Miller, Theodore G

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF THEODORE G. MILLER, INDIVIDUALLY, AND TRADING AS AMERICAN SPORTSWEAR COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THFJ ALLEGED VIOLATION OF SEC. 5 OF AN ACT.OF CONGRESS APPROVED SEPT. 26, 1914 Docket 3508. Complaint, July 22, 1938-Deci~tion, Feb. 7, 1989 Wht•re an individual engaged In sale and distribution of clothing, radios, pen and pencil sets, and other articles of nwrchandlse- Furnlshed his customers with devices and plans lnvoldng operation of games of chance, gift enterprises, or lottery schem!'s ln distribution of said merchandise to ultimate consumers wholly by lot or chnnce, and Including explanatory circulars, order blanks, and push cards for use in distribution thereof under a plan or scheme in aceot•clance with which cu>ltomers paid for chance, amount determined by number pushed by chance, and person pushing certain number received certain pen and pencil set and person who succeeded in selecting from a list· of i3 feminine names one corresponding to that concealed under card's master seal secured article of merchandise being thus disposed of, and operators of cards were compensated by premiums or prizes, and thereby plnced in the bands of others means of conducting lotteries in the sale of bls said merchandise, contrary to the established public policy of the United States Government and In competition with many who refrain from disposing of their merchandise by a method involving lottery or a game of chance as contrary to public policy; With result that many persons were attracted by his said sales plan or method of distribution of bls merchandise by element of chance involved therein, and were thereby induced to buy and sll his said produ<'ts In preference to those otrered and sold by his competitors who do not nse such or similar methods of distribution and trade was thereby unfairly diverted to him from them:

Held, That such practices as above set forth were to the prejudice of the public and competitors and constituted unfair methods of competition. Before Mr. Charles F. Diggs, trial examiner. Jh. Henry 0. Lank and J/r. D. 0. Daniel for the Commission. • Complaint Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said act, the Federal Trade Commission having reason to believe that Theodore G. :Miller, individually, and trading as American Sportswear, has violated the provisions of said act, and it appearing to said Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows:

Complaint 28F.T. C.

PARAGRAPH 1. Respondent, Theodore G. Miller, is an individual doing business under the name of American Sportswear, with his principal office and place of business located at 216 West Jackson Boulevard, Chicago, Ill. He is now and for some time last past has been engaged in the sale and distribution of clothing, radios, pen and pencil sets, and other articles of merchandise in commerce between and among the various States of the United States and in the District of Columbia. Respondent causes, and has caused, said products, when sold, to be transported from his principal place of business aforesaid and from the city of Milwaukee, 'Vis., to purchasers thereof located in the various States of the United States and in the District of Columbia. There is now, and for some time last past has been, a course of trade by said respondent in such merchandise in commerce between and among the various States of the United Stat~s and in the District of Columbia. In the course and conduct of his business respondent is in competition with other individuals and with partnerships and corporations engaged in the sale and distribution of like or similar articles of merchandise in commerce between and among the various States of the United States and in the District of Columbia.

PAR. 2. In the course and conduct of his business as described in paragraph 1 hereof, respondent, in soliciting the sale of and in selling and distributing the merchandise in commerce, furnishes and has furnished various devices and plans of merchandising which involve the operation of games of chance, gift enterprises, or lottery schemes by which said merchandise is distributed to the ultimate consumers thereof wholly by lot or chance. The method or sales plan adopted Rnd used by respondent was and is substantially as follows: Respondent distributes, and has distributed, to the purchasing public in commerce certain literature and instructions including, among other things, push cards, order blanks, circulars explaining respondent's plan of selling merchandise and of allotting it as premiums or prizes to the operators of said push cards. One of respondent's push cards bears 75 feminine names with ruled columns on the reverse side thereof for recording the name of the customer opposite the feminine name selected. Said push card has 75 partially perforated disks marked "Push," below each of which is printed one of the feminine names printed alphabetically on the reverse side of the card. Concealed within each disk is a number which is disclosed when the disk is pushed or separated from the card. The push card also has a large master seal concealed in which is one of the feminine names appearing on the reverse side of said card. The push card bears printed legends or instructions as follows:

