Grand Rapids Factory Show Rooms, Inc.

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IN THE MATTER OF . GRAND .RAPIDS FACTORY SHOW ROOMS, INC., MORRIS ZISBLATT, MEYER ZISBLATT, SAM ZISBLATT, AND LILLIAN ZISBLATT.

COMPLAINT, FINDINGS, AND ORDER IN RE~.\RD TO Tile ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CO"'GRESS APPROVED SEPT. 26, 1914 Docket 46:!?6. Complaint, Nov. 6, 1941-Decision, Oct. 12, 1942 · Where a corporation and the two l!ldivlduals directing its management, policies and opel·ations; engaged lu the Interstate sale and distribution of hou~ehold furniture- ' (a) Represented that their furniture was made In Grand Rapids, Mlch, impor- ·tant center of the furniture Industry, through di~play of their corporate name "Grand Rapids Factory Show Rooms, Inc." upon slgns on the building in \Vhlch their business wafl located, upon their business cards and those of their salesmen, and upon their stationery and Invoice forms, and through statements and words to such effect by their officers, agents, and salesmen to prospective purchasers; and · (b) Represented that their corporation owned, operated, or controlled a :factory at Grand Rapids, and that their furniture was sold direct from the factory to the consumer at wholesale prlceil, without addition of the middleman's profit, through words "Factory Show Rooms" In Its aforesaid corporate name displayed as above set forth; and also through display of words "Direct from Factory to You," and through oral statements by its officers, agents, and salesmen that Its sales were made direct from the factory to the consumer and consequently at better prices than retail dealers could give, and that ltr , Prices were wholesale prices;

'rhe facts being that only a SlJlall portion of their (nrniture was made in Grand Rapids, 1\Ilch.,' furniture of which is In widespread demand as possessing dependable qualities and other desirable ch'llracteristlcs; lt did not own, operate, or control a furniture factory In said city or elsewhere; its sales were not made direct :from the factory, but were resales at retail of furniture Purchased :from factories or wholesalers; said place of business was not n factory show room but a retail store; and prices charged by It were higher than the usual current wholesale prices;

With tendency and cacapity to mislead and deceive a sulJst'llntlal portion of the Purchasing public--which prefers, for reasons above Indicated, to purchase household furniture made in said city, and also to buy dirl'ct from the factory as securing advantages not ordinarily obtained through retail channels, and considers that there. are advantages In buying from a concern with a large . l'volume of business Indicated by "Factory Show Rooms"-into the mistaken belief said represent!ons were true; and with etrect of causing such public, because of s.uch belief, to purchase subst'llntlal quantities of furniture from aforesaid corporation:

·596 FEDERAL TRADE COMMISS'ION DECISIONS f!complaint 35F.T.C.

Held, That such acts and practices, under the circumstances set forth, were all to the prejudice of the public and constituted unfair and deceptive acts and practices in commerce.

Before Mr. John P. Bramhall, trial examiner. llfr. J. R. Phillips, Jr. and Mr. Jcwnes M. Been.tmond for the ·Commission.

llfr. Louis Liqert, of New York City, for respondents. Complaint Pursuant to the provisions of the Federal Trade Commission .A.ct, -and by virtue of the authority vested in it by said act, the Federal -Trade Commission, having reason to believe that Grand Rapids Fac· tory Show Rooms, Inc., a' corporation, and Morris Zisblatt, :Meyer Zisblatt, Sam Zisblatt, and Lillian Zisblatt, hereinafter referred to as respondents, have violated the provisions of. said act, and it o.p· ·pearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint, .stating its charges in that respect as follows: PARAGRAPH 1. Respondent, Grand Rapids Factory Show RooJllS, Inc., hereinafter referred to as respondent corporation, is a cor~o· ration, organized under the laws (.)f the State of New Jersey, with its office and place of business at 165 'Vard Street, city of Paterson, State of New Jersey, and the respondents Morris Zisblatt, Meyer Zisblatt, Sam Zisblatt, and Lillian Zisblatt are the incorporators, officers, director.c;, and executive employees of respondent· corpora~i?~' and direct its management, policies, and operations. Said indrv~ • ual respondents have acted in concert and in cooperation each Wlt~ the other, and with said corporate respondent, in doing the acts an things hereinafter alleged.

PAR. 2. Under the control and direction' of said individual re· spondents, respondent corporation ·is now,_and has been for :rn~re than 1 year last past, engaged in the business of selling and distrlb·,. uting household furniture. Said respondent sells said furniture ~ 0 purchasers situated in· various States of the United States, and 111 the District of Columbia, and causes said furniture, when sold, t~ be transported from the aforesaid place of business in the State 0 f New Jersey to purchasers thereof located in various other States 0 t the United States, and in the District of Columbia. Respond~n corporation maintains, and at all times mentioned herein has :rnaln· · tained, a course of trade in. commerce in said household furniture among and between various States of the United States, and in the District of Columbia.

