Paul A. Raich

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IN THE l\.fatter OF PAUL A. HAICH CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COl\HnSSION ACT AND OF THE WOOL PRODUCTS LABELING ACT Docket 6335. Con/plaint, Api". 1955-Decisioi~ , July, 1955 Consent order requiring a seller in New York City to cease violating the Wool Products Labeling Act by advertising and branding as "Pure Imported Cashmere, etc., blankets which were made entirely of sheep s wool or contained very little Cashmere; and to cease pre-ticketing the blankets with excessive and fictitious prices.

Before 31?'. J a:mes A. P'l.t?'cell hearing examiner. 311'. Geo?'ge E. Steln?l~etz for the Commission. il1?'. Leste?' A. Laza' l'u8 and ill?,. F?'edel'ick E. ill, B allo-n of New York City, for respondent.

CO1\IPL.-UNT Pursuant to the provisions of the Federal Trade Commission Act and the ""\tV 001 Products Labeling Act of 1939, and by virtue of the authority vested in it by said Acts, the Federal Trade Col111nission having reason to believe that Paul A. Raich, an individual, hereinafter referred to as the respondent, has violated the provisions of said Acts, and it appearing to the Commission that a proceeding by it with respect to the said Paul A. Raich would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows: PAR...iGRAPH 1. Respondent, Paul A. Raich, during the period runing rrom about September 18, 1953 until :NIarch 9, 1954, acted as the president of the corporation incorporated under the laws of the State of New Jersey, known as "Cashmere-",Vool, Ltd. . ' Both Paul A. Raich and the said corporation maintained their offices and their principal place of business at 450 Seventh A venue, New York, New York, and the said respondent Paul A. Raich now resides at 287 Terhune Avenue, Passaic, New Jersey.

PAR. 2. During all of the times mentioned the said respondent Paul A. Raich directed and controlled the acts, policies, and practices or the said corporation) namely, Cashmere-",Vool, Ltd. PAR. 3. The said corporation, Cashmere- 'V 001 , Ltd., was adj udicated a bankrupt in the District Court of the United States for the District of New Jersey on or about ~farch 9, 1954, and the business of said corporation has since been terminated and all of its assets PAUL A, RAICH Complaint since sold and disposed of pursuant to Orders entered by said United States Court.

PAR. 4. Subsequent to the effective date of the vV 001 Products Labeling Act of 1939, and particularly during the period running from said September 18, 1953, through and until on or about March 9, 1954, the respondent, Paul A. Raich, acting through the said corporate organization known as Cashmere-v V 001, Ltd., manufactured for introduction, introduced, sold, transported, distributed, delivered for shipment, and offered for sale in commerce, as "commerce" is defined in said Act, wool products, as "wool products" are defined therein. PAR. 5. Certain of said wool products were misbranded within the intent and meaning of Section 4 (a) (1) of said vVool Products Labeling Act of 1939 and the Rules 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 blankets labeled or tagged by respondent Paul A. Raich, acting by and through said bankrupt corporation Cashmere- ,V 001, Ltd., as consisting of "~1:inimum 90% Pure Iranian Cashmere Contains Pure Imported Cashmere " whereas, in truth and in fact said products "\\ere composed entirely of wool from the genus sheep or composed of wool of the genus sheep with only small amounts of Cashmere fiber, being the hair or fleece of the Cashmere goat.

PAR. 6. Certain of said wool products described as blankets were misbranded in that they were not stamped, tagged or labeled as required under the provisions or Section 4 (a) (2) of said "Vool Products Labeling Act of 1939, and in the manner and form prescribed by the Rules and Regulations promulgated thereunder. PAR. 7. The acts and practices of the said respondent Paul A. Raich, as hereinafter alleged, were and are in violation of the ",V 001 Products Labeling Act of 1939 and the Rules and Regulations promulgated thereunder, and constitute unrair and deceptive acts and practices in commerce within the meaning and intent of the Federal Trade Commission Act.

PAR. 8. In the course and conduct or the business of said bankrupt corporation Cashmere- ,V 001, Ltd., under the direction and control of respondent Paul A. Raich, for the purpose of inducing the purchase of the products manuractured and sold as aforesaid, published in magazines, during December 1953 advertisements containing various statements and representations concerning the products above , , Complaint 52 F. 1', C. referred to. Among and typical of such advertising statenients and representations were the following:

One of the world' lllost luxurious blankets For a lifetime of downy-soft comfort there can be nothing finer than this treasured blanket in which rare imported cashmere* provides the ultimate in quality. In 10 lovely deeorator.colors Mitin mothproofed for lasting protection.

CASHMERE-WOOL, LTD.

72 x 90, richly bound on four sides gift-boxed. Price: $99.

For baby, too, in crib size 36 x 50 . , . pink, blue, or maize, Price $49.

Illustration CASHMERE-WOOL, LTD.

Blanket Contains Pure Imported Cashmere U. S. Testing Co.

*Certified and approved by United States Testing Co., Inc.

