Tara Hall Clothes, Inc

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

IN THE MATTER OF TARRA HALL CLOTHES, INC., ET AL.

MODIFYING ORDER IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT AND THE WOOL PRODUCTS LABELING ACT Docket C-2797, Consent Order, Feb. 24, 1976--Modifying Order, Oct. 27, 1992 This order reopens the proceeding and modifies the Commission's cease and desist order issued on Feb. 24, 1976 (87 FTC 294), by narrowing the conditions under which Abraham Cohen, former president of Tarra Hall Clothes, Inc., must post a bond before importing wool products. The Commission concluded that the petition to modify the order should be granted to require bonding only for importation of recycled wool products. ORDER REOPENING THE PROCEEDING AND MODIFYING CEASE AND DESIST ORDER On May 1, 1992, Abraham Cohen ("Petitioner") filed a Petition to Reopen Proceeding and Modify Consent Order ("Petition") in Docket No. C-2797, pursuant to Section 5(b) of the Federal Trade Commission Act, 15 U.S.C. 45(b), and Sections 2.51 and 3.72 of the Commission's Rules of Practice and Procedure, 16 CFR 2.51 and 3.72, to reopen and modify the consent order entered by the Commission on February 24, 1976 (“consent order"), as it applies to him individually.

The final order in this matter was the product of a consent agreement Tarra Hall Clothes, Inc. ("Tarra Hall") and its president and owner, Petitioner, entered into with the Commission to resolve charges that they had imported mislabeled fabrics containing wool in violation of the Wool Products Labeling Act of 1939 ("Wool Act"). Tarra Hall is an importer of wool blend fabrics and a manufacturer of TARRA HALL CLOTHES, INC., ET AL. 921 920 Modifying Order men's clothing.’ The consent order was one of several other orders involving the misbranded importation of wool products? from a major textile center in Italy, the City of Prato.’ The consent order prohibits Tarra Hall and Petitioner from falsely and deceptively stamping, tagging, labeling, or otherwise identifying wool products, and from failing to securely affix to each product a stamp, tag, label or other means of identification showing each element of information required to be disclosed by Section 4(a)(2) of the Wool Act. The consent order further prohibits the respondents from importing wool products except upon filing a bond with the Secretary of the Treasury.’ Petitioner requests that the Commission reopen and modify the consent order to remove the Petitioner from the coverage of the bond Shortly after the consent order became effective, Petitioner notified the Commission that he had sold his interest in Tarra Hall and had purchased an interest in another importer and manufacturer of men’s clothing, Hartz & Co., Inc. ("Hartz"). Petitioner is president of Hartz, and he owns two thirds of the Class A common stock (the voting stock) and two thirds of the Class B common stock. As a result of the terms of the consent order, it applies to Hartz through the Petitioner. > The term wool5 1 7 1 1 5 882 1798 131 38 95.063065 product is defined by the Wool Products Labeling Act of 1939 ("Wool Act") as any product containing wool or represented to contain wool. The Wool Act was amended in 1980 to substitute the word recycled for the words reprocessed and reused. Recycled wool is wool that has been made into one product and then recycled into a second product. Accordingly, the order is modified by substituting the word recycled for reprocessed where appropriate. 3 See, e.g., Norlic Import Co., 84 FTC 1173 (1974); C. Itoh & Co. (America), 84 FTC 1187 (1974); Bagatelle Intl Ltd., 85 FTC 270 (1975); Allora, Ltd., 86 FTC 283 (1975); Texora Intl Corp., 87 FTC 273 (1976); Silton Brothers, Inc., 87 FTC 1335 (1976); and Verrazzano Trading Corp, 91 FTC 888 (1978). The Prato mills produced recycled wool products made from shredding of miscellaneous cloth scraps, rags and textile byproducts and then weaving or felting new wool blend products from the fibers.

