Mandel Brothers, Inc.

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IN THE ~lA TTER OF :MANDEL BROTI-IERS, INC.

orillER, ETC., IN REGARD TO TI-IE ALLEGED VIOLATION OF THE FEDERAL TRADE CO~nIISSION AND THE FUR I'RODUCTS LABELING ACTS Docket. 643.). Compl.ai-nt., Oct. '2i', 1955-Decision, July 195, Order requiring a Chicago furrier to cease violating the Fur Products Labeling Act by misbranding, falsely advertising, or falsely invoicing its fur products.

TVilZiCl'ln A. SO1ne1' Esq., for the Commission. cO lVentz by lVillia1n G. Blood IloplrJins, S1.deter, Owen, lIhdroy , 111. , for re-Esq. , and J a1J~es J. 111 colu/re ~ J/'. Esq., of Chicago spondent.

INITIAL DECISION BY HOBERT L. PIPER, I--IEARIKG EXA3IIXER ST.\ TEl\LENT OF THE G.:\SE On Oc.tober 2, , 1955, the Federal Trade Commission issued its complaint against ~landel Brothers, Inc. (hrreinafter called re, sponclent), charging respondent with misbranding and falsely and deceptively invoicing and advertising certain fur proc1uc.ts in violation of the provisions of the Fur Products Labeling Act (hereinafter C. 69 (a), et seq. and Section 5 of thecaned the Fur Ad), 15 U. Federal Trade Commission Jtct (hereinafter c.alled the Act), 15 c. 41 et seq. Copies of said complaint, together with a notice.e of hearing "ere duly served upon respondent. The c.complaint alleges in substance that respondent. (1) misbranded certain of its fur products by not labeling them as required under the Fur Act and the Rules and Regulations promulgated thereinvoic.ed certain fur produc.ts inunder; (2) falsely and deceptively violation of the Fur Act and said R.ules and Regulations; (3) falsely by misrepresentingand deceptively advertised certain fur products the prices as having been reduced from regular or usual prices, and by means of comparative prices, as having a certain value, in violation of the Act, the Fur Act and Rules and Regulations; and (4) failed to maintain adequate records upon "which such price and value representations were based, in viobtion of the R,ules and Regulations. Respondent a ppearec1 by counsel and filed an ans"er admitting the corporate and competition allegations of the complaint but denying the jurisdictional allegations and all al1egec1 violations of the Act, the Fur Ad and the Rules and Regulations. MANDEL BROTHERS, INC.

Findings Pursuant to notice, hearings were thereafter held on A priJ 12 and Tune 7, 1056, in Chicago, IJ1inois, before the undersigned hearing examiner duly designated by the Commission to hear this pro;. eeeding. Prior to the initial hearing, respondent's motion to strike the complaint upon the grounds that the Rules and Regulations promulgated by the Commission under the Fur Act were invalid that the Fur Act was unconstitutional, that the complaint "' as so vague and1mcertain as to make responsive pleading impossible, and that the complaint failed to allege sufficient facts concerning commerce to vest. the Commission with jurisdiction, was denied. A11 parties "'ere represe, nted by counsel, participated in the hearings and afforded full opportunity to be heard, to examine and cross-examine ,,-witnesses, to introduce evidence.e pertinent to the issues to argue. orally upon the record, and to file proposed findings of fact, conclusions of law, and orders, together with reasons therefor. A11 parties ,,' waived oral argument and pursuant to leave granted thereafter filed proposed findings of fact, conclusions of law and orders, together with reasons in support thereof. Al1 such findings of fact and conclusions of law proposed by the parties, respectively, not hereinafter specificany found or concluded, are herewith specificandy rejected.

Upon the entire record in the case and from his observation of the witnesses, the undersigned makes the following: FINDI:NGS OF FACT 1. The Business of Respondent The complaint alleged, respondent admitted, and it is found that respondent is a corporation organized and existing under and by virtue of the la.'\"s of the State of Dela\\are, '\,ith its principal office and place of business located at 1 North State Street, Chicago Illinois.

II. Interstate Commerce and Competition The complaint alleged, respondent denied, and it is found that respondent is now and has been since August 9 , 1052, the effec.tive date of the Fur Act engaged in the introduction into commerce and in tlw sale, advertising, and o:fl'ering for sale in commerce, and in the transportation and distribution in commerce, of fur products and has sold, advertised, offered for sale, transported and distributed fur products \\which have been made in whole or in part of fur which had been shipped and received in c.commerce, as "commerce fur and "fur products" are defined in the Fur Act. 15 V. C. ~ 1007(b).

Findings 54: F. In this connection, as noted above, respondent denies that it is engaged in commerce within the meaning of the Fur Act, or that it sold, advertised, offered for sale, transported or distributed fur products made in whole or in part of fur which had been shipped and received in commerce. However, the record establishes that respondent advertised its fur products in c.commerce, sold fur products to customers from outside the State of Illinois and subsequently delivered such products to such customers outside the State of Illinois and purchased and had shipped to it in the State of Illinois fur products from the State of New York.

Respondent advertised its fur products in The Chicago Tribune The Chicago American, and The Chicago Sun-Times newspapers with substantial circulation outside the State of Illinois. In addition the rec.ord reveals a nU111 bel' of sales by respondent to customers outside the State of Illinois. ,Vhile these sales '\"ere made at the Chicago store, respondent' s officials admitted that, bec.cause no Illinois sales tax was charged, the products must have been delivered by respondent to such customers outside the State of Illinois. The foregoing facts are substantially identical to those considered by the Commission in the Pelta FUP8 case 2 "herein the Commission, although in disagreement c.oncerning the authority for R,ule 44 of the Rules and Regulations under the Fur Act, unanimously agreed that the respondents therein "'ere engaged in "commerce': within the meaning of the Act and the Fur Act.

Based upon the abon~ undisputed facts: it is further concluded and found that respondent is engaged in commerce within the meaning of the ~c\.ct, and that, in the c.course and conduct of its business, respondent is in substantial competition in commerce with other c.orporations, firms, copartnerships and inchviduals also engaged in the sale of fur proc1uets to members of the purchasing public. III. The Unlawful Practices A. j.lJ'hbra,ndtng of PUT Produ,cts The complaint alleged that respondent misbranded certain fur products by not labeling them as required under the provisions of Section 4(:2) of the Fur -\ct and Rules 4 , 29(a) and 29(b) of the Rules and ReguJntions. 1\lore specifically~ Section 4 (2) of the Fur Act requires labels on fur products sho"ing: (a) the name of the animal as set forth in the Fur Products Name Guide promulgated by the Commission pursmmt to Section 7 of the Fur Aet; (b) that the fur is 11secl; (c) that the fur is bleached, dyed, or other"ise arti- Pclln Furs Docket ?\o. ()297 (1956).

, MANDEL BROTHERS, INc;

Findings ficiany colored; (d) that the product is composed of paws, tails etc. ; (e) the name or other identification of the. person who manufactures or sells the product; and (f) the country of origin of any imported fur.

Counsel supporting the complaint proposed no findings, and there is no proof in the record, with respect to any ,violation of (b) and (d) above. Accordingly no such violations are found. "'\With respect to (a), (c) and (f) above, there is no substantial dispute in the record. The record reveals some 12 instances of failure to label the fur products with the correc.t name of the animal producing the fur as set forth in the Fur Products Kame Guide, some 15 instances of failure to flisc.lose in the labels that. the product was bleached, dyed or otherwise artificially c.colored, and some 58 instances of failure disclose the country of origin of imported furs. "'\With respect to the alleged violations of the aforesaid rules concerning JabeJing, the record establishes some 9 instances of required information being set forth in abbreviated form c.ontrary to Rule 4, some 59 instances of m:ingling non-required information with required information in viol:ltion of Hule 2U (a L and some 119 instances of required information being set. forth in handwriting in violation of Rule 29 (b). "'\Vhile not disputing any of the foregoing violations, respondent argues that they are 111erely technical and trivial in nature, and accordingly the public interest does not ',fnTant the issuance of a cease and desist order.

