Gimbel Brothers

Text (OCR of the scan at left; may contain errors)

IN THE J\IATTER OF GIMBEL BROTHERS ORDER, ETC. , T r REGARD TO THE ALLEGED VIOLATlO OF THE FEDERAL TRADE COJ\BnSSION AND TH:r I''T PRODUCTS LARELDW ACTS Docket 7888. Complaint, May 1960-Deciion, Feu. , 1962 Order requiring a corporation operating retail stores in Ne,'" York City, Milwaukee, Pittsburgh, and Philadelphia, to cease "violating the Fur Products Labeling Act by advertising in a Philadelphia newspaper which failed to disclose the names of animals producing the fur in fur products, the country of origin of imported furs, and that certain furs were artificially colored; represented prices of fur products as reduced from usual prices when they had never sold at such prices and as "lh off" when such was not the fact; and failed to maintain adequate records as a basis for price and value claims.

COl\IPLAINT Pursuant to the provisions of the Federal Trade COllll11ission Act ,md the Fur Products Labeling Act, and by virtue of the authority vested in 1t by said ..t\cts, the Federal Trade Commission, having reason to believe that Gimbel Brothcl's, a corporation, hereinafter referred to as respondent, has violated the provisions of said Acts and t.he Hules a,nel Regulations promulgated under the Fur Products La beling 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 charge.s in that respect as follows: PARAGRAPH 1. Gimbel Brothers is a corporation organized, existing and doing business under and by virtue of the la,,-s of the State of )f ow York with its offce and principal place of business located at 34th Street and Broadway, New York, N.Y. Corporate respondent oper- , 360 FEDERAL 'TRADE COMMISSION DECISIO Complaint 60 F.

ates a. number of branch stores. The acts and practices as hereinafter alleged relate to the Philadelphia, Pa., branch store located at 8th and Market Streets.

PAR. 2. Subsequent to the effective date of the Fur Products L"bel. ing Act on August 9, 1952, respondent has been and is now engaged in the introduction into commerce and in the sale, advertising and offering for sale, in commerce, and in the transportation and distribution in commerce, of fur products; and has sold, advertised, offered for sale, transported and distributed fur products which have been made in ".hole or in part of fur which had been shipped and received in commerce, as the terms "commerce fur" and "fur product" rue defined in the Fur Products Labeling Act.

PAR. 3. Certain of said fur products were falsely and deceptively advertised in violation of the Fur Products Labeling Act in that respondent caused the dissemination in commerce, as "commerce" is defined in said Act, of certain newspaper advertisements, concerning said products, which were not in accordance with the provisions or Section 5 (a) of the said Act and the Rules and Regulations pro. mulgated thereunder; and which advertisements were intended to aid promote and assist, directly or indirectly, in the sale and offering for sale of said fur products.

PAR. 4. l\.among and included in the advertisements as aforesaid but not limited thereto, were advertisements of respondent which appeared in issues of the Evening Bulletin, a newspaper published in the city of Philadelphia, State or Pennsylvania, and having a wide circulation in said State and various other States of the United States. By means of sllid advertisements and others of similar import and meaning, not specifically referred to herein, respondent falsely and deceptively advertised fur products in the,t said advertisements: (a) Flliled to disclose the name or names of the animal or animals that produced the fur contained in the fllr products as set forth in the Fm Products Kame Guide, in violation of Section 5 (a) (1) of the Fur Products Labeling Act.

(b) Failed to disclose that fur products contained or were coin. posed of bleached, dyed or otherwise artifically colored fur, when such was the fact, in violation of Section 5(a) (3) of the Fur Products Labeling Act.

(c) Failed to disclose the name of the country of origin of the imported furs contained in the fur products, in violation of Section 5 (a) (6) ofthe Fur Products Labeling Act.

&, GIMBEL BROTHERS 351 359 Initial Decision (d) Represented prices of fur products as having been reduced from regular or usual prices where t.he so- called regular or usual prices vmre in fact fictitious in that they were not the prices at which said merchandise was l1sually sold by respondent in the recent regular course of business, in violation of Section iJ (a) (5) of the Fur Products Labeling Act and rule 44 (a) of said Rules and Regulations.

(e) Represented through the use of percentage savings claims through such statements as 113 Off" that the regular or usual prices charged by respondent for fur products in the recent regular course of business \\-ere reduced in direct proportion to the percentage of savings stated when such was not the fact in violation of Section 5(a) (5) of the Fur Products Labeling Act.

PAR. 5. Respondent in adve.rtising fur products for sale as aforesaid made claims and representations respecting prices and reductions therefrom of fur products. Respondent in making such claims and representations faile-d to maintain full and adequate records disclosing the facts upon which such claims and representations were based in violation of Rule 44 (e) of said Rules and Regulations. PAR. 6. The aforesaid acts and practices of respondent, as herein alleged, are in violation of the Fur Products Labeling Act and the Rules and Regulations promulgated thereunder and constitute unfair and deceptive acts and practices, in commerce, under the Federal Trade Commission Act.

Mr. Charles W. O' Connell forum Commission. 8chnadeT, Harri.wn, Segal Lewis by 11/1'. Bernor-d J. 8molens and 11/r. Edward W. Mullinix of Philadelphia, Pa., for respondent. INITIAL DECISION BY J. EAHL Cox, HEARDW EXAMINER Gimbel Brothers, a corporation, is charged with having violated the Fur Products Labeling Act aud the Federal Trade Commission Act. The facts are as follows:

1. Gimbel Brothers is a corporation organized, existing and doing business under and by virtue of the la"s of the State of Nc" York with its offce and principal place of business at 34th Stre"t and Broadway, New York, Xew York. This proceeding relates solely to the respondent's Phibdelphia retail store. 2. Subsequent to the effective date of the Fur Products Labeling Act respondent in connection with its Philadelphia operations, has been and is now engaged in the introduction into commerce and in t.he sale, advertising and offering for sale, in commerce) and in the transport.ation and dist.ribution, in commerce, of fur products; and has sold, advertised, oflered for sale, transported and distributed fur products which hayc been made in whole or in part of fur "which had been shipped and received in commerce as the terms "commerce 362 FEDERAL TRADE COMMISSION DECl&IONS Initial Decision 60 E' "fur" and "fur product" are defined in the Fur Products Labeling Act.

3. Respondent's Philadelphia store has caused advertisements of its fur products to be published in newspapers which have substantial circulation in states other than the State of Pennsylvania. These advertisements are and have been intended to aid, promote and assist in respondent's sale and oUering for sale of its fur products. Only one such advertisement, engrossing approximate.ly a page and a half of newspaper spa, , was introduced into the record, H.Jld only one part of that advertisement is relied upon as the basis for this action. A photostatic copy of the portion relied upon appea,rs all p. 362a. 4. The foregoing advertisement is charged to be false and deceptive and in violation of the Fur Products Labeling Act and the Rules and Regulations thereunder in five respects :-first, in that it Failed to disclose the name or name of the animal or animals that !Jroctuced the fur contained in the fur products as set forth in the Fur Products Xalle Guie1e. in "violation of 5(a) (1) of the Fur Products Labeling Act. In support of this charge, it is pointed ont that in the "mink, bea\ fox? designation the Pllrticular type of fox, as specified in the ame Guide, ,vas not disclosed. In the Gujc1e there are listed nine types of fox furs-Black, Blue, Cross, Grey, IGt, Platinum, Red, Silver and ,V11ite. There is no unqualified Fox cbssificatioll. ;,(a) (1) of the Act is as follows:

Sec. 5. (a) or the purposes of this Act, a fur product or fur shall be considered to be falsely or deceptively advertised if any advertisement, representation, public announcement, or DoUce which is intended to aid, promote, or assist directly or indirectly in the sale or offering for sale of such fur prolluet or ful"- (1) does not shmv the Ilame or names (as set forth in the Fur Products Kame Guide) of the animal or animals that produced the fur, and such qualifying statement ;lS ilay be required pursuant to section 7' (c) of this Act; 5. The advertisement does not purport to describe specifically any individual garment or group of garments. It is general in nature calling attention only to some of the types of fur that are included in the merchandise offered. In such an advertisement the listing of all the names of all the furs advertised and the colorings 01' other physical characteristics of the various garments ,vould be meaningless because the details of na,me or other eharaeteristic could not be referenced to any pn,rticular garment. The argument that specific names should be set forth in an advertisement such as is at issue hero can be reduced to an absurdity if it be applied to a general advertisement in which all of a stock of furs or fur garments are offered at specified prices. Certainly it would not be expected, under such circumstances, that all the names and characteristics of all the fur products involved in the advertised sale would have to be set forth in the general advertisement. That same reasoning applies .. . , :.. .. :;::.. ,;,:. ::, ,.. ,,,,::, , . ..,. .,; ,::,: . .,..., . ::,%, , . .. , .. GI1\IBE:I" I1FiOT''BE:Fis :I11itiul c:L"!tl1ln.Q1Jflfltfin &1011 362"

'''''0,,,,,,SQl2 :P ,J;b. JfJ1:LP/flll 'N'" ''Po"," .f p' fo,. b :/'''d," salsrO ".d.7::;." d." "''P, 'O"d' rh. 1: 0"LI" rBc',o Co.f" Indirh. p",."m'd. G"

"''''O idIJOII't Ih 't ''' Ported'h' '''''''''d ljltv 't:i 1" ez, fqiJ;j Fe. 111-'Url' furs 01. ,I RB COat 100% -"I. -to s '"3, .. I etrel, wool ". OOt. "'ro '''B 00.. '78 "'ro 100 /0 c . 0... 30 '''''1. 0 ,4l'''4e.rel Ph Oat. "or. " '88"",,,.

