L. L. Edwards

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

IN THE MATTER OF L. L. EDWARDS CO~IPLAINT, FINDINGS, AND ORDER Dl REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 \ Docket q''/97. Complaint, Aug. 6, 194:2-Decision, Oct. 12, 1942 \\'here an indivdual, engaged In competitive interstate sale and distribution of assortments of nuts so packed and assembled as to involve the use of games 0f chance, gift enterprises, or lottery schemes when sold and distributed to the consuming public, a typical assortment consisting of 30 identical 5-cent cartons for sale under a plan by which chance purchasers secured an additional cent enclosed in five of said cartons, the 5-cent piece contained S In three, and the 10-cent piece in one-- Old such assortments to jobbers and retailers by whom, as direct or Indirect Purchasers, they were exposed and sold to the purchasing public in accordance with aforesaid sale plan, involving game of chance to procure a prize in ad<lition to the nuts; and therebr supplied to and placed in the hands of others means of conducting lotteries in the sale of his prod· Ucts, contrary to an established public policy of the United States Government, and in competition with many who do not use any method in· \V Yolvlng chance or contrary to public policy; lth result that many persons were attracted by said sales plan and the element of chance involved therein, and were thereby induced to buy and sen his products 111 preference to those of said competitors; whereby trade II 'Was diverted unfairly to him froni them: · eld, That such acts and practices, under the clt·cumstances set forth, were all to the prejudice and Injury of the public and competitiors, and constituted Unfair methods of competition in commeJ·ce and unfair acts and practices therein.

Jtr. J. W. Brookfield, Jr., for the Commission. Complaint Pursuant to the provisions of the Federal Trade Commission Act ;nd by virtue of the authority vested in it by said act, the Federal inl'~d~ Commission, having r.reason to believe that L. L. Edwards, an p dividual, hereinafter referred to as respondent, has violated the e ro~isiqns of said act and it appearing to the Con1mission that a proheeding by it in respect thereof would be in the interest of the public, / 0 1~'1ebyOWs:issues its complaint stating its charges in that respect as h. p -'\lt-\.GRAPH 1. Respondent, L. L. Ed wards, is an individual, with b18 Principal office and place of business located at Shelbyville, Tenn. ~~ ~ . . ~ !'onuent is now and has been for more than 1 year last past enj~ged in the sale and distribution of nut products and candy to hers and retail dealers located in the various States of the United 614 FEDERAL TRADE C0111MISS'ION DECISIONS Complaint 35F.T.C- States and in the District of Columbia. Respondent causes and has caused his products when sold to he shipped and transported froiJ'l. his aforesaid place of business in the State of Tennessee to purchas· ·ers thereof at their respective points of location in the various Stat~s of the United States ·and in the District of Columbia. There. 15 now and has been for more th,an 1 year last past a course of trade bY' said respondent in such food products in commerce between a?d among the various States of the United States and in the District of Columbia.