Hesponc1enfs argument is without merit. Admittedly, the misbram1ing found '\"as not as serious or substantial a vio1ntion of the Fur Act as: for instance, ending muskrat mink or rabbit ermine, but the very purpose of Congress in adopting the provisions of tle Fur '-\ct and directing the Commission to promulga1e rules and regulations thereunder ,,-as to ' prevent deception of the public by such practices. It cannot seriously be urged that violations of spec.ific seetions of an ad adopted by Congress are too technical 01' trivial 10 '\"warrant the issuance of a cease and desist order. In addition, the Commission, as an expert, body, '\"as authorized :1l1(1 c1ireeted to adopt rules and regulations to C:1rr~- out the pl1rpose of tlw Act: namely, to prevent the deception of lhe rmblie by misbranding or :falsely 1Hhel'lising or invoicing' fur products. Obyiol1s1y, the use of nbbrevia tion~ ~ hand1"-ri ling, and the ming1ing of non-refp1ired information with required information fire. devices '\"which can readily be llsed to de('E:'in~ and misle:Hl the:' public. Even 1h011!:fh it be (,011('(- c1('c1 that they may h:1V8 been clone innocently. in ig' nornnce oJ the. 1a ,,- : and '\yithollt intention to c1ecein' , the~' cannot be permitteel. To dismiss respondents misbranding fls too trivial , ,, . . Findings 54 F.

or technical to warrant the issuance of a cease and desist order would be to open the door to deception and evasion of the Act. Although the complaint alleged, and counsel supporting the complaint proposed a finding, that respondent failed to attach labels to its fur products showing its name, as required by subsection (e) of Section 4(2) of the Fur Act as paraphrased above, the record establishes that respondent did not in fact fail to so label its prod- , testifiedllctS. 1\11'. Camenisch, an investigator for the Commission that he found no instances \yhere respondent's name was not set out on its labels. Commission Exhibit 1 is a facsimile of the form of label used by respondent.. Printed thereon in large type are the words "1\landel Brothers, Chicago. 1\11'. Cameniseh testified that the correct name of respondent is 1\lnndel Brothers, Inc., and apparently the proposed finding of counsel supporting the c.complaint is based upon the failure to include the word "Inc. " even though it is undisputed that respondent placed its name and city of location upon a11 of its labels. I find no merit in this proposal of counsel supporting the complaint. Subsection (e) of Section 4(2) requires that the label show plainly: "The name, or other identification issued and registered by the Commission, of one or more of the persons who manufac.ture such fur product. , introduce it into c.commerce sell it in commerce, advertise or offer it for sale in commerce.e, or transport or distribute it in commerce. Respondent has complied with this requirement literally. In addition, it included the city where it does business, more information than necessary under the subsection. The failure to attach the word "Inc." seems to me completely without significance. Respondent plainly set forth the name under which it does business and its location. To construe the omission of Inc. which respondent does not normally use as a part of its nfl.me in doing business, as a violation of the Fur Act seems to me entirely too technical and unreasonable.

B. False In-voicing of Fur Prod~tcts The complaint alleged that respondent falsely invoic.ecl certain its fur products in violation of Section 5(b) (1) of the Fur Act and Rules 4 and 40 of the R,llles and Hegulations. Section 5(b) (1) requires that the invoices show: (a) the n:1me of the animal as set forth in the Fur Products Name Guide; (b) the presence of used is bleached dyed or otherwise ar-fur; (c) that the fur product tificially colored; (d) that the fur product is composed of paws tails, etc. ; (e) the name and address of the person issuing the invoice; and (f) the c.country of origin of any imported,d fur. In support of these allegations, counsel supporting the complaint offered in evidence certain invoices issued by respondent to purchasers of its MANDEL BROTHERS, INC.

Findings fur products. These contained four instances of failure to set forth the correct name of the animal as contained in the Fur Products Name Guide, and six instances of failing to set forth that the fur in the product. was bleached, dyed or otherwise artificially colored. "\With respect to subparagraph (e) as set forth above, respondent' invoices show that, while its name is set forth thereon, no address is included as required by subsection (e). Counsel supporting the complaint proposed a finding of fact under subsection (d) above, but there is no evidence in the record that respondent's invoices ever failed to show that the fur products were composed of paws, tails, etc. vd1en such was the fact, as required by subsection (d), and accordingly no such finding is made. Counsel supporting the complaint proposed no findings of fact with respect to subparagraphs (b) and (f) of Section 5(b) (1) as set forth above and there is no proof in the record in support of these allegations. Accordingly, no finding wjth be made. 1With respect to the alleged invoicing violations of R,uses 4 and 40 which provide respectively that required information not be abbreviated and that the invoic.e disclose the item number of the fur product, counsel supporting the complaint proposed no findings of fact, there is no proof in the record to sustain such anegations, and no such findings are made. C. False Ad'uertising of Pur Products The complaint alleged that respondent falsely and deceptively advel' tisec1 its fur products in violation of the Fur Act, of Rules 4Ll(a), (b) and (c), and of the Act, by ne'\Yspaper advertisements \which represented that the prices of its fur products had been reduced from their regular and usual prices when in truth and in fact such so-called regular or usual pric.es were fi.ctitious, and by newspaper advertisements which represented that the sale pric.es of jts products enabled purchasers to eil'ectuate savings greater than the di fl'erence between such prices and current market value. Rule 44 (a) prohibits such fictitious pricing and Rules 44 (b) and (c) prohibit such comparative pricing and value claims unless based upon current market values or the time of suc.h compared prices is given and such claims are true jn fact.. It is of course well established that such false representations in commerce conc.erning prices and value are violations of Section 5 of the Ac.t.

The record establishes that respondent by its newspaper ac1vertisinp: misrepresented its regular and usual prices, and misrepresented the market price. or value of its fur produc.ts. Four newspaper advertisements of respondent were received in evidence, two from the Tht' 0/'1011 COIII)J(tIIJ/. l//c., Docket ~o, 6184 (1956), and cases cited therein, FEUERAL TRADE COMMISSION DECISIONS Findings 54 F.

Chicago 8un- Times and Chie-ago American on October 3, 1954, one from the Chicago Tribune on October 2 , 195-:1:, and the other from the Chieago Tri bulle on October 5, 1852.

1. The Comparative Pricing The aUeged misrepresentation concerning the market price or value of respondent's procluc.ts is considered first. Respondent operated two fur departments in its Chicago store, one caned the Subway Fur Department in the basement and the other on the fifth floor called the Fur Salon. Hesponclent annually e,ach October conducts a ~ale in its Subway Department during which hundreds of fur coats, jackets and other garments are sold at a single price of $125.00 each. Respondent has been conducting this partic.ular promotion for many years. The two advertisements dated October 3, 1954 and the advertisement dated October 5 , 1952, dealt with this particular annual sale of fur products. The 1954 advertisements conla in a long list of fnr garments of difierent types of furs with a col'l'esponding list of market prices ranging from $195. 00 to $499. e'-Ich, all for sale at the single price of $125.00. The 1952 advertisement "'as substantially the same except that the market prices listed ranged from $165. 00 to ~599.00. In addition, the 1952 advertisement a Iso stated that many of the fur products on sale were reduced from l't:,:.-:pondent' s own stock.

The record establishes that the market price or value of the fur products advertised by respondent in 1952 and 1954 did not equal or approach $599.00 and $499. , respectively. Commission Exhibits , through 46 are respondenes invoices showing sales made. during the HI;)- Subway I~ ur sale, together with the receiving aprons and manufac.turers' invoices tied to each such sale invoice showing the origina 1 cost of each garment and also listing respondent's retail prices hereon as $125.00. These exhibits reveal that the cost of the fur products sold by respondent during the 195-:1: Sllb,\yay sale ranged from 888.00 to approximately $100.00 a unit. Commission Exhibits 55 through 60 are manufacturers' invoices of fur produc.ts purchased by respondent for its 1952 Subway sale and show costs ranging from $87.50 to $100.00 a garment. Counsel supporting the complaint called :Messrs. I-limmel and Friedman, two experienced furriers engaged in the business in Chicago for many years, who both testified that the average mark-up in the fur industry WfiS 60 percent of the c.ost. or :1\11'. Friedman testified that the371/2 perc.ent of the retail price. maximum range of ma-rk-up was from 50 to 70 percent of the cost. Respondent oflered no evidence to c.ontradict this testimony and accordingly it is undisputed in the record. Computing the maximum marl,-up, used in the industry, 70 percent, upon the maximum cost MA1~DEL BROTHERS, INC.

