William J. Mishel

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In THE MATTER OF WILLIAM J. MISHEL ET AL. DOING BUSINESS AS TANNERS SHOE COMPANY ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE me FEDERAL FRADE COMMISSION. ACT Docket 6590. Complaint, July 19, 1956—Decision, June 13, 1957 Order requiring three copartners in Brockton, Mass., selling shoes which they bought from the manufacturer through house-to-house salesmen on a commission basis, to cease representing falsely in newspaper and other advertisements for salesmen that shoe repairmen could expect to earn $50 to $100 per week selling their shoes in addition to the income from their regular occupations; and representing falsely in advertisements in magazines, catalogues, etc., and through use of the term “orthopedic,” that their - shoes:had-health features which would prevent and cure abnormalities and diseases of the feet, and that they manufactured their shoes. Frederick J. McManus, Esq., for the Commission. Roland A. Cormier, Esq., of Boston, Mass., and Hogan & Hartson, by Joseph J. Smith, Jr., Esq., and £. Barrett Prettyman, Jr., Esq., of Washington, D.C., for respondents. . Inrrtau: Decision py Roserr L. Preer, HEARtnc EXAMINER STATEMENT OF THE CASE On July 19, 1956, the Federal Trade Commission issued its complaint against William J. Mishel, Bernard S. Lazarus and Manuel Alter, copartners doing business as Tanners Shoe Company (hereinafter collectively called respondents), charging them with the use of unfair methods of competition and unfair and deceptive acts and practices-in commerce in violation of Section 5 of the Federal Trade Commission Act (hereinafter called the Act), 15 U.S.C. 41, et seg. Copies of said complaint together with a notice of hearing were duly served upon respondents.

The complaint alleges in substance that respondents, in connection with the sale and disposition of their product, men’s shoes, made certain false representations with respect to such product. Respondents appeared by counsel and filed a joint answer admitting the partnership, commerce and competition allegations of the complaint and some of the representations set forth therein, but denying any false representations or violations of the Act. Thereafter on January 14, 1957, the parties entered into a stipulation of facts in lieu of formal hearings. Subsequently, pursuant 1138 FEDERAL TRADE .COMMISSION DECISIONS Findings 53 FTC.

to leave granted, counsel for both parties submitted proposed findings of fact, conclusions of law and: orders together with reasons in support thereof, and presented oral argument in support of such proposals. All such findings of fact and conclusions of law proposed by the parties, respectively, not hereinafter specifically found or concluded, are herewith specifically rejected.* Upon the entire.record in the case including the stipulation of facts by the parties, the undersigned makes the following: FINDINGS OF FACT I. The Business of Respondents The complaint alleged, respondents admitted and stipulated, and it is found that they are copartners doing business as Tanners Shoe Company with their office and principal place of business located at 25 Forest Street, Brockton, Massachusetts. II. Interstate Commerce and Competition The complaint alleged, respondents admitted and stipulated, and it, is found, that they are now, and since January 1, 1954, have been engaged in the sale and distribution of shoes intended principally to be worn by adults. Respondents’ principal method of selling their shoes is by means of sales representatives who make personal house-to-house solicitations of individual customers. Upon receipt of an order for a sale of shoes such representative collects a payment from the buyer, which is not more than $4.00 per pair, and the shoes are sent to said buyer C.O.D. for the remainder of the purchase price. The cash payment which the sales representative collects from the purchaser is: retained by him as his commission for making such sale and he receives no salary from respondents. Respondents cause and have caused their said shoes, when sold, to be transported from their place of business in the State of Massachusetts to purchasers thereof located in various other states of the United States, and maintain and at all times mentioned herein have maintained a course of trade in said shoes in commerce between and among the various states of the United States. Respondents’ volume of business in the sale of said shoes in commerce is and has been: substantial. In the course and conduct of their business, respondents are and have been at all times mentioned herein in direct and substantial competition with other firms and individuals, and with corporations engaged in the sale and distribution of shoes in commerce.

155 1 7 1 1 2 623 3001 108 29 73.647507 U.S.C.5 1 7 1 1 3 749 3003 15 30 88.820679 §5 1 7 1 1 4 783 3003 154 33 84.667229 1007(b). TANNERS SHOE CO. 1139 1137 Findings III. The Unlawful Practices A. The Issues The principal issues in this case are whether respondents falsely represented :

(1) The amount of earnings that can be achieved through the part-time sale of their shoes;

(2) That their shoes contain health features, preventing and curing abnormalities and diseases of the feet, keeping the feet healthy, and conducive to the health of the feet; (3) That their shoes are orthopedic shoes designed to prevent and correct diseases, deformities and disorders of the feet; (4) That the use of their shoes assures comfort and perfect fit, the correction, prevention or assured relief of sore and tired feet, and the correction of foot troubles of substantial numbers of persons, and that the cushion used in such shoes conforms to the actual shape of the foot, comes snugly up under the arch, and provides support where it is most needed; and (5) That they own the plant or factory in which their shoes are manufactured.

B. The False Representations The parties stipulated and it is found that respondents have in the past secured salesmen through the following advertisement: Hundreds of shoe repairmen are enjoying big extra incomes with this amazing plan. Men are making as much as $50 to $100 per week, in addition to the income from their shop. You Can Do It, Too! In addition, it was stipulated and is found that respondents, in the course and conduct of their business and for the purpose of inducing the purchase of their shoes, have made various statements concerning the nature and usefulness of their shoes in sales manuals supplied to their sales representatives, the contents of which are used by said persons in soliciting the purchase of respondents’ shoes and in advertisements published in magazines of general circulation, in folders, circulars, form letters and in catalogues, some of which are exhibited to prospective purchasers by such sales representatives. Included among such statements are the following: Health features, and Health Footwear.

