Knickerbocker Case Corporation et al.

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Ix THE :\IATTER OF KKICKERBOCKEH CASE COHPORATlOX ET AL.

CONSENT ORDER, ETC. : IX REG_-\RD TO THE ALLEGED VIQLATlOX OF THE FEDERAL TRADE COl\DIISSIOX ACT Docket 7818. Compla.int, Ma.?'. 10, 1960-Decision, May, 1961 Consent order requiring a Chicago manufacturer-jobber to cease representing falsely in catalogs and other advertising that its vinyl and surtex luggage and brief cases had a11 the qualities of leather, that they were scuff proof that products made of vinyl or a plastic containing pulverized leather were manufactured of leather, that it \vas the manufacturer of all such products offered for sale, and that amounts set out as "retail" were the usual retail prices therefor.

Cm.IPLAINT Pursuant to the provisiOlls of the Federal Trade. Commission Act nnrl by virtue of the anthoritv n sted in it by said -\ct, the Federal Trade Commission, having reason to believe that Knickerbocker Case Corporation, a corporation, and Chester 'Villiam Dllchsba.llm and Samuel Buchsbaum, in(lividl1ally and as offcers of slid corporation, hereinafter referred to as respondents, have violated the provisions of said Act, and it appearing to the Commission that a proce.eding by it in re.sped thereof \vould be in the public interest hereby issues its complaint, stating its charges in that respect as follows:

PAIBGHAPH 1. Respondent Knickerbocker Case Corporation is a corporation organized, existing and doing business under and by virtue of the la\\s of the State of IJJinois, \\ith its offce and principal place of business located at 501 'Yest Huron Street, Chicago, Illinois. Hespondents Chestcr 'ViJIiml1 Buchsba.um a.nd Samuel Buchsbaum are individuals and president and secretary-treasurer: respectively, of the said corporation, and have their offce and place of business at the same address as the corporate respondent. Said individual respondents direct and control the policies, acts and practices of the corporate respondent.

\R. 2. Hespondcnts are 11mv, and for more than two years last past have been, engaged in the sale oflering for sale and distribution of luggage, brief cases and other merchandise, as mannffletnrers and jobbers to 1yho1csrtlers and retailers for resale to the public. 806 FEDERAL TRADE COM).fis8ION DECISIONS Complaint ,':s F. PAR. 8. In the course and conduct of their business respondents no,,- cause, and for some time last past have caused, their said prod uets, ,,-hen sold, to be shipped from their pbce of business in the State of Illinois to purchasers thereof located in various other states of the United States, and maintain. and at nll times mentioned herein have maintained, a course of trade in said products in commerce, as "commerce" is defined in the Federal Trade Commission Act.

-\R. Lt In the COllrse and conduct of their business, and for the purpose of inducing sales of their products, the respondents have made certain statements and representations in their catalogues and other advertising media.. Among and typical, but not all inclusive of the statements and representations so made arc the foJ1o'\ing: Vinyl leather-like Leather-like Surtex Leather-like vinyl in levant-grain buchyde Scuff proof lade from skuff proof vinyl quality Italian bond-leather Black vinyl leather Buy direct from manufacturer and save Your cost. . . Retail Price. . . $15. $9.45 Your cost Similar goods retail $22. S39. 24. 41. PAR. 5. The respondent.s, through use of the aforesaid st.atemcnt.s and representations, and ot.hers similar thereto, repre.sent, directly and by implication, that:

1. Respondents: products advertised as made of vinyl and surtex have all the qualities and characteristics of leather. 2. Responnent.s' products as advertised are scuff proof. :-. Produc.s advertised by respondents are manufactured of leather. 4. Hesponclents are the manufacturer of all the luggage, cases binders, portfolios and other similar products offered for sale in their catalogue, and that a purchaser thereof can effect a saving by purchasing from the respondents any of the products offered for sale in their catalogue.

5. The amounts sct ont in the cata 10gue and other advertising material and designated as "retail" arc the usual and regulrr retail prices for their products.

