Udga, Incorporated

Text (OCR of the scan at left; may contain errors)

IN THE Matrer OF UDGA, INCORPORATED, AND WILLIAM FRASER AND MARY FRASER COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THI'} ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 2830. Complaint, June 2, 1936-Decision, May 17, 1937 Where a corporation and an individual, principal, if not sole, stockholder thereof and director and in control of its business practices and sales policies, engaged in the offer and sale of a stomach tablet designated "Udga Treatment," for use in treating stomach ulcers and other stomach ailments and diseases caused, or reputedly caused, by hyperacidity, in advertising their said product in various newspapers, trade magazines and other periodicals of interstate circulation, and in letters and copies of purported testimonials, and other matter forwarded to prospective customers throughout the various n States and in the District of Columbiaepresented, as aforesaid, that their said treatment would cure such ulcers, gastritis, indigestion, dyspepsia, and various other stomaeh ailments and diseases, including those caused, or reputedly caused, as abuve set forth, through such statements as "Stomach Ulcm·s-Thousands of sufferers, many cases of years' stauding, after using the Udga Treatment report amazing recovery. • • • l1ighly recommended for ulcers, severe, chronic gastritis, acidosis, dyspPpsiu, indigestion • • •," etc., and through numerous other statements of like tenor and etrect, facts being that said tablets could not cure the various ailments and diseases represented by them, and ma- Jority of persons who gave. testimonials were not capable of diagnosis and were not registered physicians and could not affirmatively state that afore- \V said treatment effected cures of diseases from which they suffered; ith result of misleading and deceiving members of the purchasing public into the false belief that such representations were true, and of inducing such members to bny substantial quantities of its product, and, as a result thereof, of unfairly dive1·ting trade to them from competitors who do not falsely advertise or represent the capacity of the pills or other medicines vended by them to cure ailments and di~eases hereinbefore indicated; to the injury li . of competition in commerce:

eld, That such acts and practices were to the prejudice of the public and com- Petitors and constituted unfair methods of competition. ~efore Mr. William 0. Reeves, trial examiner. Alden S. Bradley for the Commission. J"· D amborn, Gra1-•e,'l, Appel, Andre & Alorton, and Mr. John 0. eOourcey, of St. Paul, l\finn., for respondents. Complaint b Pursuant to the provisions of an Act of Congress approved Septemt er 26, 1914, entitled "An Act to create a Federal Trade Commission, 0 define its powers and duties, and for other purposes," the Federal 146756'"-39-vol. 24--81 1246 FEDERAL TRADE COl\Il\USSION DECISIONS Complaint 24 F. T. C. Trade Commission, having reason to believe that Udga Incorporatedr and William Fraser and Mary Fraser, individuals, hereinafter referred to as respondents, have been and now are using unfair methods of competition in commerce as "commerce" is defined in said act, and it appearing to the Commission that a proceeding by it in respect thereof would be iu the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent, Udga Incorporated, is a corporation~ existing under and by virtue of the laws of the State of Minnesotltr having its principal office and place of business in St. Paul, Minn. Respondents, William Fraser and Mary Fraser, respectively, are individuals having their offices nnd principal places of business in St. Paul, Minn.

PAR, 2. Respondent, Udga Incorporated, is the direct successor to William Fraser and Mary Fraser, formerly copartners doing business under the firm name and styled Udga Medicine Company, Udga Laboratories, and other names similar thereto. Said respondents, 'Villiam Fraser and J\fary Fraser, owned and now own virtually all, if not all, of the _capital stock of respondent corporation, and have so owned such stock since the procurement of the charter thereof, and have at all times herein related. directed and uominated the practices and policies of the respondent corporation. PAn. 3. Respondents, as individuals and as a corporate entity, a5 aforesaid, for a period in excess of six years have been engaged in selling and in offering for sale, a stomach tablet designated ''Udgn. Treatment," intended by the respondents and directed by them to Le used in the treatment of stomach ulcers, gastritis, indigestionr dyspepsia, and various other stomach disturbances, including those caused or reputed to be caused by hyperacidity, and in the course and conduct of the business of respondents as aforesaid, they have sold and transported, and caused to be sold and transported, such stomach tablet into and through the various States of the United States and the District of Columbia, and have in the manner aforesaid maintained a constant current of trade and commerce in interstate commerce of such commodity.