Orthopedic Shoes, and Orthopedic Styles.

Assurance of comfort that is your most important selling point. Show them comfort greater than they have ever had. Everyone is interested in greater foot comfort. You can give it to them with Kushiontred.

Giving a perfect fit to every foot.

1140 FEDERAL TRADE..COMMISSION DECISIONS Findings 53 F.T.C.

Perfection in fit * * * give exact fit to every foot. The chances are about 100 to 1 that Mr. Smith has “trouble” with his feet ** * They will almost certainly be sore and tired at the end of the day. In Tanners Shoes * * * a velvet-smooth cushion * * * conforms to the actual shape- of your foot.

* * * the cushion is extended to come snugly up under the arch.: : They’ll give you ali.the support the ordinary foot needs. ... There’s extra comfort too from the Moulded Inner ‘Arch that gives gentle support to the main arch..

‘Right and Left Ortho Rubber Heels give extra support where it is most needed.

Moulded Inner Arch for support where you need it most. It was: further stipulated . and is found that respondents i in their catalogue have used the following statements: t - The finest of footwear. comes direct to you from our Modern Factory; Our factory men, long trained in quality shoe making, work constantly to bring you the utmost in style, comfort and value; and A branch of the U.S. Post Office in‘our own plant assures you of fast, efficient service on your orders. ' Because the stipulation of facts establishes that all of. the foregoing representations were made, the primary issue for disposition is whether or not such representations are false and misleading. They are considered seriatim:

L Expected Earnings .

“As above set forth, respondents have represented that shoe repairmen may expect to earn as much as $50 to $100 extra per week selling respondents’ shoes while carrying on their regular occupation. Respondents stipulated that .repairmen who sell respondents’: shoes while carrying on their regular occupations ordinarily do not make as much additional income as.represented. Accordingly, it: is con: cluded and. found that such. representation: is false, misleading - and deceptive. moot, are ae :

