Rit-Zie Novelty Company, Inc.

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IN THE 1\LATTER OF RIT-ZIE NOVELTY CO1\IPANY INC., ET AL. Docket 6854. Complaint, May 16, 1955-Decision, Oct. , 1957 VICTOR B. ILL\.NDAL & BRO., INC., ET AL.

Docket 63"/5. Complaint, June 1955-Decision, Oct. 7, 1957 RELIANCE INTERCONTINENTAL CORPORATION ET AL. Docket 6520. Complaint, Feb. 28, 1956-Decision, Oct. , 1957 CONSENT ORDERS, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COl\fl\IISSION AND THE Flat\UIABLE FABRICS ACTS Consent orders requiring three importers in :New York City to cease violating the Flammable Fabrics Act by importing into the United States from Japan and selling and transporting in commerce silk scarves which were so highly inflammable as to be dangerous when worn. Before Afr. Ja?7~es A. urcell hearing examiner. Mr. Broc7clr"an Horn.e for the Commission. 1lVeil, Gotsha.l Jlanges of New York City, for respondents. OPINION OF TI-IE CO::\DIISSION By ANDERSON, Commissioner:

Upon the closing on the record of the case- in-chief in support the complaint in each of the above-captioned proceedings, all of the parties thereto, moving through counse.l supporting the complaint on July 8 , 1957, sought and obtained from the hearing examiner a deferment of the reception of evidence in opposition to the anegations of the complaint for the purpose of permitting negotiation of agreements containing cease and desist orders disposing of each of the proceedings. Thereafter, at. a duly noticed hearing in New Yor1\: on July 18 , 1957 , the record discloses agreements in each of the three cases had been negotiated and executed. Subsequently, on July 25 , 1957, they "-ere submitted to the hearing examiner under one memorandum of transmittal. The agreements "Were rejected by the hearing examiner. Counsel supporting the complaints and counsel for respondents in all three matters have filed joint appeal from that ruiing as permiriec1 uucler 9 ~;. :23 of tJie Colllmission Rules of Practice.

The heating examiner predicates his rejection or the consent agreements, first, upon the ground that respondents ha.ve "* * * availec1 themselves of delaying tactics and of every possible avenue of de- RIT-ZIE NOVELTY CO. , INC., ET AL. 431 430 Opinion fense and now, having forced counsel for the complaint to a full disclosure of his case and being apparently, at an end, seek approval of a consent settlement * * * " The COlmnission recognizes the hearing examiner s concern with the fact that two of these cases have been pending in the trial stage since 1955 and one since 1956 but from its examination of the record, has concluded that not an, not even the majority, of the delay can be attributed to respondents trial tactics. For example, in 1955 and 1056, as pointed out by respondents, there was pending in Congress proposed legislation which, if enacted would have exempted silk scarves such as are involved in these proceedings from coverage by the Flammable Fabrics Act, and the complaints herein would have been subject to dismissal. All participants in the proceedings during that period appear to have been in agreement as to continuance of the hearings. The record, in any event, does not disclose otherwise. On the point that respondents "forced counsel supporting the complaint to a full disclosure of his ease " this is not the criterion by which to determine whether a consent order agreement should be accepted-or rejected. The record shows no evidence not previously known to respondents and counsel supporting the complaint was not subjected to an onerous burden in the presentation thereof. On the contrary, most of the physical exhibits, consisting of scarves sold by the respondents in con1Jnerce, were identified by respondents prior to hearing and were received in evidence pursuant to stipulation as was much of the testimony, including some government expert testimony on flammability tests, thus effecting savings of time and money in making the case-in-chief.

