Esther Zitserman

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IN THE MATTER OF ESTHER ZITSERMAN TRADING AS J. M. HOWARD CO. C03fPLATXT, prXDINGS , AXD OUDERS 1l\ HEGAHD TO THE .\ALLEGED YIOLATIOX OF SEC. ;) OF A T ACT OF C01\ G1:ESS All' IWYED SF-PT. 20 , 101-1 Docket 57/17. Complaint, Jam, 1950-Decision, Nov. , 1951 The Commission is of the opinion that the distribution in commerce of devices which aid and encourage merchamhsing by gambling is contrary to the interest of the public.

Merchandising by gambling should not be diyil1ed into isolated acts, which when examined separately, mip;ht appear innoccnt, and in said connection both the gamblers and those who furnish them with the instrumcntalities by means of which merchandising by gambling is conducted, are engag-ed in practices contrary to public policy, Where an imlividual engaged in the manufacture and interstate sale and dis tribution of push carels flIrl punchhoards which, bearing appropriate explanatory legends and depictions (01' space therefor), were designed for use by retailers in the sale and distribution of merchandise to thc public by means of a game of chance, under plans whereby the purchasers of a punch or push who by chance selected concealed winning numbers became entitled to designated articles of mcrchaudise without additional cost, at IJrices which were much less than their normal retail prices, others receiving nothing fol' their money other tb 1l the privilege of a push or punch- Sow ami distributed such devices to dealers in candy, rig'arettes, pipes, clocks razors, cosmetics and other' articles, assortments of 'vllich, along with said devices, were made up Dy saw dealers and exposcl1 anu soll! by the retailer purchasers to the pmchasing public wholly by lot or clw, nce in accordance with the aforesaid plan; rind therellY sllpplied to and placed ill the hamls of retailers the means of conducting :otterics or gflmes of chance in the sale and (hstrilmtion or merchandise to the general Imblie, and IOlOwin ,,ly anel purposely assisted and participated in the violation of an established public policy of tJle United States Governmcnt;

\With the result that gambling allong members of the public was taught and filcouraged, to its injury, and said individual thus polluted the stream of interstate commerce by supplying to and placing in the hands of others instrumentalities for engaging in nnfnir acts and practices within the intent :liel meaning of the li'ederal Trade Commission Act: Hew- That such acts and prflctices, under the circumstances set forth, lvere all to tlJe prejudice and injury of the rmblic alld constituted unfair acts allel practices in commerce, As respects respondent' s appeal from the bearing examiner s initial decision in the instant matter on tlle g-round that: tbe proceccling was not in the interest of the public, since prohibiting respondent from sellng lottery dcYices in commerce '''Quid not eliminate the unfair practice, whicb was the llistribu- J. M. HOWARD CO. 479 478 Complaint Hon of merchandise by lottery: the hearing examiner correctly concluded that respondent' s acts and practices were to the injury of the public. With regard to said appeal and the second ground relied upon in support thereof namely, that respondent did not receive a fair hearing as the hearing ex. aminer arbitrarily refused to consider evidence to the effect that competition was not affected by the sale of pnnchbourds in commerce, that use thereof' in the sale or merchandise did not divert trade, and that consequently their use did not constitute an unfair method of competition: The hearing examiner ruled correctly in rejecting such evidence as immaterial to the issues in the matter, in view of the fact that the complaint did not allege that respondent's practices constituted an unfair method of competition, but alleged that her practice of supplying to others the means of conducting lotteries in the sale or distribution of merchandise was in and of itself an unfair act and practice. so that the effect thereof upon competing sellers of merchandise was immaterial. Before llfr. FJ'arnk Bier trial examiner. Mr. J. W. Brookfield, Jr. for the Commission. Mr. J. R. Mulliner of Salt Lake City, Utah, and Mr. F. W. James of Evanston, 111., 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 Tra.de Commission, having reason to believe that Esther Zitserman individually and trading as J. M. Howard Co., hereinafter referred to as the respondent has violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in regard thereto would be in the pllb11c interest: hereby issues this complaint hy stating its charges in that respect as follows:

PARAGRArn 1. Respondent, Esther Zitserman, is an individual trad ing and doing business as J. :L Howard Co. with her offce and principal place of business iDeated at 117 Sylvan Avenue in the city of N ewnrk, New Jersey.

Respondent is now and has been for more than three years last past engaged in the sale and distribution of devices commonly known as push cards and pUIlchboards and in the sale and distribution of said devices to dealers in various articles of merchandise in commerce bebveen and among the various States of the United States and in the District of Columbia and to dealers in various articles of merchandise in the various States of the United States and in the District of Columbia.

