Arnold Constable Corporation

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IN THE ::latter OF ARNOLD CONSTABLE CORPORATION ORDER, ETC. , IK REGARD TO THE ALLEGED VIOLATIOK OF THE FEDERAL TRADE CO::IMISSION ACT Docket 7657. Complaint, Nov. 16 1959-Decision, Jan. , 1961 Order requiring the operator of specialty stores in New York City and suburbs to cease making, in newspaper advertising, de('cptive pricing' and savings claims for its merchandise. such as use of the abbreviation "Reg. prl.'Ceding a price figure for which they had ne,er sold the ladies' luggage adyertiscd, and representing a fictitious figure as " customf1.Y retail value for cashmere coats copied from more expensive coats and specially made for tbe .sale from fabrics which were "seconds Charles W. O'Connell, Esq. supporting the complaint. of Klein and Opton of New York Y" for Meliin D. Kraft, Esq. respondent.

681-237- 63--- Decision 58 F.

TrrAL DECISION lly LEOX R. GROSS, HEARING EXA n1l'"R PRELIMIN.AY STATEMENTS The Federal Trade Commission filed its complaint in this proceeding on November 16 , 1959, in accordance with authority vested in it by the Federal Trade Commission Act, and therein charged the respondent, Arnold Constable Corporation, a Delaware corporation, doing business under the name of Arnold Constable, with pro. rnuJgat.ing false and misleading advertisements for ladies' luggage and ladies' cashmere coats, which respondent sold in "commerce" as that term is defined in and understood in relation to the Federal Trade Commission Act. A prehearing conference was held on December , 195D. Respondent' s answer was fied on January 19, 1960. Hearings were conducted on February 8, 1960, in New York, Kew York, and an ).Iarch 10, 1960, in )few Yark, New Yark. The transcript contains 349 pages. Forty (40) exhibits were offered by counsel supporting the complaint, and exhibits through 18A were offered by respondent. At the conclusion of the hearing on March 10, 1960 respondent requested and was given leave to file a motion to dismiss the proceeding for failure of the evidence to prove the legally essential allegations of the complaint. The hearing examiner held that a ruling on this motion would, under Iene 3.8 (e) of this Commission s Rules of Practice for Adjudicative Proceedings, necessitate an evaluation of all of the evidence in t.he record, and the examiner therefore, ordered the parties to file proposed findings, conclusions and order. By :'1:y 27 , 1960, such findings were fied, and on June , 1960, an order was entered closing the hearing record. The hearing examiner finds that counsel supporting the complaint has proven the legally essential allegations of the complaint by preponderant, reliable, probative, and substantial evidence in the record, and an order is herein entered granting to counsel supporting the complaint the relief which he has requested. Findings requested by counsel which are not specifically adopted and incorporated herein are rejected and refused. The fact that the examiner has not incorporated in this initial decision, nor rejected nor dismissed specifically, evidence which is in the record, should not be construed as indicating that such evidence has not been fully considered by the hearing examiner in preparing this initial decisia It indicates merely that the evidence which the examiner has specifirnl1y 1!lr:orpoffltpd in his findings of ffl.ct is suffciently releva.nt preponderant., reliable, probative, and substantial for a proper adjudication of the issues presented by this record. , , ARNOLD CONSTABLE CORP.

Findings Respondent' s motion of April 11, 1960, to dismiss the complaint. after the close of the hearing is hereby overruled and denied. The hearing examiner makes the following FINDINGS OF FACT Respondent, Arnold Constable Corporation, is a corporation organized, existing, and doing business under and by virtue of the Jaw" of the State of Delaware with its principal offce and place of business located at Fifth Avenue and Fortieth Street in New York, New York. It does business under the name of Arnold Constable. Respondent is now and has for some time last past been engaged in advertising, offering for sale, selling and distributing merchandise in interstate commerce, which merchandise consists, among other things of ladies' luggage and cashmere coats. In the course and conduct of its business, the respondent now causes, and for some time last past has caused, its products, when sold, to be shipped from its place of business in the State of N ew York to purchasers thereof located in various other states of the United States. Respondent maintains, and at nil times menUoned herein has maintained, a substantial course of trade in its said products, in commerce, as "commerce" is defined in the Federal Trade Commission Act.

The Federal Trade Commission has jurisdiction over the parties and the subject matter of this proceeding and this proceeding is ill the public interest.

