other than the. .

Ps s

7

- a Rekis 3

’ . 2 :

‘(D) that the fur wecdindt is cea ie

- whol or in substantial part of paws, ~~

bellies, or waste ‘tur, When such is the fact:

_(E) the name and address of the pers person is- ©

.(F) the name of the country of origin of any

‘imported furs’ or ‘those contained in a fur

3 produet ;

(2) if such invoice nested the name or

name or names speeified in paragraph (1) soil

of this subsection, or contains any form of

representation or deception, directly or by |

implication, with -respect to. wach fur product

or fur. 1300: BS Oe |

ui a . |

j 2 j . : s a .

° ‘

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. ©, &. COVERSNERT PRIKTING OFFICE .1988

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