Raladam Co. v. Federal Trade Commission

• Decision Date: 07 October 1941
• Docket Number: No. 8026.,8026.
• Citation: 123 F.2d 34
• Parties: RALADAM CO. v. FEDERAL TRADE COMMISSION.
• Court: U.S. Court of Appeals — Sixth Circuit

123 F.2d 34 (1941)

RALADAM CO. v. FEDERAL TRADE COMMISSION.

No. 8026.

Circuit Court of Appeals, Sixth Circuit.

October 7, 1941.

Rockwell T. Gust, of Detroit, Mich. (Butzel, Eaman, Long, Gust & Bills, Rockwell T. Gust, and David A. Howell, all of Detroit, Mich., on the brief), for petitioner.

Martin A. Morrison, of Washington, D. C. (W. T. Kelley, Martin A. Morrison, Harry D. Michael, and James W. Nichol, all of Washington, D. C., on the brief), for respondent.

Before HICKS, SIMONS, and ALLEN, Circuit Judges.

HICKS, Circuit Judge.

For the second time the Raladam Company petitions this court to review and set aside an order of the Federal Trade Commission directing it to cease and desist from certain practices with reference to offering for sale, and sale and distribution, in interstate commerce, of a preparation known as Marmola and used in the treatment of obesity.

In the previous case 6 Cir., 42 F.2d 430 we vacated the order of the Commission on the ground that the evidence failed to disclose the existence of competition within the meaning of the Act, 15 U.S.C.A. § 41 et seq.; and on the further ground that it was not shown that the representations in the advertising of Marmola that it was a safe and scientific remedy were in fact false.

The Supreme Court affirmed the order Federal Trade Comm. v. Raladam Co., 283 U.S. 643, 51 S.Ct. 587, 590, 75 L.Ed. 1324, 79 A.L.R. 1191 on the ground that no substantial competition, present or potential, was shown by the proof or from necessary inference, to have been injured, or threatened with injury to a substantial extent by the use of the alleged unfair methods complained of. The court held that jurisdiction of the Commission to make the order was lacking in the absence of a showing of competition, and that the proceeding must be dismissed. The Supreme Court and this court refused to grant motions to modify the order to permit the taking of additional evidence on the question of injury to competitors. Thereupon the Commission filed its amended complaint charging petitioner with certain violations of the Act subsequently to the date of its cease and desist order in the first proceeding and in due course it issued an order requiring petitioner to cease and desist from making certain specified representations in its advertising of Marmola.

Petition for review was filed here on May 19, 1938, which was subsequent to an amendment of the Act effective March 21, 1938, 52 Stat. 112, 15 U.S.C.A. § 41 et seq. Under the amendment the Commission is not required to file a petition for an order of enforcement, this court having jurisdiction upon the filing of the petition to review the record. However, since the amended complaint was filed prior to the amendment, the violations charged, if we come to that question, must be construed in the light of the wording of the Act as of that time.

Petitioner contends that the issues here are res adjudicata. We do not agree thereto. This case involves a different time period and representations which raise issues other than whether Marmola is a safe and scientific remedy. Moreover, all that was decided by the Supreme Court was that the Commission had no jurisdiction to issue the order under the evidence presented. The holding of this court that it appeared that the safe and scientific nature of Marmola as a remedy for obesity was a matter of opinion rather than one for factual determination must yield to the Supreme Court's opinion that there was no jurisdiction to issue the order in the first place. In the light of the ruling of the Supreme Court the assumption by that court that the advertisements of Marmola were dangerously misleading and that a proceeding to prevent their use was in the interest of the public, must be regarded by us as it was by the Supreme Court, i. e., simply an assumption for the purposes of its decision.

We must follow the Supreme Court upon the issue it decided, that of jurisdiction, unless the evidence in this case presents a radically different situation as to petitioner's competitors. We are bound to resolve the question of jurisdiction preliminarily to any consideration on the merits. In considering jurisdiction the Supreme Court stated that there are three distinct prerequisites for a cease and desist order, namely, (1) that the methods complained of are unfair; (2) that they are methods of competition in commerce; and (3) that a proceeding by the Commission to prevent a use of the methods appears to be in the interest of the public. In order to simplify its consideration of the second prerequisite, the court, as we have noted, assumed the existence of the first and third. As to the second, it said: "Thus the Commission is called upon first to determine, as a necessary prerequisite to the issue of a complaint, whether there is reason to believe that a given person, partnership, or corporation has been or is using any unfair method of competition in commerce; and, that being determined in the affirmative, the Commission still may not proceed, unless it further appear that a proceeding would be to the interest of the public, and that such interest is specific and substantial. Federal Trade Commission v. Klesner, 280 U.S. 19, 28, 50 S.Ct. 1, 74 L.Ed. 138, 68 A.L.R. 838. Unfair trade methods are not per se unfair methods of...