Erdley, John F

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IN Tile MATTER OF JOHN F. ERDLEY, DOING BUSINESS AS ERDLEY HATCH- ERIES, AND MONTGOMERY ·ward & COl\IP ANY COMl'LAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. li OF A.N A.CT OF CONGRESS APPROVED SEPT. 26, 1914 Docket .4G9G. Complaint, Feb . .4, 19.42-Deciswn, Mar. 21, 1913 Where an Individual, engaged In hatching and Interstate sale and distribution o:C baby chicks; through advertisements In circulars and other printed matter, directly or by lmpllcatlon- (a) Represented by such statements as "Members o:C-The Colorado U. S. Poul· try Improvement Assn.," that he was a member of such an organization, and that baby chicks offered and sold by him were hatched in a hatchery approved by the United States Government;

The facts being there was no such association; the Colorado Poultry Improve. ment Association, of which he was a member, was not a State agency and had no official connection with the "National Poultry Improvement Plan" of the U. S. Department of Agriculture, administered in the State concerned by the Colorado Poultry Improvement Board; use o:C letters "U. S." In connection with aforesaid words induced false bellef that he was a member of the Board referred to and was participating In the National Poultry Improvement Plan; and his hatchery was not approved by the Government;

(b) Falsely represented that his said baby chicks were hatched from eggs produced by a flock approved by the Government; that his chicks were "check tested," and that chicks from each parent· flock were brooder tested for health and 11vab11ity; and Where a corporation engaged in interstate sale and distribution of various lines of merchandise, Including baby chicks purchased by It from various hatcheries, Including those of aforesaid Individual; through adver· tlslng folders, pamphlets, catalogs, and otherwise, Including certificates which lt distributed through the various hatcheries with which 1t held contracts- (c) nepresented that tts baby chicks were from flocks approved by the United States Government and were hatched In hatcheries approved by the United States Government;

The facts being that such representations, Insofar as they applied to baby chicks distributed for the corporation by aforesaid Individual, upon whom 1t relied for Information, were false and misleading: With tendency and capacity to mislead and deceiye a substantial portion of the purchasing public with respect to said baby chicks, thereby !nducin~ Its purchase thereof, because of such mistaken belief: Held, That such acts and practices, upon the circumstances set forth, were all to the prejudice of the public, and constituted unfair and deceptiv-e acts and practices In commerce.

Before Mr. Lewis 0. R-"ussell, trial examiner. Mr. Jesse D.J(ash for the Commission.

Complaint 36F. T.C.

Mr. L. E. Oliphant and Mr. Francis Pitman l{eip,er, of Chicago, Ill., for respondents.

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 John F. Erdley, an individual, trading as Erdley Hatcheries, and Montgomery ·ward & Co., a corporation, hereinafter referred to as respondents, have vio- Tated the provisions of 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, John F. Erdley, is an individual, trading and doing business as Erdley Hatcheries, with his office and principal place of business located at 'Vray, Colo. Respondent, :Montgomery Ward & Co., is a corporation, organized, existing, and doing business under and by virtue of the laws of the State of Illinois, with its principal office and place of business located in Chicago, Ill. · PAn. 2. Respondent, John F. Erdley, trading as Erdley Hatcheries, is now and for more than 2 years last past has been engaged in the business of hatching and selling baby chicks. Respondent causes said baby chicks when sold by him to be transported from his aforesaid place of business in the State of Colorado to purchasers located in the various other States of the United States and in the District of Columbia.

PAn. 3. Respondent, Montgomery 'Vard & Co., is now and for more than 2 years last past has been engaged in the sale and distribution of various lines of merchandise, including baby chicks. Respondent, Montgomery 'Vard & Co., in connection with the operation of its aforesaid business, makes contracts with hatcheries located in various States of the United States for the purchase of baby chicks and the shipment of the same for the account of Montgomery 'Vard & Co. to its customers located in various States of the United States othrr tlian the States from which the shipments are made. Among such . hatcheries with which said respondent had contracts was that of respondent, John F. Erdley.

The respondents maintain and nt all times mentioned herein have maintained a course of trade in their said baby <"hicks in commerce among and between the various States of the United Stat~$ and in the District of Columbia.