* Section 8 of the Wool Act, 15 U.S.C. 68f, empowers the Commission to order importers of wool products to cease and desist from importing such products except4 1 9 1 3 0 532 2547 1336 47 -1 5 1 9 1 3 1 532 2566 76 28 96.643112 upon5 1 9 1 3 2 620 2557 83 36 96.559570 filings 1 9 1 3 3 715 2557 76 27 96.559570 bonds 1 9 1 3 4 802 2555 68 29 96.845413 with5 1 9 1 3 5 882 2555 46 28 96.979645 thes 1 9 1 3 6 940 2554 144 36 96.979645 Secretary5 1 9 1 3 7 1096 2553 34 28 97.006538 of5 1 9 1 3 8 1139 2553 47 28 96.956451 thes 1 9 1 3 9 1197 2551 158 36 96.910583 Treasury5 1 9 1 3 10 1349 2560 27 19 96.596046 in5 1 9 1 3 11 1389 2560 15 18 96.596046 a5 1 9 1 3 12 1417 2559 63 30 96.822266 sums 1 9 1 3 13 1492 2550 105 28 96.822266 doubles 1 9 1 3 14 1609 2549 46 28 96.987434 thes 1 9 1 3 15 1668 2548 83 28 96.622757 values 1 9 1 3 16 1764 2548 33 27 97.003471 of5 1 9 1 3 17 1807 2547 61 28 96.756783 said4 1 9 1 4 0 532 2596 1336 43 -1 5 1 9 1 4 1 532 2604 76 28 96.924309 wool5 1 9 1 4 2 619 2604 133 35 96.981903 products5 1 9 1 4 3 763 2602 54 28 96.860802 ands 1 9 1 4 4 828 2610 54 27 96.860802 any5 1 9 1 4 5 892 2602 68 35 97.012085 duty5 1 9 1 4 6 971 2601 123 31 96.991257 thereon,5 1 9 1 4 7 1105 2598 183 29 96.325760 conditioned5 1 9 1 4 8 1298 2606 76 28 96.844048 upon5 1 9 1 4 9 1385 2587 177 45 96.457886 compliance5 1 9 1 4 10 1573 2596 67 27 96.805092 with5 1 9 1 4 11 1651 2596 46 27 96.755531 thes 1 9 1 4 12 1707 2594 161 37 96.755531 provisions4 1 9 1 5 0 532 2639 1337 41 -1 5 1 9 1 5 1 532 2650 34 28 96.980774 of5 1 9 1 5 2 576 2650 55 28 96.490692 this5 1 9 1 5 3 644 2649 80 28 82.566452 Act. The bond is administered by the United States Customs Service, and it is subject to forfeiture if imported wool products are not labeled or otherwise identified in accordance with the Wool Act and the rules and regulations promulgated by the Commission under that Act.

Modifying Order 115 F.T.C.

requirement, or, alternatively, to require Petitioner to file a bond only with respect to the importation of recycled wool products. The request to reopen and modify the consent order was placed on the public record on May 13, 1992, and a press release regarding the request was issued on the same day. The public comment period ended on June 12, 1992, and nine comments were filed, all in support of the Petition.” For the reasons stated below, the Commission has determined to grant the Petition and limit the bond requirement to the importation of recycled wool products.

I. BACKGROUND This is Petitioner's second petition to reopen and modify the consent order. On April 2, 1987, Petitioner filed a petition to reopen and modify the consent order to eliminate the bond requirement as it applied to him as an individual ("the 1987 Petition"). He did not alternatively petition the Commission to limit the scope of the bond requirement. Petitioner recited only two changes in circumstances of fact or law to support the 1987 Petition:

(1) Petitioner sold his interest in Tarra Hall in late 1976, and purchased a controlling interest in Hartz. He then instituted procedures at Hartz, including occasional testing of imported wool products, to ensure compliance with the consent order; and (2) Petitioner contended that Commission policy on the imposition of bonds in Wool Act enforcement had changed, and after entry of the consent order, the Commission only required a bond in one other order, which involved more egregious circumstances.° Petitioner further argued that public considerations warranted elimination of the bond requirement because it imposed an economic burden on Hartz and placed Hartz at a disadvantage to its competitors who did not have to pay for a bond. He also argued that the bond > Petitioner agreed to an extension of time to permit the Commission to consider his petition.

8 See Verrazzano Trading Corp., 91 FTC 888 (1978). TARRA HALL CLOTHES, INC., ET AL. 923 920 Modifying Order requirement had served its purpose because he had absolutely complied with the order since it was issued. The Commission denied the 1987 Petition on the ground that Petitioner had not demonstrated changed conditions of fact or law warranting the elimination of the bond requirement. The Commission also determined that Petitioner had not shown that the bond requirement imposed any specific injury or resulted in harm that reasonably could not have been anticipated when the consent order was entered.’ II. STANDARD FOR REOPENING AND MODIFYING A FINAL ORDER OF THE COMMISSION Section 5(b) of the Federal Trade Commission Act, 15 U.S.C. 45(b), provides that the Commission shall reopen an order to consider whether it should be altered, modified or set aside if a respondent files a petition that makes a satisfactory showing that changed conditions of law or fact require the order to be altered, modified or set aside in whole or in part.2 A satisfactory showing sufficient to require reopening is made when a petition to reopen identifies significant changes in circumstances and shows that the changes 7 Tarra Hall Clothes, Inc., Docket No. C-2797, Letter to Lawrence M. Garten, Esq. (November 25, 1987).

