Celanese Corp. of America

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IN THE .MATTER OF CELANESE CORP. OF AMERICA Aug. 195,7 Docket 4934. Compl",int, "bit. 8-\, 19-\3-Decision and O1'der, Charge: Neglecting, unfairly or deceptively, to make material disclosure as to composition of product and advertising falsely or misleadingly as to composition, nature, qualities, properties or results and cnmparative 111f'l'itS of product; in connection with the manufacture and sale of acetat.e rayon yarn and fabrics ll1311Ufactured fronl said yarn.

Before lJlr. James A. P1lrcell hearing examiner. lvlr. R. P. Bell-nger for the Commission. Roberts McInnis and DW/Jip.s, Richberg, Tydings, Beebe L!Jda, JIb, G. Kirby lJfnnson of IVashington, D. and Mr. M aUhe10 H. Brien of New York City, for respondent.

DECISION OF THE CO:iC\fISSION Pursuant to Rule XXII of the Commission s Rules of Practice, the ltttached decision of the hearing examiner shall, on August 2, 1953 become the decision of the Commission.

Commissioner Carretta not participating.

ORDER DIS:\fIDSING C01fPLAINT IVlTUOUT PRJ':Judice INITIAL DECISION BY JAIIES A. PURCELL, HEARING EXAMINER This proceeding came on to be considered by the above-named Ilearing Examiner heretofore duly designated by the Commission on April , 1945, upon the complaint, the answer of respondent, testimony and other evidence introduced in support of and in opposition to the allegations of the complllint, and proposed findings and conclusions presented by counsel, all testimony and evidence being made a matter of record and duly filed in the office of the Commission. The complaint herein was filed on March 24, 1943, and the taking of testimony commenced on May 16, 1945, during the course of which some 4 500 pages of testimony of 105 witnesses, and 1 750 exhibits were received. Much of the testimony was highly ted-mical in nature having to do with the production of man-made flbers by chemical and mechanical processes and means. During the course of the proceedings unavoidable delays such as appeals and cross-appeals were encountered, on two occasions the matter was reopened on motion of the respondent for the reception of further testimony and evidence and on one occasion, November 15, 1949, the record was ordered reopened by the Commission for the purpose of complying with the Commission s decision on cross-appeals.

CELANESE CORP. 01' AMERICA 171 170 Order Thereafter, on .J anuary 19 , 1951, the matter was ordered by the Commission to be placed on its " suspense calendar" pending the outcome of a Trade Practice Conference Proceeding specially called to consider proposed revision of the Trade Practice Rules for the Rayon Industry, a subject of prime importance to the major issues joined in this proceeding. The afor,ementioned Rayon Rules had been in force. since promulgation of same by the Commission on October 26, 1937 and it was partially because of failure of respondent to designate its fibers and fabrics as "rayon" (a subject dealt with in said Rules although the Rules, as such were not squarely in issue), that the present proceedings were instituted. On December 11, 1951, the Commission promulgated its "Trade Practice Rules for the Rayon and Acetate Textile Industry," thereby superseding the Rules of 1937. On March 4, 1952, the Commission, by order, restored the matter to its active file with direction to the Examiner to: * . * go forward in regular course on the matters remaining in controversy. An interpretation of the last-mentioned order resulted in a further order of the Commission, dated September 18 , 1952, dismissing certain charges of the complaint and thereafter, upon motion of the respondent, the Hearing Examiner on February 6 , 1953, reopened the matter for reception of further testimony and evidence after completion of which an order closing the case for taking of testimony and reception of evidence was filed on February 27 , 1953. For the purposes of the present order necessitating a full consideration of the several issues involved, the charges of the complaint are for convenience, segregated and grouped into five categories, separately denoted, and which will be dealt with seriately under the several headings.

