Mahler' S, Inc.

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

IN THE MATTER OF MAHLER' S, INC., ET AL.

ORDER, ETC., IX REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE CQlIl\IISSION ACT Docket 6195. Complaint, Mar. 1954-Decision, May 3, 1956 Order dismissing, for failure to substantiate the allegations, complaint charging sellers in East Providence, R. 1. , with misrepresenting in advertising the effectiveness and safety of the device ").Iahler Electrolysis Epilator designed for the removal of superfluous hair by individual self.application. Mr. Jesse D. Kash and Mr. William M. King for the Commission. Letts cD Quinn of Providence, R. 1., for respondents. INITIAL DECISION BY ,T. EARL COX, JIEAIUNG EX.AMINER The complaint in this proceeding charges that respondents have violatcd the Federal Trade Commission Act by the dissemination of false and deceptive representations in advertising material used to promote the sale and distribution in commerce of the Mahler Electrolysis Epilator, a device for the removal of superfluous hair from the human body.

After the filing of an answer, hearings were held in which testimony and other evidence were presented, duly recorded and filed in the offce of the Commission, and proposed findings of fact, conclusions and orders were submitted by counsel. On the basis of the entire record, the following findings of fact are made: 1. Respondent Mahler, Inc. is a corporation organized, existing and doing business under and by virtue of the laws of the State of Rhode Island, having its offce and principal place of business located at 3124 Pawtucket Avenue, Providence, Rhode Island. Respondents Arthur Y. Mahler, Daniel J. Mahler and Harold C. Mahler are President, Vice-President, and Secretary-Treasurer respectively, of the corporate respondent. Their offce and principal place of business is the same as that of the corporate respondent. They formulate, direct and control the advertising, sales activities and policies of the corporate respondent. Respondent Arthur Y. Mahler is licensed under the laws of the State of Rhode Island to engage in the practice of electrolysis, and also teaches that subject. 2. The respondents are now, and for more than one year last past have been, engaged in the promotion, sale and distribution of a device " as that term is defmed in the Federal Trade Commission , ,, , 1218 FEDERAL 'TRADE COMMISSION DECISIONS Decision 52 F. T. C.

Act, designated as the Iahler .Electrolysis Epilator, hereinafter 1'8felted to as the Epilator which is advertised and recommended by thetn for use in the electrolytic removal of superfluous hair from the human body by individual self-application. Respondents cause and have caused the Epilator when sold, to be transported from t.their place of business in the State of R.hoc1e Island to purehascrs thereof located in various other States of the United States, and, at tll times mentioned herein, have maintained a substantial COurse of trade in said device in commerce among and between various States of the 1;nitcd States. H,esponclents, or their predecessors in the business, have sold approximately 50 000 Epilators- 000 since 1946.

3. In the course and conduct of their a.foresaid business, for the purpose of inducing the purchase of their devic.e in commerce, rcspondents have disseminated various advertisements concerning it by the United States mails and by various other means in commerce as "commerce ' is defined in the Federal Tntcle Commjssion Act including advertisements published in v triolls nmvspapcrs, Inagazines, booklets, circulars and eircular letters. One advertisement of respondents device published in various magazines of natiomd c.jrculation during 1952, 1933 and H);54 is as follows:

DESTROY Cl1yantecl Hair FOREYER Temporarr relief is XOT enough Only by I.;LLIXG THE HAIR ROOT can you be sure l': rWANTED HAIR is GOXE FOREVER. Brings relief and sodal l.HJvpiness. Do not use our method until yon have read our instruction book carefully and learned to use the MAHLER IETIIOD safely and effciently. Used successfully oyer fifty years.

Send 51 TODAY for booklet XEW BEAUTY FOR yon IAHLER' S, IKC. , Dept. 51- Providence 15 , R. I.

Persons responding to the foregoing advertisement 'iyei' c sent the booklet "Kew Beauty For yout which contains, among other things 'ivarnings against misuse, 11 money-back guarantee and a description of hmv the Epilator is used, as follows:

The use of the )-lahler Electrolysis Epilator by persons not trained in the technique of removing superfluous hair from the human body by eleetrolrsis may result in permanent disfigurement, cause infections or other irreparable injury to health, and that said device shouIn not be used to remove hair from ('flncerons or syphiltic lesions, pigmented moles or other areas sllO"dng local pathological conditions.

Therefore, for these reasons do not use the Mahler Hair Remover until you have read our instruction book carefully and learned to nse the ::lahler safely and effciently.

11AHLEH' , I C" ET AL. 1219 1217 Decision * '" '" IF. AFTER P1JRCHASISG THE MAHLER AXD LSING IT FOR 13 DAYS YOC ARE 1\ OT ESTIRELY SATISFIED, YOU MAY RETlJRl\ IT A:\TJ) WE WILL Rl' F1JND YOUR MONEY.

'" '" " By carefully following the exact inst.rudions furnished with each outfit you too can remove your superfluous hair forever. A needle almost ns fine as a hair is inserted into the pore from ,which the hair grows. right along ide Ole hair. "'ith this fine needle in place at the hair root. the hand is then placed on the wet felt pad. and in half a minute yon have de!,tl'oyed the hail' root. Some hairs may require a fe\'\ seconds less, and others more' , rlepending on the coarseness of the hair. If yOIl have operated properly, you have de tlo ecl forever the life of that. hair, and you now find that tlle hair lifts out easily with the tweezerR, nnd yon continue on to the next hair. In the case a sale did not develop ,,,within a reasonable period of time following mailing of the aforesaid booklet, respondents sent follow-lip letters and circulars to prospective purchasers. 4. Through the use of t.he foregoing and other similar statemcnts appearing- in their a.advertisements: respondents have represented diredly 01' by implication (1) that tiaid device is an effective and effcient met.hod for the permanent removal of superfluous hair from the human body, and (2) that after respondents' instructions have bee.n read, the Epibtol' molY be sa,fely, suc:c:essfnlly and effectively used by purchasers for the permanent. removal of snperfluous ha,ir by inclividnal seh-application.

5. Hcspondents lrml1ufacture b"o models of the Epilntor for selfusc-the Marvel and the Deluxe. One has 6 cells and 6 electrical outlets, the ot.her 8; both are battery-operated; each has a needle ,,;which m11y be attached to a, negative pole, and H, felt pad which may be dampened, preferably ,,,ith salt water, and attached to a positive pole so that when t.he hand or bare foot. of the person using the device is in contact ,,,ith the pad and the needle is inserted into the skin, an electric circuit is completed. The strength of the current may be regulated to some degree by the selective use of the various electrical outlets. The principle of the device is tlmt by the insertion of the electrical11y charged needle into the hair follicle, the hail' root will be brought within the field of the electric current and will be destroyed, after which the hair can be removed with a pair of tweezers; fL The Epilator is cffecti ve Rnd effcient for the permanent removal of superfluous hail' froln the human body. The reliable, probative evidence of record permits no other conelusion. ,Vitnesses appearing in !:support of the complaint as ,yell as those for the respondents so testified, and counsel supporting the complaint, in his proposed findings, states that no testimony was introduced to support a contrary conclusion. He suggests that the complaint should be dismissed insofar as it relates to the charge that such a representation is false, a, 1220 FEDERAL TRADE CO IMISSION DECISIOXS Decision 52 F. T. C.

with that suggestion the hearing examiner is in complete agreement. As to the other charges of the complaint, a thorough analysis of the evidence is required.

7. 'With the Epilator, respondents provide each purchaser with a book of instructions. In fact, two separate, almost identical booklets are used-one with the Marvel model and one with the Deluxe. Some of the instructions included in both booklets follow: Keep the little protective covering over the needle in the holder when not in use. This wil prevent its getting dirty or bent. Wipe the needle clean with alcohol before and after using. Do not use needles that are rusty, bent or broken off so they have no pointed end.

Do not use the Mahler Epilator for removing warts, moles, or bail' in moles. And do not use on skin where it is broken out, irritated, pimply or not in a healthful condition.

PATCH TEST Before removing unwanted hair from the face, it is a good plan to first remove unwanted bail' from the arms or legs. In that way you gain both practice and experience in placing the needle so as to reach tbe hair root, learning the current strength you find comfortable, and the timing necessary to "loosen" the hair. A very convenient area is on the legs, above or below lmee. Use this as your patch test area for two or three sittings, or unti you have acquired a certain amount of skil and experience in permanent hair removal. Then, when you have a good working knowledge of how the Mahler should be used, you can proceed to remove hairs from the face.