. 0... 'J28 oOat,".ro 'RRS 00..

GIMBEL BROTHERS 363 359 Initial Decision to the situation which is presented in this proceeding. There is no claim that each individual garment was not properly marked as to name and other required characteristics. The advertisement cannot be looked upon as in any way misleading or deceptive. 6. Looking again at the statute, it is clear that the reference "a fur product or fur" and that the advertisement is faulty only if it is intended to aid, promote, or assist in the sale of SItCh fur product or fur (-italics added), applies only to individual garments. Had the Congress any other intent, the wording of the statute could have readily expressed that intent by f1 very slight variance of the la.nguage used. The intent and meaning of the statute is clear, and does not require a merchant to list in a general a.dvertiscment the names of all the animals that produced the many furs that might bc contained in the numerous garments offered for sale. The converse is true \Vhen the merchant advertises specific garments, for in sllch cases the na,mes of animals, and other required characteristics, must be stated. The respondent is found not to have violated the provisions of S 5(a) (1) of the Fur Act.

7. The second violation charged is that respondent's advertisement I(b) Failed to disclose that fur products contained or were composed of bleached, dyed or otherwise artificially colored fur, when such 'was the fact, in violation of 5 (a) (3) of the Fur Products Labeling Act. In support, of this charge it is pointed out by counsel supporting the complaint that following responclent:s advertising of "mink beaver, fox, the advertised coats were inspected at respondents store by a COlllmission investigator, who observed that the bca' er-trilnmecl c.onts \'cr8 labeled as dyed beaver, and that respondent's in yo ices listed one coat, which \Vas among those advertised, as being trimmed with dyed bea,ver, and other coats as trimmed \\ith dyed mink and dyed beaver. The advertisement did not disdose that the mink and heaver trimmings were dyed. There is no dispute as to these facts. 5 (a) of the Act is as copied above; subsection (3) thereunder is as follm\s: (3) uocs not show that the fur product or fur is bleached, dyed, or otherwise artificially colored fur when such is the fact;. The singular designation is again used. Following- the reasoning set forth in the paragraph above" the same advertisement being here under consideration, the same conclusion is reached-that the requirement of the Act is applicable only \\hen specific garments arc achertised and described. The respondent is found not to have violated the provisions of S 5 (a) (3) of thc Fur Act. 8. The third violation charged is that respondent ,-iobted 5 (") (6) of the Fur Act in that its aclvertiseJ11ent does not disclose the name of the country of origin of the imported furs contained in the fur products * * "' , 364 FEDERAL TRADE CQ::IMISSION DECISIONS Initial Decision HO F.

Some of the "mink, beaver, fox" fnr in the advertised garments originated in Canada and Xorway. At the bottom of the first page (not reproduced herein) of respondent's advertise,ment is a statement in small but rcadable print fur products labeled to show country of origin of imported furs ,. * *" . This is compliance under Rule 38 (b), which is as follows:

Rule 38-Advert' ising of Furs an(Z Fu,r Products. (b) In general advertising of a group of fur products composed in whole or in part of imported furs having various countries of origin, the disclosure of such countries of origin may, by reference, be made through the use of the following statement in the advertisement in a clear and conspicuous manner: Fur products labeled to show country of origin of imported furs. This charge of the complaint wil be dismissed. 9. The next two charges of the complajnt are that respondent has made fictitious-pricing representations and savings claims, in violation of S 5 (,,) (5) of the Act and Rule 44(a) ofthe Regulations. The specific charges are, as set forth in paragra.ph 4 of the complaint subsect.ions (el) and (e), that in its advertising respondent falsely and deccpt.ively advertised products, in that it (d) Represented prices of fur products as having been reduced from regular 01' usual prices where the so called regular or usual prices were in fact fictitious in that they were not the prices at which said merchandise was usually sold by respondent in the recent regular course of business, in violation of 5(a) (5) of the Fur Products Labeling Act and Rule 44(a) of saiel Rules and Regulations; fl1d (e) Represented through the use of p€l'centagesavings claims through such statements as "1/, Off" that the regular or usual prices ('charged by respondent for fur products in the recent regular course of business were reduced in direct proportion to the percentage of savings stated, when such \vas not the fact, in violation of 5 (a) (5) of the Fur Products Labeling Act. The advertisement hereinabove reproduced, listing 29 sample coats were $118, now $78 31 sample coats were $148, now $98 30 sample coats were $195, now $128 44 sample coats were $225, now $148 is a representation that the coats listed in the advertisement had previously been priced and offered for sale by respondent at the higher prices, thflt is, unless there is a. clea.r Ilnp1ication to the contra.ry by the statements in the advertisement t.hat t.his was a "sample sale and that these ,were "sample" coats. :Much evidence was offered and many arguments "\' ere advanced relating to this phase of the proc.eeding.

10. The "sample" coats offcrccl by respondent. through this ac1vertisement had been procured by respondent:s buyer lor the Philadelphia store at special discount. prices from various manufacturers. They iGIMBEL BROTHE:RS 365 359 Initial Decision were coats which were pilot models which the manufacturers had used to show to wholesale buyers as representative of the lines of coats being offered for presentation to the retail trade. As pilot models they were original creations, had been carefully and individually handmade and trimmed perhaps with better fur than the mass-production coats patterned after the samples. They had been procured at onethird off the price for which the coats made from these samples "ere regularly sold by the manufacturer. By applying its regular marknp, respondent was able to offer these coats at retail to the public at one-third off the price at which the coats would have sold if they had been regular stock, and, as the record indicates, at one-third less than was the regular selling price of the coats for which these were the pilot samples. These facts were not contradicted. Nor was the fact contradicted that these particular coats had never before been offered for sale by the respondent, so the higher price mentioned in the advertisement could not have been the present or former reg-lar price of these smnple coats. There was no direct proof in the record that respondent had not previously offered for sale at the higher prices mentioned in the advertisement coats similar to those referred to therein, or coats manufactured through the use of the advertised samples as pilot models. That issue was not met. If the prospective purchasers of these coats had known ,,,hat a sample coat was, they would not have been misled by the advertisement. The respondent's records disclose fully the facts upon which the advertised prices "ere based.

11. In its defense respondent presented a highly-qualified expert in women s fashions and wall1cn s wear-the fashion editor of the Philadelphia Inquirer. Based on a broad advertising and retailing experience and familiarity with merchandising teclllliques followed by ret.ailers of women s clothes, she testified that the average woman customer in the Philadelphia a.rea would underst.and the term "sanlpie" as used in the trade, and would have interpreted the higherprice figure in respondent' s advertisement as being the price at \vhieh coats patterned after the advertised sample coats were currently being sold by the retailers who had purchased them, and that the saving mentioned was from that price, and would be one-third. 12. To controvert this testimony, there were produced in ",Vashingioll, D. , from the "Tashington area, seven witnesses, whose relia. bility respondent questions, whose testimony indicated that they did not understand a sample coat to be as above described and therefore thought. the "advertisement signified that respondent had previously offered these coats, or coats like these coats, at the higher price, and that, therefore, the purchasers of these coats would besa,ving onc third of the "mount they "ould have paid for the coats har! they been bought from respondent at this higher original price. Respond- 366 FEDERAL TRADE COMMISSION DECISIOK& Initial Decision 60 P.

cnt' s contention that the testimony of these public witnesses "as unreliable is based on the argument that women in the Philadelphia area understand what a smnple coat is, whereas those in the "\Vashington area do not.