ERDLEY HATCHERIES, ET' Ali, · 423 421 Complaint· The respondents, :Montgomery 1Vurd & Co., and John F. Erdley, have acted in conjunction and cooperation each with the other in carrying out the acts and practices hereinafter set forth. PAn. 4. In the course and conduct of his aforesaid business and for the purpose of inducing the purchase of his baby chicles, the respondent, John F. Erdley, circulated and is now circi.1lating among prospective purchasers throughout the United States by United States mails, advertisements, in newspapers and trade journals, by means of advertising folders, pamphlets, circular letters, and by other advertising material, all of general circulation, many false statements and representations concerning his said baby chicks. Among and typical of such false statements and representations are the follow in~: Tu~: EI:DLEY H.uCIIERIF.I!, lVray, • • . Colorado•• • • • .Members of THE COLORADO U. S. POULTRY IMPROVEMENT ASS'N. This Is to certify that -------------------- AAA Chicks Shipped • • • \Were !latched In n U. S. APPHOVED HATCHBRY from eggs of a U. S. APPROVED FLOCK, Our F'lock No. that Males mated with this tlock are wingbanded males from nr.cono Oil' I'EilFORMANCE FLocxs and from Dams with records of 200 or more. eggs per year.

WHITE LEGHORNS Our ROYAL "AAA" chicks are from well selected high producing hens, mated with wing-banded PEiliGREED Rop cockerels of 256 to 285 egg productlou records. Check Testing As a check test of the field work, samples of chicks from each tlock are regularly tested and observed for from two to four weeks. Sample chicks from each parent flock brooder tested for health and livablllty. Through the stntemPnts and representations hereinabove set forth and others similar thereto not specifically set out herein, respondent, John F. Erdley, has reprrsente<l directly or by implication that he is a member of the Colorado United States Poultry Improvement Association; that he is a United States record of performance poultry breeder, or that he operates a poultry plant or hatchery under the supervision of an official from the State agency supervising United States record of performance work in Colorado; that baby chicks offered for sale and sold by him are hatched in a hatchery inspected or approved by the United States Government from eggs produced by 1t flock inspected or approved by the United States Govemment; that eggs from which the said chicks were hatched were produced by a flock or flocks of chickens, the males of which consisted wholly of wing-Landed males from record of performance flocks of 25G to 285 Complaint 86F. T.O.

egg-production records; that his chicks have been "check-tested" and that chicks from each brooder flock were brooder tested for health and livability.

Tlle Colorado United States Poultry Improvement Association was the designation of the official State agency for administering the United States Poultry Improvement Plan in Colorado, but such designation was changed in 1938 to the Colorado Poultry Improvement Board, which is now the official State agency administering such work in Colorado.

PAR. 5. The foregoing representations are grossly exaggerated, false, and misleading. In truth and in fact, the respondent, John F. Erdley, is not and has not been a member of the Colorado United States Poultry Association; is not and has not been a United States record of performance poultry breeder and does not operate and has not operated a poultry breeding plant or hatchery under the supervision of an official for the State agency supervising United States record of performance work in Colorado. Baby chicks offered for sale and sold by him were not hatched in a hatchery approved by the United States Government or from eggs produced by a flock approved by the United States Government. Eggs from which the said chicks were hatched were not produced by a flock or flocks, the males of which consisted wholly of "wing-banded males from record of performance flocks." Respondent's said chicks were not adequately "check-tested" and sample chicks from each brooder flock were not brooder tested for health and livability.

PAR. G. A United States record of performance breeder or hatchery is understood by members of the poultry industry to be and is one operating a poultry breeding plant or hatchery under the N a tiona I J>oultry Improvement Plan sponsored by the Bureau of Animal Industry of the United States Department of Agriculture, under a designated official State agency and conforming to standards established by the United States Department of Agriculture to improve poultry.