2.5 1 8 2 1 2 1059 2232 135 80 93.026588 Health5 1 8 2 1 3 1219 2228 186 84 96.267982 Features5 1 8 2 1 4 1426 2248 73 61 96.582603 ands 1 8 2 1 5 1515 2225 200 86 64.049835 ‘Footwear5 1 8 2 1 6 1752 2270 47 21 0.000000 _2 1 9 0 0 0 527 2302 10 9 -1 3 1 9 1 0 0 527 2302 10 9 -1 4 1 9 1 1 0 527 2302 10 9 -1 5 1 9 1 1 1 527 2302 20 20 17.722565 .2 1 10 0 0 0 526 2296 1651 710 -1 3 1 10 1 0 0 527 2296 1647 586 -1 4 1 10 1 1 0 528 2296 1643 99 -1 5 1 10 1 1 1 528 2296 348 93 38.427940 Respondents5 1 10 1 1 2 903 2313 271 76 58.650280 reptesented5 1 10 1 1 3 1205 2339 127 40 96.459633 theirs 1 10 1 1 4 1349 2336 119 43 96.226334 shoes5 1 10 1 1 5 1500 2336 48 42 96.676239 as5 1 10 1 1 6 1578 2339 192 39 96.166115 “Health5 1 10 1 1 7 1803 2302 250 76 88.318665 Footwear”5 1 10 1 1 8 2073 2331 98 64 92.858719 -anda 1 10 1 2 0 526 2361 1646 96 -1 5 1 10 1 2 1 526 2361 62 88 0.000000 as5 1 10 1 2 2 603 2398 271 53 0.000000 containing5 1 10 1 2 3 883 2400 212 40 36.455120 “Health5 1 10 1 2 4 1102 2401 277 39 36.455120 Features.”5 1 10 1 2 5 1399 2401 106 39 51.706154 Thes 1 10 1 2 6 1513 2397 245 54 79.597855 complaints 1 10 1 2 7 1791 2392 165 59 96.777260 alleged5 1 10 1 2 8 1980 2391 118 50 91.375687 that:5 1 10 1 2 9 2115 2401 57 56 96.427956 by4 1 10 1 3 0 527 2451 1645 74 -1 5 1 10 1 3 1 527 2461 124 46 71.612816 such5 1 10 1 3 2 658 2466 278 45 0.000000 statements,5 1 10 1 3 3 952 2463 273 50 96.268463 respondents5 1 10 1 3 4 1256 2461 269 52 96.577148 represented5 1 10 1 3 5 1545 2458 109 43 96.142929 ‘that5 1 10 1 3 6 1686 2451 205 74 74.656891 wearing.5 1 10 1 3 7 1907 2462 113 39 96.371826 theirs 1 10 1 3 8 2053 2463 119 39 96.133110 shoes4 1 10 1 4 0 529 2519 1641 55 -1 5 1 10 1 4 1 529 2520 298 53 38.872879 will'-prevents 1 10 1 4 2 855 2523 86 40 96.392601 ands 1 10 1 4 3 970 2536 97 27 96.717621 cures 1 10 1 4 4 1096 2524 314 50 96.681763 abnormalities5 1 10 1 4 5 1440 2524 86 39 96.285049 ands 1 10 1 4 6 1557 2519 182 44 96.285049 diseases5 1 10 1 4 7 1769 2523 67 40 94.855957 of5 1 10 1 4 8 1848 2517 81 46 68.657547 ‘the’5 1 10 1 4 9 1953 2514 101 60 94.655136 feet,5 1 10 1 4 10 2068 2524 102 58 79.013657 will4 1 10 1 5 0 529 2555 1643 82 -1 5 1 10 1 5 1 529 2583 105 52 96.998062 keeps 1 10 1 5 2 666 2585 73 39 96.843552 thes 1 10 1 5 3 771 2584 88 39 96.838722 feet5 1 10 1 5 4 888 2585 194 52 96.037048 healthy,5 1 10 1 5 5 1109 2586 82 40 96.150406 ands 1 10 1 5 6 1223 2586 106 40 96.344406 that5 1 10 1 5 7 1351 2585 114 41 96.069031 theirs 1 10 1 5 8 1495 2586 121 40 96.622650 shoes5 1 10 1 5 9 1649 2584 193 40 35.730560 contain‘5 1 10 1 5 10 1855 2555 199 71 58.547188 features,5 1 10 1 5 11 2076 2579 96 48 93.036331 con-4 1 10 1 6 0 527 2644 1645 55 -1 5 1 10 1 6 1 527 2644 151 40 91.430069 ducive5 1 10 1 6 2 708 2650 45 35 96.833664 to5 1 10 1 6 3 782 2646 73 38 96.848740 thes 1 10 1 6 4 885 2646 144 38 96.703812 health5 1 10 1 6 5 1060 2646 48 39 96.151840 of5 1 10 1 6 6 1137 2647 70 38 96.063805 thes 1 10 1 6 7 1240 2647 97 40 96.417343 feet.5 1 10 1 6 8 1395 2647 47 40 96.532356 It5 1 10 1 6 9 1471 2660 93 34 88.785400 was5 1 10 1 6 10 1588 2645 244 52 83.903214 stipulated5 1 10 1 6 11 1855 2646 97 44 92.603645 that5 1 10 1 6 12 1982 2646 190 53 96.723007 wearing4 1 10 1 7 0 529 2707 1645 53 -1 5 1 10 1 7 1 529 2707 292 52 95.789833 respondents’5 1 10 1 7 2 853 2708 120 40 96.401878 shoes5 1 10 1 7 3 1003 2707 89 41 95.776947 will5 1 10 1 7 4 1123 2708 165 40 75.589127 neither5 1 10 1 7 5 1319 2714 179 46 93.884079 prevents 1 10 1 7 6 1527 2722 82 26 96.399162 nor5 1 10 1 7 7 1640 2722 101 26 96.399162 cures 1 10 1 7 8 1775 2708 328 41 69.325867 abnormalities:5 1 10 1 7 9 2125 2723 49 26 96.652283 or4 1 10 1 8 0 529 2765 1645 92 -1 5 1 10 1 8 1 529 2767 182 42 96.294464 diseases5 1 10 1 8 2 730 2769 49 40 96.919746 of5 1 10 1 8 3 792 2769 77 40 96.774612 thes 1 10 1 8 4 887 2769 88 40 96.638016 feet5 1 10 1 8 5 992 2771 83 71 96.861740 ands 1 10 1 8 6 1090 2765 92 92 85.960976 will5 1 10 1 8 7 1198 2776 76 34 96.699623 not5 1 10 1 8 8 1292 2771 219 63 96.704796 assuredly5 1 10 1 8 9 1524 2771 112 75 96.891602 keeps 1 10 1 8 10 1655 2771 73 39 96.829247 thes 1 10 1 8 11 1749 2769 88 59 94.109367 feet5 1 10 1 8 12 1857 2769 48 41 96.288040 of5 1 10 1 8 13 1924 2771 73 72 96.905869 thes 1 10 1 8 14 2016 2777 158 34 96.085396 wearer4 1 10 1 9 0 529 2831 187 79 -1 5 1 10 1 9 1 529 2831 187 79 95.326439 healthy.3 1 10 2 0 0 529 2850 1648 156 -1 4 1 10 2 1 0 582 2850 1593 100 -1 5 1 10 2 1 1 582 2880 311 69 96.560600 Respondents,5 1 10 2 1 2 923 2850 160 94 65.876526 despite5 1 10 2 1 3 1114 2893 85 40 96.755898 this5 1 10 2 1 4 1230 2883 243 61 96.545265 admission,5 1 10 2 1 5 1505 2893 183 40 96.258179 contends 1 10 2 1 6 1717 2894 104 39 96.425735 such5 1 10 2 1 7 1852 2869 248 81 96.620514 statements5 1 10 2 1 8 2125 2899 50 44 96.921532 to4 1 10 2 2 0 529 2953 1648 53 -1 5 1 10 2 2 1 529 2953 53 41 96.981415 be5 1 10 2 2 2 600 2967 114 27 96.818726 mere5 1 10 2 2 3 736 2954 161 52 77.107185 puffing5 1 10 2 2 4 918 2955 85 40 96.540550 ands 1 10 2 2 5 1023 2960 75 35 96.966927 not5 1 10 2 2 6 1119 2955 46 39 95.646843 in5 1 10 2 2 7 1186 2954 207 41 96.131454 violations 1 10 2 2 8 1415 2955 48 50 96.396919 of5 1 10 2 2 9 1485 2955 86 51 0.000000 the.5 1 10 2 2 10 1590 2955 88 42 0.000000 Act.5 1 10 2 2 11 1726 2955 57 45 87.843857 In5 1 10 2 2 12 1797 2954 97 44 87.843857 -this5 1 10 2 2 13 1915 2955 262 51 96.560005 connection, TANNERS SHOE CO. 1141 1137 Findings respondents apparently rely principally upon the holding of the Court of Appeals in the Sewell case,? wherein the Court reversed some of the Commission’s findings concerning the respondent’s advertising as mere ‘puffing and not false representations. Such reliance is misplaced. The majority in Sewell clearly pointed out that: “Insofar as purely scientific and medical claims are concerned, the Commission is fully supported by this Court.” One of the statements used by respondents in the present proceeding reads more specifically: “scientifically built health footwear.” It is clear that the Court finds claims of scientific, medical or therapeutic properties to be false representations unless founded on fact. This appears to be fully in accord with the principles of the New South Farm case, infra, discussed more fully hereinafter. Accordingly, it is found that the aforesaid representations are false, misleading and deceptive.