13. To support this contention, another highly-qualified expert was presented, who testified that she was, and lmd been for three years familia.r with the advertising of women s "eat in the 1\! ashin.6rton area and that she had never seen a sample sale advertisement hI any of the area papers, thus supporting the conclusion that sarnpIc sales are rate in \Vashington and that the women 1n "\Vashington would the-refore not be expected to understand the terms "sample:' and "sample sale" as would the women in Philadelphia, where sample sales were shown to ,be more frequent. Fortunately it is unnecessary to base a conclusion as to the meaning of respondent's advertising on the bound-to-be-unpopular determinat.ion of the cOlnparative knol\"ledge of "\Vashington and Philadelphia '\"women. 14. Respondent's expert testified as to the 11lallller in which ihe average ,roman in Philadelphia would interpret the advertisement but the Commission has said repeatedly that its obligation runs noi just to the intelligent or wen-informed person, nor to the person of average intelligence, but also to those who are even less informed. Undoubtedly there were and are many \"\women-prospective purchasers of women s fur-trimmed coats-even in the Philadelphia, area who would understand and believe that the higher prices mentioned in the advertisement were prices at which the respondent had previouslv sold or offered for saJe the same coats as those advertised, or similar coats. The conclusion is that respondent's advertisemen t is misleading and deceptive as to its price and savings representations. 15. There is one other defense presented by responclen t "which requires it determination of the meaning of the statutes under which this proceeding "Was brought. This defense is based upon facts peculiar to this proceeding, and must be determined entirely upon those facts. Hence the conclusion reached herein would be applicable only in proceedings involving precisely the same facts and circumstances. 16. During 1958 respondent's Philadelphia newspaper advertising totaled over 4 000 000 lines, of which 61 810 related to fur products; during 1959 the total was in excess of 4 500 000 lines, of which over 000 lines related to fur products. The single advertisement upon which the case in support of the complaint herein is based 'was an isolated incident which respondent asserts "Was contrary to the company s policy ane! occurred despite the fact that respondent had taken all practicable precautions to prevent such occurrences. It "Was respondent' s policy, at the time, that the aclvertiselnent after being prepared in tho advertising department and made up into proof be submittcd to the fur department buyer for approval. This advel'- GIMBEL BROTHERS 367 359 Initial Dedsion tisement was not so submitted. Shortly before the advertisement was published, respondent's experienced copywriter, responsible for preparing such advertising, left respondent' s employ, and was replaced by a persoll of less experience \yho is no longer e.nployed respondent.

17. Following the publication of this advertisement, and prior to the issuance of the complaint in this case, respondent tightened its policy rules by requiring all fur advertisements to be cleared through the offce of the Assistant to the Comptroller of the Philadelphia store this office being charged with responsibility for the store s complianco with aU matters involving governmental regulations. The record shows that respondent has on many occasions conferred with Federal Trade Commission personnel for interpretations and suggestions, and has always complied with the suggestions and recommendations received. The respondent has adopted and maintains a firm policy to comply with the laws and regulations administered by the Federal Trade Commission, and has periodically so instructed its employees. This, the respondent asserts, is motivated to accord with the company's interest in maintaining good customer relationships. It was also stat.ed in the record that it was and is against company policy to use the word "were" in comparative pricing advertisements, and that \\ere had never been so used prior to September 2D, 1959, and has not been so used since that time.

18. The foregoing facts are established by the record and are urged by respondent as requiring a finding that the publication of the one advertisement involved in this proceeding does not constitute "acts or practices:' within the meaning of S 5 of the Feeleral Trade 0011lllission Act. The Act speaks in the plural, which would indicate an int.ent of the Congress not to subject a respondent to prosecution for a single isolated act of vjolation. Public policy and the public interest -would seem not to favor, much less require, the issuance of a cease-and-desist order a.against an institution having an established policy of cooperation and compliance with the law and the regulations thereunder; but public policy and public interest are ultimately for decision by the 001nmission itself, and no conclusions reached herein will be based on the I-Iearing Examiner s interpretation of either of these terms.

lD. It is the Hearing Examine.r s conclusion that under all the facts and circumstances of this proceeding, the respondent cannot be found to have engaged in acts or pra.ctices (the complaint charges "acts and practices ) in violation of the Fur Products Labeling Act and the Bules and Regulations promulgated thereunder or of the Federal Trade Commission A_ct. Accordingly, Itl s ()J'lcl'ccl That the complaint herein be: and the same hereby is dismissed,cl.

368 FEDERAL TRADE CO:'1JISSION DECISIO Opinion 60 F.

OPINION OF THE CO)BIISSION By lAcIKTYRE Commissioner:

This matter is before us for consideration of an appeal by complaint counsel from the hearing examiner s initial decision dismissing the complaint.

'lye are here principally concerned with a single advertisement of fur products which respondent caused to appear in a newspaper of interstate circulation. 1 reproduction of the advertisement appears on page 362a.

The complaint herein, issued May 13, 1960, charges respondent with six separate violations of the Fur Products Labeling Aet and t11e Rules and Regulations promulgated therewlder. The hearing examiner dismissed all of the charges and with one exception committed error in doing so. Each of these separate lnatters are now considered seriatim.

The Improper Animal )fame Charge Paragraph 4(a) of the complaint charges that respondent's advertisement was false and deceptive in that it: Failed to disclose the name or names of the animal or animals that produced the fur contained in the fur products as set forth in the Fur Products Name Guide, in violation of Section 5(a) (1) of the Fur Products Labeling Act. The advertisement in question uses merely the word "fox" to describe certain of the fur products offered for sale. This designation was at the time of complaint, and is no\-., an improper designation for some of the fur products advertised in that "fox" is not the correct na,me of the animals which produced the fur used to trim. some of the coats offered in the ac1vertisement. The record reveals that some of the coats were trimmed with Nonvegian blue fox and dyed white fox. The heating examiner dismissed this charge of the complaint beca,use in his opinion "The advertisement does not purport to describe specificially any individual garment or group of garments." He concluded "The intent and meaning of the statute is clear and does not require a merchant to list in a general advertisement the names of an the animals that might be contained in the numerous garments offered for salo." In so holding, the examiner disregarded the prior holding of this Commission in IIoving 007poration Docket )fo. 7195 (September 23, 1960). In that matter, ,cn advertisement somewhat similar 10n November 3, 1961. the Fur Products 1' ame Guid(' was amended to permit the me of the single word "fox" to describe the genus and species of the red fox and its color phases, which are known as black fox, gross fox, pia Unum fox ilver fox. and red fox. GIMBEL BHO'IHE;RS 369 359 Opinion to the one here involved represented that a group of fur products were "lnink, chinchilla, fox . The hearing examiner there found that "fox" was an improper designation. On appeal, we aflirmed his pJlding, pointing out that even if the advertisement be considered as institutional", that is, not intended to aid or promote the sale of any ';pecific fur products, neverthcless the correct name of the animal which produced the furs must be disclosed. Here it is not even claimed that the advertisement is "institutional", leaving the examiner s decision without even the color of eorrectness. vVe hold that respondent' s use of the word "fox " to describe the lot of furs, which included Norwegian blue and dyed white fox, violated Section 5 (a) (1) oftheFur Products Labeling Act.

The Failure To Disclose Dyed Furs In paragraph 't (b) of the complaint, it is alleged that the advertisement was false in that it:

Failed to disclose that fur products contained or were composed of bleached dyed or otherwise artificially colored fur, when such was the fact, in violation of Section 5(a) (3) of the Fur Products Labeling Act. Some of the mink fox and beaver fur products advertised were dyed, and the advertisement does not disclose this fact. The hearing examiner dismissed this charge follc)\ving the same reasoning he used in dismissing the previous charge. The examiller s overtecl111ical conclusion that because the Act refers in the singular to "a fur product or fur " it cannot be held to apply to a "general advertisemene' in which "numerous ga.rments area offered for sale" is clearly erroneous. A multiple violation is even less excusable tha,n a single one. Respondent' s counsel concedes that if all the furs in the lot advertised were dyed, it "might" be held that the Act requires disclosure. Thus he is presumably not wedded to the examiner s theory but makes his plea for avoidance on the ground that the unqualified animal designations in the advertisement cannot be identified with the specific fur products which were dyed. ' While this is true, it does not in any manner rebut or dilute the fact that dyed furs were advertised for sale without disclosure of the fact of dyeing. Tlmt the dyed furs were commingled with natural furs in the lot advertised only makes the lUlquaJified designation partly true. _ Jl advertisement which is partly true is, of course pa.rtly false and subject to prohibit.ion under the statute.

