Bonwit Teller, Inc

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

IN THE MATTER OF BONWIT TELLER, INC.

COMPLAINT, FI~DI~GS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 3499. Complaint, Sept. 1'1, 1938 '-Decision, Feb. 15, 1939 Where a corporation engaged in operation· of department store from which it sold and distributed women's wearing apparel and other allied products to members of the purchasing and consuming publlc in the various States and in the District of Columbia, in substantial competition with others likewise engaged in such sale and distribution of such apparel and other products- (a) Designated and referred to certain slips, which it advertised in newspapers and periodicals of inter:>tate circulation, and in advertising which it approved and agreed to, for insertion in newspapers by others for the benefit, profit and advantage of itself and others, as "satin," through statement "A gown of cotton lace over satin," without disclosure, in immediate connection and conjunction with said word, of said slips' rayon content, so as to apprise and inform purchasing public of such composition, and thereby represented to members of purchasing public that garments thus advertised and offered were made of silk, product of cocoon of silk worm, as long associated in public mind with word "satin," used to designate, describe or refer to dress goods and other similar products, and long. held in high esteem for the preeminent qualities of products made therefrom; and (b) Advertised certain women's suits as being lined with "Silk Rayon Crepe," without disclosing, in connection therewith, that silk was weighted and not unweighted, and represented thereby to members of purchasing public that such linings consisted of a mixed fabric·made up of predominant part of unweighted silk and rayon;

With effect of misleading and deceiving substantial portion of purchasing and consuming public into erroneous and mistaken belief that such representations were true, and of inducing purchase of such items of wearing apparel on account of such erroneous and mistaken beliefs thus brought about through such deceptive and false representations, and of unfairly diverting trade in commerce to it from competitors engaged in sale of similar apparel and other allied products and who do not misrepresent material of which apparel offered for sale or sold by them is composed; to the injury of competition in commerce:

Held, That such acts and practices were all to the prejudire of the public and rompetitors and constituted unfair methods of competition. Mr. George lV. Williams for the Commission. Paskus, Gordon & Hyman, of New York City, for respondent. AMENDED Complaint Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said act, the Fed- 1 Amended.

BONWIT TELLER, INC. 541 540 Complaint eral Trade Commission, having reason to believe that Bonwit Teller, Inc., a corporation, hereinafter referred to as respondent, has violated the provisions of the said act, and it appearing to the 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 :

Paragraph 1. Respondent, Bonwit Teller, Inc., is a corporation, organized, existing, and doing business under and by virtue of the laws of the State of New York, with its office and principal place of business located at Fifth Avenue, and Fifty-sixth Street, New York City, State of New York.

It is now, and for many years last past has been, engaged in the business of operating a department store from which it sells and distribut~s women's wearing apparel and other allied products. It sells, and has sold and distributed, such articles of merchandise to members of the purchasing and consuming public located in the various States of the United States and in the District of Columbia. It causes, and during the time herein mentioned has caused, its said articles of merchandise, "hen sold, to be shipped from its place of business in New York City, State aforesaid, to the purchasers thereof located in the nrious States of the United States other than the said State of New York and in the District of Columbia. There is now, and has been at all times mentioned herein, a constant current of trade and commerce by said respondent in said merchandise, sold by it in commerce between :.md among the nrious States of the United States, and in the District of Columbia. Respondent. is now, and at all times herein mentioned, has been in substantial competition 'with other corporations and with individuals, firms, and partnerships engaged in the sale and distribution of Women's wearing apparel and other allied products in commerce bet"'een and among the various States of the United States and the District of Columbia.

PAR. 2. In the course and conduct of its business as described in Paragraph 1 hereof, respondent, in soliciting the sale of and selling such merchandise, caused, and now causes, advertising matter to be inserted in newspapers and magazines having an interstate circulation, and has approved and agreed to advertising matter being so inserted and circulated by others for the benefit, profit, and advantage of respondent and such others. In said adnrtising matter, certain "slips" worn by women were, and are, represented, designated, and 1'eferred to as "satin," said adnrtisement reading, in its material part ns follows:

A gown of cotton lnre over satin.

said word "satin" being used without being in any way qualified. Complaint !:!SF.T.C. Such statements and representations on the part of respondent serve as representations to members of the purchasing and consuming public that such garments so advertised and offered for sale were, and are, composed of silk.