PAR. 4. In the course and conduct of their said business, respondents are now and have been in competition with other corporations, firms and individuals likewise engaged in the business of selling, distributing and transporting throughout the various States of the United States, and the District of Columbia, pills and medicines for the treat· ment of the ailments above set forth.

PAR. 5. The respondents in the course and conduct of their business advertise and cause tole advertis('d in various daily newspapers, trade UDGA, INC., ET AL. 1247 1245 Complaint magazines and other periodicals having interstate circulation, and have forwarded to prospective or potential customers of respondents throughout the various States of the United States and the District of Columbia, circulars, letters, and copies of purported testimonials seemingly illustrative of the efficacy of the ''Udga Treatment," which said statements were and are in part as follows: Stomach Ulcers Thousauds of sufferers, many <"ases of years' standing, after using the Udga ·Treatment report amazing recovery. Rids you of pain, vomiting and other' discomforts at once. No diet. Improvement steady and rapid. The Udga Treatment is highly recommended for ulcers, severe, chronic gastritis, acidosis, dys- Pepsfn, indigestion. Guaranteed satisfaction on no pay trial. $1,000 Reward. Offers. Write for Free Book on Stomach Sicknesses and letters of praise from former sufferers. Udga Lnboratories, 1947 Dakota Building, St. Paul, Minn. Read our Affidavit of Truth and $1,000 Reward Offer. You know the old saying "T he proof of the pudding is in the eating." Here is proof from men and women Who have sent us these testimonial letters giving you their own true experiences. Stomach Ulcer, gas pains, indigestion victims, why suffer? For quick relief. get a free sample of Udga, a doctor's prescription, at yom· local druggists. Respondents have issued numerous other .statements of like tenor and effect, each and all of which have the tendency and capacity to and do, and are by respondents intended to, create in the minds of the Purchasing public, and in the minds of potential customers, the belief that the treatment referred to has a curative value for each and all of the afflictions and ailments above set forth. PAR. 6. The testimonials used by the respondents above referred to consist of purported copies of numerous letters, claimed by respondents to have been received from persons who had taken the "Udga Treatment" for various and sundry ailments, and who represent in such testimonials that such treatment effected cure of the ailments fomplained of.

The majority of the persons purporting to have attested the effic~cy 1 0.f this rt>medy are not capable of diagnosis, are not registered physi- Cians, and cannot affirmatively state the therapeutic or curative value of such treatment.

PAn. 7. In truth and in fact the stomach tablet known and designated as "Udga Treatment" has no therapeutic or curative value and ~aJn~ot remedy or cure the various ailments or diseases claimed, as ereut stated. · . I) .An. 8. There are among competitors of the respondents, persons,· Individuals, firms, copartnerships, and corporations, who selJ, offer 1?r sale and transport in interstate commerce, pills and other medi- Clnes for the treatment of the ailnwnts hereinabove set forth, who do 1248 FEDERAL TRADE COl\IMISSION DECISIONS Findings 24 F. T. C. not falsely represent or exaggerate the therapeutic or curative value of the same.

PAR. 9. Each and all of the above acts and practices of the respondents have a capacity to and do in fact mislead a substantial number of the members of the purchasing public into the false belief that the use of this treatment will effect a cure of the various diseases herein enumerated and referred to, and who, relying upon such belief have purchased substantial quantities of such stomach pill. Such acts and practices ·likewise cause a substantial. diversion of trade to the respondents from competitors of respondents as herein described who do not falsely represent the therapeutic or curative value of the pill or other medicines vended by them, thereby causing injury to competition in interstate commerce.

PAR. 10. The above acts and practices of the respondents are all to the injury and prejudice of the public, and to competitors of the respondents in interstate commerce, and constitute unfair methods of competition in interstate commerce, within the intent and meaning of Section 5 of an Act of Congress entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 2G, 1914.