8 Section 5(b) provides, in part, that the Commission may modify a final order. Whenever in the opinion of the Commission conditions of fact or of law have so changed as to require such action or if the public interest shall so require ... [T]he Commission shall reopen any such order to consider whether such order (including any affirmative relief provision contained in such order) should be altered, modified, or set aside, in whole or in part, if the person, partnership, or corporation involved files a request with the Commission which makes a satisfactory showing that changed conditions of law or fact require such order to be altered, modified, or set aside, in whole or in part. The 1980 amendment to Section 5(b) did not change the standard for order reopening and modification, but codifie[d]5 1 8 3 1 5 1042 2662 124 38 96.303009 existing5 1 8 3 1 6 1181 2664 195 30 96.995148 Commissions 1 8 3 1 7 1392 2668 171 34 96.394936 procedures5 1 8 3 1 8 1578 2668 38 36 97.004463 by5 1 8 3 1 9 1630 2669 144 38 96.511894 requiring5 1 8 3 1 10 1789 2671 47 27 96.497704 thee 1 8 4 0 0 498 2703 1336 48 -1 4 1 8 4 1 0 498 2703 1336 48 -1 5 1 8 4 1 1 498 2703 194 29 96.494003 Commissions 1 8 4 1 2 703 2710 28 23 96.003479 to5 1 8 4 1 3 742 2714 102 28 96.003479 reopens 1 8 4 1 4 855 2716 35 19 96.858711 an5 1 8 4 1 5 900 2708 82 28 96.749527 orders 1 8 4 1 6 991 2708 25 28 95.312073 if5 1 8 4 1 7 1024 2709 44 28 93.676994 thes 1 8 4 1 8 1080 2710 136 36 93.676994 specified5 1 8 4 1 9 1227 2711 128 37 96.885696 showings 1 8 4 1 10 1366 2713 23 27 96.950821 is5 1 8 4 1 11 1400 2713 106 33 93.277504 made, S. Rep. 96-500, 96th Cong., Ist Sess. 9-10 (1979), and added the requirement that the Commission act on petitions to reopen within 120 days of filing. Modifying Order 115 F.T.C, eliminate the need for the order, or make continued application of the order inequitable or harmful to competition.’ In instances in which changed circumstances would not require reopening an order, under Section 5(b) the Commission may nevertheless modify an order when the Commission determines that the public interest requires it. Accordingly, Section 2.51 of the Commission's Rules of Practice invites a petitioner to demonstrate in the petition how the public interest warrants the requested reopening and modification.

Regardless of whether the modification is sought because of changed circumstances or because the public interest warrants it, under Section 5(b), the burden is on the petitioner to make a satisfactory showing for the Commission to reopen the order.!° The language of Section 5(b) plainly anticipates that the petition must make a satisfactory showing to obtain reopening of the order. The legislative history also makes it clear that the petitioner has the burden of showing, other than by conclusory statements, why an order should be modified.'’ The Commission is not required to reopen the order, however, if the petitioner fails to meet its burden of making the satisfactory showing required by the statute. This burden is a heavy one in view of the public interest in repose and finality of Commission orders.!* ? Louisiana Pacific Corp., Docket No. C-2956, Letter to John C. Hart (June 5, 1986) at 4. See S. Rep. No. 96-500, 96th Cong., Ist Sess. 9 (1979) (significant changes or changes causing unfair disadvantage); United States v. Swift & Co., 286 U.S. 106, 119 (1932) ("clear showing" of changes that eliminate reasons for order or such that order causes unanticipated hardship).