In the course and conduct of its business, as described in paragraph 1 hereof, respondent, in soliciting the sale of and selling such merchandise, caused adn•rtising matter to be inserted in newspapers and other publications ha,·ing interstate circulation, and in so doing has advertised certain women's suits as being lined with ';Silk Rayon Crepe," when there was, and is, no such material as silk rayon, and when, in fact, the lining was composed of weighted silk, without any indication in said advertisement that said lining was composed of weighted silk, and in the absence of such indication such statements and representations on the part of respondent serve as representations to members of the purchasing and consuming public that such garments so advertised and offered for S<tle were composed of unweighted silk.

The representatio~s herein set forth were, and are, false and misleading, in that said garments so represented, designated, and referred to as ''satin" were, and are, not composed of silk, but were, and are, composed of rayon, and such representations had, and have, the tendency and effect of concealing the fact that such "slips" were, and are, made of rayon, when it was, and is, the duty of respondent to make disclosure of the fact that such "slips" were, and are, composed of rayon, by using the word rayon in immediate connection and conjunction with such word "satin," in such a way and manner as to apprise and inform the purchasing and consuming public that such "slips" were, and are, composed of rayon; and in that said linings were not composed of an unweighted silk, but WE're, in fact, composed of weighted silk, without indicating that such lining was weighted by the use of the word "weighted" in connection with said advertisement, in such a way as to inform the members of the purchasing and consuming public that the same was weighted. PAR. 3. The word "silk" for many years last past has had, and still has, in the mind of the purchasing and consuming public, a definite and specific meaning, to wit: The product of the cocoon of the silk worm. Silk products for many years have held, and still hold, [!real public esteem and confidence for their preeminent qualities. Silk fiber has long been woven into a variety of fabrics. A variety of distinctive terms has been applied to the fabrics resulting from the different types of treatment and weaves of silk fiber. Dress foods nnd other similar products designated, described, or referred to as "satin," and other like words, when used alone, and until quali- BONWIT TELLER, INC. 543 540 Findings fied, designate or describe the materials from which the garment is made, and have been for a long time, and at the present time still are, associated in the public mind with material made from the product of the cocoon of the silk worm, commonly known and understood by the purchasing and consuming public as silk. Rayon is the name of a chemical fiber or fabric that simulates silk, in that it has the appearance and feel of silk, and is, by the purchasing and consuming public, practically indistinguishable from silk. The use of the word "weigl!ted" in connection with silk is meant silk that has been subjected to a metallic bath, resulting in a metallic substance or substances being permanently absorbed by the silk fiber. PAR. 4. The use by respondent of the representations set forth herein has had, and now has, the capacity and tendency to, and does, mislead and deceive a substantial portion of the purchasing and consuming public into the erroneous and mistaken belief that such representations were, and are, true; and has induced, and does induce, the purchase of such items of wearing apparel, on account of such erroneous and mistaken belief brought about by the use of said deceptive and false representations. There are among the competitors of respondent, as mentioned in paragraph 1 hereof, corporations, individuals, partnerships, and firms engaged in the sale of women's wearing apparel and other allied products who do not misrepresent the material of which wearing apparel offered for sale by them is made or composed. By use of the representations aforesaid, trade in said commerce has been, and is being, unfairly diverted to respondent from said competitors. Thereby substantial injury i~ being, and has been done, by respondent to competition in commerco among and between the various States of the United States and the District of Columbia.

