David Rubenstein and Herman Schwartz

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IN THE MATTER OF DAVID RUBENSTEIN AND HERMAN SCHWARTZ DOING BUSINESS AS NU-WAY SHOE CO.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. IS OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 2560. Oomplaitnt, Sept. 26, 1935-Decision, June 23, 1936 Where a firm engaged in sale of shoes at wholesale- (a) Stamped or printed upon boxes, cartons, invoices, and other printed matter used by them in the sale of certain brands of their said product, labels or titles "Dr. Carol's Health Shoes," "Dr. .Martin's Walk-0-Pedic'', and "Dr. Rubenshaw's Supreme Stout," and caused such labels and titles to be affixed and sewn Into the interlining of said products, facts being said shoes, were not made in accordance with design, or under supervision of, a doctor, and there was no such doctor employed by or connected with them as indicated by aforesaid fictitious names; with capacity and tendency to mislead some of the trade and many ultimate consumers into the belief that said shoes were or had been fashioned or designed by a doctor; and (b) Caused word "Manufacturers" to be printed on certain invoices, stationery and billheads, and other printed matter. used by them in the course and conduct of their business, notwithstanding fact they neither owned, operated, nor controlled any factory in which their shoes were made; with capacity and tendency to mislead and deceive purchasers of· their said products into the belief that in buying from them they were dealing with manufacturers and thereby gaining an advantage in saving the middleman's profit; and With capacity and tendency unfairly to divert trade from or otherwise injure and prejudice competitors, among whom there are those who manufacture and sell at wholesale shoes which do contain special features designed to correct and alleviate certain foot ailments and weaknesses, and those who similarly sell shoes made along standard lines and over standard lasts and for which no special feature representations or claims are made, and among whom are also many manufacturers who rightfully call themselves such; to the substantial injury of competition throughout the various States:

Held, That such acts and practices, under the conditions and circumstances set forth, were to the prejudice of the public and competitors and constituted unfair methods of competition.

Before Mr. Roberts. Hall, trial examiner.

Mr. Morton Nesmith, for the Commission.

Mr. Aleremnder Bicks, of New York City, for respondents. COMPLAINT Pursuant to the provisions of an Act of Congress, approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," 704 FEDERAL TRADE. COMMISSION DECISIONS Complaint 22F.T.O.

the Federal Trade Commission, having reason to believe that David Rubenstein and Herman Schwartz, copartners doing business as Nu- ·way Shoe Co., hereinafter referred to as respondents, have been and are using unfair methods of competition in commerce as "commerce" is defined in said act, and it appearing to said Commission that a proceeding by it in respect thereto would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows:

PARAG:aAPH 1. David Rubenstein and Herman Schwartz are copartners doing business as the Nu-Way Shoe Co., with their prindpal place of business at 142 Duane St., in the city of New York, State of New York. The respondents have for more than 10 years last past been and are still engaged in the business of selling shoes, being a wholesaler thereof between and among the different States of the United States. Said respondents have caused and still cause their shoes when so sold to be transported and shipped from their said place of business in the State of New York to purchasers thereof located in States other than the State of New York. In the course and conduct of their business as aforesaid the respondents are and have been in competition with other individuals, partnerships, corporations, and associations likewise engaged in the business o~ wholesaling shoes and distributing said shoes in commerce between and among the different States of the United States. PAR. 2. The respondents, David Rubinstein and Herman Schwartz, copartners doing business as Nu-·Way Shoe Co., in the course and conduct of their business as aforesaid, in soliciting the sale of and selling their shoes in interstate commerce, for several years last past have caused the words Dr. Carol's Health Shoe to be imprinted, stamped, or printed upon boxes, cartons, invoices, and other printed matter used by them in the sale of a certain brand of their shoes, and also caused the said words to be affixed to a label sewn into the lining of said shoe.