The complaint recites:

Respondent, Celanese Corporation of America, is engaged in the manufacture, sale and distribution of acetate rayon yarn, and fabrics produced from such yarn, which it sells and distributes under the name "Celanese; acetate rayon is a chemical fiber which may be manufactured so as to simulate natural fibers in texture and appearance to such extent that members of the purchasing public are unable to distinguish fabrics manufactured from acetate rayon, so as to simulate natural fibers, and fabrics manufactured from natural fibers. The specific charges are:

Oharge I Respondent' s acetate rayon fabrics simulate, in texture and appearance, fabrics composed of silk, the product of the cocoon of the silk worm, but respondent does not inform the purchasing public that (g) ; Order 50 F. T. C.

such manufactured fabrics are not made from silk but from rayon; that failure by respondent to make such disclosure is misleading and deceptivo and members of the purchasing public are thereby led to believe said fabrics are composed of silk. Oharge II Respondent also manufactures from acetate rayon fibers, and offers same for sale, and sells, fabrics which resemble, in appearance and texture, fabrics manufactured from wool, without informing the purchasing public that such fabrics so resembling wool, are in fact acetate rayon; that failure by respondent to make such disclosure is misleading and deceptive.

Oharge III Respondent, in connection with selling its products manufactured from rayon but which resemble fabrics made from silk, designates describes and refers to certain of its fabrics as "taffeta moire crepe satin" and "jersey," without adequately disclosing the true fiber content; that the quoted designations have long been associated in the public mind with fabrics composed of silk and the use of such terms, unaccompanied by adequate disclosure of the actual fiber content as rayon, not silk, is misleading and deceptive. Oharge IV Respondent, in an endeavor to mislead and deceive the public as to the true nature of its products, has made use of the following statements and representations:

(a) "Under a current ruling of the Federal Trade Commission Celanese yarns and fabrics are classifwd as rayon (b) "all rayons are not alike (c) "an easy way to differentiate Celanese from rayons of the cellulose type (d) "Celanese is different from any type of fabric ever made (e) " * * * because Celanese is a different kind of material" (f) "Celanese is like nothing you have ever known; and Celanese has qualities that put it in a class by itself" All of the foregoing are charged as designed to import and imply that respondent's products are not composed of rayon but of fibers other than rayon.

Oharge V Respondent, by its advertisements represents and implies that its fabrics:

(/ CELANESE CORP. OF A1VIERICA 173 170 Order (a) will not shrink;

(b) are not affected by perspiration, salt water or sea air; (c) do not absorb body odors;

(d) are cooler in summer and wanner in winter; (e) do not get soggy (f) will not absorb dirt or most common stains; (g) the colors in said fabrics are especially fast; (h) have a high degree of resiliency and are more resistant to wrinkles than are other fabrics;

(i) wear better and last longer than do other fabrics. In considering the foregoing charges under their separate denotations as outlined, the following findings and conclusions are reached and stated:

charge I. Respondent, on April 18, 19, , filed its motion to dismiss certain portions of the complaint, among such being the presently considered charge, pursuant to which motion the Commission, (noting that it had, on December 11 , 1951 , promulgated the new Trade Practice Rules for the Hayon and Textile Industry which recognize that "rayon" and "acetate" are different textile fibers, and that respondent has accepted such Rules aud is presently identifying its aeetate textile products as acetate, in aeeordance with the provisions of said rules), on September 18 1952, passed the following order: It is ordered That the allegations of the complaint relating to the charge that respondent's cellulose aeetate textile products are rayon and that respondent's failure to identify said products as rayon is misleading and deceptive be, and they hereby are, dismissed wit.hout prejudice to the right of the Commission t.o institnt.e further proceedings should the facts warrant such tlc.jon. By the aforesaid order, passed by the Commission, the foregoing charge had been dismjssed wit.hout prejudice, and such order is here adverted t.o solely that this p)'esentorder shall show consideration and disposition of all issues joined.

OhaT,ge II. Respondent is here charged with nondiselosure of the true fabrie content, as acetat.e rayon, of its materials which resemble wool in appearance. There is no quest.ion here involved which would call into play any of the provisions of the IV 001 Products Labeling Act of 1939, or of the !rules and Ilegulations passed pursuant t.hereto. This charge may be considered analogous to the preeecling one which alleged t.hat respondent's products resemble silk whereas, under this allegation, the product resembles wool.

Inasmuch as the Commission has seen fit t.o dismiss the charge of simulating silk, it. would appear that the same course should be followed in the present. instance, and for the same reasons, that is, that Order 50 F. T. C: if the respondent, being signatory to the new Rayon and Acetate Rules properly identifies its fabrics in accordance with the rules, then there will be no misleading or deception of the public. For the reasons above sbJed the charge in this behaH is dismissed without prejudice.