Findings of any of the garments listed in the foregoing exhibits would result in $170.00 as the highest market value of any of the fur products. ~lessrs. l-will and Bernstein 'were the buyers for and in charge of the Fur Salon and the Subway Department, respectively. They testified that they made frequent buying trips to New York City and, by careful shopping and buying in lots rather than individual pieces, "ere able to ac.quire fur products at prices substantially less than they could be purchased by competitors in single units. :Messrs. I-lill and Bernstein also testified that the market prices listed in the three advertisements above mentioned were true and correct. For a number of reasons, this testimony cannot be credited. Based upon this and proof that respondent's mark-ups averaged from 5 to 10 percent less than the usual mark-up of 37Y2 percent of retail price, respondent argued that the market prices contained in its achertisements "ere in fac.t correct. \Vhile this would result in lower prices to the public, as contended, it by no means establishes the truth of the market "nllle representations. As heads of the respective departments, :Messrs. Hill and Bernstein either prepared or supervised the preparation of responde.nfs ne'\"spaper advertisements. Self-interest would dictate that they testify that such advertisements ,Tete true and correct. in all respects. ~I()re conclusively, the facts established by the documentary evidence in the record reveal that the market values listed in the advertisements c.ould not possibly have been true. As previously noted, a maximum mark-up applied to the fur products costing the most would have resulted in a market price of only $170.00. Based upon the highest cost of the fur products, a mark-up of 400 to 500 perc.ent \Tould have been necessary to reach the market prices of $499.00 and $599.00 listed in respondent' advertisements. In view of the testimony of :Messrs. l-limmel and Friedman, both of whom had many years of experience in the fur business and were president and secretary, respectively, of the Associated Fur Industries of Chicago, such a mark-up \Tould be incredible.

The argument that bec.cause respondent purc.based its fur products in lots or large quantities it was able to secure them at cost prices 400 to 500 percent below market "nlue isequalJy incredible. 1With regard to this, it will be noted that both :l\1essrs. Hill and Bernstein testified that they were able to purchase such products at a cost c.onsiderably lower than buying each garment individually. Hesponc1enfs argument assumes that c.compe.titors could buy fur produc.ts only as individual items, an nssumption which obviously is not sound. 1\11'. Hinunel testifjed that his firm operated the largest exclusive fur building in Chicago and was also engaged in manufacturing. The, market price or value of a product must be the average price Fin clings 54 F.

at which such products are sold in the industry at retail Here this necessarily means the price at which competitors of respondent were selling such products on the retail market in Chicago. To assume that such competitors could and did purchase, their fur products wholesale only individually or in small units instead of lots could hardly be accurate, yet this is the tenor of respondent's argument. Actually, respondent's invoices demonstrate the invalidity of this argument. An examination of them reveals that, contrary to its contention concerning buying in quantity, the lowest cost prices appear on the invoices involving the smallest number of fur products. For example, Commission Exhibit 29 involving the purchase 00 shows the cost thereof to beof eight garments to be sold for $125. $84. 00 piece. Similarly, Exhibits 40 , 42, and 44 , involving the purchase of only 14, 17 and 21 garrnents, respectively, show the cost to be $83. 00 pel' garment. COJlYersely, many of the. invoices covering a purchase of substantially larger numbers of fur garments sho"~ a higher.r cost per item. It c.an harc11y be. contended seriously that respondent's competitors, including: the. largest exclusive furrier in in qui1n-Chicago, could not purchase lots of fur garments ,,'holesale tities ranging from 8 to 21. In view of these established facts respondent' s advertised market prices representing a mark-up of 400 to 500 percent above cost ca,nnot be true. that if responc1- Another point worth noting in this connection is 00 to 8599. 00 '\,ere correct, theenfs market prices or values of *'499. c.ost of such products to respondents competitors must have ranged 00 to $:350.00 per unit, and they c.ouldfrom approximately $300. have effectuated great savings anrl substantial profits merely purchasing such garments from respondent for $125.00 during its sale. Respondent. also argued that there ,"as no proof:f in the record that the garments identified by invoice. were those advertised. Ac.tually the converse is true. ~Jr. Bernstein testified that respondent never used the $125. 00 price except during its Annual sale, and hence the identified garments m11st have been those advertised. For all of the foregoing reasons, it is c.onc.luc1ec1 and found that. respondent's its furrepresentations concerning the market price or value of prorlucts Estec1 in the foregoing adn)rtisemenj-s "'ere false. 2. The Fictitious Pric.ing The c.complaint also alleged that respondent falsely represented its usual and regular pric.es of such products. The proof in support of this allegation was the representations made in the ad\'ertisement. in The Chieago Tribune, dated October 2, 1~54 Commission Exhibit 47. This advertisement, dealt with a sale of fu r products by MANDEL BROTHERS, INC.

Findings respondent in its Fur Salon. It stated that the fur products on sale at $244.00 were "Usual11y $299.00 to $399.00. This interpretation is' corroborated by the testimony of 1\11'. Camenisch who c.ontacted ~Mr. I-lill with respect to this advertisement and asked him if could' point out the particular garments advertised. According to :Mr. Camenisch, 1\11'. teu replied that he had no definite record of the part icular garments but suggested that i\lr. Camenisch check the sales records to find any garments sold at that price pursuant to the advertisement to ascertain the validity of the claims made therein. If it be contended that the advertisement was a representation of market value rather than respondent's usual and regular prices: l\Jr. Hill: who prepared the advertisement and was contacted by ~Ir. Camenisch, could have at that time made that fact clear., Instead, hm"eve.r, :Mr. I-1i11 suggested that :Mr. Camenisc.h check responc1enfs sa.)es records to locate any particular garments sold by it pursuant to that advertisement. This testimony was undenied alt hough :Mr. HiU testified on two occasions. It seems clear, t herefore, in addition to the wording of the advertisement itself, that respondent was representing and intended to represent that the usual and regular prices of these products were from $299.00 to $399.00. l\lr. Camenisch proceeded to check the sales records and found three sa les invoices of garments sold pursuant to that advertisement. Such sales invoices and the corresponding manufacturers' invoices of the particular garments were received in evidence. The manufacturer s invoices show that at the time respondent purchased these. , $244.00 andgarments it priced them for sale at retail at $244. 8288. , respectively. Respondent's oflic.iaJs testified, and it was undisputed, that in c.connection with a11 of the manufacturers' invoices and receiving aprons received in evidence., respondent entered thereon its retail price. to be charged for the particular garments and such pric.e '\"as not thereafter changed. This demonstrates that the ga ments sold were not usually and regularly priced by respondent for sale at from $299.00 to $399.00. Accordingly, it is concluded and found that respondent, by the above, advertisement concerning the sale in the Fur Salon, falsely represented its usual and rt'gular pric.es of such products.

3. The Failure to :Maintain Records Concerning Pricing Claims and Representations The complaint also alleged that. respondent failed to maintain fun and adequate records disclosing the facts upon which the pricing claims and representations discussed above '\"ere based, in violation of R,u)e 44 (e). Rule 44 (e) provides that persons making pricing 528577-60---6 ,60 FEDERAL TRADE COMMISSION DECISIONS Findings 54 F.

c.1aill1s or representations of the types described in subsections (a), (b) and (c) thereof, namely, fictitious and comparative pricing, must. maintain full and adequate rec.ords disc.losing the facts upon which such c.claims or representations are based. ~Ir. Camenisch test,ified that he asked both :Messrs. Hill and Bernstein for such records but that none '\"\ere produc.ed or available, and that respondenfs inventory rec.ords indicated that the garments advertised never had such value or price, as previously found herein. This testimony as undisputed and accordingly it is found that respondent failed to maintain the records supporting its pricing c.claims required by Rule 44(e).

D. Respondent' s Contentions and Defense Respondents contention c.onc.erning the triviality and technicality of its labeling violations, and its contention with respect to interstate commerce.e within the meaning of the Act and the Fur Act have previously been considered herein. In addition, respondent contended that the requirements of the Fur Act with respect to invoicing do not apply to a person engaged in the retail sale of fnr products because of the definition of "invoice" in Section 2 (f). This section provides that: "The term "invoic.e" means a written account, memorandum, list, or cata.Iog, which is issued in connection with any commercial dealing in fur products or furs, and describes the, partic.ulars of any fur products or furs, transported or delivered to a pnrehaser, consignee, factor, bailee, c.orrespondent, or agent, or any other person I(oho is engaged h~ dealing co1n1nf;rci.ally in fur products OJ' fU1' (Emphasis supplied by respondent. Because of the underscored portion of the foregoing definition respondent contends that the term "invoic.e" applies only to wholesalers, manufacturers and jobbers, but not to retailers. The gist of respondent's argument is that because of the foregoing language an invoice as defuled can apply only to a purchaser \yho is engaged in dealing c.ommercially in fur products or furs. Such a construction of Section 2 (f) appears far too limited in view of the undisputed purpose of the Fur Act to protect the ultimate consumer from deception by false invoicing. It is clear that the Commission has not so construed the meaning of invoice under Section 2(f). The various rules and regulations adopted by the Commission dealing with invoicing clearly indicate that the Commission considers the invoicing requirements of the Act applicable to retailers of fur products who sell to the purc.hasing public. In addition, decisions of the Commission, including the PeZta FUTS case/ establish that the 4 See Footnote 2. SIIIJ1- MANDEL BROTHERS , INC.