In the course and conduct of his business, respondent is, and bas been, in competition with other individuals and with corporations and firms engaged in the sale and distribution of like or similar products in commcrc.e between and among the various States of the· United States and in the District of Columbia. ' PAn. 2. In the course and conduct of his business as described i~ paragraph 1 hereof, respondent sells and distributes, and has sold n~ distributed, assortments .of nuts so packed and assembled as to lfl' volve the use of games of chance, gift enterprises, or lottery sche!lles when sold and distributed to the purchasing and consuming public. d One of said a·ssortments consists of 30 small cartons of nuts packed in a display carton being the following legend: HOW LUCKY PEANUTS Pncked by L. L. EDWAimS Shelbyville, Tennessee YOU MAY FIND lc 5c loc and the nuts are distributed in the following manner: . II Said packages of nuts retail at 5 cents each and 5 of said Sllla cartons have concealed in said carton 1 cent; 3 of said small carton(I have a 5-cent piece concealed in each of them and one of said sJllil cartons contains 10 cents. All of said cartons are identical and the" prospective purchaser is unab~e to 'd?termine until after~r .a purchas~ has been made whether he will recmve a carton contammg 1 cefl t 5 cents, or 10 cents, or a carton containing nothing but nuts. The ftlC as to whether the pm:chaser of said carton of nuts receh'es the nuts plus 1 cent, 5 cents, or IO cents is thus determined wholly by lot or chance. { P ..m. 3. Retail dealers who purchase respondent's said package. 0If nuts, directly or indirectly, expose and Eel! the same to the purchn,slfl"' public in accordance with the sales plan aforesaid. Respondent thll~ supplies to, and places in the hands of others, the means of coil' L. L. EDWARDS 615 613 Findings ducting lotteries in the sale of his products in accordance with the Sales plan hereinabove set forth. The use. by respondent of said sales ~Ian or method in the sale of his products and the sale of said products Y and through the use thereof and by the aid of said sales plan or lllethou is a practice of a sort which is contrary to an established PUblic policy of the Government of the United States. PAn. 4. The sale of packages of nuts to the purchasing public by the Jnethod or plan hereinabove set forth involves a game of chance or the sa]e of a chance to procure a prize in addition to the nuts. Many , ll<'rsons, firms, and corporations who sell and distribute products in competition with respondent as above alleged, do not use said method 0 ~ any method involving a game of chance or the sale of a chance to 'tlll something by chance or any other method which is contrary to Public policy. Many persons are attracted by said sales pl:m or lllethod employed by respondent in the sale and distribution of his ~roducts and by the element of chance involved therein, and are thereby 'llld · Uced to buy and sell respondent's products in preference to prod- ;~s of his competitors who do not use the same or equivalent methods. h· e use of said method by respondent, because of said game of chance, ·ls tendency and capacity to unfairly divert substantial tra~le in com- ?lerce between and among the various States of the United States and ~~the District of Columbia to respondent from his said competitors 0 do not use the same and equivalent methods. lll\ut 5. The aforesaid acts and practices of respondent as herein ~ eged are all to the prejudice and injury of the public and of re- ~Pondent's competitors and constitute unfair methods of competition ;11 commerce and unfaii,' acts and practices in .commerce within the ntent and meaning of the Federal Trade Commission Act. , REPORT, FINDINGS .AS TO THE FACTS, AND Onder tl Pursua1~t to the provisions of the Federal Trade Commission Act, E~eterFederalserved Tradeits complaintCommissionin thisonproceedingAugust 6, upon1042, respondent,issued and there-L. L. fU\varcls, an individual, charging him with the use of unfair methods ~ competition in commerce and unfair acts and practices in comtherce in violation of the provisions of said act. 'On August 28, 1942, t e respondent filed his answer, in which answer he admitted all the :~t~erial alle~ations of fact set forth in said complaint and waived llf Intervening procedure and further hearing as to said facts. 'l1were- C~~r, ~h~ proceedin~ ·~egularly ?arne on for final hearing before the C tnnusswn on the said complamt and the answer thereto, and the 0 ~111ission, having duly consiuered the matter, and being now fully ' TRADE COMMISSION DECISIONS616 FEDERAL 35F. 'f. C. Findings 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 con· elusion drawn therefrom.

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, L. L. Edwards, is an individual, "'ith his principal office and place of business located at Shelbyville, 'fen!~ Respondent is now and has been for more than 1 year last past engaged in the sale and distribution of nuts products and candy to jobbers a~ retail dealers located in the various States of the United States flnd111.~the District of Columbia. Respondent causes an<.l has caused •1d products ~hen sold to be shipped and transported from his afores.a~t place of business in the State of Tennessee to purchasers thereo~ ,J their respective points of location in the various States of the Vnlte States and in the District of Columbia. There is now and has bee!~ for more than 1 year last past a course of trade by said respond~cls, . in such food products in commerce between and among the var 1011 States of the United States and in the District of Columbia. 11\ 5 In the course and conduct of his business, respondent is, and. been, in competition with other individuals and with corpor~t~.~Il r afld firms engaged in the sale and distribution of like or snnJ ~e products in commerce between and. among the various States of t United States and in the District of Columbia. · . 11 PAn. 2. In the course and conduct of his business as described ia paragraph 1 hereof, respondent sells and distributes, and has 60 0 and distributed, assortments of nuts so packed and assembled as t s involve the use of games of chance, gift enterprises, or lottery schcn;.e when sold and distributed to the purchasing. and consuming pub 1d One of said assortments consists of 30 small cartons of nuts packed in a display carton bearing the following legend: liOW LUCKY PEANUTS Packed by L. L. EDWAHDS Shelbyville, Tennessee YOU !IIAY FIND 1¢ 5¢ 10¢ and the nuts are distributed in the following manner: 1l Said packages of nuts retail at 5 cents each and 5 of said sJllfl s cartons have concealed in said carton 1 cent; 3 of said small cartol~l have a 5-cent piece concealed in each of them and one of said S111~ 16cartons contains 10 cents. All of said cartons are identical and t prospective purchaser is unable to determine until after a purchase L. L. EDWARDS 617 613 Order hus been made whether he will receive a carton containing 1 cent, 5 cents, or 10 cents, or a carton containing nothing but nuts. The fact as to whether the purchaser of said carton of nuts receives the ~tlts plus 1 cent, 5 cents, or 10 cents is thus determined wholly by ot or chance.

