Smith-Fisher Corporation

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IN THE MATTER OF SMITH-FISHER CORPORATION ET AL.

cox SENT ORDER , ETC. , IX REGARD TO THE ALLEGED YIOhATIOX OF TT- FEDERAL TRADE CO:\DlISSIOX ACT Docket 8169. CumplMnt, Nov. 19GO-Dectsion, Mar. SO , 19C1 Consent order requiring Owosso, Mich., manufacturers of electric fence chargers designed to prevent farm animals from straying, to cease representing falsely in adycrtiscments in trade journals and newspapers and otherwise, that their " Super-Atom Fence Charger" would confine farm animals under all conditions without: the use of insulators; would charge 50 miles of fence without immlators; was 20 times more short resistant than all other charg-ers and \vonld not: be shorted by green grass or brush rain, or ice; adjusted automatically to climatic conditions; and was guaranteed for two years.

On July 25, 1961 (59 F. T. C. - ), this matter was disposed of by sevarate consent order as to the remaining individual. COMPLAINT Pursuant to the provisioll& of the Federal Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe the Smith-Fisher Corporation, a. corporation, and Jack D. Smith and Frank Fisher, individually and as offcers of said corporation, hereinafter referred to as respondents, have violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows:

PARAGRAPH 1. Respondent Smith-Fisher Corporation is a corporation organized, existing and doing business under and by virtue of Complaint 58 F.

the laws of the State of Michigan. Its offce and principal place of business is located at 1426 orth :Michignn, Route 47 , Owosso Michigan.

Individual respondents Jack D. Smith and Fmnk Fisher are oiIcers of said corporation. They formulate, direct and control the policies and practices of the corporate respondent. The individual respondents' address is t,he same as that of the corporate responde,nt. PAn. 2. Respondents are now, and for some time last past have been, engaged in the manllfactul'ing, offering for sale and selling fence chargers known as "Super Atom Charger In the regular and usual course and eonc1uct of their business respondents cause, and have caused, said fence charger, when sold to bc transported from their place of business in the State of lichigan to purchasers ihereof located in various other States of the United States.

Respondents maintain, and at all times mentioned herein, have maintained, a course of trade in said product in commerce, as commerce" is defined in the Federal Trade Commission Act: PAIL 3. In the course and conduct or t.their business, and ror the purpose or inducing the sale or their said product, respondents have made certain statements concerning said product in flc1vert.isementa inserted in trade journals and newspapers and 11:y lneans circulars and other advertising material circulated among prospective customers in various states. Among and typical, but not all inclusive of said statements are the following:

XE\V SCPER-ATO:VI :B-'ENCE CHARGER Staple fenee wire to wood posts-::o insulators. Brnsh, Weeds, Crops, Rain, Ice - Won t short it. Works just as good-Bone Dry or Soaking Wet. Neon Fence Tester-Free Operates on 10 Per Month.

20 day Trial Period.

2 year Parts Warranty.

ALL THIS AND SAFER TOO Sl'PER- ATOl\L the Hew scientifically designed fence charger offers these outstanding features: Charges felt strongly by animal stock without fear of injury to humans.

20 times more short resistant than other leading fence charges.

Wil not be shorted by green grass or brush; rain or ice.

Wire ('an be nailed to wood posts without insulators. Cbarges 50 miles of fence.

Automatically adjust:; to both wet and dry weather. SMITH-FISHEH CORPORATION ET AL. 519 517 Complaint PAH. '1- Through the use of the statements hereinabove set forth and others of similitr import not specifically set out herein, respondents have represented, directly or by implication, that: 1. R.respondents' said product is effective in confining farm animals in an enclosure under all fencing and climatic conditions without the use of insulators.

2. Respondents' product is t\venty times more short resistant than all other fence chargers.

3. Green grass, brush, ra,in or ice will not cause a short. 4. Respondents' fence charger will effectively and safely charge fifty miles of fence without insulators.