The Ladies' Luggage:

On July 20, August 13, and August 20, 1958, respondent ran nem;paper advertisements in New York City daily newspapers, of which Commission s exhibit 1 (CX 1) is a sample, for the purpose of publicizing a special sale of ladies' light weight vinyl-covered nesting luggage at a price of $11.00 per unit regardless of size . This luggage was specially manufactured for the sale by Reliable Luggage Company of West Pittsburg, Pennsylvania. Respondent' s merchandise manager visited Reliable s plant in early 1958, and, after examining samples of Reliable s merchandise and discussing its quality and price said Sam, this is a special occasion. I have got to have something different " referring to the, ladies' luggage promotion which respondent was then planning. Respondent' s representative requested Reliable to make up its regu- Jar 6600 "Travel Joy" line of luggage at a special price, but Reliable replied tJUlt it could not cut the price of its regular line in fairness to its other customers, who purchased and sold the 6600 line in New York City and throughout the coun(TY. Reliable tially agreed to FEDERAL TRADE COM nSSION DECISIONS Findings 58 E' copy" the line, with some changes, and to "work close" and " cut corners" as much as it could.

As a result the luggage \which Reliable made up for respondent' luggage sale was not the same luggage which Reliable had previously sold to respondent and which respondent had been sellng under the name "Travel ,Joy . The linings, bindings, locks, and handles were different from the regular 6600 series which respondent had previously sold under the name "Travel Joy . Reliable s unit price to respondent for the specially constructed Juggage was $6.30. Respondent sold beb,cen 1 300 and 400 pieces of the luggage at $11.00 per unit, and its witnesses testified that not a sjngle customer had complajned about the luggage.

Respondent advertised the specially constructed luggage for sale as follows (see ex 1) in time for back-to-school ESTIKG LI:GGAGH: by TraYf'l Joy (regarrlless of size!) $11.00 ilustrations(in advertisementof herethe aIJpeareddifferent types of lug-Rage) 21" Overnight case reg. $16. 24" Jr. Pullman reg. 18. Train cases reg. 17. 26" Pullman reg. 22. 2!J" Oversize Pullman reg. 20.

The words " reg. 16. reg. 18. , reg. 17. , reg. 22.50 and reg. 29. 50" in ex 1 were ca1eulated by respondent 1.0 convey the impression to the buying public: and did so convey t.he impression, that the ident.ical luggage had previously been regnhlrJy sold by respondent at the prices indicated in ex 1. The identical luggage, constructed as it was, and manufactured as it was, had never -before been sold by respondent. Respondent's direct or jmpJjed representation that the identical luggage had previously been sold at the prices indicated was false, misleading and deceptive. In the context of this proceeding respondent's representations in CX 1 are proscribed by, and are false, mjsleading and deceptive under the Federal Trade Commission Act proscriptions.

Ladies' Cashmere Coats:

Sometjme prjor to the fall of 1958, respondent decjded to embark on a growth program for its Town and Country Shop for the approaching season. Accordingly, it began to shop the market for ladies' cashmere coats for sale at a low price. It select.ed for this sale Jadies' cashmere coats manufactured by the firm of Bernard Drobes of New York, New York.

Bernard Drobes who testjfied concernjng the coats and handled the transaction with respondent appeared to be a hard ,"wrking, cons- ARNOLD CONSTABLE CORP.

Findings cientious and honorable businessman. In conducting his business he and his brother eliminate, or materially reduce, many over-head costs which their competitors have. This includes substantial reductions in the cost of styling, cutting, finishing and delivery, among others, "nd administrative expenses, as well. It also includes using seconds" in fabrics. This permits Drabes to underseH his competitors. In making the cashmere coats for respondent, Drobes "copied" more expensive coats manufactured by his competitors. He styled the coats personally. By holding his out of pocket costs to approximately $32. , and cutting his profit to a minimum, Drobes sold the coats to respondent for $39.75 In some instances he received as much as $47.75.

Respondent advertised the coats as a $119.00 value and sold approximately 1 000 of them for $58.00.

These ladies cashmere coats, even as the luggage, were specially made up by Drabes for respondent to enable respondent to resell the coats at an attractively low price.

Respondent ran a series of seven advertisements in October and November, 1958, in the New York City daily newspapers as follows (CX2):

Pure cashmere coats $58. 00 value 119.

:Milum lined imported Chinese cashmeres famous name cashmeres The trade teI'itory in this case was and is included in a fifteen mile radius from respondent's store at Fifth Avenue and Fortieth Street, New York, New York.

The chief issue of fact with reference to the ladies' coats is whether respondent' s representation in its advert.isements that these were $119.00 values was blse, misleading and deceptive. The examiner fmds that such type of representations in respondent's advertisement was and would continue to be false, misleading and deceptive, and proscribed by the Federal Trade Commission Act and decisions interpretive of the Act.

