Robert J. Thompson Co

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IN THE MA Tler ROBERT J. THOMPSON COMPANY 'COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 1,021. Complaint, Feb. 8, 191,0-Deciswn, Nov, 12, 1940 Where 11. corporation engaged, from its principal place of business, in Philadelphia, in sale and distribution of suits, overcoats and other articles of merchandise, to members of purchasing public in State of New Jersey, in competition with others engaged in sale and distribution of like or similar merchandise In commerce among the various States and in the D:strict of Columbia- Sold and distributed its said products to members of purchasing and consuming public by means of a sales plan or method which involved operation of game of chance, gift enterprise, or lottery scheme, and under which it solicited members of purchasing public in said State to purchase, by contract, men's clothing, thereafter to be made by it at its said place of business and shipped therefrom, and under which some of such members thus contacted, and as selected wholly by lot or chance, did net pny full contract price for such clothing thus contracted for, but paid less than contract price; and :Made nse thereby, in so selling and distributing its said merchandise in accordance with aforesaid sales plan involving game of chance or sale of a chance to procure article of merchandise at price much less than normal retail price thereof, of lottery scheme or plan as above set forth, contrary to an established public policy of the United States Government and in violation of criminal laws, and In competition with many who sell and distribute merchandise and do not use said or any method involving use of a game of chance or sale of a chance to win something by chance, and refrain therefrom ;

With result that trade was thereby diverted unfairly in commerce to it from its competitors aforesaid, who did not use same or equivalent methods: Held, That such acts and practices, under the circumstances set forth, 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 Mr. John W. Addison, trial examiner. Mr. L. P. Allen, Jr., for the Commission.

Mr. Maurice S. Le'VJI' and Mr. David S. Malis, of Philadelphia, Pa., 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 Robert J. Thompson Co., a corporation, hereinafter referred to as respondent, has ROBERT J. THOMPSON CO. 1335 1334 Complaint violated the provisions of said act, and it appearing to t)le Olmmission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint, ~tating its charges in that respect as follows:

PARAGRAPH 1. Respondent, Robert J. Thompson Co., is a corporation organized and doing business under the laws of the State of Pennsylvania, with its principal office and place of business located at 1216 \Valnut Street, Philadelphia, Pa. Respondent is now, and .for more than 1 year last past has been, engaged in the sale and distribution of suits, overcoats and other articles of merchandise to members of the purchasing public located in the various States of the United States and in the District of Columbia. It causes and has caused said merchandise, when sold, to be shipped or transported from its aforesaid place of business in the State of Pennsylvania to purchasers thereof in various other States of the United States and in the District of Columbia at their respective points of location. There is now and for more than 1 year last past has been a course of trade by respondent in such merchandise in commerce between and among the various States of the United States and in the District of Columbia. In the course and conduct of its business, respondent is and has been in competition with other corporations and with individuals and partnerships engaged in the sale and distribution of like or similar merchandise in commerce between and among the varous States of the United States and in the District of Columbia. PAR. 2. In the course and conduct of its business, as described in paragraph 1 hereof, respondent is now and has been selling and distributing said merchandise to members of the purchasing public by means of sales plans or methods which involve the operation of a game of chance, gift enterprise, or lottery scheme. One of said sales plans or methods is substantially as follows: Members of the purchasing public are solicited by respondent's representatives to purchase a suit of clothes or overcoat under a so-called Club plan. Respondent supplies each purchaser participating in said plan with a contract of purchase. Said contract provides for the sale by respondent, to such purchaser, of a suit of clothes or overcoat for the sum of $40., which said amount is to be paid as follows: One dollar when said contract is delivered and one dollar in advance each week thereafter until the full amount of the contract has been paid. There is space provided on said contract for the recorcling of the weekly payments. Each of said contracts has printed thereon a "ledger" number. Purchasers are informed by respondents representatives that should said number correspond 21JG516'"-41-vol. 31-87 Complaint 31 F. T. C, with the last three figures included in the total number of shares of stock sold on the Philadelphia, Pa., Stock Exchange for the preceding week, provided all of said purchaser's weekly payments had been made up to date, then such purchaser would be entitled to and would receive a suit or overcoat without additional cost. Purchasers whose contracts do not bear numbers corresponding with the Stock Exchange number, as above alleged, prior to the payment of the full amount of their contracts, are required to pay forty dollars for their suits or overcoats. All of said suits and overcoats have normal retail values of forty dollars. The amount which the ultima·te consumer pays for one of said suits or overcoats is thus determined wholly by lot or chance.

Respondent uses and has used various sales plans which involve the operation of games of chance, gift enterprises, or lottery schemes in connection with the sale and distribution of its merchandise to the consuming public, but said sales plans are similar to the one hereinabove described, varying only in detail. PAR. 3. Respondent has sold and distributed its merchandise to members of the consuming public in accordance with the aforesaid sales plans or methods. In so selling and distributing its merchandise, respon,dent has conducted lotteries in accordance with the sales plans or methods hereinabove set forth. The use by respondent of said sales plans or methods in the sale of its merchandise and the sale of such merchandise by and through the use thereof, and by the aid of said methods, 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 criminal laws.

