Hoffman & Dengrove, Inc., et al

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IN THE MATTER OF HOFFMAN & DE:\GROVE INC. ET AL COMPLAINT, FINDINGS , AND OIWER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26 , 1914 , AND 0:1" AN ACT OF COXGHESS APPROVED OCT; 14, 1940 Docket 568-1-. Complafnt, July 20, 1949-Decision, Jan. 10, 1952 Where a corporate wholesale distributor of woolen piece goods and an individual engaged in the offer, sale and distribution in commerce of wool products as defined in the Wool Products Labeling Act, including- certain bolts of piece goods \vhicb, composed of about 50 percent wool and 50 percent viscose rayon, represented, invoiced and ticketed, as all wool, 'There the subject of sale in a number of transactions- Misbranded said bolts of piece goods in that when sold and transported in commerce as aforesaid, they did not have affxed thereto a stamp, tag, label or other means of identification show:ng their constituent fibers ami percentages thereof and the name or registration number of the manufacturer or a subsequent seller, as provided in said Act and Hules and Hegulations promulgated thereun(le1':

Held, That such acts and practices, under the circumstances set forth, were in violation of the provisions of said Act anu Rules and constituted unfair and deceptive acts and practices in COmmerce, In said proceeding, while the Commission denied l'eSIJOuclent' s appeal from the hearing examiner s initial decision, the Commission was of the opinion that said decisioll was deficient in that the order therein (1) was incorrectly limited to products containing or repre.sented HS containing "wool" and did not relate to products containing' "reprocessed wool" or "reu,'3ed wool" , and (2) did not contain any requirement that the stamp, tag, label or other means of identification affxed to a wool product contain tlle name 01' regis. tration number of the mannfactUl'el' 01' a subsequent seller as provided in the Act and Rules; and made finuings, c:onculsion lll'awn therefrom and order in lien of such initial decision.

Before 1111'. Randolph FTe,ton and J1I. Clyde ill. Hadley, hearing examiners.

3fT. Jesse D. l( ash for the Commission.

Guzik cf Engel of New York City, for I-Ioffman & Dengl'ove, Inc. lfl'. lla1"uey L. Ganlncl' of Nerv York City, for Leon Levy. COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and the \V 001 Products Labeling Act of 1939, and by virtue of the authority vested iu it by said Acts, the Federal Trade Commission ha.ving reason to believe that Hallman & Dengrove, Inc., a corporation HOFFMA:\ & DE GROVE , INC., ET AL. 665 664 Complaint and Leon Levy, an individual, hereinafter referred to as respondents have violated the provision of said Acts and Rules and Regulations promulgated under the VV 001 Products Labeling Act of 1939, 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:

P AHAGHAPH 1. Hoft' man & Dengrove, Inc., is a. corpora.tion organized existing and doing business under' and by virtue of the laws of the State of :\ ew Yark, with its offce and principal place of business locate,d at 352 Fourth Avenue, New York, New York. Said respondent is now and for more than a year last past has been engaged in the wholesale distribution of piece goods in bolts. Respondent Leon Levy is an individual with his offce and principal place of business located at 3720 Gwynn Oak Avenue, Baltimore :Maryland. Saiel respondent is now and for more than one year last past has been engaged in the sale of piece goods in b~Its, some of which are sold and have been sold to the aforesaid respondent, Hoffman & Dengrove, Inc.

PAR. 2. Hesponclents' saiel wool products are composed in whole or in part of wool, reprocessed wool or reused wool, as those terms are defined in the IV ooj Products Labeling Act of 1939, and such products are subject to the provisions of said Act and the Rules and Regulations promulgated thereunder. Since July 15, 1941, respondents have violated the provisions of said Act and saiel Rules and Regulations in the manufacture for introduction, and in the introduction into commerce and in the sale, transportation and distribution of said wool proclncts in said commerce, by causing said wool products to be misbranded within the intent anclmeaning of said Act and said Rules ancl Regulations.

