NEW AMERICAN LIBRARY OF WL v. FEDERAL TRADE COM'N

• Decision Date: 10 May 1954
• Docket Number: No. 50,Docket 22647.,50
• Citation: 213 F.2d 143
• Parties: NEW AMERICAN LIBRARY OF WORLD LITERATURE, Inc., et al. v. FEDERAL TRADE COMMISSION.
• Court: U.S. Court of Appeals — Second Circuit

213 F.2d 143 (1954)

NEW AMERICAN LIBRARY OF WORLD LITERATURE, Inc., et al. v. FEDERAL TRADE COMMISSION.

No. 50, Docket 22647.

United States Court of Appeals Second Circuit.

Argued December 16, 1953.

Decided May 10, 1954.

Freidin & Littauer, New York City, for petitioners; Rudolf M. Littauer, Sidney A. Diamond and Murray Gartner, New York City, of counsel.

Earl W. Kintner, Gen. Counsel, Robert B. Dawkins, Asst. Gen. Counsel, and James E. Corkey, Washington, D. C., for respondent.

Before SWAN, CLARK, and HINCKS, Circuit Judges.

SWAN, Circuit Judge.

This is a petition pursuant to section 5(c) of the Federal Trade Commission Act, 15 U.S.C.A. § 45(c), to obtain review of an order dated January 6, 1953, entered in a proceeding commenced by the Commission in September 1950. The corporate petitioner is engaged in the business of publishing and selling cheap, paper-covered, pocket-sized books, practically all of which are reprints of books previously published by others. The two individual petitioners are officers of the corporation who jointly control its policies and practices. Petitioners' reprint editions include both fiction and non-fiction and are designated by the trade names "Signet" and "Mentor" respectively. They are marketed through a national distributor and are retailed at 25 cents or 35 cents each through bookstores, drugstores, newsstands in railway and bus stations, and otherwise. The record shows that the petitioners sell more than 30,000,000 annually. About one-fifth of the books sold by them in recent years have been abridged editions and in some cases the original title has been changed to give the book more popular appeal or better to indicate its subject matter. Abridgment or change of title has been made with the consent of the author or the original publisher, and the fact has been stated on the title page, copyright page or elsewhere, and sometimes, but not always, on the front cover.

The complaint charged the making of certain affirmative misrepresentations with respect to the books. These charges were dismissed. The complaint also charged the petitioners with failure to disclose or to disclose adequately that certain of their books are abridgments and that changes of title have been made. The Commission found that in offering for sale and selling books which are in fact abridgments and books which have previously been published under different titles, the petitioners failed to disclose adequately the facts of abridgment and change of title, and that such failure has had the capacity and tendency to mislead and deceive a substantial portion of the purchasing public into the erroneous belief that such abridged books contained the complete original text and such newly titled books were new books. Its order forbids the sale of any abridged book or the substitution of a new title unless notice of abridgment and change of title has been given in a specified manner.¹

The Commission's conclusion that the petitioners' acts and practices constituted unfair and deceptive acts and practices rests on the premise stated in Paragraph Six of its decision:

"Paragraph Six: The offering of a book for sale constitutes an implicit representation that the book contains the entire original text and that the title under which it is offered is the original title. In the absence of a clear and conspicuous disclosure of the fact of abridgment or change of title, the offering of an abridged book or of an old book under a new title unquestionably has the capacity and tendency to deceive and mislead prospective purchasers."

This is a finding of fact which Judge Clark and Judge Hincks think the Commission was entitled to make, even though no testimony was offered on that subject, and that some of the books in evidence as exhibits sufficiently demonstrated deceptive acts or practices which "in the interest of the public" the Commission was empowered to prevent by a proper order to cease and desist."² See Hillman Periodicals, Inc., v. Federal Trade Comm., 2 Cir., 174 F.2d 122.

