Sidney Lenet

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IN THE MATTER OF SIDNEY LENET DOING BUSINESS AS M: & M SPRING COMPANY DECISION IN REGARD TO THE ALLEGED Violation OF THE FEDERAL TRADE COMMISSION ACT Docket 6029. CO'lnplaint, Aug. 14, 1952-Dec-isian, Sept. , 1953 Where an individual engaged in the interstate sale and distribution to dealers for resale, of automobile springs which 'v ere composed of some new and some aid and previously used parts, and which had the appearance of having been made entirely from new and previously unused parts through the addition of new metal covers, in competition with concerns engaged in manufacturing and sellng entirely new springs- (a) Offered and sold its said springs to dealers with no label, marking, or designation stamped thereon or attached thereto to indicate to the purchasing public 01' to dealers that said springs, which were resold to said public with no such disclosure, were made 01' assembled as aforesaid; and (b) In some instances sold to dealers as and for new springs, assembled and made entireiy from new and previously unused parts, his said product: Held That such acts and practices, under the circumstances set forth, were all to the prejudice and the injury of the public and of competitors of respondent, and constituted unfair methods of competition in commerce and unfair and deceptive acts and practices therein. Before Mr. James A. Purcell hearing examiner. ",fr. Ed1vard F. IJown.s for the Commission. .f alfpenny, Ii ahn Oassedy, of VVashington, D. for respondent. ORDERS AND DECISION OF THE COJ)IJlHSSION Order denying respondent' s appeal from initial decision of hearing examiner and decision of the Commission and order to file report compliance, Docket 6029, September 1, 1953, follows: This matter came on to be heard by the Commission upon respondent' s appeal from the initial decision of the hearing examiner and upon briefs in support of and in opposition to said appeal, oral argument not lmving been requested.

In support of his appeal respondent contends that (1) the admissions contained in his answer to the complaint were made on the condition that no order would be issued herein by the Commission until final decision in another matter, Docket No. 5964, in which matter, at the time of the filing of the appeal herein, the Commission decision was on appeal and was not final, (2) the Commission does not have the power to require respondent to affirmatively disclose that his automobile springs contain used parts, and (3) the order is Ullea- Order 50 JJ'. T. C.

son able in that it goes further than is necessary to correct the complained of unfair practice.

The entire record herein consists of the complaint and an answer by respondent admitting all of the allegations of the complaint except that respondent states that he went out of business for himself approximately 2 months prior to the issuanc e of the complaint and since that date has been engaged in the sale of automobile springs as a salesman for the Lenco Spring Company. This admission answer was filed on the condition that the Commission and the hearing examiner would not issue an order herein until final decision has been reached in the matter of Maurice .J. Lenett and Leonard Stolzberg, individuals doing business as Lenco Spring Company, Docket No. 5964. This condition was expressly waived as to the filing of the hearing exltniner s initial decision. At the time the appeal brief was filed herein, the Lenco Spring Company matter was before the United States Court for the District of Columbia Circuit for review of the Commission s decision. Said appeal was dismissed by the court on .June 2 1953, upon a stipulation of counsel. The Commission s decision therein is now final. Therefore, the condition contained in said answer has been met and the basis for respondent's said objection to the entry of a decision herein has been removed.

By his admission answer respondent admits that his automobile springs, which are made in part of previously used materials, are assembled in such a manner RS to have an appearance of being made entirely of new parts, that they are sold in commerce to dealers Rnd Rre resold by them to the consuming public without Rny marking or IRbel to inaicate they Rre made in part of previously used parts, that they are accepted by the purchasing public as made of new p trts, and that by their sale without markings disclosing they Rre made of used parts respondent has placed in the hands of dealers instrumentalities which have the tendency and capacity to deceive II substantilll portion of the purchasing public into the belief tlnt respondent' s automobile springs were made of new pllrts and to induce them to buy his springs rather than competitors RS a direct result of this erroneous belief. Upon this record it is clear that the provisions of the hearing examiner s order requiring respondent to clearly and conspicuously disdose the fret said Rutomobjle springs are made of previously used parts, not only on the containers in which they Rre sold but Rlso by a permanent stamp on each spring, are required to remove the ilJegRI deception created by respondent's practice of assembling its springs in such a manner as to resemble springs made entirely of uew parts and not disclosing their true construction. Such a requirement for affirmative disclosure by permanent markings when necessary to pre- M & M SPRING CO. 209 207 Decision within the powervent dec.eption of the purchasing public is c.le'llly of the Commission.

