Thiret v. F. T. C., s. 74-1100

• Decision Date: 18 March 1975
• Docket Number: Nos. 74-1100,74-1112,s. 74-1100
• Citation: 512 F.2d 176
• Parties: 1975-1 Trade Cases 60,221 Claude THIRET et al., Petitioners, v. FEDERAL TRADE COMMISSION, Respondent.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 176

512 F.2d 176

1975-1 Trade Cases 60,221

Claude THIRET et al., Petitioners, v. FEDERAL TRADE COMMISSION, Respondent.

Nos. 74-1100, 74-1112.

United States Court of Appeals Tenth Circuit.

March 18, 1975.

Blaine L. Boyens, Denver, Colo. (Boltz, Boyens & Glenn, Denver, Colo., on the brief), for petitioner Claude Thiret.

Richard M. Koon, Denver, Colo. (Holland & Hart, Denver, Colo., on the brief), for petitioners Certified Building Products, Inc., Certified Improvements Co., and Michael P. Thiret.

Warren S. Grimes, Washington, D. C. (Calvin J. Collier, Gen. Counsel, Gerald Harwood, Asst. Gen. Counsel, and Karl H. Buschmann, Atty., Washington, D. C.), for respondent F. T. C.

Before LEWIS, Chief Judge, and BREITENSTEIN and McWILLIAMS, Circuit Judges.

McWILLIAMS, Circuit Judge.

These consolidated cases involve two petitions for review of an order of the Federal Trade Commission that the petitioners cease and desist from certain acts and practices found by the Commission to be unfair and deceptive under Section 5 of the Federal Trade Commission Act. 15 U.S.C. § 45. The order of the Commission also provided that petitioners cease and desist from certain other acts and practices found to be in violation of the Truth-in-Lending Act, 15 U.S.C. § 1601 et seq., and Regulation Z, 12 C.F.R. 226, promulgated thereunder.

The petitioners are engaged in the business of selling and installing steel siding on residential properties in Colorado, Wyoming, Nebraska, Kansas and New Mexico. One of the petitioners, Certified Building Products, Inc., was incorporated in the early 1950's, and ceased doing business in November 1970. Certified Improvements Company, another petitioner, had been dormant since its organization in 1961 and was activated in January 1970 to carry on the business previously conducted by Certified Building Products. Michael Thiret, also one of the petitioners, was president and sole owner of Certified Building Products. Claude Thiret, the remaining petitioner, was a salesman for Certified Building Products from about 1953 to 1968, at which time he became the general manager for that company. When Certified Improvements Company was activated in January 1970, Claude Thiret became its president and he made a cash contribution for which he received 40% of the company stock. Michael Thiret then became the vice-president of Certified Improvements and by virtue of his cash contribution to the company he received 60% of its stock.

Based on its investigation the Commission issued a complaint against Certified Building Products, Inc., Certified Improvements Company, Michael Thiret, Claude Thiret and one Jack Bitman, who was the secretary-treasurer of Certified Improvements Company. In Count 1 of the complaint it was alleged that the respondents had violated Section 5 of the Federal Trade Commission Act by falsely and deceptively representing that their siding materials were being offered for sale at a special reduced price for a limited time only; that purchasers of the siding material would realize a 50% saving in their air-conditioning and heating bills; that the siding materials would never require repairing; that the siding materials were unconditionally guaranteed for 30 years; that homes of prospective purchasers had been specially selected as model homes, and, after installation, such homes would be used for demonstrating and advertising purposes for which the purchasers of siding material would receive allowances, discounts, or commissions; and that purchasers of the siding materials would receive enough commissions to obtain their own installation at little or no cost. Count 1 also charged that the respondents had violated Section 5 by negotiating customer obligations thus obtained to third parties, thereby cutting off certain defenses which might otherwise have been available to the customer who defaulted on his installment payments.