5. Respondents' fence charger has a meehanism that automatically adjusts it Lo the various climatic conditions u der which it win be operated.

6. Said product is guaranteed for two years as to parts. PAR. 5. The aforesaid statements and representations are false misleading and deceptive. In truth and in fact: 1. Respondents' fence charge is not effective as an enclosure for farm livestock under many fencing and climatic conditions when insulators are not used.

2. Said product is not more short resistant than many other fcnce chargers.

3. Green grass, brush, rain or ice that contacts the fence may cause a short.

4. Respondents' product wil not effectively and safely charge fifty miles of fence under normal climatic conditions in many sections of the country, with or without the use of insulators. Using insulators, said product could not be expected to be effective and safe for more than ten miles. VVithout the use of insulators, because or current leakage caused by various factors such as green, wet and rotted posts, it is not possible to accurately state the length of fence that wil be safcJy and effectively charged by said product. 5. There is no mechanism in respondents' fence charger that automatically adjusts it to the various climatic conditions under which fence chargers are operated.

e. The manner in which respondents will perform under their guarantee is not set, out.

PAn. 6. In t.he conduct of their business respondents are in substa,nting competition, in commerce, with corporations, firms and individuals in the sale of fence chargers.

PAR. 7. The use by respondents of the aforcsaid false, misleading and deceptive statements and representations has had, and now has thc tendency and capacity to mislead and deceive members of the !(.

Decision 58 \T. public into thc erroneous and mistaken belief that said statements and representations were, and are, true and to induce a substa,ntial number t.hereof to purchase respondents' said fence chargers as a result of such erroneous and mist.taken belief. As a consequence thereof, substantial trade in commerce has been unfairly diverted to respondents from their competitors and injury has thereby been done to competition in commerce.

PAR. 8. The aforesaid acts and practices of respondents, as herein alleged, were, n,nd are, all to the prejudice and injury of the public and of respondents' competitors and constituted, and now constitute unfair and deceptive acts and practices and unfair methods of compe titjon in commerce, within the intent and meaning of the Federal Trade Commission Act.

Before AI1' . TVnUe1' Bennett Hearing Examiner. M,.. William A. Somers supporting the complaint. Jennin, Younge,., Parsons, Key"coTth il Warren by ,lit. Jack W. WarJ'en of Lansing, :.fich. , for respondents Smith-Fisher Corporation, and Jack D. Smith.

INITLU, DECISION AS TO RESPONDENTS S:'IITH - FISI-IER CORI'OTC\ TION AND JACK D. S::\IITH, IXDIVIDT;ALLY AND AS A OFJ"Ings OF SAID CORPORATION The Federal Trade Commission issued its complaint against Smith- Fisher Corporation and Jack D. Smith (hereinafter sometimes referred to as respondents) and against Frank Fisher on November , 1960. The complaint charged respondents with making false representations concerning the guarantee of, and the eflectivene.ss of, a device for charging 'wire fences electrical.ly to prevent cattle from straying. Said representations were ehargcd to be unfair and deceptive acts and practices and unfair methods of compet.t.ion within the intent and meaning, and in violation, of the Federal Trade Commission Act.

On J "nuary 19, 1961, Counsel submitted to the undersigned hearing examiner an agreement dated January 10 , 1961, among respondent.s counsel represen6ng them and counsel supporting the complaint providing for the entry without further notice of a cease and desist order. The agreement was duly approved hy the Director, the Assistant Director and the Associate Director of the Bureau of Litigation.

