Stanley Perkis

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IN THE MATTER OF STANLEY PERKIS TRADING AS MURRAY HILL HOUSE ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COM1IISSION AGr Docket 8. Complaint lan. , 1960-Decisfon Jan. 1961 Order requiring Ii distributor of unwoven cottOll and rayon fiber towels in Farmingdale, Long Island, N. , to cease representing falsely in newspaper magazine, and other advertising that such products bad the appearance thickness, and texture of towels customarily used in the borne. FnmrXG8 As To THE FACTS, CONCLUSIONS AND ORDER The Federal Trade Commission issued its complaint against the above-named respondent on January 18, 1960, charging him with violation of the Federal Trade Commission Act in connection with the advertising and offering for saJc of certain unwoven cotton and rayon fiber products. A hearing was held before a duly designated hearing examiner of the Commission and testimony and other evidence in support of and in opposition to the allegations of the complaint were received into the record. In an initial decision filed July 19, 1960, the hearing examiner found that the charges had not been sustained by the evidence and ordered that the complaint be dismissed.

The Commission having considered the appeal of counsel supporting the complaint from the initial decision of the hearing examiner and the entire record in this proceeding and having determined that the appeal of counsel supporting the complaint should be granted and that the initial decision should be vacated and set aside, the Commission further finds that this proceeding is in the interest of the public and now makes its findings as to the facts, conclusions drawn therefrom and order to cease and desist which, together with FEDERAL TRADE CO:VLVIISSIOX DECISIO Findings 38 F.'l.

the accompanying opinion, shall be in lieu of the findings, con elusions and order contained in the initial decision. FLNDIXGS AS TO THE F .\CTS 1. Respondent., Stfl,nley Perkis, is a.n incli vidual trading as Iurray Hill House, with his offce and phce of business located at 25 Roxbury Street, Farmingdale, Long Island, New Yark. Respondent is engaged in the business of selling by mail order unwoven cotton and rayon fiber products.

2. In the course and conduct of his business, respondent has been engaged in the sale and distribution of said products in comnlerce as "commerce" is defined in the Federal Trade Commission Act. 3. Respondent at all times mentioned herein has been in substantial competioll in commerce with other corporations, firms and individuals in the sale of towels.

4. In the course and conduct of his business, and for the purpose of inducing the sale of said products, respondent has made certain statemonts with respect to said products in ac1vcrtismnents in magazincs and newspapers of national circulation of which the following are typical:

LARGE Less than NEW ea.

TOWELS That' s right! Two dozen large soft fluffy white towels for only $1. 00 .. '" '" Think of it LARGE SIZE UIlvoven cotton and rayon towels for less than a nickel apiece. 'l'erritic value you ve got to to see to believe.

5. Four public witnesses enJled by counsel supporting t.he complaint testified that respondent's advertising led them to believe that the product described theTcin was a bat.h towel or large cloth towel similar to a terry cloth or turkish towel. Another public witness testified to the effect that his first impression from the advertisement was that large bath towels were being offered for sale but that because of the low sening price he would expect to receive hand towels or face cloths that could be, used as towels. 6. An offcial of the firm that has supplied respondent with said products testified that they are made by a paper mill and that the same process is used as in making paper except that fibers are used inste,ad of pulp. The product is clcsignnted in the supplieT s Jiteratnre as " 154 Open fesh" and is described as "Non-\Yoven Cheesecloth." An examination of the product disclose,s that it Cflll be easily torn or shretlclecl and that it closely l'esembJes soft paper toweling in appea.rancc, thickness and texture.

MVRRAY HILL HOUSE Order 7. On the basis of the foregoing evidence, the Commission finds that respondent, through use of the aforesaid advertising, has represented that he is offering for sale large cloth towels which have the appearance, thickness and texture of cloth towels customarily used in the home, whereas, , in truth and in fact, said products closely rosemhle soft paper toweling, and do not have the appearance, thickness or texture of cloth towels customarily used in the home. 8. The practice of the respondent, as hereinbefore found, has had and now has the tendency and capacity to mislead and deceive purchasers of this unwoven cotton and rayon fiber products with respect to the appearance, composition and quality of such products and thereby induce the purchase of substantial quantities thereof. As a result, substantial trade in commerce may be unfairly diverted respondent from his competitors and substantial injury has been done t.o competition in commerce.

CONCLUSIONS The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent. The aforesaid acts and practices of respondent, as herein found, were a1l to the prejudicp' and injury of the public and of respondent's competitors and constituted unfair and deceptive acts and practices and unfair methods of competition in commerce within t.he intent and meaning of the Federal Trade Commission Act.

