Myers, Maurice L

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IN THE MATTER OF MAURICE L. MYERS, TRADING AS CHARLES B. JOYCE COMPANY COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 19H Docket .H76. Complaint, Mar. 26, 1941-Decision, June 9, 1942 "Where an individual, engaged in competitive interstate sale and distribution of radios, clocks, flashlights, and other novelty merchandise to dealers and other purchasers, including certain assortments thereof which were so packed and assembled as to involve the use of a lottery scheme when sold and distributed to consumers, a typical one involving sale of a radio through use of a 1,500-hole punchboard, chances on which were 5 cents each, under a plan by which the customer selecting, by chance, the winning number secured a radio, 8 others received 50 cents in trade, and 20 received 25 cents In trade, the remaining receiving nothing for their money except the right to punch- Sold such assortments to dealers and other purchasers by who.m they were exhibited and sold to the· purchasing public in accordance with sales plan above set forth, and thereby supplied to and placed in the bands of others the means of conducting a game of chance or lottery in the sale of his said products;

With the result that many were attracted by said chance sales plan and the opportunity to procure merchandise at much less than its nominal retail price, and 'were thus induced to buy and sell his products in preference to those of his competitors who do not use any chance sales plan in the sale and distribution of their products, and with effect of unfairly diverting trade to him from them:

Held, That such acts and practices, under the circumstances set forth, were all to the prejudice and injury of the publlc and competitors, were contrary to the public policy of the United States Government, and constituted unfair methods of competition in commerce and unfair and deceptive acts and practices therein.

Before Mr. John lV. Addison, trial exam~ner. Mr. J. W. Brookfield, Jr., for the Commission. Mr. Gordon L. Bazelon, of Chicago, Ill., for respondent. Col\IPLAINT 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 Morris L. l\Iyers, an individual, trading ns Charles D. Joyce Co., hereinafter referred to as respondent, has violated the provisions o£ said net, and it appearing to the Commission that a. proceeding by it in respect Complaint 34 F. T. C. thereof would be in the interest of the public, hereby issues its complaint, stating its charges in that respect as follows: PARAGRAPH 1. Respondent, Morris L. Myers is an individual, tradjng and doing business as Charles P. Joyce Co., with his office and principal place of business at 2425 North Halstead Street, Chicago, Ill. Respondent is now and during the year last past has been engaged in the sale and distribution of radios, clocks, flashlights, dothing, and novelty merchandise to dealers and other purchasers thereof located in various States of the United States and in the District of Columbia. Respondent causes and has caused said merchandise, when sold, to be transported from his said place. of business in the State of Illinois to purchasers thereof at their respecti\e points of location in the various other States of the United States other than Illinois and in the District of Columbia. There is now and has been during the year last past 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 his business respondent is and has been in competition with other individuals lind with corporations and partnerships 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 sells and has sold to dealers and other purchasers various assortments of merchandise so Dll-Cked and assembled as to involve the use of a lottery scheme when sold and distributed to consumers thereof.

One of said assortments consists of a radio together with a device commonly called a punchboard. Said radio is distributed to the consuming public by means of said punchboard in the following manner:

On the face of said bqard appears a label bearing the following legend:

5¢ Fast Action No Waiting 5¢ WIN THIS $-------------------~ No. 100 WINS RADIO $16.50 Additional Winners $16.50 NOS. 150-200-250-300-31JQ-400-450--500- 50¢ In Trade WINS rio¢ in Trade Nos. 5~--6{)().-{l50-700-750-800-850-!)U0-DG0-1000-101J0-1100- 1150-12f~121J0-1300--13r~1400--14G0-11JOO-- 21J¢ In Trade WINS 25¢ in Trade CHARLES B. JOYCE CO. 1357 1355 Complaint LAST PUNCH In Each SECTION gets UO¢ in Trade The sales are 5 cents each, and when a punch is made from the board a number is discloseLl. The numbers begin with 1 and continue to the number of purchases there are on the board (1,500), but the numbers are not arranged in numerical sequence. The board bears a statement or statements informing the respective purchasers as to which number entitles the purchasers thereof to receive a radio and which numbers entitle the purchasers to rec-eive certain amounts of merchandise. A purchaser who does not qualify by obtaining the number calling for the radio or one of the designated numbers calling for awards of merchandise receives nothing for his money. The · radio and the merchandise awards are worth more than 5 cents each, and the purchaser who obtains the number calling for the radio or cne of the numbers calling for the merchandis~ receives the same for the price of 5 cents. The numbers are effectively concealed from purchasers and prospective purchasers until a punch or selection has been made and the number punched or separated from the board. The radio and merchandise are thus distributed to the purchasing Public wholly by lot or chance.