Clw:rge If I. Under th.is heading respondent is charged with use of the terms "tafleta moire crepe satin" and "jersey," without disclosing the true fabric content. This cJllu'ge is based upon the allegation that the terms or flesig-nations quoted have "long been associated in the public mind ,,,ith fabrics composed of silk " and that the use of said terms, unaccompanied by adequate disclosure of the actual fiber content, to wit, fibers other than silk, is misleading and deceptive.

During the course of the proceedings counsel in support of the complaint abandoned that portion of the complaint which refers to the term "jersey," such being the designation oJ a special weave or knit oJ wool peculiar to the wool industry and obviously not in the same category with the remaining terms in the group, all oJ which the complaint charged, in effect, were preempted by the silk industry and so understood by the general public.

Rule 3, entitled "Construction and 'Weave Terms " oJ the aforesaid Rules of December 11 , 1951, covers the situation here presented and especially treats eo nomine of the future use of these terms by the industry. Therefore, the same reasoning which motivated the dismissal of CHAHGES I and II should apply here with equal force. For the reasons above sbted the charges in this behalf are dismissed without prejudice.

Charge IV. Here respondent is charged with the use of se"en separate representations, all oJ which, it is Llleged, were designed to mislead and deceive the public into the belief that respondent' s fabrici' were not composed of rayon but of fibers other than rayon. In this connection we are again met with the issue of the fiber content of respondent' s fabrics and of the nomenclature covering same as under Charge except that here, instead of failure to disclose rayon content, respondent is charged with an attempt to affrmatively, or by innuendo, represent that its product is "different" and "in a class by itself.

Many of the foregoing expressions may properly be considered ai' mere pulIery, and certainly a producer should be allowed some reasonable latitude to extol his wares as otherwise the practical and economic justification for advertising and publicity ceases to exist. Furthermore, there is nothing of record to substantiate the charge that 'liy or CELANESE CORP. OF AMERICA 175 170 Order all of the alleged usages ever in fact attained the end for which they were allegedly formulated and used.

In addition to the foregoing reasoning, it will be seen that all of the representations alleged are inextricably associated with fabric nomenclature, the oharges concerning which were dismissed under CHARGE as above.

For the reasons above stated the charges in this behalf are dismissed without prejudice.

Charge V. All of the representations made by respondent under this charge !fay be classified as referring to the physical attributes qualities or characteristics claimed by respondent in favor oJ its products. The vast majority of these representations were publicized through the medium of radio continuities broadcast during the year 1942, so it would appear there is no present public interest in the evanescent statements of a radio announcer of a past decade. Concerning the remaining advertisements, howsoever disseminated, all such bear date prior to .July of 1946 at which time the Com.mission had completed its proof as to these advertisements, so that the record is devoid of any indication of CUITent or actual usage of same for someeight years. Apropos the immediate foregoing, reference is made to the aforedescribed Rayon and Acetate Textile Industry Rules of December 11 1951 , Group Rule " " entitled: "Labeling Information as to Treatment and Care of Product " and Rule " " entitled: "Educational Progntm as to Treatment and Care of Product." These rules, agreed to by the respondent, provide for the giving, by tag or label attached to products, of adequate information regarding care, handliug and service of fabrics, including the proper methods of dyeing, cleaning, ,vashing and ironing thereof, as well also the furnishing and disseminating, through advertisements, educational campaigns or other media of publicity, accurate information as to the proper care, treatment and cleaning of rayon and acetate fabrics to the end that consurners may obtain and enjoy full benefit of the desirable qualities and service of such products. In furtherance and support of the objectives of the Rules as an entirety, and of Rules Group A" and " " and since the promulgation thereof by the Commission, the respondent has appropriated approximately $2 000 000 in excess of its nornml achertising budget; has made use of radio, television, advertising in the largest magazines of nation wiele circulation; educatioual services to stores and consumers on a natioual scale; issued iu excess of 100 000 000 tags and labels dealing with fiber identification and care; and further, at its own C'xpense, has repriuted the Hnles and distributed same to Order 50 F. T. C.

approximately 20 000 retailers, garment manufacturers, mils and to those engaged in the chain of distribution in the fabric field. The foregoing is recounted as indicating an intention on the part of the respondent to abide by the Rules and thus, by its example as a dominating factor in its field, to have a beneficial effect upon others. For the reasons above stated the charges in this behalf are dismissed without prejudice.