'® See S. Rep. No. 96-500, 96th Cong,, Ist Sess. 9-10 (1979). 1 This legislative history to the amended Section 5(b) states: [U]nmeritorious, time consuming and dilatory requests are not to be condoned. A mere facial demonstration of changed facts or circumstances is not sufficient . . ‘The Commission, to reemphasize, may properly decline to reopen an order if a request is merely conclusory or otherwise fails to set forth specific facts demonstrating in detail the nature of the changed conditions and the reasons why these changed conditions require the requested modification of the order. 2 See Federated Department Stores, Inc. v. Moitie, 452 U.S. 394 (1981) (strong public interest considerations support repose and finality). TARRA HALL CLOTHES, INC., ET AL. 925 920 Modifying Order II. PETITIONER'S ARGUMENTS The Petitioner raises two main arguments in support of his current Petition. First, the Petitioner argues that circumstances and facts have changed, making the bond requirement of the consent order no longer necessary to ensure compliance with the Wool Act. Petitioner states that his new company, Hartz, is larger and manufactures hi gher quality and higher priced clothing than Tarra Hall had produced.” According to Petitioner, ninety percent of the piece goods Hartz imports constitute pure virgin wool, while the remaining ten percent are wool blends of the highest quality -- wool blended with silk, linen, or cashmere. Petitioner contends that Hartz no longer imports recycled wool products, nor does it obtain any wool products from the mill in Prato, Italy that supplied the wool products that were the subject of the original Commission complaint. Petitioner also argues that Hartz carefully tests the fiber content of all imported wool products for which Hartz is the importer of record, including 100% of the wool products from Prato, Italy."4 Petitioner explains that because Tarra Hall was a smaller company, it did not have the resources Hartz has to conduct such testing. In addition, Petitioner points out that he has maintained a perfect record of compliance with the consent order.

Petitioner's second argument is that the public interest warrants modification of the consent order because the bond requirement places an unfair burden on him. He states that he currently must spend $10,000 each year to secure a surety bond for compliance with the consent order. He further claims that since 1978, Hartz has spent approximately $100,000 in compliance with the bond requirement, 3 Petitioner states that Hartz employs nearly 700 people in its factories in Maryland and Virginia, and has annual sales of about $45 million. Petitioner also states that Hartz sells its products under such well-known trade names as GIVENCHY, TALLIA, OLIVER, and CHARLES JOURDAN, and the clothes are sold nationally by such retailers as Macy's, Raleigh's, and Neiman Marcus. 45 1 7 1 5 2 622 2616 174 29 93.672661 Petitioner's5 1 7 1 5 3 809 2618 81 29 94.315811 letters 1 7 1 5 4 900 2619 34 28 97.004128 of5 1 7 1 5 5 942 2619 71 28 96.997849 June5 1 7 1 5 6 1029 2620 42 33 96.809105 18,5 1 7 1 5 7 1088 2621 81 33 96.809105 1992,5 1 7 1 5 8 1182 2622 145 30 96.675041 describes5 1 7 1 5 9 1339 2624 46 28 96.896584 thes 1 7 1 5 10 1398 2625 102 37 96.981842 testing5 1 7 1 5 11 1512 2635 131 27 96.877007 programs 1 7 1 5 12 1656 2636 31 20 96.877007 as5 1 7 1 5 13 1699 2629 126 29 81.866798 follows:4 1 7 1 6 0 571 2659 1261 42 -1 5 1 7 1 6 1 571 2659 60 28 96.981361 Thes 1 7 1 6 2 643 2665 66 23 96.978012 tests5 1 7 1 6 3 721 2669 46 20 96.965576 ares 1 7 1 6 4 778 2663 159 28 96.825287 conducted5 1 7 1 6 5 949 2672 36 20 96.964256 on5 1 7 1 6 6 997 2664 46 28 96.190155 thes 1 7 1 6 7 1055 2665 87 28 96.948593 fabrics 1 7 1 6 8 1155 2666 27 27 96.149597 in5 1 7 1 6 9 1195 2675 15 19 96.149597 a5 1 7 1 6 10 1221 2668 117 27 96.647072 random5 1 7 1 6 11 1351 2668 120 33 96.982758 fashion,5 1 7 1 6 12 1484 2671 66 27 97.006096 with5 1 7 1 6 13 1562 2672 86 27 96.200569 about5 1 7 1 6 14 1660 2673 70 28 96.200569 25%5 1 7 1 6 15 1743 2674 35 27 97.020775 of5 1 7 1 6 16 1786 2674 46 27 97.016068 thea 1 7 1 7 0 571 2704 1260 51 -1 5 1 7 1 7 1 571 2704 103 30 94.503830 fabrics5 1 7 1 7 2 686 2707 156 36 94.503830 ultimately5 1 7 1 7 3 852 2708 85 37 96.452644 beings 1 7 1 7 4 949 2710 95 28 96.452644 tested.5 1 7 1 7 5 1065 2710 150 33 96.812843 However,5 1 7 1 7 6 1227 2712 67 29 96.489059 with5 1 7 1 7 7 1305 2714 96 35 96.571732 regards 1 7 1 7 8 1413 2719 28 24 96.571732 to5 1 7 1 7 9 1452 2715 44 28 96.546234 thes 1 7 1 7 10 1508 2725 67 27 96.414062 very5 1 7 1 7 11 1586 2717 108 29 96.014717 limited5 1 7 1 7 12 1705 2719 126 36 96.712326 quantity4 1 7 1 8 0 570 2751 1261 44 -1 5 1 7 1 8 1 570 2751 35 28 96.939705 of5 1 7 1 8 2 612 2751 88 29 96.992699 fabrics 1 7 1 8 3 712 2753 139 36 96.801590 imported5 1 7 1 8 4 863 2754 72 28 96.858330 from5 1 7 1 8 5 947 2755 46 28 96.858330 thes 1 7 1 8 6 1004 2756 80 29 97.005890 Prato5 1 7 1 8 7 1095 2758 97 35 95.744827 regions 1 7 1 8 8 1204 2758 34 28 97.014854 of5 1 7 1 8 9 1246 2759 78 36 96.832649 Italy,5 1 7 1 8 10 1340 2760 84 28 96.827652 100%5 1 7 1 8 11 1436 2761 35 28 97.000847 of5 1 7 1 8 12 1478 2762 80 28 96.743835 those5 1 7 1 8 13 1570 2763 103 29 95.946693 fabrics5 1 7 1 8 14 1685 2773 45 19 96.945045 ares 1 7 1 8 15 1742 2766 89 28 95.998428 tested4 1 7 1 9 0 569 2797 611 35 -1 5 1 7 1 9 1 569 2797 45 28 97.008499 for5 1 7 1 9 2 626 2798 46 28 96.766045 thes 1 7 1 9 3 683 2806 117 21 96.843590 reasons5 1 7 1 9 4 814 2806 42 22 96.696167 sets 1 7 1 9 5 867 2800 74 29 96.369835 forth5 1 7 1 9 6 954 2801 28 29 96.979752 in5 1 7 1 9 7 994 2801 46 29 96.657341 thes 1 7 1 9 8 1052 2802 128 30 96.581406 Petition. Modifying Order 115 F.T.C, which outlay did not include administrative costs to Hartz resulting from compliance procedures. Petitioner maintains that this places the company at an unfair disadvantage with respect to his competitors, who do not have similar requirements, and is a stigma under which he and Hartz must continue to operate.