The only evidence contrary to this conclusion is that of respondent' s own witnesses who testified that the coats compared favorably with more expensiyc coats being sold by respondent' s competitors. Even though this were true, which -it is not, the testimony of Jack L. Plavnick, general manager of Ash's Inc., Bronx, New York, which is in the rei ail market arpa served by respondent was that Ash' purchased similar c,"shmerc coats from Drobes in the fall of 1958 at a wholesale price of $/17. 74 and sold them in that same season for around $80.00. Philip Brolls, downstairs buyer for Bloomingdale FEDERAL TRADE CO:\ISSION DECISIONS Findings tis F. Brothers, New York, New York, testified that his store bought 13 coats from Drobes and Company at about the same time at a wholesale cost of $64.75. Those coats had a mink collar, estimated to cost $25. , making the cost of the coat without the mink collar S39.75. The coat with the mink collar was offered for sale by Bloomingdale for $78.00. Mr. Brous stated that the coat would have retailed without the mink collar for about $69. , with the store s normal retail mark up of forty per cent of the retail price. The normal retail mark up generally in the J'ew York City trade area involved in this proceeding on ladies! coats, such as here involved was and is approximately forty per cent on the selling price. Seymour Flesser, manager of the ladies' coat department for Saks 34th Street, New York, New York, in respondent's general retail sales area, examined copies ' of the Drobes coat at the hearing and testified that in his opinion RX 15 would retail for arOlmd $70. and RX 16 would retail between $60.00 and $65.00 (tr. 329). Herbert , a ew York City depart-Wolf, ladies' coat buyer for Stern Brothers ment store, in respondent's general retail sales area, examined RX 15 and RX 16 at the hearing and testified that in his opinion, the coat, RX 15 would sell at retail for not more than $69.00-$79. , and RX 16 would sell for not more than $69.00. (tr. 315). The retail price of ladies' cashmere coats in the New York City trade area served by respondent, including coats purchased from Drabes was approximately the same at the time of the hearing as at the time of the respondent's sale under the chal1engcd advertisement CX 2.

In addition to the testimony of Messrs. Plavnick, Brmls, ,Volf and Flcsser, the testimony of Bernard Drabes, who made the coats was that the coats which he sold to respondent would retail in the ew York trade area of respondent at the time of CX 2 for $88.00. (tr. 90 , 91, 92).

The dominant item of cost in the manufacture of these coats was the cost of the cashmere. One of the principal reasons why the Drabos firm was able to make up the coats to sell at such a low price was because Drabes used "seconds:' in cashmere iabrics. Respondent' s representations that the coats had a retail market value of $119.00 in that market area, at the time of the advertisement, was false, misleading and deceptive. The testimony of Eric Ullman who is an admitted expert in the field of textiles, was not particularly pertinent to the basic issue: the Drobes coat's retail value at the time of CX 2.

1 These co!tts. RX 15 and RX 16, h!td been made up especially for the hearing by Drobes, at the request of respondent. in order to approximate or typify the. coats actually sold by means of the challenged !H1vertlsement. ex 2. ARNOLD CONSTABLE CORP.

Findings The testimony of Herman Schulman, production manager of Country Tweeds, 250 West 39th Street, New York, New York, whose company makes a ladies' cashmere coat which sells at considerably more, although interesting, did not bear directly on the retail value of the Drobes coat. One of the Country Tweeds coats was in evidence and Mr. Schulman testified that the Country Tweeds garment involved much more labor costs; had a hand made bottom; that the hems were done by hand; the linings were put in by hand; and the coat had more yardage of material and "a larger sweep in the coat"

Respondent sold approximately 1 000 of the Drobes coats for $58.00 and testified that it had received no complaints from any customers concerning said coats.

In the conduct of its business, the respondent at all times pertinent to the issues in this proceeding, was and is in substantial competition in commerce with corporations, firms, and individuals in the sale of merchandise which includes luggage and ladies' cashmere coats of the same general kind and character as those which respondent sold by me ns of the challenged advertisements, CX 1 and ex 2. Respondent was and is engaged in interstate commerce as that term is understod and defined in the Federal Trade Commission Act and decisions interpretative of the Act. Substantial commerce in ladies luggage and cashmere coats was affected by the respondent's deceptive advertisements: between 1 300 and 1 400 pieces of ladies' luggage, and approximately 1 000 ladies' cashmere coats were sold. The use by the respondent of the false, misleading, and deceptive statements, typified in CX 1 and CX 2 has had, now has, and wil have the capacity and tendency to mislead members of the purchasing public into the erroncous and mistaken belief that said statements were and are true, and, as a result thereof, to induce the purchase of substantial quantities of respondent's merchandise by reason thereof. As a cOIlscqllCnce, substantial trade in commerce has been and will be, unfairly diverted to respondent from its competitors unless said advertising practices are prohibited by order of this Commission.

