G. Sherman Corporation

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In Tor Marrer or G. SHERMAN CORPORATION ET AL.

ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION AND THE WOOL PRODUCTS LABELING ACTS Docket 7515. Complaint, June 10, 1959—Decision, Jan. 23, 1960 Order requiring a seller of men’s suitings in New York City—the selling agent for a Plymouth, Mass.. fabric manutacturer—to cease violating the Wool Products Labeling Act by misbranding as te wool content, swatches of various patterns it showed its customers and hy failing to attach to such products labels showing fiber content.

Mr. Thomas A. Ziebarth for the Commission. Silverstein & Levitt. by Mr. Abraham Silverstein. of New York, N.Y., for respondents.

Decision 56 F.T.C.

Iniriau Decision py J. Eart Cox, Heartinc EXAMINER Respondents are charged in the complaint as amended with having violated the Federal Trade Commission Act, the Wool Products Labeling Act of 1989, and the Rules and Regulations promulgated thereunder. The facts are as follows 1. Respondent G. Sherman Corporation 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 located at 40 East 84th Street, New York, New York. 2. Individual respondent George Sherman was president and treasurer of the corporate respondent until the date of his death on June 24, 1959. The proceeding is dismissed as to him. Hereinafter, whenever the term ‘ ‘respondent” 1 is used, it will refer to the respondent corporation, which is engaged in the sale of substantial quantities of men’s suitings, wool products under the Act, which have been and are distributed and transported in commerce from the state of manufacture or sale to customers located in various other states of the United States.

5. Respondent is selling agent for George Mabbett & Sons Company, of Plymouth, Massachusetts, and through its representatives participates in the designing of the various fabrics which it sells. The designers or stylists agree upon patterns, designs and colorings which they think will be merchantable. The manufacturing technicians then determine the specific weights and lay out a blanket draft—a blanket consists of a series of weavings produced to display the desired number of variations in any one pattern. 4+. The blanket usually runs 80 sections long and 15 sections wide; each section measures approximately 14” by 4” and may include four or five different patterns in various colors. The wool content may vary from all wool in one section to as much as 89% wool and 119% rayon in another. The exact. fiber content, however, is not known at this time. and is of little importance to the manufacturer and respondent. who wish only to test the comparative saleability of the various patterns. No labels as to fiber content are affixed to the blanket. The blanket. thus made up is sent by the mill to the respondent’s stylist, who “cull(s) it down to, say 100 selections” which are thought to be most saleable. These selections are shown to customers as they come in.

. The stylist, believing particular fabrics and patterns may be popular. frequently makes up a second blanket, called a filling-tie blanket, in which the same pattern is repeated in a number of different colors, or may be repeated to show a series of variations in G. SHERMAN CORP. ET AL. 785 783 Decision wool and other fiber content. The sections in this blanket may be as much as 90” Jong and 60” wide. From the filling-tie blanket swatches are cut and sometimes labeled as to wool content based on estimates made by respondent. These swatches are shown to customers who come into respondent’s place of business and to other customers who are visited by respondent’s salesmen. 6. When enough customers have indicated a preference for a given pattern to make production of the fabric worth while, the mill is advised and sufficient yardage is manufactured to meet the estimated need. During the manufacturing process the exact fiber content of the product is determined and is put on the label attached to each bolt. or piece of the material. At the same time respondent is sent a 21% yard cut of the cloth, properly labeled, together with a cost sheet. upon which the correct fiber content is stated. If there is a substantial variance between the fiber content shown on the original swatches and that shown on the mill’s labels or cost sheets, it is respondent's custom to replace all incorrect. labels with labels showing the exact fiber content as disclosed by the manufacturer, and to advise its customers by letter of the correct content. 7. Respondent’s customers are garment manufacturers who, according to respondent’s testimony, are familiar with industry practices and therefore know that the origina] swatches are labeled only as to probable fiber content. There was some testimony to the contrary, but. the factual issue need not be determined. Giving respondent’s testimony full credence. it affords little solace in this proceeding. That many of the swatches were improperly labeled is not disputed, nor is it disputed that they were used “to promote or effect sales of (such) wool products in commerce.” Rule 22 of the Rules and Regulations under the Wood Products Labeling Act of 1939 specifically provides that. such “samples, swatches or specimens * * * shall be labeled or marked to show their respective fiber contents and other information required by law.”