Findings Commission has applied the in\-Olcl11g requirements of the Act. to retailers selling fur products to the public. Respondent also argued that Rule 44 is 'Ultra vh' es as an unwarranted extension of the pmyer delegated to the Commission by the Fur Act. This iden6c.al issue '\"as considered by the Commission the PeZta Fu,rs case 5 in '\which the Commission held that Rule 44 \Vas an appropriate exerc.ise of the Commissjon s po\\-er under Sec.tions 8(b) ands(a) (5) of the Fur Act. R,respondent also contended that Rule 44 cannot operate to shift the burden of proof to respondent. Apparently this contention is based upon respondent~s belief that there is no proof in the record to sustain the allegations of fictitious and comparative pricing, and that. therefore the position of counsel supporting the compla.int. must be that respondent. is required to show that its aJ1eged fictitious and comparative prices were in fact not fictitious and were in fact true. market values, respectively. Of course respondents contention that Rule 44 ('.(l11not operate to shift the burden of proof to it is correct.. I-Iowever, no such posi hon '\vas taken by counsel supporting the c.complaint, and the record does not support respondents belief. As previously found CO1HlSe.l supporting the complaint established by reliable, probative and substantial evidence that responclenfs pricing representations were in fact false and fictitious. The burden of proof to establish any a1Jeged violation of the Act or the Fur Act is always upon counsel supporting the complaint, and in this proceeding counsel has clearly met that burden.

The fact that Hule 44 (e) requires persons making pric.e representations to maintain rec.ords supporting such representations does not operate to shift the burden of proof to such persons. Obviously, proof that. a respondent did not maintain sllc.h records, while it would establish a violation of Hule 44 (e.), would not. be sufficient to establish a violation of R,ule 44(a), (b), or (c), and the burden of prcrving that a respondent~s price representations were in fact fictitious or false would still be upon counsel supporting the complaint. The record establishes the pricing allegations of the complaint and accordingly respondent's argument in this respect without merit.

E. Concluding F'indings As previously found, there is no evidence in the record that respondent misbranded its fur products by failing to affix labels shmving that the fur was used, that the fur was composed of paws, tails etc., or the name of the person selling, advertising, transporting, or 1; See Footnote 2. s1Ipra.

, Findings 54 F.

distributing such products in commerce, as alleged in the complaint nor was there any evidence in the record that respondent falsely invoiced its fur products by failing to show thereon that the fur was used, that the fur was composed of paws, tails, etc., or the country or origin of any imported furs, or by abbreviating required information or failing to disclose the required item number, as alleged in the complaint. Aceordingly, it is found that there is no substantial evidence in the record to support the foregoing allegations of the complaint.

A preponderance of the reliable, probative and substantial evidence in the entire record eonvinces the undersigned, and acc.ordingly it is found, that respondent misbranded certain of its fur products by failing to affix labels thereto showing:

(a) The name or names of the animal or animals producing the fur or furs contained in the fur product as set forth in the Fur Products Name Guide, and as prescribed under the Rules and Heg- Hlations;

(b) The name of the country of origin of any imported furs used in the fur product; and (c) That the fur product contained or '\,as c.composed of bleached dyed or otherwise artific.ially colored fur, when such was the fact. It is further concluded and found that respondent falsely and dec.eptively invoiced fur prodllets by failing to furnish invoices to pnrc.hasers showing:

(a) The name or names of the animal or animals producing the fur or furs contained in the fur product, as set forth in the Fur Procluets N nme Guide, and as prescribed 1mc1er the Rules and Regulations;

(b) That the, fur product contained or ,,-as composed of bleached dyed, or otherwise artificially colored fur when suc.h '\"as the fact; and (c.) The address of the person issuing suc.h invojee, It is further concluded and found that respondent falsely and deceptively achertised fur prodl1ets by the use of advertisements and reprpsentntions which were intended to and did aid, promote and assist, dirpc.tly or indirectly, in the sale and oflering for sale of such products, and which.h represented, directly or by implication, that (1) its sale prices '\"ere reduced from the re.gu lar or usual pric.es of its fur prodnc.ts when in truth and in fact suc.h represented regular and usual prices were in exc.ess of the pric.es at which respondent had usna11y and customarily sold such products in the rec.ent regular course of its' business: and (2) its snap prices enabled purchasers of its fur produc.ts to etTec.tuate savings greater than the diil'erence be- MANDEL BROTHERS, INC.

Conclusions tween the stated price and the current market price of such products in violation of both the Fur Act and the Act.6 It is further concluded and found that respondent, in making the pricing claims and representations hereinabove found, failed to maintain full and adequate records disclosing the facts upon which such claims and representations were based, in violation of Rule 44 (e) of the Rules and Regulations.

F. The Effect of the Unlawful Practi.ces The use by respondent of the false, misleading and deceptive statements and representations found above in Section III Cl, 2 and E has had and now has the tendency and c.apacity to mislead and decei ve a substantial portion of the purchasing public and thereby induce the purchase of substantial quantities of respondent's fur products. As a result, substantial trade in commerce has been unfairly diverted to respondent from its c.ompetitors and substantial injury has been and is being done to competition in commerce. CONCLUSIONS OF LAW 1. Re,spondent is engaged in commerce, and engaged in the above found .1cts and pracbces in the c.course and conduct of its business in commerce, as "commerce:: is defined in the Act and in the Fur Act. 2. The acts and practices of respondent hereinaboye found are violation of the Fur Act and the Rules and Re,gu1ations promulgated thereunder, and constitute unfair methods of competition and unfair and deceptive acts and practic.es in coinmerce under the Act. a. The acts and practices of respondent found in Section III Cl 2 and E are an 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 within the intent find meaning of the Act.

4. This proceeding is in the public interest, and an order to cease and desist the above-found unla wfnl practices should issue against respondent.

5. There is no evidence that the labels affixed to respondent' s fur products were deficient in that they failed to disclose that the fur products were c.composed of used fur, or were c.composed of paws tails, benics, or \Taste fur, or that they failed to disclose respondent' name or that the invoices issued by respondent in connection '\with (; While the Commission disagreed concerning the ,aljdit~ of Rule 44 under the Fur Act in tile Pelto. Furs case, 811111' it unanimously held such practices to be in violation of Section 5 of the Act.

Order 54 F. C., the sale of fur products were deficient in that they failed to disclose that. the fur products were composed of used fur, or were composed of paws, tails, beHies, or ",aste fur, or that they failed to disclose r he. country of origin of imported furs, or the required item number or that said invoices were improper in that they abbreviated required information.

ORDER It2,s ol'deJ'ed That respondent, ~Iandel Brothers, Inc., a corporation, and its officers, representatives, agents and employees, directly or through any corporate. or other device, in c.connection with the introduction into commerce, or the sale, advertising or offering for sale in commerce, or the. transportation or distribution in commerce, of any fur product, or in connection ,,-ith the sale, advertising, offering for sale, transportation or distribution of any fur product which has been made in ,,-hole or in part of fur '\yhic.h has been shipped and received in commerce, as "commerce fur ' and " fur products are defined in the Fur Products Labeling )~, , do forthwith cease ~I1(l desist from:

A. ftJisbranding fur products by:

1. Failing to affix In bels to fur products showing: (a) The nall1P or names of the animal or animals producing the fur or furs conl ,lined in the fur product as set forth in the Fur Products X ame. Guide and as prescribed under the rules and regula tions:

(11) That. the fur product c.contains or IS composed of used fur when such is the fact:

(c) That the fur product contains or is composed of bleached d:n'd, or artificially colored fur, when suc.h is the fact; (d) That the fur product. is composed in whole or in substantial part of pa'\Ys, tails, bellies or waste fur, when such is the fact; (e) The nanw, or other identification issued and registered by the Commission, of one or more persons who manufactured such fur product for introduction into commerce.e, introduced it into commerce, sold it in c.ommerc.e~ achertised or oflered it for sale in commerce ~ or transporte(l or c1istrilmted it in commerce.; and (f) The name of the country of origin of any imported furs used in the fur produc.t..