Finally, Petitioner argues that it is unfair for the Commission to continue to require the bond as to all wool products because the Commission has previously eliminated or modified the bond requirements that the Commission had imposed on three other fabric importers, Norlic Import Company,’° C. Itoh & Co., (America), Inc.,'° and Texora International Corporation." Petitioner argues that the Commission modified the orders in Norlic and Itoh because those companies no longer imported recycled wool products, and that the Commission modified the order in Texora because the company had set up a program for testing the fibers of its imported wool products." Consequently, Petitioner contends that fairness and the public interest mandate that the Commission should treat him similarly because he, too, no longer imports recycled wool products and now tests all wool products from Prato and about 25% of all other wool products on a randomly selected basis for which Hartz is the importer of record. IV. PETITIONER HAS DEMONSTRATED THAT MODIFICATION OF THE ORDER IS IN THE PUBLIC INTEREST As stated previously, Section 5(b) of the FTC Act requires Petitioner to make a5 1 5 1 2 5 1083 2073 219 47 96.977234 satisfactory5 1 5 1 2 6 1316 2076 162 46 96.927971 showings 1 5 1 2 7 1491 2077 71 35 96.998924 that5 1 5 1 2 8 1575 2078 159 46 96.503578 changed5 1 5 1 2 9 1747 2079 200 37 96.938507 conditions5 1 5 1 2 10 1962 2081 42 35 96.643997 of4 1 5 1 3 0 664 2129 1335 55 -1 5 1 5 1 3 1 664 2129 68 35 96.452332 laws 1 5 1 3 2 758 2139 40 25 96.400513 or5 1 5 1 3 3 823 2129 89 35 96.348770 fact require the order to be modified. Where changed circumstances would not require reopening an order, the Commission nevertheless may modify an order when the Commission determines that the public interest requires it.