AMOu T OF CT;RRE T APPLIED TO HAIR ROOT Please bear in mind that the amount of current you apply to a hair root is the total of (a) the strength of the current, 'Plus (b) the length of time the current is on. In other words, if you use a stronger current, then you need less timing, and if you use a weaker current. then you need use more timing. With needle in place at a hair root, you use the same total current in each of the following ways :- Plug No. 2 30 seconds timing Plug Ko. 3 20 seconds timing MIRROR For removing unwanted hair from the face, you need a good magnifying mirror. '" '" '" arrange your magnifying mirror on the table, or around the neck as ilustrated, so the light from the lamp behind you reflects on the mirror and on your face where you wish to remove unwanted hair. DEPTH OF THE IIAIR "noon The papila, or "root" of the hair is'\ of an inch (- ) to -i of an inch (deep in the skin, depending on the coarseness of the hair. Most medium to coarse hairs are between these two extremes, namely 1/8 of an inch ( ). So for the average hair, you can plan to insert the needle lis of an inch ( ) deep to reach the hair papila, unless they are very coarse, or very fine. )\ MAHLER' , INC.) ET AL. 1221 1217 Decision THE TIMING The timing begins as soon as you place the palm of the free hand (or foot) on the wet felt pad when the needle is in place at the hair root-as soon as you feel the "tingle" or "sting" of the current. "* * oj CARE OF THE SKI -CLEANLINESS Give your skin the best care so as to prevent the possibilty of infection. The hands and the skin area should be clean and dry. This is also true of the needle needle holder and tweezers. 'Vash and dry the hands and the skin area. Moisten some clean absorbent cotton with alcohol, and apply to the skin before using the :Mahler Epirator. Wipe the needle, needle holder and the tweezers, and then throwaway this piece of cOttOll. Wait until the skin is dry before using the needle.

CARE OF THE SKIN AFTER USING 'Yhen finished using your :;Iahler, moisten a clean cloth in good warm water and apply to the skin for a few minutes. Then apply alcohol again with another piece of clean cotton, wipe yonI' needle dean and' put your utensils away. .; .. * It is best not to use cosmetics on the sldn for at least 24 hours afterwards. Do not finger the skin. Allow it to heal naturally. These and other instructions are supplemented with ilustrations. If read at a time when the Epilator is at hand to be observed and experimented with, they appear to be clear enough to enable a person of ordinary intelligence and skjll to use the device. The Epilator is not complicated. There are no moving parts. The operator need know little more about it than how to attach the needle and the pad. Knowing that, the remaining problem is to acquire the ability to insert the needle into the hail' follcle and keep it there, with the current on skil required to uselong enough to destroy the root of the hair. The the necdle properly and effectively may be acquired by practice. 8. In the State of New York, and in many other States, any person who ca.n afford to buy a machine and rent an offce may engage in the there is a practice of epilation by electrolysis. In Rhode Island, statutory requirement, adopted in 1943, that every person who shall hereafter engage in the practice in that State must have attained the age of 21 years, have graduated from high school, have served, under a licensed operator, an apprenticeship consisting of 400 hours of study and practice in the theory and practical application of electrolysis within a six-months' period, be of good moral character and free of infectious disease.

Those who engage in the business of removing superfluous hair by electrolysis refer to themselves as electrologists; yet the word "electrologist" does not appear in any of the dictionaries in the Federal Trade Commission Library. These include ' Webster s Unabridged Dictionary, 1950 edition; the Encyclopaedia Americana; Coller :Medical Dictionary, 1951 Encyclopaedia; the American Illustrated 1222 FEDERAL TRADE CO:\L\IISSIO:\ DECISIONS Decision 52 F. T. C.

Ldition; and Stedman s :IIedical Dictionary. The nearest approach to a definition is found on page 481 of the 22nd edition (1951) of the Americall Illustrated :Medical Dictionary, where the word "electrology" is defined as "that branch of science which deals "with the phenomena and properties of electricity.

The word "electrologist ' because of its derivation, carries the connotation of being descriptive of one who belongs to a learned scientific profession. Its use by those who, having no scientific training, engage in removal of hail' by the use of electrolysis, is an etymological misnomer, the suffix -ologi' being a combining form denoting a doctrine theory or science, and the sufIx "-ologist denoting one trained or versed therein.

In a cataloguing of occupational titles, put out in the form of a Dictionary of Occupational Titles" by the United States Employment Service, a division of the Department of Labor, ,vhieh is prefaced with the statement that the publication is "for the use of public employment ofices and related vocational services, and for that use alone/ the title " lectrologist' is defined rather loosely to describe the operations incident to the removal of hair by electrolysis. In the e1assification of occupations in this manual, electrologists are listed under the title "Personal Service Occupations " which includes domestic servants, protective service occupations, building serviee workers and porters.

It is apparent that there is a widespread belief that the removal of superfluous hail' by electrolysis requires no particular ability other than that possessed by the ordinary or average individual with no specialized educational qualifications. This belief is supported an examination of the qualifications of the "electrologists:: who appeared as witnesses in this proceeding.

9. Five persons engaged in the practice of remO'Ting superfluous hail' by electrolysis were offered as expert witnesses in this proceeding, in support of the allegations of the complaint. The first had entered the business of manufacturing electrolytic devices when he was 18 or 1 D years old, and operateel the IIoiTman Electrolysis School. No statement of his edueational backgrollnd was given. Two of the others '''ere graduates of the school operated by the first, which required a minimum tT'ajning period of DO hours1 for completion of the lectrolysis course, 80 honl's of which were elevoted to practiea.l training on Jive subjects ancll0 hours, approximately, t.o theoretieal tro.in- 1ng. The remaining t.wo witnesses were graduates of another electrol- 1 TJpOJl cro s-('xf!mlnHtjon it WHS disclosed that the hour's of required study WPl'P at one time redu(,l,ll to 72, which could he completed during "a glorious two-week Yllcation that wil pay diyjdcIlls for ;years to come. ,.... You ll learn II guaranteed, penmment, Rote effcient (1JHl painlcR8 method of removing hair from the face. fEmpP'1sis supplied. J MAHLER' INC. ET AL. 1223 1217 Decision ysis training "institute" similar to the school just mentioned. reference was made to any educational requirements for entering either school, and evidently there were none. Such "expertise" as these men possess has been acquired through experience and practice in the use of electrolytic devices which are similar in principle to those manufact.ured and sold by respondents. The first of these witnesses, operator of the Hoffman sehool, when he testified on September D , 1954, said that no one "not trained in electrolysis" could use respondents device for seh-application, and that "irrep,uable c1anmge to anyone s skin" might follow its use by an unskilled operator. He was particularly apprehensive of ill effects that might result from infection follmying use of the needle in the nostril area and under the arms, and stated: .. '" '" An infection in the area of the nostril can lwye fatal effects. People can die from infections in the area of the nostril '" * '" and as far as treatments underneath the arms are concerned, that is an area which, too, is subject to infection more readily than other areas Under cross-examination on :\Jarch 24, 1955, this witness admitted that during an address made by him on J anuary 26, 1955, at a. meeting in 1\'ew York of the Electrolysis Society of America, ,which consists of persons like himself who are engaged in removing superfluous hair by electrolysis, he had said that in his experience over the years the IImtter or inrection was not or great concern; that. the quest.ion of infections following electrolysis or short-wave tre.atllcnt is one which is rarely faced by the average eleetrologist; that "while it is true that occasionally a patient does develop a piulple here or there in the area fan owing treatment, it may not necessa.rily be concluded that the pimple is a result of the treatment, for it may be a question of coincidence, in that the pa.tjent might have developed the pimple whether she received treatment or noe; and that to his knowledge a seriolls infection had never occurred; and he acknowleged that he had asked the 100 or so persons present whether or not they had heard or or experienced any seriolls infection among electrolysis patients and that none could answer in the affirmative. Another or these "Titnesses had completed a c.course. at the Honman school lasting, to the best of his re( ol1ection, about three or foul' months. At the time of his appearance, on September D, 1954, he was serving his sixth term as president or the Electrolysis Society of America, and had done some writing on electrolysis. He had listened to the. direct testimony of the first witness, followed him on the witness-stand, and supplemented his statmnents, saying that: " amount of literature is adequate so that one may make a propel' insertion to remove a hair permanently. :.1y opinion is that it is the Decision 52 F. T. C.

personal instruction and the personal scrutiny of the instructor that actually teaches the operator to make the proper insertion, because insertions vary. " 1-Ie considered it "unsafe to do electrolysis under the arms, in the nostrils, and the eyelids. Allother grachlate from the Hoffman school testified that "a layman cannot operate the machine. the use of this needle entails some training (through) which a certain amount of skill must be attained before it can be used." Asked if respondents' device could be used to remove hair from the legs by self-application, he said, "You could use the machine to remove the hair, but you wouldn t be capable of doing it intelligently, the way a trained person would do it." 1-Ie had removed hair from his own arms and legs, but fOlmd, when he tried possible forto remove ingrown hairs from his face, that it was not him "to guide the needle correctly working with a mirror. Of the other two of these witnesses, one had removed hair from his own arms ancllegs but had never tried it on his face; the other said that with a short-wave set he could remove hair from his arm, but he did not think he could do it with respondents' machine. Of course the operation is exactly the same, the only difference being that in the short-wave set the electricity used is drawn from a standard house current socket, while respondents' set is battery-powered. Both these witnesses were suro that "it takes years of experience to be good" in the use of an electrolytic device, and neither thought that the Epilator could be used successfully for the permanent removal of hair by sehoperation. One of these two had been a barber, then a beauty-shop perator (for which he had a license), then started practice of electrolysis within a month after completing his course at the "institute; the other had started the practice of electrolysis on a part- time basis while he was still attending the institute clinic. A consideration of the many factors involved in evaluating the testimony of these witnesses-their demeanor all the witness-stand, their comprehension, candor ami forthrightness or lack thereof, their selfterest in the outcome of the proceeding, their educational background and experience-leads to the conclusion that their testimony can be given little weight. If the evidence presented by this group establishes anything, it is that after some initial practice an electrolytic device, such as that some by respondents, can be used to remove superfluous hair successfully, evell professionally, by persons of ordinary intelligence, education and pllysical ability. 10. Users: Of those who had purchased one or more of the 10 000 called to Epilators sold by respondents since 1946, only one was support the allegations of the complaint. This one testified that early which she used for a in 1954 she had purchased a Mahler Epilator, MAHLER' , IXC. , ET AL. 1225 1217 Decision total of eight or ten hours over a period of about a month, to remove hair from her legs. She found it diffcult to determine the correct length of time the needle should remain in the hair follicle to accomplish complete destruction of the hair; that in the area of epilation there was some discoloration of the skin, which did not disappear l11til she went to the beach a few months later; and that the removal of excess hair by electrolysis was a time-consuming operation. She had discontinued use of the Epilator for these reasons. Six other users, all women, testified ror respondents, as follows: 1. A machine operator in a dress factory, with 8 years schooling, had spent $500 ror epilation treatments over a 3-year period about 11 years ago, then bought a farvel model Epilator which she used with a mirror to remove hair from her upper lip, chin, and side or face. She prererred her own treatment to that or the practitioner; got more done, cheaper; is "very much satisfied. 2. it stenographer, who had taken treatments 20 years or more ago bought respondents' machine l1h years ago, which she then used on her upper lip and chin; was "very satjsfied. 3. A housewife, 53 years old, with little education, had previously received electrolysis treatments about twice a week ror a year, with which she was lcss satisfied than she is now with the Epilator, which she has used ror about a year to remove hair from her lip and chin; it is very easy.