The term "United States Record of Performance" is used to designate, describe, and refer to poultry products produced under and conforming to the standards established by the United States Department of Agriculture under said National Poultry Improvement Plan. PAn. 7. In the course and conduct of its business and for the purpose of inducing the purchase of its baby chicks, respondent, Montgomery 'Vard & Co., a corporation, has circulated and is now circulating among prospective customers throughout the United States, by United States mails and by means of advertising folders, pamphlets, catalogs, and other advertising matter, all of general circula- ERDLEY HATCHERIES, ET AL. 425 421 Complaint tion, many false statements and representations concerning its said product, baby chicks. Among and typical of such false statements and .representations are the following:

AAA QUALITY-R. 0. P. SIRED CHICKS From U. S. Approved Flocks-Carefully Selected and Leg-Banded. From Flocks Mated with Cocket·els from Record of Performance Dams. Hatched in Special Numbered Trays in U. S. Approved Hatcheries. Breeding Certlficate Issued by Hatchery with all Orders for AAA Chicks. Through the statements and representations hereinabove set forth and others similar thereto but not specifically set forth herein, respondent, Montgomery 'Vard & Co., has represented directly or by implication that baby chicks sold by it were United States record of performance sired chicks, from flocks approved by the United States Government and from flocl}s mated with cockerels from record of performance dams; that they were hatched in hatcheries approved by the United States Government.

PAR. 8. The foregoing representations are false and misleading. In truth and in fact, certain of said baby chicks sold by the respondent, Montgomery ·ward & Co., were not United States record of performance sired chicks and were not from flocks approved by the United States Government or from flocks mated with cockerels from record of performance dams; they were not hatched in a hatchery approved by the United States Government . .Further, in the course and conduct of its aforesaid business ana for the purpose of inducing the purchase of its baby chicks, the respondent, Montgomery Ward & Co., a corporation, has issued and distributed a so-called "'Vard's Certificate of Breeding" distributed. to and among various hatcheries located throughout the United States with which it holds contracts to furnish baby chicks, which certificate is as follows :

CERTIFICATE OF BREEDING This is to certify that-------------------------------------------------- Quanti tr and brand rhlcks shipped tO----------------------------- on ------·--------------1942 Customer Were hatched in a U. S. APPROVED HATCHERY from eg;:s of a U. S. APPROVED Flock OR Flocks. Our No.-------· That males mated wlth this tlock were Wing banded males from RECORD OF PERFORMANCE FLOCKS and from dams With records of 200 or more eggs per year. Signed _____________________________ _ A hatchery man tor Montgomery Ward.

The respondent, Montgomery 'Vard & Co., issued and distributed said certificates to respondent, John F. Enlley, who filled out the ~28713--43--voi.36----30 Findings 38F.T.C.

quantity and· brand of chickens and name of the purchaser to whom chickens were shipped on account of Montgomery 'Vard & Co. The chicks sold and shipped by respondent, John F. Erdley, on orders of respondent, Montgomery 'Vard & Co. were not hatched in a hatchery approved by the United States Government from eggs of a flock or flocks approved by the United States Government; males mated with said flock or flocks were not wing-banded males from record of performance flocks und from dams with records of 200 or more eggs per year.

1~ AR. 9. The use by the respondents of the foregoing false and misleading advertising dis.';;eminated as aforesaid has a tendency and capacity to and did and does mislead and deceive a substantial portion of the purchasing public into the ('rroncous and mistaken belief that such sales advertisements are and were true and does and did induce the purchasing public to buy substantial quantities oi re- .;;pondent's baby chicks as a result of such erroneous belief so engendered.

11 AR. 10. The aforesaid acts and practices of respondents as herein alleged are all to the injury and prejudice of the public and con- 16titute unfair and deceptive acts and practices, contrary tc~ the intent and meaning of the Federal Trade Commission Act. TIEPORT, FINDINGS AS TO Tile FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission on February 4, 1942, issued and subsequently served its complaint in this proceeding upon the respondents,· •John F. Erdley, an individual trading as Erdley Ilutdwdes, and l\Iontgomery 'Vnrd & Co., a corpomtion, charging them with the use of unfair and deceptive nets and practices in commerce in violation of the provisions of that act. After the filing of an answer hy respondent~ .John F. Enlley (no answer was filed by respondent, Montgomery 'Vard & Co.), testimony and other evidence in support of nnd in opposition to the allegations of the complaint were introduced before a trial examiner of the Commission theretofore duly designated by it, and such testimony and other evidence were duly recorcled unci filed in the ofiice 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, rl'port of the trial examiner upon the evidence, and brief in support of the complaint (no brief having been filed by respondents and oral argument not having been requested); and the Commission, having duly considered the matter and being now fully advised in the premisl's, finds that this proceeding is . ERDLEY 1-IATCilERIES, ET AL. · · 427 421 . Findings in the interest of the public and makes this its findings as to the facts and its conclusion drawn therefrom.