The Failure to Disclose Foreign Origin The third principal charge of the complaint is contained in subparagraph (c) of paragraph which nlJeges t11Rt the advertisement: ,, 370 FEDERAL TRADE COMlnSSION DECISIO:;& Opinion GO F.

Failed to disclose the name of the country of origin of the imported furs con. tained in the fur products, in violation of Section 5(a) (6) of the JJ' ur Products Labeling Act.

The record reycals that some of the coats advertised we,re trimmed 'ivith iur which was imported from foreign countries. The advertisement does not disclose this fact, but the hearing examiner dismissed the charge because a disclosure of foreign origin wa.s made in another advertisement appearing 011 an adjacent page in the newspaper. The foreign origin declaration fOlUlCl in the second advertisement obviously only refers to the different furs there offered for sale. The two advertisements are separated by an llnre1aJecl women s sweater advertisement of four-column width. In additjon, each advertisement is outlined with a heavy black border clearly setting it off as a separate advertisement. Quite obviously the foreign origin declaration in the one advertisement was insufficient to inform the public that some. of the furs depicted in the advertisement in question were imported and the dismissal of this charge was erroneous. The Fictitious Pricing Charges In subparagraphs (d) and (e) of paragraph 1, the complaint charges that the advertisement made fictitious and fah:e pricing repre sentations as follows:

Represented prices of fur products as having been reducell froll regular or usual prices where the so-called regular or usual prices l,There in fact fiditious in that they were not the prices at which said merchandise was usually sold by respondent ill the recent regular course of business, in violation of Section 5(a) (5) of the Fur Pro duds Labeling Act and Hule 44(a) of said Rules anel Hegulatiol1s.

Hcpresented through the use of percentage savings claims through such statements as "\!J Off" that the regular or usual prices charged by respondent for fur products in the recent regular course of business "-ere reduced ill direct proportion to the percentage of savings stated when such was Dot the fact in violation of Section 5(a) (5) of the Fur Products Labeling Act. It is respondents contention that the record shows Duly that respondent had never sold the advertised saJnple coats before; that the price saving representations in the advertisement "were based upon the regnlal' ("' ere ) prices of p'i'od-uctio' model coats patterned after the samples; and t.hat there is no record evidence to show that respondent did not sen such production model coats at the higher "were prices contained in the advertisement.

The hearing examiner s findings and conclusions on this subject are confusing and to a certain extent contradictory. IIis finding that , GIMBEL BROTHE'RS 371 359 Opinion the price s wing representations were misleading and deceptive is apparently based upon the respondent's admission that it had never before sold or offered any part of the particular lot of sample coats presented in the subject advertisement. He specifically found that tho record contained "no direct proof" that the respondent had not made prior sales or offerings of regular productjol1 models of these coats and concluded That issue was not met. " In view of his finding the advertisement to be deceptive, it must be concluded that he considered the lack of "direct proor' that respondent had not made prior sales of production model coats as immaterial. \Ve are llot so persuaded. Sample coats are by definition identical in all material respects to production model coats patterned after them. Thus, if Gimbel' s had in the recent regular course of business sold production models of the advertised coats at the higher ("were prices, its advertisement ".oul(l be neither misleading nor deceptive. "'Ve turn now to a consideration of such evidence as was adduced on this decisive point.

If the hearing examiner s conclusion that this issue -.vas not TI1et is correct, it -.vould appeal' tlutt he was instrumental in creating the hiatus for he stopped complaint counsels cross-examination of respondent:s comptroller all this point, saying: .; . . . there isn t question jn my mind that the witness has said the word ' were' was wrongly used there and the jmplication could well be taken by a customer thrlt they had been olfcred at this higher price by Gimbel's. I don t think there is any dispute about that.:: It is note1,orthy that responclenCs counsel offered no objection to this conclusion. In addition to chara,cterizing the word as used in the advertisement as "inaccurate, the Gimbel con1ptrol1er testified with respect to the meaning of the representation "were $118" w11ich appeared in the advertisement: "I don t think it D1efillS was Gimbel's prke." The witness was then asked flatly whether the "were" price of $118 was Gimbel's price. fIis answer was not responsive but revealed that the higher price . . . reflected the valuation that \ve -.were sa.ying represented the one-third off. '111e hea.ring examiner then interrupted the examination with the remark we quoted above. In our view, this testing10ny is conclusive on the question . of prior sales at the "were" prices. The witness involved was a high-ranking ollcial or the respondent. In response to repcfttcd direct questions as to the ".were" prices, he replied that they were not Gimbels prices but reflected a va.luation Gimbel's was ' saying" represented one-third off.

719-603--64-- 372 FEDERAL TRADE COMMISSIO T DECISIONS Opinion UO F.

'\Ve are convinced that this issue was met ancl, on the basis of all the evidence, we conclude that respondent had not in the recent regula.r course or business sold either sample or production model coats or the type advertised at the "were" prices listed in its advertisement. Respondent introduced evidence which purported to show that an unspecHied number or unnamed retailers located in unnamed areas purchased production modc1 coats patterned after the sample coats sold to Gimbel's at prices 50% higher than the prices paid by Gimbel's for the smnple coats and that said retailers resold said coats at prices approximately 50% l1higher than the "now ': prices listed in G-imoel' advertisement. Even if this evidence is given full \ycight, it Flvails respondent nothing since it does not reveal that GiInbeFs ever sold similar coats at the higher "were:' prices. This evidence has no relevance to the issues here involved and complaint counsel"s objection to it should ha.ve been sustaineel.

Respondent. attempted to shmy that the prospective customers to whom the advertisement was directed, that. is, women in the Philadelphia area, understand that a "sample sale " is an offering of one-of-a,kind samples and that production models, patterned after the sample,; ha(l been sold (not necessarily by the advertiser) "t the higher "were prices. The record contains much evidence and urgmnent on this point, none of it convincing.

Respondent relies in the main upon the test.imony of an expert witness, t.he fashion edit.or for a leading Philadelphia newspaper. Yhile undoubtedly an expert in her chosen field, we are not persuaded t11.1t the point ,,,which respondent seeks to establish is susceptible of proof by expert testinlony or at least by the expert produced. The understanding or impression communicated to a. consumer by responden(s entire advertisement is most likely to be accurately Jea.rned froln a sampling of the consumers themselves. But the evidence adduced by complaint counsel in rebuttal all this point has even less value than respondent's since it consists of the "impression :' testimony of consumers residing in the '\Vashington, D. , area where respondent has Sho\Y11 "sample sales:: a.re extremely rare or nonexistent. The testi- Inon)' of such witnesses could not, of course, rebut respondents attempted showjng as to whflt Philadelphia consumers, apparently constantly exposed to "sample sale:' advertisements, understand such advertisements to mean.

It is noteworthy that. the hea.ring examiner, having heard and observed the witnesses for bot.h sides, was of the opinion that even in the Philadelphia area many women would understand from the aclve.rtisement that respondent itself had previously sold t.he same 01' GIMBEL BROTHERS 373 359 Opinion simDar coats at the higher "'\\ere " prices. ",Ve are also convinced of this and so find.

But as we view it a. finding favorable to respondent on this point would not save this particular advertisement. By the use of the word were" prior sales by respondent itself are definitely indicated, and even though Philadelphia consumers may understand ,yhat is meant by a "sample sale, they can and will be misled by this advertisement into the erroneous assumption that the sale coats were samples of coats previously sold by Gimbel's. In other words, the representation were " is not cleansed of deception by reason of being used in 1 "sample sale" advertisement regardless of the degree of sophistication found to exist in the consumers to whom the advertisement was directed. On the basis of all of the evidence ,ye are convinced that the price saving representations made in the advertisement are false and deceptive and find the charges made in subparagmphs (d) and (e) of paragraph 4 of the complaint to be sustained and proved. The hearing examlllcr s dlsnlissal of the fictitious pricing charges is a surprising result in view of his finding that the . . . respondent's advertisement is misleading and deceptive as to its price and sa vings represe,ntations. " while, at firstreacling, the decision appears to be founded upon the patently erroneous ground that a single advertisement cannot constitute "acts or practices:: within the meaning of Section 5 of the Federal Trade Commission Act, a closer scrutiny reveals that the dismissal is based upon "all the facts and circumstances or this proceeding . It is apparent that the " facts and circumstances \which the hearing examiner had in mind were those adduced by respondent which purported to show that the advertisement in question "as a single instance, inadvertent departure rrOlll an established policy or compliance with the law. As we view it, respondents record of compliance is not so sta.inless as to force the conclusion that public protection docs not require a cease and desist order. ",Ve have, in the past, issued two cease and desist orders against Gimbel Brothers, and on six different occasions this respondent has entered stipulations with the Commission in which it agreed, without confessing illegality, to cease certain actions the Commission deemed unlawful. It is highly significant that the offcial responsible for approving' respondent's advertisements testified that the 1j3 off" representatio in the advertisement ,vas proper. By so testifying, he indicated that future similar representations not based upon respondents usual and regllla.r prices would be approved. The purpose of an order to cease and desist is not to punish but to safeguard the public from futurl' violations. Under the circumstances of this case, such an order is necessary and will issue.

