Winer Manufacturing Co., Inc., et al.

Text (OCR of the scan at left; may contain errors)

IN Tln NIATTEH OF WIKER AmJF ACTURING CO., INC., ET AL.

COX-SENT ORDER, IN REGARD TO Tile ALLECED VIOLATION OF Tile FEDERAL TRADE COl\D:ISSION ACT AND THE WOOL PRODUCTS LABELING ACT Docket 6311. Complaint, Mar. 1955-Decision, June 28, 1955 Consent order requiring a manufacturer in Hammond, Ind. , to cease violating the Wool Products Labeling Act by labeling men s jackets consisting of 35% wool and 65% reused wool as "100% Wool", and failng to label others as required by the Act, Before 3fr. James A. PU'icell hearing exa.miner. Mr. George E. Steinmetz for the Commission. Abbell &Abbell of Chicago, Ill., for respondents. C01\PLAI Pursuant to the provisions of the Federal Trade Commission Act and the Wool Products Labeling Act of 1939, and hy virtue of the authority vested in it by said Acts, the Federal Trade Commission having reason to believe that Winer :.Ianufacturing Co., Inc., a corporation, and Louis Winer, individually and as an offcer of said corporation, hereinafter referred to as respondents, have violated the provisions of said Acts; and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its comphtint stating its charges in that respect as follows: PARAGRAPH 1. Respondent ,Viner :Manufacturing Co. , Inc., is a corporation organized and existing under and by virtue of the laws of the State of Indiana. Louis ,Viner is president of said respondent corporation and this individual formulates, directs, and controls the acts, policies, and practices of said corporate respondent. The offce and principal place of business of said respondents is located at 231 Condit Street, Hammoud, Indiana.

PAR. 2. Subsequent to the effective date of the .Wool Products Laheling Act of 1939 and more especially since January 1954, respondents have manufactured for introduction into commerce, introduced into commerce, sold, transported, distributed, delivered for shipment, and o:fered for sale in commerce, as "commerce" is defined in said Act wool products, as "wool products" are defined therein. PAn. 3. Certain of said wool products were misbranded within the inteut and meaning of Section 4 (a) (1) of said ,Vool Products Labeling Act and the Rules and Regulations promulgated thereunder iu that ,, Decision 51 F, they were falsely and deceptively labelccl 01' tagged with respect the character and amount of the constituent fihers contained therein. Among such misbranded wool products were men s jackets labeled or tagged by respondents as consisting of "100% ",Voal " whereas in truth and in fact sftid products were composed of fabrics consisting of 35% '\vooI and 65% reused wool, as the terms "",VoaP: and "Reused "I\Tool" are defined in said Act.

PAR. 4. Certain of said wool products described as men s jackets were misbranded in that they were not stamped, tagged, or labeled as required under the provisions of Section 4 (a) (2) of said "Wool Products Labeling Act and in the manner and form provided hy the Rules and Hegulations promulgated thereunder.

PAR. 5. The acts and practices of respondents as herein alleged were and are in violation of the "Wool Products Labeling Act of 1939 and of the Hules and Regulations promulgated thereunder, and as such constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. DECISIO:K OF THE fJIISSIOX Pursuant to Sec. 3.21 of the Commission s Rules of Practice, and as set forth in the Commission s "Decision or the Commission and Order to File Report of Compliance " dated J UJle 28, 1955, the initial decision in the instant matter of hearing examiner Jame. Purcell as set out as follows, became on that date the decision of the Commission.

INITIAL Decision BY JA1IES A. PURCELL\ HEARING EXA1IIIXER The Federal Trade Commission on 1farch 23 , 1955 , .issued its complaint in this proceeding charging respondents with thc violation of the provisions of the Federal Trade Commission Act and of the "Wool Products Labeling Act of 1939, as wid more particularly appear by reference to said complaint.

On April 2-9 , 1955 , respondents entered into an agreement with counsel supporting the complaint and pursuant thereto submitted to the hearing examiner a stipulation for consent order disposing of aD of the issues in this proceeding.

In said stipulation the respondent Yiner :Manl1facturing Co., Inc. is identified as a corporation organized under and existing by virtue of the laws of the State of Indiana, with its offce and principal place of business located at 231 Condit Street, Hammond, Indiana. Respondent, Louis 'Viner, is identified as an individual and as Presi dent of the foregoing respondent corporation. WINER MANUFACTURING CO. , INC. , ET AL. J273 1271 Order Respondents admit a.ll or the j l1risdictional allegations set forth in the complaint, and agree that the record herein 1na)' be taken as if the Commission had made findings of jurisdictional facts in accordance thercT\ith. \Jl of tbe parties exprC',ssly wnjye the filing of answer a hearing before the hearing examiner or the Commi.ssion, the making of findings of fact or conclusions of la.w by the hearing examiner or the Commission, the filing of exceptions and oral argument before the Commission and all other and further procedure before the hearing C'::i:ilrJl.I1Jer and the Commission to \\which the ::llic1 respondents might othETyriEc be entitled under the provisions of the aforesaid Acts and the Rules of Practice of the Commission. Said stipulfltion provided further that it \Vas executed for set.tJement purposes only and does not constitute an admission by said respondents that they have violated the lay\' as alleged in the complaint. It was further agreed by thc respondents that the Order contained in the stipulation shall have the same force and effect as jf made after fun hearing, presentation of evidence, and Iindings and conclusions thereon and they specifically waive. any md an right power or priyilege to chaJIcnge or contest the validity of the Order tmtered in accordance with said stipulation. They also agree that said stipulation, together with the complaint, shall constitute the entire record in this proceeding and that the complaint herein may be used in construing the terms of the hereinafter pas .ed Order, which may be altered, modified, or set aside in the manner provided by the statute for the orders of the Commission.

In view of the facta above recited and that the Order embodied in said stipulabon is identical with the Order ni8i accompanying the complaint and that the acceptance thereof wiJI effectively safeguard the public interest and pursuant to the express terms and provisions of said stipulation, the hearing examjnel' finds that t.his proceeding is in the public interest, accepts the aforesaid stipulation for consent order and issues the following order:

ORDER It is ordered That respondent \Viner 1\Innllfacturing- Co., Inc., a corporation, and its offcers, and re pondent Louis IViner, inc1ividmtlly and as an offcer of said corporation, and respondents' representatives agents, and employees, c1jrectly or through any corporate or other de-vice. in connection with the introduction or manufflctl1Te for introduction :into commerce, or the offering for sale, sa.le, transportation or distribution in commerce, as "commerce is defined in the Federal Trade Commission Ad and the WooI Products Labeling Act of 1839 1274 FEDERAL TRADE COi\L,nSSION DECISIONS Order 51 F. T. C. of men s jackets or other "wool products " as such products are defined in and are suhject to the said "Wool Products Labeling Act of 1939 which products contain, purport to contain, or in any manner are represented as containing "wool reprocessed wool" or "reused wool as such terms are defined in said Act, do forthwith cease and desist from misbranding said prod ucts hy :

1. Falsely or deceptively stamping, tagging, labeling, or otherwise identifying such products as to the character or amount of the constituent fihers included therein;

2. Failing to securely affx to or place on each such product a stamp, tag, label, or other means of identification showing in a clear and consplcuoUS manner:

(a) The percentage of the total fiher wcight 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 hy weight of such fiber is five pcrcentum or more, and (5) the aggregate of al1 other fibers;

(b) The maximum percentage of the total weight of such wool product of any non-fibrous loading, filing or adulterating matter; (c) The name or the registered identification 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, distribution or delivery for shipment thereof in commerce, as "commerce" is defined in the ,Vool Products Labeling Act of 1939.

PT01Jided That the foregoing provisions concerning misbra.nding 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 further That nothing contained in this order shall be construed as limiting any applicable provisions of said Act or the Rules and R.eg111ations promulgated thereunder. ORDER TO FlLI REPORT OF COJIPLlANCE It is ordered That the respondents herein 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 the order to cease and desist (as required by said declaratory decision and order of ,June 28 , 1955). TRADE l:XIOX COlTRIER PUBLISI-IIN'G CORP. ET AL. 1275 Decision Ix THE :MATTER OF TRADE UNION COURIER PUBLISHING CORPORATION ET AL.

ORDER , QI'IXION, ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TR,I.DE COJ'IC\IISSSION ACT Doclcct 5966. Com.p7aint, Mar. 14, 1952 Decis.ion, June 30 , 1955 Order requiring a publishing firm in New York City to cease representing' falsely that its bi-\veekly newspaper had been endorsed by tbe American E'ederation of Labor, and publishing and demanding pa:rment for advertisements not authorized by tbe prospects solicited. Before llfr. John Leu-is hearing- examiner. Mr. Edward F. Down and 1r. Joseph Asper for the Commission. TV aidman & TV aldman of New York City, for respondents. DECISION OF IIEARIXG EXA::IIXEH OX HE::AKD OF PROCEEDING SL\TL\IEXT OF THE CASE The Federal Trade Commission issued its complaint against the above-named respondents on j\iarch 14, 1952, charging them with the use of unfair and deceptive. acts and practices and unfair methods of competition in commerce, in violation of Section 5 of the Federal Trade Commisson Act. Copies of said complaint and notice of hearing were duly served upon respondents. Said complaint charges in substance that respondents ma.de certain misrepresentations concerning their labor affliations in connection with the publication of a newspaper by them and also sought to insert unauthorized advertisements in said paper. Hespondents appeared by counsel and filed a joint answer in which the:' (1enie(1 having engaged in any of the illegal practices charged.

