Holiday Magic, Inc

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IN THE MATTER OF HOLIDAY MAGIC, INC., ET AL.

MODIFYING ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT AND SEC. 2, OF THE CLAYTN ACT Docket 883 Decision, Oct. , 1974* , Jan, 1975 Order modifying Final Order issued aganst respondents on Oct. 15, 1974, 40 F. 1066S, 84 F. C. 748, by deleting Paragrph V of the order which require corporate respondent and respondent Olivo to make restitution as provided therein.

Appeamnces For the Commission: Joseph S. Browman and D. Stuart Cameon. For the respondents: Alvin H. Goldstein, Jr., Tuckman, Goldstein & Philips San Francisco, Calif.

ORDER REOPENING PROCEEDING AND MODIFYING FINAL ORDER The Commission s final order in this matter, dated Oct. 15, 1974 provided, in Paragraph V, that respondent Olivo should make restitution as provided therein, and that corporate respondent, Holiday Magic, should also make restitution. The requirement as to Holiday Magic, however, was to be effective only in the event that the company should cease to be in compliance with a district cour order also requing that it make restitution. By order dated Jan. 8, 1975, the Commission denied a motion of respondent Olivo to reconsider its order as to him.

In its opinion, the Commission recogned that its action in ordering restitution, in particular its ,,,sertion that it possessed the authority to do so, was contrary to the holding of the Ninth Circuit Cour of Appeals in the case of Heate v. Federal Trad Commission No. 73- 1750, Sept. 11, 1974 (503 F.2d 321 (1974)) In footnote 11, page 23 (84 F . C. 1045 J of its final decision, the Commssion noted its disagreement with the holding in Heater and stated that it would seek to obtain review of the decision by the Supreme Cour.

Subsequent to rendition of the Commssion s final order in this matter, and rendition of its order denying the motion to reconsider, the Commssion has determined that it will not seek review of the Heater decision by the Supreme Cour. While this determnation should not be construed to signy a change in the view of the Commission regarding . Reported in 84 F_ C- 74K Petitiol1S for re\.;ew of the Oct. 15, 1974 order to ceas and desist were fied il1 the Court of Appeals for the Ninth CireuiL Subsequently, the appeals were rlismis.o. pursuant to petition,,!" motion. Order the correctness of the Heater decision, it does eliminate any possibility that Heater wil not continue to be governing law in the Ninth Circuit. Corporate respondent's principal place of business is in the Ninth Circuit; individual respondent and the estate of the deceased respondent are situated in the Ninth Circuit, and respondents have appealed this matter in that circuit. Under these circumstances the Commission does not feel that it is privileged to disregard judicial precedent of such recent and clearly dispositive vintage. Under the holding in Heawr the time the Commission issued its final order in this matter it w",, not empowered by the F. C. Act to require respondent to make restitution for prior fraudulent activities. That holding not having been overrled it would now be improper for the Commission, only a short time thereafter, to put respondent to the expense of relitig-ating the same issue in the same forum. This is particularly so inasmuch as the assets of the wrongdoer s estate with which the cost of such litigation would be financed are limited, and may be subject to other claims including claims of private plaintiffs seeking repayment for the same wrongs which led the Commission to issue the original order of restitution in this case.

Pursuant to Section 3.72(a) of its rules of practice, the Commission may, "prior to the fiing of the transcript of the record of a proceeding in a United States court of appeals pursuant to a petition for review" reopen the proceeding on its own motion and modify its order in said proceeding. Therefore It is ordered That this matter be reopened and that the final order be modifed by string Paragraph V in its entirety, and renumbering all subsequent paragraphs.

Commissioner N ye not paricipating.