4. A housewife, 63 years old, bought her first Epilator in 1917 or 1918 after having had some treatments from an electrolysis practitioner; Jater bought a Deluxe modcJ; had a serious problem with hair on lip, chin and neck; has used the machine for hundreds of hours successfully.

5. .AJ10ther housewire, age not given, with grade-school education procured an Epilator in 1938 and, with no previous experience, used it first on her arms, then on her chin and upper lip; she offered to demonstrate its use in the hearing room; has no diffculty using itsucccssfuJJy.6. An employee in a venetian shade shop, with 2 years high school education, had gone to an electrolysis practitioner ror about a year before buying respondents' Deluxe model in 1953, which she has since used to remove hair from her race, and is more satisfied with her own treatments than with those procured from the practitioner. During the course or the proceeding, respondent Arthur Y. l\1ahler demonstrated the use of the Epilator by removing hair from his hand and from his face using a mirror. His mother, now 73 years old testifled that she had first used a :\lahlcr home epilator to remove hairs from her face, chin and upper lip when she \Vas 16 years old , , 1226 FEDERAL TRADE C01.IMISSION DECISIONS Decision 52 F. T. C.

and without previous experience. She became so proiicient through her own use of the machine that '7 years later she -was employed by O. J. J\Iahler, father of the individual respondents herein, to dmnonstrate it. '\Vllell she \YllS 29 years old, she married O. J. J\lahler, now deceased, and has been c.onnected with the business ever since. 11. ill edica.l ((nd other'f technical experts: The.re was testimony ill support of the complaint by two medical expe.rts and a bacteriologist. Three medical experts and a physical chemist appeared for the 1'esponclents. All \Were highly trained in their respective professions. In support of the comphtint DT. Ii01v(lnl T. Beh1'1na' l1. a dermatologist, stated that if an electrolysis needle be introduced into a hair fol1iele near a small malignant mole or growth it might stimulate the development of a cancerous growth :: and it might cause serious results if used "without sterilizing" in the vicinity of a pimple or small boil or something of that type "where pns might exist. In his practice he. had observed, in patients who had bee.n treated with electrolysis pustural infections diffcult to clear up, damage to tissues, and scarring of the facial region 'which had resulted in a permanent and comparatively serious cosmetic defect.

U pall cross-examination t.he doctor said that the instances damage and scarring which he referred to ,were ca.ses in \'which the removal of hair had been done by a "professional eleetrologist" in the course of his business, and that. he had seen only a couple of cases \'liere cancer had followed electrolysis, 1-Ie acknmyledgcd that infection could be caused by and that the same damage could result from the use of a se,ying needle, a razor, or a haunner. The doctor stated that he. did not think n. layman could successfully operate the of the skinEpilator, that. it requires a ce.rtain amount. of knmde.dge. h certain amount of education and training in use of the device, and a knowledge of the. possible ill efleds or dangers that might be associated with it.s use.

Also in support of the c.complaint Dr. Fi.agent Joseph Ryan a.another dermatologist, testified that. he had n8,.or seen a. patient who had undertaken the use of electrolysis by self-application, but br.ieves that "an operator could, on himself, remove hail's from his arms and legs in certain locations anduot. have too much diffculty in doing it. He added I don t beheve, in my opinion, that it is possible for a persoll to properly and e.ffcctiyely rem aye superfluous hairs from the face * * : by means of mirrors. : Scarring, he said, is HlOre frequent if a great deni of c.urrent is used, as is possible \with a short wave outfit, and is one of the "n10st common sequelae * * * frequently 2 There WflS also a laboratory technician, who appeareu only to identify excisions, slides and othf' p11ysical exhibits referred to by one of the medical experts. . , :; MAHLER' , INC. , ET AL. J227 1217 Decision professional operator ,,,ill produce scarring. * * * A pcrson who is the nervolls, jittery t.ype would never be a good operator. ' lie added that he has sccn "considerable cbmage done to the skin, some serious conditions that perhaps were stimulated by electrolysis, Upon cross-examination, Dr. 1\yan said respondent.s' warnings in their booklet arc conect and that the eases of infection and damage he was spenking of in his direct testimony ,,,ere eases in which proper precautiolls with respect to cleanliness had llot been ta-ken. This witness personally had not used electrolysis for the past ten years but had ta.ught his offce assistants, who had been previously trained for seeretflrial ,,,ork, not nursing, how to remove superfluous hair their only training in electrolysis being that given them by Dr. Ilyan, For respondents Dr. TVilliCln 111onta.gna a biological anatomist and cytochemist 3 testified that he had examined the Epilator, and without previous experience, had used it "out of curiosity"' on his own hanel, ann, chin and upper lip, and on respondent l\lahler. It is his opinion that rt person " lnight easily use the needle:: on the chin and upper lip as well as on the hand or any other part of the body. He added:

::ly judgmf'nt would be that the danger incurred from an inrli-'idual using' such an instrument would be no greater than plucking hairs with tweezers or receh' ing scratches from pins, or nicking himself with a razor. or probably not as great as \with these other hazards that I have ,iust mentioned. because the needle is sterile, or reIllers itself sterile when the electricity is discharged. * '" '" It has to, after fill, kil cells in order to be effective, and micro-organisms are cell 1'hey, too, would be then destroyed together with the cells Under Dr. l\JontagIH1 s directions t.three biopsy specimens of human skin ,which had been epilat.ed through use of respondents: device ,,,ere examined Inieroscopically to ascertain the effects of epilation after intervals of 24 hours, 4 dn,ys and 2 weeks following epilation. At 24 hours the lowe.r half of the hair follicle had become nec.rotic, it ,vas then either dead or dying. At four days the ,,,hole structure of the hair follicle \vas precipitating or being destroyed, the tissue vms going to pieces and wandering cells from the surrounding tissue were coming in to clean out the dead or dying tissue; sweat glands about millimeter and a half from the follicle had remained "perfectly l1ormaF ; the damage ,,,as ':an extremely Jocal one. " At two weeks the entire lower half of the hair folliele was completely gone, leavjng only the upper portion of the hair follicle; thc hair had been completely destroyed.

From these examinations t.he witness concluded that the eftcctive area in electrolysis is a core of tissue, approximately one nillil1eter J He uf's(,ribe himself as " a polyglot about skin 1228 FEDERAL TRADE CO fISSION DECISIOKS Decision 52 F.

in diameter, surroUllding the needle, and that insertion of the needle need not follow with precision the direction of the hair growth. He added that the repair process "is very unexciting like any repair which follows extremely Ininor damage such as a pinprick or razor nick * * * just perfectly normal repair of an extremely minute amount of damage." In his opinion the trauma caused by plucking a hair is "considerably more severe" than that inflicted with an electric neeclle.

Dr. E"gene F. Tm"b dermatologist and syphilologist, appearing for respondents, had, in his practice, removed hair by electrolysis and had cxalninec1 respondents machine and book of instructions. He stated that in his opinion, a person could use the Epilator "perfectly safely" by self-application without injury to himself or herself, on the face as well as on the hancls and other parts of the body, if that person followed the book of instructions- * :j * it is merely a matter of acquiring a little skil, and that can be easily taught * * * by self-application.

* " " I belie,e the machine is basically a harmless machine to start with, and following instructions in the printed pad, no damage could result froll its use if the instructions are carefully followed. To confinn his opinion the doctor had organized a panel of five women, to each of whom he gave an Epilator and a copy of the book of instructions. In his presence, and without previous experience, they used the set and needle successfully on an arm or leg, and then on the face.

Itegarding infection, he said:

li '" * the possibilty of infection is not present any more in this outfit than there is in the one that ,, e use, a professional outfit. And that danger is practically minimo because we believe that the needle is more or less self-sterilzing, and infection with a properly prepared skin is practically an unknown thing. * "" " the instructions for (sic) the book for sterilzation of the skin and cleanliness are tile ones that we adopt and use as professional men for the same purpose, so that we think they are adequate. Regarding syphilitic lesions, warts, and moles, this witness said the chance of getting into a syphilitic lesion is negligible. "* * * The syphilitic lesion is practically an extinct thing, a,nd it :is hard to find syphilis to dmTIonstrate to tho medical students. \Ve very rarely see one any more.

