Reuben Pomerantz Jewelry Co., Inc.

Text (OCR of the scan at left; may contain errors)

IN THE l\IA TTER OF REUBEN POMERANTZ JEWELRY CO., INC., ET AL. ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 686.9. Conlplahlt, A 1/g. 20, 1957-,-Decision, Oct. , 1958 Order requiring manufacturers in New York City to cease representing falsely, by stamping "14K" on gold spiral chain bracelets and chokers manufactured from gold wire of only 13 % karat fineness, that such products were of 14 karat fineness.

Mr. S. F. House supporting the complaint. MT. George Landesman of New York City, for respondents. INITIAL DECISION BY JOHN B. POINDEXTER HEARING EXAMINER PRELIMINARY STATEMENT Reuben Pomerantz Jewelry Co. , Inc. Reuben Pornerantz, and Hyman Pomerantz, individually and as officers of said corporation, hereinafter referred to as respondents, are charged with violating the provisions of the Federal Trade Commission Act by misrepresenting the gold content of gold spiral chain braeelets and chokers 'which they manufacture sell and distribute to jobbers and retailers for resale to the general public. The complaint alleges that respondents stamp the phrase 14K" on their gold spiral chain bracelets and chokers which in fact, are manufactured from gold of less than 14 carat fineness. Respondents admitted some and denied other allegations of the complaint and hearings thereon have been completed. Proposed findings of fact, conclusions and proposed order have been submitted by respective counsel. All findings of fact and conclusions of law proposed by respective counsel not hereinafter specifically found or concluded are rejected. Upon the basis of the entire record, the hearing examiner Tnakes the following findings of fact, conclusions, and issues the following order: FINDINGS OF FACT 1. The respondent Reuben Pomerantz J e\velry Co. , Inc. , is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York with its, office and principal place of business at 800 Eighth Avenue New York , Findings 55 F.

Y. Individual respondents Reuben Pomerantz and Hyman Pomerantz are the president and secretary-treasurer, respectively, of said corporate respondent; they formulate, direct and control the policies, acts and practices of said corporate respondent. Said individual respondents have their office at the same place as the corporate respondent.

2. Respondents are now, and for some time last past have been engaged in the business of manufacturing, selling, and distributing gold spiral chain bracelets and chokers, to distributors jobbers and retailers for resale to the general public. In the course and conduct of their business respondents are in direct and substantial competition with other corporations, firms and individuals engaged in the distribution and sale, in commerce of gold jewelry including spiral chain bracelets and chokers. 3. In the course and conduct of their business, respondents now cause and for some time last past have caused their said bracelets and chokers when sold, to be transported from their place of business in the State of Nevl York to distributors and jobbers, located in various other States of the United States for resale to the general public. Respondents maintain, and at all times mentioned herein have maintained, a substantial course of trade in said products in commerce, as "commerce" is defined in the Federal Trade Commission Act, between and among the various States of the United States.

4. In the course and conduct of their business and for the purpose of inducing the purchase of said products respondents have sold and distributed and do 110'V sell and distribute, in COlllmerce, as aforesaid, spiral chain bracelets and chokers with the phrase 14K" appearing thereon. In truth and in fact said products are not manufactured from gold of 14 carat fineness, but are manufactured from gold of substantially less than 14 carat fineness, to wit 131 1~ earat fineness. 5. The practice of respondents, as aforesaid, in manufacturing, selling and distributing the above described jewelry in commerce with the phrase " 141(" appearing thereon, has had and nov has the tendency and capacity to mislead and deceive a substantial portion of the purchasing public into the false and erroneous belief that said products are manufactured from gold of 14 carat fineness and into the purchase of substantial qllantities of said products because of such mistaken and erroneous belief.

6. Although the respondents admit, and the hearing examiner :): :): ) REUBEN POMERANTZ JEWELRY CO., INC., ET AL. 569 567 Findings finds, that the spiral chain bracelets and chokers which respondents manufacture, sell and distribute are stamped with the phrase 14K" imprinted thereon, whereas, said products are manufactured from gold wire of a fineness of only 131j8 carat fineness respondents contend that, since they sell and distribute their products to distributors, jobbers and retailers who are cognizant that said products contain gold of a fineness of only 131j8 carat respondents have not deceived anyone.