The hearing examiner finds that said agreement includes all of the provisions required by Section 3.25 (b) of the Rules of the Commission, that. is:

SMITH-FISHER CORPORATION ET AL. 521 517 Decision A. An admission by all the respondent parties thereto of jurisdic.tional facts;

B. Provisions that:

1) The compbint. 11ny be used in construing the terms of the order;

2) The order shall have the same force and effect as if entered after a full hearing;

3) The agreement shall not become a part of the offcial record of the proceeding unless and until it becomes a part of the decision of the Commission;

:1) The entire record on which any cease and desist order may be based shall consist solely of the complaint and the agreement; 5) The order may be altered, modified, or set aside in the manner prov1dpd by statute for other orders;

C. Waivers of:

1) The requirement that the decision must contain a statement of finc1ins of fact and conclusion of law; 2) Further procedural steps before t11B hearing examiner and the Commission.

In addition the agreement contains the following permissive provisions: A waiver by the respondents of any right to challenge or contest the validity of the order entered in accordance with the agreement, and a statement that the signing of said agreement is for settle,ment purposes only and does not constitute an admission by respondents that they have violated the law as alleged in the complaint.

Having considered said agreement including t.he proposed order and being of the opinion that they provide an appropriate basis for settlement and disposition of this proceeding, so far as it relates to respondents Smith-Fisher Corporation and Jack D. Smith, the hearing examiner hereby accepts the agreement but orders that shall not become a part of the offcial record unless and until it becomes a part of the decision of the Commission. rhe follmving jurisdictionn,l findings are made and the following order issued:

1. Respondent Smith-Fisher Corporation is a corporation organized, existing and doing business under and by virtue of the laws of the State of IVIichigan; respondent Jade D. Smith, an individua) and offcer of said corporate respondent, directs and controls the policies, acts and practices of the corporate respondent. Respondents offce and principal place of business is located at 1.26 orth YIiehigall, Route 47, Ow'osso, )Iichigan.

Decision 58 F:.r.

2. The Federal Trade Commission has jurisdiction of the subj ect matter of this proceeding and of the respondents. ORDER 1 t i8 ordered That respondents Smith-Fisher Corporation, a corporation, and its offcers, and Jack D. Smith, an individual and as offcer of said corporation, and respondents' agent.s, representatives nnd employees, directly or through any corporate or other device in connection with the offering for sale, sale or distribution of a fenee dwrger known as Super Atom Charger, or any other charger of substr,ntial1y the same construction or operation, do forthwith cease and desist from representing, directly or indirectly that: 1. Their product is effective in confining farm animals in an enclosnre under all climatic or fencing conditions without the use of insulators.

2. Their product is twenty times, or any other number of times more short resistant than other fence chargers. 3. Green grass, brush, rain or ice will not cause a short in the operation of said product.

4. Their product will effectively or safely charge more than 10 miles of fence with insulators or will effectively or safely charge any stated number of miles of fence without insulators. 5. Their product ha,s a mechanism that adjusts it to the various climatic conditions under which it will be operated. 6. Their product is guaranteed unless the nature and extent of thc guarantee and the manner in which respondents will perform thereunder arc clearly set forth.

DECISION OF THE COl\IMISSIOX AND ORDER TO FILE REPORT OF COl\PLIA Pursuant to Section 3.21 of the Commission s Rules of Practice the initial decision of thc hearing examiner shall on the 30th day of March 1961, become the decision of the Commission; and, accordingly:

It is ordered That respondents Smith-Fisher Corporation and Jack D. Smith shall within sixty (60) days after service upon them of this order, fie with the Commission a report in writing setting forth in detail the manner and form in which they have complied wi th the order to cease and desist.

DIALAND ELECTRIC SALES CORP" ETC., ET AL. 523 523 Complaint Ix THE MATTER OF DIALAND ELECTRIC SALES CORPORATION TRADING AS DIAMOND ELECTRIC COMPANY ET AL.