Pursuant to notice, hearings were thereafter held on various dates between Yfay 5, 1952, and Jnne 18, 1952, at Kew York, New York and "\Vashington, D. C. , before the undersigned hearing examiner, theretofore duly designated by the Commission to hear this proceeding. said hearings testimony find other evidence were offered in support of and in opposition to the allegations of the complaint, which testimony and other evidence were duly recorded and filed in the office of the Commission. At the close of said hearings proposed findings of facts and conclu::ions of law were filed by counsel supporting the 1276 FEDERAL TRADE CO:VIMISSION DECISIONS Decisioll 51 F. 1'. C. complaint and counsel for rebpondents. a request for oral argument was made.

lfter reviewing the record herein, the undersigned on August 26 1952, filed his initial decision and order dismissing the complaint on the ground that the record was lacking in substantial evidence sustain the allegations of said complaint and because the puhlic interest did not appear to require any corrective action in this proceeding. An appeal from said initial decision and order was thereafter filed with the Commission by counsel supporting the complaint with resped to the dismissal of two of the charges in the complaint. On February 18 , 1953, counsel supporting the complaint filed a. motion with the Commission for leayc to )"ithc1raw said appe,al and to remand this proceeding to the he,aring examiner for the reception of further evidence. By order issued .June 12, 1953, the Commission granted said motion, vacated the order of dismissal as to the two charges ap pealed from, and remanded this proceeding to the hearing examiner for the purpose. of receiving further testimony and evidence on said charges.

Thereafter, pursuant to notice duly given, further hearings before the undersigned hearing examiner were held on various dates between October 1, 1953 and J line 10, 1954, in )femphis, Tennessee; Milwaukee "\Visconsin; :Minneapolis, l\1innesota; and New York, New York. Testimony and other evidence.e ,were offered in support of and in opposition to the charges in the complaint which were remanded to the hearing examiner, said testimony and other evidence. be.ing duly rec.ordeel and filed in the offce of the Commission. The parties were represented by counsel at all hearings, participated therein and were afforded full opportunity to examine and cross-examine witnesses and to introduce evidence.e bearing on the issues. At the opening of the bearings on the remand of this proceeding counsel for respondents moved to dismiss the complaint for the reason that the Commission had acted beyond its auihority in remanding this proceeding. Counsel also renewed a motion made at the earlier hearings to dismiss the allegation aT the c.complaint based on alleged unauthorized de.a1ings, for the reason that said allegation is legally insuffcient. Said motions were denied by the undersigned. At the close of the evidence on the remand of this proceeding, briefs were submitted hy counsel in support of their respective positions. a request for oral argument was Jnade.

Upon the entire record in the case and from his observation of the l,yjtnesses the undersigned makes the following: TRADE rXlO?\ COURIER FCBLISHI G CORP. ET AL. 1277 1275 Findings FINDIKGS OF :FACT I. THE BUSINESS OF RESPONDENTS Respondent Trade Union Courier Publishing Corporation is a corporation organized, existing and doing business under' and by virtue of the laws of the State of New York with its offce and principal place of business located at 1150 Avenue of the Americas, K ew York Kew York.' Respondents Maxwell C. Raddock, Charles Raddock and Bert Raddock are President, Secretary, and Treasurer, respectively of the corporate respondent and in such capacities they formulate, direct and control its policies and practices. Their business address is the same as that of the corporate respondent. Respondents have for several years last past hcen engaged in the publication of a tabloid size ne'\vspaper known as the Trade Union Courier. Said newspaper is published hiweek1y and is caused by respondents to be circulated from its point of publication to subscribers and purchasers located in various States of the United States. Respondents maintain, and at all times mentioned herein have maintained, a course of trade in said publication in commerce among and between the various States of the United States, and the amount of said trade is substantial. Further, respondents in the course and conduct of their business engage in extensive transactions involving the transmission of letters, advertising proofs, checks and other business instruments, and the use of long distance telephone, all between and among various States of the lJnited States. II. The Alleged Ilegal Practices A. Backgroun and Issues Thc American Federation of Labor, or A. F. of L., as it is sometimes referred to, is a federation of local, national and international unions with the membership in excess of three milion. As indicated in the original decision of the examiner herein, respondents' newspaper seeks to espouse the cause of the American Federation of Labor and has been endorsed by a substantial number of that organization s affliated unions. The newspaper is circulated among members of American Federation of Labor unions and is subscdbed to by certain affliated unions.

1 The address of said respondent as alleged in the complaint and admitted in the answ('r was 3 West 17th Street, New York. However, during the pendency of this proceeding snld respondent moved to the above address. 51 F. T. C. Findings A large portion of respondents' income is derived from the sale of advertising spa.ce in their paper to industrial and other business firms. Respondents employ from 9 to 12 advertising salesmen or solicitors to solicit advertising orders. Outside of the K ew York City area, such solicitation is carried on mainly by long distance telephone calls. As originally charged in the cOlnplaint, respondents were alleged to have falsely represented to prospective advertisers that they were offcially endorsed by 2 000 A. F. of L. unions and were affliated with certain labor press associations and news services. In their answer respondents admitted having made the representations attributed to them in this respect but claimed that such representatives \were truthful. They established at the initial hearings herein that their publication was endorsed by a substantial number of A. F. of L. unions and that it was affhated with certain labor press associations and news services. The charges of the complaint dealing with these issues were accordingly, dismissed. No appeal therefrom was taken by counsel supporting the complaint.

The two remaining charges in the complaint involve the allegations (1) that respondents have falsely represented that they are endorsed by the Amedcan Federation of fAtbor: and (2) that thry have engaged in the practice of placing .advertisements of business firms in their pa.per without having received authorization and then seeking to exact payment therefor. In their answer respondents denied having engaged in either of such practices. These charges were likewise dislTIisscd in the decision of the examiner originally issued herein. I-Iowever, the proceeding was subsequently remanded to the examiner for further evidence on these issues after counsel supporting the complaint withdrew the appeal which had been filed to such dismissal. The sufficiency of the evidence in the record on these two issues is considered below, with particular reference to the evidence developed upon the remand of the proceeding.

B. Endm' sonent by the A'ln.o'ican Federation of Lab01' At the most recent stage of the hearings, counsel supporting the complaint caned a number of representatives of business firms in )iemphis, :::flwaukee and 1finneapolis, who testified concerning long dista,nce telephone conversations which the.y had with various advertising Sa1eS1l811 or solicitors of respondents during tile period from 1950 to 193;1, These witness es testified that one of respondents' solicitors c.aJ1ecl them and sought to interest them in taking advertising space in respondents publication. According to the \vitnesses, the solicitor Hsnally refeJTPrt to the fact that the paper as fighting for good TRADE UKI01\-' COURIER PUBLISHIXG CORP. ET AL. 1279 1275 Findings labor management relations or was fighting against communism in the labor movement, and asked the particular businessman being solicited to sponsor an advertisement espousing such sentiments. The prices quoted for the advertisements ranged from about $600.00 to $25. , depending on t.he amount or space devoted to the advertisement of a particular firm.

During the course or the telephone conversations, according to these witnesses, respondents' solicitor referred to the fact that their newspa,per had some connection with the American Federation or Labor. The basic question ror decision on this issue is what the solicitors stated to be the nature or this connection vis. whether they limited themselves to stating the facts with respect to the paper s endorsement by certain unions of the A. F. of L. or whether they stated or sought to create the impression that the paper was endorsed the American Federation of Labor itself. Below is set forth the versions given by some or the witnesses as to what the solicitor stated with regard to respondents' A. F. or L. connections: 1. That he wanted "an ad for the AFL paper" and that the paper was the "offcial organ or the AFL operating out or their national headquarters. " (R. 500, 507) . That he "represented the American Federation or Labor" and that the paper was a "natiOllRl publication of the AFL." (R 517 522) 3. That the paper "represented" or "was affliated with the AFL." (R. 534, 548) 4. That the paper was "an offcial publication of thc AFL." (R. 551, 552) 5. That the solicitor was "connected with the AFL unions or AFL." (R. 580) 6. That th solie-itor was "representing the AFL against Coml11unism" and was soliciting ads for the newspaper "through the sanction of the AFL" (R 595 , 602) 7. That the paper was "part of" or was "put out by the American Federation ofi abor (R. 645 , 648) 8. That "they were bringing out an issue for the convention or the American Federation of Lahor and that they were the offcial publication of the American Federation of Labor. " (R 700) 9. That the solicitor was "with the A. F. of L. :' and ,vanted an ad "in the A. F. L. paper." (R 761 , 762) 10. That the paper was the "na60nal organ :for the American Federation of La,bor and that by our advertising in it we would be doing 42378 5S-- 1280 FEDERAL TRADE COMl\IISSIOK DECISIONS Findings 51 F. T. C.

a national public relations job with the American Federation or Labor. (R. 791) If the testimony of these witnesses and others who testified to similar effect is to be believed, there is no question hut that a case of misrepresentation with respect to respondents' connection with the American Federation of Lahor has hoen established. However, counsel for respondents contends that the testimony or these witnesses cannot be taken at face value hecause in some instances they admitted they were not sure as to exactly what the solicitor said to them, and some of the witnesses concedcd that the solicitor might have used the expression "A. F. or L. unions" instead or "A. F. or L." in referring to respondent's connection with that organization. Counsel ror respondents suggests that many or the witnesses called in support or the complaint were confused hecanse of their lack of appreciation of the difference hctween a claim of endorsement by thc parent body, the American Federation or Labor, and a legitimate claiIll that the paper was endorsed by a number of constituent locals atRliated with the American Federation of Labor. In arguing for the unreliability of the tes timony offered in support of the complaint, counsel caus attention to the fact that the telephone solicitors who were called as witnesses for respondents "denied categorically" that they ever represented their employer or paper as being connected with or endorsed by the American Federation of Lahor.