REPORT, FINDINGS AS TO THE FACTs, AND Onder Pursuant to the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," the Federal Trade Commission on June 2, 1936, issued and served its complaint in this proceeding upon the respondent Udga, Incorporated, a corporation, and 'Villiam Fraser and Mary Fraser, individuals, charging them with the use of unfair methods of competition in commerce in violation of the provisions of said act. After the issuance of said complaint and the filing of respondents' answer thereto a stipulation as to the facts was entered into by Alden S. Bradley, attorney for the Commission, and John C. DeCourcey, attorney for the respondents, before 'Villiam C. Reeves, an examiner of the Commission theretofore duly designated by it, and said stipulation was duly recorded and filed in the office of the Commission. Thereafter the proceeding regularly coming on for considerati~n before the Commission on said complaint, the answer thereto, said stipulation as to the facts and brief in support of the complaint; and the Commission, having uuly considcreu the same and being no« fully auvis£>d in the premises, finds that this proceedin~ is in the interest of the public, anu makes this its findings as to the facts and its conclusion urawn therefrom:

UDGA, INC., ET AL. 1249 1245 Findings FINDINGS AS TO Tile FACTS • ~ ARAORAPH 1. Respondent, Udga, Incorporated, is a corporation ex- IStlng and doing business under the laws of the state of Minnesota having its principal office and place of business in St. Paul, Minn. Respondent, William Fraser, is an individual having his principal office and place of business in St. Paul, Minn. Respondent, Mary Fraser, died on November 22, 1936.

!! An. 2. Udga, Incorporated, is the direct successor of the copartnership o£ William Fraser and Mary Fraser doing business under the firm name and style of Udga Medicine Company, Udga Laboratories, and similar names.

Virtually all, if not all, of the capital stock of the respondent corporation is owned by William Fraser and the estate of Mary Fraser. William Fraser directs and dominates the business practices and sales Policies of the respondent corporation.

PAR. 3. For a period of more than six years the respondents have been engaged in selling and offering for sale a stomach tablet designated "Udga Treatment" intended and directed by them to be used in the treatment of stomach ulcers, gastritis, indigestion, dyspepsia and various other stomach ailments and diseases, including those caused I or reputed to be caused by hyperacidity. They have, in the conduct tj of their business, sold and transported and caused to be sold and I transported such stomach tablets from their place of business in the State of Minnesota into and through various other States of the United States and the District of Colmnbia to purchasers thereof and have maintained a constant current of trade and commerce in such Icommodity in such commerce. PAn. 4. In the course and conduct of their said business respondents l and have been in competition with other corporations, are now firms I~nd of individuals likewise engaged in the business selling, distribut- Ing and transporting throughout the various States of the United States and the District of Columbia pills and medicines for the treat· ment of ailments and diseases similar to those for the treatment of Which respondents' product is sold and distributed. PAR. 5. The respondents in the course and conduct of their business advertise anu cause to be advertised in various daily newspapers, trade map:azinPs and other periodicals having interstate circulation and. have forwarded to prospective customers throughout the various States of the United States and the District of Columbia circulars, letters and copies of purported testimonials. and other matter in Which said advertisi11g matter such statements as the following were and are made :

Findings 24F.T.O.

Stomach Ulcers Thousands of sufl'erers, many cases of years' standing, after using the Udga Treatment report amazing recovery. Rids you of pain, vomiting and other dis· comforts at once. No diet. Improvement steady and rapid. The Udga Treat· ment is highly recommended for ulcers, severe, chronic gastritis, acidosis, dys· pepsin, indigestion. Guaranteed satisfaction on no pay trial. $1,000 Reward Offers. Write for Free Book on Stomach Sicknesses and letters of praise frolJ] former sutl'erers. Udga Laboratories, 1947 Dakota Building, St. Paul, 1\Ilnn. Rend our affidavit of Truth and $1000 Reward Ofrer. You know the old saying "The proof of the pudding is in the eating." Here is pt·oof from men and women who hn ve sent us these testimonial letters giving you their own true experiences.