The Commission, therefore, being of the opinion that respondent' grounds for appeal are of no merit and that the initial dec.ision of the to dispose of thishearing examiner is appropriate in all respeds proc.eeding:

It is ordeTecl That respondent's appeal from the initial dec.ision of the hearing examiner be, and it hereby is, denied. decision of the hearing ex- It i8 tlwt oTdej' That the initial the decision ofaminer shall, on the 1st. day of September 1D5;3, become the Commission.

It i8 That respomlent Sidney Lenet, an individual fUTtheT oTrleTed shall, within sixty (60) days after service upon him of this order, file forth in detail thewith the Commission a report in writing setting manner and form in which he has complied with the order to cease and desist contained in mid initial decision its Said initial decision, thus adopted hy the Commission as dec.ision, Tollows:

ITL\L DECISIO BY ;TAUES A. rURC :LL , Jl E.\ TUNG EXA nner Pursuant to the provisions of the Federal Tr"de Commission Ad , 1D52, issued and sub-the Federal Trade Commission on August 14 sequently served its complaint in this proceeding upon the respondent Sidney Lenet, an individual doing business as M &: M Spring Com- 11ethods of competitionpany, charging him with the use of unfair ' and unfair and deceptive ads and practices in commerce in violation of the provisions of said Act. After the issuance of said complaint and on the 16th day of September 1D52, respondent med an admission answer hy the terms of which he waived hearing on the allegations of bct set forth in the complaint, does not contest the facts as charged and specifically admits all of the material allegations of fact as set forth in the complaint to be true as charged except that respondent is not now engaged in the business activities described in the complaint he having abandoned such on the 15th day of .T111P ID5'2. Thereafter the proceeding regularly came on for fin:d c.consideration by said Hearing Examiner on the complaint and answer, proposed findings as to the facts and conclusion not having been requested nor filed; and said Hearing J';xamincr, having duly considered the record herein, i1nds that this proceeding is in the interest of the public ai"l makes the following fl.ndings as to lhe j'acts, conclusion dl". wn there flor11 ann. order:

403443--57-- 210 FEDERAL TRADE CO:vMISSlON DECISIONS Findings 50 F. T. C.

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent Sidney Lenet is an individual doing busiat 3842 Cambridgeness as the M & M Spring Company with his offce Philadelphia, Pennsyl-Street and shop at 884 North Budd Street, vania.

PAR. 2. Respondent for more than 1 year prior to .June 15, 1952 composed ofengaged in the business of selling automobile springs, to dealers locatedsome new and some old and previously used parts, in various parts of the United States who purchase for l'esflle; that prior to June 15, 1952, respondent was engaged on his own account in the aforesaid business since which tim.e he has abandoned same flnd is presently an employee of another who is engaged in the same line of endeavor.

PAR. 3. In the course and conduct of his business as flforesaid, respondent caused his said automobile springs, when sold by him, to be transported from his place of business in the State of Pennsylvania to purchasers located in Strites other than the State of Pennsylvania and in the District of Columbia.