PAn. 3. Among the wool products manufactured for introduction into commerce by respondents and introduced into C011merce, sold transported and dist.ributed in commerce by respondents are piece goods in bolts. Exemplifying respondents' practice of violating said Act and the Rules and Hegulations promulgated thereunder is their misbranding of the aforesaid wool products in violation of the provisions of said Act and the said Rules and Regulations by failing to affx to said wool products a stamp tag, label or other means of iclenti f-ication, or a substitute in lieu thereof, as provided by said Act showing (a) the percentage of the total fiber weight of the wool product exclusive of ornamentation not exceeding five percentllm of said total , (4)fiber ,, cight, of (1) wool, (2) reprocessed wool, (3) reused wool each fiber other than 1\001 where said percentum by weight of such fiber was Ii VB percentum or more, and (is) the aggregate of all other 666 FEDERAL TRADE CO:\L\USSION DECISIONS Decision 48 F. T. C.

fibers; (b) the maximum percentage of the. tot.al weight of the wool product or nonfibrolls loading, filling, or adulterating matter; (c) the percentages in words and figul'PS plainly legible by weight of the wool content of such wool product where said wool product contains a fiber other than wool; (d) the name of the manufacturer of the wool product, or the manufacturer s registered identification number and the name or a seller or resener of the product as provided for in the Rules and Regulations promulgated under such Act or the name or one or 110re persons subject to section 3 or saiel Act with respect to such wool prod uet.

The misbranded wool products referred to above were introduced, sold, transported, distributed, delivered for shipment, shipped, and offered ror sale, in commerce, by each of the respondents. P AH. 4. The aforesaid acts, practices and methods of the respondents as alleged herein, were and arc in violation of the Wool Products Labeling Act of 1939 and the Rules and Regulations promulgated thereunder, and constitute unfah' and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

DECISlO " OF THE COl\I1\ISS!OX AND ORDER TO FILE REPORT OF CO::IPLL-.!'rCB Pursuant to the provisions of the Federal Trade Commission Act and the \Vool Prod nets Labeling Aet of 1939, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission, on J u1y 20 , 1949, issued and subsequently served its complaint in this proceeding upon the respondents named in the caption hereof, charging them with the use of unfair and deceptive acts and practices in commerce in violation of t.he provisions of those Acts. After the filing cd respondents' answers, testimony and other evidence in support of and in opposition to the allegations of the complaint were introduced before a hearing exmniner of the Commission theretofore duly designated by it, and such testimony and other evidence ",were duly recorded and filed in the offce of the Commission. Respondent Leon Levy, on motion duly granted by the hearing examiner, then ",vithdrew his original answer and filed a substitute answer in lieu thereof admitting all material allegations of i'act set forth in said complaint and \vaiving all intervening procedure and hearings as to said facts. Thereafter on January 12 , 1951, a substitute hearing examiner, duly designated by the Commission, fi0d his initial decision herein (the original hearing examiner having retired and, therefore, being unavailable). \Within the time permitted by the Commission s rules of practice counsel for respondent IIoilman & Dengrove, Inc., filed with the Coll- HOFFMAN & DE:'GROVE , INC., ET AL. 667 664 Findings lnission an appeal from said initial decision. Thereafter this proceeding regularly came on for final hearing by the Commission upon the record herein, including the briefs in support of anel in opposition to the appeal and oral argument of counsel, and the Commission llCcl its order denying said appeal.

The Commission is of the opinion, however, that the hearing eX- Hmil1er s initial decision is dciicient in certain respects, including (1) that the order therein is incorrectly limiteel to products containing 01' represented as containing ;;'1'001" and does not relate to products containing "reprocessed wooF or ';rcused wool ': and (2) that the order thcrein does not contain any requirement that the stamp, tag, label or other means of identification uflxed to R ''1001 product contain the lHune. or registration number of the manufacturer or a subsequent seller of such product, as provided in the ,Vool Products Labehng Act of 193D and the Hnks and Regubtions promulgated theremHler. Thel' efore, the Commission, being now fully advised in the premises finds that this proceeding is in the interest of the public and makes the folJo\ying findings as to the fac:ts, conclusion dnnyn therefrom and order, thc snme to be in lieu of the initial decisioll of the hearing eXUHnner.

ITXDIXG8 ,\8 TO TI-IEL\.CTS PARAGIL\.PH 1. Respondent .Hoffmall &. Dcngroye, Inc., is a. corporation organized, existing nncl doing business under and by virtue of the laws of the State of )Jew York, with its offce and principal place of business located at 23-1. Fourth .:\.xcnue, Xe\, York, 1\ew York. Re::pondent Leon Levy is an ilHliyidual, ,with his offce and principal place of business located at 3720 Gwyn Oak A yeuue, Baltimore, Maryland.

PAn. 2. Respondent I-Ioffman &, Dengroyc: Inc., is now ancl since HJ22 has been a .wholesale distributor of woolen piece goods. :Je2ponclent Leon Levy in 19'-18 was engaged in the sale of "\vooleu piece go()ls ill bolts, some of ,which he. sold to respondent Hoffman & Dengl'o\'c, Inc. Respondent I-Iofl' man & Deng-roye, Inc., is now and since 1022 has been, and respondent Leon Levy in 19+8 \Vas, engaged in the oife.ring for sa-Ie: sale, transporta60n and distribution ill commerce, as ;'commerce" is defined in tile 'Yool Products Labeling Act of 1939 and in the Federal Trade Commission t('t, of "\'. 001 pro(luets composed in whole 01' in part of "\1001, reprocessed "\yool or rellsec1 \Vool as those terms are defined in the .\Yool Products Laheling Act of 1939. Such products are subject to the provisions of said Act and the Rules and Regulations promulgated thereunder.