Respondent causes and has caused said devices when sold to be transported from her place of business in the State of New Jersey to pur- 21::840--54- Complaint 48 F. T. O. chasers thereof at their points of location in the various States of the United States, and in the District of Colmnbia. There is now and has been for more than three years last past a course of trade in such devices by said respondent in commerce between and among the various States of the L'united States and in the District of Columbia. PAll. 2. In the course and conduct or her said business as described in Paragraph One hereof, respondent sens and distributes, and has sold and distributed, to said dealers in merchandise, push cards and punchboarc1s so prepared and arranged as to involve games of chance gift enterprises or lottery schemes when llsed in making sales of merchandise to the consuming pubbc. Respondent sells and distributes and has sold and distributed many kinds of push cards and punchboards, but all of said devices involve the same chance or lottery features when used in connection with the sale or distribution of merchandise and vary only in detail.

1\lany of said push cards and punchboards have printed on the faces thereof certain legends or instructions that explain the manner in which said devices arc to be used or may be llsed in the sale or dis. t.ribution of various specified articles of merchandise. The prices or the sales on said push cards and punchboards vary in accordance with the individual device. Each purchaser is entitled to one punch or push from the push enid or punchboarcl and whe,n a push or punch is made, a disc or printed slip is separated from the push card or punch board and a nmnber is disclosed. The numbers tlle effectively concealed from the pure-hasel's and prospective purchasers until a selection has been made and the push or punch completed. Certain specified numbers entitle purchasers to designated articles of merchandise. Persons securing lucky or winning numbers receive arti. cles of merchandise vdthout additional cost at prices which are much less than the normal retail price of s8id articles of merchandise. Persons who do not secure sllch lucky or winning numbers receive nothing for their money other than theprivileg-e of making a push or punch from said card or board. The articles of merchandise are thus distributed to the consuming or purchasing public wholly by lot or chanee.

Others of said push card and pl1nchboard devices have no instructions or legends thereon but have hlank spaces provided therefor. those push cards and punchboarcls the purchasers thereof place instructions or legends which have the same import and meaning as the instructions or legends placed by the respondent OIl said push card and punch board devices first hereinabove described. The only use to be made of said push card ,md punchboard devices, and the only J. M. HOWAHD CO. 481 478 Complaint manner in which they are used, by the ultimate purchasers thereof is in combination \with other merchandise so as to cnable said ultimate purchasers to sen or distribute said other merchandise by means of lot or chance as hereinabove alleged.

PAR. 3. Many persons, firms and corporations who sell and distribute and have sold and distributed candy: cigarettes: clocks razors cosmetics, clothing, and other articles of merchandise in commerce bet.ween and among the various States of the United States and in the District of Columbia: purchase and have purchased respondent's said push card and punch board devices, and pack and assemble, and have packed and assembled, assortments comprised of va,rious articles of merchandise together with said push cards and punchboard devices. Retail dealers who have purchased said assortments either directly or indirectly have exposed the salTe to the purchasing public and have fold or distributed said articles of merchandise by means of said push cards and punchboards in accordance with the sales plan as described in Paragraph Two hereof. Because of the element or chance involved in connection with the sale and distribution of said merchandise by means of said push cards and punchboards, many members of the purchasing public have be,en induced to trade or deal with retail dealers sening or distributing said merchandise by means thereof. a result thereof, many retail dealers have been induced to deal with or trade with manufacturers, wholesale dealers and jobbers who selI and distribute said merchandise together with said devices. PAn. 4. The sale of merchandise to the purchasing public through the use of, or by means of, such devices in the rnanner above alleged involves a game or chance or the sale of a chance to procure articles of merchandise at prices much less than the normal retail price thereof and teaches and encollrages gambling among members of the pllb1ic a11 to the injury of the public. The use of said sales plan or methods in the sale or mercha,nclise and the sale of merchandise by and through the l.1Se thereof, and by the aid of said sales pla.n or method is a practice which is contrary to an established public policy of the Government or the United States and in violation of crirninallaws, and C011titlltes unfair acts and practices in said commerce. The sale or distribution or said push cards and pul1chboard devices by respondent as hereinabove alleged supplies to and places in the hands of others the means of conducting lotteries, games of chance or gift enterprise in the sale or distribution of their merchandise. The respondent thus supplies to, and places in the hands of said persons firms and corporations the means of, and instrumentalities for, en- Decision 48 F.

gaging in unfair acts and practices within the intent and meaning of the Feclera 1 Trade Commission Act.

PAR. 5. The aforesa.id acts and practices of respondent as hereinabove alleged are all to the prejudice and injury of the public and constitute unfair acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. ORDERS AND DECISION OF THE COMMISSION Order denying respondent's appeal from initial decision of the hearing examiner and decision of the Commission and order to file report of compliance, Docket 5737, Kovember 29 , 1951, follows: This matter came on to be heard by the Commission upon the respondent' s appeal from the hearing examiner s initial decision herein and the brief in opposition thereto filed by counsel in support of the complaint.