GRAND RAPIDS FACTORY SHOW ROOMS, INC., Err AL. 597 595 Complaint PAR. :3. In the course and conduct of said business, and for the· Purpose of inducing the purchase of the said household furniture,. respondent corporation displays, and for more than 1 year last past has displayed, upon signs on the building in which its business is· located, upon its business cards, and the business cards of its saleslllen, and upon its stationery and invoice forms used in said business, its corporate name Grand Rapids Factory Show Rooms, Inc.,. and also the words "Grand Rapids Factory Show Rooms" anu "Direct lfrom Factory To You."

Said respondent, through oral statements made by its officers,. agents, and salesmen~ also represents, and has represented to prowec~ive purchasers that said furniture is manufactured in Grand ap1ds, Mich.; that its sales are made directly from the factory to the consumer, and consequently at better prices than retail deal- ~rs could give; and that its prices are wholesale prices. : PAn. 4. The city of Grand Rapids, Mich., has been for many years,. ~nd is now, a large and important center of the furniture industry llj. the United States, a fact generally known to the public throughout the United States, and furniture manufactured there has, forllla~y years, enjoyed, and now enjoys, a widespread popularity, reputation, good will, and demand throughout the United States asl>ossessing dependable qualities and other desirable characteristics. PAn. 5. Through the use of the statements and representations' hereinabove set forth, and others similar thereto not specifically set out herein, respondent corporation has represented that the furniture· Bold by it is manufactured in Grand Rapids, Mich.; that the responden~ owns, operates, or controls a factory at Grand Rapids; and that said furniture is sold direct •from the factory to the consumer, with- ~u~ the addition of the middleman's profit; that the prices at which t Is sold are wholesale prices.

~ AR. 6. The aforesaid representafions made by respondent corpo: ration are false and misleading. In truth and in fact, only a small tortion of the furniture sold by said respondent is made in Grand f api.ds, Mich. Said re~pondent does not own, operate, or control a Furniture factory in Grand Rapids, Mich., or elsewhere. Its sales ~re not made "direct from factory" as that phrase is generally used 111 the trade and understood by the public, but ate in fact resales, at . ~~ail, of furnit~re purchased by respondent ~rom ~actories or from ~h olesalers. Said respondent's place of busmess IS not a factory '\\'ow room, but a retail store. The prices which it charges for its ares are higher than the usual, current, wholesale prices for such '\\'ares.

598 ' FEDERAL TRADE COMMISS'ION DECISIONS Findings 35 F. T: c. PAR. 7. By reason of the wide~pread reputation, popularity, and good will enjoyed by furniture made in Grand Rapids, Mich., throughout the United States, there is a substantial portion of the· purchasing public which prefers to purchase household furniture manufactured in the city of Grand Rapids, which prefer to purchase direct from the factory, believing that in so doing it secures bet~r prices, superior quality, and other advantages not ordinarily obtain-, able when such furniture is purchased through ordinary retail ch?nnels; and which believes that there are advantages in purchas!U~ furniture from a concern having the large volume of. business indl• cated by "factory show rooms." · .. PAR. 8. Respondent corporation's acts and practices, as herein" above alleged, have had, and now have, the tendency and capacity.to, and do, mislead and deceive a substantial portion of the purchas1llg public into the erroneous and mistaken belief that furniture purd chased from said respondent is made in Grand Rapids, Mich., sol direct from the factory owned, operated, or controlled by it, at wholesale prices, and that the 'corporate respondent is maintaining and operating show rooms for the purpose of displaying furniture having its origin in Grand Rapids, Mich., and to cause, and do cause, a substantial portion of the purchasing public, because of sue~ erroneous and mistaken belief, to purchase substantial quantities 0 furniture from the respondent corporation.