I'INDINGS AS TO THE FACTS PAR..\GRAI'H 1. Respondent, John F. Erdley, is an individual, trad- "ing and doing business as Erdley Iiatcheries, with his office and principal place of business located at lVray, Colo. Respondent, Montgomery Ward & Co., is a corporation, organized, existing, and doing business .under and by virtue of the laws of the State of Illinois, with its principal otlice and place of business located in Chicago, Ill. PAR. 2. Respondent, John F. Erdley, is now and for a number of .}'ears last past, has been engaged in the business of hatching and selling' baby chicks. He causes and has caused his baby .chicks, when sold, to 'be transported from his place of business in the State of Colorado to purchasers thereof located in various other States of the United States. Respondent, Montgomery ·ward & Co., is now and for a number of years last past, has been engaged in the sale and distribution of various lines of merchandise, including baby chicks. In connection with the operation of its business, Montgomery lVard & Co. enters into contracts with hatcheries located in various sections of the United States, such contracts providing for the purchase by it of baby chicks from the -various hatcheries and for the shipment by the hatcheries of the baby chicks to the customers of Montgomery Ward & Co. for its account. ·Such customers are frequently located in States of the United States other than the State in which the shipment originates. Among the hatcheries with which Montgomery ·ward & Co. has had such contracts War that of respondmt, John F. Erdlt>y.

Both of the respondents maintain and have maintained a course of trade in baby chicks in commerce among and between the various States of the United States.

PAR. 3. In the course and conduct of his business respondent, John F. Erdley, has advertised his baby chicks in various ways, including the distribution among prospective purchasers of advertising circulars and other printed material. Among and typical of the various statements and representations which have appeared in such advertisements are the following:

Member·s of THE Colorado U. S. Poultry IMPROVEMENT Assn. Check Testing As a check tent of the field work, samples of chicks from each fioclc are regularly te~;ted and oh!;erred<l for from two to four weeks. Sample chicks from enth pnrent flock brood•~r tested for health and livability. 428 FEDERAL TRADE CO:MMISSION DECISIONS Findings 86F.T.C:.. Respondent, Erdley, has also issued and delivered to certain purchasers of his baby chicks a "Certificate of Breeding," which reads in part as follows :

This Is to certify that (number and description) AAA Chicks Shipped to- (name of purchaser) were hatched in a U. S . .APPROVED HATCHERY from eggs of aU. S . .APPROVED FLOCK, Our Flock No. (number). Through the use of these statements and representations, and others of a similar nature, respondent, Erdley, represented, directly or by implication, that he was a member of the "Colorado U. ·S. Poultry Improvement Association"; that baby chicks offered for sale and sold by him were hatched in a hatchery approved by the United States Government, and that such baby chicks were hatched from eggs produced by a flock approved by the United States Government; that his· chicks were "check tested," and that chicks from each parent flock were brooder tested for health and livability. PAn. 4. For a number of years, a program known as the "National Poultry Improvement Plan" has been sponsored by the Bureau of Animal Industry of the United States Department of Agriculture, such program having as its objectives the improvement of the breeding and production qualities of poultry and the reduction of losses from certain diseases. The program is administered by official State agencies in the various States, the official agency in Colorado being the Colorado Poultry Improvement Board. 'Vhile there exists in Colo· rndo a trade association known as the "Colorado Poultry Improvement Association" (of which respondent Erdley is a member), this association is not a State agency and has no official connection with the administering of the National Poultry Improvement Plan. There is no such organization as the "Colorado U. S. Poultry Improvement Association" referred to in respondent Erdley's advertising. The use by respondent Erdley of the Letters "U. S." in connection with the words "Colorado Poultry Improvement Association" induced the belief among poultrymen that respondent was a member of the Colorado Poultry Improvement Board and was participating in the National Poultry Improvement Plan.