374 FEDERAL TRADE C01\:vnSSION DECISION& Opinion GO F.

The Failure to Maintain Records Charge The fu1al charge in the complaint is contained in paragraph 5 , which reads:

Respondent ill advertising fur products for sale as aforesaid made claims and representations respecting prices and reductions therefrOIl of fur products. Respondent in making such claims and representations faiJecl to maintain full and adequate records disclosing the facts upon which such claims and representatiolls .were based in violation of Rule 44(e) of said Rules and Regulations. The hearing examiner found that the respondents records disclose fully the facts upon which the advertised prices were based and (lismissed the charge. ' With this conclusion, we agree. At the time this complaint issued, the C0111nisslon interpreted Rule 44(e) as requiring that sellers making pricing representations must maintain records . . . in suffcient detail and in such form as affrmatively to disclose the accuracy of the representations. (31orton slnc. Docket No. 6976, February 25 , 1960). 1-iowever, this Commission holding was appealed to a circuit court which held that the interpretation extended the rule beyond the scope of our rule-making power. (M GO'ton s Inc. , et al. v. Fedeml Trade 001nmi88ion 286 F. 2c1158 (1st Cir. 1061 J. ) Thus the law as it now stands requires only that respondent keep such records as llre needed to disclose the truth or falsity of the pricing representations made. In this matter, respondent kept and produced all records possible under the circumstances. Records of prior sales at the "were" prices were not produced for the simple reason that such sales lutcl not been made. ,Vo have noted t.hat we are here principally concerned with a single advertisement which respondent caused to appmtr in a newspaper of -interstate circulation. I-Iowever, it violated the law in several respects. :i\1moreover, prior to the institution of this proceeding this respondent was before the Commission charged 'with other violations of the Fur Products Labeling Act. There the Commission chose to not issue a complaint" ; instead it resorted to the utilization of the "i11g-eniolls" aspect of aclmin:istratiyc process of a:il'ording respondent the pportun1ty of disposing or the charges through U1 informal stipulation providing for voluntary compliance with the Jaw. On that occasion respondent in 1959 agreed to forth\\'ith cease and desist cel'tilin false and misleading advertising claims in connection with the offering ror sale, transportation, or distribution or any rur product made wholly or partly or rnr. In that connection respondent agreed that its advertising or such products through labels on garments would clearly sho"\y the mun8 or names of animals producing the furs as required by law and regulations, the name of the country of origin or imported GIMBEL BROTHERS 375 359 Dissenting Opinion furs contained in a fur product, and accurately show the facts when any fur products offered for sale by respondent contain or are composed of bleached, dyed, or artificia.l fnr, \vhen such is the fact. That was not the only instance ,,,here respondent was before the Commission on charges that it had violated the law through false and misleading advertising. On several earlier occasions in connection "dth the advertising, offering for sale and sale and distribution of ot.her products, respondent entered into infol'rnal stipulations ,with the .Federal Trade Commi::sion to cease and desist the use of particular statements which the Commission deemed to be :raise and misleading. These repeated instances of the Commission s willingness and effort to iP1ide responc1p.nt down the road to voluntary compliance with the requirements of the lull apparently have not cleterred it from the vio1alion of law \YO have found here. Nevertheless, the Comllission willillg;ness ana eUol'ts to bring about voluntary observance of the la,y are clear in -its repented contaets wit.h the respondent in this ease. ,Vhen ono revieiYs the background a.nd history of the Commission repeated contacts with the respondent and its use oJ the informal administrative process, there is little or no cause to wonder why an informal ac1rninistratiye process \vas avoided in the C01mnission dispJsiiion of l'' spondcnt:s clear violations of law which have been established(l in this instance.

It should be kept in mind that "e are not here dealing with violation of the Federal Trade COlmnission Act; instead we are here concerned ,vit.h clear violations of the Fur Products Labeling Act. Congress made the provisions of that law specific for the protection of the consumer. In doing so, Congress did not provide the Commission w.jth the flexibility and the latitude it has in the enforcement of Section 5 of the Federal Trade Commission Act. The initial decision of the hearing examiner is vacated and set aside and inljen thereof we arc issuing our own findings of fact, conclusions and order to cease and desist.

COlllnissioner Elman dissented to the decision in this Inutter. DISSENTING OPINION By EL\lax Oommi.5Jsioner :

I think the complaint should be dismissed.

At the risk of seeming 10 restate the obvious, I should like to preface what I have io say about this case by Inaking some general observations on the Commission s so-called adjudicative function. By doing Dissenting Opinion GO F.1'. , my reasons for writing a dissent in a case which itself is of little importance may emerge more clearly.

The Federal Trade Commission is an administrative agency, not a court. Congress has given the Commission a broad range of powers to carry out its statutory responsibilities. One of these-and not necessarily the most effective or important-is the power to fie complaints in formal proceedings looking to thc issuance of cease-anddesist orders against particular respondents. In one basic respect, court and agency are alike. Both are governed by the fundamental principle that in adjudicative proceedings the tribunal must decide the issues fairly, impartially, and solely on the basis of facts of record or within offcial notice. In fmother basic respect, hmve\ , an agency is not. at all like a court, even as to adjudicative proceedings. The difi'erence between them in thi.s regard reflects a distinctive characteristic of the administrative proc-ass.

A court is a passive, disinterested arbiter of controversies that happen to be presented to it by the parties. Its business is determined fortuitously, comprising matters brought to it by litigants, not those which it chooses to hear. If a case on its docket-no matter how it got there-presents a justiciable controversy, a court ordinarily has no choice but to decide it. A court may feel that its time and energy are being wasted on cases that for one reason or another ought not. be before it, but-generally speaking-it cannot on that ground refuse to hear and decide them. Almost inevitably, therefore, judgemade law tends to evolve episodically and without symmetrical or even coherent design.

This characteristic of the judicial process was an important reason for the creation of administrative agencies. The job of an agency, unlike a court, is to rcguJate through adllrinistTatwn a unique process of gmTernmental activity that requires positive, planned, and systematic enort to achieve the statutory objectiyes. The J' ederal Trade Commission is a clem' example of this. In his address before both IIouses of Congress on January 20, 1914, when Prcsident 1Vilson asked for thc establishment of an interstate trade commissioll\ he said it \Vas needed "as an instrumentality for doing justice to business where the processes of the courts or the natural forces of correction outside the courts are inadequate * * * " l As 11:1'. tTustice Brandeis' Gratz case theaptly characterized it in his notable opinion in th 1 Congressional Record, () rJ Cong., 2d Sess. , p. HJ63. 2 Federal Trade Commission Y. Gmtz 253 t:. S. 421, 435 (dissent). (pp.

GIMBEL BROTHERS 377 339 Dissenting Opinion Commission represented a "new experiment on old lines" in dealing with unfair and restrictive trade practices. Congress did not contemplate that the Commission would function like a. court as a passive arbiter of contro\Tcrsies. It was not created merely to apply Epecific legal standards to isolated commercial acts. If Congress had had a. design so narrow, it would hardly have thought it necessary to establish a ne'" kind of governmental mechanism endmyed with a comprehensive range of powers for "doing justice where the processes of the courts are inadequate. Congress gave the Commission 11 most challenging assignment, expecting that it would be met by creative, resourceful, and, above all, planned affrmative a.ction.