The examiner has carefully analyzed the testimony of the witnesses and the contentions of counsel for respondents and is convinced that the greater weight of the evidence supports a finding that respondents' solicitors did represent their pa.per as being endorsed by, or having an even closer connection with, the American Federation of Labor. A number.r of the instances cited by counsel for respondents where witne,sses stated on cross-examination that the solicitor used the expression "A. F. of L. l1nions: involve merely affrmative responses by the witnesses to leading questions addressed to them by respondents' counsel and the record indicates the \Vitnesses did not appreciate the distinction which counsel Wf\S trying to make between the A. F. of L. ,mc1 unions of the A. F. of L. MoreoY8I', when the testimony of these witnesses is analyzed as a whole it is clear that in most instances it was their understanding that the solicitor was referring to the America.n Federation of Labor. Although some of the witnesses were not certain of the precise words used by the solicitor, they were clear that the solicitor stressed the paper s connection with the American Federal.ion of Labor ilnd not merely with some unions of that organization. TRADE 1:::10:: COLTlIH PFBLlSHL'\G CORP, ET AL. 1281 1275 Findings It is significant that while F:ome of the cOlln l'sations related took place several years prior to the witness' testimony, at a time when the witness' recollection might be less than clear, others testified about cony('rsations which took place in recent months prior to the hearing. The record reflects a close parallel in the statements reported to have been made by respondents' solicitors in both the earbel' and t.he more recent periods.

Corroboration of the oral testimony of the witnesses called in support of the complaint appears, in several instances, in written records made by them at a time when the conversations were clear in their mind. Thus one of the witnesses referred to by counsel for respondents, who gaye an affrmative answer on cross-examination in response to the question whether the solicitor said respondents' paper was the paper of "A. F. of L. Unions nationally," indicated in a letter written to the paper within a week after the conversation what his actual l11derstanding was of the representation made by the soEcHor. In advising the paper that it was cancelling an order for an advertisement the following was given as the reason: IVe have received information that your paper is not affliated with the American Federation of Labor as represented by your (salesn1OnJ." (CX67) In reply to this letter, respondents' advertising manager advised the writer, in part, as follows:

The Trade Union Courier, leading independent labor newspaper in the country, was founded in .J anuary, 1936, and has been published regularly since that year, presenting the vital labor news affecting the nation and covering the A. F. L. union it represents from an anti- Communist standpoint and from the standpoint, too, of better labormanagement relations." (CX63) It is significant that in his reply the advertising manager did not make a clear-cut denial of any claim of representation of the American Federation of Labor but added to the confusion by an ambiguous refel'f'nce to the paper s presentation of labor news "affecting the nation and covering the A. F. L. Ul1ion it represents. Another witness within a month after a telephone conversation with one of respondent's solicitors in which he agreed to take an advertisement, addressed a letter to respondents requesting return of his check for the following reason:

Upon checking further, we fid that you have misrepresented. IVhen soliciting us by phone, you gave us a lengthy description of how the American Federation of Labor was making a 'drive' to hetter 1282 FEDERAL TRADE COMMISSIOK DECISIONS Findings 51 F. T. C. relations between employer and employee, and that all the A. F. of L. locals were participating in this. " (CX 98) Still another witness, who had some prior de.alings \\'ith respondents, asked his secretary to get on the phone as soon as he recognized the nature of the can and she recorded respondents' solicitor as having made the follmying statement:

am wjt,h the Trade Union Courier of the .\mcrican Federation of Labor.''' (CX 100) Although as previously mentioned, the witnesses called hy respondents generally denied the statements attributed to them, the examine!' can give little weight to their denials. ' ,'Vl,ile they were quite certain an answer to leading questions directed to them on their direct examination that they had made none of the statements attrihuted to them their testimony on cross-examination as t.o whom they spoke "ith and when the conversations took place, indicated that they had very little actual recollection of the conversations about which they professed to have such vivid recollections on direct examination. Considering the fact that they usually make about 2 000 telephone solicitations a yen,r, it 1S not surprising that they could not recall cOllycrsations which in some instances went back three or four years. The same witnesses sought to bolster their evidently fauHy recollections by reference to what they saiel was their usual practice in talking to prospective advertisers over the telephone. A large portion of this testimony impressed the examiner as unconvincing and lacking in inherent probability. Despite the fact that the paper i endorsed by a number of unions affliated with the American Federation of Labor and this would be a natural talking point in seeking to sell advertising, several of the witnesses at first insisted that. they made no reference to the American Federation of Labor in n,ny way, shape or form in their conversations. \Vhen the absurdity of this situation became apparent to them, several of the ,,' witnesses conceded that they referred to the American Federation of Labor but. that this '''HS only done in response to some query Ly the recipient of the call as to ,yhat connection they ha.d with the Jabol' movement. In such instances. ac- 2 Counsel for rf'spondents contend this transcription is not accurate because the e(;n'tarr did not g-et on the telephone until after tile solicitor had introduced himself and that tbe above statement was something whicb the witness bad inserted find W!l not an actual part of the conversation, However, tlle examiner is satisfied that the l1bo\ was an actual vart of tl1c conversation ami ,nls not edited in any Wily b l' tile wHnf'SS. a In several lnstanees the conversations with OJ1e of the respondents ' salesmen were Ht. tributed to fin employee 'Who is no longer with respondents and who respondents eIaim could not be located to testify, In thesf' instances the te timotly of the conycrsation stands uncontradicted in the record, except for some gPllerf!! testimony of ff'spOllrlf'nts advertising manager which bas little probative yalue, , TRADE UNION COURIER PUBLISHING CORP. ET AI. 1283 1275 Findings cording to these \vitnesses, they wouldmcnt,ion the endorsement of the paper by American Federation of Labor unions. However, a careful examination of their testimony convinces the examiner that they did more than they had a right to do legitimately, and that they deliberately set about to create an impression of some connection between the paper and the national A. F. of L. Thus, one of the solicitors testified:

"* * * when I told lr. Cooney we were a labor paper, he asked me what sort of a labor paper we are, and I told him we are a pro-A. F. of L. paper, and during the conversation there he asked me what affliation you might have had with the A. F. of L. and I told him we were offcially endorsed by the A. F. of L. Unions " (R. 852) (Emphasis supplied) Another solicitor testified that if a person asked him: "Are you people endorsed by CIO or A. F. of L. " he would reply " (WJe are endorsed hy A. F. of L. Unions. (R. 922) Stil another witness testified that when people asked me what labor publication we arc, I tell them we espouse and expound the principles of A. F. of L." (R. 978) Although the examiner has already found above that a member of the witnesses called in support of the complaint testified truthfully and accurately that the solicitor told them the paper was connected with or endorsed by the American Federation of Labor, it is immaterial in the opinion of the examiner whether the solicitor, under the circumstances here present, used the expression "A. F. of L. unions rather than A. F. of L. In the context in which these conversations took place, the use of the expression "A. F. of L. Unions" was calculated to give the listener the impression that a relationship to the national body of the organization or to the organization as a whole was involved. That the use of this expression has such a tendency to deceive was unwittingly admitted by respondents' advertising manager who indicated that even his own salesmen had been misled by the paper s claim of A. F. of L. association. Thus, the witness testified: "* * * they themselves (the salesmen) sometimes (were) confused they asked me do you represent the American Federation of Labor and I said yes we represent the .American Federation of Labor Unions.''' (Emphasis supplied.

4 It may be noted that while the same witness at ODe point in his testimony stated tJ1at he never gave the salesmen instructions on what Dot to tell prospective advertisers "became tbej' know what not to say " (R. 1003, J004), at another point lie claimed that he specifically instructed them Dot to tell people the paper was endorsed by the American Federation of Labor (R. 1010). No credence is given hy the examiner to the latter statement.