As far as getting into a cancerous lesion or something of that sort. I cannot possi1Jly cancel'Ve that fl patient, in searching for a hair follcle, would yick a tumor or something of that sort to try to find a 11ai1'. As regards moles, it is a teaching premise, basic tea child?; premise, that the hairs, particularly all the face, that contain-the moles th t contain hairs are the non-dangerous ones, and they are the ones we have all our lives destroyed MAHLER' , I)lC. ) ET AL. 1229 1217 Decision by electrolysis. That is the treatment of choice for that particular mole that ! have written up and called the "Common ::Uole of the Face. The dangerous mole, the dangerous pigmented mole, is the fiat, smooth pigmented non-hairy mole. so that the individual using an apparatus of this type would not be in that field because there is no hair. lipon cross-examination by counsel supporting complaint, Dr. Traub added:

" '" oj I do not believe the average layman would atte.mlJt to tackle a hair in a mole because they inherently are very Cilreful of themselves. I am amazed that my patients are so much more careful of themselves than the doctor would be for them.

I think that counselor has the opinion that the layman is a pretty careless individual about himself. That is not so. I find they are much more meticulous than the average doctor. * '" * They are much marc apt to he fussy about washing their face with soap and water and using alcohol fairly generously; much more so tl.an I think ,ve ,,,auld be in the offce. Also upon cross-examination he said that in 36 years of practice in which he had observed thousands of patients in his office and in clinics with which he ,vas connected, he had ' never seen an immediatc infection following the use of an electrolysis needle" and had never known of infection from a pimple going into the bloodstrea.m. Dr. Herbert John Spoor also a dermatologist and syphilologist, and an associate in practice ,with Dr. Traub, confirmed Dr. Traub: s testimony, stating that in his practice he had removed hair by electrolysis that he had examined the Epilator, re.ad respondents' instruction book, and used the Epilator on his own arm and chin, and is of the Gpinion that a person can, by self-application, using the Epilator successfully and safely remove. superfluous hair from the face as well as from the hands. Hc added t.o Dr. Traub' s t.testimony as to the panel of five \vomen, that under his personal observation they were abJc to remove hair from the face, using a mirror, aiter practicing for approximately twenty minutes.

Dr. Daniel P. IV orman a physical chcmist with t.hirty years' experienc.e as President of one and director of another scientific laboratory engaged in research and testing activities pertaining to com- (a) to determine themercial products, had been asked by respondents suita.bility, practicability and safety for use in self-application of the Epilator, and (b) to determine thc cITcct on bacteria of a needle "ctivated by the device.

To arrive at a conclusion as to the first point of inquiry, Dr. Korman examined, made physical tests and TIleasured the effectiveness of respondents c1cyice. tie read the instruction booklet, used the Epilator on himse.lf, and observed it.s use by members of a volunteer panel who were each given a machine nnd asked to use it with no other 451524- , 1230 FEDERAL TRADE COMMISSION DEClSIO Decision 52 F.

instruction than that which they obtained by reading respondents booklet. Based upon the resulting data, hc concluded that the Epilator may be used in self-a.pp1ication safely and effectively, in conformance "ith the printcd instructions, by persons of ordinary or average skill and ability, and that respondents' booklets give adequate and satis factoTY instructions.

To determine the effect of the electrically charged needle upon bacteria, a standard bacteriologic.aI test was performed in triplicate using the Epilator. The needle, cttrrying no electrical charge, WtLS touched to a sterile gro-wth medium after having been dipped into a standard staphylococcus aurons culture and a standard E coli culture; &11 abundant growth of both organisms developed during a succeeding 24-hour' incubation period. Following the same procedure in two other tests, but using a needle that carried an electrical charge, deriyed from terminals 2 and 4, respectively, of the Epilator, no gro\vth of bacteria was observed either after twenty-rour hours or arter seven days of incubation. The laboratory notes or this test are in the record. Dr. Norman concluded:

It is my opinion that any bacteria within the electrical field of the current from these needles would be destroyed.

To rebut the testimony or Dr. Norman, the. testimony or Louis F. Ortenzio bacteriolgist in the United States Department of Agriculture, was presented. He had been given Dr. N orman s test report and handwritten laboratory notes, and said that he knew there was some controversy about the matter, but not that he would be expectcd to appear at a hearing as a witness to answer questions about his report. Therefore, upon completion or his series or tests, he "cleaned up:' his laboratory, threw out some wire he had used to complete an electrical circuit in part of his tests, and destroyed his notes. In Dr. Ortenzio s test the Epilator needle carrying an electrical charge was dipped into a standard micrococcus pyogenes val', aureus culture, then "suomerged': in a tube of sterile nutrient broth, which after 48 hours' incubation, showed "a good growth or test organism. The same results were obtained using terminals 2, 4 , 6, and 8, and by "stabbing" the contaminated needle into a sterile agar nutrient instead of broth. Other variations of this experiment shovred similar results.

As a result of these experiments, Dr. Ortenzio concluded In my opinion the device is not self -sterilizing * * * the bacteria on or around the necdle would not be destroycd by electrolysis. 4 An in 1.WD test was made on two successive days, using a rabbit, but some of the results of this test were erratic and It 113 generally understood that the results of an experin1ent performed on a single animal cannot lie accepted as significant or valid. MAHLER' ET AL. 1231 1217 Conclusions There is no question but that the experiments as they were performed by Dr. Ortenzio support his conclusion. However, when Dr. Norman duplicated the Ortenzio tests, exactly opposite results were obtained, confirming his own earlier report and conclusion. The laboratory notes of this second series of tests by Dr. Norman are in the record. It was explained by Dr. Norman that the difference in the results obtained by him was due to the greater degree of care exercised in his laboratory-the contaminated needle was not "submerged" or "stabbed" into the culture of test organisms or into the sterile broth, but placed carefully in each, so that only the currentcarrying part of the needle came in contact with either substance it being recognized that the plastic holder of the needle is a nonconductor, would carry no electrical charge, and, therefore, that the bacteria coming in contact with this part of the apparatus would not be affected by the electrical charge of the needle and would be transferred as active bacteria from one medium to the other. This is a fact which perhaps was not known to Dr. Ortenzio, since, as he said, he is not an electrical engineer, and not familiar with electrical circuits and currents. Dr. Norman stated that the test requires a knowledge of electricity and bacteriology. Further doubt as to the validity of Dr. Ortenzio s conclusions arises out of the fact that although he stated that he had duplicated the tests originally made by Dr. Norman, he did not bring in a report of the results he obtained; hence the presumption is strong that they supported Dr. X orman s findings.

Under all of these circumstances, the results of Dr. Norman s experiment n1ust be taken as correct, and his conelusion must be accepted as authentic and valid-that the charged Epilator needle does destroy bacteria.

CONCLUSIONS (1) It is undisputed that the removal of superfluous hair by use of respondents' Epilator is an effective and effcient method for the permanent removal of unwanted hair from the human body. (2) Thc Epibtor can bc successfully employed by individual selfapplication to remove superfluous hair from all accessible parts of the body by persons with ordinary care and skill after reading the instruction book published by respondents and distributed with the device.

From observing the user witnesses who appeared in this proceeding and listening to their testimony, it is evident that they are such individuals a.s one might meet on the street, in church, at a railroad station or any other public place-persons of ordinary means, ordinary education and intelligence, ordinary physical characteristics-persons 1232 FEDERAL TRADE COYJMISSIOK DECISIONS Conclusions 52 F.

having some pride of appearance! who were embarrassed to some extent because of having superfluous hair on t.he face, arms or other commonly exposed parts of the body. For all the purposes of this proceeding, they may be looked upon as being representative of the type of persons who arc purchasers or prospective purchasers of electrolytic devices such as respondent's Epilator, and of similar devices produced by other manufacturers. They are of those whom one expert referred to as creating a social problem through the development of inferiority complexes because of their concern about unwanted hair, especially if it is prominent upon the face. They are, as stated, persons of ordinary means who cannot readily afford the tedious, expensive treatments which would be necessary if they went to an "electrologist." None of the user-witnesses had any difficulty using the Epilator, except one, and her diffculty was such that it could have been readily overcome with patience and practice. All except this one were thoroughly satisfied with its use. Under expert observation, two separate panels of untrained indi viduals used the Epilator successfully with no instructions except those gained from reading responde,nts' booklet. The weight of the expert testimony is to thc effect that respondents' device can be used by self-application by persons of ordinary qualifications, effectively and successfully, after a little practice-and sa.Iely, if the instructions in respondent.s' booklet are observed.

It is a matter of common knowledge that there are some individuals who cannot successfully employ self-application of any productcannot use an electric or safety razor, cannot give themselves a waveset or a facial treatment. Respondents recognize this fact and afford protection for such persons through their guarantee to refund the entire cost to any purchaser who is not "entirely satisfied" after fifteen days' use of the device. It is common knowledge, too, that certain parts of the lnunan anatomy are inaccessible to any device that luts to be used with the hands, but certainly no potential purchaser is so foolish as to believe that any device would make such inaccessible parts accessible.

