Regina Corporation v. FTC, 14254.

• Citation: 322 F.2d 765
• Decision Date: 19 August 1963
• Docket Number: No. 14254.,14254.
• Parties: The REGINA CORPORATION, a corporation of the State of Delaware, Petitioner, v. FEDERAL TRADE COMMISSION, Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

322 F.2d 765 (1963)

The REGINA CORPORATION, a corporation of the State of Delaware, Petitioner, v. FEDERAL TRADE COMMISSION, Respondent.

No. 14254.

United States Court of Appeals Third Circuit.

Argued June 4, 1963.

Decided August 19, 1963.

Rehearing Denied September 12, 1963.

As Amended September 18, 1963.

COPYRIGHT MATERIAL OMITTED

Chester Mueller, Toms River, N. J., for petitioner.

J. Richard Carr, Federal Trade Com., Washington, D. C. (James McI. Henderson, Gen. Counsel, J. B. Truly, Asst. Gen. Counsel, Miles J. Brown, Attys., on the brief), for Federal Trade Commission.

Before BIGGS, Chief Judge, and McLAUGHLIN and KALODNER, Circuit Judges.

KALODNER, Circuit Judge.

The issues presented by this appeal are whether substantial evidence supports the Federal Trade Commission's finding that petitioner violated Section 5 of the Federal Trade Commission Act¹ in that it had misrepresented, and placed in the hands of others certain price lists that were used to misrepresent, the usual and customary retail prices for petitioner's products; and if so, whether the Commission's cease and desist Order is valid and proper in scope.

On March 14, 1961, the Federal Trade Commission issued its Complaint alleging that petitioner had engaged in the practice of supplying its distributors and retailers with fictitious "manufacturer's list prices" or "suggested list prices", thereby representing, directly or by implication, that such "list" prices were the usual and customary retail prices for its merchandise, and that petitioner, by engaging in this practice, placed in the hands of retailers and others the means and instrumentalities by and through which they misled the public as to the usual and customary retail prices for its electric floor polishing machines and vacuum cleaners.

The petitioner admitted that it furnished suggested list prices but denied that such prices were fictitious, or that they purported to be the usual and customary prices for the products involved, or that it provided to others the means and instrumentalities by and through which the public was misled.

The evidence adduced before the Hearing Examiner may be summarized as follows:

Petitioner manufactures electric floor polishers and vacuum cleaners, marketed through wholesalers and retailers to whom it supplied list prices, since 1958 called "suggested list prices"; consumers were informed of suggested list prices through the medium of newspaper advertisements published and sponsored by retailers handling petitioner's products; the sale price, usually lower than the suggested list price, was inserted in the advertisements in juxtaposition with the suggested list price, variously referred to as a "list price" or "Manufacturer's list price" or "Mfg. List"; petitioner at times contributed to the cost of the advertisements; petitioner knew that retailer adherence to the suggested list price was the exception rather than the rule; and "gullible" people could believe that the suggested list price was the "going price".

The Commission found that petitioner represented its "suggested list prices" as the usual and customary prices although it "was aware that the usual and customary prices for its products were generally lower * * *", and concluded that the dissemination of suggested list prices injured the public and constituted "unfair and deceptive acts and practices and unfair methods of competition in commerce within the intent and meaning of the Federal Trade Commission Act."²

We are of the opinion that the record, viewed as a whole, supports the Commission's findings.³ To the extent that petitioner contributed towards the cost of misleading advertisements, it was equally responsible with its retailers for the deceptive character of the representations that appear therein. The vice inherent in the representations is the inability of the "gullible" price-conscious consumer to control his urge to make what he erroneously may believe is a good buy, Helbros Watch Company v. Federal Trade Commission, 310 F.2d 868 (D.C. Cir., 1962), cert. den. 372 U.S. 976, 83 S.Ct. 1110, 10 L.Ed.2d 142 (1963). The courts have upheld the Commission's proscriptions on advertising, not only when there is proof of actual deception, but also when the representations made have a capacity or tendency to deceive, Federal Trade Commission v. Sterling Drug, Inc. 317 F.2d 669 (2 Cir., 1963); Goodman v. Federal Trade Commission, 244 F.2d 584, 604 (9 Cir., 1957). It is now settled that deception may be accomplished by innuendo rather than by outright false statements. See Bakers Franchise Corporation v. Federal Trade Commission, 302 F.2d 258, 261 (3 Cir., 1962).