Congress deliberately chose, therefore, not to leave the Commission circumscribed with respect to selection of cases. It recognized that the Commission, if it were to fulfill its responsibilities as an agency and not it court, should have full control over the selection of eases on its docket. Congress knew that the extent of the benefits which the public would derive from the Commission vwuld bear a direct relation to the public importance of the practices assailed. Accordingly, it provided, in Section 5 (b) of the Federal Trade Commission Act, that hvo determinations must be made by the Commission before it can issue a complaint: (1) that there is "reason to believe" a violation of Inw exists; and (2) that a proceeding by the Commission with respect to such violation "would be to the interest of the public. " Thus, Congress directed the Commission not to proceed on a hit-or-miss basis, depending upon the tomplaints that arri\' c in its mail. It perceived that the \\fly in which cases are selected may be as important as the ,yay they are decided; and it told the Commission, in eiIeet, that cases for c01nplaint should be selected in order of priority of public importance.

Reviewing the .. cfs legislative history in his classic study, "The Federal Trade Commission " (1024), Gerard C. Henderson observed tha.t one of the reasons why Congress adopted the " noma.lous procedure" which make.s the Commission ';both complainant and judge \yas that. "the legislators feared that the Commission would be over. whelmed with a. host of petty squabbles, and therefore provided that t.he forma1machinery of the Commission could be set in motion only by the COJnmission itself, \yhere the case seemed to be of suffcient importance. 328-29) Throughout its history, from its earliest days to the present, the Commission has been charged with failing to fulfil this responsibility (p.

378 FEDERAL TRADE COMMISSIO" DECISION& Dissenting Opinion GO F. T.

imposed on it by Congress. Surveying its docket almost forty years ago, IIenclcrson found:

. . . that the Commission is handling too many cases, and that it should (!xer. rise a greater discretion in selecting those cases which involve questions ImbJic importance. It does Dot seem necessary that public funds should be employed to prosecute cases. . . involving trivial or merely technical offenses, in \which the public interest is not always easy to discern. '1' 11e1'e is constant complaint of the crowclecl condition uf the Commission s docket. It takes months to bring a case to a hearing, and additional months to reach a decision. 337) "'\Then the Task Force of the l1:oove1' Commission made its study in 1949, it fourid that time had only aggravated the conditions described by Henderson in 1924:

As the YC'D.'S ba vc progressed, tbe COllmission has become irumersed in a multitude of petty problems. . . . Tbe Commission bas largely become a passive udidal agency, \waiting for cases to come up on the docket, under routinized procedures, \YithOllt active responsibilty for achieving statutory objectives. In the selection of cases for its formal dockets, the Commission has long been guilty of prosecuting trivial and technical offenses and of failng to confine these dockets to cases of public importance. (pp. 125, 128) It is eommOll kllmvlec1ge that the Commission is still beset by this problem. Its resources of nl ulpower, money, and time are necessarily limited. The basis of selection of cases in which complaints are to be issued is thus of prime importance in detenllining how well the Conlmission doe,s its job. lim' , too, there operates a kind of Gresham law. The trivial and inconseqnential cases leave little room for, and tend to drive out, the substantial and sig11il1cant. The public interest requires that the COl1llnission not squander its resources by undertaking extensive and expensive formal proceedings where, as I believe is true here, the alleged violation arises out of a single, isolated, and extraordinary episode, having no significance beyond the particular circumstances, and where the violation is, at most, technical and legalistic in the invidious sense of those terms. It is error for the Commission to find initilllly that it is to the interest of the public" to place such a case on its formal docket. It only compolUlds the error for it to fail to dismiss the complaint when 3 A perceptive scholar has pointed out that a basic weal;:ness of the agencies "is that they are so ovcl'burclenerl with interlocutory and final decisions in cases that they do not have time, energy, or perhaps inclination to face large policy issues. It llust be easy in the fmileWorli: within which commissions operate to succumb to the pressure of detail. Someone has suggested that the ndministmtor should be forewarned that the most important business is often not that in the in-basket. There is also ihe warning to the administrator that a heavy volume of world;: in his in-basket may be an indcx of poor work assig-nment. Emmette S. Redford. National Regulatorv C01n1niss'lons; Need jor a New Look 1958, p. 15. GIMBEL BROTHERS 379 359 Dissenting Opinion the case is subsequently brought before the Commission for review. Issuance of an order cannot be justified on the theory that it is now too late to undo what has been done, or that, after long and costly proceedings, the Commission would "lose face" if it rescinded its original action issuing the complaint. Failure to dismiss a complaint in such circumstances serves to encourage rather than discourage the bringing of insignifica,nt cases that drain the Commission s capacity to proceed in the significant cases raising substantial issues of law or policy which, in the public interest and for the guidance of businessmen and the bar, the Commission should undertake to resolve. Just as courts abJ10r hard cases because they make bad law, administrative agencies should abhor petty cases because they n1ako no law. The courts, which have found it necessary to keep reminding the Cmll11ission of the statutory requirement that only those pl'oceedjngs should be brought that are "to the interest of the public (e. , Federal Trade Oommission v. Iilesne1' 280 U. S. 19, 30), have understandably been reluctant to sit in judgment 011 the COll11nission s assessment of the public interest. Compare Exposition FTess, Inc., v. Fedeml Trade 001n1nission decided by the CouTt of Appeals for the Second Circuit, Kovenlber 6 , 1961 , with JforetTench Corp. v. Federal Trade Gomm'lssion 127 F. 2d 792, 795 (C.A. 2). In the Exposition Press case, tT udge Friendly thought the lack of public interest so clear that he dissenteel from affrmance of the C0l11l11ission s order, stating that the government funds that have been spent on this proceeding, not to speak of the diversion of energies from more worthwhile tasks outran any possible public benefit by a tremendous margin. (Slip op., at p. 81.) "\Yhatever the scope of judicial review in this respect, it is the responsibility of the Commission, primarily and principally if not exclllsively, to determine whether issuance of a complaint is in the public interest. This responsibility, confronting us as it does every day of the Commission s workweek, cannot be shirked in any spirit of aoad-natured accommodation or deference to institutional habits. , as I believe, major change must be made in the criteria governing selection of cases on the COIT11ission s doeket, it is the Commission which must, make it. Individual.l members of the Commission cannot publicly annOlU1ce the fact of, and reasons for, dissent when particular complaints are issued. Hence I hELve thought it appropriate to express here my reasons for believing that this is not the kind of case in which the public interest is served by issnanee of a complaint. , , ,, Dissenting Opinion 60 F.

I turll now to this particular case which arises under the Fur Products Labeling Act, G5 Stat. 175, 15 U.S.C. G9. Tbe benefits which the public nU1Y derive frolll t.hat statute, like other regulatory acts depend largely on how it is interpreted and applied by the responsible a.gency. Through practical flexibility and reasona.bleness in administration, the statllt,e can be it useful instrument for protecting the consuming public against dcc.cptiyc selling practices. On the other hand, if n.c1ministercd ,with art.ificial rigidity and litera.lness, the statute can impose neeelle,58 burdens on business with no compensating protection of the public.

The Commission has re,cognized this in administering the Fur Prodacts Labeling Act. For example, Section i5 (a) provides, in absolute and unqualified terms that " a fur product or fur shan be considered to be falsely or deceptively adve.rtised if any advertiselne.nt * * * which is intended to aid, promote, or assist directly or indirectly ' in its sa Ie fails to reveal (1) the correct animal name, or (2) that the fur is used, (3) bleached or dyed, or (4) includcs in substantiallxtrt paws tails, bellies, or ,-;aste furs, or (5) contains an erroneolts animal name or (6) fails to reveal the cOlUltry of origin of a,ny imported furs. Disregarding the 1iterallanguage the Commission has-as flllllHter of fair and se,nsible administration-relaxed the requirements of the statute to avoid unnecessary severity, For example, under Rule 38(h) promulgated by the Conunission the country of origin need not be shown in advertising a group of furs, so long as the advertisement states the following: "Fur products labeled to show country of origin of imported furs. Similarly, Rule 18(c) gives carte blanche to omit all of the information required by Section is (a,) of the Act here the advertising is "of an institutional type. " The examples given are: X Fur Company Famous for its Blaek Dyed Persian Lamb Since 1900 " or X Company lIanllfactnrers of Fine ::Iuskrat Coats Capes and Stoles, It. is hard to reconcile the reasonable, flexible approac.h followed in Rule 38 with the formalistic, technical approach taken i11 the Commission s opinion in this ca.se. lImy, from the sta.ndpoint of proteC'tillg consumers against deeeptioll can we distinguish bet,yeen an ;ldvertisement stating generally that X Fur COlllpany is " fa mons" for its furs a.nd one, also in general terms, that it is having a sale of furs '; a1: J/; off" '? The fonner seeks to sell by pointing to a tradition of quality, the latter by advertising a general price reduction. But, obviously, GIMBEL BROTHE'RS 381 359 Disse.ting Opinion both advertisements are "intended to aid, promote, or assist directly or indirectly" in the sale of furs and thus fall witbin the literal language of Section 5 (a) .