(3) Use of the Mahler Epilator is H safe method of removing superfluous httir from the human body by self-applicat.oll- The weight of the t('f:timony of the qunlifiecl experts supports this conclusion. K ot It single Bpecific instance of infection, permanent scarring, or other damage to the skin or injury to the health of any person who had used the Epilator or any similar device upon his own person is disclosed in the record. The needle of the Epilator will kill bacteria within the field of its clutrge; the precautions set forth in respondents' booklet are explicit and ade.quate, and ate the same ( .

MAHLER' , INC., ET AL. 1233 1217 Opinion precautions as those ordinarily taken by dermatologists in their practice, and, if followed, reduce the chances of infection to a minimum; experience indicates that individuals observe more care when they re treating themselves than is exercised by the professionalsphysicians or "electrologists; the trauma resulting from use of the Epilator is less than that resulting from plucking a hair or from a pinprick or slight cut; and certainly there is less danger of infection in the self-use of an electrolytic device than would be present where the removal of superfluous hail' by electrolysis is performed by one \vho has no specialized training in the physiology of the skin, in Lntisepsis, or in any of the various phases of dermatology in an offce or place of business where a succession of miscellaneous patients receive similar treatments with the same instrument. The specific cases of injury or skin damage shown in the record came from the offces of profe,ssional practitioners.

The foregoing conclusions are as positive as though the burden of proof -.\'cre upon respondents, which is not the case. Thc burden has been and is upon counsel in support of the complaint to substantiate the allegations of the complaint. That burden has not been sustained; thc charges contained in the complaint are not supported by substantial, reliable, probative evidence; and it cannot be round that the respondents have violated the Federal Trade Commission Act. Therefore, the complaint should be dismissed. Accordingly, It is ol'del'ed That the complaint herein be, and the same hereby is dismissed.

OPIXIO)l OF THE CO)BIISSIO By ANDERSON, Commissioner:

The initial decision filed by the hearing examiner after the hearings were concluded providcd for dismissal of the complaint. The case is presented here on the appeal fied by counsel supporting the complaint rrom such initial decision, the briefs in support or and in opposition to theapppal, and the oral arguments of counsel. The respondents engage in the sale to the general public of electrolysis machines which are to be used in removing superfluous hair from the body and face by self-application. Before proceeding to a discussion of the issues, some facts about the machines should be noted. A typical device includes a cabinet holding electric eel1s, a series of posts affording varied amounts of electricity, and a small needle. By puncturing the skin and inserting the needle along the hair shaft toward thc hair root and then applying the proper amount r; The testimony () the witnesses in support of the complaint goes no further than to say that Injury may result if persons using' the Epllator operate it contrary to or in disreg-ard of the printed instructions Ilnd wllrnings. 1234 FEDERAL TRADE COMMISSIO)l DECISIONS Opinion 52 F. T. C. of current, the user will destroy the hair root if it is within the range of the current. In such case, that particular hair will not grow again. N or is there l1ny dispute as to the general routine followed by the respondents in soliciting sales of their machines in commerce. includes the insertion of advertisements in magazines of national circulation reading as follows:

DESTROY Unwanted Hair FOREVER Temporary relief is NOT enough Only by KILLING THE HAIR ROOT can you be sure U WANTED HAIR is GONE FOREVER. Brings relief and social happiness. Do not use onr method until you have read our instruction book carefully and learned to use the )'IAHLER METHOD safely and effciently, Used suc cessfully over fifty years.

Send 5f( TODAY for booklet NEW BEAUTY or You MAHLER' , 11\0" Dept. 51- Providence 15, R. r.

To prospects responding to their initial contact advertisements the respondents transmit certain literature including a so-called beauty booklet which contains the following admonition or disclosure: The use of the Mahler Electrolysis Epilator by persons not trained in the technique of removing superfluous hair from the human body by electrolysis may result in permanent disfigurement, cause infections or other irreparable injury to health, and'" * '" said device should not be used to remove hair from cancerous or syphiltic lesions, pigmented moles or other areas showing local pathological conditions.

Those subsequently electing to purchase receive with their machines an instruction booklet. It reiterates the foregoing revealing statement and counsels buyers to acquire dexterity in using the device by experimental removal of hair near the knee prior to undertaking to remove hair from the face. In addition to outlning procedures for removing hair effectively and other practices to be avoided, the instruction booklet also contains directions relating to care and cleanliness of the skin and needle before and after operation of the machine. Turning now to the issues presented, the complaint under which this proceeding was instituted alleges that the respondents have falsely represented through their previously noted advertising that use of their devices through self-application constitutes a safe method for the removal of superfluous hair and that such advertisements are violative of the Federal Trade Commission Act. It additionally charges, among other matters, that various of the respondents' advertisements are misleading because they fail to reveal matsrial facts with respect to the consequences which allegedly may result from use of the electrolysis devices under conditions prescribed in the ad- MAER' , INC. , ET AL. 1235 1217 Opinion vertisements or conditions \which are customary and usual among purchasers.

The initial decision held that the statement in the initial contact advertising against using the method until purchasers read the instruction book carefully and have learned to use the machine safely and effciently was not misleading and has not served to misrepresent the device s safety when so used. The hearing examiner s rulings in this regard are based on his conclusions that respondents' machine constitutes a safe. method for removing superfluous hair from the face and body by self-application provided that the directions or precautions set forth in the instruction book furnished all purchasers are followed.

The appeal contends that he erred and that risks of injury definitely attend use of respondents' machines even as directed for the reasons (1) that use of thc needle on areas in the vicinity of potentially malignant moles or growths may stimulate them into cancerous growths and that removal of hair adjacent to the nose or under the arms may cause infection, none of which procedures is advised against in the instructions; and (2) that the instructions relating to cleanliness and care of the skin and needle merely minimize but do not eliminate the incidence of infection and consequent injury. A vic\v that infection may stein from removing hair immediately adjacent to the nostrils or under the arms was expressed by a professional electrologist ,vho has engaged in his profession for more than twenty years. No probative ll1medical evidence was received indicating that the hazards of removing hair from that area are greater than those encountered in removing it from elsewhere on the face, nor is the record persuasive that users are tempted to the needle method of epilation on tender underarm areas. Scientific evidence, including the testimony of physicians specializing in the field of dermatology, also was received bearing on the other issues. One of the physicians called by counsel supporting the complaint expressed the view that applying the needle within onefourth of an inch of a potentially malignant mole or growth might stimulate it to a cancerous course of development. He further stated that hE', had observecl two instances in which cancers had followed electrolysis; and another physici l,n testified that he had seen serious conditions of this type which perhaps were stimulated into activity by electrolysis. The scientific testimony introduced by respondents included evidence to the efiect that the directions and revealing statements including the instructions, adequately inform on matters to be avoided by users. Evidence also vms received tending to show that , \\ Opinion 2 F. '1. C. the effective area in electrolysis is limited to a core of tissue only 1/25 of an inch in diameter.

Te.stimony was received in support of the complaint relating to the inability of laymen in identifying pathological conditiolls 01' areas where hair removal is contra-indicated. In addition to the testimony relating to the adequacy of the directions, respondents offered testimony which tends to show that passable effciency in operating their machines can be acquired within a reasonably short time by people generally through the trials recommended in the instructions. vYhile we do not adopt the view that no risks can accompany the public self-use of needle electrolysis teehniql1cs pursuant to the respondents instruct.ions, we recognize that the burden of proof is on the proponent of the complaint. It is OUI' view, therefore, that the greater weight of the evidence docs not support affrmative conclusions that the devices are unsafe when the instructions are observed or to the effect that the advertising is rendered false by matters omitted from the revealing statement. This aspect of counsel's appeal is cleniecl \ aceorclingly.

'Ve also have considered the appears content.ions of non-safety because of risks from skin infection in addition to those previously referred to. It urges that the instruct.ions relating to care of the skin and c1c lling of the needle serve. only to reduce moterially and do not eliminate possibilities of infection. The precautions counseled by the respondents appear generally similar to those used among professional electrologists and in many physicians' offces. There can be no doubt but that infections have followed professiOlml removal of hair by electrolysis methods. 110w8ver, there is no probative evidencp indicating that they have resulted from inadequacies in the recognized procedures instead of deviations from them. Hence, the record does not suffce for informed determinations of ,,,whether appreciflblc risks of infection attend use of electrolysis when the respondents' directions on skin care ancl other matters arc observed. The initial decision also dismissed the companion cluLrge earlier mentioned that certain of the respondents' advertisements were misleading uecallse they failed to reveal material facts \with respect to the consequences, i.e. injuries hich may result from use of the machines under conditions prescribed in the advertisements or those cllstomary and usual among purchasers. The advertisements which initially solicit inquiries from prospective purehasers have contained no revealing statement with respect to specific risks which may attend respondents' hair removal method. On the other hand information on price and other matters also is omitted and we, ,,"auld not be warranted in concluding that the initial contact advertisement has served :MHLER' , INC. , E'r AL. 1237 1217 Opinion to induce sales of the machine. The so-called beauty booklet containing the revealing statement and a letter, a brochure and order blank, none of which reiterate it, make up the respondents ' first mailing. If the prospect does not order, follow-up literature is sent at intervals of three weeks, three months and six months after initial inquiry. At one time, mailings also were made nine months after inquiry. These mailings have included order blanks and descriptive and testimonial pamphlets. Only in the first mailing does the prospect receive the beauty booklet. Except for a pamphlet included in the now discontinued nine-month mailing and the instruction booklet none of the promotional matter htter transmitted contains any disclosure of potential dangers inhering in use of the machine. Certain of the advertisements offer the machine for removing unwanted hair and clearing the face, and a testimonial pamphlet has em phasized that the skin remains clear and soft. The respondents introduced scientific testimony to the effect that hair does not grow in moles which are potentially malignant and that no risks would accompany removal of hair from the benign type of mole. This was qualified by an admission that benign and potentially malignant areas sometimes arc intermixed; but the witness was of the view that the presence of hair is rare in such areas and those conditions are "not really much of a problem." :\lore credible in the Commission s view however, are the opinions expressed by witnesses testifying in support cf the complaint that appreciable risks are presented when users remove ha.ir frOlI1 moles or from areas very close to them or pigmented spots. It is, clear from the record, furthermore: that ignorance of or departures from proper procedures and precautions in clearing the face of hair may result in infection or disfigurement. Implicit in the initial decision are conclusions to the contrary and, to the extent that exceptions are intcrposed thereto under the appeal, the appeal obviously has merit. It would be unrealistic to conclude that these machines do not come within the category of potentially injurious devices.