CONSENT ORDER ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THE FEm HAL TRADE cO:::EnSSION ACT Docket 8195. Com.pla.int, Nov, 1960-lJeciston, Jlar. 30 , 1961 Consent order requiring two affliated Rochester, J\. Y. , distributors of electric supplies and equipment to cease representing falsely that they manufactl'irerl products which were actually made in Japan, by such practices as advertising as an "Elkee Corp. Product" their " Evercel Plastic Electrical Tape, on the inside surface of the spool of which was a small sticker with tlle words "Made in Japan " in small print; advertising as . . . Stock Xo. . . . S. C. 30 . . . l\Ifgr. . . . Elkee Corp. " their " Solderless Service Connectors" which also carried the word "Japan " in obscurely printed and virtually inrlistingl1ishablc letters; and by the indiscriminate mingling of domestic and foreign goods in their advertising catalogs. COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said Act, the Federal Trade Commission, having reason to believe that Dialand Electric Sales Corporation, a corporation, trading as Diamond Electric Company, and EUiott Landsman and Morris Diamond, individually and as offcers of said corporation, and Elkee Corporation, a corporation, hereinafter referred to as respondents, have violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest hereby issues its complaint stating its charges in that respect as foJ1ows :

PARAGRAPH 1. Respondent Dialand Electric Sales corporation is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York, said Dialand Electric Corporation trades and does business under the name of Diamond Electric Company. Its principal offce and place of business is located at 1230 Lyell A venue, in the City of Rochester, State of New York.

Respondent Elkee Corporation is a corporation organized, existing and doing business under and by virtue of the laws of the State X ew York. Its principal offce and place of business is the same as that of the said Dialand Electric Sales Corporation. , 524 FEDERAL TRADE COM.MISSION DECISIONS Complaint 58 F.

respondents Elliott Landsman and Morris Diamond are individuals and are offcers of the said Dialand Electric Sales Corporation. Said individual respondents formulate, cHrcct and control the acts and practices of each of the aforenamcd corporate respondents. Their address is the same as that of the said Dialand Electric Sales Corporation.

PAH. 2. Respondents arc now, and for some time last past have been, engaged in the advertising, offering for sale, sale and distribution of electric supplies and equipment to distributors and jobbers and to retailers for resale to the public. PAR. 3. In the course and conduct of their business, respondents now cause, and for some time last past have caused, their said products, when sold, to be shipped from their place of business the State of New York to purcha,sers thereof located in various other states of the 'Cnited States ,md in the District of Columbia and ma.intain, 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 COl1Jnission Act. PAR. 4. In the course and conduct of their business, as aforesa.id and for the purpose of inducing the sale of their said electrical supplies and equipment, respondents have made certain stat.ements and representations with respect to the origin and manufa,cture of said products. Typical and ilustrative of such statements and representations are the following:

With respect to plastic electrical tape respondents' advertising states:

Kvercel Plastic Electrical 'rape. . . an Elkee Corp. Product, Rochester New York.

The container in which said tape is offered for sale reads in part: Eyercel Plastic Electrical Tape. . . Elkee Corporation, Rocl1ester, I\ew York, Each package contains one roll of tape. The tape is further wrapped with a clear cellophane-like material. On the inside surface of the spool on which said tape is wrapped is a small stickcr with the ords in small print 1fade in Japan In advertising " Solderless Service Connectors ' for sale, the following representations arc typical1 of those made: Solderless Senice Connectors. Stock ::0. . . . S.B.C. 30 . l\1fgr. . . . FJlkee Corp.

In the publication in which said connectors are a.advertised and offered for sale are the products of many domestic manufacturers of electrical equipment such as General Electric, 'Vestinghouse, and DIALA D ELECTRIC SALES CORP. , ETC. , ET AL. 525 523 Complaint others. The listing in which said connectors are offered for sale conta.ins the name of well-known domestic manufacturers such as the Burndy Corporation. Said service connectors are branded with a stock number such as "SEC 30" and the word "Elkee . Obscurely printed in small and virtually indistinguishable letters is the word Japan PAR. 5. (1) Through the use of the expressions "An EJkee Corporation Product, Rochester, New York':' and similar statements and representations in connection with said electrical.l tape and through the indiscriminate mingling of domestic and foreign goods in its advertising catalogs and the representation "Mfgr. Elkee Corp." in connection with said solderless service connectors respondents have affirmatively represented that said products are manufactured in the United States.

