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Hoving Corp. v. Federal Trade Commission.

decided: May 25, 1961.


Author: Smith

Before WATERMAN, MOORE and SMITH, Circuit Judges.

SMITH, Circuit Judge:

Hoving Corporation is a large scale, high volume retailer of women's wearing apparel and accessories; it trades under the name "Bonwit Teller" in New York, Chicago, Cleveland and other large cities. In August of 1958 a complaint was filed against it charging violations of the branding, invoicing and advertising sections of the Fur Products Labeling Act, 15 U.S.C. § 69. Counsel for the Commission later moved to amend the complaint to add further alleged violations (both prior and subsequent to the date of the original complaint); the Hearing Examiner denied the motion. Although counsel for respondent failed to appeal that ruling within the prescribed period, they later obtained leave from the full Commission to amend the complaint through a collateral certification proceeding.

After a full hearing, the Examiner found that petitioner had committed numerous violations of the Act. On appeal, the Commission adopted his findings and ordered petitioner to cease and desist from (1) misbranding furs as to all particulars enumerated in § 4(2) of the Act, 15 U.S.C. § 69b (2);*fn1 (2) falsely or deceptively invoicing fur products as to the information covered by § 5(b)(1) of the Act, 15 U.S.C. § 69c(b);*fn2 and (3) falsely and deceptively adventising in violation of five specific requirements of § 5(a), 15 U.S.C. § 69c(a).*fn3

Petitioner here claims that the Commission erred in permitting a collateral attack on the Examiner's denial of the motion to amend the complaint. Further, that Hoving was wrongfully denied an exemption, pursuant to Rule 39, 16 C.F.R. § 301.39,*fn4 from compliance with the requirements of the Act. Alternatively, it asserts the invalidity of "that portion of the rule" limiting the scope of the exemption because the Commission, in promulgating the rules, failed to include a "concise general statement" of the basis and purpose of the regulations. Finally, Hoving urges that the evidence in the case does not support such a broad cease and desist order.

Evidence was submitted before the Commission showing violations of all three general categories of the Act - misbranding, false invoicing and deceptive advertising. One group of violations cutting across all categories concerned the marketing of bleached white mink muffs and mink "sets" (muff, hat and ascot choker). The fur pieces were made from waste fur of mink tails, flanks, bellies, etc. - and Bonwit Teller nowhere informed its customers of that fact.*fn5 On the invoice, the only document likely to be retained by the customer, the petitioner failed to inform the buyer that the fur had been bleached. Hoving argues that the broad order surely cannot be supported by only one proven instance of misbranding of a mink muff. Although Commission investigators actually bought only one muff, the uniformly misleading advertising - and the invoicing violations - on that item support the inference that many of the waste fur mink muffs and sets were sold similarly mislabeled.

The greatest number of violations shown were in petitioner's advertising copy. Most of those involved the failure to use properly the Fur Products Name Guide, 16 C.F.R. § 301.0, or to identify the country of origin of the fur producing animal. Petitioner's principal argument is that the majority of violations were "technical" and "trivial" ones and that the Commission abused its discretion in the breadth of its order.

Administrative agencies have great discretion in framing their orders and are empowered to enjoin related unlawful acts which may occur in the future; there must merely be a reasonable relationship between the facts found and the breadth of the order issued. Federal Trade Commission v. Mandel Brothers, Inc ., 359 U.S. 385 (1959); National Labor Relations Board v. Express Publishing Co ., 312 U.S. 426, 436 (1941). The court, at first glance, might be tempted to agree with petitioner that some of the violations found below are trivial ones not deserving of overly broad prophylactic relief. It is difficult to imagine an area of expert and technical competence, however, where it would be less seemly Supreme Court's apparent reliance on a numerically impressive list of offenses while affirming a broad injunctive order in F.T.C. v. Mandel, supra, fn. 8 at 393, we do not think the number of violations proved in every case should be the sole determinant.*fn6 The failure to inform the public of the use of waste furs in its labeling, invoicing and advertising is probably a more serious breach of the Act than any of those found in Mandel . The more than a dozen violations characterized as minor by petitioner support the inference that Hoving has been generally rather lax in conforming to the requirements of the Act. If the courts were to stare indiscriminately whittling away at the "sentences" of administrative agencies, they would soon be inundated with such requests. We cannot in each case substitute our judgment for that of the Federal Trade Commission; the facts of the instant case do not present the clear abuse of discretion necessary to warrant modification of the administrative order.

There is nothing in petitioner's first three points. Hoving was adequately put on notice as to the charges against it in the proceedings below. The Commission found that the amended complaint was a proper question for the certification procedure; minus a showing of unfairness or prejudice, this court will not dictate to the Federal administrative bodies concerning minor procedural technicalities.

The Commission, in making rules for the Fur Products Labeling Act, followed the procedures of Section 4 of the Administrative Procedure Act, 5 U.S.C. § 1003. Notice of public hearing on the proposed regulations was published in the Federal Register on May 3, 1952, 17 Fed. Reg. 4121 (1952). Interested parties were heard both orally and through submission of written material; among the subjects discussed was the exemption here in question. Regulations so promulgated will not be declared void*fn7 merely because of a purely technical flaw in failing to include within the Rules themselves a "concise general statement" of basis and purpose, 5 U.S.C. § 1003(b); Courtaulds (Alabama) Inc. v. Kintner, 182 F.Supp. 207, 212 (D.D.C. 1960). Both the basis and purpose are obvious from the specific governing legislation and the entire trade was fairly apprised of them by the procedure followed.

The manufacturer's price of the furs contained in the mink muffs in issue here was less than $5.00. Petitioner claims that therefore it was entitled to the Rule 39 exemption from the disclosure requirements of the Act. The Commission held however that the exemption was inapplicable because Hoving had made "representations" concerning the furs, supra fn. 4. Petitioner urges that representations should be interpreted as mis representations, of which it asserts its innocence. We think that the Commission was correct in its interpretation. The exemption may have been intended to allow fur accessories, collars, sleeves, etc., to avoid the full disclosure requirements of the Act - if the accessories were made up of cheap fur and marketed without any separate representations as to the fur. Even if such an interpretation were erroneous, certainly the advertising and sale of a "mink muff" without effective notice that it was made of waste fur qualifies as a mis representation.

Affirme ...

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