1284 FEDERAL TRADE COMMISSION DECISIO Findings :)11". 1'. C. It may be noted that in reaching this conclusion the exarninel' does not do so as the basis of the argument made by counsel supporting the complaint, both at the earlier stage of this proceeding and again now that a truthful statement by respondents as to their endorsement by certain unions of the A. F. of L. is per se a representation as to endorsement by the American Fedcration of Labor. The examiner conclusion is, rather, based on the subtle, and sometimes not so subtle insinuations which pervaded the sales talk of the solicitors and which tellded to create the impression of an association with the A. F. of L. as a national organization. Under these circumstances IVhether the sulicitors used the exprpssion ;;j., F. of L,': or "A. F. of L. Unions" is of little import. In fact, in a long distance telephone cau the differ- 8lJce between the use of the singular or plural is sometimes blurred out and: under the circumstances here present, it is probable that this "nls done purposely, Counsel for respondents suggests in his brief that any instances where f1 salesman might have overstated respondents' relationship to the American Federation of Labor must be regarded as isolated and as not being a part of the deliberate policy of the paper. The examiner cannot agree with counsel's contention in this regard. It is the opinion of the examiner that the record as it no\\ stands shows a widesprea,d and deliberate policy of misrepresentation which cannot be regarded as the isolated action of individual salesmen. In his earlier decision, the examiner inclicateu his awareness of the existence of suspicious circumstances in the case but, because of the confusion in the great bulk of the testimony, he could not make any affrmative finding of misrepresentation and gave respondents the benefit of the doubt by attributing hyo proven statements concerning respondents connection with the A. 'F. of L. to the i:-olated, lmintentional action of individual salesmen. He-wever, the examiner is now satisfied that neither these instances, nor the other instances which have been estf1blishec1 at the present hearings, were at all isolated. There is no question that the salesmen "-ere acting within the scope of their apparent authority and respondents cannot escape re8poTlsibi1ity for their cond uet.

In an effort (0 show respondents' good faith and to c1emollsrrate that their ofJcia.l policy "- as to di::pcl ilny possible mi"lln(1(' t:llil1illg of their connection ",',ith the American Federation of Labor, 0011n::e1 for respondents rely upon a change in the format of respondents ' 1Jublication which, it is claimed, "',as voluntaril)' clone after tlw time, of the examiner s earlier dismissal of the complaint herein. As indi- 58t(l11'lanl D'iRtJfbutors, Inc, Y. F. T. c. 211 F. 2d 7, 13 (C. il. 2 , 18:S4j. ,.

TRADE U:\1O:\ corHlEn prBLI.SHTXG COHP. ET AL. 1285 1275 Pindings cated in the examiner s prior decision, respondents pre:viously stated at the top of the editorial page of thc paper that it was: "Devoted to the interests of all Unions in the Eastern States Affliated with the American Federation of Labor. " This statement has been changed to read as follows:

The Trade Union Courier was founded in 19:36 in the interest of all t.trade unions aiIliated with the American Federiltion of Labor , The Trade Union Courier is offcially endorsed by more than 2000 A. F. L. unions in the United States and Canada and supports the aims and aspirations of all anti-communist unions. This newspaper does not speak oflicially for the A. F. of L. national body in "lVashington and is not the offcial voice or organ of the Executive Council of the A. F. of L." (RX 34) Counsel apparently regards this staten1ent as clarifying respondents' relationship to the American Federation of Labor. In the opinion of the examiner, the revised statement hardly serves this purpose. Vhereas the former statement refers to a limited commnnity of interest with "Unions in the Eastern States " the new statement refers to a broad association with "all tra.de unions affliated with the American Federation of Labor. "lVhiJe the statement. also says that the paper " does not speak offcially for the A. F. of L. national body 'in Wa.hington and is not. the offcial organ of the Executive Oouncil the A. F. of L." (Emphasis suppJiedJ, there is a suggestion in the language used of some unofficial relationship between the paper and the A. F. of L. as an organization. Nowhere is there a clear-cut staternent that the paper is not endorsed by the American Federation of Labor.

It may also be noted that this alleged voluntm'Y effort to clarify matters did not occur un61 shortly after the Commission had remanded this proceeding to the hearing examiner to take further evidence. Considering the time lag of one year between the issuanre of the examiner s decision and t.he cha,nge in format, and the fact that the change occurred within two months after t.he Commission s order of remand it may be doubted that respondents' action was pnrely voluntary. In any event, there is evidence in the record that the type of practices charged in the complaint were continued by salesmen even after the alleged change of format. It is clear, therefore, that this issue is not moot and that there is t definite need for corrective action. On the record as a -\Whole t.he examiner concludes and finds that respondents have engaged in misrepresenting the facts as to their relationship with the American Federation of Labor and ha.ve sought to create, and have created! the impression among prospective advertisers that their Findings 51 F. T. C.

newspaper is endorsed by, affliated with, or bears a close connection with the American Fede.ration of Labor.

Counsel for respondents make the argume.llt in their brief that it is of no real significance to a prospective advertiser whether the connections of a labor publication are with the A. F. of L. or with A. F. of L. unions. Counsel suggest that since respondents' paper is endorsed by a substantial number of unions and is eircllJated among union members, a prospective advertiser ",vauld have little concern "with whether the paper had an offcial connectioIl "with central headquarters in \Vashington." The examiner cannot agree with argument. ,Yhile it may be that respondents have some following in the labol' movement it is one thing to represent that it. is endorsed by (1, segment. of a labor organization and another to claim endorsement. by the entire body. The claim of endorsement by the American Federation of Labor is not merely a claim of recog11ition by some labor offcials in \Vashington but hy the entire body of unions comprising the federation and acting as an organized group. There can be no question but thflt the fact of an endorsement by, or relationship with, the A. F. of L. is a material fact which, it may reasonably be inferred, would influence the judgment of a prospective advertiser and as to ,,,which he is entitled to be correctly advised.

Counsel for respondents also make the argument that the distinction between the American Federation of Labor and unions of that organization has been largely obliterated in common parlance lnd that it has become a familiar practice to represent or identify organizations or publications as being "A. F. of L. " although not technically a part of the parent organization. The only evidence cited to support, this assertion is the fact that some witnesses referred loosely to local labor organizations and publications as being "A. F. of L.:' However, the record discloses that the witnesses appreciated the distinction between a local organization affliated with the .A.erican Federation of Labor and the national organization itself. In any event there has been no showing that the expression "American Federation of Labor" or "A. F. of L." has acquired any such secondary meaning as to justify a claim of A. F. of L. endorsement when only endorsement by certain unions of the A. F. of L. is involved.' The Federal Trade Commission Act is intended to protect the uninformed ancl the innocent and not merely the sophisticated. The fact that any signiiicant portion of the public may be misled is suffcient to establish a violation of the Act.' aF. T. c. v. Winsted Hosiery Co. 258 U. S. 483, 493: Hunt Pen CO. Y. F. T. C. 197 F. 20273 280, (C. A. , 1952).

Positive Products Co. v. F. . C. 132 F. 2d lG5 (C, A. 7 1942) ; Prima Products, Inc. v. F. T. G. 209 F. 2d 405, 409 (C. A. 2, 1954). TRADE UXIOX COt'RIER PUBLlSHJXG CORP. ET AL. 1287 1275 Findings C. Unauthorized Dealings Counsel supporting the complaint offered evidence that in a number of instances respondents sent bills to business firms and sought to collect for advertisements, despite the fact that a representative of the firm had refused to agree to take (l,n (l,dvert.isement when solicited hy long distance telephone call.

In some instances there was an outright refusal but respondents nevertheless sought to insert an advertisement and to collect therefor. In other instances the firm s represent.ative told the solicitor that he could not agree to an advertisement without the approval of a partner or of the company s board of directors, or reque.sted that the solicitor send a ",written proposal because the company did not authorize advertisements by telephone. In the latter instances respondents nevertheless sent bills and sought to collect for an advertisement without awaiting the necessary approval action by the company. The record discloses that it was particular.rly in the latter type of situation, where there was any indication tha,t the firm might possibly accept an advertisement, that the solicit.or would "jump the gun" and have a bill sent to the firm.

('oUJ;sd for rl'spoll(lents urge. thrt the evidence oflered in support of the complaint not be accepted because of its unre1iability and as being contrary to the evidence offered by respondents' witnesses. In two instances the claim of unreliability is based upon the fact that counsel supporting the complaint relied wholly upon letters written to respondents by the firms in question stating that the advertisement had not been authorized, such letters not being supported by any witness who talked to the solicitor. Counsel contend that these letters are hearsay evidence and that no finding can be based thereon. I-Iowever, it may he noted that no objection to these letters was made at the hearings based on the hearsay character thereof. Although the letters are undoubtedly hearsay they are a reliable type of hearsay, having been written contemporaneously with the events at issue, and the record fails to disclose that respondents ever replied to these letters to question the correctness of the statements therein made. I\1moreover the circumstances under which respondents sought to foist an advertisement on these firms, as recorded in the letters, comports with other reliable evidence in the record.

In any event, even disregarding these two transactions, there is ample evidence in the record to support the charges in the complaint. 6 These instances involve transactions with R. L. Bernardo & Sons !lnd .American Snuff Company, both of Memphis. ((CX 57, 77 and 79). 1288 FEDERAL TRADE C01\BHSSIOK DECISIONS Findings 51 F. T. C.