'® Norlic Import Co., 84 FTC 1173 (1974), modified, 91 FTC 112 (1978). ® ©. Itoh & Co., (America), 84 FTC 1187 (1974), modified, 96 FTC 40 (1980). ’5 1 7 1 3 2 775 2676 109 28 89.599594 Texora5 1 7 1 3 3 895 2677 64 28 93.263885 Intl5 1 7 1 3 4 971 2677 96 36 93.146347 Corp.,5 1 7 1 3 5 1081 2677 37 29 93.133408 875 1 7 1 3 6 1130 2678 71 29 92.459984 FTC5 1 7 1 3 7 1214 2678 55 29 94.705284 2735 1 7 1 3 8 1283 2680 111 34 94.736847 (1976),5 1 7 1 3 9 1408 2680 148 34 94.736847 modified,5 1 7 1 3 10 1570 2681 36 29 96.842751 975 1 7 1 3 11 1619 2682 70 28 95.321426 FTC5 1 7 1 3 12 1702 2683 52 28 93.403694 3515 1 7 1 3 13 1772 2683 111 35 85.263733 (1981).2 1 8 0 0 0 1426 2560 142 8 -1 3 1 8 1 0 0 1426 2560 142 8 -1 4 1 8 1 1 0 1426 2560 142 8 -1 5 1 8 1 1 1 1426 2560 142 8 95.000000 2 1 9 0 0 0 1534 2634 142 10 -1 3 1 9 1 0 0 1534 2634 142 10 -1 4 1 9 1 1 0 1534 2634 142 10 -1 5 1 9 1 1 1 1534 2634 142 10 95.000000 2 1 10 0 0 0 1406 2708 142 10 -1 3 1 10 1 0 0 1406 2708 142 10 -1 4 1 10 1 1 0 1406 2708 142 10 -1 5 1 10 1 1 1 1406 2708 142 10 95.000000 2 1 11 0 0 0 656 2737 1337 105 -1 3 1 11 1 0 0 656 2737 1337 105 -1 4 1 11 1 1 0 733 2737 1260 55 -1 5 1 11 1 1 1 733 2737 70 43 41.101349 Bon5 1 11 1 1 2 816 2752 119 33 92.165253 Texora,5 1 11 1 1 3 948 2753 47 29 96.858925 thes 1 11 1 1 4 1007 2753 198 30 95.961769 Commissions 1 11 1 1 5 1217 2757 143 35 96.561119 reopened5 1 11 1 1 6 1372 2757 55 28 96.498756 ands 1 11 1 1 7 1440 2758 140 28 96.614922 modified5 1 11 1 1 8 1592 2758 47 29 96.973915 thes 1 11 1 1 9 1651 2759 82 29 96.384552 orders 1 11 1 1 10 1744 2764 28 24 96.561951 to5 1 11 1 1 11 1785 2760 149 29 96.775192 substitutes 1 11 1 1 12 1946 2761 47 28 97.018669 thea 1 11 1 2 0 656 2801 918 41 -1 5 1 11 1 2 1 656 2801 75 28 96.238754 wool5 1 11 1 2 2 745 2802 119 36 96.226479 products 1 11 1 2 3 876 2802 103 37 96.226479 testing5 1 11 1 2 4 991 2803 171 36 96.954826 procedures5 1 11 1 2 5 1175 2803 45 30 96.852135 for5 1 11 1 2 6 1231 2804 46 29 96.930794 thes 1 11 1 2 7 1289 2805 77 28 96.670578 bonds 1 11 1 2 8 1378 2806 196 36 96.362587 requirement. TARRA HALL CLOTHES, INC., ET AL. 927 920 Modifying Order In the 1987 petition, Mr. Cohen had requested that the bonding requirement be entirely eliminated. As changed conditions of fact, Petitioner claimed that his company had instituted testing procedures and that the bond requirement imposed economic and competitive hardship. Petitioner also claimed that Commission policy on bonding requirements had changed. The Commission concluded that the above contentions did not establish sufficient changes of fact to warrant the requested order modification.

