Holloway v. Bristol-Myers Corporation

• Decision Date: 15 April 1971
• Docket Number: Civ. A. No. 2194-70.
• Citation: 327 F. Supp. 17
• Parties: Gladys G. HOLLOWAY et al., Plaintiffs, v. BRISTOL-MYERS CORPORATION, Defendant.
• Court: U.S. District Court — District of Columbia

327 F. Supp. 17

Gladys G. HOLLOWAY et al., Plaintiffs, v. BRISTOL-MYERS CORPORATION, Defendant.

Civ. A. No. 2194-70.

United States District Court, District of Columbia.

April 15, 1971.

William A. Dobrovir, Bruce J. Terris, Washington, D. C., for plaintiffs.

Gilbert H. Weil, New York City, William G. Greif, Washington, D. C., for defendant.

OPINION

WILLIAM B. JONES, District Judge.

Plaintiffs brought this action for a declaratory judgment, injunctive relief, compensatory and punitive damages. They allege that defendant's advertisement of its product Excedrin has been and is false as a result of which they, and all other persons similarly situated, have been injured and are continuing to be injured.

The false advertising plaintiffs assert is defendant's statements that Excedrin is more than twice as effective an analgesic as aspirin and that this has been demonstrated by a study of pain among patients in a hospital. According to plaintiffs these statements have been and are being published in newspapers and magazines, displayed in buses and broadcast by radio and television stations in the District of Columbia and throughout the nation.

Plaintiff Holloway alleges that she was induced in 1970 by such advertising to purchase six bottles of Excedrin. She sues on her own behalf and on behalf of all other persons who similarly relied on defendant's advertisements.

Plaintiff Adams reads newspapers and magazines; listens to radio broadcasts and views television. She also rides buses. She reads, listens to and views defendant's advertisements of Excedrin. She asserts that she does not wish to be subjected to false, misleading and deceptive advertising. She sues on her own behalf and on behalf of all other newspaper and magazine readers, radio listeners and television viewers who do not want to be subjected to false, misleading and deceptive advertisements.

Plaintiff Consumer Association of the District of Columbia (Association) is composed of 200 consumer members, most of them housewives. It alleges that members have been induced by defendant's advertising to purchase Excedrin and may in the future be induced to buy that product.

Plaintiff Federation of Homemakers, a District of Columbia corporation (Federation) is a nationwide non-profit corporation. It has 5,000 members in 46 states who are consumers. It alleges that its members by defendant's advertising have been induced to buy Excedrin and may in the future be induced to make further purchases.

Plaintiffs Association and Federation claim to represent the class consisting of all consumers and purchasers of analgesics who are being and will be deceived and misled by defendant's advertising of Excedrin if its dissemination is not restrained.

Plaintiffs base their right to relief (1) on a statutory cause of action under sections 5, 12 and 14 of the Federal Trade Commission Act, 15 U.S.C. §§ 45, 52, 54, (2) an equitable cause of action for fraud and nuisance, and (3) a common law cause of action for deceit. Defendant has moved to dismiss the complaint for lack of jurisdiction and for failure to state any cause of action.

1. Statutory cause of action. Section 5 of the Federal Trade Commission Act (15 U.S.C. § 45) declares unlawful "unfair or deceptive acts or practices in commerce."¹ Section 12 of the Act (15 U.S.C. § 52) declares it to be unlawful for a corporation to disseminate, or cause to be disseminated, any false advertisment in commerce by any means for the purpose of inducing, or which is likely to induce, the purchase of drugs. Such advertising "shall be an unfair or deceptive act or practice in commerce" within the meaning of section 5 of the Act (15 U.S.C. § 45).² Section 14 of the Act (15 U.S.C. § 54) makes a violation of section 12 (15 U.S.C. § 52) a misdemeanor punishable by fine or imprisonment, or both, if the false advertising was with the intent to defraud or mislead.³

Plaintiffs argue that those sections of the Act have as their purpose the protection of the consumers of the country. Since, as they assert, they are consumers who have been injured because of defendant's false advertising they come within the class Congress sought to protect. Therefore, they reason, they have a right to bring this action under the Act to rectify the wrongs that have been worked upon them.

The difficulty in accepting plaintiffs' argument is found in the authorities which hold that the Federal Trade Commission Act creates no private right of action. In 1926, the Supreme Court in Moore v. N. Y. Cotton Exchange, 270 U. S. 593, 603, 46 S.Ct. 367, 368, 70 L.Ed. 750, asserted that relief in cases asserting unfair methods of competition under section 5 of the Act (15 U.S.C. § 45) "must be afforded in the first instance by the commission."