In the case of the one advertisement, the Commission construes th statute not to require that specific and detailed information be contained in the ad as to each and all of the particular garments offered for sale. Why should it construe the statute differently in the case of the other advertisement? The rationale of Rule 38 is that neither the statute nor its policy of protecting consumers against deception in the sale of furs requires that such particularized information be stated in general a.advertising. I cannot see why the Commission should be reluctant to apply that rationale here. As I understand the Commission s position, as expressed both in Rule 38 a.nd in its opinion in this case, it ,vould permit ail advertisement "X Fur Company-Seller of Furs" even though the ad does not specifically disclose that some of the furs are dyed, bleached, or artificially colored. However, if X Fur Company advertises "All furs in stock on sale at 1J3 off " the Commission 'would apparently hold omission of such specific informat.ion un1nwfuJ. There may be a distinction between the two advertisements, but-from the standpoint of responsible administration of a statute designed to safeguard purchasers from false advertising- \vhore is the difference 1 Further, the Conmlission s finding of a fictitious-pricing violation rests on a most strained reading of the record. Disregarding the principle that a finding should be based on ,ell the evidence taken as a ,,,hole, the Commission resorts to patching together a case out of discrete bits and pieces. The opinion states that "if Gimbel's had in the 41' he majority opinioll, pointing out that the statute here involved i not Section :' of tile Federal Trfde Commis"ion Aet but the Fur Products Labeling Act, states that the Jatter is "sIJecific" and does .110t afford the Commission "with the flexihility lino latitude it: has in the enforcement of Section 5 of the Federal ' rfde Commission .det. Slgnifi cantly, the Commission stops short of denying that the Fur -\et, like the Federal Trade Commission .lct, is to be Invoked in a formal proceeding only upon a determination that it would serve the' public interest-a determination that, in my view, cad Dot bl' self,orted on these facts, The Fur Products Labeling Act expressly states in Section S(a) that its provision-!ls shall be enforced" by the Commission under the " procedure provided for in tbe Federal Trade Commission Act. , . in the same manner, b ' the same means, fin!1 with tile same jurisdiction, powers, and duties as though all applicable terms and IHO\' isions of the Federill Trade Commission Act were incorporated into and made a part of t.his Act. - . 'l' b 11 S, it is irrelcyant, foJ' 1Jreent purposl' , that this proccedingwas brought for vioiation oJ the Fur Act rather than Section 5 of the Federal Trade Commission Act. Furth!' r, if tJJe Fur Act (ieprives till' Commi ion of "fle;'ibility " and "latitude " bow can we explnin or justify - the flexibilty and latitude of adi1inistl'lltion reflected in Rule 3:' which cert iJnl)- cannot be reconciled with the "specific" provisions of Section 5(a) of the Fur Act. Have the "specific" provisions of Sertion 5(a) somehow berome more specific since Angust 9, H152, when Rule 38 (16 C. R. 301.38) was proilu1gated by the Comion '! , :

382 FEDERAL TRADE CO:NnSSION DECISIONS Dissenting Opinion 60 Ji-' recent regular course of business sold production models of the advertised coats at the higher (' were ) prices, its advertisement would be neither misleading nor deceptive. " This, the opinion declares, is the decisive point." As thus stated, there seems to be an implication, not expressly disavowed, that the burden was on Gimbel's to come forward with facts proving that the advertised price claims were truthful. is elementary, however, that the burden was on Commission counsel to present evidence to substantiate the complaint's allegations that these claims were false and misleading.

The opinion labors mightily to overcome the deficiency of proof in the record on this issue. It states, on the onc hand, that" lij f the hearing examiner s conclusion that this issue Yi'S not met is correct, it would appear that he was instrumental in creating the hiatus" by stopping complaint counsel's cross-examination of a witness. This may have beon error all the examiner s part, suggesting the possibility of a remand in order to amplify the record; but if there is a hiatus in the record as it now stands, we cannot properly find that a violation has been proved. But the C011n1i55ion concludes on the basis of all tho evidence " that "this issue was mel" Its conclusion seems to rest on a dubious string of inferences drawn from remarks of the hearing examiner, silence by respondent's counsel, a.nd an (l,dmittec11y nonresponsive answer made by a witness. ,With all deference, I am bound to say that the obvious gap in the evidence on this issue, which it vms the burden of Comnlission colu1sel to present, cannot be filled simply by stating, "on the basis of all the evidence " that it does not exist.

Finally, the seTiatil1 treatment of the charges inflates the apparent importance of the case far out of proportion. The opinion states that the case is "primarily concerned': with fl, single newspaper advertisement. Actually, that advertisement, which appeared in the Philadelphia Evening B,dZetin for September 29 1959, is all there is in thc case, despite the fact that respondent placed over 75 000 Jines of newspaper advertising relating to fur products in the smne ;year, and almost 000 in the previous year. And, as the hearing examiner found, the advert.isen1ent appeared as the result of a solit.ary act of inac1vertance contrary to respondent's elaborately enforced practice of scrupulous adherence to the statutory requirements in advertising fUTs. :foreover, the minor loophole in responclcnt:sadvertising procedures that then existed has long since been plugged by a requirement that an fur adds must now bc cleared by a high-ranking offcial specifically GIMBEL BROTHERS 383 359 Dissenting Opinion duuged with responsibility for assuring compliance with the Act. The peeuliar combination of circumstances that produced this particular advertisement is not likely to be repeated, and it is hard to see how the entry of a cease-and-desist ordcr could have any substantial effect in making any such ads less likely in the future. The purpose of a cease-and-desist order is not to punish but to prevent future violations. If, as a practical matter, entry of an order wil add little or nothing by way of prevention, how is the public benefitted? The Commission s portrayal of respondent as having a proclivity for fur advertising violations is overdrawn. First, the stipulation under the Fur Act ,,'hieh it cites referred to Gilllbel' s of ew York; this case arose out of an advertisement by Gimbel's Philadelphia store. The record indicates, as respondent's could1sel stated at the oral argument that Gimbel's various stores " arc pretty much autonomously operated with respect to advertising and merchandising policies." Even more important, the stipulation (No. 9245, approved November 24, 1959) did not deal with advertising at all, but only with labeling and invoicing. It is true, in a general sense, that labeling is often considered a part of advertising, insofar as it may assist in selling the product. But both the Fur Act and our orders issued under it treat labeling, invoicing, and aclve.rising as distinct matters. )foreover, when respondent has shown, as it has here, that its pro cedllres for screening advertising (as distinguished from invoicing and labeling) negate the likelihood of future advertising violations it is no justification for a cease-and-desist order directed only against advertising to show that there is a danger of future invoicing or labeling violations. Conversely, since there is no proof here of invoicing or labeling violations, we have no reason to doubt respondcnes assuranee that it has scrupulously conformed to the terms of the stipulation. Apparently, then, the Commission infers a propensity to disobey one (; The hearing examiner made the following finding: Following the publication of this advertisement. and prior to the issuance of the complaint in this case, respondent tightened its policy rules by requiring all fur advertisements to be cleared through the olIce of the Assistant to the Comptroller of the Philadelphia store, this offce being cbarged with responsibilty for the store s compliance with all matters involving- governmental regulations. The record shows that respondent has on many occasions conferred with Federal Trade Commission personnel for interpretatiorJs and suggestions, and has always compiled Witll the suggestions and recommendations received. The respondent bfls adopted and maintains !l firm posey to comply with the laws and regulation1S a(1ministered by the Federal Trade Commission, and bas periodically so instructed its employees. This, the respondent asserts, is motivated to accord .with tile company interest in maintaining good customer relat1onsl;"ps. It was also stated in the recorrl that it was and is against company pohcy to use the word ' were' in comparative pridng advertisements, and thar. 'were ' had never been so used prior to September 2D, 1950, and has not been so used since that time.

Findings and Order 60 F.

provision of the law from irrelevant facts which may even suggest a propensity to obey another.

III I do not mean to suggest by what I have said that the Conunission should stand idly by, ignoring violations of law simply bec'1U8e they are of relatively minor significance. To object to swatting flies with a sledge-hammer is not to object to swatting them at all. The Commission is not confined to a choice between "issue a complaint" or "file and forget." The genius of the administrative process is that it affords flexibility of action in dealing with problems. The Commission may determine, for example, that although formal adjudicative proceedings would involve a disproportionate expenditure of resources the law and the public interest would be fully served through some other kind of administrative action informal or voluntary compliance procedures, rulcmaking, industry guidance, publicizing reports or studies, reference to other federal or local agencies also having jurisdiction in the matter, etc.

