Mars Mfg. Co., Inc. of Asheville, Korth Carolina

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IN THE MATTER OF MARS MFG. CO., INC. OF ASHEVILLE, KORTH CAROLINA ETAL.

CONSE"T ORDER, ETC. , IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COM~IISSION AND THE TEXTILE FIBER PRODUCTS IDENTIFICATION ACTS Docket C-1245. Complaint, June 30, 1961-Decision, June 30, 1967 Consent order requiring an Asheville, N. distributor of textile products to cease misbranding textile fiber products and misrepresenting imperfect hosiery as first or perfect quality.

COMPLAIC'T Pursuant to the provisions of the Federal Trade Commission Act and the Textile Fiber Products Identification Act, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission, having reason to believe that ;vars Mfg. Co., Inc. of Asheville, North Carolina, a corporation, and Morry A. Bard Ronald S. Bard and Sally G. Bard, individually and as offcers of said corporation, hereinafter referred to as respondents, have violated the provisions of said Acts and the Rules and Regulations promulgated under the Textile Fiber Products Identification Act, and it appearing to the Commission that a proceeding by it respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent Mars Mfg. Co. , Inc. of Asheville Korth CaroUna, is a corporation organized, existing and doing business under and by virtue of the laws of the State of North Carolina.

Respondents Morry A. Bard, Ronald S. Bard and Sally G. Bard are offcers of said corporation. They formulate, direct and control the policies, acts and practices of the corporate respondent. Respondents are engaged in the sale and distribution of textile products such as hosiery, leotards, swim wear and beach wear gar- Complaint 71 F.

ments. Their offce and principal place of business is located at Route I Johnson School Road, Asheville, North Carolina. PAR. 2. Respondents are now, and for some time last past have been, engaged in the introduction, delivery for introduction, manufacture for introduction, sale, advertising, and offedng for sale, in commerce, and in the transportation or causing to be transported in commerce, and in the importation into the United States, of textile fiber products; and have sold, offered for sale, advertised delivered, transported and caused to be transported, textile fiber products, which have been advertised or offered for sale in commerce; and have sold, offered for sale, advertised, delivered, transported and caused to be transported after shipment in commerce textile fiber products, either in their original state or contained in other textile fiber products; as the terms "commerce" and "textile fiber product" are defined in the Textile Fiber Products Identification Act.

PAR. 3. Certain of the textile fiber products were misbranded by respondents in that they were not stamped, tagged, labeled, or otherwise identified to show each element of information required to be disclosed by Section 4 (b) of the Textile Fiber Products Identiication Aet, and in the manner and form prescribed by the Rules and Regulations promulgated under said Aet. Among such misbranded textile fiber products, but not limited thereto, were ladies hosiery with labels which failed: 1. To disclose the true generic names of the fibers present. 2. To disclose the percentage of each fiber present, by weight in the total fiber content of the textile fiber product, exclusive of ornamentation not exceeding 5 per centum by weight of the total fiber content;

3. To disclose the name, or other identification issued and registered by the Commission of the manufacture of said ladies hosiery or one or more persons subject to Section 3 of the saiel Act with respect to such hosiery.

4. To disclose the name of the country where imported textile fiber products were processed or manufactured. PAR. 4. Certain of said textile fiber products were misbranded in violation of the Textile Fiber Products Identification Act in that they were not labeled in accordance with the Rules and Regulations promulgated thereunder in the following respect: 1. All parts of the required information were not conspicuously and separately set out on the same side of the label in such a MARS MFG. CO. , INC. OF ASHEVILLE , K. C. , ET AL. 1561 1559 Complaint manner as to be clearly legible and readily accessible to the prospective purchaser, in violation of Rule 16 (b) of the aforesaid Rules and Regulations.

2. Nonrequired information and representations were placed on the label or elsewhere on the product and were set forth in such a manner as to interfere with, minimize, detract from, and conflict with required information, in violation of Rule 16 (c) of the aforesaid Rules and Regulations:

PAR. 5. Respondents have failed to maintain and preserve proper records showing the fiber content of the textile fiber products manufactured by them, in violation of 6 (a) of the Textie Fiber Products Identification Act and Rule 39 of the Regulations promulgated thereunder.