(2) The obscure, indistinct markings which purport to reveal thc country of origin of said products are wholly and completely inadequate to give to the public notice of the country of origin of said products.

When products of foreign origin are offered for saJe to thc public and are not marked so as to give notice of their foreign origin, the i,blic understands and believes that they are of domestic origin. (3) Through the use of thc expression "An EJkee Corp. Product Rochester, New York" in connection with said tape and through the usc of the exprcssion "Mfgr. Elkee Corp." in connection with said connectors, respondents represent that they are the manufacturers of said products.

PAR. 6. Said statements and representations are false, misleading and deceptive. In truth and in fact:

(1) Said products are not manufactured in the United States. Said products are manufactured in Japan.

(2) Said markings arc wholly and completely inadequate to advise or apprise purchasers of the fact that said products are manufactured in Japan and not in the United States. (3) Respondents do not manufacture said products. Said Elkee Corporation is simply a convenient corporate device used by respondents to import foreign made goods which are t.hen offered for sale and sold by respondents under the aforesaid trade name of Diamond Elecimported in bulk from Tapan. It is tric Company. Said tape is wrapped and packaged by independent contractors in this country for respondents. Said solderless service connectors are wholly Inanufactured in Japan.

\H. 7. By the aforesaid acts and practices, respondents place in the hands of retailers and dealers the means and instrumentalities 526 FEDERAL TRADE COIvISSION DECISIOKS Decision 58 by and through which they may mislead the public as to the country or origin and the manufacturer of said products. PAR. 8. A substantial portion of the purchasing public has a preference for articles of domestic manufacture or origin as distinguished from products of foreign origin, including the products sold and distributed by respondents.

PAR. 9. There is a preference on the part of purchasers to deal directly with the manufacturer of products in the belief that they receive, among other things, better prices and service. PAR. 10. Respondents, in the course and conduct of their business, are in substantial competition, in commerce, with corporations firms and individuals engaged in the sale of products of the same kind and nature as those sold by respondents. P(8. 11. Thc usc by respondents of the ,dorcsaid false, misleading and deceptive statements, representations and prac6ccs 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 respondents' products by reason of said erroneous and mistaken belief. As a consequence thereof substantial trade in commerce has been, and is being, unfairly diverted to respondents from their competitors and substantial injury has thereby been, and is being, done to competition in commerce. PAR. 12. The aforesaid acts a,nel practices of rsepondents, as herein alleged, were and are all to the prejudice and injury of the public and of respondents' competitors and constituted and now constitute, unfair and deceptive acts and practices and unfair methods of competition, in commerce, within the intent and meaning of t.he Federal Trade Commission ct.

il r. l'eTral A. J O?'dan supporting the complaint. Hespondents pro se.

IXI'lAL DECISIO)l BY ,VALTEH. IC BEXXBTT HEARING DIINER On November 29, 19GO, the Federal Trade Commission issued a complaint ehurging that the above-named respondents had viohtted the provisions of the Federal Trade Commission Act. The complaint alleged that for the purpose of inducing the purchase of their electrieal supplies and equiplllent, respondents had made certain false statements and misrepresentations with respect to the origin a,nc1 manufacture of said products.