Since that decision other courts have held that no private action may be maintained because of acts declared unlawful by section 5. LaSalle Street Press, Inc. v. McCormick and Henderson, Inc., 293 F.Supp. 1004, 1006 (N.D.Ill.1968); Carlson et al. v. Coca-Cola Co. and Glendinning Companies, Inc., 318 F.Supp. 785, N.D.Cal.1970; Marquette Cement Mfg. Co. v. Federal Trade Commission, 147 F.2d 589, 594 (7 Cir. 1945). Samson Crane Co. v. Union Nat. Sales, Inc., et al., 87 F.Supp. 218, 221 (D.Mass.1949), while dealing only with section 5 of the Act, cited Moore v. N. Y. Cotton Exchange, 270 U.S. 593, 603, 46 S.Ct. 367, as authority for the proposition that private litigants have no right of action to enforce the Act against any of the acts and practices declared unlawful by the Act.

As recently as 1965, the Supreme Court, in an unfair competition action, held that this Commission "in the first instance is to determine whether a method of competition or the act or practice complained of is unfair." Atlantic Refining Co. v. Federal Trade Commission, 381 U.S. 357, 367, 85 S.Ct. 1498, 1505, 14 L. Ed.2d 443. (Emphasis supplied.)

There is no merit to plaintiffs' argument that because the cited cases did not deal with "deceptive acts or practices" by false advertising, they are not applicable authorities. Such "unfair practices" as well as "unfair methods of competition" are both declared unlawful by section 5 of the Act (15 U.S.C. § 45). And section 12 (15 U.S.C. § 52) declares "deceptive act or practice" by false advertising to be within the meaning of section 5.

In 1938 the Federal Trade Commission Act was amended by the Wheeler-Lea Act. (52 Stat. 111.) However, there is nothing in the legislative history of those amendments to suggest that Congress even considered providing a private right of action to enforce the Act. Instead there is ample in the legislative history to indicate that the focus of Congress' concern was to strengthen the Commission's power to control advertisements affecting the public health. In speaking of the provision on advertising (now § 12 of the Act), the House sponsor of the bill, Congressman Lea, stated that "the main purpose of this is to strengthen the jurisdiction that the Federal Trade Commission already has over advertising." 83 Cong.Rec. p. 392 (January 12, 1938). In trying to clarify his amendment to the bill, Congressman Wolverton said that "* * * the only substantial difference of opinion within the committee arises with regard to the penalties provided, the method of enforcement and by what agency of the Government." 83 Cong.Rec. 396 (January 12, 1938). Thus the obvious emphasis in the legislative history is on strengthening the powers of the Government, principally through the Federal Trade Commission, to deal with unfair trade practices such as false advertising. However, plaintiffs argue that the broadening of section 5 to prohibit unfair trade practices, whether or not they affect competition, and the enactment of section 12 without express Congressional exclusion in either instance of a private right of action to enforce them so strongly implies such a right that the Supreme Court's decision in Moore v. N. Y. Cotton Exchange, supra, prohibiting such a right of action is limited to original section 5 situations. They make that argument relying solely on the rationale that the 1938 amendments were designed to protect the consumer more directly than were the provisions of the original act, which had focused on preventing unfair trade practices injurious to competition. Such an argument is unpersuasive. Atlanta Brick Co. v. O'Neal, 44 F.Supp. 39, 42 (E.D.Texas 1942).

Moreover, Congress currently recognizes that no private right of action was meant to exist under the Act. There were several bills before the 91st Congress which would have created such a right of action under the Act by providing that consumers who have been damaged by unfair or deceptive trade practices may bring class actions to seek relief under the standards of the Act.⁴ The necessity for such a legislative change is quite clear to the sponsor of one bill in the House, Congressman Robert C. Eckhardt: "Under present law the Federal Trade Commission Act provides only for the processing of cases against persons engaged in unfair or deceptive practices by the Commission itself."⁵

Notwithstanding the authorities against them, plaintiffs contend that by the doctrine of implication they can bring this action under the Federal Trade Commission Act. That doctrine states that a "federal statute passed to protect a class of citizens, although not specifically authorizing members of the protected class to institute suit, nevertheless implies a private right of action." Allen v. State Board of Elections, 393 U.S. 544, 557, 89 S.Ct. 817, 827, 22 L.Ed.2d 1 (1969). While courts have implied rights of action for a variety of reasons, none of them are applicable to plaintiffs' situations. For instance, in one line of cases the courts have been faced with the choice of either allowing a private right of action by implication from a statute or forcing the people for whose protection the statute was enacted to rely upon the threat of...