Sydco Industries, Inc.

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IN THE l\1A TTER OF SYDCO INDUSTRIES, INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE CO~'lil\IISSION AND THE WOOL PRODUCTS LABELING ACTS Docket 6,,/"/4. Complaint, Apr. 11, 195" Decision Tilly, 1,95"/ Consent order requiring a denier in New York City to cease misbranding ,yool-fined bed comforters by fniJing to disclose the nature of the fibers used in the covering materials, nnd to cease marking contniners of such comforters with fictitious prices and with the word "1\1othproof" improperly.

il1ichael J. Fitale and Tho1nas A. Ziebarth Esqs. in support of the complaint.

INITIAL DECISION BY JAMES A. PURCELL, I-IEARING EXAMINER The complaint in this proceeding, issued April 11 , 1957, charges the respondents Sydeo Industries, Ine. , a corporation, and :Morton Springer, individually and as an officer of the corporate respondent with violation of the provisions of the Federal Trade Commission Ad and the ,Vool Products Labeling Ad of 1939, and of the Rules and Regulations promulgated under authority of the said 'V 001 Products Labe.ling Ad, in eonneetion "ith the sale, offering for sale and distribution of bed eomforters under the bra,nd name S,,' eetheart Custom :Made Comforter " in commerce, as "commerce is defined in said Ads.

After the issuanee of said complaint respondents, on l\:fay 28 1957, entered into an agreement for a consent order with counsel in support of the complaint, disposing of all of the issues in this proceeding, ",hieh agreement was duly approved by the Director and Assistant Direetor of the Bureau of Litigation of the Federal said agreementTrade Commission. It was expressly provided in that the signing thereof is for settle,ment purposes only and does not constitute an admission by respondents that they have violated the law as alleged in the complaint.

By the terms of said agreement, the respondents admitted all of the jurisdictional allegations of the complaint and agreed that the record herein may be taken as though the Commission had made findings of jurisdictional facts in aceordanee with such allegations. waived a hearing beforeBy said agree,ment the p:duties expressly the I-Iearing Examiner or the Commission, the making of findings of fact or eonell1sions of law by the I-Iearing Examiner or the Commission, the. filing of exceptions and oral argument before the Com- Order 54 F.

mission, and all further and other procedure before the Hearing' Examiner and the Commission to which the respondents may otherwise, but for the execution of said agreement, be entitled under the Federal Trade Commission Act or the Rules of Practice of the Commission.

By said agreement, respondents further agreed that the order to. cease and desist issued in accordanee with said agreement shall have the same force and effect as though made after a full hearing, presentation of evidence and findings and conclusions thereon, and specifieally waived any and all right, pmyer or privilege to challenge or contest the yalic1ity of sneh order.

It \Vas further provided that said agreement, together with the complaint, shall constitute the entire record herein; that the complaint herein may be used in construing the terms of the order' issued pursuant to said agreement; and that the said order may altered, modified or set aside in the manner provided by statute for other orders of the Commission.

, Inc. , is Said agreement recites that respondent Sydco Industries a corporation existing llncle,r and by virtue of the laws of the State its office and principal pla.ee of business lo-of New Yor1\:, with cated at No. 624 Broadway, New York, New York; that responddent :l\forton Springer is an individual and President of the corporate respondent; that as such he formulates, directs and controls the policies, acts and practices of the corporate respondent. The I-Iearing Examiner has considered such agreement and the order therein contained, and, it appearing that said agreement and order provides for an appropriate disposition of this proceeding, the same is hereby accepted and is ordered filed upon becoming part of the Commission s decision in accordance with Sections 3. the terms and 3.25 of the R.ules of Practice, and in eonsonance ",it h of said agreement, the IIearing Examiner finds that the Federal Trade Commission has jurisdiction of the. subject matter of this proceeding and of all respondents named herein, and that this proceeding is in the interest of the public, wherefore he issues the following order:

onder Inc. , a corpo- It is o?'dcred That respondents Syeko Industries, as an ration, and its Offict:'TS an(l :.\forton Spl'inf!er~ indi,-iehml1y find , agents oflicer of said corporation, and respondents' representatives and employees, directly or through any c.corporate or other device oflering in eom1eetion with the introdnetion into commerce, or the for sale, sale, transportation or distribution in eommeree, as "com- SYDCO INDUSTRIES, INC., ET AL. 103 101 Order meree is defined in the Federal Trade Commission Act and the v 001 Products Labeling Act of 1939, of bed comforters or other wool products" as such products are defined in and subject to said tV 001 Products Labeling Act, which products contain, purport to contain, or in any way are represented as containing "wool reprocessed wool" . or "reused wool" as these terms are defined in said Act, do forthwith cease and desist from misbranding such products by:

Failing to securely affix to or place on each such product a stamp, tag, label or other means of identifieation showing in a clear and eonspleuous manner:

(a) The percentage of the total fiber weight of such wool products, exclusive of ornamentation not exceeding five percentum of said total fiber weight of (1) wool, (2) reproeessed wool, (3) reused wool, (4) each fiber other than wool where such percentage by weight of such fiber is five pereentum or more, and (5) the aggregate of all other fibers;

(b) The maximum percentage of the total weight of such wool products of any non-fibrous loading, filling or adulterating matter; (c) The name or the registered identification number of the manufacturer of such wool products or of one or more persons engaged in introducing such wool product into eommeree, or in the ofiering for sale, sale, transportation, distribution or deliv~ry for shipment thereof in commerce, as "commerce" is defined in the'" 001 Products Labeling Act of 1939.

1 t is f'uTtheT o1Yle'J'ed That Sydeo Industries, Ine., a corporation and its ofli.eers and :l\forton Springer, individually and as an offieer of said corporation, and respondents ' representatives, agents and employees, directly or through any corporate or other device, in eonneetion with the oflering for sale, sale or distribution of bed -comforters or any other products in commerce, as "commerce defined in the Federal Trade Commission Ad, do fortlnvi th cease and desist from directly or indirectly:

1. Hepresenting in any manner that said bed comforters or any other products are mothproof, when such is not the fact. 2. He-presenting in any manner that various prices are the regu- Jar and usual retail prices of bed comforters or other products \vhen snell prices are in excess of the prices at which such bed comforters or other products are usually and regularly 80)(1 at retail. 3. Putting into operation any plan or scheme, or furnishing any materials, devices, or promotional media ",hereby retailers or others may misrepresent the regular and usual retail prices of merchandise. Decision 54 F.

DECISION OF THE COllIl\IISSION AND ORDER TO FILE REPORT OF CO:\IPLIANCE Pursuant to Section 3.21 of the Commission s Rules of Praetiee the initial deeisioll of the hearing examiner shall, on the 17th day of July, 1957, become the decision of the Commission; and, accordingly :

t 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 eomplied with the order to cease and desist. SUPERIOR DISTRIBUTING CORP. ET AL. 105 Decision IN THE J\lA TTER OF SUPERIOR. DISTRIBUTING CORPORATION ET AL. CO::\'SENT onder, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COl\nnSSION ACT Docket G7"JU. Call/plaint, Fell. 1, 195" Decision, July 18, 1957' Consent order reqlliring sellers in Denver, Colo. , to cease representing falsely through ~alesmen whom tlh~Y full1ishet1 with sales literature and achertising ill newspnpers and periot1icnls-tlJe profits to be m:H1e by n purelw~er of ten of their hot drinl;: vending mil chines or 111e assistance they rendered pure-basel's in obtaining locations, that they trainec1 purchasers in mnintenanee and seJ'YiC'in~: tlle mHclJines, nl1otted exclusive tel'l'itory, or conducted sllneys to (1etermine the number of machines that could be prolitabl~. located in a locality; and requiring them to meet promised c1delivery dates.