AMERICAN SPORTSWEAR 399 397 Complaint Do Not Remove Person Selecting Seal Name under Seal Until Receives Choice of: All Sold MEN'S GENUINE ELKSKEIN SPORT JACKET or LADIES' SPORT JACKET With Beret to Match Nos. 1 to 25 Pay What You Draw Those Over 25 Pay Only 25¢ -EXTRA WINNER- No. 33 Receives Fountain Pen and Pencil Set Write Purchaser's Name Opposite Name Selected in Space Provided on the Reverse Side of This Card Respondent furnishes, and has furnished, his representatives with additional printed instructions or suggestions for using said push card which are as follows:

HOW TO USE SALES CARD There is a number under each girl's name. These numbers range from one upwards but the person selecting the number pays only 1¢ to 25¢ according to the numbers selected. If 1 is punched 1¢ is paid. If 10 is punched 10¢ is paid, or if 50 is punched only 25¢ is paid. NOTHING liiGHEB THAN 25¢. Total $9.85. When all names have been taken and collections made, the large seal at the · top of the card is opened. The person who has selected the name corresponding to the name under that seal is entitled to one Ladies' or l\fen's Jacket. The person selling the card also receives one Ladies' or Men's Jacket. The person who has selected No. 33 receives the Fountain Pen and Pencil Set illustrated below.

Sales of respondent's products by means of said push card are made in accordance with the above-described legends or instructions. Said prizes or premiums are allotted to the customers or purchasers in accordance with the above legends. The said articles of merchandise are thus distributed to the purchasing public wholly by lot or chance. Respondent furnishes, and has furnished, various push cards accompanied by a set of order blanks, instructions, and other printed matter for use in the sale and distribution of his merchandise by means of a game of chance, gift enterprise, or lottery scheme. Such push cards are similar to the one hereinabove described and vary only in detail. PAR. 3. The persons to whom respondent furnishes, and has furnished, said push cards use, and have used, the same in purchasing, .i Findings 28F.T.C.

selling, and distributing respondent's merchandise in accordance with the aforesaid sales plan. Respondent thus supplies to and places in the hands of others a means of conducting lotteries in the sale of his merchandise in accordance with the sales plan hereinabove set forth. The use by respondent of said method in the sale of his merchandise and the sale of such merchandise by and through the use thereof and by the aid of said method is a practice of the sort which is contrary to an established public policy of the Government of the United States and in violation of the criminal laws.

PAR. 4. The sale of merchandise· to the purchasing public in the manner alleged involves a game of chance or the sale of a chance to procure an article of merchandise at a price much less than the normal retail price thereof. :Many persons, firms, and corporations who sell and distribute merchandise in competition with the respondent as above alleged are unwilling to adopt and use said method or any method involving a game of chance or the sale of a chance to win something by chance or any other method that is contrary to public policy, and such competitors .refrain therefrom. Many persons are ·attracted by said sales plan or method employed by respondent in the sale and distribution of his merchandise and the element of chance involved therein and are thereby induced to buy and sell respondent's merchandise in preference to merchandise offered for sale and sold by said competitors of respondent who do not use the same or an equivalent method. The use of said method by respondent, because of said game of chance, has a tendency and capacity to, and does, unfairly divert trade to the respondent from his said competitors who do not use the same or an equivalent method.

PAR. 5. The aforesaid acts ·and practices of the respondent, as alleged herein, are all to the prejudice of the public and of respondent's competitors and constitute unfair methods of competition in commerce within the intent of meaning of the Federal Trade Commission Act. REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on July 22, A. D., 1938, issued and served its complaint in this proceeding upon the respondent, Theodore G. Miller, trading as American Sportswear, charging him with the use of unfair methods of competition in commerce in violation of the provisions of said act.

After the issuance of said complaint, the respondent filed his answer thereto, admitting all the material allegations of fact set forth in said complaint and waiving hearing and all intervening procedure. Al\IERICAN SPORTSWEAR 401 397 Findings Thereafter, the proceedings regularly came on for final hearing before the Commission on the said complaint and the answer thereto, and the Commission, having duly considered the same and being now 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 FACTS PARAGRAPH 1. The respondent, Theodore G. Miller, is an individual doing business under the trade name of American Sportswear, and having his principal office and place of business at 216 West Jackson Boulevard, Chicago, Ill. Respondent is now, and for some time past has been, engaged in the sale and distribution of clothing, radios, pen and pencil sets, and other articles of merchandise, all of which are sold and shipped by him to purchasers in States other than the· State in which respondent's place of business is located and from which said shipments are made. In the course and conduct of his business respondent has been and is in competition with other indi- -viduals, partnerships, and corporations engaged in the sale and distribution of like or similar articles of merchandise in commerce between and among the various States of the United States and in the District .of Columbia.