However, Petitioner now offers a number of new changed conditions of fact not presented in the 1987 petition. Petitioner observes that the subject of the Commission's complaint had been the mislabeling of recycled wool products purchased from the Prato, Italy region. Petitioner states that he now is president and an owner of a different company, Hartz, that does not purchase wool products from Tarra Hall's supplier in Italy and, in fact, does not import any of the recycled wool products and other types of fabrics that gave rise to the complaint. Petitioner claims that such facts, in conjunction with the company's testing program and other facts cited in the Petition, warrant modification of the bonding requirement. The legal test regarding changed conditions of fact is whether such facts eliminate the need for the order, or make continued application of the order inequitable or harmful to competition. The changes in fact that Petitioner cites, standing alone, do not meet this test. At the time the order was entered, it was foreseeable that Petitioner might sell his interest in Tarra Hall and start or purchase an interest in another business such as Hartz. It also was foreseeable that Petitioner might institute procedures, such as the testing of imported wool products, to ensure compliance with the order. The Commission expects respondents to modify their practices so as to comply with an order.’ And finally, it was foreseeable that Petitioner might stop importing wool products from the troublesome supplier in Prato, Italy, or might cease importing recycled wool 19 Petitioner also offers as a changed condition of fact that the company has a perfect record of compliance with the order. The Commission disagrees that compliance with orders represents a change of fact. It is the responsibility of all respondents to comply with orders. However, a good record of compliance creates a favorable climate for the Commission's consideration of order modification petitions. Modifying Order 115 F.T.C.

products altogether. The Commission nevertheless determined at the time the order was entered that the bond requirement was a prudent safeguard. Moreover, there is no guarantee that Hartz will continue its present testing safeguards or that it will never import lesser grades of wool products that might cause labeling problems. Despite this absence of sufficient changes of fact, the Commission may still grant the petition on public interest grounds. Petitioner argues that economic and competitive hardship warrant reopening and modifying the order on public interest grounds.” The Commission is not persuaded by this claim. It is evident that the bond requirement has not prevented Hartz from successfully competing in the marketplace. Petitioner states that Hartz has annual sales of about $45,000,000 and is one of the very few domestic clothing manufacturers making a profit at this time. It is doubtful that the $10,000 in annual premiums that Petitioner pays for the bond is an economic or competitive hardship. Consequently, the Commission declines to modify the order on the basis that the order is against the public interest due to economic burden.

Economic and competitive hardship are not the only criteria the Commission may consider.”’ The Commission also may examine the 20 Although Petitioner also claims that the bond imposes a stigma upon him and his company, which is against the public interest, he offers no substantiation for his claim. To the contrary, the materials submitted with the petition indicate that Petitioner and Hartz enjoy a good reputation within the garment industry. Consequently, the Commission considers any stigma associated with the bonding requirement to have been negligible.

21 See, e.g., American Home Products Corporation, 103 FTC 528 (1984) (order reopened and modified on public interest grounds to bring petitioner's order into general parity with other similar Commission orders), Redman Industries, Inc., 110 FTC 636, 640 (1988)(four orders reopened and vacated on public interest grounds because they contained remedies contemplated and rejected as not beneficial to consumers in connection with proposed rulemaking); Liquid Air Corporation of North America 111 FTC 135, 137 (1988) (order reopened and modified on public interest grounds because order's requirement of prior Commission approval of petitioner's acquisitions imposed substantial compliance costs and required prior approval for potential wholly internal activities); Lenox, Incorporated, 111 FTC 612, 620 (1989) (order reopened and modified in part on public interest grounds because order prohibited conduct that itself may not be unlawful and provision no longer necessary to ensure compliance).

TARRA HALL CLOTHES, INC., ET AL. 929 920 Modifying Order entirety of the circumstances in each case to determine whether intrinsic fairness dictates that an order be modified.” The new petition presents a significantly stronger case for order modification on fairness grounds than the 1987 Petition. With the addition of the facts that Petitioner does not sell recycled wool products, does not purchase such products from the mill that supplied the offending fabrics, and now requests in the alternative that the bond requirement merely be limited rather than eliminated, the Petition presents circumstances similar to those in Norlic and C. Itoh. In those cases, the petitioners similarly had ceased buying wool products from the offending mills in Prato, Italy and had ceased buying recycled wool products altogether. The Commission modified the orders in each case to apply the bonding requirement only to the importation of recycled wool products. ”

In sum, Petitioner, while not presenting changed facts that by themselves warrant an order modification, has demonstrated that a modification is in the public interest. This fairness consideration, when coupled with the changed facts noted above, justifies granting the limited modification requested.”