:2. Setting forth on labels attached to fur produc.ts: (a) Required information in abbreviated form or in, hand\'\Titing; Ib) Son-required information mingled '\with required information. FnlseJ~- or deccpti,-ely inyojcing fur products by: r. 1. Fnihng to furnjsh invoices to purchasers of fur products 1o'\y ~n cn"

MANDEL BROTHERS, INC.

Opinion (a) The name or names of the animal or animals producing the fur or furs contained in the fur product as set forth in the Fur Products Name Guide and as prescribed under the rules and regulations;

(b) That the fur product contains or is composed of used fur when such js the fact;

(c) That the fur product contains or is composed of bleached dyed, or artificially colored fur, when suc.h is the fact; (d) That the fur product is composed in whole or in substantial part of paws, tails, bellies, or waste fur, when such is the fact; ( e) The name and address of the person issuing such invoices; (f) The name of the country of origin of any imported furs c.contained in the fur product.

. Setting forth required information in abbreviated form. 3. Failing to show the item number or mark of fur products on the invoices pertaining to such products.

C. Falsely or deceptively advertising fur products through the use of any advertisement, public announcement, or notice which is intended to aid, promote or assist, directly or indirectly, in the sale or offering for sale of fur products, and which represents directly or by impJic.ation that the regular or usual price of any fur product is any amount which is in excess of the price at which respondent has usually and c.customarily sold suc.h products in the recent. regular course of its business;

D. :M aking pricing claims or representations of the type referred to in Paragraph C above, unless there is maintained by respondent full and adequate records disc.losing the facts upon which such c.1aims or representations are based.

OPINION OF THE CO)')IMISSION By ANDERSON, Commissioner:

nespondent has appealed from the hearing examiner s initial decision "hic.h found that. it had violated the Fur Products Labeling '-\ct and the rules and regu1n.t.ions promulgated thereunder in that in certain respec.ts, it had misbranded, falsely invoiced, and falsely achertised fur products sold by it. Hespondenfs appeal essentially is to the, effect (a) that the Commission lacks jurisdiction and (b) ~'ite8 the Commis-that Hule 44: of the Fur Regu1ntions is ultra sion s pmycrs under the Fur Act. Hesponclent also questions "whether the evidence supports the findings as to misbranding, false invoicing and false advertising.

Counsel in support of the complaint have also appealed, questioning the limited scope of the order to cease and desist in the initial ,66 FEDERAL TRADE COMMISSION DECISIONS Opinion 54 F.

decision insofar as the prohibitions against misbranding and false 'invoicing are concerned. They deem the order to be satisfactory insofar as the advertising violations are concerned. Respondent's first contention, in effect, is that the evidence does not support the finding that respondent, :Mandel Brothers, Inc. , is subject to the Commission s jurisdiction under the Fur Act and the Federal Trade Commission Act. Under Section 3(a) of the Fur Act, the introduction, or manufacture for introduction, into commerce, or the sale, advertising or offering for sale in commerce, or the transportation or distribution in commerce, of any fur product which.h is misbranded or falsely or deceptively advertised or invoiced within the meaning of the Fur Act or the rules and regulations promulgated thereunder is unlawful and is an unfair met hod of competition, and an unfair and dec.eptive act or practice, in eommerce under the Federal Trade Commission Act. Section 4 of the same Act provides that for the purposes of the Act a fur product shan be considered to be misbranded i-f there is not affixe(l thereto a label showing the proper name of the nnimal producing the constituent fur; that it. contains u~ec1 fur, '\"hen such is the fad: that it c.contains bleached, dyed, or othenvise artificially colored fur, when such is the fac.t; that it contains paws, tails, bellies 01" waste fur when such is the fact; the name or other identification of the person 'who manufactured it for introduction into c.commerce, who introc1uc.ec1 it into commerce, or who gens, advertises or offers it for sale, or transports or distributes it in c.commerce; and the name of the country of origin of the constituent fur; and Sections 5 (a) and (b), respectively, provide that for the purposes of the Aet a fur product shan be considered to be falsely or deceptively advertised or invoiced if the advertisin!! or invoices do not show substantially the same information. Section 8 of the Fur Act among other things, authorizes and directs the Federal Trade Commission to prevent "iola60ns of Section 3 by the same means, and with the same jurisdiction, powers and duties as though an applicable terms and provisions of the Federal Trade Commission Act were made a part of the Fur Act.

As "\\"ill hereinafter appear, the record discloses that respondent misbranded, falsely invoic.ed, and falsely advertised fur 'Products sold by it. The rec.ord further disc.loses that respondent advertised and offered for sale in c.ommerc.e fur produc.ts through the recognizedly interstate media of The Chicago Tribune, The Chicago American and The Chicago Sun-Times, newspapelrs with substantial circulation outside the State of Illinois. Furthermore, the record shows a numbet of instances where respondent shipped and delivered, or introduced into commerce, fur products sold to customers MANDEL BROTHERS, INC.

Opinion outside the State of illinois. In this latter connection, the hearing examiner found, in effect, that respondent's officials admitted such interstate sales because c.customer invoices showed that no Illinois sales tax '\,"as charged. Thus, the factual evidentiary situation in this regard is substantially the same as that which obtained in Jacques De Gorter and Suze O. De Gorter, trading as Pelta Furs C. (C.A. 9, decided April 17, 1957), and we conclude that the principles enunciated there are controlling here and that respondent's contentions as to the jurisdiction of the Commission are without merit.

Considering now respondent' s second principal contention, namely, that Rule 44 of the Fur Regulations prohibiting price misrepresentations with respect. to fur products is an unwarranted extension of power delegated to the Commission pursuant to the Fur Act, it is the opinion of the Commission that this point should be, and it hereby is, decided adversely to respondent-also for the reasons stated in the PeZta Furs case supra where the Court, upholding, in efl'ec.t, the Commission s opinion that Rule 44 is a valid, substantive regulation with the full force and effect of the statute itself, held: By npplying the principles in the cn~es just cited, and taking into account tl)t~ legislative llistory of the Act, it is quite evident that the intention was to reach all 1n;.step1' evel1tat.ions ,in adrerUsiny, including those relating to prices and yalue, If any doubt exists about the matter tlle clause under consideration indicates the intention 10 inelmle them, The Commission was right in so interpreting the statute an(1 acted within its powers in promulgating the rule un(1er discussion. fEmllhasis by the Conrt) Finally, as indicated above, respondent attacks the sufficiency the evidence.e to support findings in the initial decision as to misbranding, false invoicing and deceptive advertising. labeling re- Respondent does not dispute that it has violated the quirements of the Fur Act and the rules and regulations promulgated thereunder.1 It contends, however, that the instances of violation were merely technical and too trivial in nature to warrant a cease and desist order in the public interest. On this subject, the hearing examiner found as follows:

Hespnnflent' s argument is without merit. Admittec1Jy, the misbranding found was not as serious or substantial a viol:ltion of the Fur Act as, for instance, calling n1l1skl'at mink 01' rabbit ermine, but the very pmpose of Congress n(10pting the provisions of the Fur Act and directing tile Commission to pro- 1 In fact. respondent lists in its brief on appeal some seven pages of more than one hundred instances of H(lmitted misbranding, These encol11IHlssed failure to use proper nllmes of constituent furs. fni1ure to properly show country of origin and that fur was dyed 01' nrtiticinll~' colored(l, improper use of abbreviations, the mingling of non-required whh required information find labeling containing information in handwriting, Some of these are in direct contravention of the statute; others are in violation of rules and' regulations l))'omulgated under the Act, "hith are by statute also misbranding, (See Pe/in Furs v. C., supm, Opinion 54 F.

mulgate rules and re~I1ations thereunder was to prevent deception of the public by such practices. It cannot spriou~l~- be urgec1 that violations of specific sections of an act adopted by Congress are too technical or trivial to wa rrant the isslwlwe of a ce:lse and desist order. In addition, the Commission. as an expert bod~-, was authorizecl and directed to :H10pt rules and regulations to carry out the purpose of the Act, namely, to prevent the deception of the publ ic by misbranding or fa Isely advertising or invoicing fur products. OJ.n-iousb', the use of abbreviations, handwriting, and the mingling of non-required information ,dth required information are devices which can readily be used to deceive and mislead the public. Even tl1ough it be conceded that they may have been clone innocently, in ignorance of the law, and withollt intention to deceive, they cannot be permitted. To dismiss respondent's misbranding as too trivial or technical to warrant the issuance of :l cease and c1desist order would be to open the door to deception and evasion of the Act.