PAR. 2. In the course and conduct of his said business, respondent furnishes and has furnished to his customers various devices and plans of merchandising which involve the operation of games of chance, gift enterprise, or lottery schemes, by which said merchandise is distributed to the ultimate consumers thereof wholly by lot or chance. The method or sales plan adopted and used by the respondent is as follows:

Respondent furnishes his customers with push cards, order blanks, and circulars explaining his plan of selling merchandise and allotting his premiums or prizes, to the operators of said push cards. On said push cards appear 75 partially perforated disks marked "Push," below each of which is printed one of the feminine names appearing on the reverse side of the push card. The push card also contains a large master seal which conceals one of the feminine names. Respondent furnishes his representatives or customers with instructions for using said push cards, the method outlined being as follows: The customer pushes the disk over the :feminine name selected by him, thus disclosing a number which determines the amount to be Paid by him in cents. These numbers range from 1 to 50, but those PUnching 25 or above are required to pay no more than 25 cents. Order 28F.T.C.

\Vhen all the disks have been punched the master seal is broken and the person who has punched the disk over the same feminine name as that disclosed by the removal of the master seal receives choice of a "Man's Genuine Elkskin Sport Jacket," or "Lady's Sport Jacket with Beret to Match." The one who has punched the disk which discloses the number 33 receives a fountain pen and pencil set, and the person operating the push board, or selling the pushes, receives a lady's or man's jacket.

PAR. 3. The various other articles of merchandise sold and distributed by the respondent are sold by means of push cards similar to that hereinabove described, varying only in minor detail, and all of respondent's products are sold and distributed solely by lot or chance.

PAR. 4. Respondent, by the methods hereinabove described, places . in the hands of others the means of conducting lotteries in the sale of his said merchandise, and the said method of sale and distribution of his products is contrary to the established public policy of the Government of the United States -and is in violation of the criminal law.

PAR. 5. Many persons are attracted by respondent's sales plan or method of distribution of his merchandise by the element of chance involved therein, and are thereby induced to buy and sell respondent's merchandise in preference to merchandise offered for sale and sold by respondent's competitors who do not use the same or similar methods of distribution. l\fany of respondent's competitors refrain from disposing of their merchandise by a method involving a lottery or game of chance, because such method is contrary to public policy, and, as a result, trade is unfairly diverted from such competitors to the respondent.

CONCLUSION The practices of the respondent, as set forth in the aforesaid finding of facts, are to the prejudice of the public and of respondent's competitors, and constitute unfair methods of competition in commerce in violation of the Federal Trade Commission Act. ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission and the answer of respondent, in which answer respondent admits all the material allegations of fact set forth in said complaint, and states that he waives all intervening procedure and further hearing as to said facts, and AMERICAN SPORTSWEAR 403 397 Order the Commission having made its findings as to the facts and conclusion that said respondent has violated the provisions of the Federal Trade Commission Act.

It i8 ordered, That the respondent, Theodore G. Miller, individually and trading as American Sportsweat, or trading under any other name, his representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, and distribution of clothing, radios, pen and pencil sets, or any other articles of merchandise, in commerce, as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from: · 1. Supplying to or placing in the hands of others push or pull cards, punchboards, or other lottery devices for the purpose of enabling such persons to dispose of or sell any merchandise by the use thereof. 2. Mailing, shipping, or transporting to his agents or to distributors or to members of the public push or pull cards, punchboards, or other lottery devices so prepared or printed as to enable said persons to sell or distribute any merchandise by the use thereof. 3. Selling or otherwise disposing of any merchandise by the use of push or pull cards, punchboards, or other lottery devices. It is further ordered, That within 60 days from the date of the service of this order upon said respondent he shall file with the Commission a report in writing setting forth in detail the manner and form in which this order has been complied with.

Syllabus 28F.T.C.