Seymour Sales Company v. Federal Trade Commission

• Decision Date: 04 November 1954
• Docket Number: No. 12064.,12064.
• Parties: SEYMOUR SALES COMPANY, et al., Petitioners, v. FEDERAL TRADE COMMISSION, Respondent.
• Court: U.S. Court of Appeals — District of Columbia Circuit

94 US App. DC 403, 216 F.2d 633 (1954)

SEYMOUR SALES COMPANY, et al., Petitioners, v. FEDERAL TRADE COMMISSION, Respondent.

No. 12064.

United States Court of Appeals District of Columbia Circuit.

Argued October 11, 1954.

Decided November 4, 1954.

Writ of Certiorari Denied January 31, 1955.

Mr. Howard R. Koven, Chicago, Ill., of the bar of the Supreme Court of Illinois, pro hac vice, by special leave of Court, with whom Mr. Arnold F. Shaw, Washington, D. C., was on the brief, for petitioners.

Mr. Alan B. Hobbes, Sp. Atty., Federal Trade Commission, with whom Mr. Robert B. Dawkins, Assistant General Counsel, Federal Trade Commission, was on the brief, for respondent.

Before EDGERTON, PRETTYMAN and FAHY, Circuit Judges.

Writ of Certiorari Denied January 31, 1955. See 75 S.Ct. 340.

FAHY, Circuit Judge.

We are asked to set aside an order of the Federal Trade Commission requiring petitioners to cease and desist from:

"1. Supplying to or placing in the hands of others push cards, sales cards, punchboards, or other lottery devices, either with other merchandise or separately, which said push cards, sales cards, punchboards, or other lottery devices are designed or intended to be used in the sale or distribution of said merchandise to the public.

"2. Selling or otherwise disposing of any merchandise by means of a game of chance, gift enterprise, or lottery scheme."

Petitioners' main contention is that the acts which gave rise to the order occur in intrastate commerce and the Commission therefore is without jurisdiction, citing Federal Trade Commission v. Bunte Brothers, 312 U.S. 349, 61 S.Ct. 580, 85 L.Ed. 881.

The jurisdiction of the Commission is to prevent "unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce." 15 U.S.C.A. § 45(a), 52 Stat. 111-112. By definition the Act limits "commerce", insofar as here material, to commerce "among the several States." 15 U.S.C. A. § 44. In Bunte Brothers it was held that this grant of jurisdiction was not coextensive with the reach of the Commerce Clause itself and did not extend to unfair methods of competition which only affected interstate commerce. Since the commerce involved was entirely within Illinois the Court held the Commission was without jurisdiction though the interstate commerce of competitors was affected by the practices. Here, as we shall see, petitioners' own commerce is interstate and the practices condemned by the Commission occur in its conduct, thus removing the case from the rule laid down in Bunte Brothers.

The findings of the Commission as to the nature and interstate characteristics of petitioners' practices are in outline as follows: Petitioners are located in Chicago. They sell and distribute cameras, pens, and other merchandise throughout the country by means of a mail order business. They send out literature and order blanks, receive orders and ship the merchandise, — all through interstate channels. They solicit, sell and distribute their merchandise in part by furnishing plans involving games of chance, gift enterprises, or lottery schemes to be conducted not at petitioners' place of business but at the point of sale to the consuming public. Included in the literature are push cards, accompanied with instructions. A typical push card bears 16 feminine names with ruled columns on its reverse side for writing in the appropriate space the name of the purchaser of a push who selects the corresponding feminine name. The push cards have 16 discs, each bearing a feminine name corresponding to one on the list. Under each disc is a number which is disclosed when the customer separates the disc from the card. One of the names appearing on the disc is also concealed under a master seal and the person selecting the name corresponding to this one receives an article of merchandise. A typical circular advises that the recipient might receive a camera or other article "almost as a gift", and explains how through the use of the push card "friends, relatives, neighbors and co-workers" can also get a camera "almost as a gift". The instructions specify the amounts to be paid for the different numbers. After selling all the chances and remitting the full proceeds to petitioners, with an order form, the operator of the push card receives without additional charge a duplicate of the prize which goes to the winner.

As the Commission found, this manner of merchandising results in the purchaser either receiving an article or receiving nothing for the amount paid, the amount is determined wholly by lot or chance, and the article has a value substantially greater than the price paid for the chance.¹

It is too late seriously to entertain doubt that the facts set forth show unfair acts and practices within the meaning of § 45(a) of the Act, supra. Federal Trade Commission v. R. F. Keppel & Bro., note 1, supra. And the courts...