The Federal Trade Commission Act prohibits the false and deceptive advertising which respondent employed to seh the luggage and ladies' cashmere coats in the instant proceeding. Substantial injury has been and wiJ continue to be done to respondent' s competition, in commerce, unless respondent's said false and misleading advertising typified by CX 1 and CX 2 are proscribed am! prohibited.

FEDERAL TRADE COMMISSIO DECISIONS Dis:cussion 58 F. T. RE8POXDENT S ALLEGED ABANDO :MEN'r 01" THE CHALLENGED PRACTICES The luggage advertisement ran on three dates in 1958, the last of which was August 20, 1958, and had not been repeated up to the time that this record was closed. The cashmere coat advertisement ran for a few dates in October and K ovember, 1958, the last of which was November 28 1958. The coat advertisement had not been repeated since. The cessation of the advertisements on November 28, 1958 was not related to the commencement or the instant proceeding. Hmvever, respondent changed the coats' declared value from $119. 00 to 899.00 after a Commission representative called upon him. Although respondent has not repeated the precise luggage and cashmere coat advertisements represented by CX 1 and CX 2, this record does not justify a finding that the particular advertising practice will not be resumed or used agajn by respondent. There is no convincing proof in the record that the form of deception practiced by means of CX 1 and CX 2 will not hereafter be repeated. Testimony that some offcial of respondent made respondent' s employees conscious or the Federal Trade Commission Guides Against Deceptive Pricing falls far short of the proof required to support a dismissal under the rationale Sheffield Merchandise Inc. tt al. Docket Ko. 6627, or any other decisions in which dismissal has been sustained by this Commission, on grounds that the challenged practice has been abandoned and there is substantial proof that it will not be repeated or resumed. As a matter of fact, a dismissal of this proceeding on such ground might be interpreted by respondent as an indirect condonation of such practices. DISGGSSTON To support a cease and desist order by the Federal Trade Commission in a proceeding such as this under the Federal Trade Commission Act there is no need to show injury to the purchasing public. " Capacity to deceive and not actual deception is the criterion by which practices are tested under the Federal Trade Commission Act." 3 The buying public does not '''8igh each word in an advertisement or representation. It is important to ascertain t.he impression that is likely to be created upon the prospective purchaser. -1 It is in the public interest to preyent the sale of commodities hy the use of false and misleading statements and representations. Advertisements a.re 2 Jacob Siegel... FTC, 150 F. 2d 751, 755. 3 Goodman Y. FTC, 244 F. 2d 584, (\04 CA 9th (1937). Kalwajt.ys v. FTC, 237 F. 2d OM. 656 (Cert. deal. 352 uS 1025). Parke Austin & Lipscomb Y. FTC , 142 . 2d ,.137. ARNOLD CONSTABLE CORP.

DisClls:sion not to be judged by their cHeet upon the scientific or legal mind which will dissect and analyze each phrase but rather by their effect upon the average member of the pubhc who more likely will be infiuenced by the impression gleaned from II first glance at the most legible \words.

The "impression gleaned from a. quick glance at the most legible words" in respondent's aclvel'tiserncllt of the belies' luggage (CX 1) is that the l:denticalluggage had previously been 'tegulaTly sold by respondent at the prices quoted in the advertisement. This is so contrary to fact, as not t.o require any laboring of the point. For the lnggage, constructed identically as that made up for the sale had never, regularly or otherwise, been offered for saJe by respondent. Respondent asked for, and the lnggage manufacturer gave him, a substitute piece of luggage in \'\hieh the manufacturer " cut corners and "worked close . The Jug-gage had been purposely made up to sell at the special $11.00 price.