ill-r. lVilliam A. Somers for the Commission. ill '1'. Thomas Ii. IIlldson of Denver, Colo., for respondents. INITL\L DECISION BY J-OHX B. POI::\TDEXTEH, J-IEARING Ex..UIINEn The complaint in this proceeding charges that the respondents have violated the provisions of the Federal Trade Commission by the use of false and misleading newspaper advertisements in connection with the sale of hot drink vending maehines. After issmmce and service of the complaint, the respondents, their counsel, and counsel supporting the complaint entered into an agreement for a consent order. The order disposes of the matters complained about. The agreement has been approved by the Director and Assistnnt Director of the Bureau of Litigation. The pertinent provisions of said agreement are as follows: Respondents admit all jurisdictional facts; the complaint may be used in construing the terms of the order; the order shall have the same force and effect. as if entered after a full hearing and the said agreement shah not become a part of the official record of the proceeding unless and until it becomes a part of the decision of the Commission; respondents \,aive the requirement that the decision must contain a statement of findings of fact and conelnsion of law; respondents waive further procedural steps before the Hearing Examiner and the Commission, and the order may be altered, modified or set aside in the manner provided by statute for other orders; respondents waive any right to ehal1enge or contest the validity of the order entered jn accordance "ith the agreement; and the signing of saiel agreement is for settlement purposes only and does not Order 54 F.

constitute an admission by respondents that they have violated the law as alleged in the complaint.

The Hearing Examiner having considered the agreement and proposed order and being of the opinion that the aeceptanee thereof will be in the public interest, hereby accepts such agreement, makes the following jurisdictional findings, and issues the following order: JURISDICTION AL FINDINGS 1. The respondent Superior Distributing Corporation, is a corporation organized and doing business under-r the laws of the State of Colorado, with its office and principal place of business located at 4555 East ,Yarren A venue, Denver, Colorado. The individual respondent Glenn E. l\lercer is the president of said corporation and his office and principal place of business is the same as that of the corporation.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER I t is oTClered That respondents Superior Distributing Corporation, a corporation, and its officers; Glenn E. l\lercer, individually and as an offieer of said corporation and their agents, representatives and employees, directly or through any corporate or other device, in connection with the oflering for sale, sale or distribution of vending machine.s or vending machine supplies, or both, in commerce, as "c.commerce:' is defined in the Fe.deral Trade Commission , do forthwith cease and .desist from representing, directly or by implication:

1. That the earnings or profits derived from the operation of respondents' machine,s are any amounts in excess of those "which have been, in fact, customarily earned by operation of their machines. 2. That respondents' experts, or any other person or persons, will obtain satisfactory or profitable locations, or any other locations for machines purchased from respondents, unless such is the fact. 3. That purchasers of respondents' maehines will be trained respondents' experts, or by any other person, in the maintenance repair or servicing of said mac.hines, or in any other respect, unless suc.h is the fact.

4. That respondents will allot exclusive territory in which mac.hines purchased by them may be located, unless such is the fact.. 5. That respondents conduct surveys of any nature in localities in ,,-hieh their machines are offered for sale, unless such is the fact. SUPERIOR DISTRIBUTING CORP. ET AL. 107 105 Decision 6. That maehines purchased will be delivered within a specified period of time unless delivery is made within the time specified. DECISION OF THE CO:YUIISSION 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 did, on the 18th day of July 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. ;'):;8::i77- 60- &: &: Appeal 54 F.