The grounds reJiedllpon iu support of said appeal are (1) that this proceeding is not in the interest of the public, as prohibiting respondent from selling lottery devicrs in commerce will not eliminate the unfair practice which is the distributing of merchandise by lottery, and (2) that respondent did not receive a fair hearing as the hearing examiner arbitrarily refused to consider certain evidence. The Commission is of the opinion that the distribution in commerce of devices which aid and encourage merchandising by gambling is contrary to the interest of the public. :Mrrchnndising by gambling should not be divided into isolated acts, which when examined separately may appear innocent. The gamblers and those who furnish them with the instrumentalities by means of which merchandising by gambling is conducted are both engaged in practices contrary to public policy. The hearing examiner, therefore, correctly concluded that respondent's acts and practices were to the injury of the public. Respondent' s contention that she did not receive a fair hearing relates to the ruling of the hearing examiner striking from the record the testimony of 'witness \Y. J. Jennings and his refusal to receive the testimony of certain other witnesses, all of which testimony being to the effect that competition is not affected by the sale of Pllllchboards in commerce, that the use of punchboarc1s in the sale of merchandise does not divert trade and that consequently their use. does not constitute. an unfair method of competition. Inasmuch as the comp1oint herein does not allege that respondent's practice constitutes an unfair method of competition but alleges that respondent' s practice of supplying to others the means of conducting lotteries in the sale or dis- J. M. HOWARD CO. 483 478 Decision tribution of merchandise is in and of itself an unfair act and practice, the effect of the said practice upon competing sellers of merchandise is immaterial1. The hearing examiner, therefore, ruled correctly in rejecting this evidence as being immaterial to the issues in this matter. The Commission, therefore, being of the opinion that the respondent."s appeal is ,yithol1t lnerit nnd that the hearing examiner s initial decision is appropriate in all respects to dispose of this proceeding: It i8 ordered That the respondent's appeal from the hearing examiner s initial decision be, and it hereby is, denied. It i8 furthe1' ordered That the initial decision of the hearing eXaminer shall on the 29th day of :'ovemher 1951, become the decision of the. Commission.

I t is further or-del. That the respondent Esther Zitserman shall within sixty (GO) days after service upon her of this order, file with the Commission a report in writing setting forth in detail the manner and form in which she has complied v,ith thc order to cease and desist. Commissioner Iason concurring in this decision insofar as it rclates to the findings as to the facts anc1conclusion, but not conc-nrring in this decision insofar as it relates to the form of order to cease and desist, for the reasons stated in his opinion concurring in part and dissenting in part in Docket o. 520::\ \V ortlunore Sales Company. Said initial decision, thus adopted by the Commission as its deeision follows:

IXITL\L DECISlOX BY FRA K HIER, TRIAL EXA::IlNER Pursuant to the provisions of the Federal Trade Commission Act the, Fe,loral Trade Commission on J annary 25, 1950, issued and subsequently served its complaint in this proceeding upon respondent Esther Zitserman, charging her with the use of unfair 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 thereto, hearings ,were he,lel at which testimony and other evidence in support of and in opposition to the allegations of said complaint were introduced before the above-named trial examiner theretofore duly designated by the COlllllllssion, and said testimony and other evidence ,were duly recorded and filed in the offce of the Commission. Thereafter,r, the proceeding regularly came on for final consideration by said trial examiner on the complaint, the answer thereto, te,stimony and other evidence, proposed findings as to the facts ilnd conclusions presented by counsel; and said trial examiner, having duly considered the, record herein, finds that this proceeding is in the interest of the l1"indings 48 F. T. C. public and makes the following findings as to the facts conclusion drawn therefrom, and order:

FINDIKGS AS TO THE FACTS PAHAGRAI'II 1. Respondent Esther Zitserman is an individual trading and doing business as J. :M. Howard Co., with her offce and principal place of business located, since 1940, at 117 Sylvan Avenue Newark, K ew J crscy. Prior to 1940, she was Jocated in Philadelphia Pennsylvania.

Respondent is now and has been for many years engaged in the manufacture, sale and distribution of devices commonly kno-wll as push cards and punch boards to dealers in various articles of merchandise in commerce between and among the various States of the United States and in the District of Columbia. and to dealers in various articles of merchandise in the various States of the United State, and in the District of Columbia.