PAR. 6. The said statements and representations as hereinabove set forth arc false: misJefHEng and deceptive. In trut.h and in fact: 1. The. proc111cts advertised as made of vinyl and surtex do not have a.11 the flun1ities and characteristics of leather. IL\HCKERBOCKER CASE CORPORATION ET AL. 807 805 Complaint 2. The products represented as such are not scuff proof. 3. Certain of respondents' products represented as being manufacts1 ed of leather are manufactured of and made out of vinyl or a plastic or pulverization of leather containing 50%, more or less of leather that has been pulverized.

4. Respondents do not manufacture all the luggage, cases, binders portfolios and other.r similar products they offer for sale in their c.atalogue, and purcha.sers can purchase the products, jobbed and offered for sale by the respondents, at a lower price from the manufacturer of the products jobbed by the respondents. 5. The amounts set out in the catalogue and advertising material and designated as "retail" were, in many instances, fictitious and in excess of the prices at which such products ,were usually and regularly sold at retail.

PAR. 7. There has long been a preference on the part of a substantial portion of the purchasing and consuming public to deal direct with the manufacturer of the product being purchased, in the belief thftt more reliance may be placed on a manufacturer \with reference to carrying out representations and contracts, and that lmyer prices, elimination of middlemen s profits, superior products and other advantages can thereby be obtained. PAR. 8. In the conduct of their business, at all times mentioned herein, respondents have been in substantial competition, in commerce, with corporations, firms and individuals in the s111e of luggage, cases, portfolios an(l other products of the same general kind and nature as that sold by respondents.

PAR. D. The use by respondents of the aforesaid false, misleading and deceptive statements, representations a.nd practices has had, and now has, the ca.pacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief that saiclstatements and represe,ntations ,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 eompctition in commerce. PAR. 10. 1'he aforesnid acts and practjces of respondents, as herein a1Jcged, were and are a11 to the prejudice and injury of the public and of respondents' competitors Hnd constitut.ed, a,ncl now constitutes unfair and deceptive acts and practices and unfajr methods of competition, in commerce, within the intent and meaning of the Federal Trade Commission Act.

808 FEDERAL 'rrade COMMISSION DECISIONS Decision 58 F.

vVilliam A. Son16T8, Esq. for the Commission. Kennedy, Golan ilo?,,'is by Stanley J. ilorris, Esq. of Chicago 111. , for respondents.

INlTUL DECISION BY ROUEHT L. PrPEH, HEARING EJU\MINER The Federal Tra, c1e Commission on Iarch 10, 1960, issued its complaint against the abo\Ce-named respondents, charging them with having violated the Federal Trade Commission Act, by luisrepresenting t.he quality and price of their products. Respondents appeared and entered into an agreement chted January 25 , 1961, conta.ining a. consent order to cease and desist, disposing or all the issues in this proceeding "\yithont further hearings, which agreement has been duly approved by the Bureau of Litigation. Sa.id agreement has been submitted to the undersigned, heretofore duly designated to act as hearing examiner herein, for his consideration in accordance with 83.25 of the Rules of Practice of the Commission. Respondents, pursuant to the aforesaid agreement, have admitted ull of the jurisdictional allegations of the complaint and agreed that the record may be taken a.s if findings of jurisdictional facts had been made duly in accordance with such allegations. Said agreement further provides that respondents waive all further procedural steps before the hearing examiner and the Commission, including the making of iindings of fact or conclusions of law and the right to chanenge or contest the validity of the order to cease and desist entered in accordance with such agreement. It has also been agreed that t hc record herein shall consist solely of the complaint and said agreement, that the agreement shall not become a part of the offcial record unless and until it becomes a part of the decision of the Commission, that said agreement is for settlement purposes only and does not. constitute an admission by respondents that they have violated the law as alleged in the complaint, that said order to cease nd desist shall have the same force and effect as if entered after a full hearing and may be a,herec1, modified, or set aside in the madner provided for other orders, and that the complaint may be used in construing the terms of the order.

