Mueller v. United States

• Decision Date: 23 December 1958
• Docket Number: No. 17293.,17293.
• Citation: 262 F.2d 443
• Parties: Sidney J. MUELLER, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

262 F.2d 443 (1958)

Sidney J. MUELLER, Appellant, v. UNITED STATES of America, Appellee.

No. 17293.

United States Court of Appeals Fifth Circuit.

December 23, 1958.

Seymour Lieberman, Houston, Tex., for appellant.

Charles C. Moore, Jr., Washington, D. C., John H. Baumgarten, Asst. U. S. Atty., William B. Butler, U. S. Atty., Houston, Tex., for appellee.

Before TUTTLE, JONES and WISDOM, Circuit Judges.

WISDOM, Circuit Judge.

Sidney J. Mueller appeals from a judgment in favor of the United States in an action by the United States to recover penalties for Mueller's violation of a cease and desist order of the Federal Trade Commission.¹ We affirm.

Sidney J. Mueller, Hair Expert,² had a sure-fire recipe for a profitable business. He could make hair grow where before there was only fuzz. He could thicken hair, rejuvenate the growth function of hair, and banish baldness. He could energize the scalp. He could kill bacteria beneath the scalp. He could eliminate forever one's dandruff, itchy scalp, dry scalp and oily scalp. Or so he represented. And so he advertised. Unfortunately for Mr. Mueller, in 1952 the Federal Trade Commission ordered him to cease and desist from "disseminating or causing to be disseminated by means of the United States mails or by any means in commerce" any advertisement containing such representations.³

At the time the order was issued Mueller had offices in six states and shipped considerable merchandise (cosmetics and home treatment kits) across state lines. Mueller consented to the order and after its issuance closed all of the offices not located in Texas.⁴ In Texas he continued to maintain offices in Houston, Dallas, Fort Worth, and San Antonio. His method of doing business, however, was substantially the same as it was before the cease and desist order: Mueller Hair Experts sold scalp and hair preparations directly to the consumer for home use and also gave treatments at the office, the "trichologists" using the same preparations sold for home use.

After the cease and desist order, Mueller advertised only in Texas papers. Sixteen advertisements are in the record. These are engaging: "It's never too late to save your hair"; "There but for Mueller go I"; "After worrying about baldness for 5,354 years, man learns to Make Hair Grow"; "Save Your Hair Week Starts Tomorrow". Five of the advertisements referred to special home treatments for people who live out-of-town or travel. Mueller mailed no newspapers and shipped no cosmetics out of Texas. The publishers circulated their newspapers outside of Texas in part through the United States mails.

The facts were stipulated. The district court found that the advertisements in the record violated the Commission's cease and desist order and rendered judgment for the United States in the amount of $8000. We agree with the district court.

I.

Mueller contends that he did not disseminate the advertisements; the newspaper publishers did. Mueller contends that the government stipulated itself out of court in agreeing that "Defendant did not buy, sell, or ship the various cosmetics or other preparations in question, or anything else outside the state" and that the "newspapers were distributed by said publishers of said newspapers through the United States mail and to points outside the State of Texas". "Anything else", Mueller argues, includes newspapers.

The weakness in this argument is the assumption that the Federal Trade Commission Act and order are applicable only if the false advertising is disseminated by the defendant himself. The cease and desist order, however, applies to the defendant "causing the advertisements to be disseminated". This language tracks the Act. Section 12(a) of the Act, 15 U.S.C.A. § 52(a), provides:

"It shall be unlawful for any person, partnership, or corporation to disseminate, or cause to be disseminated, any false advertisement —

"(1) By United States mails, or in commerce by any means, for the purpose of inducing, or which is likely to induce, directly or indirectly the purchase of food, drugs, devices, or cosmetics; * * *."

