Johnson, C. C

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IN THE MATTER OF C. C. JOHNSON, TRADING AS SUPREME MANUFACTURING COMPANY, CARLYLE SERVICE, l\fARVO l\fANUF ACTUR- ING COl\IP ANY AND PEERLESS l\1ANUF ACfURING COMPANY COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 1l OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 3712. Complaint, Feb. 1~, 1939-Decision, Nov. 7, 1939 Where an individual engaged in sale and distribution of product represented as preservative of silk hosiery and lingerie, under trade names "Supreme," "Marvel," "Marvo," and "Peerless," through direct selling methods and through sales persons and representatives who traveled from State to State and canvassed cities and towns therein and in the District of Columbia, and made general house-to-house canvass soliciting orders therefor through stereo· typed sales, talk furnished by him, and in substantial competition, ns thus engaged, with others selling and distributing preparations for treating such products and increasing their durability and resistance to snags and runs, and including many who do not mil;:represent that they manufacture products sold by them and do not misrepresent quality and effectiveness of their respective products or make any other similar false statements in connection with sale and distribution thereof- ( a) Represented, through statements on labels affixed to containers of product in question, and through sales talks made to prospective purchasers by his agents, directly or by implication, that use of his said product would prevent runs and snags In, or the rotting and fading of, hosiery and lingerie, and that through such use purchaser could save approximately ·5o per cent of the cost of such articles; and (b) Represented, as aforesaid, that such use strengthened heels and toes of silk hosiery and that hosiery treated therewith would last four or five times longer than it would without being so treated; Facts being product In question would not stop runs or snags, prevent rotting or fading, make such a saving, or strengthen, as aforesaid, silk hosiery, with increase in durability or life thereof as above set forth; and (c) Represented, as aforesaid, and through use of word "manufacturing" in various trade names employed by him, that he was manufacturer of the product in question, notwithstanding fact he was not such manufacturer; With result that many members of the purchasing public, who are of opinion that advantage In price, service, or other respects is to be secured by purchasing direct from manufacturer without intervention of middlemen, were led, through use of trade names aforesaid, to believe that said individual was manufacturer of product in question and were caused to purchase same, and with effect of misleading and deceiving substantial portion of purcbas· ing public into erroneous and mistaken belief his said representations as to efficacy of such product were true, and that be was manufacturer thereof, and of causing such substantial portion of public in question to buy his said product in preference to that of competitors, and of thereby diverting trade unfairly to him ft·om competitors; to their injury and that of public: SUPREME MANUFACTURING CO., ETC. 1271 1270 Complaint Held, That such acts and practices were all to the prejudice and injury of the public and competitors and constituted unfair methods of competition In commerce and unfair and deceptive acts and practices therein. Before 11/r. John J. Keenan, trial examiner. 11/r. John R. Phillips, Jr. for the Commission. MO'J"'lig, l{ixMiller & Baar, of Washington, D. C., and lVrigltt, Rogers & Margolin, of Kansas City, Mo., for respondent. 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 C. C. Johnson, an individual, trading as Supreme Manufacturing Co., Carlyle Service, Marva Manufacturing Co., and Peerless Manufa-Cturing Co., hereinafter referred to as respondent, has violated the provisions of the said act, and it appearing to the Commission that a proceeding by it i11 respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent, C. C. Johnson, is an individual, trading and doing business as the Supreme Manufacturing Co., Carlyle . Service, 1\Iarvo Manufacturing Co. and Peerless Manufacturing Co., with his principal office and place of business located at 1014 City National Bank Building in the city of Omaha, Nebr. Respondent is now and has been for several years last past engaged in the business of selling and distributing a preservative or mending powder for silk hosiery and lingerie under the trade names of Supreme, ~Iarvel, l\Iarvo, and Peerless, in commerce as hereinafter set out. PAR. 2. Respondent sells said product by direct selling method;; and by means of sales persons and representatives who travel from one State to another and canvass all cities and towns within the V!lrious States of the United States and in the District of Columbia and make a general house-to-house canvass soliciting orders for the respondent's product, said sales persons and representatives using a stereotype sales talk as furnished by the respondent. Respondent causes said product when sold to be shipped from his aforesaid place of business in the State of Nebraska to said purchasers located in various States of the United States other than the State of N ebruska and in the District of Columbia. Respondent maintains and at all times mentioned herein has maintained a course of trade in said product in commerce between and among the various States of the United States and in the District of Columbia. PAR. 3. The respondent is engaged in substantial competition with other individuals, and with partnerships, firms, and corporations Complaint 29F.T. C.