,Yiih respect to respondent Samuel Buchsb8um, named in the complaint individually and as an offcer of tile corporate respondent the agreement recites that he does not now direct or control have any responsibility for directing or controlling, nor has he ever directed or controned, or had any responsibility for directing or COD- Iro11ing, alone or with the respondent Chester ,Yi1iam Buchsbaum any policies, acts or practice,s of the corporate respondent, exee,pt for !let.s. if any, required of him as such offcer and a director of the KNICKERBOCKER CASE CORPORATION ET AL. 809 805 Decision corporate respondent, as sho\vn in the affdavit of Samuel Buchsbaurn, which affdavit is attached to and made a part of the agreement; and accordingly the agreement provides for dismissal of the comphtint as to respondent Samuel Buchsbaum individual1ly. This proceeding having now come on for final consideration on the complaint and the aforesaid agreement containing the consent order, and it appea.ring that t.he order and agreement cover all of the nJlegations of the complaint and provide for appropriate disposition of this proceeding, the agreement is hereby accepted and ordered filed upon this decision and said agreement becoming part of the Commission s decision pursuant to 83.21 and 83.25 of the Rules ,Of Practice, and thc hearing examiner accordingly makes the followjng findings, for jurisdictional purposes, and issues the following order:

1. Hespondcnt J(nickcrbocker Case Corporation is a corporation orgnnizecl. existing and doing business under and by virtue of the laws of thc State of illinois, respondent Chester 'Villiam Buchsbrul11 : an individual and offcer of the said corporate respondent directs and controls the policies, acts and practices of the corporate re.spondent, and Samuel Buchsbaum is an offcer of sa.id corporation "ith their offce and principal place of business located at 501 'Vest II uron Street, Chicago. illinois.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents hereinabove na.med except re.sponde.nt. Samuel Buchsbaum individually, against whom the complaint shall be dismissed. The complaint states a cause of action against said respondents under the Federal Trade Commission Act, anti this proceeding is in the interest of the public. I t ordered. That, respondent Knickerbocker Case Corporation a corporation and its offcers, Samuel Buchsbaum and Chester Willia,m Buchsbaum as offce.rs of said corporation; and Chester ", Til1iam Buchsbmun, individually, and respondents ' representatives, agents and employees. directly or through any corporate or other device in connection with the offering for sale, sale or distribution of prod- 11cts made of vinyl or surtex-, or any other product, in commerce\ as commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Representing, directly or by implication, that: (a) A product has any of the characteristics or qualities of leather which it does not in fact possess; or misrepresenting in any manner the characteristics or qualities of a product; (b) An)' product made of vinyl or surtex is scuff proof, or that any other prochlCt is senff proof, unless such js the fact; 810 FEDERAL TRADE COMMISSIOK DECISIONS Syllabus 58 F.

(c) Any product not made entirely of leather, is Jeather, provided however, that if a part of a product is leather such part may be designated as Jeather providing the part is clearly identified; (d) Hespondents are the manufacturers of any products sold by them unless they own, operate or directly and absolutely control the manufacturing plant or factory where the product is manufactured; (0) An)' product is offered for sale at the manufacturer s price unless respondents manufacture the product so offered or, if they do not manufacture such product, unless the price at which it is offered is in fact the manufacturer s price; (f) Any amount is the usual and regular retail price of a product when it is in excess of the price at which said product is usually and regularly sold at retail in the trade areas or areas where the representn.tion is made;

2. ::1isrcpresenting in any manner: directly or by implication, the savings resulting in the. purchase of respondents' product. It is further ordered That the complaint be, and it is hereby, dismissed as to respondent Samuel Buchsbaum as an individual. DECISION OF THE CO::IlIISSIQX AND ORDER TO FILE REPORT OF C02\IPLIANCE Pursuant to Section 3.21 of the Commission s Rules of Practice t.he initial decision of the hearing examiner shall, on the 18th day of 1ay: 1861 , become the decision of the Commission; and, accordingly:

It i8 ordered That respondents Knickerbocker Case Corporation a corporation, Samuel Buchsbaum and Chester 'Villiam Buchsbaum as offcers of said corporation, and Chester "\Villiam Buchsbaum individual11y, 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 llnc1 form jn which they have complied with the order to cease and desist.