3. Orthopedic Shoes Respondents represented their product as “Orthopedic Shoes” and “Orthopedic Styles”. Respondents also characterized their heels as “ortho,” and used the term ortho several other times throughout the stipulated advertising. Respondents stipulated that their shoes are stock shoes and not orthopedic shoes, because they are not so constructed as to, and will not, prevent or correct deformities, diseases or disorders of the feet. It.is well established that “orthopedic” shoes are those especially designed and constructed to cure, correct or improve the abnormalities, diseases or disorders of the feet of a particular individual.* Webster’s New Unabridged International Dictionary, Second Edit., 1950, defines “ortho” as follows: “Med., rectification; correction of deformities, as in orthopedic.” It is clear that the term “ortho” carries much the same connotation as that found by the Commission with respect to the term orthopedic, and undoubtedly amounts to the same type of representation to the public.’ Accordingly, it is concluded and found that such representations are false, misleading and deceptive. . ? Sewell v. F.T.C., 240 FP. 2d 228 (C.A. 9, 1956), petition for certiorari filed with the Supreme Court.

’ 8 Bxhibits C and L.

The Irving Drew Corp., 49 F.T.C. 56 (1952); Dr. Hiss Shoes, Inc., 49 ¥F.T.C. 67 (1952).

5 Although respondents contend that the term “ortho” is not in issue, the use of such representation is specifically alleged in the complaint and found in the Exhibits C and L attached to and made a part of the stipulation, and obviously is used therein as synonymous with “orthopedic”, exactly as defined above. Such a term, denoting correction of deformity or disorder, is patently medical, indisputably false and not puffing under all of the cases, and clearly within the scope of the allegation of the complaint concerning the use of “orthopedic.” To permit its continuation would undo whatever might be accomplished by prohibiting the use of the term “orthopedic.” 1142 FEDERAL TRADE COMMISSION: DECISIONS Findings 53 F.T-.C.

a Comfort, Fit, Conformance and Arch Support The ‘complaint alleged that by the use of the third, fourth, fifth, sixth and seventh statements set forth above in Section B, respond: ents represented that their shoes will assure comfort and a perfect fit. It was stipulated that it is not literally true that respondents’ shoes will “assure” comfort or a perfect fit to all individuals. However, respondents contend that such representations constitute legitimate trade puffing and are not false representations within the meaning of the law. Needless to say, counsel supporting the complaint contends to the contrary.

- An analysis of the leading cases appears to support the: position of respondents in this respect. The best definition- of-:the term puffing found by the undersigned is that used by the Supreme Court in the Vew South Farm. case,® where the Court said: “Mere puffing, ie., the mere exaggeration of the qualities which the article has, is not actionable, but when a seller goes beyond that and assigns to an article qualities which it does not ‘possess, does not simply magnify an opinion which he has, but invents advantages and falsely asserts their existence, he transcends puffing and engages in false representations and pretenses.” It seems clear from the foregoing that the distinction between puffing and false representation is the distinction between exaggerating qualities which a product has as distinguished from falsely asserting qualities which it does not have. The stipulated record herein establishes that respondents’ product, sold under the trade name “Kushiontred”, consists of a soft resilient innersole from heel to toe made of sponge latex to cushion the foot, together with an elevated arch portion fitting more snugly under the arch of the foot than an ordinary shoe. It seems indisputable that such a cushion would provide more comfort than no cushion at all. With respect to the “perfection of fit” allegation, respondents used this representation in connection with their statement of the undisputed fact that they had a far larger stock of shoes and range of sizes than the ordinary store, in fact more than ten times as many, ranging from sizes 5 to 14 and widths AAA to EEEEE. In the light of the definition of puffing by the Supreme Court and the fact that respondents’ shoes possess qualities of greater comfort and the ability to provide a better fit because of their unusually large stock and range of sizes, it seems clear that respondents were exaggerating such qualities of comfort and fit and not attributing to their product qualities which it did not possess at all. The Carlay °U.8. v. New South Farm & Home Oo., 241 U.S. 64; See also, Gulf Oil. Corp. v. F.T.C., 150 F. 2d 106 (C.A. 5, 1945) ; Carlay Co. v. F.T.C., 153 F. 24 493 (C.A. 7, 1946). TANNERS SHOE CO. 1143 1137 Findings case cited above is authority for the conclusion that such terms as “easy” and “perfect” are merely puffing and not false representations. The logic of the definition adopted by the Supreme: Court seems inescapable.