PAR. 6. The acts and practices of ,'respondents, as set forth above were, and are, in violation of the Textile Fiber Products Identification Act and Rules and Regulations promulgated thereunder and constituted, and now constitute, unfair and deceptive acts or practices, in commerce, and unfair methods of competition in commerce, under the Federal Trade Commission Act. PAR. 7. In the course and conduct of their business, respondents purchase unfinished hosiery products which are imperfect and unlabeled as to quality. Such hosiery products are known to the trade as "irregulars seconds " or "thirds " depending upon the nature of the imperfection. The respondents cause such hosiery products to be finished and then sell and distribute them to retailers who in turn sell said hosiery products to the consuming public.

PAR. 8. In the course and conduct of their business, respondents now cause, and for some time last past have caused, their said products, including hosiery, when sold, to be shipped from their place of business in the State of North Carolina to purchasers thereof located in various other States of the United States, and maintain, and at all times mentioned herein have maintained, a substantial course of trade in said products in commerce, as "commerce" is defined in the Federal Trade Commission Act. PAR. 9. In the conduct of their business, at all times mentioned herein, respondents have been in substantial competition, in commerce, with corporations, firms and individuals in the sale of products of the same general kind as that sold by respondents. PAR. 10. In the conduct of their business as set forth above respondents did not mark their said imperfect hosiery products Complaint 71 F.

in a clear, and conspicuous manner to disclose that they were irregulars" or j'seconds " so as to inform purchasers thereof of their imperfect quality. The purchasing public in the absence of markings showing that hosiery products are lIirregulars " or "seconds," understands and believes that they are of perfect quality. Respondents' failure to mark or label their products in such a manner as wil disclose that said products are imperfect, has had and now has, the capacity and tendency to mislead dealers and members of the purchasing public into the erroneous and mistaken belief that said products are perfect quality products and into the purchase of substantial quantities of respondents' products by reason of said erroneous and mistaken belief. Offcial notice is hereby taken of the fact that, in connection with the sale or offering for sale of imperfect hosiery, the failure to disclose on such hosiery products that they are "irregulars" or seconds " as the case may be, is misleading, ",,,hieh offcial notice is based upon the Commission s accumulated knowledge and experience, as expressed in Rule 4 of the Commission s amended Trade Practice Rules for the Hosiery Industry promulgated August 30, 1960 (amended June 10, 1964).

PAR. Il. Respondents in selling their imperfect hosiery products as aforesaid have labeled certain of said hosiery products by transfer as " First quality," thereby representing that said hosiery is of first quality. Respondents' practice of labeling by transfer imperfect hosiery as " First quality" has had, and 11mv has, the capacity and tendency to mislead dealers and members of the purchasing public into the erroneous and mistaken belief that said products are first quality products and into the purchase of substantial quantities of respondents ' products by reason of said erroneous and mistaken belief.

PAR. 12. The use by such respondents of the aforesaid false misleading and deceptive statements, representations and practices has had, and now has, the capacity and tendency to mislead dealers and other purchasers into the erroneous and mistaken belief that said statements and representations "were, and are, true, and into the purchase of substantial quantities of respondents' products by reason of said erroneous and mistaken belief. PAR. 13. The aforesaid acts and practices of respondents, as herein alieged, were and are, all to the prej udice and inj ury of the public and of respondents' competitors and constit.uted, and now constitute, unfair and deceptive acts and practices and unfair methods of competition, in commerce, within the intent and meaning of Section 5 (a) (1) of the Federal Trade Commission Act. MARS MFG. CO. , I:-C. OF ASHEVILLE , N. C. , ET AL. 1563 1559 Decision and Order DECISION AND ORDER The Federal Trade Commission having initiated an investigation- of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the Bureau of Texties and Furs proposed to present to the Commission for its consideration and \which, if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act and the Textile Fiber Products Identification Act; and The respondents and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settement purposes only and does not constitute an admission by the respondents that the law has been violated as alleged in such complaint, and waivers and provisions as required by the Commission s rules; and The Commission, having reason to believe that the respondents have violated said Acts, and having determined that complaint should issue stating its charges in that respect, hereby issues its complaint, accepts said agreement, makes the following jurisdictional findings, and enters the following order; 1. Respondent Mars Mfg. Co., Inc. of Asheville, Korth Carolina is a corporation organized, existing and doing business under and by virtue of the laws of the State of North Carolina, with its offce and principal place of business located at Route 1 Johnson School Road, Ashevile, North Carolina.

