Grand Rapids Furniture Co, Inc

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• IN THE MATTER OF GRAND RAPIDS FURNITURE CO., INC.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Doclcet .H63. Complaint, Feb. 11, 1911-Deeision, July 13, 1942 Where a corporation, eng:~ged ln competitive. Interstate ,;:ale and distribution of furniture-- Represented, through use of its corporate name, including. words "Grand Rapids." and through use, occasionally, of words "Grand Rapids" and "Grand Rapids Furniture" separately and independently of its corporate name, in news· papers of Interstate circulation, and by radio broadcasts, that furniture· off('red and sold by It, or a major portion thereof, was manufactured in Grand Rapids, Mich.:

The facts being that while in Its. early days it did purchase a major port! oil of Its furniture from manufacturers in Grand Rapids-long known as ail important center of the furniture industry, products of which, by reason of their reputation, for quality, style, and other desirable characteristics. are preferred by a substantial portion of the purchasing public, so tba.t dealers frequently use as a selling point said origin-such purchasing: had declined until in recent years it obtained not over 5 percent froJil · the city In question, and none of the specific articles referred to In said advertisements were In fact made there;

With tendency and capacity of ruisteading •and deceiving a substantial portion of the purchasing public in said respect, and result of thereby causiog: such public to purchase substantial quantities of its furniture because of such mistaken belief, whereby trade was unfairly diverted to it 'troJil its competitors who do not misrepresent the place of origin of their products:

Held, That such acts and practices, under the circumstances set forth, were all to the prejudice of the public and competitors, and constituted unfair methods of competition in commerce and unfair and deceptive acts and: practices therein;

ll3fore 11/r. lii iles J. Furnas, trial examiner. llfr. J. R. Phillips, Jr., and llfr. Carl·el /?. Rhodes for: the Corn~ mission.· 'llfr . .Aaron IleZler and llfr. Sol Eigen, of Passaic, N. J., 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 Grand Rapjd~ Furniture Co., Inc., a corporation, hereinafter referred to ns re~ GRAND RAPIDS FURNITURE CO., INC. 153 152 . qomplaln t 8P<lndent, has 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 itl:l charges in that respect as follows:

PARAGRAPil 1. Respondent, Gra11d Rapids Furniture Co., Inc., is a ·c~rporation, organized, existing, and doing business under and by " 1rtue of the laws of the State of New Jersey, with its office and Place of business located at 300-302 1\fonroe Street in the city of Passaic, State of New Jersey. Respondent is now, and for several Years last past has. been, engaged in the sale and distribution of household furniture to purchasers located at points in the various ~states of the United States, and causes and has caused said housebol~ furniture, when so sold, to be transported fr?m its place of Ustnes§l in the city of Passaic, State of New Jersey, to purchasers thereof in the State of New Jersey and to purchasers located in 1lther States of the United States. Respondent now maintains, and fo~ more· than 5 years last past has maintained, a course of trade in ~td household furniture in the State of New Jersey and in commerce tween and among the various States of the United States and in the Disiricf of Columbia.

PAn. 2. In the course and conduct of its business as aforesaid, the respondent is, and for more than 5 years last past has been, in ~ 0l11petition "·ith corporations, individuals, and partnerships located 111 the various States of the United States other than the State .of ~ew Jersey, who are engaged in the sale and distribution of house~ old furniture in commerce between and among the various States , of the United States and in the District of Columbia. Among the totnpetitors of the ·respondent are many corporations, individuals, and, partnerships who sell and distribute in New Jersey and in said ~ 0l11rnerce between and among the various other States of the United ~ate.s household furn~ture manufact?re.u and having its o~igin in . e Ctty of Grand Rapids, State of M1clugan, and others sellmg and {hstributing household furniture not having been manufactured in or. having ite> origin in the city of Grand Rapids, and who do not ~ 1Sl'epresent their business nor the quality or origin of their 0Usehold furniture.

t PAR. 3. In the course and conduct of its aforesaid business, and for he purpos~ of inducing the purchase of its said furniture, respondent ~'ll.lploys and displays, and for more than 5 years last past has employed ?nd displayed in its corporate name, in signs on the building in which lts business is located, and upon its stationery and invoices, and in (Jther ways, the words "Grand Rapids." Respondent has further repre- Complaint 35F. T.G.

sented by advertisements appearing in newspapers and other period~ icals or advertising media of general circulation, the following: Grand Rapids Furniture Co., Inc.