In at least two inst.ances the testimony of witnesses concerning unauthorize.d clealingsstanc1s uncontradicted in the record and is corroborated by letters written contemporaneously with the event.' In one of these transactions the witness testified that he had advised the solicitor that he could not take an advertisement without the concurrence of his partner. Nevertheless he received a biU for $150. upon receipt of which he wrote to respondents as follows: I did not give your 111'. Picard authority to run an advertisement in your publication, nor do I appreciate YOllr apparent effort to try to force me to order an advertisement." (CX 70) In another transaction involving the same solicitor, a witness testified that he told the latter to write a lett.er outlining his proposition but received instead a hiU for $100. , whereupon he sent a telegram to respondents and then wrote as follows:

Confirming our telegram we did not authorize your Their. Bob Picard to insert an ad in your magazine.

'Ve did ask him to write us an air mail letter explaining in detail exactly what he was wanting.

",Vo do not authorize any donations by telephone "" ,,: ,; and do not a.ppreciate the high pressure methods involved in this instance. (OX 82) ,Vhile respondents' solicitors in several other instances claimed that they had received approv ll for an advertisement before having a bill sent to the firm, the examiner "ras not impressed with the testimony of these witnesses. It was evident that they hac1little recollection of their fllleged cOllver-satlons and were relying primarily on the fact that after the, conversation "with a representative of the firm in question they had filled out a Loren of sales mcmol'mdmn, from which they concluded that the transactiollmust have been authorized. I-Iowever, the examiner cannot accept this testimony ill the Jight of the testimony given by appa.rently truthful witnesses who testified in support of the complaint. and in the light of the ge,nerally unconvincing and unimpre8sive performance given by the solicitors, both with respect to the testimony on this issue and that discussed above. Counsel for respondents urges that any instances of unauthorized dealings which may have been established by the record should be regarded as the unauthorized, isolated action of individual salesmen. 110\'l:ver, the examiner does not find this to be the case. This type of 9 These involve transactions with tl1c solicitor preYiol1;ly mentioned who is no Jonger employed b . respondents.

TH.\DE r:\IOX C(JLHlETI YCRLTsnr::(; CORP. ET ,\1. 1289 1275 Findings prndice wa too ,Yidespreac1 to be regarded as the isolated action of in clividual solicitors.

III the light of the evidence now in the record, the ex uninel' is of the opinion tlutt several instances of unauthorized dealings referred to in his prior decision \,"which were then regarded as isolated transactions not. refie,acting respondents' regukr policy of doing business, can no longer be considered t.o be such. It is accordingly concluded and found, on the record as a. whole, that respondents have engaged in the praetiee of billing firms for advertisements which were not authorized and of seeking to insert advertisements without authorization and then seeking to exact payment therefor. Counsel for respondents take the position that even if there were some instances of una.authorized dca-lings, there is no showing that re sponclents engaged in any fraudulent or deceitful conduct or attempted to roHect payment by threats of Jawsuit or other forcihle methods. Counsel point out that where the customer advised respondents that the ad was unauthorized no further attempts Were made to enforce payment. Counsel accordingly contends that the conduct established by the record fails to establish any violation of the Federal Trade Commission ..\.ct, citing particularly the cases ,\"hieh the examiner cited in his earlier cleeision.

Insofar as the facts are (joncernecl, the record does show that 1'8spor,dents made persistent efforts to enforce payment for ac1vertisellellt inc1nclil1g the sencling of sev81'alletters Rnclnotices to the pubtiye ft(hel'ti E'r one of which was entitled "Fiml1 2\'notice" and advised the achcftiser that his remittance:

,;* * * must reach this offce by (a. given c1at.eJ * * *. You will Sh,ve lls time and expense by immediate payment." :However' , it is true that except for one instance there i 110 evidence that respondents continued to seek payment after.r being advised that the a,clvertlsement IYas not authorizect. XcvBrtheJess, it is the opiniOIl of the examiner that irrespectil'e of Iyhcthel' st.renuous efforts or threats were made to enforce payment, the engagement in a reg1l1ar practice of biling customers for ac1vcl'tisements which Ivere not authorized 8.nd .seeking to colleet therefor is itself a form of unfair 10 III nt least on instance e\.en after respondents we1'e advised that DO autlwrizatiou for th ad hnd been given they continued to bi1 the firm. (CX 78 , 78. "Tllc above finding is not based on the transaction with Hom S:'vings Dank of :\lilwauker. upon which counsel supporting the complaint relies. TIle record bows that this firm did agref' to take an adnrtiserncnt, albeit based on the represrntrdion that th(' paper was an offcial publication of the American Federation of Labor. . 12 See footnotf' "10" for a reference to this incident. Findings 51 F. T. C.

or deceptive practice proscribed by the Federal Trade Commission Act. To the extent that the examiner may have appeared to take a different position in his earlier decision, it may be. regarded as hereby modified. The examiner has ca.refully studied the Commission cases cited in his earlier decision and is now convinced that the deliberate practice of biling for wlauthorized ads falls within the purview of the Act. 'While it is true that similar conduct in a number of the cases cited occurred in a context of fraud and of threats to enforce payment, nevertheless, the Commission s order in each case specif-ically enjoined the practice of billing customers for or delivering merchandise not ordered, as \Veil as the other prftctices found. III. THE EFFECT OF THE PRACTICES FOUND The record establishes, and it is so found, that respondents, in the conduct or their business, are in substantial competition in commerce with other firms and individual1s likewise engaged in the publication of newspapers and other periodicals, some of which sell advertising to be inserted therein, and particularly with the publishers of newspapers and other periodicals published or endorsed by the American Federation of Labor or by unions and organization. affliated with the American Federation of Labor.

The acts and practices of respondents above found, with respect to representing that their paper is endorsed by, affiliated with, or closely connected to, the American Federation of Labor have had and now have the tendency and capacity to mislead prospective purchasers of advertising space into the erroneous and mistake.n belief that the said representations were and are true and into the purchase of advertising space because of such erroneous and mistaken belief. As a result it may reasonably be inferred that substantial trade in commerce has been unfairly diverted to respondents from their competitors and substantial injury has been and is being done to competition in commerce.e, The unfair practice engaged in by respondents of publishing unauthorized advertisements in their publication has subjected firms and individuals to harassment and unlawful demands for payment of nonexistent debts.

See, in addition to the cases dated in the examiner s earlier decision, Dorfman F. T. C. 144 F. 2d. 737 (C. A. 8 , 1944), affrming one of the cases cited by the examiner sub. Dom. Stetson Felt Mills 36 F. T. C. 651. In that case paragraph 6 of the order enjoined responu.ents from:

Preparing orders for quantities of rug" or other merchandise in excess of the quanti. ties requested b ' purcha"ers .. * This paragraph was specifically app!.ored by the court of appeals as follows: In short, the Order says to petitioners and their salesmen, cease deceiving your cus. tomeI's and stop plldding their orders. The Order, in our opinion, places no unfair burden upon the petitioners. It should be strictly obeyed. , .

TRADE UNION COURIER PUBLISHED..G CORP. ET AL 1291 1275 Appeal cm' CLUSION OF LAW It is concluded that the acts and practices of respondents, as hereinabove found, are all to the prejudice and injury of the puhlic and of respondents: competitors and constitute unfair and deceptive acts and practices and unfair methods of competition, in commerce, within the intent and meaning of section;) of the Federal Trade Commission Act. It is accordingly concluded that this proceeding is in the interest of the public and that an ordcr to cease and d.sist should issue enjoining respondents from engaging in such conduct. ORDER It is ordered That respondents Trade Union Courier Publishing Corporation, a corporation, its offcers, and Maxwell C. Raddock Charles Raddock and Bert Raddock, individually and as offcers of said corporation, and respondents' representatives, agents and employees, directly or through any corporate or other device, in connection with the offering for sale and sale of advertising space in the newspaper now designated as the '; Tracle Union Courier,: whether published under that. name, or any other name: and in connection with the offering for sale c.ale and distribution of said newspaper, in commerce, as "commerce: is defined in the Federal Trade Commission Act, do fortln'with cease and desist from:

1. Representing, directly or by implication, that said newspaper is endorsed by, affliated with, sponsored by, or otherwise connected with the American Federation of Labor.

2. Placing, printing or puhJishing any advertisement on behalf of any person or finn in said paper without a prior order or agreement to purchase said advertisement.

