Economy Men'S Hat Company, Inc.

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IN THE l\fA 'ITER OF ECONOMY MEN'S HAT COMPANY, INC., AND ROSALIND NISSENBAUM, LENA NISSENBAUl\1, AND NAT GILMAN, INDIVIDUALLY AND AS OFFICERS OF ECONO;\IY MEN'S HAT COMPANY, INC.

COMPLAINT, FDlDIXGS, AND ORDER IN REG.-\RD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF COXGRESS APPROVED SEPT. 26, 1914 Docket 383"1. Complaint, June 28, 1939-Decision, Feb. 2-1, 19.]0 Where a corporation and three individuals who were geneml officers thereof and as such managed, controlled, and <lominated its affairs and activities, and fourth Individual who acted as general manager tht>reof, engaged in manufacture of hats from felt and other materials obtained frolll old, worn, and previously usetl bats or products and in so treating and proeessing through cleaning, steaming, ironing, and shaping and fitting with new trimmings, sweat bands and size labels, old, worn, and used felt hat bodies purchased by them that they had the appearance of new hats made from felts which had never been worn- Sold said hats with appearance aforesaid and with no label, marking or designation stamped thereon to indicate to pu1·chasing public that they were w fact made from old, worn, and used bodies cleaned and renovated as above set forth, to jobber, wholesaler, and retailer dealers by whom as direct or indirect purchasers from it said hats were resold to purchasing public with· out disclosing facts aforesaid, and failed through use of words "l\lade Over Hat" immediately preceding such terms as "Deluxe Quality" or other 8imila1· terms and names embossed on sweat bands of hats in question to disclose to purchasers that articles concerned wet·e in fact made from old, worn, and previously used hat bodies as distinguished from products made ft·om shop worn hat bodies never worn or used, as made in many Instances by manufacturers through similar pt•ocess employed with new but shop worn hats reclaimed by them from merchants' shelves; \With effect of misleading and deceiving substantial numlwr of wholesale dealers, jobbers, retailers, and members of purchasing public into enoneons und mistaken beliefs that said pro(]ucts wet·e made from either new and unused materials or from new but shop worn hat bodies which had never been worn or used and into purchase of substantial numbers of said hats because of such mistaken beliefs :

Held, that such acts and pmctices under the circumstances set forth we:·e nll to the prejudice of the public and constitutpd unfair and decepth·e acts aud practices in commerce.

Mr. Robert Mathis, Jr. for the Commission. Mr. A/arc Bergman, of New York City, for respondents. 548 FEDERAL TRADE COl\IMISSION DECISIONS Complaint 30F.T.C.

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 Economy Men's Hat Co., Inc., a corporation, and Rosalind Nissenbaum and Lena Nissenbaum, individually and as officers of Economy Men's Hat Co., Inc., a corporation, and Samuel Gilman, an individual, hereinafter referred to as respondents, have violated the provisions of 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, Economy Men's Hat Co., Inc., is now and has been at all times mentioned herein, 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 5 Elizabeth Street, in the city and State of New York. Respondents, Rosalind Nissenbaum and Lena Nissenbaum, are individuals and are president, and secretary and treasurer, res_pectively, of respondent Economy Men's Hat Co., Inc., and as such manage, control, and dominate its corporate affairs and activities. Respondent, Samuel Gilman, is an individual and is employed by and acts as general manager for respondent corporation. All of said respondents have their office and principal place of business at 5 Elizabeth Street, in the city and State of New York. Respondents are now, and for more than 1 year last past have been, engaged in the business of manufacturing hats from felts and other materials obtained from old, worn, and previously used hats, and of selling the same to retailers, jobbers, and wholesalers located in the various States of the United States and in the District of Columbia. Respondents cause, and at all times herein mentioned have caused, such hats to be transported from their place of business in the city and State of New York to the aforesaid purchasers thereof, at their respective points of location in various States of the United States other than the State of New York and in the District of Columbia. PAR. 2. In the course and conduct of said business, described in paragraph 1 hereof, respondents buy old, worn, and previously used felt hats. The old, worn, and used felt-hat bodies are cleaned, steamed, ironed, and shaped by respondents and then fitted with new trimmings, sweat bands, size labels, and sold by respondents to retailers who, in turn sell said products to the purchasing public. PAR. 3. The aforesaid old, worn, and previously used hat bodies, after having been made by respondents into hats with new trim- ECONOMY MEN'S HAT CO., INC., ET AL. 549 547 Complaint mings, sweat bands, size labels, as described in paragraph 2 hereof, have the appearance of new hats manufactured from felts which have never been worn, and said hats are sold by respondents to retailers, and to jobbers and wholesale dealers without any label, marking, or designation stamped thereon to indicate to the purchasing public that said hats are in fact manufactured from old, worn, and previously used felt-hat bodies, which have been cleaned and renovated by respondents. Said hats are also sold to jobbers and wholesale dealers and are resold by said jobbers and wholesale dealers to retail dealers, who sell them to the purchasing public without disclosing the fact that said hats are manufactured from felts, previously worn and then cleaned and renovated, and under such circumstances as to indicate that they are in fact new hats.