The respondents, David Rubenstein and Herman Schwartz, copartners doing business as N u-"\Vay Shoe Co., in the course and conduct of their business as aforesaid, in soliciting the sale of and selling their shoes in interstate commerce, for several years last past have also caused the words Dr. Martin's Walk-0-Pedic to be imprinted, stamped, or printed upon boxes, cartons, invoices, and other printed matter used by them in the sale of a certain brand NU-WAY SHOE CO. 705 703 Complaint of their shoes, and also caused the said words to be affixed to a label sewn into the lining of said shoe.

The respondents, David Rubenstein and Herman Schwartz, copartners doing business as Nu-llay Shoe Co., in the course and con- ?uct of their business as aforesaid, in soliciting the sale of and sell- Ing their shoes in interstate commerce, for several years last past have also caused the words Dr. Rubenshaw's Supreme Stout to be imprinted, stamped, or printed upon boxes, cartons, invoices, and other printed matter used by them in the sale of a certain brand of their shoes, and also caused the said words to be affixed to a label sewn into the lining of said shoe.

PAR. 3. The respondents in the course and conduct of their business as aforesaid caused and still cause to be printed on certain invoices, stationery, billheads, and other printed matter to be printed for them the word "Manufacturers," which invoices, stationery, billheads, and other printed matter were and are used by the respondents in the course and conduct of their business in interstate commerce. PAR. 4. In truth and in fact the shoes so marked, stamped, labeled, branded, advertised, and sold, as described in paragraph 2 hereof, were not made in accordance with the design of or under the supervision of a doctor and did not contain special orthopedic features which were the results of medical advice or services, all of which has a capacity and tendency to mislead many among the aforesaid trade and among the purchasing public into the belief that said shoes had been fashioned or designed by a doctor or someone with a special orthopedic know ledge.

PAR. 5. In truth and in fact the respondents, David Rubenstein and Herman Schwartz, copartners doing business as Nu-Way Shoe Co., are not manufacturers of shoes, nor do they own, operate, or control any factory wherein their shoes are made or manufactured. Said representation made by respondents on their invoices, stationery, billheads, and other printed matter that they are ".Manufacturers" is false and misleading and has a capacity and tendency to mislead and deceive purchasers of respondents' shoes into the belief that when purchasing from respondents they are dealing with manufacturers, thereby gaining an advantage and saving the middleman's profit.

PAR. 6. The respondents, David Rubenstein and Herman Schwartz, copartners doing business as Nu-·Way Shoe Co., in the sale of their shoes as aforesaid, ship and distribute to their retail dealers their shoes, and said retail dealers resell the same so labeled and branded to the consuming public.

Findings 22F.T.C.