3. Sending bills, letters or notices to any person or firm with regard to an advertisement which has been or is to be, printed, insertcd or published on behalf of said person or firm, or in any other manner seeking to exact payment for any such advertisement, without a bona fide order or agreement to purchase said advertisement. 0); APPEAL FIW2\I INITIAL DECISION Per CURIAM: :

Statement of the Case Complaint herein issued on March 14, 1952, charging respondents with violation of Section 5 of the Federal Trade Commission Act by the use of unfair and deceptive acts and practices and unfair methods of competition through st.atements made in the Trade Union Courier 1292 FEDERAL TRADE CO).BHSSI02\-; DECISrOKS Appeal 51 "F. T. C.

and through oral statements made by respondents' duly authorized representatives, to the effect that the Trade Union ConrLcr is endorsed hy the American Federation of Lahor; that said publication offcially is endorsed by 2 000 A. F. L. unions, that it is affliated with the American Labor Press Association and that it is serviced by tlle Int.ernational Labor News Service and by the American Labor News Service (correctly identified in the record as American Federation of Labor News Service (T. 13)J. The complaint also charges respondents will having engaged in the further practice of placiJ1g advert.isements of various business concerns in the Trade B"union Courier without. having received authorization therefor and of then seeking to exact payment for said advertisements from said concerns. Thereafter, in the usual course, answer was filed a,nd hearings were helel before a hearing examiner duly designated by the Commission. On August 26, 1952, the hearing examiner filed his initial decision and order dismissing the complaint. for lack of record evidence to sustain the allegations of the complaint and beeanse the public. interest did not require corrective action against the respondents. --lppeal to the Commission was taken by counsel supporting the complaint with respect to the dismissal of two of the charges of the complaint. 1. e.

(1) that respondents falsely represented that their publication was endorsed by the American Federation of Labor, anll (2) that respondents placed advertisements of various business concerns in their publication without having rcceiyed authorization therefor and of them seeking to exact payment for sllch advertlsements from said concerns.

No appeal was ta,ken from the dismissal of the other charges in the complaint.

By order of June 12 , 105:1, this Commission granted- a niotion filed by counsel supporting the t:complaint for permission to withdraw his partial appeal from the initial decision. The said order of .June 12 lD53 also vacated the order of the hearing examiner dismissing the compb.int as to the two charges appealed from: reopened the ease for the introduction of testimony and evidence pro and con on the aforeaid two charges and remanded the proceedjng to the hearing cxtllninel' for the reception of further testimony a,nel evidence. In due course further hearings before t.he hearing examiner were held and testimony and evidence adducecl -in support. of and in opposition to the two cha.rges of the complaint which were: remanded to the hearing examiner. At the opening of the hearjngs on remand and :It Ihe clo e of evidence offered 1n support of the l'oJ1l'laint. as wen as TR.\DE L'dOX CUCHIEH PGBLISHIXG COTIP. ET J. 1293 1275 Appeal at the end of the entire case, respondents filed motions to dismiss which were denied by the hearing examiner. Briefs were submitted to tho hearing examiner by counsel in support. of their respective positions. And, upon till entire record and from his observation of t.he witnesses, the hearing examiner 011 December 29, 1954, filed his initial decision on remand consisting of his statClnent. of the case, findings of fact, conclusion of law and order to cease and desist from: 1. Representing, directly or by implication, that said newspaper rTl'ade l,Tnion CourierJ is endorsed by, affliated with, sponsored by, or otherwise conneeted with the American Federation of Labor. 2. Placing, printing 01' publishing any advertisement on behalf of any person or firm in said1 paper without a. prior order or agreement to purchase said advertiseJnent.

3. Sending bills, letters or notices to finy person or i-irm with regard to an advertisement which has been or is to be printed, inserted or published on behalf of eaic1 person or firm, or in any other manner seeking to exact payment for any such advertisement, without a bona fide order or agreement to purchase said advertisement. Timely appeal from the hearing examiner s initial decision on remand was taken by respondents and briefs were fied with the Commission by both sides. The case is nm\' before the Commission for fulal disposition on the merits on the full record, including a. document filed by respondents April 28, 1955, withdrawing their request for oral argument on appeal before the Commission, and requesting that particular reference be made to a brief filed by respondents on N 0vember 12, 1952, as wen as renewing a contention by respondents respecting certain rulings by the hea ring examiner (T. 776-779, 802-803) with regard to stat.ements given by ,witnesses to Federal Trade Commission investigators.

Statement of Facts Respondent corporation publishes a biweekly tabloid size newspaper-Trade 1.'nioll Courier. The named individual respondents are offcers of the corporation and each is actively engaged in formulation, direction, management or control of the paper s policies and practices. Respondents employ from 9 to 12 advertising salesmen 01' solicitors who solicit advertising orders by personal contact and otherwise. :Mainly, such solicitation is by long distance telephone. A large portion of respondents' incOlnB is derived from this sale to industrial and other business firms of advertjsing space, in the form of "institutional" advertising promoting "good labor-management relations" and "fighting against Commnnism in the labor movement. 1294 FEDERAL TRADE CO:'IYlISSION DECISIONS .Appeal 51 F. T. C.

The publication is endorsed by a substantial numher of American Federation of Labor trade unions and is affliated with several labor press associations and news services. As previously indicated, all charges or the complaint, with two exception.s, were resolved in rcspondents' favor by the hearing examiner. The Commission s action of June 12, 1953, in remanding the case to the hearing examiner for further hearings on the two remaining issues, iu effect sustained the hearing examiner s original initial decision dismissing the complaint on all points except those two issues which are now before us on appeal for final decision. At the time of issuance of the order of remand we did not specifically so hold. 'Ve do so now. Respondents' A ppeai Respondents vigorously contend at the outset that the llearing examiner erred in denying respondents: motions to dis111iss paragraph 6 of the complaint and to dismi.ss the two remaining charges in the COlllplaint fied at the end of the Commission s case and at the end of the entire.e case.

Paragraph 6 of the complaint reads in fuji as follows: In the course and conduct of their business, respondents have engaged in the further practice of pla,cing advertisements of various concerns in their paper without having received authorization therefor and then seeking to exact payment for said advertisements from said conc.erns.

Respondents urge that the allegations of this paragraph are insuffcient as a matter of law to constitute a violation of the Federal Trade Commission Act and that, therefore, the Commission is without jurisdiction "to enter.rtain that item of the complaint." The hearing examiner denied the motion, holding that "the deliberate practice of billing for una,authorized ads fads within the PUl'ViB\\ of the Act. It is too well settled to require citation of authorities that the Commission, in the first instance, subject to the judicial review,w prm'ided has the determination of what practices come within the scope of the Act. It is Ollr vie-w, and \\c so find, that the. hearing examiner correctly denied respondents' motions in this regard. The question of whether 01' not the evidence sustains the charge that respondents in fact engaged in the pradjce in question will be discllssed hereinafter in connection with our disposition on the merits of the two issues before us.

Respondents also contend that the hearing examiner erred in denying motions to dismiss the two charges of the complaint which were the subject of the C0ll1ission s order remanding the proceeding to the TRADE ex ION GOrRIER prBLISHING COHP. ET AL. 1295 1275 Appeal hearing examiner-i. e., endorsement of the Trade Union Courier by the A. F. of L. and unauthorized insertion of advertisements. Theyadvance as principal grounds in support of those motions contentions among others, that the findings, concl usion and order in respect to each of these issues are not within the scope of the complaint, that the testimony and evidence are insuiIcient to support the charges made, and that an Older to cease and desist entered against respondents would not be in the public interest.

,Ve turn Jirst to the a.rgullent of respondents with regard to the alleged variance of the hearing examiner s findings, conclusion and order from the charges of the complaint. Essentially it is respondents position that "Had they been faced with the type of charge which ,voulcl support an order such as is proposed by the examiner, they would have known what they had to meet and could have presented their defense accordingly. The fact is ihat they were not; no such notice \Vas given them. The complaint a1Jegec1 that respondents, in the Trade 1Jnion Courier and through statements by its advertising solicitors, represented, directly or by irnplication, that the paper is endorsed by the American Federation of Labor and that respondents inserted advertisements in the said paper without prior authorization therefor and then sought to exact payment for those advertisements. Respondents answered, including seven pages of affrmative defenses therein, much testimony was taken and elaborate findings of fact were made by the hearing examiner, the ultimate conclusion of which is that respondents, in fact, had engaged in the practices described. The record is dear that respondents at flJI times in the proceeding were fully aware of the scope and intent of the charges aga.inst them and the disposition or the two issues by the hearing examiner corresponds generally to the actual situation sought to be corrected. There was not here any abandonment. of the very substance of the original charges of the complaint and the substitution of other charges which respondents could not have anticipated and had no opportunity to meet. I-Iaving been fully justified in his findings that respondents have engag-eel in the unfair and deceptive practices alleged in the complaint the examiner equally '\as justifled in entering an order which would be effective in preventing the use of such practices in the future. case. of Federal TTade COTi1mis-was held by the Supreme Court in the sion v. RllbeT'oicl 00, Orders of the Federal Trade Commi sion are not intended to impose cl'imjnal punishment or exact compensatory damages for past acts, but to prevent illegal practices in the future. In carrying out JFedcral 'trade COJ/HliS8'ion v. R-llbeToirl Co. 343 L. S. 470, 173 (1952). 423783--58-- , 1296 FEnERAL TRADE COMMISSION DECISIONS 51 F. T. c. Appeal this function the Commission is not limited to prohibiting the ilegal practice in the precise form in which it is found to have existed in the past. If the Commission is to attain the objectives Congress envisioned, it cannot be required to confine its road hlock to the narrow lane the transgressor has traveled; it must be allowed effectively to close all roads to the prohibited goal, so that its order may not be bypassed with impunity. Moreover (tJhe Commission has wide discretion in its choice of a remedy deemed adequate to cope with the unlawful practices ' disclosed. Jacob Siegel Co. v. Federal Trade Cornrn 327 U. S. 608, 611 (1946)." We are of the opinion, and find that the hearing examiner s order conforms to the theory of, and is reasonably related to, the charges contained in the complaint. The suffciency of the evidence with respect thereto is hereinafter considered and weighed.