Count 2 of the complaint alleged that the respondents had violated the Truth-in-Lending Act and its implementing Regulation Z relating to the extension of credit to customers.

A prehearing conference was held before the Administrative Law Judge, during which Michael and Claude Thiret were deposed. As we understand it, at the time of this so-called prehearing conference it was contemplated that a consent decree would be entered as concerns the two business entities, i. e., Certified Building Products and Certified Improvements Company, and Michael Thiret. The prehearing conference was apparently held for the primary purpose of ascertaining the degree of involvement, if any, on the part of Claude Thiret and Jack Bitman. In an event, based on the testimony of Michael and Claude Thiret given at this prehearing conference, Claude Thiret and Jack Bitman filed motions to dismiss based on the proposition that neither had any control over the activities of the salesmen who were doing the actual selling of the steel sidings.

In this posture, then, the matter was certified to the Commission by the Administrative Law Judge. The Commission, however, rejected the proposed consent decree as being inadequate, and denied the motions to dismiss made by Claude Thiret and Jack Bitman.

The entire matter then came on for full hearing before the Administrative Law Judge. After hearing the testimony of some twenty-two witnesses, the Judge dismissed both counts in the complaint as to all respondents. As to Count 1, the Judge found that complaint counsel had failed to sustain its burden of proof.

As to Count 2, though the respondents were found to have violated Regulation Z, the violation was characterized as only "technical," and not substantive in nature. Further, the Judge found that since the practices in question had been discontinued and the respondents were unlikely to resume them in the future, there was no need for a cease and desist order.

Complaint counsel then appealed the matter to the Commission and the latter in its decision modified the Judge's order in substantial particulars. The Commission substituted its findings for those of the Judge with respect to Count 1, the Commission finding that the evidence sustained most of the allegations of unfair and deceptive trade practices as set forth in the complaint. The Commission also concluded that the violations of the Truth-in-Lending Act should be prohibited. Accordingly, cease and desist orders were issued in connection with both counts of the complaint as to all respondents, except Jack Bitman. The four petitioners in the present consolidated proceeding in this court, namely, the two business entities, Michael Thiret and Claude Thiret, seek review of the orders thus entered.

The questions to be resolved are as follows: (1) Are the findings of fact as made by the Commission supported by substantial evidence on the record as a whole; (2) do the findings in turn support the remedial orders entered by the Commission; and (3) is Claude Thiret properly held to be subject to the cease and desist orders? In our view the answer to each of the questions is in the affirmative.

The applicable statute provides that "the findings of the Commission as to the facts, if supported by evidence, shall be conclusive." 15 U.S.C. § 45(c). This statutory language has been held to mean that the findings of the Commission as to facts are conclusive on the courts if the findings be supported by substantial evidence. Adolph Coors Company v. F. T. C., 497 F.2d 1178 (10th Cir. 1974), and OKC Corp. v. F. T. C., 455 F.2d 1159 (10th Cir. 1972). Where, as here, the Commission in effect overrules the Judge and substitutes its findings for those of the Judge, the Commission's findings should be closely scrutinized. However, even though the Judge and the Commission may disagree as to the proper findings, our task is still to determine whether the Commission's findings are supported by substantial evidence. Universal Camera Corp. v. Labor Bd., 340 U.S. 474, 496, 71 S.Ct. 456, 95 L.Ed. 456 (1951).

Our study of the record as made in the instant case leads us to conclude that the findings of the Commission regarding unfair and deceptive trade practices are supported by substantial evidence. More than a score of persons who had purchased steel siding from the petitioners testified as to the selling tactics practiced upon them by petitioners' salesmen. And to us there was a remarkable similarity in the testimony of these several witnesses. In each instance the salesmen hired by the petitioners to go out in the field and sell steel siding were using pressure tactics, of one form or another.

Many of the witnesses testified that they were led to believe that they were receiving special discount prices in exchange for use of their homes as "showcases" or "model homes," when in fact such prices were those normally charged by petitioners. In some...