The statute does not establish or specify any c.criteria to permit differentiation between the trivial or serious nature of instances where a retailer fails to affix a label to fur products disclosing, in the manner and form eontemplatecL al1 of the information required by the Fur Act and rules and regulations promulgated thereunder. ",Yhen alleged practices of a retailer are found to c.onstitute violations of the statute, the Commission is under an obligation to correct them. In the c.circumstances of record in this proceeding, the Commission has concluded that the hearing examiner s findings in the respect indicated is entirely proper and correct. The reasons urged by respondent against sustaining such finding are without meri t.

On the question of false in/voicing: the hearing examiner found four instances of failure to state the correct name of the animal producing the, fur c.contained in respondents fur products and six instances of failure to set forth on invoices to customers that a fur product was bleac.hed, dyed or other,ise artificially colored. He also found that respondent's inyoic.es, while setting forth its trade name~ do not include its address, as required by Section 5 (b) (1) the Act.

Respondent contends that these findings as to false invoic.ing should not be sustained. It does not seriously question that its sales slips are deficient in that they fail to show the name of the animal producing the fur, or that such slips do not carry respondent's address. It. does question the suffic.ienc.y of the evidence.e to establish the fact that the fur products to which.h the sales slips related "were adl1a)):,- dyed, bleac.hed or artific.ially c.colored. Considering this latter point first, sales slips in evidence show sf11es of fur products nmde of muskrat and black Persian lamb 11l1flCCOmpanied by a statement that they are dyed. There is uncontroverted testimony that furs made of the skins of muskrat and MANDEL BROTHERS. INC.

Opinion black Persian lamb are always dyed. R,respondent's argument that this finding as to false invoicing, with respect to bleached, dyed, or artifieialJy colored fur, should be stricken is without merit. On the question of failure to show respondent's address on sale slips, it is the position of respondent that the omission is of such tri"ial character as not to require corrective action by the Commission. Counsel supporting the complaint point to the express provision of Section 5(b) (1) (E) of the Fur Act which requires invoices to show:

(E) the name and address of the person issuing such invoice * * (Emphasis supplied.

In the face of this statutory directive, the hearing exanllner could not find otherwise than he did in this connection. In Section 2(f) of the Act, the term " invoic.e" is defined to mean: * .. * a "written account:, llll'll1orandnm, li!'::t or entaJog:. which is i:;;Slh~d in COl~- Hexion with any commercial Ilealing in fur l)ro(1uds or furs, and describes tlw partil'ulnrs of an~' fur pl' O(\ucts or 1'UI' , trnnsportecl or delivered to a purebaser, consignee, factor, bailee, C'orrespondent, or agent, or any other person who is engaged in dealing commer('iall~- in fur products or furs. Respondent's main contention in justification of its false and deceptive invoicing practices is that the requirements of the Fur Products Labeling Act respecting invoicing are inapplicable to transactions involving the retail sale of fur products. I-Iolding in efl'ec.t. that the construction advocated by the respondent misconstrues the impact of the word "other" in the con1ext above, the hearing examiner rejected respondent:s argument, and correctly so. The Commission has consistently construed the statute s proscriptions against false and dec.eptive invoicing to extend to invoices or sales slips furnished by retailers to the purchasing consumer. That a prime purpose of the Act. '\\":18 to eliminate deceptive invoicing at the consumer level is evident from its title, namely, "To protect consumers and others against * * * false invoicing of fur products and furs: To ac.cept the c.onstructioi1 advanced by the respondent. clearly would defeat the c.ongressional declaration purpose ~md render the Act ineffective in a major respect. In the latter conne-chon, it should be noted that the retailer nwmorandnm of sale or invoice constitutes doc.umentary evidence of rightful possession by the consumer of her fur garment, a factor obviously conc1uciye to preservation of the invoice. This consideration is not. applicable, hmyever, with respect to the garment label. Inasmuch as the invoice may serve as a documentary link connecting the sale of specific fur products back through the 1'retailer 5 rec- Opinion 54 F.

ords with advertisements therefor, the application of the invoicing provisions of the Act to transactions between retailers and consumers represents a key implement for effective administration of theAct.Not only is the interpretation advocated by the respondent in conflict with the Act's avowed purpose and the legislative design underlying the invoicing provision, but such a construction ignores the language arrangement of Section 2(f) itself. The words "or agent" prefacing the phrase "or any other person who is engaged in dealing commercially in fur products;' are set off from the preceding and suc.ceeding parts of the sentenc.e by commas. flence, the words " agent" comprise a separate and integral phrase in their own right. It accordingly seems reasonable to conclude that the final phrase extending the definition of invoice to memoranda issued to commercial dealers generally was intended to augment and expand the kindred class of persons dealt with in the preceding phrase, namely, agents.

Another consideration detracting from the force of the respond- Sec.tion 3 of theent's argument is the fact that subsection (b) of Act not only proscribes misbranding and false advertising but false invoicing as well. Subsection (a) similarly forbids misbranding and false and deceptive advertising and invoicing, but its proscriptions relate only to interstate aspects of the marketing and distribution of fur products and furs. Subsection (b) confers jurisdiction over fur products made in whole or in part of fur which has been clearly reaches deceptionshipped and received in commerce, and point. of retailengage,d in at the local or intrastate level, the prime sales' consummation. The inclusion in this subsection of the provision against false invoic.ing is similarly suggestive of a legislative purpose that the Act's invoicing requirements be applicable to re-tail transactions. Respondent further submits that "it would be an unworkable burden on the retailer at a time of an extensive sale with many inexperienced sales persons on the floor to require each of them to have the detailed and intimate knowledge of the Fur Act * * *" 5 (b) of the necessary to enter the information required by Section Act on the invoice, or sales slip, delivered to each customer. The sales person is not required answer to this contention is that such to have any specialized knowledge properly to complete the sales C~l11 be copied by the sales person directly slip. The information is no more from the required label attached, to the fur product. It than on a wholesaler and in fact is less, burdensome on a retailer physical contact with the whose clerical personnel may have no ,, MANDEL BROTHERS, INC.

Opinion merchandise or labels on merchandise being shipped to meet invoicing requirements of the Act. Respondent's contention that invoicing requirements of the Fur Act and rules and regulations promulgated thereunder do not apply to retail transactions is rejected. Finally, respondent contends that the evidence does not support the hearing examiner s finding that its advertising of fur products contained false and fictitious state,ments. The complaint in this respect charges that respondent (1) misrepresented prices of fur products as having been reduced from regular or usual prices in that the regular or usual prices set forth in advertisements in fact '\,ere not the prices at which the merchandise was usually sold by respondent in the recent regular course of business, and (2) misrepresented by means of comparative prices and other statements as to "value" the amount of savings to be effectuated by purchasers. As to (1 )-the fictitious pricing charge-the record shows, and the hearing examiner found, that respondent placed an advertisement in The Chicago Tribune of October 2, 1954, which stated that fur products offered at. a pric.e of $244.00 were "Usually $299. to ~~i)!)9.00." The record also discloses that it was respondent's customn ry and usual practice (never deviated from) to enter on manufacturers' invoices, at the time of receipt of merchandise, the intended regular and usual retail prices which, according to the testimony of respondent' s buyers, always were observed. l\1anufactureJ's ' invoices introduced into evidence herein, and concerning hieh the same buyers also testified, showed as usual and regular 1'0t nil prices, amounts of $244.00 or $288. , not the prices stated in the advertisement as "Usually $299.00 to $399.00. :Mr. Camenisch a '\"itness called in support of the complaint, identified, and testified as to respondent's invoices furnished to customers on or about the date of The Herald Tribune advertisement. His testimony was that, through identifying stock item numbers appearing on these en~tcmel' invoices, he traced the particular merchandise involved t h1'ongh respondent's records back to the manufacturers' invoices previolls1y mentioned. He thus established that. certain garments sold c1nring the sale for $244.00 "ere the same garments advertised. This testimony and evidence clearly establishes the relationship of the sales and advertising in question. The net. effect of respondent's use of " fictitious" prices such as the above-quoted "Usually $209. 00 to $399. " in the opinion of the Commission, was to mislead and deceive purchasers as to the amount of savings to be realized if advantage '\,ere take,n of the sale price of $244.00. The evidence fully substantiates the hearing examiner s finding that respondent , !;? Opinion 54 F.

did engage in fictitious pricing. Respondents contention on this point, therefore, is rejected.