In his Exposition Press dissent, Judge Friendly characterized the opinion of lr. Justice Brandeis in the !(lesner case as "a summons to the Commission to do "hat it had been created Lo do, to get on with the great purpose of the act,'. . . . " (Slip op., at p. 81). Today decision suggests that that summons is still timely. FINDlXGS AS TO TI-IE FACTS, CONCLUSIONS AND OHDEB. Pursuant to the provisions of the Federal Trade Commission Act and the Fur Prodllets Labeling Act, the Federal Trade Commission on 1ay 13, 19GO, issued and subsequent 1y 8ervecl its complaint in this proceeding upon respondent, charging it with violations of the Fur Product.s Labeling Act and the Hllies and Hegulations promulgated thereunder. lIea.rings '''ere held before a hearing examiner of the Commission and testimony and other evidence in support of and opposition to the allegations of the complaint ,were received into the record. In the initial decision filed .J anuary 31 IDGl, t.he hearing examiner he.ld that none of the complaints allegations were sllstflined and ordered it entirely dismissed.

The Commission having considered the appeal by complaint counsel the opposition thereto by respondent and the entire record in this proceeding, and having determined that the initial decision should C Tile irrelevance of stipulations entered under other statutes, mentioned by the Commission, is cycn more apparf'nt tbf' ' tf'lI us nothing of Gimbel's fur n1el"chandis,jng practices and they support DO infcrences concerning the likelihood of future fur advertising violations, since Giml!cl' s procedures for screening fur ads are separatf' fnd distinct. , GIMBEL BROTHEHS 385 :i;jU Findings and Order be vacated and set aside, now makes this its findings as to the facts conclusions dra\vn therefrom and order, the same to be in lieu of those contained in said initial decision.

FINDINGS AS TO THE :FACTS 1. R.respondent, Gimbel Brothers, is a corporation organized under the laws of the State of Xew York, with its principal offce located at 34th Street and Broadway, Kew York, N.

2. Gimbel Brothers is primarily a department store retailer selling to the public a wide variety of goods, including women s fur-trimmed coats. Respondent's depitrtment stores are located in several sections of the country, including NC'\' York, l\T ; J\1:lwaukee, \Nis. ; and Pittsburgh and Philadelphia, Pa.

8. Subsequent to August 9 , 19:,2, the effcctiye date of the Fur Products Labeling Act, respondent has been, and is now, engaged in the introductioninto commerce and in the sale, advertising, and offering for sale, in commerce, and in the transportation and distribution, in commerce, of fur products; and has sold, Rdvertised, offered for side transported and distributed fur products which have been made, in \,hole or in part, of fur \,hieh had been shipped and received in commerce, as the terms "commerce fur" and "fur product" ate defined in said Fur Products Labeling Act.

4. To a.id, promote R,nd assist it in the sale of its fur products, respondent causes advertisements prepared by it to appear and be disse.minated in newspapers having substantial circulation in states other than the states in which respondent's stores are located. One such newspaper utilized by respondent is The Evening Bulletin which is published in Philadelphia, Pa., but has \vide. circulation in other states including the State of New ,Jersey.

5. This matter is primarily concerned \"ith an advertisement which re,spondent caused to appear in said The l, vening BItlletin edition of September 29 1859. The following is a reproduction of the advertisement in question: (See p. 862a) 6. The women s coats depicted and described in the advertisement are fur products as tlmt term is defined in Section 2 (d) of the Fur Prod ucts Labeling Act.

7. Among the coats offered for sale in the advertisement in question \were coats trimmed with dyed white fox and naturnJ Norwegian blue fox. The correct names of the animals which produced the furs on these coats are not disclosed by the adve.rtisement in questioll. 8. Among the Goat.s offered for sale in the advertisement in question were coats trimmed with c1ye,c1 mink, beaver, and \"white fox fUTS. The , 386 FEDERAL TRADE COMMI&SION DECISIONS Findings and Order 60 F.

fact that said furs \were bleached, dyed, or otherwise artificially colol'cd'is not. disclosed by the advertisement. 9. Among the coats oifered for sale in the advertisement were coats trimmed with beaver which originated in Canada and natural blue fox which originated in Norway. Respondent did not disclose in the advertisement the countries of origin of said ilnported furs. The foreign origin disclosure made in another of respondent's advertisements which appeared on an adjoining page of the newspaper referred only to the furs advertised in that advertisement and was insuffcient to inform the public of the foreign origin of the fur products offered in the advertisement in question. 10. The coats depicted and described in the advertisement were purchased by respondent from S8\ erDJ manufacturers at prices onethird less than the prices charged by said manufacturers to other retailers for production models of the sanle coats. The coats depicted and described in the advertisement were not production models but were samples in(1i'i ic1ually made to show to prospective wholesale buyers.

11. The prices at \,which the advertisement in question offered the coats to the public, that is Jlo', ' prices, reflected respondent's customary markup for goods of this type of 66 /3 percent of its purchase cost and resulted in its receipt of its customary profit of approximately 40 per cent of the retflil price.

12. Hesponclent had not in the recent regular course of its business sold sample coa.,ts of the type described in its advertisement or production model COflts patterned after srlid sample coats at the higher "were prices set out in said advertisement.

13. Through use of the terminology "1;3 off" and the words "were and "now, respondent represented, contrary to fact, that the higher were" prices set out in its aclvertisC1nent were the regular or usual prices charged by respondent for fur products of the type depicted in the advertisement in the recent regular course of its business. Through use of said terminology, it represented and implied contrary to fact that customers purchasing the fur products offered at the now " prices would effect an approximate 331h per cent saving from the prices at which respondent had sold similar fur products in the recent regular course of its business.

14. nesponc1ent has maintained records disclosing the facts upon which its pricing representations are based consisting solely of the invoices of the manufacturers from whom the advertised coats were purchased. Said records do not support the price respresentations made in respondent' s advertisement.

GIMBEL BROTHERS 387 359 Findings and Order CONCL'CSIO:NS 1. The Federal Trade Commission has jurisdiction of the subj ect matter of this proceeding and of respondent. 2. This proceeding is in the public interest. 3. The a.foresaid acts and practices of the respondents are in viola. tion of the Fur Products Labeling Act and the Hules and Regulations promulgated thereunder and, as specified under the provisions of said Act, constjtute unfair and deceptive acts and practices in commerce within the meaning of the Federal Trade Commission Act. 4. The charge made in paragraph 5 of the complaint that respondent had not maintained full and adequate records disclosing the facts upon which its pricing claims were based was not sustained and the hearing examiner s dismissal of this charge was proper and correct. ORDER It is o7'dered That respondent, Gimbel Brothers, a corporation and its offcers, and respondent's representatives, agents and employees directly or through any corporate or other device, in connection with the introduction into commerce, or the sale, advertising, ofiering for sale, transportation or distribution, in commerce, of fur products; or in conl1ection with the sale, advertising, offering for sale, transportation, or distribution of fur products whi9h are made in whole or in part of fur which has been shipped and received in commerce, as commerce, "fur" and "fur product" ate defined in the Fur Products Labeling Act, do forthwith cease and desist from: A. Falsely or deceptively advertising fur products through tho use of any advertisement, representation, public announcement, or notice which is intended to aid, promote or assist, directly or indirectly, in the sale, or offering for sale of fur products and which: 1. Fails to disclose:

(a) The name or names of the animal or animals producing the fur or furs contained in the fur product, as set forth in the Fur Products Name Guide, as prescribed under tI,e Rules and Regulations; (b) That the fur product contains or is composed of bleached dyed or otherwise artificially colored fur; (e) The name of the country of origin of any imported furs contained in a fur product.

2. Hepresents, directly or by implication, that the regular or usual price of any fur product is any amount which is in excess of the price at which respondent has usually and customarily sold such products in the recent regular course of business.

719-603--64-- 388 FEDERAL TRADE COM.'.ISSION DECISIONI' Complaint 60 F.

3. :Misrepresents in any manner the savings available to purchasers of respondent's fur products.

It i8 further ordered That the charge made in paragraph 5 of the complaint be, and it hereby is, dismissed.

It i8 further ordered That respondent, Gimbel Brothers, slmll within sixty (60) days after service upon it of this order, file with the Commission a report., in writing, setting forth in detail the manner and form in which it has eomplied with the order to cease and desist. By the Commission. Commissioner Elman dissenting.