PAR. 7. There are among the competitors of the respondents many persons, firms, corporations, and associations who manufacture and sell at wholesale shoes which contain special features designed to correct and alleviate certain foot ailments and weaknesses. There are also among the competitors of the respondents many persons, firms, corporations, and associations who manufacture and sell at wholesale shoes manufactured along standard lines, over standard lasts and for which no special feature representation or claims are made, and the use by the respondents of the abbreviation "Dr." in connection or conjunction with the name, brand, or designation of their shoes or in the advertisement of same, together with other special feature representations, and the further representation by respondents that they are manufacturers when they are not, has the capacity and tendency to unfairly divert trade from or otherwise injure and prejudice respondents' competitors in interstate commerce. PAR. 8. The above alleged acts and things done by the respondents are all to the injury and prejudice of the public and of the competitors of the respondents in interstate commerce, and constitute unfair methods of competition in interstate commerce within the intent and meaning of Section 5 of an Act of Congress entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, 1914. REPORT, FINDINGS AS TO Tile FACTS, AND ORDER Pursuant to the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes,'' the Federal Trade Commission on September 30, 1935, issued and served its complaint in this proceeding upon the respondents, David Ruben- . stein and Herman Schwartz, copartners doing business as Nu-Way Shoe Co., charging them with the use of unfair methods of competition in commerce in violation of the provisions of said act. Thereafter respondents filed their answer to said complaint, denying the material allegations thereof. Subsequently on June 13, 1936, respondents filed a motion to withdraw said answer, and substituted answer, which substituted answer admitted all of the allegations of the complaint, and consented that the Commission make its findings as to the facts and conclusion. Respondents also executed a stipulation as to the facts, admitting the material allegations of the complaint, and in their substituted answer consented that the Commission could make its findings as to the facts and conclusion from the facts so stipulated and to enter, issue, and serve upon them an order to cease and desist from the practices alleged in said complaint. The NU-WAY SHOE CO. 707 703 Findings Commission thereafter granted respondents' motion to withdraw its original answer and received and filed respondents' substitute answer. Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint, substituted answer and stipulation as to the facts; and the Commission having duly considered the same, and being fully advised in the premises, finds that this proceeding is in the interest of the public and makes this its findings as to the facts and its conclusion drawn therefrom: FINDINGS AS TO THE FAOI'S PARAGRAPH 1. The respondents, David Rubenstein and Herman Schwartz, are copartners doing business as the Nu-Way Shoe Co., with their principal place of business at 142 Duane St. in the city of New York, State of New York. The respondents have for more than 10 years last past been and are still engaged in the business of sell,ing shoes, being wholesalers thereof between and among the different States of the United States. They have caused and still cause their shoes when so sold to be transported and shipped from their said place of business in the State of New York to purchasers located in States other than the State of New York. In the course and conduct of their business, the respondents are and have been in competition with other individuals, corporations, and associations likewise engaged in the business of wholesaling shoes and distributing said shoes in commerce between and among the different States of the United States . . PAR. 2. The respondents, doing business as the Nu-Way Shoe Co., In the course and conduct of their business, and in soliciting the sale of and selling their shoes in interstate commerce, did for several years cause to be stamped or printed upon boxes, cartons, invoices, and other printed matter used by them in the sale of certain brands of their shoes, the following labels or titles: "Dr. Carol's Health Shoes," "Dr. Martin's Walk-0-Pedic," "Dr. Rubenshaw's Supreme Stout."

The respondents also caused these labels and titles to be affixed and sewn into the interlining of their shoes.

The respondents, copartners doing business as the Nu-Way Shoe Co., have, however, discontinued the use of these labels and have not used the same since March 4, 1934.

PAR. 3. The respondents, in the course and conduct of their business, for several years last past did cause to be printed on certain invoices, stationery, and billhe~ds and other printed~ matter, the Word ".Manufacturers," which invoices, stationery, billheads, and other printed matter were used by them in the course and conduct ~889~m--B8--VOL22----47 Findings 22F.T.C.

of their business in interstate commerce. However, at the present time the respondents have discontinued this practice and do not use the word "Manufacturers" on any of their printed matter or advertising.

PAR. 4. The shoes advertised as "Dr. Carol's Health Shoes," "Dr. Martin's Walk-0-Pedic" and "Dr. /Rubensha.w's Supreme Stout" were not made in accordance with the design of or under the supervision of a doctor, neither is there a Dr. Carol, a Dr. Martin, or a Dr. Rubenshaw employed by the respondents or connected with them, these names being entirely fictitious. This advertising has a capacity and tendency to mislead some of the shoe trade and many ultimate consumers into the belief that respondents' shoes were or had been fashioned or designed by a doctor. PAR. 5. The respondents, doing business as Nu-Way Shoe Co. do not own, operate, or control any factory wherein their shoes are made or manufactured and their use of the word "Manufacturers" is false and misleading and has a capacity and tendency to mislead and deceive purchasers of their shoes into the belief that when purchasing from respondents they ·are dealing with manufacturers, thereby gaining an advantage and saving the middleman's profit. PAR. 6. There are many persons, firms, and corporations in competition with the respondents and among them those who manufacture and sell at wholesale shoes which do contain special features designed to correct and alleviate certain foot ailments and weaknesses. Some of respondents' competitors are those who sell shoes at wholesale, manufactured along standard lines over standard lasts and for which no special feature representations or claims are made. There are also many manufacturers of shoes who rightfully call themselves such. The use by respondents of the abbreviation "Dr.'' in connection and conjunction with the name, brand, or designation for their shoes or in the advertisement of same and the representation that respondents are manufacturers when they are not, has the capacity and tendency to unfairly divert trade from or otherwise injure and prejudice respondents' competitors in interstate commerce. PAR. 7. The aforesaid advertisements, representations, and statements made by the respondents as set forth in the foregoing paragraphs hereof have had the capacity and tendency to divert trade to said respondents from competitors. Competition throughout the various States of the United States has been substantially injured by said respondents through the use of, or by means of such representations and statements.