PAR. 4. The sale of merchandise to the purchasing public, in the manner above alleged, involves a game of chance or the sale of a chance to procure an article of merchandise at a price less than the normal retail price thereof. Many persons, firms, and corporations who sell or distribute merchandise in competition with the respondent, as above alleged, are unwilling to adopt and use said methods or any methods involving usa of 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. l\fany persons are attracted by respondent's said methods and by the e.element of chance involved in the sale of said merchandise in the manner above alleged and are thereby induced and persuaded to buy respondent's merchandise in preference to the merchandise offered for sale and sold by said competitors o£ respondent who do not use the same or equivalent methods. The use of said methods by the respondent, because of said game o£ chance, has the tendency ROBERT J. THOMPSON CO. 1337 1334 Findings and capacity to and does unfairly divert trade in commerce between and among'0 the various States of the United States • and in the District of Columbia to respondent from its said competitors who do not use the same or equivalent sales plans or methods. As a result thereof substantial injury is being and has been done by respondent to competition in commerce between and among the various States of the United States and in the District of Columbia. PAR. 5. The aforesaid acts and practices of the respondent, as herein alleged, are aU to the prejudice and injury of the public, and of respondent's competitors and constitute unfair methods of com· petition in commerce and 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 ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Conunission, on the 8th day of February 1940, issued and subsequently served its complaint in this proceeding upon the respondent, Robert J. Thompson Co., a corporation, charging it with 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. On February 26, 1940, the respondent filed its 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 David S. Malis, counsel for the respondent, and; 'V. T. Kelley, chief counsel for the Federal Trade Commission, subject to the approval of the Commission, may be taken as the facts in this proce-eding and in lieu of testimony in support of the charges stated in the complaint or in opposition there"to, 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 and 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 the said complaint, answer and stipulation, said stipulation having been approved, accepted and filed, and the Commission, having duly considered the same and being now fully advised in the premises, finds that thi$ 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, Robert J. Thompson Co., is a corpora· hon organized and doing busines under the laws of the State of Penn- Findings 31 F. T. C. sylvania, with its principal office and place of business located at 1216 1Valnut Street, Philadelphia, Pa. Respondent, for some time prior to the filing of the complaint in this matter, engaged in tlle sale and distribution of suits, overcoats and other articles of merchandise to members of the purchasing public located in the State of New Jersey. It caused said merchandise, when sold, to be shipped or transported from its aforesaid place of business in the State of Pennsylvania to purchasers thereof in the State of New Jersey, at their respective points of location. There was, for some time prior to the filing of the complaint in this matter, a course of trade by respondent in such merchandise in commerce between the States of Pennsylvania and New Jersey. In the course and conduct of its business, respondent has been in competition with other corporations, and with individuals and partnerships engaged in the sale and distribution of like or similar 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 its business, as described in paragraph 1 hereof, respondent has been selling and distributing said merchandise to members of the purchasing public by means of a sales plan or method which involved the operation of a game of chance, gift enterprise or lottery scheme. The sales plan or method was substantially as follows:

Members of the purchasing public in the State of New Jersey were solicited by respondent's representatives to purchase by contract men's clothing thereafter to be manufactured by respondent at its place of business in Philadelphia, Pa. Some of the aforesaid members of the purchasing public so contacted did not pay the full contract price for the article of men's clothing contracted to be purchased but paid less than the contract price for the said articles of clothing. The persons who were entitled to receive and who did receive the articles of men's clothing for less than the full contract price were selected wholly by lot or chance. The said articles of men's clothing so sold and distributed were shipped by common carriers from respondent's aforesaid place of business in Philadelphia, Pa., to the said customers of respondent wherever located in the State of New Jersey. PAR. 3. Respondent has sold and distributed its merchandise to members of the consuming public in accordance with the aforesaid sales plan or method. In so selling and distributing its merchandise, respondent has conducted lotteries in accordance with the sales plan or method hereinabove set forth. The use by respondent of the said sales plan or method in the sale of its merchandise and the sale of such merchandise by and through the use thereof and by the aid ROBERT J. THOMPSON CO. 1339 133-! Order of said method is a practice of a sort which is contrary to an established public policy of the Government of the United States, and in violation of criminal laws.

PAn. 4. The sale of merchandise to the purchasing public in the manner above found involves a game of chance or in the sale of a chance to procure an article or merchandise at a price much less than the normal retail price thereof. l\Iany persons, firms, and corporations, who sell or distribute merchandise in competition with respondent, as above found, do not use said method or any method involving the use of a game of chance or the sale of a chance to win something by chance, and such competitors refrain therefrom. The use of said method by respqndent because of said game of chance had a tendency and capacity to and did unfairly divert trade, in commerce between and among the various States of the United States, to respondent from its said competitors who did not use the same or equivalent methods.

CONCLUSION The aforesaid acts and practices of respondent, as herein found, 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 deceptive 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 respondent and a stipulation as to the facts entered into between counsel for the respondent and ,V. T. Kelley, chief counsel for the Federal Trade Commission, which provides, among other things, that without further evidence or other intervening procedure the Commission may issue and serve upon the respondent herein findings as to the facts and conclusion based thereon and an order disposing of the proceeding, and 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 is ordered, That the respondent, Robert J. Thompson Co., 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 suits, overcoats or any other merchandise in commerce as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from: Order 31F.T.C.

1. Supplying to or placing in the hands of others any merchandise, together with a sales plan or method involving the use of a game of chance, gift enterprise, or lottery scheme by which said merchandise is to be, or may be, sold to the purchasing public . . 2. Selling or otherwise disposing of any merchandise by the use of a game of chance, gift enterprise, or lottery scheme. It is further ordered, That the respondent shall, within 60 days after service upon it of this order, file with the Commission a report il! writing setting forth in detail the manner a11d form in which it has complied with this order.

JUNIOR LEAGUE LINGERIE, INC. 1341 Syllabus