No inference should be drawn (for none is intended) that the luggage \'\as not "'vorth the price at "which it was sold, but this does not mitigate the fact that respondent's advertisement (CX 1) falsely and deceptively represented that the identical luggage had rcgnlarly sold at higher prices. This represent.ation in ex 1 was simply not true. The meaning of the \Yard "regular" in reference t.o price is ,,'ell settled under Commission decision as being the sellers usual and customary price for -icle,ntical merchandise in the same trade area. Respondent' s advertisements for the Juggage (eX 1) represented directly or by irnplieaJion that the higher prices set out in said advertisements \were respondent:s "regular" retail prices for the identic l1 luggage advertised. The "regular" price for an article is the price at which the seller customarily sells it in the trade area involved. Hcspondent had not prcviously sold the identical luggage at any price and it was, and is false, misleading and deceptive for respondent and any other vendor to contrast a current price with a price at 'Which similar merchandise, even though manufactured by the sa,me manufacturer, has previously been sold unless the prior saJe was of identical products.

R.respondent' s advertising in ex 2 'Was false, misleading and deceptiyc in that it was ca.1culatec1 to convey, and did convey the impression to a person reading it, that the ladies' cashmere coats therein advertised for sale had a "value" of $119.00. The use of the word o Wnrd Lnhoratorles, Inc., et :tl. v. FTC, 276 I" . 2d 952 (CA 2- Aprij 14. 1960). 7 See the Commission s opinion of Janllary 7 , 1960, in Bond Stores, Inc. Docket o. 67S9. which, ineidp.ntall ' refers to another vroceeding Involving the same respondent, Arnold Constable In Docket No. 7101) FEDERAL TRADE COMMSSION DECISIONS Discus-sion 58 F.

value" in such context, measured against pertinent decisions, 8 is that the Drobes coats ordinarily sold in respondent's retail market area for $119.00. The precise coats had been, even as the Juggage, made up speciaJJy for the sale, and had never before been sold in the trade area.

The manufacturer of the coats, who should be best qualified to set a value for them, fixed their retaij value at $88.00. Four other weJJ qualified expert witnesses also testified that their retail value was considerably under $119.00. Respondent itself reduced the value stated on the price tags from $119.00 to $99.00 when it Jearned that the Commission was questioning justification for the "value" figure. The Federal Trade Commission Guides Against Deceptive Pricing adopted October 2 , 1958 , inter aJia, proscribe the use of the word regularly" or any abbreviation thereof unless the saving or reduction is from the advertisers usual and customery retaij price for the same specific article offered for saJe as distinguished from similar or comparable merchandise. Inasmuch as the same specific Juggage offered for sale by respondent's advertisements (CX 1) had never previously been offered for saJe by respondent, the representation that the $11.00 advertised price was a reduction from former prices of $16. , $17. , $18. , $22. , and $29.50 for the same and identical luggage was and is patently false, misleading and deceptive, and proscribed by Section 5 of the Federal Trade Commission Act. The testimony of the luggage manufacturer and respondent's buyer is unambiguous and clear to the effect that the manufacturer refused to furnish the regular 6600 series, Travel ,Toy, which respondent had previously sold, for this particular saJe. Respondent' s advertisement of that luggage as its "reg." or regular Juggage was false, misleading and deceptive and violative of the Commission Guides Against Deceptive Prioing, with which respondent is certainJy now familiar.

Similarly, the Guides make it unmistakably clear that the word value" is deceptive unless it is a true and accurate representation of an article s usual and customary retail price in the trade area involved. The retail value of the ladies ' coats, which respondent advertised in CX 2 at $119.00 was considerably Jess than that figure according to the testimony of four qualified disinterested coat buyers plus the testimony of the man who manufactured the coats. THE " ABANDONMENT': DE:FENSE In order to justify the dismissal of a proceeding on the grounds that the proscribed practice has been discontinued, or abandoned, S See the Bona Stores opinion. supra (Note 7) Docket No. 6789 tor a limited discussion of the use ot the word "value , ARKOLD em,STABLE CORP.

Conclusions there must be in the record suffcient evidence from which the examiner may fid that there is no reasonable likelihood that the practice will be resumed.' One of the most recent Commission decisions discussing this defense is in Sheffield M erchandise, Inc., et al. Docket No. 6627 (March 4 1960). As recently as :May 23, 1960, the Commission affrmed a dismissal in a false and misleading advertising case: Oharles Pfizer 00. , Inc. Docket Ko. 7487. In Pfizer the examiner found, inter alia It is believed that the practice charged has been completely abandoned and because of the circumstances of its abandonment that it is improbable that it will ever be resumed by the present management of respondent, or any successor." The record in this proceeding wil not support such finding. The application of the pertinent statutes, decisions, and precedents to this record, compels the following:

CONCLTISIONS The complaint filed herein states a good cause of action against respondent under the Federal Trade Commission Act and this proceeding is in the public interest.

The Federal Trade Commission has jurisdiction over and of the parties to this proceeding and the subject matter thereof. Respondent is engaged in "commerce" as "commerce" is defined in thc Federal Trade Commission Act.