PAR, 3. Retail dealers who purchase respondent's said package of llttts, directly or indirectly, expose and sell the same to the purchasing Dllblic in accor.dance with the sales plan aforesaid. Respondent thus ~llpplies to, and places in the hands of, others the means of conducting hotteries in the sale of his products in accordance with the sales plan crcinabove set forth. The use by respondent of said sales plan or lllcthod in the sale of his products and the sale of said products by and through the use thereof and by the aid of said sales plan o'r li1cthod is a practice of a sort which is contra.ry to an established Dttblic policy of the Government of the United States. PA.n. 4. The sale of packages of nuts to the purchasing public by the lllethod or plan hereinabove set forth involves a game of chance Al' the sale of a chance to procure a prize in addition to the nuts . . !any persons, firms and corporations who sell and distribute products 111 competition with respondent as above found, do not use said method 0 ~ any method involving a game of chance or the sale of a chance to "'111 something by chance or any other method which is contrary to l?llblic policy. l\fany persons are attracted by said sales plan or li1ethod employed by respondent in the sale and distribution of his rtoducts and by the element of chance involved therein, and are t h(!reby induced. to buy a~d sell respondent's products in pre~ercnce 0 Products·of h1s competitors who do not use the same or eqmvulent lnethods. The use of said method by respondent, because of said !,ta111e of chance, has the tendency and capacity to unfairly divert sub- :tantial trade in commerce between and among the various Stutes of h~e United States and in the District of Columbia to respondent from 18 said co1hpetitors who do not use the same and equivalent methods. CONCLUSION 'lhe aforesaid acts and practices of respondent as herein found are al} to the prejudice and injury of the public and of respondent's comlletitors and constitute unfair methods of competition in commerce 1111d unfair acts and practices in commerce within the intent and lneaning of the Federal Trade Commission Act. ORDER TO CEASE AND DESIST . 'I'his proceeding having been heard by the Felleral Trade Commit=;- ~1011 upon the complaint of the Commission and the answer of respond- 33F. T. C. o,nl'}r ent, in which answer respondent admits all the material allegations of fact set forth in said complaint, and ~states that he waives all inter· vening procedure and further hearing as to said facts, and !he Commission having made its findings as to the facts and conclu51~11 that said respondent has violated the provisions of the Federal Tntc e Commission Act; . It is ordered, That the respondent, L. L. Edwards, an individual, }1lS representatives, agents, and employees, directly or through any corpod rate or other device, in connection with the offering for sale, sale, 11~ distribution of his nuts or nut products, or any other produc~s,, 111 commerce, as commerce is defined in the Federal Trade CommtSS1011 Act, do forthwith cease and desist from:

' 1. Selling or distributing nuts or nut products, or any other· mer· chandise, so packed and assembled that sales of said" merchandise to the public are to be made or, due to the manner in which such mel'· chandise is packed and assembled at the time it is sold by respondent: may be made by means of a game of chance, gift enterprise, or lottery scheme;

2. Supplying to or placing in the hands of dealers, or others, assort· ments of packages of nuts or nut products which are to be used 0~ due to the manner in which such merchandise is packed and assemble at the time it is sold by respondent may be used to conduct a Iotter~ gaming device, or gift enterprise in the sale or distribution of sue nuts or nut products to the public;

3. Packing or assembling in the same assortment packages of nnts or nut products for ultimate sale to the public which individual1 packi ages of nuts or nut products are of uniform appearance but son1e 0 which contain coins or other United States money; £ 4. Selling or otherwise disposing of any merchandise by means 0 a lottery, game of chance or gift enterprise. . · It .is further ordered, That the respondent shall, within 60 clays aft~r 111service upon it of this order, file with the Commission a report writing setting forth in detail the manner and form in which it h115 complied with this order. · MASTER HERB CO • 619 . Complaint