Secondly, the hearing examiner, in his notice of rejection of the proposed agreements for settlement, refers to the Commission policy of denying the privilege of informal stipulation procedures to respondents in certain types of cases, including those involving flammable fabrics; and states that, by analogy, the reasoning on which such policy is bottomed "should govern " the extension of the privilege of disposing of a, proceeding through the entry of a, consent order under S 3.25 of the l\ules of Practice. ,Ve disagree that there , or should be, any significant parallel bet\'\een the policy behind informal stipulation procedures available prior to issuance of eomplaint and the policy embodied in the consent order method of disposing of cases after complaint has issued. lender the pertinent rule, the latter procedure is clearly available in all types of cases at any stage of a proceeding subsequent to the issuance of a complaint.

The hearing examiner next assigns as a reason for his rejection of the consent agreements the fact that respondents, in refusing an offer Decision 54 F. T. C. of settlement in a pretrial hearing, thereby gave themselves an unfair competitive advantage over their competitors ,,-ho did execute consent agreements even though they had on hand considerable stocks of the scarves of the flammnble type involved here. ",Vhatever merit this argument may have, other considerations in the situation found here are persuasive for the acceptance of the agreements. The saving of time and money that will result win be more in the public interest than would the rejection of the agreements and the remand of the proceedings for the taking of further testimony and the reception of evidence in opposition to the complaints. Under the agreements, as a practical matter, everything is accomplished that would be achieved by entry of cease and desist orders after trial in each of the three cases, and, having in mind the statutory mandate contained in Sec.t.ion 6 (a) of the Administrative Procedure Act, 5 D. A. 1005 (b), that "Every agency shah proceed with reasonable dispatch to conclude any matter presented to it ,': we feel that the agreements should be accepted. In the light of the foregoing considerations, the Commission is of the opinion that the agreements constitute appropriate disposition of the issues in each case, and we direct their acceptance and the entry of an appropriate decision in eac.h proceeding.

DECISION OF TI-IE COl\Il\IISSION AND ORDER TO FILE REPORT OF COl\IPLL\NCE On the dates noted in the above title the Federal Trade Commission issued and subsequently served its c.omplaints in these proceedings charging that the name.d corporate and individual respondents, in their respective capacities, ",were and are engaging in acts and practices in violation of the Flammable Fabrics .Act and of the rules and regulations promulgated thereunder ",'Which constitute unfair and deceptive acts and practices and unfair methods of competition in c.commerce within the intent.. and meaning of the Federal Trade Commission Act. After the issuance of said complaints, the filing of respondents' ans"- ers thereto and the c.losing on the record of the. cases-in-chief in support. of the c.omplaints, at a duly noticed heating on uly 8 , 1057, in New Yor1\:, on the request of counsel supporting the complaints fl postponement "-as granted by the hearing examiner to permit negotiation of agreements for eon sent. settlements. Thereafter, at a hearing convened ul)" 18 , ID57, before the hearing examiner, such Agreements, entered into bet,yeen connsel supporting the complaints and respondents ""ere snbrnitted in disposition of aD the issues presented in these proceedings. Under . procedures provided in 9 3.25 (e) of the Commission s Rules of Plac- RIT-ZIE NOVELTY CO. , INC., ET AL. 433 430 Decision tice, the agreements are now before the Commission for its consideration.

Pursuant to the agreements, respondents hate admitted all the jurisdictional allegations of the complaints and agreed that the records herein may be taken as if the Commission had made findings of jurisdictional facts in accordance with such allegations. The agreements further provide that responde,nts waive all further procedural steps before the hearing examiner or the Commission including the making of findings as to the facts or conclusions law and the right to challenge or to contest the validity of the orders to cease and desist entered in accordance with these agreements. The agreements further state that the records on which the, decision the Commission shall be based shall consist solely of the complaints and said agreements. Further, the agreements assert. that they are for settlement purposes only and do not constitute admissions by respondents that. they have violated the law as aneged in the complaints. Respondents additionally have agreed that the orders to cease and desist contained in the agreements may be entered in these proceedings ",without furthe.r notice to respondents and that, when so entered, they shah have the. same force and eifect as if entered after fun hearing, and that they may be altered, modified or set aside in the manner provided by statute for other orders, and that the complaint may be used in construing the te.r111S of the orders. For the reasons assigned in its accompanying opinion, the Commission has determined that the. aforesaid agreements containing the consent orders to cerise and desist provide for an appropriate disposition of these proceedings in the public interest, and the same are hereby acc.epted and ordered filed; and Having determined that these proceedings a.re in the public interest, the Commission hereby makes the following jurisdictional findings, and issues the follmving orders: TCRJSDICTIOX..-\L FIXDIXGS I~ DOCKET G35-! 1. The respondent Rit-Zie Xove1ty Company, Inc., is a corporation existing and doing business under and by virtue of the la"s of the State of Xe",;' York, with its office ~1Jld principal place of business located at 284 Fifth A venue, in the City of X ew Yor1\: , State. of Ne', York.