PAR. 5. The aforesaid acts and practices of the respondent as herein alleged are all to the prejudice of the public and of respond~ ent's competitors and constitute unfair methods of competition in commerce within the intent and 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 September 17, 1938, issued and on September 21, 1938, served its amended complaint in this proceeding upon respondent llonwit Teller, Inc., a corporation, charging it with the use of unfair methods of competition in commerce in Violation of the provisions of said act. On November 30, 1938, the .... :544 FEDERAL TRADE COl\Il\IISSION DECISIONS ' Findings 28F.T.C.

respondent filed its answer, in which answer it admitted all the material allegations of fact set forth in this said complaint excepting that part of paragraph 2 of the complaint which charges that the words "Silk Rayon Crepe" serve as representations to members of the public that the garments they described were composed wholly of unweighted silk. Respondent waived all intervening procedure and further hearing as to said facts. Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint and answer thereto, and the Commission, having duly considered the matter, 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, Bonwit Teller, Inc., is a corporation, organized and existing and doing business under and by virtue o£ the laws of the State of New York, with its office and principal place of business located at Fifth Avenue and Fifty-sixth Street, New York City, State of New York.

Respondent Bonwit Teller, Inc., is now and for many years last ·past has been, engaged in the business of operating a department store from which it sells and distributes women's wearing apparel and other allied products. Said merchandise is sold and distributed, by respondent, to members of the purchasing and consuming public located in the various States of the United States and in the District of Columbia.

Respondent causes, and during the time herein mentioned has caused, its said articles of merchandise, when sold, to be shipped fronl its place of business in the State of New York to the purchasers thereof located at various points in States of the United States other "than the State from which said shipments are made and in the Dis· trict of Columbia. Respondent maintains and has maintained a course of trade in commerce in said merchandise, sold by it between and among the various States of the United States and the District of Columbia.

Respondent is now, and has been, in substantial competition with other corporations and with individuals, firms, and partnerships like~ wise engaged in the business of selling and distributing women's wearing apparel nnd other allied products in commerce between and among the various States of the United States and the District of Columbia.

PAR. 2. In the course and conduct of its business as described in paragraph 1 hereof, respondent in offering for sale nnd selling its BONWIT TELLER, INC. 545 540 Findings . merchandise caused advertising matter to be inserted in newspapers and magazines having an interstate circulation. Respondent also ap~ proved and agreed to the insertion of certain advertising matter in newspapers by others for the benefit, profit, and advantage of respondent and such others.

In said advertising matter, certain "slips" worn by women were represented, designated, and referred to as "satin," said advertise· ment reading in its material part as follows: A gown of cotton lace over satin.

The word "satin" was used in said advertisements without being qualified in any manner.

The Commission finds that the use of the word "satin" in the manner aforesaid serves as a representation to members of the pur• chasing public that the garments so advertised and offered for sale were composed of silk.

Respondent also advertised certain women's suits as being lined with "Silk Rayon Crepe."

The Commission finds the use of the words "Silk Rayon Crepe" in the manner aforesaid serves as a representation to members of the purchasing public that the lining of the suits consisted of a mixed fabric made up of a predominant part of unweighted silk combined solely with rayon.

PAR. 3. The Commission finds that the above representations made by respondent in advertising these women's slips and suits were and are false, misleading, and untrue.

In truth and in fact said women's "slip~" were and are not satin. The Commission finds that said slips were and are composed of rayon. In truth and in fact the linings of said suits were and are not com· posed of unweighted silk and rayon. The Commission finds that the linings of the suits were composed wholly of weighted silk. PAR. 4. The Commission finds that it was and is the duty of re· spondent to make disclosure of the fact that the "slips" respondent offered for sale and sold were and are composed of rayon by using the word "rayon" in immediate connection and conjunction with the Word "satin," in such a way and manner as to apprise and inform the purchasing public that such slips were and are composed of rayon.

The Commission finds that it was and is the duty) of respondent to n~ake disclosures of the fact that said linings were not composed of an unweighted silk, but were, in fact, composed of weighted silk by the use of the word "weighted'' in connection with said advertise· Findings 28F.T.C.

ment in such a way as to inform the members of the purchasing public that the same was weighted.

