Azome Utah Mining Company, Inc., et al.

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IN THE l\IA TTER AZO~IE UTAI-I )IINING CO~IPANY, INC., ET AL. ORDER ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COl\HnSSION ACT Docket G.ris. Complaint, Dec, 1955-Deciston, Sept. , 1957 Order requiring sellers in Sterling, Utah, to cea!;':e disseminating in commerce false advertising coneel'lling the value and effectiveness of their "Azomite product, a natural rocl;:-like substance mined or coJJected from the surface of Ole land in central Utah am1 proces~ed and sold by them for use in the feeding of poultry and other animals and also as a soil conditioner. Before .il1T. lVillia.'ln L. Pack hearing examiner. ll!?. George E. Steinmetz and Jl1, Tet7yd A. JO1ylan for the CommJSSlOn.

111-)'. DilwoPth lVoo7ley, of ~lanti, Utah, for respondents. FeWIXGS OF FACT CONCLUSION .AND OnDEl~ The complaint in this matter, issued December 6 , 1D55, and subsequently sel'\'pd on all the respondents named therein, charged said respondents with the dissemination of false advertisements, as that term is defined in the Federal Trade Commission Act, and with other'\yise misrepresenting the value. and efl'ectiveness of a product sold by them kno"-n as " \zomjte " all in yjo1ation of said Federal Trade Commission Act. After the filing of respondents' ans,ver admittillg in part and denying jn part the various allegations in the conlplnint, he~Il'ings ,were held at ,,- which testimony and other etic1ence both in support oJ and in opposition to the complaint, ,were received. Proposed findings and conclusions having been submitted by tho parties, the hearing examiner, on ~Iay 23, 1957, filed his initia 1 decision in ,,-which he found t11(11: certain of the respondents representations ,,:ere erroneous and misleading and included an order to cease and desist.

1\0 appeal from said initial decision ha,-ing been filed, the Commission, by order issued July 3 , 1 a57 placed the case on its own docket for review,,:, and having snbs' equently vDented anel set nsidp. the initial decision. makes the foJ1myin!!" fmdin!!s of fact. conclusion and order in lien of those contained in snic1 initial c1ecison: FINDINGS OF FACT 1. Hesponclent. Azome 1;tah r.Iining Company: Inc., is a corporation organized and doing business under the laws of the State of Utah with its principal ofrice and place of business located in Sterling, ;).

Findings 54 F.

Utah. Respondents Rollin J. Anderson, Alyce T. west and Elsie M. Anderson are president, vice-president a.nd secreta.ry-treasurer respectively, of the corporation. Respondents Donald K. Jensen and Sherman C. Anderson a.re directors of the corporation. The address of the individual respondents is the same as that of the corporation with the exception of respondent Sherman C. Anderson, whose address is 237 Trinity Avenue., Berkeley, California. The individual respondents have formulated, controlled and put into e.ffect the policies, acts and practices of the corporate respondent including those here.inafter referred to.

2. Respondents are engaged in the sale and distribution of a prod- " -n"which they recommend for use in the feed-- -uct kn0'yn as "Azomite ing of poultry and other animals, and a.lso as a soil conditioner. To the extent that said product is used in the feeding of poultry and other animals, it is a food and drug fls those terms ate defined in the Federal Trade Commission Act. There is no issue as to the interstate character of respondents' business, substantial quantities of their product be.ing regularly sold by them to purchasers located in va.rious states of the United States other than the State of Utah. 3. Respondents' product is a rock-like substance 'Which is found at certain places in the ce.ntral part of Utah. It is mined or collected by respondents from the surface of the land. It is processed by respondents into particles of various sizes, depending upon the use to which it is intended to be put. According to an analysis supplied by respondents, the product contains the following ingredients:

Percent S i 1 i ca - - - - - - - - - - - - - - - - - - - - - - - - - 66. Ferrous Oxide ---------- ---------------------------------- 0. Fenic Oxide ---------- --- 0. A luminum Oxide ------------------------------------------------- 15. Titanium Oxide -------------------------------------------------- 0. Calcium Oxide ------ 7.:1 Magnesium Oxide ------ ------------------------------------------ 0. ---------------- 2. Sodium Oxide -------- Potassium Oxide ------ ------------------- 1. Moisture at 1050 c. ---------- ------------------------------------ 1. Combined 'Vater & Organic ~Iatter -------------------- ---- 4. l\Ianganese Oxide ---------- ---------------------------- 0. Cl1rom i lllll Oxicle ------- Trace Strontium Oxide ---- ----------- 0. --- 0. 0':1 Barinm Oxide --------- -------- O. Carbon Dioxide --- S111phuric Anhydride ---------- -- 0, Phosphoric Anhydride ---------- --------------- TrHce ---- 0. Boric Anhydride -------- AZOME UTAH MINING CO. , INC., ET AL. 271 269 Findings Percent Chlori de -------- ------ 0, Arsenic Oxide ----------------------------------------------______1 ppm Copper Oxide ---------------------------------------------------- 0. Zirconium Oxide ------------------------------------------------- 0. Lead Oxide ------------------------------------------------------ Trace Gallium Oxide --------------------------------------------------- Trace 4. In the course and conduct of their business, respondents have disseminated and caused the dissemination of advertisements conc.erning said product by the United States mails and by varous means in commerce, as "commerce:' is defined in the Federal Trade Commission Act, including cjrcu1ars entitled "AZO:JIITE :I,: * * Natural ~linerals for Particular Poultry Producers" and "AZO~IITE Soil Ayd '" '" * Natural :Jlinerals for N onnal Agriculture " for the purpose of inducing and which were likely to induce, directly or indirectly, the purchase of said product; and respondents have also disseminated find enused the dissemination of advertisements bv various means, including the circulars above mentioned, for the purpose of inducing, and which "ere likely to induce, directly or indirectly, the purchase of said product in commerce, as "commerce is defined in the Federal Trade Commission Act. By means of statements appearing in said nc1vertising with respect to the. feeding of the product to poultry, respondents have represented, among other things (n) That poultry will consume minerals ,,-hen ever they n.re needed for nutrition.

(b) That the addition of Azomite to feed will furnish poultry with needed minerals.

(c) That the use. of Azomite. will lower the cost of production. (d) That. Azomite. is fi. stimulator of appetite. (e) That the. use of Azo1nite will reduce "picking" and "cannibalism " in poultry, increase profits, increase growth of poultry, and increase egg production.

(f) That Azomite will acce.lerate growth in poultry. (g) That Azomite will satisfy "hidden hunger" of poultry for minerals.

5. In addition to the foregoing, and in c.connection with the use of the product Azomite ns n. soil conditioner, respondents in the advertising matter hereinaboye referred to have made the following representations:

(n.) That Azomite will aid in growing plants on poor soil andinc.rense the resistance of plants to disease. (b) That the use of Azomite on soil will keep the soil healthy and restore needed minerals to worn-out soil.

,, : Findings 54 F.

(c) That the use of Azomite on soil will result in fewer insects on plants.

6. Three members of the faculty of the Utah State Agricultural College at Logan, Utah, were called as witnesses in support of the complaint. The first is head of the Poultry Department in this institution and is a specialist in poultry nutrition and husbandry. The second is an agronomist, being a professor of ..~\gronomy and head of that department. . The third is a veterinarian, being a professor and head of the Department. of Veterinary l\fedicine. There appears to be no doubt that all of the witnesses are 'yell qualified in their respective. fields.

R.respondents caned as their expert witness a biochemist of Los Angeles, California, who, like the Commission s experts, appears to be ,ycll qualified in his field. There ,yas also extended testil11ony from respondent. Robin ~T. Anderson ,yho, ,yhile claiming 110 qualifications from the viewpoint of formal scientific education, has devoted the past tI"entry years to the study of minerals and their eiIects on plant and animal life. Finally, there was testimony from five laymen, primarily poultrymen, relating to their use of Azomite. The finding.s and conclusions 'Thich follow lwve been reached after consideration of all of the evidence. As to some of the issues there is little 01' no conflict in the evidence. On those points "here there is conflict, the findings and conclusions are in accord with ",hat the hearing examiner and the Commission consider to be the greater eight. of the evidence.

