Dandy Products, Inc. v. FTC

• Decision Date: 07 July 1964
• Docket Number: No. 14320.,14320.
• Citation: 332 F.2d 985
• Parties: DANDY PRODUCTS, INC., a corporation, and Joseph M. Gron, individually and as an officer of said corporation, and Joseph M. Gron and Carlo E. Ferrari, copartners trading and doing business as Capitol Mailers, Petitioners, v. FEDERAL TRADE COMMISSION, Respondent.
• Court: U.S. Court of Appeals — Seventh Circuit

332 F.2d 985 (1964)

DANDY PRODUCTS, INC., a corporation, and Joseph M. Gron, individually and as an officer of said corporation, and Joseph M. Gron and Carlo E. Ferrari, copartners trading and doing business as Capitol Mailers, Petitioners, v. FEDERAL TRADE COMMISSION, Respondent.

No. 14320.

United States Court of Appeals Seventh Circuit.

June 11, 1964.

Rehearing Denied July 7, 1964.

Charles H. Rowan, Willis Hagen, Milwaukee, Wis., for petitioner.

J. B. Truly, Asst. Gen. Counsel, W. Risque Harper, Atty., Federal Trade Commission, Washington, D. C., James McI. Henderson, Gen. Counsel, for the Federal Trade Commission.

Before DUFFY, CASTLE and KILEY, Circuit Judges.

KILEY, Circuit Judge.

The question is whether the Federal Trade Commission's order that Dandy Products, Inc. and Joseph Gron, individually and as an officer of Dandy, cease and desist from using lottery devices or games of chance in sale or distribution of merchandise should be set aside because of a change in the "moral" climate of the business community. We think the order should stand.

Petitioners' briefs do not challenge, as they could not successfully do, the finding that the punchboard device used was a lottery device, or game of chance. Federal Trade Commission v. R. F. Keppel & Bro., Inc., 291 U.S. 304, 54 S.Ct. 423, 78 L.Ed. 814 (1934), Gerson v. Federal Trade Commission, 325 F.2d 93 (7th Cir. 1963), Wren Sales Co. v. Federal Trade Commission, 296 F.2d 456 (7th Cir. 1961), Peerless Products, Inc. v. Federal Trade Commission, 284 F.2d 825 (7th Cir. 1960), cert. denied, 365 U.S. 844, 81 S.Ct. 804, 5 L.Ed.2d 809 (1961), Goldberg v. Federal Trade Commission, 283 F.2d 299 (7th Cir. 1960), Surf Sales Co. v. Federal Trade Commission, 259 F.2d 744 (7th Cir. 1958), Modernistic Candies, Inc. v. Federal Trade Commission, 145 F.2d 454 (7th Cir. 1944).

But we are urged to turn away from Keppel because it was decided in "an earlier and different day" and involved children's market. However, Modernistic Candies involved both children and adults, and Gerson involved adults. The Keppel case was decided in 1934, and this court followed it in Modernistic Candies in 1944, has continued to follow it in more recent Surf, Goldberg, and Peerless cases, and in the 1961 Wren Sales case. Petitioners argue that "the moral tone of the business community in which they operate is substantially different" from that in Keppel's time, that criminal laws have developed which show a change in public policy with respect to gambling in general and punchboards in particular, and that the Commission erred in not taking evidence "of moral standards in the present business community with respect to this type of merchandising."

Without agreeing that morals are relative, as petitioners argue, we have considered petitioners' arguments that there are many contests, involving prizes, used by major companies; that in some states gambling is permitted and in others punchboards are held not to be gambling equipment; that gambling is not immoral per se, and is involved in stock brokerage and other businesses; and that a gambling "instinct" seems to be a weakness in human nature. All these arguments were addressed to the Commission below, and in one degree or another have been addressed to this court, without success, in Wren Sales, Peerless and Modernistic Candies.¹ We are not persuaded that this merchandising practice is less an "unfair method of competition" today than it was in the time of Keppel.

The Commission was within the power granted to it, by Congress, in entering the order. See Lichtenstein v. Federal Trade Commission, 194 F.2d 607 (9th Cir. 1952), cert. denied, 344 U.S. 819, 73 S.Ct. 15, 97 L.Ed. 638. And the law is firmly established that the merchandising practice found here is against the established public policy of the United States. Peerless Products, Inc. v. Federal Trade Commission, 284 F.2d 825, 826 (7th Cir. 1960), cert. denied, 365 U....