Broadmore Fashions, Inc., Dan-Del Coat Corp., and Bernard Drobes and Harry Brody

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IN THE :\'fatter OF BHOAD;VroRE FASHIO , INC., DAN-DEL COAT CORP. AND BERNARD DROBES A D HARRY BRODY ORDER ETC. , IX REGARD TO THE ALLJ:OED VIQLATIOX OF THE FEDI.'RAL TRADE COMMISSION ACT AKD UP THE WOOL PROD"CCTS LABBLr::-m ACT Docket 6231. Gmnplaint, Aug. lD54-Decl8ion, Jan, , 195/j Order requiring two sellers in :Kew York City to cease violfiing the 'Vaal Products Labeling Act by labeling certain ladies' coats as '; )00% Cashmere" when they were composed entirely of sheep s wool, by failing to label wool products as required, and by failng to set forth f'cparately on tag-s the fiber content of interlining-so Alt. OeOl'ye Steinmetz for the Commission. 17fT. Charles 111. Kagan of New York City, for respondents. DECISlOX OF Tile C03DlISSIOX Pursuant to Rule XXII of the COl1ullission s Rules of Practice, and as set forth in the Commisslon s "Decision of the Commission and Order to File Heport of Compliance/' dated anuary 18 , 1855, the initial decision in the instant matter of hearing examiner Loren H. La.ughlin, as set out as 1'ol1ows, became 011 that date the decision of tile Commission.

IXlTIAlj DECISION BY LOHEN H. LAFGI'ILJN, HEATIKG EX.DIIXEIt The Federal Tra.de Commission (hereinafter re1errecl to as the Commission) on August 31 , 1954, issued its complaint herein under the Federal Trade Commission A.ct and the T\' o01 Products Labeling Act of 193D, against the above-named corporate respondents and against the respondents Bernard Drobes and Harry Brody, both individually and as ofrc.ers of both of said corporations, charging thCln and each of them in several particulars iyith having vio1nted the p1'ovisions of said .:'ets and of the Hules and Regulations of the Cornmissioll proHwlgatedullcler said 'Yool Products Labeling Act. Said complaint. was duly served upon each of said respondents. On September 20, ID,H alll'esponc1ents iiled their rllswer and on October 4 19;')4 , pursuant to an order of the hearing examiner so authorizing, they med their aJlwuded ans1YCr. The amended nllswex ill substance admits all allegatioIls of t11e complaillt except that respondent harry Brody denies being an offcer of Dan-Del Coal: Corp., and all respondents state they are Iyithout any knmyJe.dge as to Iyhether t.he ladies' Nmts refelTed BROADMORE FASHIONS , Th, E'l AL. 611 610 Deeisioll to in the complaint contained any of the hair or fiber of the Cashmere or ICashmir goat as alleged therein. Respondents reserved, hO\yeve1' in said amended answer, their right to submit proposed fmdings and conclusions of law and the right to appeal under the R.ules of Practice of the Commission.

A hearing was helel pursuant to the notice given in the complaint at New York, 1\ ew York, on October 26 19;'54 , before the above-named hearing examiner, theretofore duly designated by the Commission upon the issues prcscnted by said complaint and amended answer. such hearing respondents appeared by their above-nam0d attorney of record and it was a.greed between counsel supporting the complaint. and an respondents by their said attorney that in lieu of the introduction of oral testimony and other evidence by the parties that the proceeding \\Could be submitted for decision on the basis of a "Stipulation as to the Facts':' upon which the hearing exarnineT might in his discrehcm proceed to make his initial decision, sta,ting therein his findings to the facts, including inferences to be drawn from said stipulation and that an order might be entered by him disposing of the proceeding as to each and all or the respondents, in form and substance as set forth in the otiee" portion of the complaint, without the filing of proposed findings and conclusions, or the presentation of oral argument. There 'vas no waiver by respondents or their right to appeal and was stipulated that if the proceeding should come before the Feder Trade Commission upon appeal rrom the hearing eXflminer s initial decision or by review,y upon the Cornlnission s own motion, it may set aside the stipulation and remand the case to the hearing examiner for further proceedings under the complaint.