For the reasons above given, and under the circumstances here presented, the public interest does not require any corrective action at this time. It is accordingly, Ordered That the complaint in this proceeding be, and the same hereby is, dismissed, without prejudice.

FRUITVALE CANNING CO. 177 Order Ix Tile ilfATTER OF FIlUITV ALE CA NING COMPANY Docket 989. Or-der and opinion, A"'!l"8t 4, 1953 Before jYfr. Abner E. Lipscomb hearing examiner. JIr. Edward S. Ra.gsda1e and Mr. Oecil a. Miles for the Commission. Hadsell, lJluT'rnan Bishop, of San Francisco, Calif., for respondent. ORDER DENYING RESPONDEXT S PETITION FOR REHEARING OF APPEAL Respondent, subsequent to the filing of its answer to the complaint in this proceeding, fied a motion with the hearing examiner for a biJ of particulars. The hearing examiner issued an order granting said motion, and counsel supporting the complaint appealed to the Commission from said order. The Commission, after determining that a prompt decision on the appeal was necessary to prevent unusual delay and expense in the disposition of this proceeding, considered said appeal on it.s merits, and on February U, lU53, issued an order sustaining the appeal, vacating and setting aside the hearing examiner order, and remanding the case to the hearing examiner for trial in regula!' course. Respondent, ou June 29 1953, filed a petition with the Commission for a rehearing on the said appeal. Counsel supporting the complaint, on .July 3, 1953 , fied an answer' opposing the petition. The only point raised by respondent in said petition for rehearing which W lS not before the Commission at the time of its deeision on the appeal is that the Commission, on May 19 , 1953, denied appeals of counsel supporting the complaints in the matters of DistiJers Corporation-Seagrams Ltd., Docket No. 6047, and Schenley Industries, Inc. Docket No. 6048, from orders of the hearing examiner by which motions of the respondents for biJs of particulars were granted in part and denied in part. Respondent cont.ends t.hat. the Commission s action on those appeals "indicates a change of view more favorable to respondents ,yho seek, through biJs of particulars, more informative details than are given in the forms of complaints in use in these proceedings. The Commission, in it.s orders denying t.he appeals of counsel supporting t.he complaint.s in t.he t.wo cases cit.ed by respondent, st.at.ed that it was not shown t.hat prompt decisions on t.he appeals were necessary to prevent unusual delay and expense in the disposition of the proceedings, and also t.hat t.he hearing examiner, by his rulings on respondents' motions for bills of part.iculars, had not. abused the discretion vested in him. The Commission s actions in those cases cannot be const.rued as representing a change in vie'y with respect t.o request.s "03"43--57--J 3 Opinion 50 F. T. C.

for bills of particulars. The complaints in those two cases charged violations of Section 5 of the Federal Trade Commission Act. The complaint in this case charges violation of subsection (a) of Section 2 of the Clayton Act. It is obvious that complaints involving violations of the broad terms of the Federal Trade Commission Act might require more particularization than complaints involving violations of the Clayton Act, where the statutory offenses are defined in greater detail. The Commission, in its order of February 9 , 1953, sustaining the appeal of counsel supporting the complaint in this case, expressed the opinion that the complaint herein is not only legally suffcient but also that the absence of further particulars therein cannot operate to deprive the respondent of a full and fair hearing. Respondent' petition for a rehearing on the appeal presents no reason for changing that opinion.

The Commission having duly considered respondent' s said petition and answer thereto, and being of the opinion that the rehearing requested is not warranted:

It is ordered That respondent's said petition for rehearing be, and it hereby is, denied.

It is further ordered That this case be, and it hereby is, remanded to the hearing examiner for trial in regular course. OPINION Commissioners MasOl, and Carretta concur in this order and repeat that, in their opinion, the complaint issued in this matter suffciently informs respondent of the statutory violations with which it is charged. Commissioners Mason and Carretta also repeat that they are of the opinion that if counsel in support of the complaint seeks to prove at the hearing violations other than those alleged in Paragraph 7 the complaint, counsel for the respondent may then renew his motion for a biJJ of particulars.

DICTOGRAPH PRODUCTS , INC. 179 Consent Settlement