The respondent sells and distributes and has sold and distributed . various other assortments of merchandise involving a lot or chance f:ature but the sales plans or methods by which said merchandise is ~hstributed are similar to the ones hereinabove described, varying only ln detail. .

PAn. 3. Retail dealers who purchase respondent's merchandise di- ~ectly or indirectly expose and sell the same to the purchasing public 1U accordance with the sales plans aforesaid. Respondent thus sup- Plies to and places in the hands of others a means of conducting a lottery in the sale of his product in accordance with the sales plan hereinabove set forth. The use by respondent of said sales plan or method in the sale of his merchandise and the sale of said merchandise by and through the use thereof and by the aid of said sales ~Ian or method is a practice of a sort which is contrary to an established public policy of the Government of the United States. PAR. 4. The sale of merchandise to the purchasing public by th~ method or sales plan hereinabove set forth involves a game of chance or the sale of a chance to procure merchandise at a price much less than ~he normal retail price thereof. l\Iany persons, firms, and cor· Porahons who sell and distribute products in competition with re· spondent, as above alleged, are unwilling to adopt and use said lllethod or any method involving a game of chance or the sale of ll Findings 34F. T. C.

chance to win something by chance or any other method which is contrary to public policy and such competitors ·refrain therefrom. 1\fany persons are attracted by said sales plans or methods employed by respondent in the sale and distribution of his products and by the element of chance involved therein and are thereby induced to buy and sell respondent's products in preference to products of said competitors of respondent who do not use the same or equivalent methods. The use of said methods by respondent because of said game of chance has a tendency and capacity to unfairly divert trade in commerce between and among the various States of the United States and in the District of Columbia to respondent from his said competitors who do not use the same or equivalent methods. PAR. 5. The aforesaid acts and practices of respondent, as herein alleged, are all to the prejudice and injury of the public and of respondent's competitors and constitute unfair methods of compe· tition in commerce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Com· mission Act.

REPORT, FINDINGS .AS TO THE FACTS, .AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on the 26th day of March A. D. 1941, issued and thereafter served its complaint in this proceeding upon the respondent, 1\faurice L. Myers (named in the complaint as Morris L. Myers), an individual, trading as Charles B. Joyce & Co., charg· ing him 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.

After the issuance of the complaint and filing of respondent's answer thereto, testimony and other evidence in support o:f the allegations of the complaint were introduced by attorneys for the Commission before John ,V, Addison, a duly appointed trial examiner of the Commission designated by it to serve in this proceeding, and said testimony and other evidence were duly recorded and filed in the office of the Commission.

Thereafter the proceeding regularly came on for final hearing be· fore the Commission upon the complaint, the answer thereto, the testimony and other evidence, the trial examiner's report and brief in support of the complaint: And the Commission, having duly considered the matter and being now fully advised in the premise;, 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. CHARLES B. JOYCE CO. 1359 1355 li'indings FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Maurice L. Myers, is an individual, trading as Charles B. Joyce Co., with his principal place of business at 2425 North Halstead Street, in the city of Chicago and State of Illinois.

PAR. 2. Respondent for more than a year next preceding the issuance o£ the complaint herein has been, and now is, engaged in the sale and distribution of radios, clocks, flashlights, and other novelty merchandise to dealers and ot)ler purchasers thereof located in various States o:f the United States. Respondent causes said merchandise, When sold, to be transported from his place of business to the purchasers thereof located in vaz:ious States of the United. States, and during all of the time herein mentioned respondent has maintained a constant course of trade in commerce between and among various States of the United States, and has been, during such time, in competition with other individuals and with corporations and partnerships engaged in the sale and distribution of like or similar articles of merchandise in commerce between and among various States of the United States.