Grand Rapids Furniture Presents Endure for Many a Christmas to Come! PAR. 4. The city of Grand Rapids, :Mich., has been for many years and is now a large and important center of the furniture industry in the United States, a fact generally known to the public throughout the United States, and furniture m~nufactured there has for many years enjoyed and now enjoys a widespread popularity, reputation, good will, and demand throughout the United States as possessing depend· able quality and other desireable charal'teristics. By reason of the widespread reputation, popularity, and good will enjoyed by furniture made in Grand ~apids, .Mich., throughout the United States, there is a substantial portion of the purchasing public which prefers to pnr· chase household furniture manufactured in the city of Grand Rapids, believing that in so doing it secures a superior quality and other ad· vantages not ordinarily obtainable in furniture manufactured and originating in places other than Grand Rapids, Mich. PAR. 5. Through the use of the statements and representations here· inabove set forth and others similar thereto not specifically set out herein, the respondent has represented that the furniture sold by it is manufactured in Grand Rapids, .Mich., and that the respondent deals exclusively in furniture manufactured and originating in the city of Grand Rapids, l\fich.

PAR. 6.· The aforesaid representations made by respondent are f:ilse nncl misleading. In truth and in fact, only a very small portion of the furniture sold by respondent is made in Grand Rapids, Mich. The , respondent, in truth and in fact, sells furniture manufactured and originating generally in cities other than the city of Grand Rapids, Mich.

PAn. 7. The use of the,words "Grand Rapids" in the corporate name of the respondent "Grand Rapids Furniture Co., Inc." and the I"epresentations made in its advertising, directly or by· inference, that it deals exclusively in furniture manufactured and originating in the city of Grand Rapids, Mich., has the tendency and capacity to, and does, mislead and deceive a substantial portion. of the purchasing public into the erroneous and mistaken belief that furniture purchased from the said respondent is made in Grand Rapids, Mich.; and as B result of such belief, so engendered the public is induced to. purchase substantial quantities of furniture from respondent, thereby unfairly diverting to respondent' trade from its said competitors in commerce between and among the several States ofthe United States and in GRAND 'RAPIDS FURNITURE CO., INC. 155 152 Findings the District of Columbia who do not use the same or equivalent methods; to exclude from the furniture trade competitors in said commerce . ~ho. do not use the same or equivalent methods of advertising; and ~lessen competition in said furniture business and to deprive the pure asing public of the benefit of free competition in the furniture trade. The use of the said, methods in th,e State of New Jersey byihe ·re · spondent has a direct, burdensome, and retarding effect upon the normal flow of interstate commerce in furniture manufactured and Originating in the city of Grand Rapids, Mich., heretofore described, nloving from other States of the United States into the State of :New Jersey, by reducing shipments of such furniture in interstate commerce to. the State of New Jer~ey, retarding the normal increase in "volume of such goods shipped in interstate commerce to the State ?f New Jersey, and in some instances causing a complete cessation of erstate movement of said Grund Rapids furniture sought to be llppeu in intel·state commerce to the State of New Jersey. The use ~f said method~ by respon~ent has a tendency and capacity to eliminate rom the furmture trade m the State of New Jersey all actual com- !Mitors from the city of Grand Rnpids, Mich., who sell their furniture the State of New Jersey and to exclude therefrom competitors whol? 0< not adopt and use said methods or eq~ivalent methods. t :PAR. 8. The aforesaid acts and practices of the respondent are all 0 the prejudice of the public and of respondent's competitors, and constitute unfair methods of competition in commerce and unfair nnd deceptive acts and practices in commerce -\within the intent and meaning of the Federal Trade Commission Act. REPOIIT, FINDINGS AS TO THE FACTS, AND ORDER ti Pursuant to the provisions of the Federal Trade Commission Act, le Federal Trade Commission, on February 11, 1941, issued and sub- ~quentiy served its complaint in this proceeding upon the respondent, tll'anJ Hapids. Furniture Co., Inc.,. a. cmyoration, charging it. with d le U:;e of unfair methods of competition m commerce and unfair and :ceptive acts and practices in commerce in violation of the provisions 0 that act. · After the filing of respondent's answer, testimony and ?ther evidence in support of the allegations of the complaint were lll.~produced by the attorney for the Commission (no testimony or other evidence in opposition thereto being offered by the respondent), before a t~ial examiner of the Commission theretofore duly designated by it, ~htch testimony and other evidence were duly recorded and filed in the 0 Bee of the Commission. Thereafter, the proceeding regularly came on for final hearing before the Commission on the complaint, the 156 FEDERAL TRADE COMMISSION DECISIO!NIS , Findings 35F. T.C. . answer thereto, testimony and other evidence, report of the trial examiner upon the evidence and the exceptions to such report, briefs in support of and in opposition to the complaint, and oral argument; and the Commission, having duly considered the matter and being now fully advised in the premises, finds that this proceeding is in the inter- .est of the public and makes this its findings ~s to the facts and its conclusion drawn therefrom:

FINDINGS AS TO THE FACTS PAR.-\GRAPH 1. The respondent, Grand Rapids Furniture Co., Inc., is a corporation organized and existing under the laws of the State of New Jersey, with its office and pla~e of business located at 300-302 .Monroe Street, Passaic, N.J. Respondent is now and since the y~Jar 1V25 has been engaged in the. sale and distribution of household furniture.