But a majority of the court, consisting of Judge Hincks and Judge Swan, believes that the order is not supported by necessary evidence and findings with respect to the requirement that the notice of abridgment or change of title be carried "in immediate connection with the title." The witness Lockley, a Professor of Marketing in the Graduate School of Business Administration of New York University, testified as to the factor of "attention value" which he defined as the ability of an element on the printed page to attract a reader's attention. His opinion testimony satisfies us that in many contexts a disclosure not in immediate connection with the title of the book would sufficiently attract the reader's attention to prevent deception. His testimony was not disputed. Doubtless the Commission was not required to accept it if not satisfied as to the witness' expert qualifications or if it seemed inherently unsound or in conflict with physical evidence. But it was at least under a duty to weigh it. The trial examiner had found that "there was strong support for the respondents' (now the petitioners') position" and that it had "substantial merit," but thought himself bound by the Hillman case, supra, to require the disclosures to be in immediate connection with the title in the case of abridgments and to accompany immediately the new title in the case of a change in title. The Commission held that the trial examiner was in error and that the Hillman order was not meant to set up a fixed and immutable rule for the way in which such disclosures must be made in every case in order to be adequate. In Paragraph Eight of its decision the Commission says: "It may be that those disclosures could be made adequately, so far as averting deception is concerned, elsewhere than in immediate connection with the title, but this would be at the expense of the respondents petitioners in distracting initial attention from the title." As shown by the quotation the Commission's reason for requiring the disclosures to be in immediate connection with the title is not to avoid deceiving the public but to avoid unduly burdening the petitioners. But the petitioners in some of the exhibits have themselves chosen to bear the burden of distracting initial attention from the title by printing the original title on a brilliantly colored strip, far removed from the title under which they offer the book for sale. See, for example, the exhibit entitled "Gunsmoke" discussed by the Commission in Paragraph Seven of the decision.

If the notice actually given is sufficient to avoid deception, the majority of the court thinks the Commission lacks power to require it to be located in a position other than that chosen by the petitioners. In our view the situation is not one in which the need to prevent deception has been shown to require the regimentation of an industry thereby depriving it of the benefit of legitimate enterprise in competition and denying to its product the quality of individualized treatment. In short, we think that both the public interest and the legitimate interests of the publisher could be sufficiently protected by a more flexible requirement, such as that the notice of abridgment or new title should be carried on the cover in immediate connection with the title or in a position adapted readily to attract the attention of a prospective purchaser.

Accordingly, because of the expansive scope of the order, the order is reversed and the cause remanded for further proceedings.

CLARK, Circuit Judge (dissenting in part).

The opinion and decision herein is confusing; I find it difficult to ascertain just the present or future posture of the case. First, there is affirmance (by majority vote) of the Commission's basic finding that the petitioners' acts and practices were unfair and deceptive. This finding clearly calls for affirmative relief to be determined by the Commission, whose discretion in this regard is extensive under our settled view. Consumer Sales Corp. v. F. T. C., 2 Cir., 198 F.2d 404, 408, certiorari denied 344 U.S. 912, 73 S.Ct. 335, 97 L.Ed. 703; Independent Directory Corp. v. F. T. C., 2 Cir., 188 F.2d 468, 470; Gold Tone Studios, Inc., v. F. T. C., 2 Cir., 183 F.2d 257, 259; Hillman Periodicals, Inc., v. F. T. C., 2 Cir., 174 F.2d 122, 123; Herzfeld v. F. T. C., 2 Cir., 140 F.2d 207, 209. Then, contrary to this line of authority, it is ruled (by vote of a different majority) that the Commission's remedy — which we have earlier affirmed in Hillman Periodicals, Inc., v. F. T. C., supra — is here erroneous. When content is given to this charge, the discovered error seems slight, if not nonexistent; for it is said that there should be "a more flexible requirement, such as that the notice of abridgment or new title should be carried on the cover in immediate connection with the title or in a position adapted readily to attract the attention of a prospective purchaser." Only the part I have italicized is new; paradoxically it states merely the obvious intent of the earlier part, but by its very protestation and addition it waters down and confuses the original clear statement. Thus except for the circumstances of its origin, it might be taken as only a gloss on, or interpretation of, the original. But be that as it may, it thus seems held that the Commission's own order should be changed only by the addition of these few words. Yet actually the direction is for a complete reversal and remand of the proceedings.

I think the confusion arises from our having stepped out of our usual role of reviewing only for substantial error and of seeking to avoid interference with the Commission's discretion in...