Spiegel, Inc. v. FTC, 17210.
| Decision Date | 11 June 1969 |
| Docket Number | No. 17210.,17210. |
| Citation | 411 F.2d 481 |
| Parties | SPIEGEL, INC., Petitioner, v. FEDERAL TRADE COMMISSION, Respondent. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Patrick W. O'Brien, James W. Gladden, Jr., Chicago, Ill., for petitioner; Mayer, Friedlich, Spiess, Tierney, Brown & Platt, Chicago, Ill., of counsel.
J. B. Truly, Robert E. Duncan, Asst. Gen. Counsel, James McI. Henderson, Gen. Counsel, Alvin L. Berman, Atty., F. T. C., Washington, D. C., for respondent.
Before DUFFY, Senior Circuit Judge, KERNER, Circuit Judge and BEAMER, District Judge.1
This is a petition for a review of a cease and desist order of the Federal Trade Commission issued at the conclusion of an administrative hearing upon a complaint filed by the Commission which charged Spiegel, Inc. (Spiegel) with engaging in unfair methods of competition and deceptive acts and practices in promoting and advertising certain items of merchandise.
The Federal Trade Commission contends that in the period of 1962 to 1964, Spiegel violated Section 5 of the Federal Trade Commission Act (15 U.S.C. § 45) by offering for sale in its catalogs, seven items of merchandise, the advertisements for which it claims were false and misleading.
Spiegel, located in Chicago, Illinois, is a catalog house which sells its merchandise exclusively by mail order. Two major catalogs are issued each year. In addition, Spiegel regularly issues supplementary sales and seasonal catalogs.
In some of the supplementary catalogs, Spiegel used a merchandise technique known as the "dollar sale." Among the lines of merchandise which it advertised in this manner were seven items: Williamstown Heirloom Bedspreads; St. Mary's Blankets; Fruit of the Loom Quilts; Pacific Percale Sheets; Acrilan Comforters; Beacon Blankets and Ladies' Pump style Shoes.2
To illustrate the type of advertisement to which the Trade Commission objected, we refer to Exhibit A which is reproduced in the printed appendix. There appears a picture of two double beds each having a bedspread. A wide arrow is pointed at one of the bedspreads and carries the slogan "Get This Second Spread for Only $1 More." At the bottom of the advertisement is the name "Williamstown" heirloom bedspreads, and the price stated is "only 9.98 each any 2 for 10.98" In fine print after describing the bedspreads there appears: "Save $8.98 when you buy any two spreads."3 It is admitted by the Commission that any customer could have purchased one such spread for $9.98 or two for $10.98.
In advertisements for Fruit of the Loom Quilts, the price of one such quilt was listed as $8.98 each, two at $9.98. In small print appeared "Save $7.98 when you buy two of these quality brand quilts." The Commission admits that any customer could have purchased one such quilt for $8.98 or two for $9.98.
In the advertisement for the sale of St. Mary's blankets, the price given was two for $11.96 or three for $12.96. The arrow at the top of the picture carries the slogan "Get This Third Blanket for Only $1 More When You buy 2 for $11.96." At the bottom of the advertisement, in small print it is stated: "During this sale you can get three nationally known St. Mary's blankets for only $1 more than the low price of two." It is admitted by the Commission that any customer could have purchased two of these blankets for $11.96 or three blankets for $12.96.
The advertisements for the sale of Acrilan Comforters, Beacon Blankets and Pacific Percale Sheets need not be described in detail. Spiegel used substantially the same format of words and figures in such ads as it had used in the advertisements hereinbefore described.
It is true that in some of its advertisements, Spiegel did not expressly use the word "regular" in connection with the price asked for the merchandise. However, the Commission found that the language and illustrations which were used clearly implied that the unit price stated was Spiegel's regular and usual price, and that the combination sale was for a specially reduced price.
Of the fifty-one advertisements involved, forty-one stated that a savings could be realized in the purchase of the items in combination. Nineteen of the fifty-one advertisements expressly referred to a "regular" price. In twenty-five of the fifty-one advertisements, statements such as "special purchase", "now sale priced", "amazing offer", "once-in-a-lifetime chance", or "now one of the greatest offers we've made", indicate that the combination offer is an unusual opportunity in comparison with previous prices for the articles. Each catalog stated that the "sale" ends at a specific time.
The meaning and "impression upon the mind of the reader arises from the sum total of not only what is said but also of all that is reasonably implied." Aronberg v. Federal Trade Commission (7 Cir., 1942), 132 F.2d 165, 167.
Since Spiegel does not operate any retail stores and all of its business is conducted by catalog, a consumer was and is unable physically to inspect the advertised items prior to a purchase. Therefore, a fictitious price or a fictitious claim of savings constitutes a material influence on the consumer's decision to purchase.
It long has been held a deceptive practice violative of the Federal Trade Commission Act to misrepresent a product's usual and regular price and the savings available to a purchaser, and this includes such misrepresentations made in the course of combination sales. Federal Trade Commission v. Standard Educational Society (1937), 302 U.S. 112, 114-117, 58 S.Ct. 113, 82 L.Ed. 141; Kalwajtys v. Federal Trade Commission (7 Cir., 1956), 237 F.2d 654, 656, cert. den. 352 U.S. 1025, 77 S.Ct. 591, 1 L.Ed.2d 597.
The Commission held that a "regular price" is the price at which an article or service is openly and actively sold by the advertiser to the public on a regular basis for a reasonably substantial...
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