22 See, e.g., National Tea Company, 111 FTC 109, 110 (1988)(order reopened and modified on public interest grounds because company had exited the geographic market and order requirements imposed substantial costs and put petitioner at disadvantage to competitors who were not under similar restraints); see also American Home Products Corporation, 103 FTC at 528. 23 The Commission finds Petitioner's analogy to Texora less persuasive. The petition was similar to this case in that Texora claimed strict testing procedures as a changed condition of fact. Petitioner also points to his company's testing program. However, in Texora the Commission, while eliminating the bond requirement, also modified the order to make testing mandatory. Petitioner does not seek this substitution of a testing requirement for the current bond requirement. Consequently, testing by Hartz would remain voluntary and there is no guarantee that the company would continue this practice.

*4 This is not to suggest that an order modification is always warranted whenever the petitioner's order contains provisions that differ from those in orders covering its competitors. Nevertheless, maintaining a level playing field among competitors, to the extent practicable and justified by the facts, is of concern to the Commission. This concern is heightened where, as here, the order imposes affirmative obligations that go beyond prohibiting violative practices (in this case, a bond requirement) on only one of several members of an industry. The order provision at issue is not a core provision Modifying Order 115 F.T.C.

Accordingly, the Commission grants Petitioner's alternative request that the order be modified to require bonding only with respect to the importation of recycled wool products. The Petitioner will continue to be bound by the order’s general prohibitions against falsely labeling any wool products. In the event Petitioner again imports recycled wool products, he must obtain a bond to ensure those wool products are properly labeled.

V. CONCLUSION The Commission concludes, in the public interest, that the Petition should be granted to require bonding only for importations of recycled wool products.

It is therefore ordered, That the proceeding is hereby reopened and the Decision and Order issued on February 24, 1976, is hereby modified to read as follows:

ORDER It is ordered, That respondents Tarra Hall Clothes, Inc., a corporation, its successors and assigns, and its officers, and Abraham Cohen, individually and as an officer of said corporation, and respondents’ representatives, agents, and employees, directly or through any corporation, subsidiary, division or any other device, in connection with the introduction, or manufacture for introduction, into commerce, or the offering for sale, sale, transportation, distribution, delivery for shipment or shipment, in commerce, of wool products as commerce and wool5 1 7 1 9 6 1378 2181 165 46 86.764465 product are defined in the Wool Products Labeling Act of 1939, do forthwith cease and desist from misbranding such products by:

|. Falsely and deceptively stamping, tagging, labeling or otherwise identifying such products.

2. Failing to securely affix to, or place on, each such product a stamp, tag, label or other means of identification showing in a clear that directly prohibits deceptive practices or violations of a statute. Instead, the provision at issue is a perpetual bonding requirement in a non-fraud case. TARRA HALL CLOTHES, INC., ET AL. 93] 920 Modifying Order and conspicuous manner each element of information required to be disclosed by Section 4(a)(2) of the Wool Products Labeling Act of 1939.

It is further ordered, That respondent Tarra Hall Clothes, Inc., a corporation, its successors and assigns, and its officers, representatives, agents, and employees directly or through any corporation, subsidiary, division, or other device, do forthwith cease and desist from:

Importing or participating in the importation of wool products into the United States except upon filing bond with the Secretary of the Treasury in a sum double the value of said wool products and any duty thereon, conditioned upon compliance with the provisions of the Wool Products Labeling Act of 1939.

It is further ordered, That respondent Abraham Cohen, his representatives, agents, and employees, directly or through any corporation, subsidiary or division, or other device, do forthwith cease and desist from:

Importing or participating in the importation of recycled wool products into the United States except upon filing a bond with the Secretary of the Treasury in a sum double the value of said wool products and any duty thereon conditioned upon compliance with the provisions of the Wool Products Labeling Act of 1939. It is further ordered, That respondents notify, by registered mail, each of their customers that purchased the wool products which gave rise to this complaint of the fact that such products were misbranded. It is further ordered, That the individual respondent named herein promptly notify the Commission of the discontinuance of his present business or employment and his affiliation with a new business or employment. Such notice shall include respondent's current business address and a statement as to the nature of the business or employment in which he is engaged, as well as a description of his duties and responsibilities.

Modifying Order 115 F.T.C.

It is further ordered, That the respondent corporation shall forthwith distribute a copy of this order to each of its operating divisions.

It is further ordered, That respondents notify the Commission at least thirty (30) days prior to any proposed change in the corporate respondent such as dissolution, assignment, or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries or any other change in the corporation which may affect compliance obligations arising out of the order. Commissioner Azcuenaga concurring in the result only. POMPEIAN, INC. 933 933 Complaint