As found above, one of the statements used by respondents was the following: “The chances are about 100 to 1 that Mr. Smith has ‘trouble’ with his feet * * * They will almost certainly be sore and tired at the end of the day.” This representation was made in a salesman’s manual designed to educate respondents’ salesmen in the art of selling their product. The Mr. Smith referred to is a fictional owher and operator of a hardware store and the reference is to persons who because of their occupation are on their feet all day. The sentence following this statement reads: “He [Mr. Smith] will certainly welcome shoes that are of the correct size and width to give him perfect fit. He will certainly be interested in the luxurious comfort of the Tanners Kushiontred heel-to-toe Insole.” ; The complaint alleges that by the foregoing statement respondents represented that their shoes will correct, prevent or assure the relief of sore and. tired feet and that substantial numbers of persons suffer from foot troubles which will be corrected by wearing respondents’ shoes. Just how this representation is derived from the foregoing statement is not explained, nor is it elucidated in the proposed findings of counsel supporting thé complaint. All the statement amounts to is that a person who is on his feet all day will almost certainly have sore and tired feet at the end: of the day. Counsel supporting the complaint apparently connotes from the use of the word “trouble” that respondents represented that substantial numbers of persons suffer from foot trouble which will be corrected by using respondents’ shoes, and also that such shoes will correct, prevent or assuredly relieve tired and sore feet. As pointed out by counsel for respondents, the statement appears to be no more than a representation that a: person who is on his feet all day probably will find them sore and tired and welcome shoes which give him more comfort and a better fit.

It should be noted that the word trouble was used in quotation marks by respondents and as so used clearly does not refer to diseases of the feet generally, but refers to the following specification of “sore and tired.” The statement as set forth in the complaint did not include the quotation marks around the word trouble, and without them it is of course possible to draw a different inference as to the meaning of the word in. the context. However, as used, it seems clear that it is a general term modified immediately thereafter by a specific example. Such construction is a well established Findings 53 ELC.

and logical.method for determining the meaning of a word in a particular context. The representations which the complaint derives from this relatively simple statement do not, as respondents pointed out, accurately reflect the representations actually made. At most, the statement constitutes representations concerning comfort and fit, which already have been disposed of above as not- being false representations within the meaning of the Act.’ The complaint also alleged that respondents falsely represented that the cushion in their shoes conforms to the shape of the foot, comes up snugly under the arch, and provides support where it is most needed, based upon respondents’ statements numbers 9, 10, 11, 12 and 14 set forth above in Section B. It was stipulated that the cushion does not in all cases conform to the shape of the foot, come snugly up under the arch, or provide support where it is most needed, but that it does however conform more nearly to the shape of the foot than the ordinary shoe, comes up more snugly under the arch than the ordinary shoes, and provides support where support is often needed. With respect to these representations concerning conformance to the shape of the foot and the fit of the cushion to the arch, the stipulation establishes that respondents’ product does have such qualities and hence such representations appear to fall within the category of legitimate puffing, or exaggeration of qualities which the product does possess, in the same manner as found above. It is accordingly found that these representations are not false and misleading within the meaning of the Act. A more difficult question arises with respect to respondents’ representation that their product will provide support where it is most needed. Respondents’ eleventh statement set forth above in Section B is that the shoes give all the support the ordinary foot needs. This alone would appear to be proper and not a false représentation concerning the product. At most, it would fall within the area of legitimate puffing previously described. However, the representation that the product provides support where it is most needed clearly carries an orthopedic or health connotation, and it is undisputed that respondents’ shoes are not orthopedic or health shoes but are stock shoes. It would appear therefore that such representation is false in attributing to the product a quality which it does not possess rather than exaggerating a quality which it has. Different 7In this connection it is interesting to note that in the Sewell case, supra, the Commission in its decision, James H. Sewell, Docket No. 5850 (1954), dismissed an allegation that respondent’s product therein, somewhat similar functionally to the one involved in this proceeding, did not relieve strained and tired feet as represented. This would seem to lend support to the conclusions herein concerning respondents’ representations having to do with comfort, fit, conformance and snugness. “TANNERS SHOE CO. ~ cet 1145 1137 — Findings deformities, diséases and disorders of the feet would necessitate different types and kinds of support, and in such circumstances respondents’ product could not and, as was stipulated, does not provide support where it is most needed. Accordingly, it is concluded and. found that this representation is false, misleading and deceptive. 5. Ownership of Factory or Plant As hereinabove found, respondents represented that they own or control the plant or factory in which their shoes are manufactured. It was stipulated that respondents do not manufacture their product but purchase it from another company and pay the manufacturer’s profit thereon. It was also stipulated that there is a preference on the part of many members of the purchasing public to deal directly with the manufacturer of a product in the belief that by doing so they are afforded advantages such as better prices, services and values. It must now be considered well settled that such representations are false, misleading and deceptive and constitute violations of the Act.® C. Respondents’ Defense and Contentions In addition to respondents’ contentions concerning the merits of their various representations considered above, respondents also contend with respect to certain of these representations that the public interest does not require an order to cease and desist because they have discontinued these particular representations. After the issuance of the complaint respondents filed an affidavit that they had discontinued and do not intend to resume the representations concerning the amount of earnings that shoe repairmen can be expected to make selling respondents’ shoes part time, the use of the term orthopedic in. deseribing the shoes or styles of shoes sold by them, and any statements indicating or inferring that they own or operate the factory in which their shoes are manufactured. This contention is without merit. It is well established that even the discontinuance and abandonment of the manufacture and sale of a product does not deprive the Commission of its discretion to issue a cease and desist order against future violations of the Act.® °F.T.0. v, Royal Milling Oo., 288 U.S. 212 (1933); F.T.C. v. Mid West Mills, Inc., $0 F. 2d 723 (C.A. 7, 1937); M. Rudin € Sons, Inc., Docket No. 6318 (1956); Rudin é& Roth, Docket No. 6419 (1956), and numerous cases cited therein. ®F.T.C. v. Goodyear Tire & Rubber Co., 804 U.S. 257 (1988); F.7.0. v. Wallace, 75 F. 2d 733 (C.A. 8, 1985); Perma-Maid Oo. v. F.T.C., 121 F. 2d 282 (C.A. 6, 1941); Philip R. Park v. F.T.0., 186 F. 2d 428 (C.A, 9, 1943); Geld v. F.T.0., 144 F. 2d 580 (C.A. 2, 1944); Deer v. F.7.C., 152 F. 2d 65 (C.A. 2, 1945); Marlene’s Inc. v. P.T.C., 216 F. 2d 556 (C.A. 7, 1954).