PAR. 5. The Commission finds that respondent Erdley's representations were misleading and deceptive. While respondent, Erdley, sub· sequently became a member of the Colorado Poultry Improvement Board, he was not a member of such organization at the time the fore· going representations were made and was not participating in the National Poultry Improvement Plan. His hatchery was not approved by the United States Government, nor were his baby chicks hatched from eggs produced by a flock approved by the United States Govern· ment. His chicks were not adequately "check tested," nor were sample chicks from each parent flock brooder tested for health and livability. EIU>LEY HATCHERIES, ET AL. 429 -421 Order PAR. 6. Respondent, Montgomery \Yard & Co., in the course and conduct of its business, and for the purpose of inducing the purchase {)£ its baby chicks, has circulated among prospective purchasers advertising folders, ·pamphlets, ,catalogs, an~ other statements and representations, the following: • From U. S. Appr.!Jved 1·Flocks.

Hatched in Special Numbered Trays. in U. S. Approved Hatcheries.

The company also issued and distributed, through the various hatcheries with which it held contracts, a certificate designated "Ward's Certificate of Breeding." This certificate represented, among other things, that the baby chicks therein referred to "were hatched in a U.S. Approved Hatchery from eggs of aU. S. Approved Flock." Through the use of these statements and representations, and others of a similar nature, respondent, Montgomery "\V n.rd & Co., represented that its baby chicks were from flocks approved by the United States Government and were hatched in hatcheries approved by the United States Government. As heretofore pointed out, these representations were misleading and deceptive insofar as they applied to baby chicks distributed for the t;company by respondent, Erdley. The evidence shows that in making these representations Montgomery \Vard & Co. was relying upon information supplied to it by respondent, Erdley, and that after the Commission's investigation was instituted and the company ascertained that its information was incorrect, it discontinued the purchase of baby chicks from respondent, Erdley.

PAR. 7. The use by the respondents of the misleading and deceptive representations set forth herein had the tendency and capacity to mislead and deceive a substantial portion of the purchasing public with respect to respondents' baby chicks, and the tendency and capacity to cause such portion of the public to purchase substantial quantities of respondents' baby chicks as a result of the erroneous and mistaken belief so engendered.

CONCLUSION The acts and practices of the respondents 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, the answer of respondent, 430 FEDERAL TRADE COMMISSION DECISIONS· Order 36F.T.C.

John F. Erdley (no answer having been filed by responde.nt,.Montgomery Ward & Co.), testimony and other evidence in support of and in opposition to the allegations of the complaint taken before a ·trial examiner of the Co~mission theretofore duly desigriated ~y it, report of the trial examiner upon the evidence, and brief in support of the complaint (no brief having been filed by respondents and oral argument not having been requested); and the Commission having made its findings as to the facts and its conclusion that the respondents have violated the provisions of the Federal Trade Commission Act.

· It is ordered, That respondent, John F. Erdley, individually, and trading as Erdley Hatcheries, or trading under any other name, and his agents, representatives, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, and distribution of respondent's baby chicks in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, directly or by implication: . 1. That respondent is a member of the Colorado Poultry Improvement lloard, or is participating in the National Poultry Improvement Plan, when such is not the fact.

2. That respon,Jent's hatchery is approved by the United States Government, or that respondent's baby chicks are hatched from eggs produced by a flock approved by the United States Government1 when such is not the fact.

3. That respondent's baby chicks are "eheek teste1l," unless adequate check tests nre in fact made.

4. That chicks from each of respondent's parent floeks nre brooder tested for health and livability, when such is not the fact. It u further m·dercd, That respondent, Montgomrry 'Vard & Co.t o. 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 respondent's baby cllicks in commerce, as "commrrre" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing. directly or by implication:

. That respondent's baby chicks are from flocks approved by the United States Government, or that they are hatched in hateheries approved by the Unitell States Gowrumcnt, which such. is not the fact.

It is further ordered, That the rpspondents shall within 60 days after service upon them of this order, file with the Commission a ,J"eport in writing setting forth in det11il the manner anu fnrm in which they have complied with this order.

WALTER KIDDE &'CO., INC. 431 SYLLABUS