Section 15 (a) (1) of thc Federal Trade Commission Act, as amended, provides that an advertisement shall be deemed misleading if it fails to reveal material facts respecting consequences from use under the condit.ions there prescribed or t.hose customarily or usual. The Commission, therefore, ,vonld be jlls6fied in concluding that any advertisement di seminatecl in commerce for the purpose of inducing or like.ly to induce sales of thc re,spondents apparatus is false as a matter of law if it is offered for the removal of superfluous hair or clear.ring the face and cont.ains no revealing statemcnt in the vein similar to that in the heaut r and instruction booklets. 1238 FEDERAL TRADE CO IMISSIOK DECISIONS Opinion 52 F.

There is, however, no direct record support for conclusions that any substantial portion of the machines distributed by the respondents have been sold as a result of the mailings following the first one. Because all purchasers receive the two booklets, the record additionally suggests that prospects are guided by the beauty booklet in making their decisions to purchase and users guided by the respondents' instruction booklet. In this factual situation, there is no clear showing that the public interest requires issuance of an order forbidding respondents fr01n disseminating advertisements which do not contain the booklets' revealing statements. On the basis of the present record, therefore, dismissal also is warranted as to the complaint' additional charges of falsity of the advertising for alleged failure to reveal material facts. The appears exceptions to the initial decision provision for dismissal are accordingly denied and the order below affrmed.

In reaching certain conclusions as to the effect of the needle s charge on bacteria, the hearing offcer discussed various scientific experiments conducted by witnesses who testified in this case. Vigorous objection is taken under the appeal to the hearing examiner statement of a strong presumption that a report on tests not brought to the hearings by a bacteriologist called by Commission counsel on rebuttal really supported the experimental results of another scientist who previously testified as a defense witness. As elsewhere mentioned in the initial decision, the bacteriologist did submit a report OIl his experiments which was received in evidence. His reported results were contrary to those of the defense witness. The initial decision also stated that those experiments supported his conclusions. The witness, a scientist in the employ of the Government, testified that he had destroyed his laboratory notes after completing the experiments and writing his report from them; that his report included all experimental work he had done in the matter; and that certain of them repeated the tests made by the scientist who had conducted experiments at the request of the respondents. There accordingly was no record basis for the hearing examiner s assumption that the witness conducted experiments on which he made no report or that the data which he destroyed after completing his report related to l11reported tests. The hearing txarniner clearly erred in such respect and the appeal's exception thereto is well taken.

The appeal, accordingly, is granted to the extent hereinbefore noted and otherwise denied. To the extent that the appeal is granted, the findings of the initial decision are to be deemed modified in conformity therewith and, as thus modified, the initial decision is affrmed. MALER' , INC., ET AL. 1239 1217 Order Chairman Gwynne concurs in the result insofar as dismissal of the complaint is concerned.

Commissioner Secrest did not participate in the decision herein. FINAL ORDER COllisel supporting the complaint having filed an appeal from the hearing examiner s initial decision in this proceeding; and the matter having been heard on briefs and oral arguments of counsel, and the Commission having rendered its decision granting the appeal to the extent noted therein and otherwise denying the appeal, and affrming the initial decision as modified under the Commission s decision: It is ordered That the complaint in this proceeding be, and it hereby is, dismissed.

Commissioner Secrest not participating.

, Complaint G2 F. T. C.

THE fA TTER OF VNITED FISHERMEN OF ALASKA ET AL.

CUXSENT ORDER, ETC. , IX REG.'\RD TO THE ALLEGED Vl0LATION OF THE FEDEH.AL TRADE cO n.nSSIO)''' ACT Doc"h" et 6368. Complaint, June 1955-Decision, Mays, 1.956 Consent order requiring two respondents, canners of king crab caught in waters adjacent to their packing plants in Kodiak, Alaskf.-cbarged with effectuating a conspiracy with two fishermen s associations to restrain cOlllpetition in the sale and distribution of king crab and king crab meat in commerce, in the course of which they jointly fixed and maintained minimum prices for all king crab caught in said area by ilCllllS of allllual contracts with the fishermen s associations, enforced by intimidation and threats of violence against canners and fishermen not parties to the agreement and threats of black-listing fishermen who sought employment with other canners not paying the fixed minimum prices-to cease and desist from sneh joint price fixing and from empowering any association or group to negotiate prices for king crah or crab meat;

Provided, hou;ever That this order cease to be of any effect if the pending pro. ceeding against respondent fishermen s Ilssociations be finally determined in any manner other than in an order to cease and desist from the same acts and practices.

Before llfr. WilUam L. Pack hearing examiner. Mr. Fletcher G. Oohn, Mr. Lewis F. Depro and Mr. John J. Ai eN ally for the COlmnission.

;lh. Herald A. O'Neil of Seattle ash., for Island Seafoods, Inc. and King Crab, Inc.

CO::\IPLAINT 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 the parties hereinafter referred to as respondents have violated the provisions of Section 5 of the Federal Trade Commission 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 this respect as follows:

PARAGRAPH 1. Respondent United Fishermcn of Alaska, hereinafter referred to as "respondent Union " is an unincorporated association which is all affliate or constitue,nt unit of the Seafarers International Union of North America (A.american Federation of Labor). Among its members arc fishermen who fish for ICing crab in the waters bordering Western and Northwestern Alaska, including the UNITED FISHERMEN. OF ALASKA ET AL. 1241 1240 Complaint waters adjacent to Kodiak, Alaska. Its principal offce and place of business is in ICodiak, Alaska, where its mailing address is P. O. Box 501- , Kodiak, Alaska.

PAn. 2. Respondents Eldon Lester, John Anderson, and P. J. Kerrigan are individuals and are" respe(.tively, Presic1ent Vice-President and Secretary-Treasurer of respondent Union, with the offce and place of business of each being the same as that of respondent Union. Respondents Charles 'WalTen, Russell Attwood, and Alfred Levine are individuals who compose the Executive Board of said Union. All of the respondents named in this Paragraph, ,which are hereinaftr referred to as a group as "respondent -cnion offcials " indi. vidnalJy and in their respective capacities as offcials of respondent Union have formulated, directed, or controlled thc policies and activities of said union, and in so doing, have, expressly or impliedly, authorized, performed, adopted, or affrmed one or more of the policies, acts and practices herein alleged to have been performed by or through respondent cnion. Said policies, acts, and practices 'were performed through the medimn of said Union, with the approval and on behalf, of al1 of its fishermen members and particularly those engaged in the catching of ICing crab in the waters bordering "\\T estern and Korthwestern Alaska and especially in t.he ,..aters adjacent to Kodiak, Alaska, and were intended to, and did, bind said members in the same manner and with the same effect as though they had individually engaged in same.

The members of respondent -Cnion are too numerous and the changes in the membership of said Union too frequent to render it practicable to name as re,spot1dents herein each and all members of respondent Union, without manifest delay and inconvenience. Therefore, there are named and inclucled as respondents in this proceeding the above-named respondent offcials of respondent Union individuallYj as offcials of respondent Union, and as representing all members of said Union.

PAR. 3. Hespondellt ICoc1iak Fish Producers Association, hereinafter referred to as "respondent Cooperative " is a nonprofit organization, organii'ecl in the first quarter of 1954 under the Jaws of the Territory of Alaska nnd under the provisions of the Act of Congress of .Tune 25 , HW-d, entitle,cl ")tll Act authorizing associations of producers of aquatic products. ' It has its principal offce and place of business in Kodiak, Alaska.