PAR. 9. The aforesaid acts and practices of the respondent, 11~ herein alleged, are all to the prejudice and injury of the public, a~ constitute unfair and deceptive acts and practices in commerce withlll the intent and meaning of the Federal Trade• Commission Act. REPORT, FINDINGS AS TO THE FACTS, .AND ORDER Pursuant to the provisions of the Feder-al Trade Commission A.ct, . the Federal Trade Commission on' the 6th day of November 194!, issued its complaint in this proceeding against Grand Rllpids F~tC· tory Show Rooms, Inc., a corporation, and Morris Zisblatt, 1\fe!er Zisblatt, Sam Zisblatt, and Lillian Zisblatt, individuals, chargi11g them with the use of unfair and deceptive acts and practfces in coJll· merce in violation of the provisions of that act. On August 21, 1942,'the respondents Grand Rapids Factory Sho« Rooms, Inc., Meyer Zisblatt, and Sam Zisblatt filed their ans«er, in which answer the said respondents admitted all the material aile· gations of fact set forth in said complaint,· and waived all interven; ing procedure and further hearing as to said facts. The prese~. whereabouts of the individual respondents, Morris Zisblatt and J;I GRAND RAPIIDS FACTORY SHOW ROOMS, INC., Err AL. 599 .S95 Findings lian Zisblatt, are unknown to the Commission, and service of the ~complaint upon these respondents was not perfected. The proceed- Ing regularly came on for final hearing before the Commission on the said complaint and the answer thereto of Grand Rapids Factory Show ·Rooms, Inc., Meyer. Zisblatt, and Sam Zisblatt; and the Commission, having fully considered. the matter and being now fully advised in the premises, finds that this proceeding is in the interest .of the public, and makes this its findings as to the facts, and its conclusion drawn therefrom:

FINDINGS AS TO THE FACTS PARAGRAPH '1. Respondent, Grand Rapids Factory Show nooms, lnc., hereinafter referred to as respondent corporation, is a corporation, organized under the laws of the State of New Jersey which heretofore had its office and place of business at 165 Ward Street in the city of Paterson, State of New Jersey, and the respondents, Meyer Zisblatt a_nd Sam. Zisblatt, ars the incorporators,. officers, directors, and executrve employees of respondent corporation, and direct its management, Policies, and operations. Further, respondents, Grand Rapids Factory Show Rooms, Inc., Meyer Zisblatt, ·and Sam Zisblatt, state in their answer that Grand Rapids Factory Show Rooms, Inc., discontinued its furniture business about the middle of June 1940, and that neither it n_or any of the individual respondents have resumed actual participatron in the furniture business since that date. The individual respondents, Meyer Zisblatt and Sam Zisblatt, have acted in concert and in co- 'OPeration each with the other and with said corporate. respondent in doing the acts and things hereinafter alleged. ' PAR. 2. Under the control and direction of said individual respondents, respondent· corpora:tion was prior to June '1940, engaged in the business of selling and distributing household furniture. Said re- ~Pondent sold said furniture to purchasers situat~d in various States of the United States and 'in the District of Columbia and caused said furniture, when sold, to be transported from its aforesaid place of business in the State of New Jersey to purchasers thereof located in ~~rious other States of the United States and in the District of Columla, Respondent corporation maintained prior to June 1940, a course of trade in said household furniture in commerce among and between the various States of the United States and in the District of Columbia. PAR. 3. In the course and conduct of said business and for the pur- Pose of inducirig the purchase of the said household furniture, responde~t corporation for more than 1 year prior to June 1940, displayed upon signs on the building in which its business was located, upon its busi- 600 FEDERAL TRADE COMMISS'ION DECISIONS Findings 35F. T.C.

ness cards and the business cards of it salesmen, and upon the stationery and invoice forms use'd· in said business, its corporate name, Grand Rapids Factory Show Rooms, Inc., and also the words "Grand Rapids Factory Show Rooms" and "Direct from factory to you." Said respondent corporation through oral statements made by its officers, agents, and salesmen also has represented to prospective pur· chasers that said furniture was manufactured in Grand Rapids, Mich.;. that its sales were made direct from the factory to the consumer, and consequently at better prices than retail dealers could give; and that its prices were wholesale prices. • PAR. 4. The city of Grand Rapids, Mich., has been for many yearsr and is now, a large and important center of the furniture industry in the United States, a fact generally known to the public throughout the United States, and furniture manufactured there has for many years enjoyed, and now enjoys, a widespread popularity, reputation, good· will, and demand throughout the United States as possessing depend· able qualities_and other desirable characteristics .. PAR. 5. Through the use of the statements and representations here· inabove set forth, and others similar thereto not specifically set out herein, respondent corporation has represented that the furniture sold by it was manufactured in Grand Rapids, :Mich.; that it owned, op· erated, or controlled a factory at Grand Rapids; that said furniturewas sold direct from the factory to the consumer, without the addition of the middleman's profit; and that the prices at which the furniture was sold were wholesale prices.