selling and distributing a preparation for treating silk hose and lingerie to increase their durability and their resistance to snags and runs in commerce between and among the various States of the United States and in the District of Columbia. Among said competitors are many who do not misrepresent that they are manufacturers of the products they sell, and who do not misrepresent the· quality or effectiveness of their respective products, or make other- ~imilar false statements in connection with their sale and distribution . . PAR. 4. In the course and conduct of his business as aforesaid and for the purpose of inducing the purchase of said product in said commerce respondent has made and is now making representations with respect to his business status and with respect to the quality :mel effectiveness of his said product by means of statements appearing on labels affixed to containers of said product and by means of sales talks made to prospective customers by agents of respondent. Among and typical of said representations so used and caused to be used by said respondent in the manner aforesaid are and ha \'e been. the foliowing :

Supreme Manufacturing Company l\Iarvo Manufacturing Company Peerless Manufacturing Company No more runs and snags.

Prevents runs and snags.

No more rotting and fading.

Prevents rotting and fading, Sll\·es 50% on hosiery and lingerie expense. One treatment good for life of' hose. Strengthens heels and toes.

Prevents the runs and snags in your silk hosiery and lingerie • • • strengthens the heel and toe of your hosiery, thereby making them last 4 or 5· times longer * * • this treatment is permanent • • • now this product will cut your hosiery and lingerie expense in half • • * also preyeuts the silk from rotting, and one treatment is sufficient for the life of the hose. PAR. 5. All of said statements purport to be descriptive of his. business status and of his product and of its effectiveness when used. In said statements and through other means respondent, directly orby inference, through statements and representations herein set out and other statements of similar import and effect, represents that his product prevents runs and snags in said hosiery, that it prevents rotting and fading, that the public generally are saved approximately 50 percent of silk he siery nnd lingerie cm;t, that it strengthens the heels and toes of said hosiery, and that the life of the silk hosiery and lingerie is preserved due to the quality of the respondent's product; and that he manufactures the products he sells. 1\fany consumers are of the opinion that an advantage in price, service and SUPREME l\IANUF ACTURING CO., ETC. 1273 1270 Findings other particulars is to be secured by purchasing direct from the manufacturer without the intervention of middlemen. PAR. 6. In truth and in fact these representations thus made are false and misleading in that the respondent does not manufacture ~aid product. Respondent's product will not stop or prevent runs or snags in silk hosiery and lingerie. It does not prevent silk from rotting and fading. It does not save the purchasing public 50 per- ~ent on hosiery and lingerie expense. The so-called treatment iJ not permanent and it does not strengthen the heels and toes of silk hosiery. In truth and in fact said product is manufactured by an independent manufacturer and the respondent purchases the chemical product from such independent manufacturer and distributes the said' product under his various trade names as aforesaid. PAR. 7. Each and all of said false and misleading statements are calculated to and have had and now have the capacity and tendency to, and do, mislead and deceive a substantial portion of the purchasing public into the erroneous belief that said representations nre true, and to cause, and have caused a substantial part of the purchasing public to purchase the products of respondent in preference to the products of his said competitors, and unfairly to divert business from them to respondent. As a result thereof injury has been done and is now being done by respondent to competition in commerce bet,veen and among the various States of the United States and in the District of Columbia.

