Eral Transmissio S Corporatio of W Ashi Gton

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ERAL TRANSMISSIO S CORPORATIO

OF W ASHI GTON ET AL.

Docket 8713. OTder, Dec. , 1966 Order denying respondents' request that it be allowed to take depositions and serve subpoenas duces tecum upon certain of its competitors.

ORDER DENYING REQCEST FOR PERMISSIOJ\ TO FILE

INTERLOCUTORY Appeal This matter is bef01' e the Commission on respondents' request for permission to file an interlocutory appeal from the hearing examiner's order of December 6, 1966, denying respondents application for orders to take oral depositions of competitors accompanied by subpoenas d1.tCCS tec1I?n. In support of their request, respondents cite the Commission's order of December 1 1966 (p. 1833 hereina, denying their motion for suspension of pro-

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ceedings or, in the alternative, for dismissal of the complaint and in lieu thereof the institution of a trade practice conference proceeding. In that motion respondents contended that their competitors were engaging in the same practices which are the subject of the complaint in this proceeding. Respondents claim that should they be forced to discontinue certain practices while their competitors are not similarly restricted, they would be severely injured and might be forced out of business before the Commission takes action in the case of their rivals. The Commission, by its order of December 1, denied the motion for suspension, noting that it was not able to pass on the practices of General Transmissions' competitors on the basis of respondents ' charges alone. It held that the conclusion that proceedings against respondents' competitors would result in cease and desist orders was premature. The Commission further held there is no evidentiary basis for the inferenec that respondents would be forced out of business by bringing this case to an expeditious conclusion. For the foregoing reasons, respondents motion to suspend the proceeding was denied. On December 5, 1966, respondents filed before the hearing examiner an application to take depositions from, and for subpoenas duces tecum against, certain of their competitors. In support of this application respondents argued that the evidence to be obtained through these procedures was relevant since it would show that the practices of respondents' competitors are the same as those of respondents. In addition, respondents argued that the evidence they seek by the deposition procedure is the evidence which the Commission, in its order of December 1, stated is required to pass on respondents' motion to suspend.

The examiner, on December 6, 1966, denied respondents' applications for depositions and subpoenas on the ground that the application did not meet with all the requirements of of the Rules. The examiner found that the specifications on respondents ' applications for subpoenas duces tecum appear to be unduly burdensome in scope and of doubtful relevance since the purpose of this proceeding is not to investigate the acts and practices of respondents' competitors. The examiner further stated that his ruling was not to be understood as precluding the respondents from applying, under 17 of the Rules, for appropriate subpoenas directen to witnesses whom the respondents intend to present during the further course of the proceeding. The request for permission to me an interlocutory appeal from the ruling complained of will be denied. There is no indication here that the examiner abused his discretion in making the ruling complained of.

Respondents rely upon the Commission's order of Deeember 1 1966, as an invitation for them to produce direct evidence as to the practices of their competitors. They have misconstrued the Commission's order. If anything, the language relied upon indicates that the Commission intends to rely upon its own investigation of the matters alleged by respondents. The Commission order of December 1 made it clear that it would take respondents' allegations under consideration and take whatever action is appropriate. This it intends to do.

Respondents, in their motion to suspend filed November 16 1966, did not apparently allege that the practices cited by their competitors were a defense against the charge of deceptive advertising; rather, the gist of their motion to suspend seemed to be simply that competitors were engaging in the same practices and General Transmissions would be under a disadvantage if were put under order and similar restrictions were not taken against its rivals. The Commission therefore construed that motion as a request that in the exercise of its discretion it employ different measures to enforce the law in this industry. Such a request, of course, does not constitute a defense against the charges in the complaint that General Transmissions has misrepresented its services in the advertisements under consideration. In the request for permission to file the interlocutory appeal respondents, however, now chm'acterize the contention that the practices of their competitors are identical to those of General Transmissions as their "defenses. An unfair trade practice does not cease to be so because competitors engage in identical practices. Fede?' aZ TTade Commission v. Winstcd Hosiery Co. , 258 S. 183, 493-94 (1922). The widespread prevalence of an unfair trade practice neither constitutes a legal defense on the merits to the allegations of a complaint nor provides any reason for the Commission to withhold remedial or corrective action. As previously indicated, the extent to which the allegedly illegal practices are also followed by competitors will be considered by the Commission in exercising its discretionary powels to fashion appropriate relief. We are unable to find, therefore, that the examiner erred in holding that at this stage of the proceeding the data respondents seek in the course of the depositions and related subpoenas duces tecum is of doubtful relevance to the proceeding. On questions of this nature the examiner has broad discretion and his rulings on such issues wi1 not be reviewed in the absence of unusual circumstances. See AmeTicnn Bmke Shoe

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Co. Docket No. 8622, Order Denying Appeal from Denial of Applications for Depositions and Subpoenas (September 1965) respondents' rights have beenfG8 F. C. 1169). Furthermore, preserved, as heretofore noted, in view of the examiner's willingness to consider applications for subpoenas under 17 of the Commission's Rules in the further course of the proceeding. The Commission is unable, in this Instance, to find the existence of the extraordinary circumstances requiring an immediate Commission decision in order to prevent detriment to the public interest contemplated by 20 of the Commission's Rules of Practice. Accordingly,

It is ordered That respondents' request for permission to file an interlocutory appeal from the hearing examiner's order of December 6, 1966, be, and it hereby is, denied.