8. The variance between actual fiber content and that. which appeared on some of the labels exceeds the limitations prescribed by the Act. Swatches Jabeled “all wool except decoration” actually contained :

Wool Other 4% 6% 92% 8% 90% 10% 89% 11% 88% 12% 88% 1T% 80% 20% Decision 56 F.T.C.

The respondent has violated Rule 22, mentioned above, and §4(a) (1) and §4(a)(2)(A) of the Act, which state:

$4(a) (1):

“A wool product shall be misbranded if it is falsely or deceptively stamped, tagged, labeled, or otherwise identified” ; §4 (a) (2) (A):

“the percentage of the total fiber weight of the wool product, exclusive of ornamentation, not exceeding 4 percentum of said total fiber weight, of (1) wool * * *; (and) (4) each fiber other than wool if such percentage by - weight of such fiber is 5 per centum or more’—must be shown. 9. The charges of the complaint as amended, that the respondent has violated §4(a) (1) and §4(a) (2) of the Act and Rules and Regulations thereunder, have been established by substantial, reliable, probative evidence.

10. There is another charge in the complaint—that the respondent, for the purpose of inducing the sale of its products, has made false, misleading and deceptive statements, in correspondence and otherwise, to the effect that the fiber content of its fabrics was “All wool except decorations,” whereas said fabrics actually contained a substantial amount of other fibers over and above the 5 percentum of total fiber weight allowed under the Act. 11. This charge has likewise been established. The labels were incorrect, and in some instances letters were written to customers by respondent, in which the wool content. of its products was misstated, and orders were taken which contained false statements as to wool and fiber content. of the fabric for which the orders were given.

12. In the content of its business at all times mentioned herein, respondent has been in substantial competition in commerce with corporations, firms and individuals in the sale of woolen fabrics. 3. The acts and practices of respondent, as hereinabove set. forth, were and are in violation of the Wool Products Labeling Act of 1939 and the Rules and Regulations promulgated thereunder, and — constituted and now 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. 14. The use by respondent of the aforesaid false, misleading and deceptive statements, representations and practices has had, and now has. the capacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief that said statements and representations were and are true, and into the purchase of substantial quantities of the respondent’s products by reason of said erroneous and mistaken belief. As a consequence thereof, substan- G. SHERMAN CORP. ET AL. 787 783 Decision tial trade in commerce has been, and is being, unfairly diverted to respondent from its competitors, and substantial injury has thereby been, and is being, done to competition in commerce. The Hearing Examiner, having considered the entire record herein, finds that the Federal Trade Commission has jurisdiction in this matter, and that this proceeding is in the public interest. Therefore, It ts ordered, That respondent G. Sherman Corporation, a corporation, and its officers s, and respondent’s representatives, agents, and employees, directly or through any corporate or other device, in connection with the introduction into commerce or the offering for sale, sale, transportation, or distribution in commerce, as “commerce” is defined in the Wool Products Labeling Act of 1939, of fabrics or other “wool products.” as such products are defined in and subject to the Wool Products Labeling Act of 1939, do forthwith cease and desist from misbranding such products by: 1. Falsely or deceptively stamping, tagging, labeling, or otherwise identifying such products as to the character or amount of the constituent fibers contained therein:

2. Failing to affix labels to such products showing each element. of the information required to be disclosed by §4(a) (2) of the Wool Products Labeling Act of 1939:

3. Failing to stamp, tag or label] samples, swatches or specimens of wool products, which are used to promote or effect. sales of such wool products in commerce. with the information required under paragraph 2 hereof, as provided by Rule 22 of the Rules and Regulations promulgated under the Wool Products Labeling Act of 1939. It as further ordered, That respondent G. Sherman Corporation, a corporation, and its officers, and respondent’s representatives, agents, and employees. directly or through any corporate or other device. in connection with the sale or distribution of fabrics or other products in commerce, as “commerce” is defined in the Federal Trade Commission Act, do forthwith cease and desist from, directly or indirectly. misrepresenting the constituent fibers of which their products are composed or the percentages thereof orally, on order forms, in correspondence. or in any other manner. It is further ordered, That the complaint herein. insofar as it relates to individual respondent George Sherman, be, and the same hereby is, dismissed.

DECISION OF TITE COMMISSION AND ORDER TO FILE REPORT OF COMPLIANCE Pursuant. te Section 3.21 of the Commission's Rules of Practice, the initial decision of the hearing examiner shall, on the 28rd day of Decision 56 F.T.C, January, 1960, become the decision of the Commission; and, accordingly:

It is ordered, That respondent G. Sherman Corporation, a corporation, shall, 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 andi desist.