7. Respondents also contend that there is no privity between respondents and the purchasing public and there is no fraud or deception in the sale of said products to department stores and other wholesale outlets by reason of the fact that the actual 131ja caratamount of gold contained in said products, to wit is known to said department stores and wholesalers. 8. The circumstance that respondents do not sell their products direct to the general public does not relieve respondents of responsibility in falsely and deceptively stamping their products. The stamping of "14K" on their products when, in truth and in fact, said products actually contain gold of a fineness of only 131ja carat, is an unfair n1ethod of competition as against manufacturers of spiral chain bracelets and chokers who stamp their products truthfully. \\Then misstamped chain bracelets and chokers attract customers by means of fraud which the false stamping perpetuates, trade is diverted from the producer of truthfully marked bracelets and chokers. In C. v. W1~nsted H osieTY, 258. S. 483, the Supreme Court stated "that a person is a wrongdoer who so furnishes another with the means of consummating the fraud has long been a part of the law of unfair competition." Nor does the practice cease to be unfair because the falsity of the manufacturers' representation is so "veil known to the trade that dealers, as distinguished from consumers, are no longer deceived. 9. The National Stamping Act (15 U. C. Sec. 294 , et seq. provides that the actual fineness of gold (shipped or transported and delivered in "commerce shall not be less by more than one-half of one carat than the fineness indicated by the mark stamped" thereon. Admittedly, respondents' acts in knowingly stamping chains "14K" when they contain gold of a fineness of only 131ja carat is a violation of the above-named Act. Proof of such violations are competent evidence that they are to the prejudice and injury of the public and of competitors and constitute unfair and deceptive acts and practices and unfair methods of competition within the meaning of the Federal Trade Decision 55 F.

Commission Act. Also, the circumstance, as alleged by respondents, that 30me manufacturers stamp their products " 14K " when in fact, their products contain gold of a fineness of only 131 carat and respondents merely followed this alleged "custom no excuse or justification for respondents to violate the law. CONCLUSIONS 10. The acts and practices of respondents, as herein found are all to the prejudice and injury of the public and of respondents' competitors and constitute unfair and deceptive acts and practices and unfair methods of competition in commerce, \within the intent and meaning of the Federal Trade Commission Act. ORDER It 1:S ordered That respondents, Reuben Pomerantz Jewelry Co. , Inc. , a corporation, and its officers, and Reuben Pomerantz and Hyman Pomerantz, individually and as officers of said corporation, and their agents, representatives and employees, directly or through any corporate or other device in connection \\with the offering for sale, sale, or distribution of any articles composed in whole or in part of gold or an alloy of gold in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: Stamping, branding, engraving, or marking any article with any phrase or mark such as 14K, or otherwise representing directly or by implication that the whole or a part of any article is composed of gold or an alloy of gold of a designated fineness unless the article or part thereof so nlarked or represented composed of gold of the designated fineness within the permissible tolerances established by the National Stamping Act (15 S. Code, Sec. 294, et seq.

DECISION OF THE COMMISSION AND ORDER TO FILE REPORT OF COMPLIANCE The Commission, by order issued September 23, 1958, having placed this case on its own docket for review, and having considered the matter, has concluded that for purposes of clarification certain nlodifications hereinafter specified should be made in the hearing examiner s initial decision herein: Acco1'dingly, it is ordered That paragraphs 9 and 10 be deleted and the follo\ving substituted therefor as paragraph 9 9. The National Stamping Act (15 U. C. Sections 294 , et ) REUBEN POMERANTZ JEWELRY CO. INC., ET AL. 571 567 Deeision seq. ) provides that the actual fineness of gold (shipped or transported and delivered in 'commerce shall not be less by more than one-half of one carat than the fineness indicated by the mark stamped' * * * thereon. Admittedly, respondents' acts in knowingly stamping chains ' 14K' when they contain gold of a fineness of only 131j8 carat is a violation of the above-named Act. Proof of such violations are competent evidence that they are to the prejudice and injury of the public and of competitors and constitute unfair and deceptive acts and practices and unfair methods of competition within the meaning of the Federal Trade Commission Act. Also, the circumstance, as alleged by respondents, that some manufacturers stamp their products '14K,' when in fact, their products contain gold of a fineness of only 131j8 carat and respondents merely followed this alleged 'custom ' is no excuse or justification for respondents to violate the law. It is further oTClered That the initial decision, as so modified , and it hereby is, adopted as the decision of the Commission. It is further ordered That the respondents, Reuben Pomerantz Jewelry Co., Inc., a corporation, and Reuben Pomerantz and Hyman Pomerantz, individually and as officers of said corporation 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 contained in the initial decision as modified.

Complaint 55 F.