Counsel supporting thc complaint has proven the legally material allegations of the complaint by a preponderance of relevant, probative, substantial and material evidence in the record; and The acts and pra.ctices of the respondent so proven, were and are to the prejudice and injury of the public, and of respondent's competitors, and did, 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; Now, therefore It i8 ordered That respondent Arnold Constable Corporation, a corporation, and its offcers, agents, representatives and employees directly or through any corporate or other device, in connection with the offering for sale, saJe, or distribution of Juggage, wearing apparel, or any other merchandise in commerce, as "commerce " is 9 See Wlldroot Company. Inc., Docket No. 5920 (1953); Argus Camera, Inc., Docket No. 6199 (1954); Bell Ilnd Howell Co., Docket No. 6729 (1957); Boho Aluminum, et o.l. Docket No. 5720 (1955) ; Stokely-Van Co. v. FTC, 246 F. 2d 458 (1957) ew Stanaard Publishing Co. v. FTC, 194 F. 2d 181: Sheffeld Merchandising IDe. Docket No. 6627 (1960). See July 7, 1958, opinion of Comm!sslon. FEDERAL TRADE COMMISSION DECISIOKS Opinion 58 F.

defined in the Federal Trade Commission Act, do forthwith cease and desist from:

A. Representing, directly or by implication: 1. That any amount is re.sponde,nt' s usual and customary retail price of merchandise when it is in excess of the price at which said merchandise is usually and regularly sold by respondent in the recent regular COUfse of its business.

2. That any amount is the retail value or price of an article of merchandise when it is in excess of the price at which said merchandise is usn ally and customarily solel at retail by respondent in the. trade area, or areas, where the representation is made. 3. That any savings arc afforded in the purchase of merchandise from respondent's llSlUtI and regular prices unless the prices at which it is ofl'erecl eonstitllte reductions from the prices at which said 1nerchandise is usually and cllst.omarily sold by respondent in the normal course of its business.

4. That any savings are affordeu in the purchase of merchandise from the price at which said merchandise is usmtlly and customarily sold at retail in the trade area or areas where the representations are made unless the price at ,which it is offered constitutes a reduction from the price at which said merchandise is usually and customarily sold at reta,il by respondent in such trade area or areas. B. ::iisreprcsenting in any manner the amount of savings avail table to purchasers of respondent's merchandise, or the amount by which the price of said merchandise is reduced from the price at which it is usuany and customarily sold by respondent in the recent regular course of its business, or from the price at which said merchandise is usually and customarily sold in the trade area, or areas, where the representation is made.

OrINIO.: OF TI-rE COMMISSION By SECREST Oommissioner:

The hearing examiner found that the complaint's charges that the respondent had engaged in deceptive pricing practices were sustained by the evidence. The respondent has appealed from the initial decision filed by the hearing examiner which contains his findings in those respects and order to cease and desist froln such practices. The respondent operates a specialty store in New York City and branches in its suburbs. It is undisputed that respondent advertised certain luggage at $11.00 per unit, which advertisements included jJustrations or the different sizes offered and described them as reg. " $10. , $17. , $18. , $22.50 and $29.50. It also is undisputed that other advertising used by respondent reatured cashmere coats ARXOLD CO STABLE COHP.

Opinion for 58.00 "value 119.00. " The luggage offered in the sale represented a special purchase from the manufacturer who had supplied luggage previously sold by the respondent at the higher prices. However, such promotional merchandise varied from the original luggage in certain respects, inclmling locks and handles. The price of $6.30 per case paid by respondent for the sale luggage was specially negotiated, whereas respondent' s costs for the silnilar vinylcovered luggage formerly sold had ranged from 88.75 up to $16. depending on size.