2. Respondents )'Ioe Liebowitz and Samuel Einhorn (the latter whose. name. is incorrectly spelled in the caption of the complaint herein) are. president-secretary and vice-president-treasurer, respectively, rJf said corporate respondent, and they formulate, direct and 434 FEDERAL 'I'TRADE COMMISSION DECISIONS Order 54 F. T. C.

control the policies, acts and practices of said corporation. Their address is the same as that of the corporate respondent.. JURISDICTION AL FI~DINGS IN DOCKET 6375 1. Respondent Victor B. Randal & Bro., Inc., is a corporation existing and doing business under and by virtue of the laws of the State of New York, and with its principal place of business located at 277 Fifth Avenue, in the City of New Yor1\:, State of New York. 2. Respondents Victor B. I-landal and John Randal are individuals and are vice-president and secretary-treasurer, respectively, of said c.corporate respondent, and they formulate, direct and control the policies, acts and prac.tices of said corporation. Their address is the same as that of said corporate respondent. JURISDICTION AL FINDINGS IN DOCI\:ET 6520 1. The respondent R.elia-nce Interc.ontinenta.l Corporation is a c.orporation existing and doing business under and by virtue of the laws of the State of New York, with its office and principal place of business located at 48 "'\Vest 37th Street., in the City of New York State of New Yor1\:.

2. Respondents Adolph :Meirowitz and Jerrold J~urtz are individuals and are president and secretary-treasurer, respe.c.tively, of said corporate respondent, and they formulate, direct and c.control the policies, acts and practic.es of said c.orporation. Their address is the same as that of said corporate respondent. 3. The Federal Trade Commission has jurisdiction of the subject matter of these proceedings and of the respondents, and the proceedings are in the public interest.

ORDER It is ordered, That respondents Rit-Zie Novelty Company, Inc., a corporation, and its officers, and l\10e Liebowitz and Samuel Einhorn individually and as officers of said corporation; Victor B. Handal & Bro., Inc. , a c.orporation, and its ollic.ers, and respondents Victor B. Handal and John Handal, individually and as officers of said corporation; and Reliance Intercontinental Corporation, a c.orporation, and its officers, and respondents Adolph l\leirowitz and Jerrold E:urtz, individually and as officers of said corporation; and respondents' representatives, agents and employees, directly or through any corporate or other device, do forthwith cease and desist from: (a) Importing into the United States; or RIT-ZIE NOVELTY CO. , INC. , ET AL. 435 430 Order (b) Selling, offering for sale, introducing, delivering for introducastion, transporting, or causing to be transported, in commerce, commerce" is defined in the Flammable Fabrics Act; or ( c) . Transporting or causing to be transported, for the purpose of sale or delivery after sale in commerce;

any article of wearing apparel, which, under the provisions of Section 4 of the said Flammable Fabrics Act, as amended, is so highly flammable as to be dangerous when worn by individuals. respondents shall, within It is further ordered That above-named sixty (60) days after service upon them of these orders, file with the Commission reports, in writing, setting forth in detail the manner and form in which they have complied with the order to cease and desist.

\\ Decision 54 F. T. C.