KED R. BASKIN DOING BUSINESS AS HOLLYWOOD

FILM STUDIOS

Docket. .4-102. 01'der, Dec. SO 196(j Order vacating Commissions order of Oct. 28, 1966, p. 1131 herein, and remanding the case to the hearing examiner for receiving additional evidence on the question of,,,whether the public interest requires the modification of the original cease and desist order.

ORDER GRA2\TING REQUEST FOR RECONSIDERATION, VACATING

ORDER REOPENING PROCEEDING, AND DIRECTING HEARING

The Commission, on September 14, 1966, served upon respondent its order to show cause why this proceeding should not be reopened and the order therein modified by adding certain specified paragraphs. On October 28, 1966 fp. 1131 herein), the Commission issued its order reopening the proceeding and modifying the order to cease and desist in the respects so indicated, it then appearing that respondent had not responded to the show cause order within the period provided in the Commission Rules. SuhsequentJy, disc10surc was made that respondent did in fact, file a timely response to the Commission's order to show cause and that through clerical error such response was not brought to the Commission's attention prior to the issuance of the order of October 28, 1966. Complaint counsel, on December, 1966, filed an answer to respondent' s response to the Commission's show cause order.

In the circumstances, the Commission wi1 treat respondent' notice of November 9, 1966, advising the Commission of the filing of his response to the show cause order, as a request for reconsideration of the Commission's order of October 28, 1966, reopening and modifying the order to cease and desist. Such a request wi! be, and hereby is, granted, and the response filed September, 1966 and complaint counsers answer filed December 8, 1966 wi1 be included in the Commission's reconsideration of the show cause order.

Respondent, in his response, includes samples of his advertising, a business reply card, a form letter, and a magazine advertisement. His main argument seems to be that bis advertising is not deceptive because he does supply an enlargement free of charge as represented, and because the patron can discern from the advertisements that the purchase of a color enlargement, for which there is a charge, is optional Complaint counsel bases his argument for the modification of the order on the contention that respondent' s advertising has been, and continues to be, misleading in that it fails to reveal that the free offer is a black and white enlargement-not a colored enlargement-and that the purpose of the advertisement is to try to induce the purchase of the coloring services of the respondent.

Under 28(b) (3) of the Commission's Rules of Practice if an order to show cause is opposed but the pleadings do not raise issues of fact to be resolved, the Commission, in its discretion, may decide the matter on the order to show cause and answer thereto, or it may serve upon the parties a notice of hearing setting forth the date on which the cause will be heard. filing ofIn such a case the hearing wi1 be limited to the briefs and may include oral argument when deemed necessary by the Commission. When the pleadings raise substantial factual issues, the Commission, under the Rules, will direct such hearings as it deems appropriate.

The first question here is whether this matter can be decided on the initial briefs. We do not believe it can. Complaint counsel in his answer, has raised certain issues of fact which he has not cJeal'y demonstrated are supported by the record. For instance, he makes such statements as the following: " Since the inception of the Commission's consideration of Mr. Baskin's advertise- " and OUY experiencements the same basic deception remains in evaluating numerous consumer complaints against respondent over the years indicates that they are based on the reader's misunderstanding of what is being offered in the advertisements and on the belief that patrons will receive color photographic en-

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largements free." He elsewhere refers to a "constant volume of consumer complaints received over the years" and consumer letters which in "virtually every instance are concerned with complaints of being deceived about the nature of the offer made in respondent's advertisements; and to a quoted Compliance Staff statement advising Mr. Baskin as to the likely deceptive nature of his advertising. There are no citations to the record given for these various assertions and, consequently, there is uncertainty as to the extent such are based on evidence in the record in this proceeding.

Complaint counsel, moreover, at one place in his brief, asserts that many of respondent's customers have expressed dissatisfaction over the caliber of respondent's coloring services and that this has been admitted, though the relevance of this, in light of the show cause order, is not explained, nor is it clear where this admission appears.

In the circumstances, it is believed that the Commission order of October 28, 1966, reopening the proceeding and modifying the order to cease and desist should be vacated and set aside. It is further believed because of the substantial factual issues raised that this matter, in accordance with S 3.28(b) (3) of the Commission's Rules of Practice, should be referred to a hearing examiner for a hearing to receive evidence in support of and in opposition to, the show cause order. Accordingly, It is onlered That the Commission's order of October 28 1966 (p. 1131 hereina, reopening the proceeding and modifying the order to cease and desist be, and it hereby is, vacated and set aside.

It is further ordered That this matter be, and it hereby is referred to a hearing examiner for the purpose of receiving evidence in support of, and in opposition to, the question of whether or not the public interest requires that the Commission reopen this proceeding and modify the order to cease and desist contained therein to read the same as the order to cease and desist set forth in the Commission's show cause order issued September 9, 1966.

It is further onler. That the proceeding be conducted pursuant to the Commission's Rules of Practice For Adjudicative Proceedings insofar as those Rules are applicable; and It is fnTthe? ordel' That the hearing examiner, upon the conclusion of the hearings, certify the record, together with a report of his findings, conclusions and recommendations with respect thereto, to the Commission for final disposition