1146 FEDERAL TRADE, .COMMISSION:: DECISIONS Findings 53 F.T.C.

This is.true even, where the practice has. been. discontinued’ prior to the issuance of the complaint. .Here the affidavit of discontinuance was.executed and filed subsequently to the issuance of the complaint. In such circumstances the need for a cease and’ desist order'is even more apparent. As the courts have pointed out, it isa simple matter to discontinue a practice after a complaint has been issued. Only a cease and desist order effectively ¢an prevent the resumption of such practices after the case is ended. As pointed. out by counsel supporting the complaint, some years ago Mr. Mishel; one of the respondents herein, executed a stipulation with the Commission to cease and desist the use of some of the false representations alleged and: found, herein. In the light of this background, the appropriateness of the Commission’s exercise of its discretion to issue a cease and desist order herein seems apparent. _D. Concluding Findings “ Respondents’ representations. concerning comfort, fit,. conformance to the foot, and conformance to the arch constitute pufling of qualities which respondents’ shoes actually possess. There is no substantial evidence in the record that respondents represented that their.shoes will correct, prevént or assuredly relieve sore and tired feet, or that. substantial numbers of persons ‘suffer from foot troubles which will be:corrected by wearing respondents shoes. Accordingly, it is found that the foregoing allegations of the complaint are not supported by reliable, probative and ‘substantial. evidence in the record. - _The undisputed evidence in the record establishes, and: hence it is found, that respondents, in the course and conduct of their business in commerce, by representing their product to contain health features and to be health footwear, to contain “ortho” qualities or. be orthopedic shoes or styles, and to provide support where it.is most.needed, falsely and deceptively represented that their product contained such qualities and properties when in fact they did not, and further falsely and deceptively represented the amount of income which could be earned by selling respondents’ product on a part-time basis, and falsely and deceptively represented that they owned.:and operated the plant or factory in which their product was manufactured. It is further concluded arid found that respondents, by furnishing their sales representatives the representations’ hereinabove found in Section III B 2, 3, 4 and 5, have. placed .in the hands of said persons @ means and: instrumentality whereby they ‘may deceive and mislead the purchasing ‘public in such respects as to respondents’ product. . TANNERS SHOE CO. 1147 1137 © ' Order E. The Hffect of the Unlawful Practices The acts and practices of respondents, as hereinabove found, have had and now have the tendency and capacity to mislead and deceive a substantial portion of the purchasing public with respect to such representations and thereby induce the purchase of substantial quantities of respondents’ product. As a result, substantial trade in commerce has been and is being unfairly diverted to respondents from their competitors, and substantial injury has been and is being done to competition in commerce.

CONCLUSIONS OF LAW 1. Respondents are engaged in commerce, and engaged in the above-found acts and practices in the course and conduct of their business in commerce, as “commerce” is defined in the Act. 2. The acts and practices of respondents hereinabove found are all to the prejudice and injury of the public and of respondents’ competitors and constitute unfair methods of competition and unfair and deceptive acts and practices in commerce, within the intent and meaning of the Act.

3. As a result of the above-found acts and practices of respondents, substantial injury has been done to competition in commerce. _ 4, This proceeding is in the public interest and an order to cease and desist the above-found unlawful practices should issue against respondents.

5. Respondents have not, as alleged.in the complaint, violated the Act by representing that their product assures comfort and perfect fit, will correct, prevent or assuredly relieve sore and tired feet, will correct foot troubles suffered by substantial numbers of persons, conforms to the actual shape of the foot, or comes snugly up under the arch. ;

ORDER It is ordered, That respondents William J. Mishel, Bernard S. Lazarus and Manuel Alter, copartners doing business as Tanners Shoe Company, or in any other name or names, and their representatives, agents and employees, directly or through any corporate or other device, in connection with the offering for sale, sale or distribution in commerce, as “commerce” is defined in the Act, of respondents’ shoes, or any other shoes of similar construction or performing similar functions, do forthwith cease and desist from: 1. Using the terms “health features” or “health footwear” or any other term or words importing a like or similar meaning, alone or in combination with any other term or words, to describe or desig- Decision 53 F.T.C.