IN' THE MATTER OF BELL & HOvVELL COMPANY ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMl\f1SSION ACT Docket 6729. Complaint, Feb. 20, 1957-order, July 19, 1957 Order on interlocutory appeal dismissing-due to abandonment of the alleged unfair practices when respondent terminated its over-all fair trade program prior to issuance of complaint-complaint charging sellers of audiovisual equipment with unfair practices in cases of sales outside of allocated territories, and sales at less than "fair trade" prices, both types of practices dependent for operation upon the establishment of minimum retail prices under the various State fair trade laws. Before llfr. John B. Poindexter hearing examiner. JJl1' . William, H. Smith for the Commission. Ca1T~pbell, fililler, Carrol Paxton of Chicago, Ill. , and H owrey Si17wn of Washington, D. , for respondent. ON INTERLOCUTORY APPEAL FROJ.\-I RULING OF THE HEARING EXAMINER By the Commission:

Respondent has appealed from the hearing examiner s order of l\fay 29, 1957, denying its motion to dismiss. Counsel in support of the complaint has filed an answer in opposition thereto. The sole question presented for determination by the Commission is whether that the praetieesthe complaint should be dismissed on the ground likelihood thatalleged have been surely stopped and there is no they will be resumed in the future.

attacks par- Complaint herein was served February 28, 1957. It ticularly two practices engaged in by respondent as being violative of Sec.tion 5 of the Federal Trade Commission Act. The first of special repre-these involves contracts between respondent and its sentatives who sell audio-visual equipment to institutions and commereial accounts whereby such special representatives, if they sell outside their allocated territory, are required to pay respondent the difference between the "dealer net price and the minimum retail price established by respondent." The second praetiee involves sales by special representatives or regular retail dealers at less than "fair trade" prices. ,Yhere such sales are made, respondent collects from profit realized on the sale, orthe ofl'ender an amount equal to the equal to the established dealer discount, which in turn is paid to BELL & HOWELL CO. 109 108 Order one of respondent's other dealers who has claimed injury. ' by reason of loss of such sale.

Respondent, according to the supporting affidavits accompanying its motion for dismissal, effective February 1, 1957, terminated its over-all fair trade program, and because both' of the practices in question depended for their operation upon the existence of established minimum retail prices under the various state fair trade laws they became inoperative. Such action was announced to respondent' s dealers and to the public in January, 1957, prior to issuance of the complaint herein.

respondent' s action in voluntarily abandoning the practices complained of, it is shown, resulted from its appraisal of the difficulty of maintaining a fair trade program in the light of developments in that field of law in recent years. This evidences respondent's bona fide abandonment of the practices claimed to be unlawful and we think, establishes it is not only unlikely that they will be resumed, but that there is no reasonable possibility that they will be resumed. The sworn assuranees of respondent's responsible officers that the pracfices ,dll not be revived are likewise persuasive that the "l)ractices aJlegec1 have been surely stopped and there is no likelihood that they will be resumed in the future. Everything that could be accomplished by a cease and desist order has been accomplished. It would not be in the public interest for the Commission to issue an order to cease and desist at this time. It is the Commission s opinion that the hearing examiner acted erroneously in denying respondent's motion for dismissal and that respondent's appeal should be granted. The Commission is further of the opinion that the complaint in this proceeding should be dismissed without prejudice. An appropriate order will be entered. , re- Briefs filed by counsel in support of, and in opposition to spondent' s appeal have afforded sufficient basis for an informed determination on the merits of the appeal and respondent's request for oral argument, therefore, is not being granted. Chairman Gwynne did not participate in the deeision herein. GlillER DISMISSING CO1\Il)LAINT WITHOUT PREJUDICE This matter having come on to be heard by the Commission upon appeal from the hearing examiner s order denying respondent's motion to dismiss the complaint, and answer of counsel supporting the complaint filed in opposition to the appeal; and The Commission, for the reasons stated in its accompanying opinion, having determined that respondent's appeal is well taken: t is ordered That the appeal of respondent be, and it hereby is granted.

Order 54 F.

I t is further ordered That the complaint in this proceeding be and it hereby is, dismissed, without prejudice, however, to the right of the Commission to issue a new complaint or to take such further or other action against the respondent at any time in the future as may be warranted by the then existing circumstances. Chairman Gwynne not participating.

..;;;.. . . ,,, :;: . ., -'.Y NORD-RAY BELT MFG., INC., ET AL. 111 Dedsion