With respect to those instances where petitioner did not contribute to the cost of misleading advertising, it is settled that "One who places in the hands of another a means of consummating a fraud or competing unfairly in violation of the Federal Trade Commission Act is himself guilty of a violation of the Act.", C. Howard Hunt Pen Co. v. Federal Trade Commission, 197 F.2d 273, 281 (3 Cir., 1952); see Federal Trade Commission v. Winsted Hosiery Company, 258 U.S. 483, 494, 42 S.Ct. 384, 66 L.Ed. 729 (1922). Proof of petitioner's intention to deceive is not a prerequisite to a finding of a violation, Pep Boys — Manny, Moe & Jack, Inc. v. Federal Trade Commission, 122 F.2d 158, 161 (3 Cir., 1941); it is sufficient that deception is possible. Bankers Securities Corporation v. Federal Trade Commission, 297 F.2d 403, 405 (3 Cir., 1961).

The purpose of the Federal Trade Commission Act is to protect the public, not to punish a wrongdoer, Gimbel Bros. v. Federal Trade Commission, 116 F.2d 578, 579 (2 Cir., 1941), and it is in the public interest to stop any deception at its incipiency. See Progress Tailoring Co. v. Federal Trade Commission, 153 F.2d 103, 105 (7 Cir., 1946).

What has been said brings us to the second issue presented — the scope of the Commission's order, which petitioner challenges as "discriminatory — vague — indefinite — unduly broad — and unconstitutional."

The Order, in relevant parts, directs petitioner to cease and desist from:

"Supplying to, or placing in the hands of, any distributor or retailer any tabulation of figures, sales literature, price list or other material containing `manufacturer\'s list prices,\' `manufacturer\'s suggested list prices,\' `suggested list prices,\' or `suggested retail prices,\' when said respondent petitioner knows or has reason to know, that such figures are in excess of the price or prices at which the items of merchandise to which they refer are usually and customarily sold at retail in the trade areas where the figures are supplied."

With respect to petitioner's contention that the Order is discriminatory, the short answer is that petitioner has not presented sufficient evidence to demonstrate that it has in fact been "singled out". But in any event — in the absence of a patent abuse of discretion — "The Commission alone is empowered to develop that enforcement policy best calculated to achieve the ends contemplated by Congress * * *." Moog Industries, Inc. v. Federal Trade Commission, 355 U.S. 411, 413, 78 S.Ct. 377, 379, 2 L.Ed.2d 370 (1958). Courts will not ordinarily refuse to enforce a valid order merely because the law is not being enforced against others. See Jaffe, The Judicial Enforcement of Administrative Orders, 76 Harv.L.Rev. 865, 878 (1963).

As to the contention that the Order is vague, indefinite and unduly broad and that "it is impossible to obey without completely sacrificing the preparation and dissemination of suggested list prices", we, as well as other courts of appeals, have enforced orders in analogous cases where the words "usual and customary" were used, as here, in relation to prices charged at retail in a particular "trade area". Bankers Securities Corporation v. Federal Trade Commission, supra; Baltimore Luggage Company v. Federal Trade Commission, 296 F.2d 608 (4 Cir., 1961), cert. den. 369 U.S. 860, 82 S.Ct. 949, 8 L.Ed.2d 17 (1962); Helbros Watch Company v. Federal Trade Commission, supra; Giant Food, Inc. v. Federal Trade Commission, D.C.Cir., 322 F.2d 977 (1963). Moreover, the Supreme Court has ruled that the Commission is clothed with wide discretion in determining the type of order that is necessary to bring to an end the unfair practices found to exist.

In Federal Trade Commission v. Ruberoid Co., 343 U.S. 470, p....