The hearing examiner found among other things, that the luggage advertisements featuring the higher prices or amounts and their designation "reg." falsely represented and implied that respondent had previously sold such merchandise at those higher prices in regular course of business. In contending error, respondent states that the only representation implicit in the ach erti:3ellellt i:: that its stores had sold substantially the smne or similar luggage at the higher prices indicated; and it also argues that the hearing examiner erred in excluding testimony to that effect by respondent's luggage buyer and also improperly excluded evidence sho,,'ing that any differences between the promotional luggage and that previously sold at the higher prices were inconsequent.ial. Substitution is unlavdul, 110wc\'o1', even though qualitative cquivalence be shown. C. v. Algoma Lwnbo' Co. 291 U. S. 67, 77 (1934). One of respondent' s representatives coneedcd that the term "reg. " as used in the advertisement for designating the higher prices 01' amollnts Incant "rcgula.rly. " L;se of this word in merchandising, of course ext.ends back to antiquity and it wa.s not an abuse ot discretion for the heating examiner to exclude opinion testimony by such trade witness ascribing an added import. or meaning to "regularly ' contrary to its traditional one. The hearing e,examiner correctly found that respondents advertisement.s designating certain prices as regular ones a.nd oflering its luggage for a specified lesser price reasonahlv have served to engender impressions and beliefs that the hiO'ho mnounts were the customary and usual prices of the respondent for such luggage in regular course of business. In this connection, respondent turther argues that a "fat.al omission" of proof is presented because no witness expressly testified that respondent competed wit.h ot.hers in the sale of luggage of the "same general kind and nature" as that offered in the advertisements. Respondent, however, maintained during the hearings and noy\, maintains that the sale luggage, notwithstanding its departures as to locks and handles from that previously sold at the hi "her rices was generally comparable to that sold by it at the higher or regular Opinion 58 F.

prices. Furthermore, a representative of the luggage manufacturer testified that its regular line of luggage was being supplied to stores all over the country, including stores in New York. Respondent' contention that the record does not establish that it has been competitively engagcd with others selling luggage of the same general kind and nature, therefore, is rej ected. Respondent additionally excepts to a statement in the initial decision that the luggage advertisements were "violative of the Commssion Guides Against Deceptive Pricing. The hearing examiner also expressly found, however, that such advertisements were violative of the Federal Trade Commission Act; and as respondent recognizes in its brief, the question for adjudication is not whether the advertising departed from criteria announced in the Guides but whether violation of the Act itself was shown. Those administrative interpretations as to the application of the statute to various categories of pricing representations were formulated for use by the Commission s staf!' in evaluating such matters, and their release to the public looked to obtaining voluntary and prompt cooperation by those whose activities were subject to the Act. To such extent as the initial decision s reference to violation of gnides may suggest or imply their force and effect as substantive law, such statement is patently erroneous. On the other hand, a statement that the advertising practices found violative of the Act also departed from basic criteria in the guides clearly would not imply such substantive force and effect. The initial decision shall be so amended.

We also have carefully considered the matters argued by respondent in support of its contention that the hearing examiner erred in finding that the record established that the cashmere coats being offered for sale at $58.00 did not have a customary and regular retail value of $119.00 in the respondent' s trading area as represented in the advertisements. Detailed discussion of the evidence relevant to this issue would unduly lengthen this opinion. It suffces instead to say that we find no error and think that the hearing examiner conclusions that such garments had not been regularly and usually sold at $119.00 in respondent's trading area as represented and implied by the advertisements had sound record basis. Part of the evidence relating to the aforementioned issue of alleged deceptive value claims for the cashmere coats 'Was received at a hearing held on March 10, 1960, and respondent requests that such evidence be stricken. At the first hearing held on February 8, 1960 counsel supporting the complaint presented seven witnesses including two of the respondent's offcials, and then announced that he had no ARNOLD CONSTABLE CORP.

Opinion further witnesses present for examination, but was not, however resting his case. As directed by the hearing examiner but under protest, respondent proceeded with its presentation or the case on derense. At the second hearing, counsel supporting the complaint introduced additional evidence and the record was closed ror the taking or testimony arter counsel ror the parties stated they had no rurther evidence to offer. Respondent argues that convening or the second hearing violated its constitutional rights or fail' and speedy hearing and that the evidence so received must be stricken. In administrative proceedings, due regard for the convenience of the parties and the presentation of evidence necessary for informed decision rrequently require that the hearings be held at intervals. Moreover, respondent has shown no racts indicative that the second hearing in New York, the city in which its principal place or business is located, was unduly burdensome or otherwise prejudiced the respondent. The request to strike is wholly without merit and is denied.

The challenged luggage advertisements appeared in July and August, 1958, the bst being August 20 , 1958, and those for the cashmere coats ran in October and November, 1958, the last appearing all November 28, 1958. The complaint issued November 16 , 1959. Respondent contends that the complaint should be dismissed inasmuch as the advertising was discontinued long prior to institution of this proceeding. In this connection, respondent also emphasizes that its general manager discussed the previously mentioned Guides Against Deceptive Pricing with members or the staff or the store and in December, 1958, distributed a memorandum directing that they be adhered to. An affdavit in kindred vein executed on November 15 1960, by 1\11'. Dingivan, one of respondent' s offcers, and expressing its intention never to resnme the practices complained of also was proffered by counsel at the oral argument and hereby is received and fileel. Such showing of self-instituted voluntary compliance with the Commission s published administrative interpretations or guides respondent argues, indicate likelihood that the challenged practices will not be resumed.