nate said shoes, or representing in any ‘manner, directly or by implication, that the use of respondents’ shoes will prevent or cure abnormalities or diseases of the feet, will keep the feet healthy, or that said shoes contain features conducive to the health of the- feet. 2. Using the terms “ortho”, “orthopedic shoes” or “orthopedic styles” or any other term or words importing a like or. similar meaning, alone or in combination with any other term or, words, to describe or designate said shoes, or representing in any manner, directly or by implication, that the use of respondents’ shoes will prevent or correct diseases, deformities or disorders of ‘the feet. 3. Representing, directly or by implication: (a) That the cushion in said shoes provides support where it is most needed ;

(6) That shoe repairmen or others who sell respondents’ shoes earn as much as $50 to $100 per week, in addition to their incomes from their shops or regular employment, or any amount in excess of the actual amount earned by respondents’ representatives working on a part-time basis; and (c) That respondents own, operate or control a factory or plant in which their shoes are manufactured, or that by buying from respondents a purchaser is buying from the manufacturer. DECISION OF THE COMMISSION AND ORDER TO FILE REPORT OF COMPLIANCE Pursuant to Section 3.21 of the Commission’s Rules of Practice, the initial decision of the hearing examiner shall, on the 138th day of June, 1957, become the decision of the Commission; and, accordingly:

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. COLONIAL MANUFACTURING CO., INC., ET AL. 1149 Complaint In THE Marrer OF COLONIAL MANUFACTURING COMPANY, INC., ET AL. CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF SEC. 2(C) OF THE CLAYTON ACT ‘ ‘Docket 6725. Complaint, Feb. 18, 1957—Decision, June 13, 1957 Consent order requiring a manufacturer of jellies and preserves in Oklahoma City to cease paying illegal brokerage fees on purchases of foodstuffs from a brokerage firm owned by its officers, 90% of whose business involved Sales to it, with the result that it was receiving brokerage on its own purchases, in violation of Sec. 2{c) of the Clayton Act. - ' Mr. Cecil G. Miles for the Commission.

Mr. C. D. Ellison, of Oklahoma City, Okla., for respondents. CoMPpLaAINT _ The Federal Trade Commission, having reason to believe that the parties respondent named in the caption hereof and hereinafter more particularly designated and described have been and are now violating the provisions of subsection (c) of Section 2 of the Clayton Act (U.S.C. Title 15, Sec. 13), as amended by the Robinson-Patman Act approved June 19, 1936, hereby issues its complaint stating its charges with respect thereto as follows:

ParacrarH 1. Respondent Colonial Manufacturing Company, Inc., hereinafter sometimes referred to as “buyer respondent” is a corporation existing and doing business under and by virtue of the laws of the State of Oklahoma, with its offices and principal place of business located at 2800 So. Western Avenue, Oklahoma City, Oklahoma. Said buyer respondent has been, for the past several years, and is now, engaged in the business of manufacturing, selling and distributing jellies, preserves, apple butter, and other related products, ‘hereinafter referred to as “food products”, with gross sales approximating $2,000,000 annually.

Par. 2. Respondent N. F. Raupe Brokerage Company is a partnership engaged in the brokerage business, principally as the buying agent for respondent Colonial Manufacturing Company, Inc., the buyer respondent named herein. Respondent N. F. Raupe Brokerage Company, hereinafter sometimes referred to as “broker respondent”, maintains its principal office and place of business in the same building and in the same offices with the buyer respondent. The broker respondent is 75 percent owned by the three individual respondents named herein, who are officers and substantial owners, if not the 1150 _ FEDERAL: TRADE' COMMISSION DECISIONS - Complaint 53 F.T.C.

sole owners, of said buyer respondent. Approximately 90 percent of the brokerage business’:done by the broker respondent for its various. principals during 1956, was on sales to buyer respondent. ‘The total amount of such sales to said buyer respondent during 1956 was in excess of $300,000, on which sales the broker respondent collected brokerage fees from the sellers or suppliers of said food products: at the rate of 2% to 5 percent of the net sales price, depending on the particular product sold.

Par. 3. Respondents L. J. Wilkes, Jack W. Wilkes and L. T. Wilkes are individuals ‘engaged principally in business as manufacturers of jellies, preserves, apple butter, and other related products. They are Chairman of the Board; President; and Secretary-Treasurer, respectively, of respondent Colonial Manufacturing Company, Inc. These individual respondents own and control all or substantially all of the capital stock of the buyer respondent and are responsible for its operational policies, including its purchase and sales policies. These individual respondents are also copartners in respondent N. F. Raupe Brokerage Company, located at the same address and in the same offices as the buyer respondent. They, along with one N. F. Raupe, who is head salesman for the buyer respondent, wholly own, and control the said brokerage company, and are responsible for its sales and operational policies: These partners share equally in the profits of the broker respondent, including the profits on brokerage or commissions received on sales to the buyer respondent. __.

Par. 4. In the course and conduct of the businesses of respondent, Colonial Manufacturing Company, Inc. and the N. F. -Raupe Brokerage Company, the buyer respondent since 1948 has made substantial purchases of food products from its suppliers. through the.broker respondent, on which purchases it received, or its officers and owners. received, something of value as a commission, brokerage, or other compensation, or allowance or discounts in lieu thereof. Par. 5. In the course and conduct of the businesses, as aforesaid, all the respondents named herein, directly or indirectly, cause said food products, when purchased, to be. transported: from. said state of origin to destinations in, another state. There has been: at all times mentioned herein a continuous course of trade in commerce, as “commerce” is defined in the aforesaid Clayton Act, in said food products, across state lines, between these respondents, and the sellers of said food products. .