PAR. 8. The use of the aforesaid acts and practices by the respondent as herein alleged are all to the prejudice of the public and of respondent's competitors and constitute unfair methods of competition in commerce and unfair and deceptive acts in commerce within the intent and meaning of the Federal Trade Commission Act. REPORT, FINDINGS As TO THE FACTs, AND OnnER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on February 14, 1939, issued, and on February 1G, 1939, served, its complaint in this proceeding upon the respondent, C. C. Johnson, trading as Supreme Manufacturing Co., Carlyle Service, l\Iarvo Manufacturing Co., and Peerless Manufacturing Co., charging him will} the use of unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce in violation of the provisions of said act. After the issuance of said complaint and the filing of respondent's answer, the Commission, by order entered herein, granted respondent's motion for permission to w·ithdrnw said answer and to substitute therefor 1274 FEDERAL TRADE COl\Il\IISSION DECISIONS Findings 29F.T.C.

an answer admitting all the material allegations of fact set forth in said complaint and waiving all intervening procedure and further hearing as to said facts, whi~h substitute answer was duly filed in the office of the Commission. Thereafter, this proceeding regularly came on for final hearing before the Commission on the said complaint and substitute answer, 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. Respondent, C. C. Johnson, is an individual, tra,ding and doing business as the Supreme 1\Ianufacturing Co., Carlyle Service, 1\Iarvo :Manufacturing Co. and Peerless 1\Ianufacturing Co., with his principal office and place of business located at 1014 City National Bank Building in the city of Omaha, Nebr. Respondent is now, and has been for several years last past, engaged in the sale and distribution of a product represented as a preservative of silk hosiery and lingerie under the trad~ names Supreme, 1\Iarvel, 1\farvo, and Peerless.

PAR. 2. Respondent sells said product by direct selling methods and by means of sales persons and representatives who travel from one State to another and canvass all cities and towns within the various States of the United States and in the District of Columbia and make a general house-to-house canvass soliciting orders for the respondent's product, said sales n_ersons and representatives using a stereotyped sales talk as furnished by the respondent. Respondent causes said product when sold to-be shipped from his aforesaid place of business in the State of Nebraska to said purchasers located in various States of the United States other than the State of Nebraska and in the District of Columbia. Respondent maintains and at all times mentioned herein has maintained a course of trade in said product in commerce between and among the various States of the United States and in the District of Columbia. PAR. 3. The respondent is engaged in substantial competition with other individuals, and with partnerships, firms, and corporations selling and distributing preparations for treating silk hosiery and lingerie to increase their durability and their resistance to snags and runs in commerce between and among the various States of the United States and in the District of Columbia. Among said competitors are many who do not misrepresent that they are manufacturers of the products they sell, and who do not misrepresent the quality or SUPREME MANUFACTURING CO., ETC. 1275 1270 Findings effectiveness of their respective products, or make other similar false statements in connection with their sale and distribution. PAR. 4. In the course and conduct of his business as aforesaid and for the purpose of inducing the purchase of said products in said commerce, respondent has made and is now making representations with respect to his business status and with respect to the quality and effectiveness of his said product by means of statements appearing on labels affixed to containers of said product and by means of sales talks made to prospective customers by agents· of respondent. Among and typical of said representations so used and caused to be used by said respondent in the manner aforesaid are and have been the following:

Suprei:ne Manufacturing Company.

1\larvo Manufacturing Company.

Peerless Manufacturing Company.

No more runs and snags.

Prevents runs and snags.

No more rotting and fading.

Prevents rotting and fading.

Sa¥es 50% 011 hosiery an~ lingerie expense. One treatment good for life of hose.

Strengthens heels and toes.

Prevents the runs and snags in your silk hosiery and lingerie • • • strengthens the heel and toe of yo<Ur hosiery, thereby making them last 4 or 5 times longer • • • this treatment is permanent • • • now this product will cut your hosiery and lingerie expense in half • • • also pre- '·ents the silk from rotting, and one treatment is sufficient for the life of the hose.