PAR. 3. Respondent, in the course and conduct of his business, sells and has sold to dealers and other purchasers various assortments of Inerchandise so packed and assembled as to involve the use of a lottery scheme when sold and distributed to the consumers thereof. One of said assortments consists of a radio, together with a device known as a "punchboard.". The radio is distributed to the consuming public by Ineans of the punch board in the following manner: On the face of said board appears a label bearing the following legend:

5t Fast Action No Waiting 5¢ WIN Tills $-------------------- No. 100 WINS RADIO ~16.50 Additional Winners $16.50 Nos. 15Q-2Q0-250-30Q-85o-400-450-500 5!>t In Trade WINS 00¢ In Trade Nos. 550--600--G50--700--75Q--80Q-850--900--95Q-1000--105Q-1100-- 115Q-1200--125Q-130Q--1350--1400--145Q-1500 25¢ In Trade WINS 25¢ In Trade LAST PUNCllln Each SECTION gets 50¢ In Trade Conclusion 34F.T.C.

The punchboard has 1,500 holes, each containing a slip of paper bearing a number which is not disclosed until the slip of paper is pushed from the hole. These numbers range from 1 to 1,500 and are not consecutively distributed. Punches are sold at 5 cents each, and the l'rizes listed are distributed in accordance with the legend appearing on the punchboard. A person who does not punch a number entitling him to a prize receives nothing for his money except the right to punch.

The radio and other prizes are worth more than the price of the punch, but are distributed to the winners without additional payment. The radio and other merchandise are thus distributed to the purchasing public wholly by lot or chance.

Respondent sells and distributes various other assortments of merchandise by means of games of chance, the sales plans differing only in detail from that hereinabove described.

PAR. 4. Persons who purchase respondent's merchandise, directly or indirectly, exhibit and sell the same to the purchas~ng public in accordance with the sales plan described in paragraph 3 hereof. Re- ~pondent thus supplies to and places in the hands of others the means of conducting a game of chance or lottery in the sale of his products. PAR. 5. Many of respondent's competitors are unwilling to and do not adopt and use any sales plan involving a game of chance or lottery scheme in the sale and distribution of their merchandise. Many persons are attracted by respondent's sales plan and by the element of chance involved therein and the opptrtunity to procure merchandise at a cost much less than its nominal retail price, and are thereby induced to buy and sell respondent's products in preference to products of competitors of the respondent who do not use the same or similar methods.

Respondent's sales methods have the tendency and capacity to, and do, unfairly divert trade in commerce between and among~ various States of the United Stutes to the respondent from his competitors who do not use the same or equivalent methods. CONCLUSION The aforesaid acts and practices of the respondent are all to the prejudice and injury of the public and of respond£>nt's competitors, and are contrary to the public policy of the United Stat£>s Government, and constitute unfair methods of competition in commerce nnd unfair and deceptive acts and practices in commerce, within the intent and meaning of the Federal Trade Commission Act. CHARLES B. JOYCE CO. 1361 135() Order ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Com- :rnission upon the complaint of the Commission, the answer of respondent, testimony, and other evidence in support of the allegations of the complaint taken before J. W. Addison, a duly appointed trial examiner of the Commission designated by it to serve in this proceeding, the report of the trial examiner, and brief in support of the complaint; and the Commission having made its findings as to the facts and its conclusion that the respondent has violated the pro- "Visions o£ the Federal Trade Commission Act. It i8 ordered, That the respondent, Maurice L. Myers, trading as Charles D. Joyce Co., or trading under any other name, directly or indirectly, or through any corporate or other device, in connection With the offering for sale, sale, and distribution · of radios, clocks, flashlights, or any other merchandise, in commerce as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Selling or distributing any merchandise so packed or assembled that sales of such merchandise to the public are to be made, or may he :made, by means of a game of chance, gift enterprise, or lottery scheme.

2. Supplying to, or placing in the hands of others punchboards, Push cards, or pull cards, or other lottery device, either with assort- :rnents of merchandise or separately, which said punchboards, push or pull cards, or other lottery device, are to be used, or may be used, in selling or distributing said merchandise to the public. 3. Selling or otherwise disposing of any merchandise by means of a game of chance, gift enterprise, or lottery scheme. It v; further ordered, 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 whichI he has complied with this order. · . 46G506'"-42-vol. 34-86 Syllabus 34 F. T.C.