Par. 6. The acts and practices of the buyer respondent, the broker respondent, and the individual respondents, acting through COLONIAL MANUFACTURING CO., INC., ET AL. 1151 1149 Decision or in behalf of said buyer respondent as its officers and owners, in recelving and accepting something of value as a commission, brokerage, or other compensation, or allowance or discounts in lieu thereof, on their purchases of food products through a brokerage company: owned and controlled by said individual respondents as herein alleged and. described, are in violation of subsection (c) of Section 2 of the Clayton Act, as amended by the Robinson-Patman Act (U.S.C. Title 15, Section 13).

Inirtat Decision By FRANK Hier, Heartine ExXaMINER Pursuant to the provisions of subsection (c) of section 2 of the Clayton Act (15 U.S.C. 13) as amended by the Robinson-Patman Act, the Federal Trade Commission on February 18, 1957, issued and subsequently served its complaint in this proceeding against respondents Colonial Manufacturing Company, Inc., a corporation existing and doing business under and by virtue of the laws of the State of Oklahoma; L. J. Wilkes, Jack W. Wilkes, and L. T. Wilkes, individually and as chairman of the board, president, and secretarytreasurer, respectively, of said corporate respondent, and also as copartners in the N. F. Raupe Brokerage Company. The office and principal place of business of respondents is located at 2800 South Western Avenue, Oklahoma City, Oklahoma.

On April 29, 1957, there was submitted to the undersigned hearing examiner an agreement between respondents and counsel supporting the complaint providing for the entry of a consent order. By the terms of said agreement, respondents admit all the jurisdictional facts alleged in the complaint and agree that the record may be taken as if findings of jurisdictional facts had been duly made in accordance with-such allegations. By such agreement, respondents waive any further procedural steps before the hearing examiner and the Commission; waive the making of findings of fact and conclusions of law; and waive all of the rights they may have to challenge: or’ contest the validity of the order to cease and desist entered in -accordance with this agreement. Such agreement further provides that it disposes of all of this: proceeding as to all parties; that the record on which this initial decision and the decision of the Commission shall be based shall consist solely of the complaint and this agreement; that the latter shall not become a part of the official record unless and until it becomes a part of the decision of the Commission; that the agreement is for settlement purposes only and does not constitute an admission by respondents that they have violated the law as alleged in the complaint; and that the following 511071—60—_74 1152 . FEDERAL’ TRADE: COMMISSION DECISIONS ~’- Order 53 B.T.C.

order: to cease and: desist may be entered ‘in this. proceediig by tlie Commission without further notice to respondents, and, when so entered, it shall have the same force and effect as if entered: after a full. hearing, and may be altered, modified, or set aside-in the manner provided for other orders; and: that the complaint ‘may: be used in construing the terms of the order. - ‘The. hearing examiner having considered the agreemént and proposed order, and being of the opinion that they provide an-appropriate basis for settlement and disposition of this proceeding, the agreement is hereby accepted, the following Jurisdictional findings made, and the following order issued. :

.1.-Respondent.Colonial Manufacturing Company, Ine. .» 1S @ Corporation existing and doing business under the laws of Oklahoma, with its office and principal place of business located at 2800:South Western -Avenue, Oklahoma City, Oklahoma. Respondents L. J. Wilkes, Jack W. Wilkes, and L. T. Wilkes are chairman of. the board, .president, and secretary-treasurer, respectively, of said corporation, and also are copartners in the N.. F. Raupe Brokerage Company, with their office and principal place of business located at the same address as the corporate respondent. _ 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents. ORDER It is ordered, That the respondent Colonial Manufacturing Company, Inc., a corporation, and its officers, and the individual respondents, L. J. Wilkes, Jack W. Wilkes and L. T. Wilkes, individually and as officers of Colonial Manufacturing Company, Inc., and partners in the N. F. Raupe Brokerage Company, their respective representatives, .agents and employees, directly or through any corporate or other device, in connection with the purchase of food products in commerce, as “commerce” is defined in the aforesaid Clayton Act, do forthwith cease and desist from receiving or accepting, directly or indirectly, from any seller anything of value as a commission, brokerage or other compensation, or any allowance or discount in lieu thereof, upon any purchase of food products for their own account or for the account of any of them. It is further ordered, That the respondent N. F. Raupe Brokerage Company, a partnership, and L. J. Wilkes, Jack W. Wilkes and L. T. Wilkes, individually and as partners in the said N. F. Raupe Brokerage Company, and their respective representatives, agents and employees, directly or through any corporate or other device in COLONIAL MANUFACTURING CO., INC.,-ET AL. 1153 1149 Decision connection with the purchase of food products in commerce as “commerce” is defined in the aforesaid Clayton Act do forthwith cease and desist from receiving or accepting, directly or indirectly, from any seller, anything of value as a commission, brokerage or other compensation or any allowance or discount in lieu thereof upon any purchase of food products by or for the account of Colonial Manufacturing Company, Inc., where either of the individual respondents L. J. Wilkes, Jack W. Wilkes or L. T. Wilkes, individually or collectively are the agents, representatives or intermediaries acting for or in behalf of or are subject to the direct or indirect control of said Colonial Manufacturing Company, Inc., or any other buyer. DECISION OF THE COMMISSION AND ORDER TO FILE REPORT OF COMPLIANCE Pursuant to Section 3.21 of the Commission’s Rules of Practice, the initial decision of the hearing examiner shall, on the 13th day of June, 1957, become the decision of the Commission; and, accordingly:

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. 1154 . FEDERAL TRADE COMMISSION DECISIONS Decision 53 F.T.C.