U. S. Testing Co.

*Certified Quality Control by United States Testing Co., Inc. minimum content 90% Iranian Cashmere Cashmere-Wool Ltd.

1127 West Division St.

Chicago 2, Ill.

PAUL A. RAICR Complaint PAR. 9. The above alid foregoing advertisement ,vas represented in toto in the form of advertising "flyers" or inserts, with the addition at the start there of the .words reading "As Advertised in Vogue :Jnd thereafter enclosed in the individual boxes or containers for said blankets and repeated in substance on fold-over paper labels attached to each individual blanket.

PAR. 10. Through the use of the term "Cashmere~' together with the statements of the percentage thereor, the respondent Paul A. Raich, acting by and through said corporation, Cashmere- \V 001, Ltd. directly and by implication represented that said blankets "' ere composed of at least 90% Cashmere, or of Pure Iranian Cashmere, as the term "Cashmere" is generally understood by a substantial portion of the purchasing public; namely, the hair or fleece of the Cashmere goat. Further, respondent, through the use of the words and figures Price: $99,50" and "Price: $49. represented that such amounts were the prices, at which the blankets to which they refer, were sold by retailers in their usual and regular course of business. PAR. 11. The said representations were untrue since, in truth and in fact, said blankets were composed entirely of wool of the genus sheep, or composed of wool of the genus -sheep ,,'ith only small amounts of Cashmere fiber, being the hair or fleece of the Cashmere goat. The amounts of $99. 50 and $49.50 ,,'ere fictitious and greatly in excess of the prices at "which retailers offered to sell and sold such blankets in their usual and regular course of business. This practice of respondent provides a means and instrumentality hy and through which retailers may misrepresent the usual and regular retail price of such blankets.

PAR, 12. The respondent Paul A, Raich, acting by and through the corporation Cashmere- ,V 001, Ltd" was at all times mentioned herein in competition, in commerce, with other individuals and with firms and corporations likewise engaged in the sale of blankets. PAR. 13. The use by said respondent Paul A. Raich, acting by and through said bankrupt and defunct corporation, of said deceptive and misleading statements and representations with respect to said described blankets had the tendeney and capacity to mislead a substantial portion of the purchasing public into the erroneous and mistaken belief that said statements and representations were true, and to cause substantial purchases of said blankets because or such erroneous and mistaken belief. As a consequence thereof, substantial trade in commerce was unfairl)7 diverted to the respondent Paul A, Raich and the said corporation through which said respondent operated, from their competitors, with substantial injury being done to competition in commeree, as "commerce" is defined in the Federal Trade Commission Act. Decision 52 F. T. C, PAR. 14. The acts and practices of the said respondent as hereinabove alleged in Paragraphs Eight to Twelve, inclusive, were all to the prejudice and injury of the public and of respondent' s competitors and constitute unfair and deceptive acts and practices and unfair methods of competition, in commerce, within the intent and meaning of the Federal Trade Commission Act.

INITB.L DECISION BY J A~IES A. PURCELL, HEARING EXAJUINER 1. The Federal Trade Commission on April 26, 1955, issued its complaint in this proceeding charging respondent with violation of the Fedei' al Trade Commission Act and of the ",V 001 Products Labeling Act of 1939, as will more particularly appear by reference to said COlllplaint. On ~lay 24, 1955, respondent entered into a Stipulation or Agreement for Consent Order with counsel supporting the complaint all in conformity with Rule No. 3.25 of the Commission s Rules of Practice. Thereafter said Agreement was submitted to the hearing examiner who, being of opinion that the Agreement effectually disposes of all of the issues herein, hereby accepts same, with the proviso that this Initial Decision shall not become a part of the official record of this proceeding unless and until it beCOllleS the official decision or the Commission.

2. The Agreement recites that respoildent, Paul A. Raich, ,vas, during the period September 18, 1953, to on or about ~1:arch 9, 1954, the president or Cashmere- "\V 001, Ltd., a corporation organized under the laws of the Stafe of New Jersey with offices and principal place of business located at No. 450 Seventh Avenue, New York, N. Y., and as president, as aforesaid, directed and controlled the acts, policies and practices of said corporation which form the basis of the complaint herein; that said corporation was duly adjudged banln'upt in the United States District Court for the District of New Jersey and its affairs liquidated. 3. By said Agreement respondent specifically admits all or the jurisdictional allegations set forth in the complaint and agrees that the record herein may be taken as though the hearing' examiner or the Commission had made findings of jurisdictional facts in aecordance with such allegations; that the order therein agreed upon shall have the same rorce and effect as though made upon a full hearing, presentation of evidence and findings and conclusions based thereon specifically waiving any and all right, pos\"er or privilege to contest the validity of said order: that the complaint herein may b0 used in construing the terms of said order, which order may be altered, modified or set aside in the manner provided by statute affecting orders of the Commission.