Upon the statements or counsel and upon due consideration of said stipulation by the hearing exmniller, said stipulation was accepted by the hearing examiner and receive.cl in evidence, subject only to a reservation then made by counsel Tor respondents that later in the 11hearing he might also submit in evidence a photost.atic copy or t certain bank resolution purporting to prove that the respondent Harry Brody had first become an offcer of the respondent Dan-Del Coat Corporation on :.larch 12, 1954. An exhibit purporting to be such bank resolution was thereafter offered in evidence on behalf or said respondent I-Iarry Brody without objection and the same was re- ,ceived in evidence by t.he hearing examiner. This document, how- 'ever, the hearing examiner finds is not in fact a bank resolution and at most is only indica.tive that one Gustave Daniels was the president of Dan-Del Coat Corp. on February;' , 1954, and it does not tend to prove or disprove any or the issues presented herein or in any malller , , 612 FEDERAL 'I'HADE COMMISSION DECISIONS Decision 51 y, T, G. affect the agreed facts set forth in the said "Stipulation as to the Facts. "

Counsel for respondents also made an argument purporting to bear upon mitigation, explaining in substance the business losses claimed to have been sustained by the respondent Dan-Del Coat Corp. prior to its dissolution in connection with the. sale or resale of certain of the misbranded coats involved herein; that Brae Burn Coats, Inc. , a newly organized corporation has succeeded to the business of Dan-Del Coat Corp., now dissolved, and of which new corporation the respondents Bernard Drabes and Harry Brody are the oiEcers and formulators of policy; and that such new corporation is conducting its business in accordance with the 'Voal Products Labeling Act. Such matters of aI1egcd mitigation have 110 bearing in this partieuIaI' proceeding which is preventive in nature. The complaint herein does not, allege any intent to do a wrongful act. The \V 001 Products Labeling Act has among its express objectives s stated in its Title, the protection of producers, manufacturers, distributors, and consumers from the unreveaJecl presence of substitutes and mixtures in sPUD , Vi'Over1 knitted, felted or otherwise manufactured wool product s." The Act makes misbranding the gist of the offense and "contemplates corrective action by the Commission regardless of \whether such misbranding is based upon wilfulness, negligence, or other causes. Sml:thlhu?, Coats, et al. 45 F. T. C. 79 (1948), opinion of Commissioner Ewin L. Davis, pp. 86, 87. And it just as clearly appears that whether the respondents here have profited or lost by the re-sale of misbranded garments after ally alleged violation of the Act is immaterial to a decision in this particular proceeding on the issue of ,whether or not they were in fact misbranded contrary to the Act. And now the proceeding having come on for iinal consideration and init.ial decision by the hearing examiner upon the complaint, answer stipulation, evidence and statements and arguments of counsel made at the hearing, counsel having stipulated not to file proposed findings and conclusions, and the hearing examiner having duly considered the whole record herein, finds that this proceeding is in the interest of the public; that the complaint states in each alleged particular a cause for complaint under the Federal Trade Commission Act ilnd the ,Vool Products Labeling Act of 1939 , and R,ules and Regulations promulgated under the later act; a,nd that t.he Commission has jurisdiction of the subject matter and of each of the parties respondent. The hearing examiner therefore makes the follmying findings of fact:: as so Stip1F lated, the conclusions drawn therefrom, and onle1'. , BROADMORE FASHIONS IXC. ET AL. 613 610 Findings FINDINGS OF FACTS PARAGRAPH 1. The c.corporate respondent Broadmore, Fashions, Inc. is a corporation organized and existing under and by virtue of the laws of the State of New York, and respondent Bernard Drobes is president and secretary, and respondent Harry Brody is vice president and treasurer thereof. These individual respondents formulate, direct a.nd control the acts, policies and practices of the said corporate respondent Broadmore Fashions, Inc. ; and thc principal offce and place of business of each said corporate and individual respondents is 237 fercer Street, K ew York 12, New York.

PAR. 2. The corporate respondent, Dan-Del Coat Corp., was a corporation organized under and by virtue of the laws of the State of New York in January 1954, and thereafter continued to function as a corporate Inanuiacturing, selling, and distributing organization until on or about September 15, 1954, at which time it filed a Certificate of Dissolution with the Department of State, State of New York, pursuant to the statutes of the State of New Yark, in such case made and provided.

PAR. 3. That during the existence of said corporate respondent Dan-Del Coat Corp., the respondent Bernard Drohes acted as prcsident, and the respondent Harry Brody, as secretary and treasurer thereof. These individual respondents, Bernard Drobes and Harry Brody formulated, directed and controlled the acts, policies and practices of said corporate respondent, Dan-Del Coat Corp., during the term of its existence, and the of lice and principal place of business of said respondents, including Dan-Del Coat Corp., was 286 Taaffe Place Brooklyn, N cw York.

PAR. 4. Subsequent to the effective date of the 'Wool Products Labeling Act of 1939, and more especially since September 1st, 1953, the said respondents, have manufactured for introduction into commerce, introduced into commerce, sold, transported, distributed, delivered for shipment and offered for sale in commerce, a,s "commerce" is defined in said Act Wool products, as "wool products" are defined in said Act. PAR. 5. Cert.ain of saiel wool products were misbranded within the intent and meaning of Section 4 (a) (1) of said Wool Products Labeling Act and the Hules and Regulations promulgated thereunder in that they were falsely and deceptively labeled or tagged with respect to the character and amount of the constituent fibers contained therein. Among such misbranded wool products were ladies' coats labeled or tagged by respondents as consisting of "100% Cashmere " whereas, in t.ruth and in fact, said products were composed ent.ire)y of the -wool of the genus sheep.

