Country Tweeds, Inc. v. FTC
| Decision Date | 03 January 1964 |
| Docket Number | Docket 28014.,No. 57,57 |
| Parties | COUNTRY TWEEDS, INC., a corporation, and Marcus Weisman, individually and as an officer of the said corporation, Petitioners, v. FEDERAL TRADE COMMISSION, Respondent. |
| Court | U.S. Court of Appeals — Second Circuit |
Barshay & Frankel, New York City (Nathan Frankel, New York City, of counsel), for petitioners.
James McI. Henderson, Gen. Counsel, J. B. Truly, Asst. Gen. Counsel, Miles J. Brown, David B. Morris, Attys., Federal Trade Commission, for respondent.
Before WATERMAN, HAYS and MARSHALL, Circuit Judges.
This is a petition to review a cease and desist order of the Federal Trade Commission issued after the Commission had determined that certain advertising practices of petitioners violated Section 5(a) (1) of the Federal Trade Commission Act, 15 U.S.C. § 45(a) (1).
The petitioners are Country Tweeds, Inc., a New York corporation engaged in the manufacture of ladies' cashmere coats and other clothing products, and the corporation's president, Marcus Weisman. In early 1958 Country Tweeds, which does not itself manufacture the cashmere fabric used in its coats, began purchasing its requirements of cashmere from a new supplier, Cashmere Products, Ltd. Country Tweeds had formerly purchased its cashmere from Einiger Mills, Inc., but changed suppliers because it believed that the cashmere produced by Einiger was no longer the best on the market. Petitioners called the new fabric "Country Tweeds El Elegant Cashmere."
Petitioners submitted two samples of cashmere fabric to the United States Testing Company. One sample, the fabric formerly purchased from Einiger, it labeled "Best Quality Cashmere produced to date"; the other sample, the new fabric it was then using, it labeled "Country Tweeds El Elegant Cashmere." The testing company subjected the samples to three comparative tests requested by petitioner: (1) an abrasion test; (2) a breaking load test; (3) a dry cleaning test. A two page report was then submitted to petitioners setting forth the results of the tests and in this report the testing company designated the samples by the designations given them by petitioners. The report was on the official letterhead of the testing company, and it was signed by two of its officials.
After receiving the report petitioners altered it and in so doing reduced its size to one page. It was then sent, in its altered form, to petitioners' dealers throughout the United States. At the same time petitioners also furnished to the dealers a brochure, which included the following information:
The report as thus altered and distributed contained a reproduction of the testing company's official letterhead and the two signatures which were on the original report, but the body of the original report was changed. The petitioners changed that portion of the testing company's report dealing with the dry cleaning test by merely printing the testing company's stated results without the introductory material which had appeared in the original report explaining in detail the manner in which the test was conducted.
The portion of the altered report that dealt with the other two tests eliminated even more.
In the original report the testing company had set forth the results it had reached for the abrasion test in terms of the number of abrading cycles necessary to produce a given degree of wear for each sample. The report set forth that "Country Tweeds El Elegant Cashmere" had withstood 715 cycles, while "Best Quality Cashmere produced to date" had withstood only 673. The testing company inserted in its report, immediately after the statement of this result in its tests, the following "Comment": In the altered report petitioners omitted this qualifying statement and expressed the test results in the following language: "COUNTRY TWEEDS' El Elegant 100% Cashmere lasts 6.3% longer than Best Quality Cashmere produced to date."
The results of the breaking load test were expressed by the testing company in its original report in terms of a given number of test pounds. Numerals indicating the measure of the results for each sample were set forth for both "warp" and "filling." The numerals for "Best Quality Cashmere produced to date" were 29.6 for "warp" and 14.5 for "filling." The numerals for "Country Tweeds El Elegant Cashmere" were 28.5 and 22.7 for these two categories. The report as altered by petitioners described the test results in the following terms: "COUNTRY TWEEDS' El Elegant 100% Cashmere proves 56.5% stronger than Best Quality Cashmere produced to date." This 56.5% figure accurately represents only the percentage of difference between the original test results that dealt with "filling." The percentage figure does not take into account the difference in original test results for "warp," a difference which showed that "Best Quality Cashmere produced to date" performed better in this regard than "Country Tweeds El Elegant Cashmere."
On the basis of these facts, undisputed by petitioners, the Commission concluded that petitioners had violated Section 5 of the Federal Trade Commission Act by falsely representing: (1) That the United States Testing Company, prior to the comparative tests conducted on both samples, had already found one of the fabrics to be the best quality cashmere produced up to that time; (2) That "Country Tweeds El Elegant Cashmere" was in fact 56.5% stronger than another fabric subjected to a breaking load test; and (3) That the altered test report which was circulated was an authentic reproduction of the report originally submitted to petitioners by the United States Testing Company.
The record amply supports the conclusions of the Commission that petitioners made representations which were false, misleading, and deceptive. Petitioners, admitting that the altered report was not an authentic facsimile of the original report, contend that it was a fair summary of the original, framed in less technical terms. We find it impossible to accept this contention. Even if we were convinced (which we are not) that framing the test results in percentage terms did not cause the test results to appear more favorably to the fabric petitioners were interested in promoting, we would still be compelled to refuse to hold the altered report a fair summary. In the original report the testing company, immediately below the formal statement of the abrasion test results, had explained that the results were to be interpreted as evidencing no significant difference between the two fabrics tested. Petitioners chose to delete this important qualifying statement from the altered report which they distributed, simply stating that the fabric they were then using would last 6.3% longer than the other fabric. Thus, though the testing company had stated in the original report that the fabrics tested showed no significant difference when subjected to the abrasion test, petitioners chose to attribute to the company the opinion that one of the fabrics tested would last longer than the other.
What petitioners did in "summarizing" the results of the breaking load test was even more misleading. The test which was conducted involved two aspects, one dealing with "warp" and one dealing with "filling." The figures in the original report favored the fabric petitioners were interested in with respect to "filling," but showed that the other fabric had performed slightly better in the "warp" test. The percentage figure published in the altered report was one which presented the difference between the performance of the two fabrics with respect to "filling" only.
We agree with the Commission that this publication went beyond the mere misrepresentation of a testimonial or an endorsement; it amounted to a direct misrepresentation of the quality of petitioners' cashmere. A national testing company had given petitioners a report setting forth the comparative performance of two fabrics as a result of tests conducted at the behest of petitioners. Petitioners, in advertising one of those fabrics, made representations about it which were not supported by the test results they had received.
The Commission also found that petitioners had falsely represented that the testing company had previously tested one of the fabrics and had found it to be the best quality produced up to that time. Petitioners, when they submitted the competing fabric to the testing company, labeled it "Best Quality Cashmere produced to date." In their original report the testing company, as petitioners could well anticipate, designated the samples by the names petitioners had given them when the samples were submitted for testing, and petitioners carried over these names into the altered test report.
The Commission was correct in concluding that the report distributed by petitioners, which labeled the competing product tested as "Best Quality Cashmere produced to date," falsely represented that the testing company had previously tested the fabric and had found it to be of the best quality up to that time. Publication of the results of the comparative performance of these two fabrics in three tests carried with it the implication that the one labeled "Best Quality Cashmere produced to date" had previously been subjected by the testing company to a battery of tests that had established that quality, tests that were at least similar to those being then reported. Admittedly no prior tests had been conducted.
That the public was not misled in this particular by any alteration of the...
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