In the course of the operation of their business respondents use the words "De Luxe Quality" and other similar words or names in designating said merchandise. Respondents cause said words or similar words or names to be embossed on sweat bands which are attached to said hats. Immediately preceding the words "De Luxe Quality" or other similar terms and names used by respondents in designating said hats respondents have cause to be embossed the words "Made Over Hat."

It is the practice of various manufacturers of hats to manufacture finished hats from previously used felt-hat bodies, and from new felthat bodies, obtained from new but shop-worn hats, as well as from newly manufactured felt. Shop-worn hats are new hats which are reclaimed from merchants' shelves by said hat manufacturers, anq which have never been worn or used. Said shop-worn hats are cleaned, steamed, and renovated by said hat manufacturers in the same manner as hats made from old, worn, and previously used felthat bodies.

By the use of the words "l\fade Over Hat" in the manner aforesaid, respondents fail to disclose to purchasers that said hats are made from old, worn, and previously used hat bodies, as distinguished from hats made from shop-worn hat bodies which have never been worn or used.

PAR. 4. The use by respondents of the acts and practices, above set forth, has the capacity and tendency to, and does, mislead and deceive a substantial number of wholesale dealers, jobbers, retail dealers, and members of the purchasing public into the erroneous and mistaken beliefs that said hats are manufactured from either new and unused materials, or are made from new but shop-worn hat bodies which have never been worn or used, and into the purchase 550 FEDERAL TRADE COl\IMISSION DECISIONS Findings 30F, T. C.

of a substantial number of said hats because of such erroneous and mistaken beliefs.

PAR. 5. The aforesaid acts and practices of the respondents as herein alleged are all to the prejudice of the public and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. REPORT, FINDINGS AS TO THE Facts, AND Onder l'ursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission on the 28th day of June, A. D. 1939, issued and served its complaint in this proceeding upon said respondents, Economy Men's Hat Co., Inc., a corporation, and Rosalind Nissenbaum, Lena Nissenbaum, Nat Gilman (herein erroneously designated as Samuel Gilman), individually and as officers of Economy l\fen's Hat Co., Inc., a corporation, charging them with the use of unfair and deceptive acts and practices in commerce in violation of the provisions of said act. On August 15, 1939, the re- !ipondents by their attorney, Max Bergman, Esq., filed their answer in this proceeding. Thereafter, a stipulation was entered into whereby it was stipulated and agreed that a statement of facts signed and executed by the respondents' couns€1, Max Bergman, Esq., and ,V, T. Kelley, chief counsel for the Commission, subject to the approval of the Commission, may be taken as the facts in this proceeding and in lieu of testimony in support of the charges stated in tbe complaint, or in opposition thereto, and that the said Commission may proceed upon said statement of facts to make its report, stating its findings as to the facts and its conclusion based thereon itnd enter its order disposing of the proceeding without the presentation of argument or the filing of briefs. Thereafter, this proceeding regularly came on for final hearing before the Commission on said complaint, answer, and stipulation, said stipulation having Leen approved, accepted, and filed, 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 its findings as to the facts and its conclusion drawn therefrom: FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Economy Men's Hat Co., Inc., is now and has been at all times mentioned herein, 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 5 Elizabeth Street, in the city and State of New York. Respondents, Rosalind Nissenbaum and Lena Nissenbaum, are indi- ECONOMY 1\IEN'S HAT CO., INC., ET AL. 551 547 Findings viduals and are president, and secretary and treasurer, respectively, of respondent Economy l\Ien's Hat Co., Inc., and as such manage, control; and dominate its corporate affairs and activities. Respondent Nat Gilman, herein erroneously designated as Samuel Gilman, is an individual and is employed by and acts as general manager for respondent corporation. All of said respondents have their office and principal place of business at 5 Elizabeth Street, in the city and State of New York. Respondents are now, and for more than 1 year last past have been, engaged in the business of manufacturing hats from felts and other materials obtained from old, worn, and previously used hats, and of selling the same to retailers, jobbers, and wholesalers located in the various States of the United States and in the District of Columbia. Respondents cause, and at all times herein mentioned have caused, such hats to be transported from their place of business in the city and State of New York to the aforesaid purchasers thereof, at their respective points of location in various States of the United States other than the State of New York and in the District of Columbia.