Shafe v. Federal Trade Commission, 6 Cir., 1958, 256 F.2d 661, concerned false advertisements of O-Jib-Wa Bitters, a wondrous cure for a variety of ailments. Shafe claimed that in advertising in Michigan papers only and in restricting their sales to the state of Michigan, he was not subject to regulation by the Federal Trade Commission, which has no authority over purely intrastate transactions. Federal Trade Commission v. Bunte Bros., Inc., 312 U.S. 349, 61 S.Ct. 580, 85 L.Ed. 881. Compare: Chas. A. Brewer & Sons v. Federal Trade Commission, 6 Cir., 158 F.2d 74, 79. He argued that only a small percentage of the newspapers carrying their advertisements went into states other than Michigan and, in any event, such interstate delivery was the act of the newspapers and not the act of the petitioners. In Shafe v. F. T. C., 6 Cir., 1956, 256 F.2d 661, 664 it was held:

"Nor is it necessary that the false advertising be directly disseminated by the respondents. The statute makes it unlawful for the respondents to cause such false advertising to be disseminated. Under these plain, unambiguous provisions of the statute, petitioners\' contentions that they made no sale in interstate commerce and that they did not personally disseminate any false advertisement do not constitute a defense to the action."

We agree with this decision. Here it is immaterial that Mueller, himself, did not buy, sell or ship "anything" out of Texas. It is immaterial that the stipulation recited that Texas publishers circulated their newspapers in other states. Mueller was responsible for the advertisements being placed in the newspapers. That caused, resulted in, the advertisements being disseminated by United States mails.

The term "cause" is in the statute without any qualification relating to the advertiser's state of mind. It is unimportant therefore whether Mueller thought that he was not violating the cease and desist order and did not intend to come under federal jurisdiction.⁵ The statute holds him liable for the natural consequences of his act regardless of his intentions. A contrary construction would blow the Act apart.

II.

Mueller's second contention is that under the cease and desist order and Section 12 of the Federal Trade Commission Act (15 U.S.C.A. § 52) there is no federal jurisdiction since his advertisements applied only to intra-state sales and treatments. He contends that for federal jurisdiction to attach, the advertisements must induce the purchase of goods in interstate commerce.

The cease and desist order in this case consists of two paragraphs.⁶ Paragraph I prohibits defendant from disseminating false advertisements "by means of the United States mails" or in interstate commerce. Paragraph II prohibits the dissemination of the advertisements "by any means * * * for the purpose of inducing, or which is likely to induce, directly or indirectly, the purchase" of Mueller's cosmetics in interstate commerce. Thus, under the first paragraph there is no necessity of an intent or likelihood of inducing interstate sales; under the second paragraph, such sales must be intended or likely.

This order is based directly on Section 12(a) of the Federal Trade Commission Act.⁷ This section reads:

"Sec. 12(a) It shall be unlawful for any person, partnership, or corporation to disseminate, or cause to be disseminated, any false advertisement —

"(1) By United States mails, or in commerce, by any means, for the purpose of inducing, or which is likely to induce, directly or indirectly the purchase of food, drugs, devices, or cosmetics; or

"(2) By any means, for the purpose of inducing, or which is likely to induce, directly or indirectly, the purchase in commerce of food, drugs, devices, or cosmetics."

Construing Section 12(a) in Shafe v. Federal Trade Commission, 6 Cir., 1958, 256 F.2d 661, 663, 664, the Court held:

"Under this section it is not necessary that there be a sale in interstate commerce. It is the dissemination of false advertising that the statute is directed against. The use of advertising is well recognized as an integral part of the production and distribution of goods, and as such is subject to the regulatory powers of the Commission. * * * In addition, it will be noticed that Section 12(a) of the Act makes it unlawful to cause the dissemination of false advertisements by the United States mails irrespective of whether such dissemination is or is not in interstate commerce. It is settled law that congressional control of the mails, under the power conferred by the Constitution, includes the power to forbid the use of the mails for deceptive transactions which are detrimental to the financial well-being of the nation."

Federal jurisdiction attached because Mueller used the United States mails and also caused his false advertisements to be disseminated across state lines, for the purpose of inducing purchases in commerce. That was the offense Congress described in Section 12(a) (1). The offense does not depend on inducing purchases in interstate commerce.

III.

Mueller's last stand is that he advertised treatments, not products; that the Act applies to products, not treatments.

When a man indulges in a shave in a barber shop he is buying a service (the barber's skill and time); he is not buying shaving cream and shaving lotion.⁸ We buy shoe shines not shoe polish. On the other hand, we purchase material as well as tailoring when we buy a tailored suit....