course of Respondent at all times mentioned herein maintained a is de-trade in said automobile. springs in commerce, as "commerce" businessfined in the Federal Trade Commission Act. The volume of of respondent in said commerce is and has been substantial. PAR. 4. In the course and conduct of his business the respondent bought automobile springs composed of some new and some old and previously used parts to which he added nev, metal covers in a manner which gave to such springs the appearance of having been assembled or ltl1lufactured entirely fronl new and previously unused parts. PAR. 5. Respondent sold his automobile springs, as above described to dealers who purcJulsed :for resale to the purchasing public, without any label, marking, or designation stamped thereon or otherwise attached thereto, to indicate to the purchasing public or to the dealers that said automobile springs were assembled in part from old and previously used parts, and such aut.omobile springs were resold to the consuming public wit.hout any disclosure that they were assembled in part from old parts that have been previously used. In some inst.ances respondent sold such automobile springs t,o dealers as and for new lwtomobile springs assembled or manufactured entirely from new and previously unused parts. PAR. 6. ,Vhen arti( les. which are assembled or manufactured in whole or in part from previously used materials in such a mannl'. thflt they have the appearancc of being assembled or manufactured from new and previously unused materials, are offered to the pur- M & M SPRING CO. 211 207 Order chasing public, and such articles are not clearly and conspicuously marked or labeled as having been. assembled or manufactured from previously used materials, they are readily accepted by members of the purchasing public as having been assembled or manufactured entirely from new and previously unused materials. PAR. 7. In the course and conduct of his business the respondent was at all times mentioned herein in substantial competition with individuals, earporations and firms engaged in the business of manufacturing and selling automobile springs manufactured entirely from new and previously unused parts in commerce among and between the various States of the United States.

PAR. 8. By the aforesaid acts and practices, the respondent placed in the hands of dealers the means and instrumentalities whereby said dealers may deceive or mislead members of the purchasing public into the erroneous and mistaken belief that they were purchasing automobile springs manufactured entirely from new and previously unused parts, when in fact said springs were composed in part old and previously used parts.

PAR. 9. The failure of the respondent to mark his said springs showing that they contained old and previously used parts had the tendency and capacity to mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that the automobile springs sold by him were new springs assembled or manufactured entirely from new and previously unused parts, and to induce a substantial portion of the purchasing public to purchase substantial quantities of respondent's automobile springs because of such erroneous and mistaken belief. As a direct result of the respondent' s practices as aforesaid, substantial trade in commerce has been diverted to the respondent from his said competitors ,wd injury has been done to competition in commerce between and mnong the various States of the united States and the District of Columbia. CONCLUSION The acts and practices of the respondent, as herein found, were all to the prejudice and injury of the public and of the competitors of the respondent, and constituted unfair methods of competition and unfair and deceptive acts and practices, in commerce, within the intent and meaning of the Federal Trade Commission Act. ORDER It is ol'ael'ea That the respondent Sidney Lenet, individually and doing business as the.M &.H Spring Company or doing business under 212 m;RAL TRADE COMMISSION DECISIONS Order 50' F T. C. any other name or names, his representatives, agents, and employees directly or through any corporate or other device, in connection with the offering for sale, sale and distribution of automobile springs in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Offering for sale, selling or delivering to others for sale to the public any automobile spring which is composed in whole or in part of previously used parts unless a disclosure that said automobile spring is composed, in whole or in part as the case may be of previously used parts, is permanently stamped or iixed on each said automobile spring in a clear find conspicuous manner and in such locfltion as to be clearly legible to the purchflser thereof, and unless there is plflinly printed or marked on the box, carton, wrapper, or other conatainer in which such automobile spring is sold or offered for sale, notice that sflid automobile spring is composed, in whole or in part as the case may be, of previously used parts.

2. Rcprcse.nting, by failure to reveal or otherwise, that an automobile spring composed in whole or in part of previously used parts is composed entirely of new and previously unused parts. ()WEll TO FILB I(m OI(T OF COJlU'LIANCE It is fu:rther ordered That respondent Sidney Lenet, an individual shali, within sixty (60) days after service upon him of this order, file with the Commission a report in writing setting forth in detail the manner and form in which he has complied with the order to cease and desist * * * (as required by aforesaid order and decision of the Commission J.

THE KROGE,R CO. 213 Order