NU-WAY SHOE CO. 709 703 Order CONCLUSION . The aforesaid acts and practices of respondents under the conditions and circumstances described in the foregoing findings are to t~e prejudice of the public and respondents' competitors and constitute unfair methods of competition in commerce within the intent and meaning of Section 5 of an Act of Congress entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

ORDER TO CEASE AND DESIST The respondents, David Rubenstein and Herman 3chwartz, copartners doing business as Nu-Way Shoe Co., having heretofore on <?ctober 18, 1935, filed an answer herein denying the material allegations of the complaint, and subsequently on the 13th day of June 1936, respondents having filed with the Commission a motion that they be Permitted to withdraw said answer and be permitted to file in lieu thereof their substituted answer which is incorporated in said motion, ~nd respondents having also executed a stipulation as to the facts in heu of testimony; nnd the Commission having duly considered said motion, substituted answer, and stipulation as to the facts, and being fully advised in the premises.

It is hereby ordered, That the said motion be, and the same is, hereby granted, that the said answer be, and the same is hereby withdrawn, that the said substituted answer be and the same is hereby filed in lieu of the said answer so withdrawn. And the respondents in and by their substituted answer having admitted the allegations contained in the complaint, consented that the Commission make its findings as to the facts and conclusion from the facts stipulated, and having consented to the entry, issuance, and service upon them of an order to cease and desist from the practices alleged in the complaint; and the Commission being fully advised in thQ premises and having made its findings as to the facts and its conclusion that respondents have violated the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

~tis hereby further ordered, That ~he responden~s, David fubenstein and Herman Schwartz, copartners doing busmess as .Nu-W~y Shoe Co., their aO'ents servants representatives, and employees, m connection with s;licidnO' the sale of and selling their shoes in interstate commerce, forthwith cease and desist from: . (1) Representing directly or indirectly through advertisements or on labels, stationery, invoices, and other printed matter, or in any Order 22F.T.C.

other manner that their shoes are made in accordance with the design or under the supervision of a doctor, when such is not the fact. (2) Directly or indirectly using or causing to be used the word "Doctor" or the abbreviation "Dr." in connection or in conjunction with the name or with any word or words or in any way as a trade name in the advertising or designation of their shoes; or in any way which may have the capacity and tendency to confuse, mislead or deceive purchasers into the belief that said shoes are made in accordance with the design or under the supervision of a doctor, when such is not the fact.

(3) Directly or indirectly using or causing to be used the word "Doctor" or the abbreviation "Dr." in connection or in conjunction with a name or with any word or words or in any way as a trade name, brand, label, or designation on their shoes; or in any way which may have the capacity and tendency to confuse, mislead, and deceive purchasers into the belief that said shoes are made in accordance with the design or under the supervision of a doctor, when such is not the fact.

(4) Representing directly or indirectly through the use of the word "manufacturer" alone, or in conjunction with other words, or through the use of any other word or words of similar import or meaning in their advertising matter, or in or through other means, that they are manufacturers.

It is further ordered, That the respondents shall within 60 days after the service upon them of a copy of this order file with the Commission a report in writing, setting forth in detail the manner and form in which they have complied with the order to cease and desist hereinabove set forth.

AMERICAN SHEET & 'lin PLATE CO. ET AL. 711 Syllabus