It is composed of approximately fifty independent fishennen who own their boats and who formerly were members of respondent -Union. Its function is to act as a fish marketing cooperativc for said members. Several of the directors of respondent Cooperative were formerly Complaint 52 F.

offcers of respondent Union and acted for and on behalf of respondent Union in carrying on the negotiations and entering into the contracts hereinafter described, for the sale by the respondent fishermen members of respondent Union of the King crab caught by said members. PAR. 4. Respondents 'V. A. Cannon, Dal Valley, Barney COl'gatell Jack vVarren, A. J. Cichoski, Ray Heinrichs, and Thomas Clampffer who are hereinafter referred to as a group as "respondent Cooperative offcials " are individuals who are directors of respondent Cooperative. Said respondents, individually and in their respective capacities as offcials of respondent Cooperative, have formulated, directed, or controlled the policies and activities of said Cooperative, and in so doing, have, expressly or impliedly, authorized, performed, adopted or affrmed one or mote of the policies, acts, and practices herein alleged to have been performed by or through respondent Cooperative. Such policies, acts, and practices were performed through the medium of said Cooperative, with the approval and on behalf of all its independent boat owner members who are fishermen engaged in the catching of King crab in the waters bordering vVestern and Northwestern Alaska and more particularly in the waters adjacent to Kodiak Alaska, and were intended to, and did, bind said members in the same manner and with the same effect as though they had individually engaged in same.

The members of respondent Coopenltive are too llmnerous to render it practicable to name as respondents herein each and all members of respondent Cooperative without manifest delay and inconvenience. Therefore, there are named and included ab respondents in this proceeding the above-named offcials of respondent Cooperative individually, as offcials of respondent Cooperative, and as representing all members of said Cooperative.

PAR. 5. Respondent Island Seafoods, Inc., is a corporation organized il1der the laws of the Territory of Alaska, with its principal offce and place of business being located at 66 Marion Street, Seattle Washington, and having a packing plant located at Kodiak, Alaska. Respondent ICing Crab, Inc., is a corporation organized under the laws of the Territory of Alaska, with its principal offce and place of business being located at Kodiak, Alaska, where its mailing address is P. O. Box A-I047, Kodiak, Alaska.

Respondents 'Valter J\Iul1er and :Ylildrcd D. Muller are individuals composing a partnership trading as Kodiak Sea Foods Packing Company, with their principal offce and place of business being located at Kodiak, Alaska.

Each of the respondents named in this paragraph, and hereinafter referred to as a group as "respondent Canners: is engaged in the UNITED FISHER1IEN OF ALASKA ET AL. 1243 12,10 Complaint business of canning and packing crabmeat secured fr01n ICing crabs caught in the waters of 'Western and Northwestern Alaska, especially the waters adjacent to Kodiak, Alaska.

PAR. 6. The King Crab Industry is relatively new and has grown very rapidly. For the 19M season the pack of such crab had a wholesale value in excess of $2 000 000. Approximately one-half of said pack is purchased by the respondent Canners from the respondent fishermen members of respondent Gnion and/or respondent Cooperative. A large proportion of the other half is either caught on the boats owned or controlled by a concern other than the responde, Canners or is purchased by such concern from fishermen who, like the fishermen employed on the boats owned or controlled by this concern, are not members of either the respondent L-"union or respondent Cooperative. This other concern freezes the crab or the crabmeat secured from the King crabs which it obtains by either of the aforementioned methods, and transports the same directly to the United States. Part of the crab secured by this concern is frozen on the boats used to catch same in the waters boarding on the "\Vestern and Northwestern Coast of Alaska, including the waters adjacent to the Kodiak Bay area, and the rest is frozen in plants located at or near Kodiak, Alaska, which are owned or operated by the concern. This concern likewise has never entered into any contracts or agreements with either the respondent Union or the respondent Cooperative for the purcha,se of lCing crab or crabmeat.

P AH. 7. All of the respondent fishermen members of both the respondent union and the respondent Cooperative who are engaged in the catching of IGng crab in the waters of "\Vestern and N orthwestern Alaska, including the waters adjacent to ICodiak, Alaska, are independent fishermen who own their own boats and either own or rent the traps or other gear used in the catching of said crabs. K one of such respondent fishermen members of either respondent LTnion or respondent Cooperative are employees of respondent Canners. R.eopondent Union and/or respondent Cooperative are themcdia whereby the offcials of both respondents and the respective respondent fishermen members of each, who are engaged in the catching of such crab have performed the illegal acts and practices hereinafter alleged. PAR. 8. In the course and conduct of their respective businesses respondent Canners each makes substantial sales of the ICing crabmeat and crab which they purchase from the respondent fishermen members of respondent 17union and/or respondent Cooperative and pack and can in their respective plants, to customers located in the various States of the United States and cause same to he transported from the Territory of Alaska to such customers. Said respondents , 124- FEDERAL TRADE CO)'IMISSIO DECISIONS Complaint 52 F.

as well as the respondent fishermen members or both the respondent Union and respondent Cooperative, maintain, and at all times herein mentioned have maintained, a regular course or current or trade in commerce in King crab in the Territory or Alaska, between said Territory and the various States of the United States, and among and between the several States or the lJnited States. The respondents union anel Cooperat.ive hate been, and are, the media whereby the respective re,spollc1ent offcia.ls or each and the respective members or each ha VB committed and performed, in commerce, the alleged illegal policies, acts, and practices hereinafter set forth. All respondents named herein have been, and are, engaged in commerce in King crab and crabmeat as "commerce:' is defined in the Feclera.l Trade Commission Act.

P AH. 9. In the course and conduct of their respective businesses respondent Canners are in competition in such commerce with each other, and with others who not only purchase and sell King crab which arc canght in the waters adjacent to ICoc1iak, Alaska, but also King crab canght in various waters bordering on the "'Vestern and northwestern Coast of Alaska, a,nel also with others who freeze the crab so caught, in the purchase and sale of raw or fresh King crab and King crabmeat, except insofar as such competition has been restntinec1 or c1estroyecl by thc policies, acts, and practices hereinafter set forth.

Also, except as it has been rcstrained or destroyed by the policies acts, and practices hereinafter set forth, the respondent fishermen members of respondent Union and/or respondent Cooperative VdlO arc cnga.ged in catching ICing crab in the waters hereinbefore described, including those adjacent to Kodiak, Alaska, are in competition in such commerce with each other and with other fishermen who likewise are engaged in catching King crab in the aforedescribed waters including those adjacent to I\:odiak, Alaska, but who are not members of either respondent Union or respondent Cooperative, in offering for sale and se.lling such crab to the respondent Canners and to others who are engaged in businesses similar to respondent C,tnl1ers, inc1uc1ing those freezing such I(ing crab or crabmeat. PATI. 10. Eaell of the respondents named herein, directly 01' indirectly, participated in, appl'oycd, 01' adopted one or more of the alleged illegal policies: acts, and practices herein,deter set forth. \IL 11. For many year,') last past and especially during 1952 and 1053, respondent 17union and respondent TJnioIl offcials, acting individually and/or through 01' by lleans of respondent Union, and since 1954 responde.nt Coopel'iltlYE', and respondent Cooperative offcials hcting indiyic1nally anel/or throngIt or by means of respondent Co- UNITED FISHER 1EX OF ALASKA E'f AL. 124. 1240 Complaint operative, and respondent Canners have entered into, maintained, and effectuated an agreement, understanding, or conspiracy between and among themselves to pursue, and they have pursued, a planned common and concerted course of action to adopt, fix, a.nd adhere to the practice and policy of restricting a.nd restraining competition in the offering for sale, sale, and distribution of IGng crab and ICing crabmeat in commerce in the Territory of Alaska, between said Territory and the several States of the United States, and among and between such States.

PAn. 12. As part of, pursuant to, and in furtherance of the aforesaid agree,ment, understanding, conspiracy, and planned common and concerted course of action, respondents have performed and pursued the following policies, acts and practices: (1) To fix and maintain, and they have fixed and maintained, the minimum prices at "which all ntw or fresh King crab and ICing crabmeat caught in the waters bordering ,Vestern and Northwestern Alaska, including the waters adjacent to Kodiak, Alaska, are bought and sold;

(2) Respondent Union, at least for the years 1952 and 1953, entered into annual contracts with each of respondent Canners wherein and whereby were fixed, esta.blished, and maintained the minimum prices which each of said Canners should pay, and each paid, to respondent f-ishermel1 members of respondent Union for the raw or fresh IZing crabs 'ivhich said fishermen members en,ught in the aforementioned area;

(3) Since 1954, respondent Cooperative, acting in conjunction with and with the approval of, respondent Union, has entered into annual contracts with respondent Canners wherein and whereby have been fixed, established, and maintained the minimum prices which said respondent Canners should pa.y, and each has paid, to the respondent fishermen members of respondent Cooperative and/or respondent Union for the ra\v or fresh I\:ing crab caught by said fishermen members in the aforec1escribed waters, and which prices respondents have established as the minimum prices to be p1Lid for all IGng crab caught in said flTca, even though same be purchased by parties other than respondent Canners (Lnd be caught by fishennen who are not members of either rpspOnde1Jt Union or resp01ll1ent Cooperative; (4,) Itespol1de.nt Cooperative and respondent Cooperative offcials in conjunction \, it.h respondent 11union and respondent union offcials have employed and are employing various means and n1cthods, including intimidations Hnd threats of violence, to require purchasers of raw ICing crab, for the purpose of pac.king, canning, or freezing same who have )101- elltpl''(1 into ag:reements 01' understandings with rc- 451524 - !1!)- 1246 FEDERAL TRADE COYI:\USSION DECISIONS Complaint 52 F. T. C.

spondent Cooperative or respondent 'Union, to pay for the King crab which they purchase the mininl1Ul prices fixed in a.greements between respondent Cooperative and respondent Canners; (5) Respondent Cooperative and respondent Cooperative offcials in conjunction with respondent Union and respondent Union offcials have employed various means and methods, including intimidation and threats of violence, to compel fishermen who are not members of either respondent Union or respondent Cooperative to refrain frolll catching ICing crab for any purchasers or prospective purchasers of said crabs who will not pay the minimum prices for such crabs which re :fxed by the current annual agreements between respondent Cooperative and respondent Canners;

(6) Respondent Cooperative and respondent Cooperative offcials acting in conjunction with respondent Union and respondent Union offcials, have, by various means and methods, including threats of blacklisting, sought to prevent fishermen from securing or accepting employment as cannery workers for canners other than respondent Canners when said other cannp,rs do not pa.y to the fishermen who catch ICing crab in the aforeclescribed area the minimum prices which are fixed by the current agreements or contracts between respondent Cooperative and respondent Canners;

(7) Respondent Canners have jointly negotiated with respondent Union and/or respondent Cooperative as to the 111ini11u11 prices each and all would pay to the respondent fishe.rmen members of respondent lJnion and/or respondent Cooperative for the raw I\:ing crab caught by such fishermen members in the aforedescribed waters; (8) Respondent Canners have agreed to pay, and have paid through and by means of the aforesaid agreements or contracts between each of them and respondent Union and/or respondent Cooperative the identical minimum prices to the respondent fishermen 11lembers of respondent Union and/or respondent Cooperative for such King crab.