Counsel presented to the undersigned hearing Examiner on J auuary 27, 1961, an agreement dated January 17, 1961, between respond- DIALAND ELECTRIC SALES CORP. , ETC. , ET AL. 527 523 Decision onts and counsel supporting the complaint providing for the entry without further notice of a cease and desist order. Said agreemont has been duly approved by the Acting Director, the Associate Director and the Assistant Director of the Bureau of Litigation. The Hearing Examiner finds that said agreement includes an of the provisions required by Section 3.25 (b) of the Rules of the Commission, that is :

A. An aelmission by all the respondent parties thereto of jurisdictional facts;

B. Provisions that:

1) The complaint may be used in construing the terms of the order; 2) The oreler shall have the same force and effect as if entered after a full hearing;

3) The agreement shall not become a part of the offcial record or the proceeding unless and until it becomes a part or the decision or the Commission;

4) The entire record on which any cease and desist order may be based shall consist solely of the complaint and the agreement; 5) The order may be altered, modified, or set aside in the manner provided by statute for other orders;

C. 'Waivers of:

1) The requir81nent that. the decision must contain a statement of findings of fact and conclusions or law;

2) Further procedural steps before the Hearing Examiner and the Commission.

In addition the agreement contains the following permissive provisions: A waiver by the respondents or any right to challenge or contest the validity of the order entered in accordance with the agreement, and a statement that the signing or said agreement is for settlement purposes only a,nd does not constitute an admission by respondents that they have violated the law as alleged in the complaint.

Having" considered said agreement, including the proposed order and being of the opinion that they provide an appropriate basis ror settlement and disposition or this proceeding; the I-Iearing Examiner hereby accepts the agreement but orders that it shall not become a part of the offcial record unless and until it becomes a part of the decision of the Commission.

Tho rollowing jurisdictional findings are made and the following order issued:

1. Respondent., DiaJand Electric Sales Corporation, is a corporation existing and doing business under and by virtue of the laws of the State of New York, with its offce and principal place of 528 FEDERAL 'frade COMMISSION DECISIONS Order 5D F.

business located at 1230 Lyell Avenue, in the City of Rochester State of New York. Said DiaJand Electric Sales Corporation also trades and does business under the name of Diamond Electric Company.

2. Respondent, Elkee Corporation, is a. corporation organized existing and doing business under and by virtue of the laws of the State of New York. Its principal oifee and place of business is the same as that of the said Dialand Electric Sales Corporation. 3. Respondents, Elliott Landsman and Morris Diamond, are individuals and are offcers of the said Dialand Electric Sales Corporation. Said individual respondents formulate, direct and control the acts and practices of each of the afOrenalllecl corporate respondents. Their address is the same as that of the said Dialand Electric Sales Corporation.

4. The Federal Trade Commission has jurisdiction of the subjcet matter of this proceeding and of the respondents. ORDER It is ordered That respondents, Dialand Electric Sales Corporation, a corporation, trading and doing business under its own na, or under the name of Diamond Electric Company, or under any other name, and its offcers, and Elliott Landsman and l\Iorris Diamond, individually and as offcers of said Dialand Electric Sales Corporation, and Elkee Corporation, a corporation, and its of-ficers and respondents' representati'\' , agents and employees, directly or through any' corporate or other device, in connection with the offering for sale, sale or distribution of electrical tape or solderless service connectors or any other articles of merchandise, in commerce as "commerce" is defined in the Federal Trade Commission Act, do fortlnvith cease and desist from:

(1) Hepresenting, directly or indirectly, in advertising or in labeling that products manufactured in Japan or any other foreign country are manufactured in the United States; (2) Offering for sale or selling products which are, in whole or in substantially part, of foreign origin, without clearly and con spicuously disclosing on such products, and if the products are enclosed in a package or carton, on said package or carton, in such a manner that it wil not be hidden oroblitemted, the country of origin thereof;

(3) Representing, directly or indirectly, in any manner 0:'- by any means that respondents manufacture any product that is not manufactured in a factory owned, operated or controlled by them. GREE \VOOD FURS , INC. , ET AL. 529 523 Complaint DECISION OF THE COl\BIISSIOX AND ORDER TO :FILE REPORT OF CO:MPLIASCE Pursuant to Section 3.21 of the Commission s Rules of Practice the initial decision of the hearing examiner shall on the 30th day of March 1961 , become the decision of the Commission; and accordingly:

It is O''de,' That the respondents herein 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