, ,, Order :11 F.

PAR. 6. Through the llse of saicllabe1s, tags a.nd legends aforesaid respondents represented that said wool products were manufactured from fabrics composed of the hair or fiber of the Cashmere or 1(a8h11ir goat, which representations were false and deceptive in that they did not contain any of the hair or fiber of the Cashmere or Kashmir goat but were composed entirely of fabrics manufactured from the wool of the genus sheep.

PAR. 7. Certain of said wool products were misbranded within the intent and meaning of Section 4 (a) (2) of said Wool Products Labeling Act of 1039 and of the Rules and Hegl1lations promulgated there. under, in that they "were not stamped, tagged or labeled as to c1isc1ose the name or the registered identification number of the manufacturer thereof or of one or more persons subject to Section 3 of saiel Act \'dtll respect to said ,vaal products.

PAIL 8. Certain of said wool products were further misbranded in that the fiber content of the interlinings was not separately set fornl on the stamps, ta.gs, labels or other means of ic1entificaticJl attached thereto.

CONCLUSlOXS The acts and practices of the respondents as above stipulated by the parties and hereinabove found to be factually true were and are in each particular in violation of the \V 001 Prodllcts Labeling Act of 1989 and of the Rules and Regulations promulgated thereundcr and constitute unfair a.nd decept.ive acts and practices in cummerce within the intent and meaning of the Federal Trade Commission Act. Although the Dan-Del Coat Corp. was dissolved subcequeut to the institution of this proceeding, \\"hieh dissolution took place on or about September. , 1954, for the purposes of this p.roceeding the order hereimdter entered should rnn against. it and its sa,id offcers. ORDER It is D1'dered That respondent Broadmore. Fashions, Inc. , a C01'pOration; respondent Dan- Del Coat Corp. , a corporation; respondents Bernard Drobes and Harry Brody, individually and as officers of said corporations; and respondents' representatives, agents and employees directly 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 distril:motion in comnlClTC a.s "commerce" is defined in the Federal Trade Commission Aet and the Wool Products Labeling Act of 1939, of ladies' coats or other wool products " as such products are defined in and are subject to the said 'Vool Products Labeling Act of 1939; which products contain RROAD LORE FASHIONS, IXC., ET AL. 615 610 Order purport to contain, or in any manner are represented as containingwool re,processed "\yool" or "reused '''ooj as such terrns are defined in said Act, do forthwith cease and desist from misbranding said prod uets by:

1. Falsely or deceptively stamping, tagging, labeling or otherw ise identifying such products as to the character or mnonnt of the constjt. uent fibers incJudecl therein;

2. Failing t.o securely affx to or place on each such product a stamp, tag, label or other means of identification shmving in a clear and con SPlCUOUS manner;

(a) The percentage of the tota.J fiber weight of such "\yool product exclusive of ornamentation not exceeding five pel'Centu11 of said total fiber ".eight, of (1) wool. (2) reprocessed wool. (3) reused wool, (4) each fiber other than wool "\"here said percentage by weight of such fiber is five percentmn 01' more, and (5) the aggregate of a1l other (7;) The maximmn percentage of the total weight of slich wool prodfibers;uct of any non-fibrous loading, filling or adulterating matter; (c) The name or the registered ic1entifieation nmnber of the manufacturer of sneh wool product or 01 one or more persons engaged in int.producing such wool product into conllnerce or in the offering for sak, sale transportation, distribution or delivery for shipment thereof in commerce, as "'eommcrce" is defined ,in the 'Yool Products Labeling Act of J 939.

3. Falsely or deceptively stamping, tagging, labeling, or otherwise identifying such products as containing ha il' or fleece of the Cashmere or ICashmir goat.

4. Failing to separately set forth on the stamps, tags, labels or other means of identification, the true character and amount of constituent fibers of the interlinings of any such wool product. Provided That the foregoing provisions concerning misbranding shan not be construed to prohibit acts permitted by paragraphs (a) and (b) of Section 3 of the Wooll' roducts Labeling Act of 1939, and Provided further That nothing contained in this order shan be construed as limiting a,ny applicable provisions of said Act or the Hules and Regulations promulgated thereunder.

ORDER TO FILE REPORT OF C01\IPLT A KCE It is ordered That the respondents herein shan 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 the order to cease and desist (as required by said declaratory decision and order of .January 18, 1955J. 616 FEDERAL TRADE COM1oUSSION DECISIONS Orders and Decision 51 F.