Respondents :VIorry A. Bard, Ronald S. Bard and Sally G. Bard are offcers of said corporation and their address is the same as that of said corporation.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents, and the proceeding is in the public interest.

ORDER !tis orde?' That respondents Mars Mfg. Co. , Inc. of Asheville North Carolina, a corporation, and its oiIcers, and Morry A. Bard Ronald S. Bard and Sally G. Bard, individually and as offcers of said corporation, and respondents' representatives, agents and employees, directly or through any corporate or other device, in connection with the introduction, delivery for introduction, n1anufacture for introduction, sale, advertising, or offering for sale, in j Order 71 F.

commerce, or the transportation or causing to be transported in commerce, or the importation into the United States, of any textile fiber product; or in connection with the sale, offering for sale, advertising, delivery, transportation, or causing to be transported, of any textile fiber product which has been advertised or offered for sale in commerce; or in connection with the sale, offering for sale advertising, delivery, transportation, or causing to be transported after shipment in commerce, of any textile fiber product, whether in its original state or contained in other textie fiber products, as the terms "commerce" and "textile fiber product" are defined in the Textile Fiber Products Identification Act, do forthwith cease and desist from:

A. Misbranding textile fiber products by: 1. Failing to affx a stamp, tag, label, or other means of identification to each such product showing in a clear legible and conspicuous manner each element of information required to be disclosed by Section 4 (b) of the Textile Fiber Products Identification Act. 2. Failing to set forth all parts of the required information conspicuously add separately on the same side of the label in such a manner as to be clearly legible and readily accessible to the prospective purchaser. 3. Setting forth nonrequired information or representations on the label or elsewhere on the product in such a manner as to minimize, detract from, or conflict with information required by the said Act and the Rules and Regulations promulgated thereunder B. Failing to maintain and preserve for at least three years proper records showing the fiber content of textile fiber products manufactured by them, as required by Section 6 (a) of the Textile Fiber Products Identification Act and Rule 39 of the Regulations promulgated thereunder.

It is further o1"dererl That respondents Mars Mfg. Co., Inc. of Ashevjl1e, North Carolina, a corporation, and its offcers, and Morry A. Bard, Ronald S. Bard and Sally G. Bard, individually , rep- and as offcers of said corporation, and respondents' agents resentatives and employees, directly or through any corporate or other device, in connection with the offering for sale, sale or distribution of hosiery, or other related " industry products " which are Hirregulars seconds, " or othenvise imperfect, as such terms are defined in Rule 4 (c) of the Amended Trade Practice Rules for the Hosiery Industry (16 CFR 152.4(c)); in commerce as MIDWESTERN CHINCHILLA CORP. ET AL. 1565 1559 Complaint commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

A. Selling or distributing any such product without clearly and conspicuously marking on each stocking the words "irregulars" or "seconds " as the case may be, in such degree permanency as to remain thereon until the consummation of the consumer sale and of such conspicuousness as to be easily observed and read by the purchasing public. B. Using the words "first quality" or words of similar import on the package in which such product is sold or in reference to any such product in any advertisement or promotional material.

C. Representing in any other manner, directly or by implication, that such products are first quality or perfect quality.

It is further ordered That the respondents herein shall, within sixty (60) days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form in which they have complied with this order.