PAR. 2. In the course and conduct of said business, described in paragraph 1 hereof, respondents buy old, worn, and previously used felt hats. The old, worn, and used felt hat bodies are cleaned, steamed, ironed and shaped by respondents and then fitted with new trimmings, sweat bands, size labels, and sold by respondents to retailers who, in turn sell said products to the purchasing public. PAR. 3. The aforesaid old, worn, and previously used hat bodies, after having been made by respondents into hats with new trimmings, sweat bands, size labels, as described in paragraph 2 hereof, have the appearance of new hats manufactured from felts which have never been worn, and said hats are sold by respondents to retailers, and to jobbers and wholesale dealers without any label, marking or designation stamped thereon to indicate to the purchasing public that said hats are in fact manufactured from old, worn, and previously used felt hat bodies, which have been cleaned and renovated by rekipondents. Said hats are also sold to jobbers and wholesale dealers and are resold by said jobbers and wholesale dealers to retail dealers, who sell them to the purchasing public without disclosing the fact that said hats are manufactured from felts, previously worn and then cleaned and renovated, and under such circmnstances as to indicate tha~ they are in fact new hats.

In the course of the operation of their business respondents use the words "De Luxe Quality" and other similar words or names in designating said merchandise. Respondents cause said words or similar words or names to be embossed on sweat bands which are attached to 2GOGO~m--4t--vol.30----38 Order 30F.T.C.

said hats. Immediately preceding the words "De Luxe Quality" or other similar terms and names used by respondents in designating said hats respondents have caused to be embossed the words "Made Over Hat."

It is the practice of various manufacturers of hats to manufacture finished hats from previously used felt-hat bodies, and from new felthat bodies, obtained from new but shop-worn hats, as well as from newly manufactured felt. Shop-worn hats are new hats which are reclaimed from merchants' shelves by said hat manufacturers, and which have never been worn or used. Said shop-worn hats are cleaned, steamed, and renovated by said hat manufacturers in the same manner as hats made from old, worn, and previously used felthat bodies.

By the use of the words "Made Over Hat" in the manner aforesaid, respondents fail to disclose to purchasers that said hats are made from old, worn, and previously used hat bodies, as distinguished from hats made from shop-worn hat bodies which have never been worn or used.

PAR. 4. The use by respondents of the acts and practices, above set forth, has the capacity and tendency to, and does, mislead ancl deceive a substantial number of wholesale dealers, jobbers, retail dealers, and members of the purchasing public into the erroneous and mistaken beliefs that said hats are manufar.tured from either new nnd unused materials, or are made from new but shop-worn hat bodies which have never been worn or used, and into the purchase of a substantial number of said hats because of such erroneous and mistaken beliefs.

CONCLUSION The aforesaid acts and practices of the respondents as herein found are all to the prejudice of the public and constitute unfair and decep· tive acts and practices 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, the answer of the respondents, and a stipulation as to the facts entered into between counsel for the respondents herein, Max Bergman, Esq., and W. T. Kelley, chief counsel for the Commission, which provides, among other things, that without further evidence or other intervening procedure the Commission may issue and serve upon the respondents herein findings as to the facts and conclusion based thereon and an ECONOMY ~:IEN'S HAT 00., INC., ET AL. 553 547 Order order disposing of the proceeding, and the Commission having made its findings as to the facts and conclusion that said respondents have violated the provisions of the Federal Trade Commission Act. 1 t is ord&red, That the respondent Economy Men's Hat Co., Inc., a corporation, its officers, representatives, agents, and employees, and respondents Rosalind Nissenbaum, Lena Nissenbaum and Nat Gilman, (herein erroneously designated as Samuel Gilman), individually and as officers of said corporation, their representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale and distribution of hats in commerce, as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Representing that hats composed in whole or in part of used or second-hand materials are new or are composed of new materials by failure to stamp on the sweat bands thereof, in conspicuous and legible terms which cannot be removed or obliterated without mutilating the sweat bands, a statement that said products are compos£>d of second-hand or used materinJs, provided that if sweat bands are not affixed to said hats then such stamping must appear on the bodies of such hats in conspicuous or legible terms which cannot be removed or obliterated without mutilating said bodies; 2. Representing in any manner that hats made in whole or in part from old, used or second-hand materials are new or are composed of new materials.

It is fwrther ordered, That respondents shall, within 60 days after service upon them 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 this order.

554 FEDERAL TRADE 001\IMISSION DECISIONS Syllabus 30F. T. C.