Castle Company, Inc.

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

IN THE l\fATfER OF CASTLE COMPANY, INC.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO Tile ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT 26, 1914 Docket 418.J. Complflint, July 11, 19~!-Decision., Mar. 15, 1943 Where a corporation, engaged In Interstate sale and distribution of jewelry, Including Its "Our Lady of the Miraculous Medal" pendants- (a) Represented that the settings therein were precious stones, through · referring thereto In newspaper advertisements as "birthstones," and dis· played them on cards bearing such words, for example, as "January" and, immediately beneath, the word "Garnet"; · The facts being settings In question were not precious stones as long understood from the word "birthstone," but were made of glass colored to simulate such precious stones ns garnets, rubles, emeralds, Nc. ; and (b) Falsely represented, througli use of word "Manufacturers" on Its letter· ht>ads, that It was the manufacturer of the jewelry sold by It; With tendency and capacity to mislead and deceive a substantial portion of the purchasing public with respect to the character of its business and com· ptJs!tlon of cet·taln of Its merchandise, thereby cau.~ing said public's pur· chase thrreof been use of such mistaken belief: Held, That such acts anu practices, under the cl!cumstances set forth, were all to the prejudice of the public, and constituted unfair and deceptive acts and practices in commerce.

Before Mr. Clyde !If. lladley, trial examiner. Mr. B. G. Wilson for the Commission.

Mr. John Lockwood, of New York City, for respondent. Complaint Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said act, the Federal Trade Commission, having reason to believe that Castle Co., Inc., hereinafter referred to as respondent, has violated the provisions of the said act, and it appearing 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, Castle Co., Inc., is a corporation, or· ganized, existing and doing business under and by virtue of the laws of the State of New York, with its principal office and place of busi· ness located at 1374 Broadway, New York, N.Y. PAn. 2. Respondent is now, and for more than '1 year last past has been, engaged in the sale and distribution of sih·er chains with "Our Lady of the Miraculous Medal rendants" and other articles of 332 FEVE'R:Ail TRADE COMMISSION D'E·CTSIONS Complaint 36F. T.C.

jewelry in commerce between and among the various States of the United States and in the District of Columbia. Respondent causes said articles of jewelry, when sold, to be shipped from its place of business in the State of New York to purchasers thereof located in various other States of the United States and in the District of Columbia.

Respondent maintains, and at all times mentioned herein, has maintained, a course of trade in said medal pendants and other articles of jewelry in commerce between and among the various States of the United States and in the District of Columbia. PAR. 3. The respondent, Castle Co., Inc., in connection with the sale and distribution of said medal pendants, and other articles of jewelry and for the purpose of inducing the purchase thereof, makes, and has made, certain representations in its advertising literature, on its business stationery, and otherwise, to the effect that it is a "manufacturer" of jewelry and that the "Our Lady of the Miraculous Medal Pendants" which it sells contain "Your Own Birthstone." PAR. 4. All of said representations, together with other similar statements appearing in respondent's advertising literature and otherwise, constitute representations to the purchasing public that the respondent manufactures the aforesaid medal pendants and other articles of jewelry which it sells and distributes, as herein alleged, and that certain of the settings in its medal pendants are precious or semiprecious stones.

PAR. 5. In truth and in fact said statements and representations are false and misleading in that neither do the medal pendants contain precious or semiprecious stones nor does the respondent manufacture the said medal pendants or other articles of jewelry sold and distributed by it as aforesaid.