The record jncludes testimony that an investigational representative of the Commission contacted the respondent in December, 1958 for the purpose of inquiring into the luggage advertising and made inquiry the next month respecting the advertising for the cashmere coats. Notice to respondent shortly following such advertising fls to the Commission s hand upon its shoulder accordingly must be inferred from the record. In cases of asserted abandonment, the Commission is vested with broad discretion in its determinations as p.

FEDERAL TRADE COMMISSIO:' DECISIONS Opinion 58 F, to whether ft practice has been surely stopped a.nd whether an order v. Federal T1'adeto cease and desist is proper. E'7.Jgene Dietz r;en Co. Commission 142 F. 2cl 32l (7th Cir. , 19J4); Automobile 01VI1e, v. Federal TTade Com.mission 255 F. 2d 295Safety Insui'((:l1oe Co. (8th Cir., 1958). The dismissal of complaints in aba.ndollment cases is not. the llsllal procedure nnd should be limited to truly unusual si.tuations. In the llfltter of 11' anl Bakl ng Oompany, Docket o. 6833 (DelOision on "appeal Jnne 23 1958).

In the cited CHses inyolving such dispositions by the Commission, it has had assnrances by reason of changed industry-wide business conrlitions 01' other circumstances that t,he challenged practices would its intention tonot be resumed. I1ers, the respondent expresses continue the llSP of the "words "yalue" and "regulfT" in the advertising 01 it:; prices flld promises to make only such savings claims, vflIne. claims 01' compflrntiv8 value claims as are 1\RITanted by the true facts. Its promise. notwithstanding, respondent for compelling competitive re,aSOl1S wOlllcl be free to adopt t.he salnc or similar practices absent effective legal restraint. K or has the 1'respondent unequivocally receded from its position that no capacity to mislead inhered in certrt,n of the fl(lvp,rtisements. In also' vie" , t.he circumstances attending the respondent's discontinuance of the challenged advertising do llot ,warrant dismissal of the complaint, and we believe that the public inte,rest requires issuance in t.his proceeding of appropriate order to cease and desist.

Rcspolldent s objpct.ions t.o the order to ce lse and desist insofar as they except to inelnsion of the \YDrds "by respondent" in paragraphs A(2) anel A(4) of such oreler "1'8 being granted. Such bnguage of limitation renders the order unduly n strictive and it is being appropriately modified. On the ot.her hand, the respondent Olc1eT is unduly broad eompnnion contention that. the scope of the bec.cause it.s proscriptions aga.inst deceptive pricing are not limited to ales of light-"\yeight luggage a.nd cashmere coats is rejected. The order s inclusion of the words "other merchandise" looks only to preventing respondent from continuing past unlawful practice,s in refcrp,nce to merchandise other than luggage and women s coats. The Commission may properly close the door to future sales of other produc.s by the same', deceptive sales 1l1ethoc1; and to be of value a C\)mlnission order nmst proseribe the unfair method as well as the He7'8hey Chocolate Corp. sperifie acts by .which it was manifested. Federal Trade Oom.1ni8' sion. 121 F. 2d 9(;8 (:1rd Cir. , 1941) ; (jon.sumel' S(fles (701' Y. Federal Tmde Com1ni8. on. 198 F. 2d ,10.1 (2nd Cir.. 1952) .

(;;) PERFECT EQUIPMEST CORP.

COlnplaint To the extent noted hereinbefore, the appeal of the respondent is granted but denied in all other respects. The initial decision, modified in the respects previously mentioned, is being adopted as tile decision of the Commission.

FIK AL ORDER This matter ha,ving- been heard by the Commission upon the respondent' s appeal from the inltiaJ decision of t.he heft,1-ing examiner; and the Commission having rendered its decision granting the appeal in part but denying such appeal in all other respects and having' det.ermined, for reasons st.ated in the accompanying opinion, that the order to cease and desist should be modified: It is ordered That the order to cease, and desist. contained in the initial decision be, and it hereby is, modified by striking the words by respondent" from line 4 of paragraph A(2) and from Jine 8 of paragraph A (4) of said order.

It is fmthe1' ordered That the respondent shall, "within sixty (60) cltys 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 ,,,it.h the order to cease and desist as modified. It is fui'hel' o1'dered That the initial decision, as moclified herein , and it hereby is, adopted as the decision of t.he Commission.