As to (2)-the c.comparative pricing charge-the respondent is alleged to have misrepresented the amount of savings possible to a prospective purc.haser by stating in advertisements that fur products featured therein had a stated "market value" or "market price" when such stated value, or price, was not true in fact. The hearing examiner found that the market value or price stated by the respondent in its advertisements exceeded considerably the actual market value or price of the fur products offered. This finding is based on his analysis of respondent' invoices of sales made together with manufacturers' invoices, showing costs to respondent to which.h are attached "receiving aprons" on which had been made notations of the retail price of the advertised garments to be $125.00. Of the above-mentioned manufacturers' invoices, Commission Exhibits 25 through 46 , covering the 1954 Subway store sale show costs of garments to respondent ranging from $83.00 to $100.00; Commission s Exhibits 55 through 60, covering the 1952 Subway store sale, shmy costs to respondent ranging from $87.50 to $100. per garment. There is expert testimony that maximum mark-up usually \Yould range from 50 to 700/0 of c.ost. Using that range of mark-up on respondent' s unit costs of record, the hearing examiner reasoned, would result in $170.00 as the highest market value of any of the fur products-not the market value or price placed upon them by respondent in its advertisements as ranging from $195. to $499.00 in 1954 and from $165.00 to $599.00 in 1952. Also, the hearing e,examiner found that Based upon the highest cost of the fur produc.ts, a mark-up of 400 to 500 percent would have been necessary to reach the, market prices of $499.00 and $599.00 listed in responde,nt' s advertisements. The hearing examiner further found that such a mark-up would be incredible. He found equally incredible respondent's argument that because it purchased in Jots and quantities, it was able to secure c.ost prices 400 to 500 percent. below\Y market value.

This reasoning of the hearing examiner, while cogent, does not establish to the satisfaction of the Commission that the respondent misrepresented, by means of c.comparative prices and other stateb~'ments as to "value " the amount of savings to be effectuated purchasers. In order to make snc.h a finding, it is obviously necessary to first find what the actual market value, or price, of the fur product involved in this proc.eeding in fact was. There is no evidentiarv basis on the record here to make such a determination. An that this record does show is what respondent's costs were, the MAl'\fDEL BROTHERS , INC.

Opinion usual and customary trade mark-up in the Chicago area and the retail prices at which respondent sold fur products. In view of the lack of evidence establishing actual market value, the Commission cannot accept the reasoning of the initial decision 5.S establishing the conclusion that respondent did, in fact, misrepresent savings to be efrectuated by prospective purchasers of fur products advertised and sold by it. It follows that the charge in the complaint to the effect that respondent misrepresented, by means of comparative prices and other statements as to "value" not based on current market values, the amount of savings to be effectuated by purchasers of respondent' s fur products has not been substantiated. The initial decision will be modifiedaceordingly.

Turning now to a consideration of the appeal of counsel supporting the complaint, their appeal is limited to challenging the scope of the initial decision s order to cease and desist. Counsel contend in such connection, that the hearing examiner erred in failing require the respondent to comply with all labeling and invoicing re,quirements, respectively, prescribed in Sections 4(2) and 5(b)(1) of the Act. The allegations of the complaint in Paragraphs 3 and 5 are that certain of the respondent's fur products were misbranded and falsely invoiced in that they were not labeled or invoiced as required by these sections.

Linder Section 4 (2) of the Fur Products Labeling Act, a fur product is misbranded if it does not have affixed to it a label showing in words and figures which are plainly legible: (A) the name 01' names (as set forth in the Fur Products Name Guide) of the animal or animals that produced the fur, and such qualifying statement ns may be require(l pursuant to section" (c) of this Act; (B) that the fur product contains or is composed of used fur, wl1en such is the fact;

(C) that the fur pro(luct contains or is composed of bleached, dyed, or otherwise artificinlly colored fur, when such is the fact: (D) that the fur product is composed in whole 01' in substantial part pa"\'\8, tails, bellies, 01' waste fur, when such is the fact: (E) the name, or other identification issued and registered by the Commission, of one or more of the persons who manufacture such fur product for introduction into commerce, introduce it into commerce, sell it in commerce. ad'\ertise or offer it for sale in commerce, 01' transl1ort or distribute it in commerce;

(F) the name of the country~- of origin of nny imported furs used in the fur product.

,With slight variation, the information prescribed by Section 5 (b) (1) for incJllsion on invoices to avoid falsity is the same. ,Vit h respect to the charge of misbranding in violation of Section 4 (2), the record discloses numerous instances of the respondent's Opinion 54 F.

failure to label its fur prochlcts with the correct name of the ani- 111al producing the constituent fur. Also, there were about 1:) occasions when the respondent neglected to disclose on labels attached to its garments the fact that they "'ere composed of dyed, blpached or otherwise artificially colored furs. In addi tion, we note II 11 merolls cases of failure adequately to disclose on labels the reqll i red in formation as to the country of origin of the component furs of the respondents garments. The evidence shows, ho,\yever, that t hc respondent' s labels did carry in large type print the ,"ords " :\Iandel Brothers, Chicago " and this we regard to be in substantial conlpliance '\"ith the subsection s requirement for identification of the seller.

The initial decision s findings generally reflect the foreg-doing', and similarly recognize that no instances "'ere shmn1 in ,,' hie)) the. respondent' s labels "'ere legally deficient through failure to reveal matters concerning the pre,se,nce of used fur or paws and tails or relating to the seller s identity. A generally similar situation prcvails as to some of the items of information on invoices. The order c.contained in the. initial decision is limited to refluiring cpf:;satioll of the labeling and invoicing deficiencies found, and omits ally provision making it mandatory for thc respondent to like,,-ise ol)sll'\' the. other affirmative requirements of either Section 4(2) 01' 5(b) (I). The Fur Produc.ts Labeling Aet expresses a national polin' against misbranding and false invoicing of fur products. Under t1H~ Act, a fur proeJuet is misbranded and the introduction, or mal\1lfactllre it for introduction, into commerce, or the transportation 01' distribution of it in commerce, or the sale, advertising or offering of it for sale in commerce is unlawful, unless it has attached to it a l:1be, setting forth c.learly and conspicuously aU the data indi(' ateeJ as neecssary to be inc.luded thereon by Section 4(2), and is falsely inyoict'd unless there is issued, in connection ,,-ith its sale, all il1\.oice '\,"hieh incorporates each of the statements of the nature contemplated by Section 5(b) (1). The yiobtions with '\"which t1w sl1lJsections are concerned consist of the failure to attach to a fill' garment an adequate label as there preseri bed or to del i \"1:'1' to the customer in c.onne,ction with the sale an invoice that imparts n11 I'eflllired information. The subsections do not deal '\"itb se.p:irate yiohtiol1s in and of themselves, nor do they recognize oj' excuse misbranding or false invoicing in varying degree,es. Undpr the plain language of the statute, the offense of misbranding or fnlsl' invoicing OCellI'S either by reason of failure to attach to a fur product a MANDEL BROTHERS, INC.

Opinion label or to issue in connection with its sale an invoice, or failure to include on a label which is attached or to show on an invoice which is issued each of the items of information which the statute requires. , Further supporting this interpretation is the circumstance that the particular definitive provisions relating to misbranding and false invoicing appearing in the subsections mentioned comprise only part of the definitions contained in Section 4 and Section 5 (b). Two additional definitions of misbranding appear in other subsections of Section 4, one (subsection 1) relating to deceptive representations on labels, and the other (subsection 3) specifically prohibiting use on labels of animal names other than those provided in the Fur Products Name Guide. Substantially similar supplemental definitions relating to false invoicing appear in subsection (2) of Section subsection (1) of Sections(b). Subsection (2) of Section 4 and 5 (b) evidence a clear legislative design that garments subject to the Act be at all times identified by labels and invoices revealing facts generally relevant to the utility and value of the component fur and continuously identified with a person likewise subject to the Act. Congress' inclusion of these subsections looked not only to combatting deception by insuring disclosure of material facts, but the subsections were also intended to serve as keystones for effective enforc.ement of companion sections of the Act likewise directed against misbranding and false invoicing and others proscribing false advertising. The requirements specified for an adequate label in subsection (2) of Section 4 are closely interrelated, and the same holds true for those contained in subsection (b) (1) of Section 5 respecting invoices.