Stomach Ulcer, gas pains, indigestion victims, why sufrer? For quick relief, get a free sample of Udga, a doctor's prescription, at your local Druggists. Respondents have issued numerous other statements of like tenor and effect, each and all of which have the tendency and capacity to, and do, and are by respondents intended to, create in the minds of the purchasing public, and in the minds of potential customers, the belief that said product referred to will cure each and all of the ailments and diseases above set forth in paragraph 3. PAR. 6. The testimonials used by the respondents above referred to consist of purported copies of numerous letters, claimed by re· spondents to have been received from persons who had taken the "Udga Treatment" for various and sundry ailments and diseases and who represent in such testimonials that such treatment effected cures of the ailments and diseases from which they suffered. The majority of persons who gave such testimonials are not capa· ble of diagnosis, are not registered physicians and caimot affirma· tively state that such treatment effected cures of the ailments and diseases from which they suffered.

PAR. 7. The stomach tablet known and designated as "Udga Treat~ ment" cannot cure the various ailments and diseases as represented by the respondents.

PAn. 8. Among the competitors of respondents are· individuals, firms and corporations who sell and transport in interstate com· merce pills and other medicines for the treatment of the ailments and diseases described in paragraph 3 hereof and do not misrep· resent or exaggerate the capacity of such pills and other medicines to cure such ailments and diseases. · PAR. 9. The use by the respondents of the statements and repre· sentations described in paragraphs 5 and 6 hereof and other state· ments similar thereto in offering for sale and selling such products in commerce as herein set out has had and now has the tendency and UDGA, INC., ET AL. 1251 1245 Order -capacity to and do mislead and deceive members of the purchasing public into the false belief that the representations so made are true and has induced such members to purchase substantial quantities of respondent's products. As a result thereof trade has been unfairly -diverted to the respondents from competitors referred to in para- ¥raph 8 hereof who do not falsely advertise or represent the capac- Ity of the pills or other medicines vended by them to cure the ail- Inents and diseases described in paragraph 3 hereof. In consequence thereof injury has been done by the respondents to competition in commerce between and among the various States of the United States.

CONCLUSION The aforesaid acts and practices of the respondents, Udga, Incorporated, a corporation, and ·william Fraser, an individual, are to the prejudice of the public and of respondents' competitors and con- .stitute unfair methods of competition in commerce, within the intent and meaning of Section 5 of an Act of Congress approved Septemb.er 26, 1914, entitled "An Act to create a Federal Trade Commis- Sion, to define its powers and duties, and for other purposes." ORDER TO CEASE AND DESIST . This proceeding having been heard by the Federal Trade Commis- Sion upon the complaint of the Commission, the answer of the respondents and the record herein including a stipulation as to the facts entered into before ·william C. Reeves, an examiner of the Commission theretofore duly designated by it, brief on behalf of the Commission, ~nd the Commission having made its findings as to the facts and Its conclusion that said respondents have violated the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

. It is ordered, That the respondents, Udga, Incorporated, a corporat~on, its officers, and 'Villiam Fraser and their respective representatr.ves, agents, and employees in connection with the sale and distribution in interstate commerce and in the District of Columbia of any medicinal tablets now known as "Udga Treatment" or of a?y other medicinal product having substantially the same ingredients or the same effect sold under that name or under any other name forthwith cease and desist from:

Representing, directly or indirectly, through advertisements, circulars or testimonials or through any other means or device or in 1252 FEDERAL TRADE COl\Il\IISSION DECISIONS Order 24F.T.C.

any manner that said medicinal product will cure stomach ulcers, gastritis, indigestion, dyspepsia and various other stomach ailments and diseases, including those caused or reputed to be caused by hyperacidity.

It is further ordered, That the respondents shall within 60 days after service upon them of this order file with the Commission a report in writing setting forth in detail the manner and form in which they have complied with this order.

THE WATER WORKS VALVE, ETC., GROUP ET AL. 1253 Syllabus