ORDER It is ordered That the respondent, Stanley Perkis, trading as Murray Hill House or under any other name or names, and respondent' s agents, representatives and employees, directly or through any coi1orate or other device in connection \with the offering for sale sale or distribution of unwoven cotton and rayon fiber products, or any other like merchandise, in commerce, as "commerce" is defmed in the Federal Trade Commission Act, do forthwith cease and desist from:

Hepresenting, directly or by implication, that such product has the appearance, thickness or texture of cloth to,vels or misrepresenting in any manner' the appearance, thickness or texture of such product.

It is jurlher ordered, That respondent, Stanley Perkis, shall within sixty (60) days after service upon him of this order, file with the Commission a report, in n-writing, setting forth in detail the manner and form in which he has eomplied ,with the order to cease and desist.

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FEDERAL TRADE CQMMISSIOev DECISIONS Opinion 58 F.

OPINION OF THE CO:;fMISSroX By ANDERSON Commissioner:

The complaint in this matter charges respondent with violation of Section 5 of the Federal Trade Commission Act. The hearing examiner held in his initial decision that the charges were not sust.ained by the evidence and ordered that the complaint be dismissed. The matter is now before the Commission on the appeal of counsel supporting the complaint from this decision. Oral argument was not had.

The complaint challenges certain advertising used by respondent in connection with the sale by mail order of certain unwoven cotton and rayon fiber products. The following representations are typical of those used in the advertising of such products: LARGE Less than NEW 51! ea.

TOWELS That' s right: 'I'wo dozen large soft fluffy white towels for only $1. 00 Think of it - LARGE SIZE unwoven cotton and rayon towels for less than a nickel apiece. Terrifc value you ve got see to believe.

The following allegations with respect to this advertising were made in the complaint:

PAR. 5. Through the use of the aforementioned statements respondent represent.ed directly and by implication, that the product offered for sale is a large cloth towel which has the appearance thickness and texture of towels customarily used in the home. PAR. 6. Said statements and representations were false, misleading and deceptive. In truth and in fact, said so-called towel is not of the type customarily used in the home but is an unwoven product which does not have the appearance, thickness or texture of towels customarily used in the home and is not large compared to household towels since its dimensions are 12 inches wide by 18 inches long. The first question raised on the appeal concerns the hearing examiner s interpretation of the complaint. Although he assumed that respondent' s advertising would be interpreted by the public in the manner indicated in Paragraph 5, he ruled in effect that the principal issue framed by Paragraph 6 'vas whether respondent's product is a towel of the type customarily userl in the home and that it was incumbent upon counsel supporting the complaint, therefore, to show what type or types of towels are customarily used in the home and that respondent's prorluct is not of such type or types. He then found that respondent's product falls within the definition of the term "towel", which includes "absorbent paper" as well as "cloth" MURRAY HILL HOUSE Opinion and that there are many types of towels customarily used in the home. Since the record failed to show that respondent' s product was not one of these types, the heMing examiner held that the charge had not been sustained.

IVe agree with counsel supporting the complaint that the hearing examiner erred in his interpretation of this charge. In construing the complaint, Paragraphs 5 and 6 must be read together. Paragraph 5 contains the allegation that respondent had represented that the product offered for sale is a large cloth towel having the appearance thickness and texture of towels customarily used in the home. When read in context, the phrase "towels customarily used in the home means cloth towels customarily used in the home, not paper towels or some other non-woven products. Paragraph 6 negates the representation made by respondent, stating in effect that the product is not a cloth towel of the type customarily used in the home and that it is not large compared to such towels. The issues raised, therefore are whether respondent's advertisements create the impression that th product described therein is a large cloth towel having certain physical characteristics of cloth towels customarily used in the home whether it is a towel of this particular type, and whether it is large compared to household towels.

Five public witnesses were called by counsel supporting the complaint for the purpose of testifying as to their understanding respondent' s advertising. Four of the witnesses stated that they would be led to believe by such advertising that the products offered for sale were bath towels, such as turkish towels, and one witness stated that he beheved that the advertised products would be hand towels or face cloths. Although the testimony of these witnesses fully supports the allegation in Paragraph 5, the hearing examiner made no finding to that effect but merely assumed that the advertising created the impression as alleged. He ruled, however, that the evidence given by these witnesses was entitled to little weight since their testimony and demeanor was such as to indicate that their statmncnts were influenced by the interview" \with the Commission investigator. Counsel supporting the complaint has taken exception to this ruling.