7. Respondents: statement that poultry will consume minera.Js \T:hencyer they :ue needed is substanti~lly true. On the other hand it is not true that the addition of .lLzomite to feed ,yiJ1 furnish poultry ,,'ith needed minerals. For example, it ,will not supply a.adequate amounts of calcium, manganese, phosphorus, chlorine or sodium. 'Vhile these minerals are present in Azomite, they are not present in quantities sufficient. to be of significance in the feeding of poultry. Nor will Azomite stimulate the ~ppetite, accelerate or increase the growth of poultry, satisfy "hidden hunger for minerals, lower the cost of production, increase egg production, or increase profits. 'With respect to " picking" and "c~nnibalism " picking is the tendency of poultry, ,vhen irritated due to oye.rcl'OIHling or overheating, to pick at. the feathers of one another. If a feather is pulled out and bleeding results, the other birds in the pen or coop are attracted by the blood and fire likely to nttae!\: or cannibalize the victim. indicated, all of this is usually due. to overcrowding or overheating, and the use. of Azomite is incapable of afl'acting it. AZOME UTAH MINING CO. , INC., ET AL. 273 269 Order Accordingly, it is found that the representations referred to in paragraph 4 concerning the feeding of Azomite to poultry have been and are misleading in material respects, and the advertisements wherein such representations are made are "false advertisements" as that term is defined in the Federal Trade Commission Act. 8. Insofar as the use of Azomite as a soil conditioner is concerned most soils already contain essential minerals in sufficient amounts and in such cases the addition of Azomite will serve no useful purpose. Speaking generally, therefore, the use of Azomite will not aid in growing plants in poor soil, increase the resistance of plants to disease, or restore needed minerals to the soil. Azomite might, however, be of some benefit to the soil in those e~ceptional cases in which the soil is deficient in the minerals ~. which are found in Azomite provided sufficient quantities of the product are used to supply such deficiencies. In no event will the use. of Azomite kee.p the soil healthy or result in fe,,-er insects on plants. Hespondents' representations to the contrary as set forth in paragraph 5 have been and are false and deceptive. D. At the. hearings it. was found that certain of the advertising referred to in the complaint had not in fact been disseminated or authorized by respondents, and in conseque.nce a number of the charges in the complaint have not been sustained. CONCLUSION The use by respondents of the representations found to have been false has the tendency and capacity to mislead and deceive a substantial portion of the public with respect to respondents' product and the results which may be expected from its use, and to cause such members of the public to purchase the product as a result of the erroneous and mistaken belief so engendered. The present proceeding is, therefore, in the public interest. Respondents' acts and practices are to the prejudice of the public and constitute unfair and deceptive acts and practices in commerce within the intent and mean in 0" of the Federal Trade Commission Act. ORDER 1 t is O1odered That the respondents, Azome Utah ~fining Company, Inc. , a corporation, and Hollin T. Anderson, Alyce T. "'Vest and Elsie M:. Anderson, individually and as officers of said corporation, and Donald Ie Jense.n and Sherman C. Anderson, individuany and as directors of said corporation, and the respondents , Order 54 F.

agents, representatives and employees, directly or through any corporate or other device, in connection with the oflering for sale, sale or distribution of their product designated "Azomite " or any other product of substantially similar composition or possessing substantially similar properties, under 'Thatever name sold, do fortlnyith cease and desist from:

1. Disseminating or causing to be disseminated, by means of the isUnited States mails, or by any means in commerce as "commerce" defined in the Federal Trade Commission Act, any advertisement for the purpose of inducing or which is likely to induc.e, directly or indirectly, the purchase of said product which advertisement represents, directly or by implication:

(a) That the addition of saiel product to poultry feed will supply poultry with needed minerals.