PAR. 6. The aforesaid representations made by respondent cor· poration were false and misleading. In truth and in fact, only a small portion of the furniture sold by such respondent was made in Grand Rapids, Mich. Said respondent did not own, operate, or con· trol a furniture factory in Grand Rapids, Mich., or elsewhere. Its sa)es were not made "direct from factory" as the phrase is generally used in the trade and understood by the public, but were in fact resales at retail of furniture purchased by such respondent from fac· tories or from wholesalers. Said respondent's place of business w~s not a factory show room but a retail store. The prices which 1t charged for its wares were higher than the usual, currel!t, wholesale prices for such wares.

PAR. 7. By reason of the widespread reputation, popularity, and goodwill enjoyed by furniture made in Grand Rapids, :Mich., through· out the United States, there was and now is a substantial portion of the purchasing public which prefers to purchase household furniture manufactured in the city of Grand ;Rapids; which prefers to purchase direct from the factory, believing that in so doing it secures better ' GRAND RAPIDS FACTORY SHOW ROOMS, INC.1 Err AL. 601 595 Order Prices, superior quality, and other advantages not ordinarily obtainable when such furniture is purchased through ordinary retail chan- ~els; and which believed and still believes that there are advantages In purchasing furniture from a concern having the large volume of business indicated by "factory show rooms." · PAn. 8., The respondents' acts and practices as hereinabove found have had the tendency and capacity to mislead and deceive a substan· tial portion of the purchasing public into the erroneous and mistaken belie£ that furniture purchased from said respondents was made in Grand Rapids, Mich., sold di.rect from a factory owned, operated, or· controlled by respondents, at wholesale prices, and that the corporate respondent was maintaining an<;! operating show rooms for the pur- Pose·of displaying furniture having its origin in Grand Rapids, Mich.; and to cause, and have caused, a substantial portion of the purchasing Public, because of such erroneous and .mistaken belie£, to purchase substantial quantities of furniture from the respondent corporation. CONCLUSION .·The acts and practices of the respondent corporation and the indiv- Idual respondents, Meyer Zisblatt and Sam Zisblatt, as herein found, are all to the prejudice of the public and constitute unfair and deceptive acts and practices in commerce, within the intent and meaning of the Federal Trade Commission Act.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission and the answer of. respondents, Grand Rapids Factory Show Rooms, Inc., Meyer Zis: hiatt and Sam Zisblatt (service of the complaint not having been obtained upon the other respondents), in which answer said :respondents admit all the material allegations of fact set iorth in said Complaint, except as to the continuation in business after· June 1940, of the respondent, Grand Rapids Factory Show Rooms, Inc., and state that they waive all intervening procedure and further hearing on said facts, and the Commission having made its findings as to the f~cts and its conclusion that said respondents have violated t.he pro· \'isions of the Federal Trade Commission Act. lt is ordered, That said respondents, Grand Rapids Factory Show llooms, Inc., a corporation, and its officers, aud Meyer Zisblatt and Sam Zisblatt, individually, and as officers, of said corporation, and respondents' repres~ntatives, agents, and employees, directly or through any corporate or other device, in connection with the offering 602 FEDERAL TRADE COMMISS'ION DECISIONS Order 35F. T.C ..

for sale, sale and distribution of furniture in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith· cease and desist from:

1. Using the words "Grand Rapids," or any simulation thereoft· as n. part of respondents' corporate or trade name, or otherwise repre·: senting, directly or by implication, that the furniture sold by, ~espond·. ents is obtained principally from Grand Rapids, Mich. 2: Using the words "Grand Rapids," or any simulation, thereoft to designate, describe, or refer to furniture which is not in fact manufactured in Grand Rapids, Mich. . 3. Misrepresenting in any manner the' place of origin or manufac- · ture of respondents' furniture. . 4. Using the term "Factory Show 'Rooms,". or any other term of similar import, as a part of respondents' corporate or trade name· or otherwise representing that respondents' place of business is a factory show room: · 5. Using the phrase "Direct from factory to you.," or any other phrase of similar import, to designate, describe or refer to the char· acter of respondents' business, or otherwise representing that respond· ents' own or operate a factory o·r that respondents' furniture is sold: direct from the factory to the consumer, or that the prices at which: respondents sell their furniture are wholesale prices. It is further ordered, That said respondents ~hallf within 60 days-. after service upon them of this order, file with the Commission a report in writing settin·g forth in detail the manner and form in which they have complied with this order. . It is further ordered, That this proceeding be, and it hereby is, closed as to respondents, Morris Zisblatt and Lillian Zisblatt without prejudice to the right of the Commission, should the facts so warrant, to reopen the proceeding and resume trial thereof in accordance with its regular procedure. · MONTGOMERY~_WARD :& CO., INC, 603 Complaint.