"\Vhile "wc will ordinarily accept a hearing examiner s evaluation of the testimony of witnesses who have appeared before him, we believe that the record in this matter clearly discloses that the examiner was not justified in holding that the statements made by the pubhc witnesses were not worthy of credence. In the first place we fid nothing in the testimony of these witnesses to indicate that they had been influenced by an interview with the Commission Opinion 58 F.

investigator. It is also obvious from the remarks made by the hearing examiner during the hearing that his determination with respect to the credibility of these witnesses was based on a preconceived notion that any public witness who is interviewed prior to giving testimony will be unduly influenced by the interview. In this connection, the hearing examiner made the following observations on the record prior to giving testimony will be unduly influenced by the interview. In this connection, the hearing examiner made the following observations on the record prior to hearing the testimony of all of the public witnesses:

. . . I have said repeatedly in these cases and I think I might as well repent , I am not thriled with these witnesses who are brought in after having been interviewed and talked to by somebody connected with one side or the other of the case.

Yon just can t help be somewhat influenced by what took place and I think the testimony is ,vDrtll very little. I am not talking for your benefit. I am talking for the benefit of the lawyer and I just can t get excited about it and I would base very little finding upon their opinion. . . . Now, if you are going to read the ad and interpret the ad as a whole, your interpretation is not acceptable, and I have told you, Mr. O' Connell, before we ('time here that I had very little reliance on public witnesses, and this is an example of wily I cannot as a Hearing Examiner rely on their testimony. They look at f! thing. They have been given the notion of what the case is about. They get some idea what they have to say and they say it. I say that from experience, because I have had witnesses on the sta.nd that had not been told by anybody what they were to say, but they knew when they were interviewed first that there was some case involved, some funny a.advertising involved, and tlley tried to make a case ant for what they thought was- "\'anted. . .

'Ve do not subscribe to the position taken by the herring examiner nor do the courts. Culf Oil Oorporation v. 150 F. 2d 106 (4 S. & D. 374) (5th Cir. 1945); Stonley Labomtories v. F.T. , 138 F. 2c1 388 (3 S. & D. 596) (9th Cir. 19'18) ; Rhodes Phal'wcal 00. he. 208 F. 2c1 382 (5 S, & D. 582) (7th Gir. 1953). On the basis of the testimony of the public \vitnesses and from our own reading of respondent, s ac1veliising-, it if' our opinion that the public ma.y be led to believe by such advertising that the products described therein arb cloth tmvels having the appeaTll1ee: t.hickness and te.xture of cloth tol'\els cllstomarily used in the hornc. The use of the words soft fluffy " in its adve-rtisemcnts '\youlcl certainly contribute to this mistaken belief.

Thefina1 questions presented for our determination are whether respondent' s product is a cloth tm,el of the type cllstomarily used in the home and whet.her the product is large compared to household towels. With respect to the latter point., thc complaint alleges that the product is not large since its dimensions are 12 inches wide and THE GRAHAM CO. , IKC.

Syllabus 18 inches long. As found by the hearing examiner, however, respondent' s product measures 17 inches by 47 inches. Consequently, the allegation that respondent had misrepresented the size of his product has not been sustained.

There can be no doubt, however, that respondent's product is not a cloth to\"el having the appearance, thickness and texture of towels customarily used in the home. This is obvious from an inspection of the product and from the testimony of one of the offcials of the firm that supplied the product to respondent. The product is designated in the supplier s literature as " o. 154 Open lesh:' and is described as " on-\Vovcn Cheesecloth." The president of this firm testified that the process used in making the product is the same as that used in making paper to\vels except that cotton a,nel rayon fibers are used instead of pulp. He ,Llso testified that the product wi1 disintegrate if washed and that it is used as a disposable towel. From our own examination of the product, we find that it can be torn or shredded without difficulty and that it closely resembles soft paper toweling in appeantnee, thickness and texture. It may ,ycll be that responclent product may be considered to be a type of towel, as found by the hearing examiner, but it is not lL cloth to\yel of the type used in the home nor does it resemble such towels. For the foregoing reasons, it is our conclusion that respondent's advertising of unwoven cotton and rayon fiber products eonstit.utes an unfair trade practice in that such aclyertising has the capacity and tendency to mislead the public into believing that the product ofiered for sale is a cloth towel of thc type customarily used in the home. ",Ve are, therefore, issuing our OI\'n findings, conclusions and order to cease and desist in lieu of Lhe intitial decision of the hearing examiner, ,which is vacated and set aside.