PAR. 13. The capacity, tendency, and effect of the aforesaid understanding, agreement, combination, conspiracy, and planned common and concerted course of action and the policies, acts, and practices, as hereinbefore set forth, have been, and are now, to unlawfully restrict, restrain, and hinder the catching of ICing crab in the waters bordering 1Vestern and N orthwest.ern Alaska, including those adjacent to Kodiak, Alaska; to prevent price competition in the aforedescribcd commerce between and among respondent Canners in the purchase of such King crab; to prevent competition in such commerce between said respondent Canners and others engaged in the purchase and sale of such crab and crabmeat; to prevent such competition (a) between ITED FISI-IER:\EN OF ALASKA E'T AL. 1247 1240 Decision and among respondent fishermen members of respondent Union (b) between and among respondent fishermen members of respondent Cooperative (c) between and among respondent fishermen members of respondent Union and respondent fishermen members of respondent Cooperative, and (d) between such respondent fishermen members of respondent Union and respondent Cooperative and other fishermen who are not members of rcspondcnt Union and/or respondent Cooperati ve but are engaged in the catching of sllch crab in the aforedescribed waters, in the sale of same to respondent Canners and to others engaged in the purchase and/or sale of King crab and crabmeat in interstate commerce: all within the intent and meaning of Section 5 of the Federal Trade Commission Act.

PAR. 14. In addition to the elieets, hereinbefore set forth, of said understanding, agreement, combination, conspiracy, and planned common and concerted course of action of the respondents and the policies acts, and practices done pursuant thereto, they likewise have the capacity and tendency to unduly enhance the price which the public required to pay for ICing crab and crabmeat when same is offered for sale to the consuming public.

PAR. 15. The policies, acts, and practices of the respondents, all and singularly, as hereinbefore set forth, are to the prejudice of the public, have a dangerous tendency to unduly hinder competition and to create a monopoly in respondents in the King Crab Industry, and constitute unfair acts and practices and unfair methods of competition in commerce within the intent and meaning of Section 5 of the Federal Trade Commission Act.

INITIAL DECISION AS TO CERTAIX RESPONDENTS BY WIIAM L. PACK HEARING EXAMINER The complaint in this matter charges the respondents with entering into a combination in restraint of trade in violation of the Federal Trade Commission Act. An agreement has now been entered into by two of the respondents, Island Seafoods, Inc., and King Crab, Inc. and counsel supporting the complaint which provides, among other thing", that said respondents admit all of the jurisdictional allegations in the complaint; that as to that part of the proceeding which is disposed of by the agreement, the answer of each of said respondents to the complaint shall be considered as having been withdrawn and that the record, insofar as it pertains to said respondents, on which the initial decision and the decision of the Commission shall be based shall consist solely of the complaint and the agreement; that as to that part of the proceeding which is disposed of by the agreement each of said respondents waives any further procedural steps before 1248 FEDERAL TRADE COMMISSIQX DECISIO:\S Order 52 F.

the hearing exa,mincr and the Commission, the making of findings of fact or conclusions of law, and all of the rights each of said respondents may have to challenge or contest the validity of the order entered in accordance with thc agreement; that thc order hereinafter set forth may be entered in disposition of the proceeding as to said respondents such order to have the same force and effect as if entered after a full hearing; that the order may be altered, modified or set aside in the manner provided for other orders of the Commission; and that the agreement is for settlement purposes only and does not constitute an admission by either of said respondents that it has violated the law as alleged in the complaint.

The hearing examiner having considered the agreement and proposed order and being of the opinion that they provide an adequate basis for an appropriate disposition of the proceeding as to said respondents, the agreement is hereby accepted, the following jurisdictional findings made, and the following order issued: 1. Respondent Island Seafoods, Inc., is a corporation organized tmd existing under the la\vs of the Territory of Alaska with its principal offce and place of business located at 66 ;yIarion Street, Seattie ashington, and having a packing plant located at Kodiak, Alaska. Hesponclent King Crab, Inc., is a corporation organized under' the laws of the Territory of Alaska with its principal omee and place of business located at Kodiak, Alaska, its mailing address being P. O. Box A-I074, Kodiak, Alaska.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of said respondents, and the proceeding is in the public interest.

OIUJEH It is ordered That re.spondents Island Seafoods, Inc., a corporation and King Crab, Inc., a corporation, their respective offcers, agents representatives and employees, directly or through any corporate 01' other device., in connection with the purchase, 01' offering to purchase in commerce, a.s "commerce" is defined in the Federal Trade Commis tion Act, of ntw king crab caught in waters bordering western and nortlnvestern Ahskn., including the waters adjacent to ICodiak Alaska, do forthwith cease and desist from entering into, cooperating in or carrying out any planned common and concerted course of action, understanding or agreement bebyeen said respondents or between or among said respondents and one or more of the other respondents named in the complaint herein 01' between.n either of said respondents and others not parties hereto, to do or perform any of the following acts:

1:-:\ITED FISHER:'IE OF ALASKA ET AL. 1249 '140 Order 1. Fixing, establishing, maintaining or adhering to, or attempting to fix, pstablish or maintain, or cause adherence to, by any means or met.hod, any prices for the purchase or sale of such raw king crab and king crab meat;

2. Jointly or collectively negotiating, bargaining or agreeing, by any means or method, as to the price or prices at which said raw king crab or king crab meat are proposed to be, or are, purchased or sold;

3. Authorizing or empowering any association, group, corporation or union to negotiate, bargain or agree as to the prices to be paid or received in the purchase of such king crab or king crab meat; Profvided, however That nothing herein contained shall be construed or interpreted as preventing or prohibiting any respondent named herein, individually, from purchasing or selling, or bargaining for the purchase or sale of such raw king crab and king crab meat with any boat owner, boat captain, or other single seller or buyer. Provided further That nothing herein contained shall be deemed to prohibit the respondents herein from entering into a bona fide partnership, joint operation, or venture, or consolidation, for the purpose of operating one or more canneries a.nd in which - the prices of such nlW king crab and king crab meat are det.ermined by said partnership, joint operation, or venture, or consolidation, and where such determination is under the contract establishing such partnership, :joint operation, or venture, or consolidation binding upon all members t.hereof. This proviso shall not be construed as either an approval.l or disapprm-al of any speciIlc partnership, joint operation or venture or consolidation, nor as permitting any such partnership, joint operation or venture or consolidatioll\ to be continued or formed for the purpose, or with the effect, directly or indirectly, of rendering ineffective or unenforceable the inhibitions of this order and the purposes thereof.

Provided furthe1' That nothing herein contained shall prevent any association of bona fide crab fishermen, acting pursuant to or in accordance 'with the provisions of the Fisheries Cooperative :YIarketing Act (15 U. A. Sections 521 and 522) from performing any of the acts and practices permitted by said Act; and Provided further That if the pending proceeding against respondents 'United Fishermcn of Alaska and Kodiak Fish Producers Association is finally determined in any manner except by the issuance of an order to cease and desist, either (a) by consent, or (b) by final , or (0) by order order of the Commission not subject to further review of the Commission, which, although subject to further review, continues effective, requiring said respondents United Fishermen or 1250 FEDERAL TRADE COMMSSION DECISIONS Decision 52 F.

Alaska and Kodiak Fish Producers Association to cease and desist from the same or similar acts or practices provided by the order contained herein, then this order shall terminate and cease to be of any effect.

REPORT OF COMPLIANCEDECISION OF THE CQl\DfISSroX AND ORDER TO FI Pursuant to Section 3.21 of the Commission s Rules of Practice, the initial dccision of the hearing examiner shall, on the 3rd day of May, 1956, become the decision of the Commission; and, accordingly: It is ordered That respondents Island Seafoods, Inc., and King Crab, Inc., corporations, herein shall within sixty (60) days after service upon them of this order, file with the Commission a report in writing setting forth in detail the manner and form in which they have complied with the order to cease and desist. &; &; &; &; &; &; , PUGET SOUND SALMO:: CA.,'LERS , INC., ET AL. 1251 Complaint