Encyclopaedia Britannica, Inc. v. F. T. C.
Decision Date | 02 August 1979 |
Docket Number | No. 76-1477,76-1477 |
Citation | 605 F.2d 964 |
Parties | 1979-2 Trade Cases 62,793, 5 Media L. Rep. 1685 ENCYCLOPAEDIA BRITANNICA, INC., and Britannica Home Library Services, Inc., Petitioners, v. FEDERAL TRADE COMMISSION, Respondent. |
Court | U.S. Court of Appeals — Seventh Circuit |
Bryson P. Burnham, Mayer, Brown & Platt, Chicago, Ill., for petitioners.
D. Barry Morris, F. T. C., Washington, D.C., for respondent.
Before FAIRCHILD, Chief Judge, and SPRECHER and WOOD, Circuit Judges.
This is a petition to review an order of the Federal Trade Commission holding that certain practices of petitioners, Encyclopaedia Britannica, Inc. and its subsidiary, Britannica Home Library Services, Inc. (hereinafter referred to jointly as Britannica) violated § 5 of the Federal Trade Commission Act, 15 U.S.C. § 45(a)(1) 1, and ordering Britannica to cease and desist from certain practices. Some of the cease and desist provisions of the orders were so framed as to forbid certain customary sales and promotional activity unless specified notices were given. These notice provisions are the subject of this review.
Encyclopaedia Britannica, Inc. is a New York Corporation with its principal place of business in Chicago. As is widely known, Britannica publishes, sells, and distributes encyclopedias, textbooks, general reference works, and other educational and literary products throughout the world. The primary sales method is direct selling at the homes of customers.
The complaint which initiated the proceeding before the Commission was issued December 11, 1972. It charged deceptive practices in recruitment of sales representatives, in sales presentations to members of the public, in obtaining leads to persons who will allow Britannica sales representatives into their homes, in seeking subscriptions to book promotions, and in collection procedures. On December 16, 1974, after trial hearings, ALJ Barnes entered very extensive findings, conclusions, and a remedial order. In respects not material on this review, the ALJ found deceptive and unfair practices in recruiting advertisements, in certain sales devices, a mail order program, and the use of types of collection letters. On this review, Britannica has narrowed its challenges to remedial provisions relating to deception on initial contact of salesmen with consumers, and to deception in certain advertised offerings.
The portions of the ALJ's order challenged by Britannica and remedying the practices above described require Britannica to cease and desist from:
"D. Visiting the home or place of business of any persons for the purpose of soliciting the sale, rental or lease of any publications, merchandise or service, unless at the time admission is sought into the home or place of business of such person, a card 3 inches by 5 inches in dimension, with all words in 10-point bold-face type, with the following information, and none other, in the indicated order, is presented to such person:
(1) the name of the corporation;
(2) the name of the salesperson;
(3) the term 'Encyclopedia Sales Representative' (or other applicable product);
(4) the terminology: 'The purpose of this representative's call is to solicit the sale of encyclopedias' (or other applicable product); and
(5) the statement: This card should be kept as part of your permanent records of this transaction.
(Paragraph 5 was deleted from the order by the Commission.)
In discussing the remedial order, the ALJ said he had "taken into consideration . . . (1) the numerous violations of law by respondents which this record establishes, consisting of conduct which has been declared unlawful by the Commission over the years, (2) the fact that this order must be designed to protect the general consuming public which includes the ignorant, the unthinking and the credulous . . ., (3) respondents' past record of unlawful conduct as determined in previous Commission proceedings, (1952 and 1961 orders concerning representations with respect to allegedly 'special' prices and the like) and (4) the fact that '. . . once the Government has successfully borne the considerable burden of establishing a violation of law, all doubts as to the remedy are to be resolved in its favor' . . . ."
With respect to the Initial Contact deception, the ALJ wrote as follows:
The requirement of the Card-at-the-Door was debated in the briefs of counsel on appeal to the Commission. Britannica pointed to testimony that the required presentation of the card would have a devastating effect upon a rational interchange between salesman and prospect. Britannica proposed as less drastic alternatives (1) the requirement of oral disclosure and of training of sales personnel to make such disclosures, and (2) the requirement that the sales representative present an ordinary business card, disclosing his title as "Sales Representative."
Commission counsel argued several aspects of the greater effectiveness of the prescribed card, as compared with an ordinary business card, in giving persons clear notice of the caller's sales purpose and an opportunity to protect themselves from unwanted harassment.
The opinion of the Commission dealt specifically with Britannica's concern over the Card-at-the-Door requirement. Adverting in detail to evidence that Britannica's sales representatives have been trained to conceal the sales purpose of seeking admission to a home, the Commission concluded that "(t)he company-described disguise techniques necessitate inclusion of an order provision requiring clear and conspicuous disclosure of the fact that the representative is a salesman and of the true purpose of gaining entry into the home."
The Commission concluded that the prescribed advice to the customer to keep the card did "not appear to be necessary in order to provide a clear and conspicuous disclosure of the nature and purpose of the call" and omitted that prescription.
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