Gimbel Bros. v. Federal Trade Commission
| Decision Date | 06 January 1941 |
| Docket Number | No. 72.,72. |
| Parties | GIMBEL BROS., Inc., v. FEDERAL TRADE COMMISSION. |
| Court | U.S. Court of Appeals — Second Circuit |
Chadbourne, Wallace, Parke & Whiteside, of New York City (Horace G. Hitchcock and Walter T. Southworth, both of New York City, of counsel), for petitioner.
W. T. Kelley, Chief Counsel, Martin A. Morrison, Asst. Chief Counsel, Merle P. Lyon and James W. Nichol, all of Washington, D. C., Sp. Attys., Federal Trade Commission, for respondent.
Before SWAN, AUGUSTUS N. HAND, and CLARK, Circuit Judges.
This case comes before the court upon the petition of Gimbel Brothers, Inc., which asks us to review and set aside an order of the Federal Trade Commissioner directing the petitioner to cease and desist from using the word "wool" or "woolens" or any other word or term descriptive of wool to designate any product not composed wholly of wool; with a proviso that goods composed in part of wool may be so advertised if the percentage of each constituent material is stated. The facts upon which the order is based are not seriously in dispute.
The petitioner conducts a retail department store in New York City and is engaged in both intrastate and interstate commerce. In March 1938 it purchased from a jobber in dress goods a job lot of fabrics, comprising 7150 yards of "Mill ends", and put them on sale at its store. Some of the goods were all wool, but a large part of them were mixtures of wool and other material, such as rayon or cotton, in varying proportions. It advertised the goods as being offered at bargain prices and described them in its newspaper advertisement as "woolens" — a term which means to the purchasing public a fabric composed wholly of wool. The commission found that the goods were misrepresented in the advertisement and that such misrepresentation has the tendency to deceive the public and unfairly to divert interstate trade from competitors of the petitioner; it made no finding that the petitioner knew, or was negligent in not knowing, that the goods were not all wool.
The petitioner contends that a single instance of unintentional misrepresentation does not constitute an unfair method of competition within the meaning of section 5 of the Federal Trade Commission Act of 1914, 15 U.S.C.A. § 45. We think it plain that soliciting the purchase of goods by advertisement is a method of competition; if the advertisement contains false representations, it is an unfair method of competition. Cf. Sears, Roebuck & Co. v. Federal Trade Commission, 7 Cir., 258 F. 307, 6 A.L.R. 358. Whether or not the advertiser knows the representations to be false, the deception of purchasers and the diversion of trade from competitors is the same. The purpose of the statute is protection of the public, not punishment of a wrongdoer. See Federal Trade Commission v. Klesner, 280 U.S. 19, 27, 50 S.Ct. 1, 74 L.Ed. 138, 68 A.L.R. 838; Royal Baking Powder Co. v. Federal Trade Commission, 2 Cir., 281 F. 744, 752. It is in the public interest to prevent the sale of commodities by false and misleading statements. Federal Trade Commission v. Winsted Hosiery Co., 258 U.S. 483, 494, 42 S.Ct. 384, 66 L.Ed. 729; Federal Trade Commission v. Raladam Co., 283 U.S. 643, 649, 651, 51 S.Ct. 587, 75 L.Ed. 1324, 79 A.L.R. 1191. Hence a deliberate effort to deceive is not necessary to make out a case of "using unfair methods of competition" within the prohibitions of the statute. Federal Trade Commission v. Algoma Lumber Co., 291 U.S. 67, 79, 81, 54 S.Ct. 315, 78 L.Ed. 655; Federal Trade Commission v. Balme, 2 Cir., 23 F.2d 615, 621. The petitioner urges that a single instance of false advertising cannot be a "method" of unfair competition....
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