PAR. 2. In the course and conduct of its business the respondent sells and has sold its furniture to purchasers located in States of the United States other than the State of New Jersey, and causes and has caused its furniture, when sold, to be transported from its place of business in the State of New Jersey to such purchasers located in other States. PAR. 3. In the sale and distribution of its furniture the respondent is now, and at all times mentioned herein has been, in competition with other corporations and with individuals and partnerships engaged in ihe sale and distribution of household furniture in commerce among .and between the various States of the United States. PAR. 4. In the course and conduct of its business and for the purpose of inducing the purchase of its furniture, respondent has advertised . its furniture by various means, including the distribution of advertising circulars among prospective purchasers and the insertion of advertisements in newspapers having a circulation not only in the State of New Jersey but in other States of the United States as well. Respond· mt has also advertised, to a limited extent, by means of radio continu- Hies broadcast from a radio station located in Jersey City, N.J. In respondent's advertising the words "Grand Rapids" and "Grand Rapids Furniture" have been prominently displayed. 'While these words have usually been employed only as a part of and in connection with respondent's corporate name, they have occasionally been used -separately and independent of the corporate name. For example, one newspaper advertisement in December 1940 contained, at the top thereof, the statement in prominent type, "Grand Rapids Furniture presents endure for many a Christmas to come." At the bottom of this :advertisement the corporate name also appeared. GRA...'l"D RAPIDS FURNITURE C0. 1 INC. 157 152 Conclusion PAn. 5. Through the use of these advertisements, including the use of the words "Grand Hapids" in its corporate name, the respondent has represented that the furniture offered for sale and sold by it, or the tnajor portion thereof, is manufactured in the city of Grand Rapids, Mich PA~. 6. In the early days of its business operations; respo~dent did Purchase the major portion of its furniture from manufacturers located in Grand Rapids, Mich., but beginning about 1930 the proportion ·of such furniture sold by respondent declined rapidly, and this decline has continued down to the present time. During recent years, respondent has obtained only a very s111all proportion of its furniture, not over ~Percent, from Grand Rapids. The remaining 95 percent is obtained from various sources throughout the United States. .None of the 1~Pecific ·articles of furniture referred to in the advertisements mentiol~ed above were in fact manufa~tured in Grand Rar)ids. PAn. 7. For many years the city of Grand Rapids, :Mich., has been known not only in the trade but to the purchasing public generally as a large and important center of the furniture industry. Furniture ~anufactured in Grand Rapids enjoys a distinct reputation for qual- .Jty, style, and other desirable characteristics, and by reason of such reputation there is a preference on the part of a substantial portion of the purchasing public for such furniture. Th,e record discloses that, >vhen undertaking to sell furniture which is in fact manufactured in Grand Rapids, dealers frequently use successfully as a selling point the fact that the furniture is Grand Rapids furniture. · ·PAn. 8. The Commission finds that the use by the respondent of the ;epresentations herein referred to, including the use of the words 'Grand Rapids" in respondent's corporate name, has the tendency and capacity to mislead and deceive a substantial portion of the purrhasing public into the erroneous and mistaken belief that resp.ondent's furniture is manufactured in Grand Rapids, Mich., and the tendency and capacity to cause such portion of the public to purchase substantial quantities of respondent's furniture as a result of such erroneous and mistaken belief. In consequence thereof, substantial trade has been diverted to the respondent from its cop1petitors, among . IVhom are those who do not misrepresent the place Qf origin of their Products.

CONCLUSION The 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 and unfair and ~leceptive acts and practices in commerce will;l.in the intent and mean- Ing of the Federal Trade Commission Att.

509749m--43--vol.35----13 158 FEDERAL TRADE COMl\IISSION DE,CISION1S Order 35F.T.C~ ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commis· sion upon the c.complaint of the Commission, the answer of the re· spondent, testimony and other evidence taken before a trial examiner of the Commission theretofore duly designated by it, in support of the allegations of the complaint (no testimony or other evidence being offered by respondent), the report of the trial examiner upon the evidence and the exceptions to such report, briefs in support of and in opposit.ion to the complaint, and oral argument, and the Commis·.· sion having made its findings as to the facts and its conclusion that tho respondent has violated the provisions of the Federal Trade Commission Act. · .

·It is ordered, That the respond(lnt, Grand Ra.pids Furniture Co., Inc., a corporation, and its officers, 'agents, representatives, and em· ployees, directly or through any corporate or other device, in connec· tion ·with the offering for sale, sale, and distribution of respondent's furniture in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Using tho words "Grand Rapids," or any simulation thereof, as a part of respondent's corporate name.

2. Using the words "Grand Rapids," or any simulation thereof, to designate, describe, or refer to furniture which is not in fact manu· fnctured in Grand Rapids, Mich.

3. l~isrepresenting in any manner the place of origin or manu· fnctl!-re of respondent's furniture. · It is further ordered, That the respondent shall, within 60 days after service upon it of 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 •.

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IXCO:\IE AUDIT SERVICE CORP. ET AL •. 159 Complaint