PAR. 6. Many purchasers of articles of jewelry have a preference for those of such articles which may be purchased dir<'ct from the manufacturer in the belief that in so purchasing they may have the advantage of lower prices, better quality and other advantages which would not be available if said purchases would have to be made through middlemen, wholesalers or retailers. For a long period of time the word "birthstone" hns haJ, and still has, a definite and significant meaning in the minds of the purchasin~ public in that they know that diamonds, <'meralds, rubies, garnets, and other precious or semiprecious stones have been, and still are, designated as the "birthstones" for particular months of the year. PAR. 7. The respondent, by representing itself as being the manufacturer of the jewelry sold and distributed by it as aforesaid, and by representing that the settings in its medal pend11nts are "birthstones," 1 CAS'fLE CO., INC. 333 I ~1 Findings leads the purchasing public into the mistaken and erroneou~ beliefs tl11at respondent, in fact, manufactures the various articles of jewelry sold and distributed by it as aforesaid and that, in fact, the settings appearing in the medal pendants are precious or semiprecious stones. PAR. 8. The aforesaid acts and practices of the respondent, as herein alleged, are all to the prejudice and injury of the public, and constitute unfair. and deceptive acts and practices within the intent and meaning of the Federal Trade Commission Act. REPORT, FINDINGS As TO Tile FACTs, AND Onder Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on July 17, 1942, issued and subsequently served its complaint in this proceeding upon the respondent, Castle Co., Inc., a corporation, charging it with the use of unfair and deceptive acts· and practices in commerce in violation of the provisions of that act. After the filing of respondent's answer, testimony, and other evidence in support of the allegations of the complaint were introduced by the attorney for the Commission, and in opposition thereto by the attorney for the respondent, before a trial examiner of the Commission theretofore duly designated by it, and such testimony and other evidence were duly. recorded and filed in the oflice of the Commission. Thereafter, the proceeding regularly came on for final hearing before the Commission on the complaint, the answer thereto; testimony and other evidence, report of the trial examiner upon the evidence and the exceptions to such report, and briefs in support of and in opposition to the complaint (oral argument not having been requested); and the Commission, having duly 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 Tile FACTS PARAGRAPH 1. The respondent, Castle Co., Inc., is n corporation, Drganized, existing and doing business under and by virtue of the hws of the State of New York, with its principal office and place Df business located at 1374 Droadway, New York, N.Y. Respondent is now and for a number of years last past has been engaged in the sale and distribution of various articles of jewelry, including certain pendants described by respondent as "Our Lady of the Miraculous 1tfedal" pendants.

PAR. 2. Respondent causes and has caused its jewelry, including .such pendants, when sold, to be transported from its place of business 334 FEDERAL TRAD:E co:MMi:SSION DECISIONS Findings S6F.T.C.

in the State of New York to purchasers thereof located in various other States of the United States and in the District of Columbia. Respondent maintains and has maintained a course of trade in its merchandise 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 its business and for the pur~ pose of inducing the purchase of its pendants, respondent has represented through advertisements in newspapers that certain of the settings in the pendants are "birthstones." The cards on which the pendants are displayed and sold also make reference to such settings. For example, one of such cards bears the word "January," and, in1mediately beneath, the word "Garnet."

Through the use of these statements or legends, respondent has represented that the settings referred to are precious stones. The evidence shows that the word "birthstone" has long been associated in the public mind with precious stones, and that when the word is used to designate or describe a jewelry setting, the purchasing public or a substantial portion thereof understands that the setting referred to is a precious stone.

PAR. 4. The Commission finds that these representations are false and misleading in that the settings in question are not precious stones but are in fact made of glass colored in such manner as to simulate various precious stones, such as garnets, rubies, emeralds, etc. PAR. 5. Rrspondent has also represented, through the use of the word "Manufacturers" on its letterheads, that it is the manufacturer of the jewelry sold by it. This representation is likewise false and misleading, as respondent is not a manufacturer but is engaged only in the retail sale of jewelry. There is a preference on the part of a substantial portion of the purchasing public for dealing with manufacturers, such preference being due to a belief on the part of such portion of the public that by dealing with manufacturers, lower prices and other advantages may be obtained. PAR. 6. The Commission further finds that the use by respondent of the false and misleading representations set forth herein has the tendency nnd capacity to mislead and deceive a substantial portion of the purchasing public with respect to re~pondcnt's business status and with respect to the character nnd composition of certain of its merchandise, and the tE>ndency and capacity to cause such portion of the public to purchase substantial quantities of respondent's merchandise as n. result of the erroneous and mistaken belief engendered by such representations.

CASTLE CO., INC. 335 831 Order CONCLUSION The acts and practices of the respondent as herein found are all to the prejudice of the public and constitute unfair and deceptive acts and practices in commerce within the intent a.nd meaning of the Federal Trade Commission Act.

ORDER TO CF.ASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer of respondent, testimony and other evidence in support of and in opposition to the allegations of the complaint. taken befqre a trial examiner of the Commission theretofore duly designated by it, report of the the trial examiner upon the evidence and the exceptions to such report, and briefs in support of and in opposition to the complaint (oral argument not I1aving been requested) ; and the Commission having made its findings as to the facts and its conclusion that the respondent has violated the provisions of the Federal Trade Commission Act.

It is ordered, That the respondent, Castle Co. Inc., a corporation~ and its officers, agents, representatives, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, and distribution of responJent's jewelry in commerce, as "commerce" is defined in the Federal Trade -Commission Act, do forthwith cease and desist from:

1. Using the word "Birthstone" or "Garnet" or any other word which is indicative of a precious stone, to designate or describe any substance which is not in fact a precious stone. 2. Using the word "Manufacturers," or any other word of similar import, to designate or describe respondent's business; or otherwise representing, directly or by implication, that respondent manufactures the articles sold by it.

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

FEDERAL TRADE CO:\I.M~SSION DECISIONS 336 Syllabus 3BF.T.C.