For the foregoing reasons, the Commission is of the opinion that in any case in which it is found that the 1labeling or invoicing requirements of Sections 4(2) or 5(b) (1) of the statute have not been conclusion is that the fur prod- fully c.complied with, the appropriate ucts in connection with which the deficiencies have occurred have been misbranded or falsely invoiced, and that the appropriate order to be issued in correction of the offense is one requiring c.essation of the practice, namely, the misbranding or false invoicing by failure to attach proper labels or to issue proper invoices. ,Yhile the foregoing considerations are fully controlling on the scope of the order, it should be noted, too, that the Commission is il1legal practice in the precise form in not limited to prohibiting an past. Hershey Ohocoln,te '\"which it is fmmd to have existed in the OO'i' 7JO?Yrtion v. 121 F. 2d 968 (C.A. 3, 1941). In addition to proscribing specific dec.eptive acts, unfair methods reflecting ex- 52Sfl77-GO- Opinion 54 F.'l' pansion' or variation in original basic theme also may be prohibited. GomJ'U1ners Sales Gorponltion v. 198 F. 2d 404 (C.A. 2, 1952). Considerations of sound administrative policy similarly require that orders be not unduly narrow in their scope when issued in proceedings wherein proof of misbranding or false invoicing has been limited to failure to comply with some, rather than all, of the requirements of subsections 4(2) or 5(b) (1). If compliance with all criteria of the relevant subsection were not required, institution of new proceedings manifestly would be necessitated in challenging subsequent omissions not theretofore resorted to but similarly violative of the public policy expressed in the subsection. The multiplicity of actions so resulting patently "ould not be in the public interest.

The Commission s long established policy with respect to orders covering violations of Section 4(2) of the '\Vool Products Labeling Act obviates such multiplicity in the enforcement of that statute. Orders thereunder have included prohibitions against failure to disclose on labels all elements of information required by that subsection, even though failure to disclose some elements of information were not involved in various of the cases; and our orders heretofore issued under the Fur Products Labeling Act generally have c.ontained requirements for a disclosure on labels and invoices of all information prescribed by Sections 4(2) and 5(b) (1) of that Act. An example of such an order was that approved by the Court in the Pelta Furs case S1.lpTa.

By issuing an orde.r of the sc.ope indicated, the Commission is not finding directly, or by implication, that respondent has engaged in any questionable practices other than those of misrepresenting that its advertised pric.es were reduc.ed from regular and usual prices; and by failing to label and invoice its fur produc.ts so as to show its name and address, the name of the animal producing the constituent fur, the fact that certain of its fur products contained bleac.hed, dyed, or otherwise artificially colored fur, and, in some instances, the country of origin of imported component furs. These conclusions notwithstanding, it would be erroneous to conclude that the rec.ord affords adequate basis for informed determinations that the respondent's labeling has never in any instance.e reflected departures from the requirements of subparagraphs (b), (d) or (e) of Section 4(2); and neither does the record suffice for similarly informed determinations respecting certain of the invoicing requirements prescribed under the subparagraphs of Section 5 (b) (1) . Insofar as the fifth numbered conc.lllsion of In w in the MANDEL BROTHERS, INC.

Order initial decision may imply the contrary, modifica6on of the initial decision in that respect, in addition to modification of the order contained therein, is warranted.

To the extent previously indicated herein, the appeal of counsel supporting the complaint is deemed well taken, and our order providing for appropriate n10dification of the initial decision is issuing herewith.

Commission Tait concurs in the result..

FIN AL onder Respondent and counsel supporting the complaint having filed cross-appeals from the hearing examiner s initial decision filed October 9 , 1956, and the matter having come on to be heard by the Commission upon the whole record, including briefs and oral argument, and the Commission having rendered its decision granting in part and denying in part the appeal of respondent and granting the appeal of counsel supporting the complaint and directing modificationIt -is onleTedof the initialThatdecision:Paragraph 5 of the conclusions of law contained in the initial decision be modified to read as follows: 5. There is no evidence that the labels affixed to respondent's fnr products were deficient in that they failed to disc.lose that the fur products were composed of used fur, or were composed of paws tails, bellies, or waste fur, or that they failed to disclose respondenfs name or that the invoices issued by respondent in connection with the sale of fur products were deficient in that they failed to disclose that the fur products were composed of used fur, or were composed of paws, tails, bellies, or waste fur, or that they failed to disclose the country of origin of imported furs, or the required item number, or that said invoices were improper in that they abbreviated required information.

is further onlered That the follo'\\ing order be, and it hereby is substituted for the order contained in the initial decision: t is onlered That respondent, l\Iandel Brothers, Inc.. , a corporation, and its officers, representatives, agents and employees, directly or through any corporate or other device, in connection with the introduction into commerce, or the sale, advertising or offering for sale in commerce.e, or the transportation or distribution in commerce of any fur product, or in connection with the sale, advertising, offering for sale, transportation or distribution of an:v fnr product. which.h has been made in whole or in part of fur which has been shipped and received in commerce, as ' commerce fur' and ' fur . ( ( 54 F. Order p~oducts' are defined in the Fur Products Labeling Act, do forth- with cease and desist from: "A. Misbranding fur products by:

1. Failing to affix labels to fur products showing: ( a) The name or names of the animal or animals producing the fur or furs contained in the fur product as set forth in the Fur Products Name Guide and as prescribed under the rules and regu- 'lations;

(b) That the fur product contains or is composed of used fur when such is the fact;

( c) That the fur product contains or is composed of bleached dyed, or artificially colored fur, when such is the fact; ( d) That the fur product is composed in whole or in substantial part of paws, tails, bellies or waste fur, when such id the fact; " ( e) The name, or other identification issued and registered by the Commission, of one or more persons who manufactured such fur product for introduction into commerce, introduced it into commerce, sold it in commerce, advertised or offered it for sale in commerce, or transported or distributed it in commerce; and " (f) The name of the country of origin of any imported furs used in the fur product.

2. Setting forth on labels attached to fur products: ( a) Required information in abbreviated form or in handwri ting ;

(b) Non-required information mingled with required informa'tion.

B. Falsely or deceptively invoicing fur products by: 1. Failing to furnish invoic.es to purchasers of fur products showing:

( a) The name or names of the animal or animals producing the fur or furs contained in the fur product as set forth in the Fur Products Name Guide and as presc.ribed under the rules and regulations;

(b) That the fur product contains or is composed of used fur w hen such is the fact;

( c) That the fur product contains or is composed of bleached dyed or artificially colored fur, when such is the fact; 1) That the fur product is composed in whole or in substantial part of paws, tails, bellies, or waste fur, when such is the fac.t; ( e) The name and address of the person issuing such invoices ( f) The name of the country of origin of any imported furs contained in the, fur product.

2. Setting forth required information in abbreviated form. MANDEL BROTHERS, INC.

Order 3. Failing to show the item number or mark of fur products on the invoices pertaining to such products.

C. Falsely or deceptively advertising fur products through the use of any advertisement, public annoucement, or notice which is intended to aid, promote or assist, directly or indirectly, in the sale or offering for sale of fur products, and which represents directly or by implication that the regular or usual price of any fur product is any amount which is in excess of the price at which respondent has usually and customarily sold such products in the recent regular course of its business;

D. :l\laking pricing claims or representations of the type referred to in Paragraph C above, unless there is maintained by respondent fun and adequate records disclosing the facts upon which such claims or representations are based.

1 t i8 further ordered That the initial decision of the hearing examiner, as so modified, be, and it hereby is, adopted as the decision of the Commission.

1 t is fu'pther ordered That the respondent, l\1andel Brothers, Inc., shan, within sixty (60) days after service upon it of this order, file with the Commission a report, in writing, setting forth in detail the manner and form in which it has complied with the order to cease and desist.

Commissioner Tait concurring in the result. (( FEDERAL TRADE CO:M:~IISSION DECISIONS Decision 54 F.