PAR. 2. Respondent causes and has caused said devices when 801(1 to be transported from her place of business in the State of K ow J ersev to purchasers thereof at their places of business located in the various States of the United SULtes and in the District of Columbia. There is and has been for many years a constant course of trade. in such devices by said respondent in commerce between and among the various States of the United States anel in the District of Columbia. p AR. j. In the course and con dud of her b11siness, as hcrcinabove described, responelent sells anel distributes and has sold anel distributed to sa.id dealers in various merchanc1ise push cards and punchboards designed prepared and arranged for e by retailers in the sale and distribution of merchandise to the public by means of a game of chance, gift enterprise or lottery scheme. Respondent sells and distributes and has sold anel distributed many kinels of push cards and punchboards, which vaTY in detail but all involve the smne l)principle of merchandise distribution by chance or lottery. Some of said push carels and punchboards have printeel on the faces thereof, legends or instructions which explain the manner in which aid devices are to be used or may be used in the sale or dist.riblltion various specified articles of merchandise. The prices of the sales on t.these push carels and punchboards vary with the individual device. Each purchaser is entitled to one punch or push from the push card or punchboard, and when a push or punch is made\ a. disc or printed slip is separated from the push ca.rd of punchboard and a. number is disclosed. The number is dfectively concealed from the purchaser or J. M. HOWARD CO. 485 478 Findings prospccti ve purchaser until a selection has been made, the price of the punch paid and the push or punch completed. Certain specified numbers entitle purchasers to designated articles of merchandise. Pureha,sers securing lucky or winning numbers receive articles of merchandise without additional cost at prices which are much less than the normal retail price of said articles of merchandise. Purchasers who do not secure such lucky or winning numbers receive nothing for their money other than the privilege of making a push or punch from said card or board. The articles of merchandise are thus distributed to the public ,.holly by lot or chance.

Some of these push cards and punchboarc1s bear picturizations of various articles of merchandise, such as candy, cigarettes, pipes, etc. Others have no pictures, legends or instructions but have blank spaces provided for the insertion thereon by the purchaser of the device of his own instructions and a statement of the merchandise to be ay., ardecl by chance as prizes. The only use to be made of any of these push card and punchboard devices and the only manner in which they are used, by the ultimate purchasers . thereof, is for the distribution of merchandise, sneh as candy, cigarettes, pipes, etc., by means of lot or chance, as hereinabove described.

\.R. 4. Persons, firms and corporations who sell and distribute and have sold and distributed candy, cigarettes, pipes, clocks, razors cosmetics and other articles of merchandise in commerce between and among the various States of the United States and in the District of Columbia purchase and have purchased respondent's push card and punchboard devices, and pack and assemble and JlftVe packed and assembled assortments composed of various articles of mercha.ndise, together with said push card and punchboard devices and have sold such combinations in commerce to retailers. Retail dea.lers who have purchased said assortments or combinations, either directly or indirectly, have exposed the same to the purchasing public and have sold or dis tributecl the merchandise so assembled and combined as outlined hereinabove in Paragraph Three.

PAR. 5. Respondent thus supplies to and places in the hands of retail dealers, through the channels of interstate commerce, either directly or indirectly, the means of conducting lotteries or games of chance in the sale and distribution of merchandise to the general public and teaches and encourages gambling among members of the public to iis injury. The sale of merchandise by and through such means and methods is a practice which js in contravention of an established public policy of the Government of the United States and respondent, through the supplying of such means, kno,.i11gly and pur- Order 48 F.

posely assists and participates in tbe violation of sucb policy. Respondent thus pollutes the stream of interstate COllmerc.e by supplying to and plncilJg in the hands of other persons, firms and cOl'pol'a- 60118 the means of and the instrumentalities for engaging in unfair acts and practices "within tbe intent and meaning of the Federal Trade Commission Act.

CONCLUSION The aforesaid acts and practices of respondent, as hereinabove described, are all to the prejudice aud injury of the public and constitute unfair acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

ORDER It is ordc'Jcd That the respondent, Esther Zitsennan, individually, and trading as J. 11. Howard Co., or under any other name, her agents representatives, and employees, directly or tl1Tough any corporate or other device, do forthwith cease and desist from selling or distributing in commerce, as " commerce" is defined in the Federal Trade Commission Act, punchboards, push cards, or other lottery devices which are to be used, or which may be used, in the sale and distribution of merchandise to the public by means of a game of chance, gift enterprise or lottery scheme.

ORDER TO FILE REPORT OF co:rrrLIAXCE It i8 further ordered That the respondent Esther Zitserman shall within sixty (60) days after service upon her of this order, file with the Commission a report in v.;writing setting forth in detail the manner and form in which she has complied with the order to cease and desist (as required by aforesaid orders aed decision of the Commission). ;;

NEO-MINEHAL CO, ! INC. , ET AL, 487 Syllabus