668 FEDERAL TRADE COj\IMISSI01\ DECISIOKS Order 48 . T. C. PAR. 3. Among the wool products sold, transported, distributed and introduced into commerce by respondents were four bolts of piece goods composed of approximately 50 percent wool and 50 percent viscose rayon. These four bolts of piece goods, represented and in. voiced as being all wool, were sold to respondent HoiIman & Dengrove Inc., through an independent broker, by respondent Leon Levy, who caused them to be transported from Baltimore Iaryland, to the place of business of respondent I-Iofrman & Dengrovc, Inc., in New Yark, New Yark. Respondent IIoffman & Dengrove, Inc., ticketed these four bolts as 100 percent wool and resold them as all wool to Rosenthal, a Philadelphia concern, and caused them to be transported from New York to Philadelphia, Pennsylvania. This purchaser upon discovery that these goods were seconds as to quality, returned them to respondent Holman & Dengrove, Inc., who resold them ticketed as 100 percent wool and represented as being all wool, but of second quality, to the Mayflower Manufacturing Company, of Scranton, Pennsylvania, and caused them to be transported from New York to Scranton, Pennsylvania. 17pon being informed by the ~ayflower Manufacturing Company that these four bolts of piece goods had been tested by the Commission and found to be composed of approximately 50 percent wool and 50 percent viscose rayon, respondent Hoffman & Dengrove, Inc. , accepted the return or these goods lttemptingrefunded the purchase price, and after unsuccessfully return them to respondent Leon Levy, resold them, correctly labeled. Said four bolts of piece goods, \fhcn sold and transported in commerce as aforesaid, were misbranded in that they did not have affxed to them a stamp, tag, label or other means or identification showing the constituent fibers, and percentages thereof, or such products, and other information required by the Wool Products Labeling Act of 1939 and the Hules and Regulations promulgated thereunder. CON elusion The acts and practices or the respondents, as hereinabove found were in violation or the provisions of the VV 001 Products Labeling Act of 1939 and the Rules and Regulations promulg"ted thereunder and constituted unfair and decepti ve acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. ORDER It is ordered That the respondent I:Ioffman & Dengrove, Inc. , a corporation, and its offcers, and responde,nt Leon Levy, an individual and their respective representatives, a.ge,nts and employees, directly HOFFMAN & DENGROVE, INC., ET AL. 669 664 Order or through any corporate or other device, in connection with the introduction or manufacture for introduction into commerce, or the offering for sale, sale, transportation or distribution in commerce as "commerce" is defined in the aforesaid Acts, of bolts of piece goods or other wool products, as such products arc defined in and subject to the W 001 Products Labeling Act of 1939, which products contain purport to contain or in any way are represented as containing "wool reprocessed wool" or "reused wool " as those terms arc defined in said Act, do forthwith cease and desist from misbranding such bolts of piece goods or other products by failing to affx securely to or place on such products a stamp, tag, label or other means of identification showing in a clear and conspicuous manner:

(a) The percentage of the total fiber weight of such wool product exclusive of ornamentation not exceeding five percentum of said total fiber weight, of (1) wool, (2) reprocessed wool, (3) reused wool, (4) each fiber other than wool where said percentage by weight of such fiber is five percentum or more, and (5) the aggregate of all other fibers.

(b) The maximum percentage of the total weight of such wool product of any non5brous loading, filling or adulterating matter. (c) The name or the registered indentification number of the manufacturer of such wool product or of one or more persons engaged in introducing such wool product into commerce, or in the offering for sale, sale, transportation or dist.ribution thereof in com. meree, as "commerce" is defined in the Federal Trade Commission Act and in the Wool Products Labeling Act of 1939. Provided That the foregoing provisions concerning misbranding shall not be construed to prohibit acts permitted by paragraphs (a) and (b) of section 3 of the Wool Products Labeling Act of 1939; and provided f"rther that nothing contained in this order shall be construed as limiting any applicable provisions of said Act or the Rules and Regulations promulgated thereunder.

It is further O1'dered That the respondents shall, within sixty (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.

670 FEDERAL TRADE, CONDIISSIOX DECISIONS Syllabus 48 F. T. C.