PAR. 5. The word "silk" for many years last past has had, and still has, in, the mind of the purchasing and consuming public, a definite and specific meaning, to wit: The product of the cocoon of the silkworm. Silk products for many years have held, and still hold, great public esteem and confidence for their preeminent quali· ties. Silk fiber has long been woven into a variety of fabrics. A variety of distinctive terms has been applied to the fabrics resulting from the different types of treatment and weaves o£ fiber. Dress goods and other similar products designated; described, or referred to as "satin," and other like words, when used alone, and until quali· fled, designate or describe the materials from which the garment is made, and have been for a long time, and at the present time still are, associated in the public mind with material made from the product of the cocoon of the silkworm, commonly known and understood by the purchasing and consuming public as silk. Rayon is the name of a chemical fiber or fabric that simulates silk, in that it has the appearance and feel or silk, and is, by the purchasing and consuming public, practically indistinguishable from silk. The use of the word "weighted" in connection with silk is meant silk that has been subjected to a metallic bath, resulting in a metallic substance or substances being permanently absorbed by the silk fiber.

PAR. 6. The use by respondent of the representations set forth herein has had, and now has, the capacity and tendency to, and does, mislead and deceive a substantial portion of1 the· purchasing and con· suming public into the erroneous and mistaken belief that such representations were, and are, true; and has induced, and does induce, the purchase of such items of wearing appttrel, on account of such erroneous and mistaken belief brought about by the use of said deceptive and false representations.

There are among the competitors of respondent, corporations, in· dividuals, partnerships, and firms, engaged in the sale of women's wearing apparel and other allied products who do not misrepresent the material of which wearing apparel offered for sale by them is made or composed.

Dy use of the representations aforesaid, trade in said commerce has b£>en, and is being, unfairly diverted to respondent from said competitors.

As a result thereof, injury is being, and has b£>en done, by respond· ent to competition in commerce among and between the various Statrs of the United States and in the District of Columbia. BONWIT TELLER, INC. 547 540 Order CONCI.USION· The aforesaid acts and practices of the respondent as herein found are all to the prejudice of the public and of respondent's competitors and constitute unfair methods of competition in commerce within the intent and meaning 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, except that part of paragraph 2 of the complaint which charges that the words "Silk Rayon Crepe" serve as representations to members of the public that the garments they describe were composed wholly of unweighted silk, and states that it waives all intervening procedure and further hearing as to said facts, and the Commission having made its findings as to the facts and conclusion that said respondent has violated the pro- \Tisions of the Federal Trade Commission Act. It is ordered, That the respondent, llonwit Teller, Inc., a corporation, its officers, representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale and distribution of fabrics, ladies' wearing apparel and garments, and other like articles of merchandise, in commerce, as commerce is defined in the Federal Trade Commission Act, do forth- With cease and desist from:

1. Using the word "satin" or "crepe" or any other word or words of similar import or meaning, to describe or designate any fabric or product which is not composed wholly of silk, the product of the cocoon of the silkworm, unless such descriptive word or words are Used truthfully to designate the type of weave or construction, in Which case such words shall be qualified by using in immediate connection or conjunction therewith, in letters of at least equal size and conspicuousness, a word or words clearly naming or describing the fibers or materials from which said product or fabric is made. 2. Using the words "silk rayon" to designate or describe any fabrics, Wearing apparel, garments, or other like merchandise, provided, however, that in the case of mixed fabrics which contain silk and rayon, the fibers or materials of said mixed fabrics, wearing apparel, garments, or other like merchandise, shall be designated or described in the order of their predominance by weight beginning with the largest single constituent.

548 FEDERAL TRADE COl\IMISSION DECISIONS Order 28F. T.C.

3. Advertising, offering for sale, or selling fabrics or any other products composed in whole or in part of rayon without clearly disclosing the fact that such fabrics or products are composed of rayon, and when such fabrics or products are composed in part of rayon and in part o:f other fibers or materials, such fibers or materials, including the rayon, shall be named in the order of their predominance by weight, beginning with the largest single constituent. It is further ordered, That the respondent shall, within 60 days after service upon it o:f this order, file with the Commission a report in writing, setting forth in detail the manner and. form in which it has complied. with this order.

FERRARA PANNED CANDY CO., INC. 549 Syllabus