As indicated above, respondents in addition urge that an order to cease and desist entered against them would not be in the public interest claiming that there has been no showing whatever of any specific, substantial public interest in this case or of the type of practice and injury covered hy the Act. We have here a situation where, in the entire context surrounding all actions of the respondents and their authorized representatives, the hearing examiner found that over a substantial period of time, over a representative area, and in a sub:' stantial number of transactions, through statements by salesmen through correspondence, invoices, letterheads, etc. respondents engaged in the practices involved for the purpose of inducing sales of advertising space as charged in the complaint. Admittedly, respondents' solicitors contact several thousands of prospective customers a year, a considerable segmcnt of the public, who through alleged misrepresentations are induced to purchase advertising space which, also admittedly, accounts for a large part of the corporate respondent' income. Evidence of record establishes also that the Trade union Courier is competitive for the advertising dollar with several hundreds of other lahor publications, of which there are several thousands, and that it rcachcs labor leaders throughout the country, of whom there are 300 000 to 500 000 at the present time. It is clear therefore, that there is suffcient public interest present here to warrant this proceeding and to support the order which we determine below should issue.

Respondents also filed a number of specific exceptions to the findings, conclusion, and to certain rulings of the hearing examiner. The first four of respondents' exceptions are disposed of by our rulings above. The ha1ance of the specific exceptions are disposed of in the TRAnE UNION COURIER PUBLISHING CORP. ET AL. 1297 Appear1275next succeeding paragraphs or are overruled in effect by our final disposition of this matter on the merits.

In their appeal respondents except specifically to the denial by the hearing examiner of motions to dismiss on the ground that the hearing examiner s 1952 initial decision dismissing the complaint was res adjudicata. The Commission s order of June 12, 1953, remanding the case adverted to hereinabove, disposes of this point. There in ruling upon respondents' obj sections in opposition to remand, the Commission held that:

The power to reopen a proceeding for the reception of additional evidence is inherent in trial tribunals and its exercise is a matter within their discretion. That the Commission delegates certain of its trial functions to hearing examiners does not divest it of its status as a trial tribunal, nor convert it into an appellate body. 'Whatever cogency respondents' objections might have were they made in a court proceeding between private litigants, they are not persuasive here in a proceeding which is predicated upon the public interest which demands that the Commission be fully informed concerning the practices in question.

This exception of respondents is denied.

Respondents further except to rulings of the hearing examiner admitting over objection testimony concerning "impressions" of certa.in witnesses as to what was said to them orally by respondents' solicitors. It is well established that there is no better method to resolve whether or not a statement or representation is misleading than to determine its meaning to those to whom such statements or representation has been made. The record discloses here that in most instances witnesses testified to their best recollection of the substance of their conversations with respondents' solicitors. Some did relate their impressions gained therefrom as to respondents' relationship with the A . F. of L. Wigmore ' perhaps best states the rule controllng in the latter circumstances which we believe is dispositive of respondents' contention in this respect:

The general rule, universally accepted is therefore that the substance or effect of the actual words spoken wil suffce, the witness stating this substance as best he can from the impression left upon his memory. He may give his 'understanding' or 'impression' as to the net meaning of the words heard.

This exception of respondents is denied.

I Wigmore, On Evidence, Third Edition, Section 2097; See also U. S. v. Krulewitcll, 167 F. 2d 943.

1298 FEnERAL TRADE CO:I:'ISSION DECISIONS Appeal 51 F.

Respondents also except to the denial by the hearing examiner of motions to sb'ike the testi1nony of one witness as not being connected with or binding upon respondents and to strike the testimony of another witness as not being within the issues of the case. In the first instance the witness testified he received a long distance call from New York for an ad in 1953, which he declined to authorize and that he was subsequently biled therefor as shown by a registered letter in evidence. Respondents' witness I(oota, a solicitor, testified he called tile \vitness but could not recall whether or not an ad was authorized. In the second instance the witness testified as to the substance of what was said to him over the phone j and an invoice for an ad, as well as a letter from respondents' advertising manager acknowledging the advertising order, connects up the witness' testimony whh the issues in this proceeding. The Commission has concluded that the hearing examiner s rulings on these two motions were correct. Even if respondents' contentions here were ,veil grounded, it would not affect final disposition of respondents' appeals herein since the greater weight of other testimony and evidence supports the initial decision on remand as herein appears. These exceptions of respondents are denied. The hearing examiner denied a request and a motion by respondents' counsel that statements of interviews with witnesses by Federal Trade Commjssloll investigators be produced at the hearings before the hearing examiner. These rulings ,were based upon the ground that reports of such investiga60ns are made in the COllrse of the discharge of offcial duties and are confidential except where used for the purpose of refreshing a witness' recollection, in which event their confidential nature is waive,d. H,respondents excepted. In a memorandum filed with the Commission ---\.11 i1 28! 1955, respondents cite that in the case of Gonion v. United States the Supreme Court definitively held t.hat where a witness testifies to having given a statement to a Government investigator, the trial tribunal must examine that statement for inconsistencies with his statement on the stand, and in the event of such inconsistency must furnish the statement to the defendant. Jlcfcrence also was made to U. S. v. 1'ltlewitch. Counsel for respondents contend that this rule applies irrespective of whether the witness used the statement 011 the stand. The case of Gordon v. United States, 81.p1'a is distinguishable frOTI1 the situation here. The former was a criminal proceeding where the prosecution s case. stood or fen on the testimony of a witness who admittedly had made prior statements contradictory to those made on 8 Gordon v. United States, 344 U. S. 414 (1953). 'U. s. v. Krulewitoh 145 F. 2d TG (2d Cir. 1944). frade UNION COURIER PVBLISmXG CORP. ET AL. 1299 1275 Appeal the witness stand. Here there is no criminal proceeding where the considerations involved in production of prior contradictory statements dictate strict application of the pertinent rules of evidence. In the Gordon case there was proof that the prior statements sought to he produced were in fact contradictory. That is not so here. Further, in its opinion, the Supreme Court recognized inter alia that the assertion of privilege as to confidential character could have defeated a move to require production of the contradictory statements if the statements there involved had been of that nature. The case of U. S. v. 1(1'Ulewitch, supra similarly is distinguishable. It, in pertinent part, merely restates the rule in the Gordon case. K or is there any question of waiver here. The witnesses involved did not use confidential reports of Commission investigators to refresh their recolJections so as to constitute such waiver and the confidential character of the statements was asserted. This exception of respondents is denied.

This leads us now to consideration of the suffciency of the evidence of record herein and to final disposition of the two issues remaining in thi sease.

1Jnauthorized Advertisements The gravamen of the charge here is that respondents without prior authority inserted advertisements in the Trade Union Courier on bellalf of various industrial and other concerns and thel' eafter sought to eXllct payment therefor. This charge is attackcd by respondents on jurisdictional grounds which are disposed of above. In addition employment of the practice categorically is denied by them. The hearing exr1 liner in his initial decision on Temand reviews in considerable detail the testimony and evidence relevant to this point. He had an opportunity to observe at close hand the bearing and den1eanor of the witnesses and he states in his initial decision that he was not impressed with the testimony of respondents' salesmen witnesses that particular advertisements had been authorized. The hearillg examiner concluded that he could not accept this testimony the light of the testimony of apparently truthful witnesses in support of the compla.int and in the light of the generally "unconviJicing and unimpressive performance given by the solicitors. \Vhilc not bound by the findings and conclusions of the hearing examiner in this respect, our o\\n examination of the whole cold record has convinced us that the testimony of the solicitors was based at best upon a vague recollection of their conversations with prospective customers and that, as found by the hearing examiner, they relied primarily upon 51 F. T. c. Appeal the fact that after a given solicitation they had filled out a sales memorandum from which they concluded that the transaction must have been authorized. And the record contains numerous instances of the unauthorized insertion of advertisements. The testimony of witnesses in support of the complaint establishes that no less than sixteen firms 8Jd individuals were biled in amounts from $25.00 to $350.00 for advertisements which they had not authorized, or which they had expressly refused to take. Documents in evidence further establish that payment for such advertisements was sought to be exacted through several follow-up letters and "Final Notices" requesting payment. Persistent efforts were made to enforce payment and the examiner concluded that the extent to which this practice was engaged in amounted to an unfair and deceptive practice proscribed by the Federal Trade Commission Act. Our examination of the "whole record" leads us to determine that the findings in this respect clearly are supported by the greater weight of the evidence. Respondents' appeal from the hearing examiner s initial decision on the issue of insertion of unauthorized advertisements and the efforts of respondents towards exaction of payment therefor as constituting a violation of the Federal Trade Commission Act is, therefore, denied Endorsement by American Federation of Labor The hearing examiner in his initial decision found that, On the record as a whole, respondents misrepresented the facts as to their relationship with the American Federation of Labor and that they sought to create, and did create, the impression among prospective advertisers that the Trade Union Courier is endorsed hy, affiated with, or bears a close connection with, the American Federation of Labor. This finding by the hearing examiner is based upon his evaluation of the versions given by some of the businessmen witnesses as to what respondents' advertising solicitors said to them when they were approached to take advertisements in the Trade Union Courier as follows:

1. That he wanted 'an ad for the AFL paper' and that the paper was the 'offcial organ of the AFL operating out of their national headquarters.' 2. That he 'represented the American Federation of Labor' and that the paper was a 'national publication of the AFL.' 3. That the paper 'represented' or 'was affliated with the AFL.' 4. That the paper was 'an offcial publication of the AFL.' 5. That the solicitor was 'connected with the AFL unions or AFL.' TRADE UNlOX CO"CRIER PUBLISHING CORP. ET AL. 1301 1275 Appeal 6. That the solicitor was 'representing the AFL against Communism' and was soliciting ads for the newspaper ' through the sanction of the AFL.' 7. That the paper ' (was represented asJ part of' or was ' put out by the American Federation of Labor.' 8. That 'they were bringing out an issue for the convention of the American Federation of Labor and that they were the offcial publl. cation of the American Federation of Labor. 9. That the solicitor was 'with the A. F. of L.' and wanted an ad in the A. F. L. paper.' 10. That the paper was the 'national organ for the American Federation of Labor and that by our advertising in it we would be doing a national public relations job with the American Federation of Labor.

This testimony was attacked hy respondents on the ground that it was unreliable because some of the witnesses on cross-examination admitted they were not sure as to exactly what the solicitor said to them and because some conceded that the solicitors might have used the term "A. F. of L. Unions" instead of "A. F. of L." The hearing examiner in this connection notes that in such instances the responses of the witnesses were affrmatively given to leading questions by respondents' counsel and that he, the hearing examiner, was satisfied that the witnesses did not appreciate the distinction between the two terms. He concluded that the evidence established .that respondents solicitors consistently stressed the paper s connection with the American Federation of Labor and not merely the fact of record of the paper s endorsement, affliation, or connection with only some of the constituent unions of the Federation. Uncontroverted on the record and not subject to dispute is the fact that the American Federation of Labor, as such, endorses no newspaper that solicits, accepts or publishes advertising.

Further, the hearing examiner found this oral testimony to have been corroborated by written records made by some of these witnesses at a time when the conversations were clearly in their minds. For example, the hearing examiner in his initial decision points out that one witness, who testified that one of respondents' solicitors stated to him that respondents' paper was the paper of "the A. F. of L. unions nationally," in advising thc paper, hy a letter in evidence, that an order for an advertisement was being cancelled, gave the following reason: I'Ve have received information that your paper is not affliated with the American Federation of Labor as represented by your (salesment."

Appeal 51 F. T. O. In a reply to this letter, respondents' advertising manager made no clear cut denial as to any claim of representation of the Federation but stated ambiguously only that:

THE TRADE UNION COURIER, leading independent labor newspaper in the country, was founded in tT anuary, 1936, and has been published regularly since that year, presenting the vital labor news affecting the nation and covering the A. L. union it 1'elJ'' esentB from an anti-Communist st.andpoint. Rnd from the standpoint, too, of better labor-management relations. (Italics supplied. Another of these witnesses, the initial decision points out, within a month after a. long distance telephone cOllversa6on with one of respondents' solicitors, wrote to respondents requesting return of his check in payment for an advertisement as follows: pon checking further, we find that you hn,yc misrepresented. 'Vhen soliciting us by phone, you gave us a lengthly description of how the American Federation of La,bor was making a 'drive' to better relations between employer and employee, and that all the A. F. of L. locals wore participating in this.

And, another witness had his secretary get on the phone as soon as one of respondents' solicitors identified himself. She recorded the latter as stating:

I am with the Trade union Courier of the l\.american Federation of Labor.

Respondents' solicitors on the stand denied the statements attributed to them and, in this connection, the hearing examiner s initial decision concludes as follows:

* * * A large portion of this testimony impressed the examiner as unconvincing and lacking in inherent probability. Despite the fact that the paper is endorsed by a number of unions affliated with the American Federation of Labor and this would be a natural talking point in seeking to sell advertising, several of the witnesses L respondents ' advertising soJicitorsJ at first insisted that they rnac1e no reference. to the American Federation of Labor in any way, shape or form in their conversations. "\Vhen the absurdity of this situation became apparent to them, several of the ,yitne,sses conceded that they referred to the American Federation of Labor, but that t.his was only done in response to some query by the recipient of the call as to what connection they had with the labor movement. In such instances, according to these wltnesses, they would mention the endorsement of the paper by American Federation of Labor unions. I-Iowever, a careful examination of their testimony convinces the examiner that they did more than they had a right to do legitimately, .

TRADE UXJOX COURIER PUBLISIIII\G CORP. ET AL. 1303 1275 Appeal and that they deEberately set about to create an impression of some connection between the paper and the national A. F. of 1. Thus one of the solicitors testified:

"'* * * when I told :\11' . Cooney we were a labor paper, he asked me what sort of a labor paper we are and I told him we are a pm-A. F. of L. paper, and during the conversation there he asked me what affliation you might have had loith the A. F. of L. and I told him we were offcially endoT8ed by the A. F. of L. Unions Another solicitor tes6fied that if a person asked him: 'Are you people endorsed by CIO or A. F. of L..' he would reply ' (WJe are endorsed by A. F. Unions. (Emphasis supplied. In the light of the record the hearing examiner fil1ally concluded that the sales pitch of respondents' solicitors was pervaded with subtle and sometimes not so subtle, insinuations which tended to create the impression of an association with the A. F. of L. as a national organization and that the solicitors did not limit themselves to statil1g the actual fact of rceord with respect to the paper s endorsement by only some unions of the A. F. of L. The fact that the paper is endorsed by some A. F. of L. unions is undisputed, the hearing examiner so found, and the Commission does not question such fu1ding. The Com. mission agrees with the hearing examiner, however, that while respondents may have some following in the labor movement, that does not justify their solicitors in seeking to create the impression that the paper is endorsed by the American Federation of Labor itself. The Commission is satisfied, on the holc record, that the hearing examiner was correct in finding that respondents' authorized solicitors customarily followed the pattern indicated in their sales talk and that a significant portion of the public. was in fact misled thereby. Respondents' appeal from the hearing examiner s initial decision in respect to the misrepresentation of the Trade Union Courier s relationship ,with the American Fede.ration of Labor is denied. Scope of Ordcr In addition to contending tha.t the order to c.ease and desist, contained in the initial decision on remand, is not within the scope of the complaint-which contention already has hecn denied ahove-respondents press the point that the said order is so broad and vague as to render respondents liable to the penalties of contempt for perfectly legitimate conduct. They cla.im they arc given noguidance as to \vhat instrudions they must give their solicitors, nor are the solicit.ors themselves told what they can do and what they cannot do in simple, intel- Final Order 51 F. T. C.

ligible terms. In essence their contention is that the proscriptions of the order are too general in scope and that the only order which can properly be entered here is one inhibiting the use of representations that the Trade union Courier is "endorsed" by the American Federation of Labor.

There is no merit to this contention. The Commission s orders being wholly prospective in operation and intended to prevent the occurrence in the future of illegal activity, must of necessity be somewhat general in their scope. To he effective, such orders must proscribe not only specific acts allegcd or proved to have been engaged in in the past, but, to the extent that the pleadings and the proof wil permit, the general, and other specific, related course of conduct as well.

,Ve have found above that the terms of the order to cease and desist are reasonably related to, and within the scope of, the allegations of the complaint. Record proof further substantiates that finding since the testimony and evidence herein clearly establish a course of conduct on the part of respondents' authorized solicitors which was intended , and did in fact mislead prospective purchasers of advertising space to authorize advertisements and to pay therefor in the mistaken belief that the Trade Union Courier was offcially endorsed by, affliated with, sponsored by, or otherwise connected with the American Federation of Labor as an organizational entity itself. Respondents exception on this point is denied.

Conclusion . We have fully considered the whole record herein, including the transcript of hearings, exhihits, and briefs (including respondents brief filed with the Commission Novemher 12, 1952) of both parties. For the reasons hereinahove stated, we conclude that the hearing examiner s initial decision on remand and his rulings on respondents various motions are correct. Accordingly, respondents' appeal from the initial decision, including their exceptions thereto, is hereby denied and the initial decision of the hearing examiner is affrmed. Appropriate order wil be entered.

FINAL ORDER This matter having come before the Commission upon respondents' appeal from the hearing examiner s initial decision and the matter having been heard on the whole record, including briefs (request for oral argument having been withdrawn by respondentsJ ; and the Com- TRADE UNION COURIER PUBLISHIG CORP. ET AL. 1305 1275 Final Order mission having rendered its decision denying respondents' appeal and affrming the initial decision:

It is ordered That the respondents herein shall, within sixty (60) days after service upon them of this order, fie with the Commssion a report in writing, setting forth in detail the manner and form in which they have complied with the order contained in said initial decision.

Decision 51 P.