PAR. 5. All of said statements purport to be descriptive of respondtnt's business status and of his product and its effectiveness when used. Through the statements and representations hereinabove set out and others of similar import and meaning not herein quoted, 1·respondent represents and implies that the use of his said product will preyent runs and snags in hosiery and lingerie; that it prevents rotting and fading; that through the use of said product approximately 50 percent of silk hosiery and lingerie costs can be saved; that the use of said product strengthens the heels and toes of silk hosiery, thereby making such hosiery last four or five times longer than it ordinarily would; and that the respondent is the manufacturer of said product.

PAR. 6. In truth and in fact, the use of respondent's said product will not stop runs or snags in silk hosiery or lingerie; it will not preyent rotting and fading; the use of said product will not save approximately 50 percent of silk hosiery and lingerie costs; the use of said product does not strengthen the heels and toes of silk hosiery, 1276 FEDERAL TR.\DE COl\11\IISSION DECISIONS Order 29F. T.C.

thereby making such hosiery last four or five times longer than it ordinarily would; and the respondent is not the manufacturer of said product.

PAR. 7. :Many members of the purchasing public are of the opinion that an advantage in price, service, or in other respects is to be secured by purchasing direct from the manufacturer of a product without the intervention of middlemen. The use by the respondent of the trade names Supreme :Manufacturing Co., Marvo Manufacturing Co. and Peerless Manufacturing Co. in connection with the sale and distribution of said product leads many members of the purchasing public to believe that respondent is the manufacturer of the product and causes them to purchase said product.

PAR. 8. Each and all of said statements and representations have had, and do have, the capacity and tendency to, and do, mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that said representations as to the efficacy of said product are true, and that the respondent is the manufacturer thereof, and have caused, and do cause, a substantial portion of the purchasing public to purchase the product of the respondent in preference to the products of his competitors. In consequence thereof, trade in commerce between and among the various States of the United States and in the District of Columbia has beei1 diverted unfairly to the respondent from his competitors to their injury and to the injury of the public. CONCLUSION The aforesaid acts and practices of the respondent are all to the prejudice and injury of the public and of respondent's competitors and constitute unfair methods of competition in commerce and unfair and decepti,·e acts and practices in commerce within the intent nnd 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, and states that he waives all intenening 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 provisions of the Federal Tratle Commission Act.

SUPRE~IE MANUFACTURING CO., ETC. 1277 1270 Order It is ordel·ed, That the respondent, C. C. Johnson, trading as Supreme Manufacturing Co., Carlyle Service, l\Iarvo Manufacturing Co., and Peerless Manufacturing Co., or trading under any other name or names, his agents, servants, representatives1 and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, or distribution of the product for the treatment of hosiery aJHl lingerie now sold and distributed by the respondent under the trade names Supreme, Mrtrvel, Marvo, and Peerless, or any other product composed of substantially the srtme ingredients or possessing substantially similar properties, whether sold under said names, or any other trade name, or names, in commerce, as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Representing, directly or by implication, that the use of said product 1Will prevent runs and snags in, or the rotting and fading of, hosiery and lingerie.

2. Represl'nting, directly or by implication, that through the use of said protlnct, the purchaser can save approximately 50 percent of the cost of silk hosiery rtnd lingerie.

3. Representing, dirl'ctiy or by implication, that the use of said product strengthens the heels and toes of silk hosiery, or that hosiery treated with said product "·ill last four or five times longer than it would without being so treated, or that the use of said product will result in any substantial increase in the wearing quality1es or silk hosiery.

4. Representing, through the use of the "·ord "manufacturing," or any other word or term of similar import or meaning, as part of the trade name used by the respondent, or in any other manner or through any other means or device, that said respondent is the manufacturer of the product sold by him, unless and until such respondent actually owns and operates, or directly and absolutely controls, a manufacturing plant wherein said product is manufactured by him. ·It is further ordel·ed, That the respondent shall, within 60 days after service upon him of this order, file with the Commission a report in writing, setting forth in detail the manner and form in which he has complied with this order.

21370B'"-4()-\'0L. 29-83 Syllabus 29F. T. C.