(b) That the use of said product will accelerate or increase the growth of poultry, stimulate the appetite, satisfy hidden hunger of poultry for minerals, lm-ver the cost of production, increase egg production or increase profits.

or "can- (c) That the use of said product will reduce "picking" nibalism" in poultry.

2. Disseminating or c.ausing to be disseminated, by any means, for the purpose of inducing or which is likely to induce, directly or indirectly, the purchase of said product in commerce, as "commerce is de.fined in the Federal Trade Commission Act, any advertisement which contains any of the representations prohibited in paragraph hereof.

respondents, Azome Utah ~rining It is fu,1'thel' ordered That the Company, Inc., a. corporation, and Rollin ~T. Anderson, Alyce T. 'Vest and Elsie 1\1. Anderson, individually and as oflicers of said corporation, and Donald IC Jensen and Sherman C. Anderson individually and as directors of said corporation, and the respondents' agents, representatives and employees, directly or through any corporate or other devic.e, in connection with the oflering for sale sale or distribution in commerce, as "commerce" is defined in the " or anyFederal Trade Commission Act, of the product "Azomite other product of substantially similar composition or possessing substantially similar properties, under whatever name sold, do forthwith cease and desist from representing, directly or by implication: the. soil 1. That the addition of said product to the soil will keep hea.lthy or result in fewer insects on plants. 2. That the addition of said product to the soil will restore needed minerals to the soil, aid in growing plants on poor soil, or increase the resistance of plants to disease, unless such representations are AZOME UTAH MINING CO. , INC. , ET AL. 275 269 Opinion limited to those cases in which the soil is deficient in the minerals contained in said product and said product is used in quantities sufficent to supply such deficiencies.

I t is fu-rther ordered That the aforesaid responclents shall, within sixty (60) days after service upon then! 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 this order. ON REVIEW OF INITIAL DECISION By KERN, Commissioner:

This case has been fully tried before the hearing examiner who, on ~fay 23, 1957, fiJecl his initial decision consisting of certain findings of fact, conclusions and an order to cease and desist. Neither the respondents nor counsel in support of the complaint appealed the decision, but the Commission, acting pursuant. to 9 3.21 of its R,ules of Practice, on July 3 , 1957, issued its order placing the matter its own docket for review.

The proceeding involves the respondents' advertising elaims for a natural rock-like substance which they sell under the trade name Azomite" and which thev reeommend for use in the feeding" of poultry and other animals, and also as a soil conditioner. In separate paragraphs, the complaint charges the respondents, in part, with having disseminated and caused to be disseminated certain false adver6sements of the product as a food or drug for poultry and other animals, and, in part, with having misrepresented in ndvertising the value of the product as a soil conditioner. In so doing, the complaint clearly reeognizes the distinction between a violation of Section 12 of the Federal Trncle Commission Act, under which it is unlawful to disseminate any false advertisement, through the mails or by a.ny means in commerce, for the purpose of inducing or which is likely to induce the purchase of food, drugs, devices or cosmetics, or to disseminate any such advertisement, by any means for the purpose of inducing or which is likely to induce the purchase in commerce of such commodities, and a violation of Section 5, which broadly proscribes "unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce." The initial decision, ho.wever, does not. take into account this distinction, but, on the other hand, deals with the case just. as though all of the charges arose under the general provisions of Section 5, thus limiting somewhat the. permissible scope of the order to cease and desist. In view of the fact that the record supports the broader approach insofar as concerns the respondents' claims in connection with the 276 FEDERAL TRADE COl\IMISSION DECISIONS Opinion 54 F.

feeding of their product to poultry, the Commission feels that the initial decision is deficient and should be modified. "\Ve have noted also that the initial decision does not find, as alleged in the complaint and admitted in the respondents' answer, that the individual respondents have formulated, controlled and put into effect the policies, acts and practices of the corporate respondent including those which are alleged to be unlawful. Such a finding should have been made as a basis for the order to cease and desist against these respondents.

The initial decision is vacated and set aside, and the Commission findings of fact, conclusion and order to cease and desist will be issued in lieu thereof.

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ANHEUSER-BUSCH, INC. 277 Decision