PAUL A. RAICH Order 4. All of the parties to said Agreement waived the filing of answer; hearing before a hearing examiner or the Commission; making of findings of fact or conclusions of law by the hearing examiner or the Commission; filing of exceptions and oral argument before the Commission; all further and other procedure before the hearing examiner and the Commission to which the respondent might otherwise, but for the execution of said Agreement, be entitled under the Federal Trade Commission Act, or the ",V 001 Products Labeling Act of 1939 or the Rules of Practice of the Commission (effective Th'Iay 21, 1955) : Further, it was agreed that the aforesaid Agreement, together with the complaint, shall constitute the entire record herein. Pursuant to the intent of said Agreement and of the facts therein recited, and that the order embodied therein is identical with the order nisi accompanying the complaint, the hearing examiner, being of opinion that the order agreed upon will effectually safeguard the public interest, finds that this proceeding is in the public interest and issues the following order:

ORDER It is ordered That the respondent Paul A. Raich, individually, and his representatives, agents, and employees, directly or through any corporate or other device, in connection with the introduction or manufacture for introduction in commerce, or the offering. for sale sale, transportation, or distribution in commerce, as "commerce" is defined in the Federal Trade Commission Act and the 'V 001 Products Labeling Act of 1939, of blankets or other ""'001 products'" as such products are defined in and are subject to the ",V 001 Products Labeling Act of 1939, which products contain, purport to contain, or in any, way are represented as containing "wool reproeessed wool ~~ or reused wool " as those terms are defined in said Act, do forthwith cease and desist from misbranding or misrepresenting such products by:

1. Falsely or deceptively stamping, tagging, labeling or othenvise identifying such proc1nets as to the character or amount of the constituent fibers therein;

2. Failing to securely affix or to place on each such product a stamp, tag, label' or other means of identification showing in a dear and con- SplCllOliS manner:

a. The percentage of the total fiber weight of such wool products exclusive of ornamentation not exceeding five pereentum of said total fiber weight of (1) wool, (2) reprocessed wool, (3) reused wool, (4) en,eh fiber other than wool where said percentages by weight of such Order 52 F. T. C.

fiber is five percentum or more and (5) the aggregate of all other fibers;

b. The maximum percentage of the total weight of such "\yool product or any non-fibrous loading, fining, or adulterating matter; c, The name or the registered identification number of the mannfactureI' of such wool product or of one or more persons engaged in introducing such "\,"001 product int.o commerce or in the o11ering for sale, sale, transportation, distribution or delivering.' for 811 ipment thereor in commerce, as "commerce': is defined in the "~ool Products Labeling Act of 1939.

3. Falsely or deceptively stamping, tagging, labeling, or ot henyise identifying such products as containing hail' or fieeee of the Cashmere goat;

4. Stamping, tagging, labeling, or othenyise identii'ying' such products as containing hair or fleece or the Cashmere goat \\"ithollt setting forth in a clear and conspicuous manner on each of the required L- stamps, tags, labels or other means of identific.ation the percentnge of such Cashmere fiber therein;

P?'ovided That the foregoing provisions concerning' misbranding shan not be construed to prohibit acts permitted by Paragraphs (a) and (b) or Section 3 or the \Y 001 Products Labeling Act of 1D39, Provided further That nothing contained in this order shan be construed as limiting any applicable provisions of said Act or the Rules and Regulations promulgated thereunder, 1 t is f'n?'thej' O1'clered That the respondent Paul A. Raich, individually, and his representatives, agents, and employees, directly or through any corporate or other device, in connection "\with the otI'ering for sale, sale or distribution in commerce, as "commerce:: is defined in the Federal Trade Commission Act of blankets 01' other products do forthwith cease and desist from, directly or indirectly: 1. Using the word "Cashmere " or any simulation thereof, either alone or in conjunction 'with other words, to designate, describe or rerei' to any product which is not composed entirely of the hair of the Cashmere goat: Provided, however, that in the case of any product composed in part of the hair of the Cashmere goat and in part of other fibers or materials, such word may be used as descriptive of the Cash'" mere content if there are used in immediate connection therewith, in letters of at least equal conspicuousness, words truthfuny describing such other constituent fibers or materials. 2. Representing in any manner that said products contain a greater percentage of Cashmere than is the fact. 3. Representing in any manner that certain amounts are the usual ' and regular retail prices of said products when such amounts are in PAUL A, RAICH Order excess of the prices at "Which said products are usually and regularly sold at retail.

4, 1t1aking any false statement or representation or engaging in any deceptive practice or plan which would provide retailers of said products with a means of misrepresenting their usual and regular retail pnces, DECISION OF THE CO:i\DIISSION AND ORDER TO FILE REPORT OF COMPLIANCE Pursuant to Sec. 3.21 or the Commission s Rules of Practice, the initial decision of the hearing examiner shall, on the 8th day of July, 1955, become the decision or the Commission; and, accordingly: 1 t is onle?' That the respondent herein shall, within sixty (60) days after service upon him of this order, file with the Commission a report in writing setting forth in detail the manner and form in which he has complied with the order to cease and desist. , .

Complaint 52 F. T. C.