Hi-Glo Electroxics Corporation

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Ix THE JlATUOR OF HI-GLO ELECTROXICS CORPORATION ET AL.

cm' SE: -n' ORDER , ETC., IX REGAlm TO 'fee ALLEGED VIOLATION OF THE FEDERAL TRADE C01\lhission ACT Docket 7960. Complaint, June 1960-Decision, Mar. 1, 1.961 Consent order requiring a manufacturer and itr corporate sales agent ill Goodrich Mich. to cease representing falsely on labels and otherwise that their rebuilt television picture iuhe.s which contained used parts were new in their entirety, and to cle-army disclose tllat such tubes were rebuilt. CO:lIPLAIXT 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 Hi-Gla Electronics Corporate.ion, ft corporation, and Sylvan EJectronics Corporation, a corporation, and Leonard 1\1. Rozner, individually a.nd as an offcer of said corporations, hereinafter referred to as respondents, have violated the provisions of said Act, and it appearing to the Commission that a proceeding by it in respect thereof "auld be in the public interest, hereby issues its complaint stating its charges in that respect as follo"s:

PARAGRAPH 1. gespondent Hi-GJo Electronics Corporation is a corporation organized, existing and doing business under and by virtue of the laws of the State of Michigan, with its principal offce and place of business located at 8267 South State, Goodrich :Michigan.

Respondent Sylvan Electronics Corporation is a corporation organized, existing and doing business under and by virtue of the laws of the State of Michigan, "ith its principal offce and place business located at 8267 South State, Goodrich, Michigan. Said corporation is the exclusive sales agent for Hi-Glo Electronics Corporation and both corporations cooperate and act together in carrying out the acts and practices hereinafter set forth. Respondent Leonard M. gozner is an offcer and major stockholder of both corporate respondents. He formulates, controls and directs the policies, acts and practices of the corporate respondents. His address is the same as that of the corporate respondents. Pall 2. Responden ts are now, and for some time last past h t ve been engaged in the manufacture, offering for sale, sale and distribu- , HI-GLO ELECTHONICS CORPORATIO ET AI.. 241 232 COll111flint tion of rebuilt television picture tubes containing used parts to distributors for resale to the public.

PAIL 3. In the course and conduct of their business, respondents now cause, and for some time last past have caused, their said products when sold, to be shipped from their place of business in the State of l\lichigan to purchasers thereof located in various other states of the United States, and maintain, and at all times mentioned herein have maintained, a substantial course in trade in said products in commerce, as " commerce" is defined in the Federal Trade Commission Act.

PAR. 4. In the course and conduct of their business, and for the purpose of inducing the sale of their products, respondents made certain statements concerning their products on labels and by other media. Among and typical of such statemonts is tho following: This is a NEIl' GLE:\DALE PICTURE 'rUBE \R. 5. Through the use of the aforesaid statement respondents represented that certain of their television picture tubes were ne,,, in their entirety.

PAR. G. Said statements and representtLtions ,yerc false, misleading and deceptive. In truth and in fact, the television picture tubes represented as being "new:' are not new in their entirety. PAR. 7. The television picture tubes sold by respondents are rebuilt. containing used parts. Hespondents do not disclose on the tubes, or on he cartons in which they are packed, or on invoices, or in any other manner that said television picture tubes are rebuilt and contain used parts.

,Vhen television picture tubes are rebuilt containing used parts in the absence of a disclosure to the contrary, such tubes are understood to be and are readily accepted by the public as new tubes. PAR. 8. By failing to disclose the facts as set forth in Paragraph Seven, respondents place in the hands of uninformed or unscrupulous dealers means and instrumentalities "hereby they may mislead and deceive the public as to the nature of their said television picture tubes.

PAR. 9. In the conduct of their business, and at all times mentioned herein, respondents have been in substantial competition, in commerce, with corporations, firms and individuals engaged in the sale of television picture tubes.

PAR. 10. The use by respondents of the aforesaid false, misleadmg and deceptive statements and representations and the failure 681-237--63-- Decision 58 F.

of respondents to disclose on their television picture tubes, on the cartons in which they are packed, on invoices, or in any other manner, that they are rebuilt, containing used parts, have had, and now have, the capacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief that said statements and representations were and are true and into the purchase of substantial quantities of respondents' said tubes by reason of said erroneous and Inistaken belief. As a consequence thereof substantial trade in commerce has been, and is being, unfairly diverted to respondents from their competitors and substantial injury has thereby been, and is being, done to competition in commerce.

, as PAR. 11. The aforesaid acts and practices of respondents herein alleged, were, and are, all to the prejudice and injury of the public and of respondents' competitors and constituted, and now constitute, unfair and deceptive acts and practices and unfair methods of competition, in commerce, within the intent and meaning of the Federal Trade Commission Act.

Mr. Michael J. Vitale supporting the complaint. Mr. Douglas H. P. Hall of Flint, which., for respondents. INITIAL DECISION BY WALTER K. BENNETT, HEARING EXA1rI:\ER The Federal Trade Commission issued its complaint against the above-named respondents on June 17, 1960. The complaint charged respondents with making false representations that rebuilt or partially rebuilt picture television tubes "ere ne". Said representations were charged to be unfair and deceptive acts and practices and unfair methods of competition within the intent and meaning, and in violation, of the Federal Trade Comnlission Act. On December 15, 1960, Counsel submitted to the undersigned Hearing Examiner an agreement dated December 5 , 1960, among respondents, counsel representing them and counsel supporting the complaint, providing for the entry without further notice of a consent. order. The agreement was duly approved by the Director the. --\ssist,ant Director and the Associate Director of the Bureflu or Litigation.

The I-Iearing Examiner finds that said a.agreement includes all of the provisions reql1i red b l Sect.ion 25 (b) of the Hules of the COlnmission, thflt is:

A. And mlmission by an the respondent parties therdo of jurisdictional fa.cts;

HI -GLO ELECTRONICS CORPORATION ET AL. 243 232 Decision Provisions that:

(1) The complaint may be used in construing the terms of the order:

(2) The order shall have the same force and effect as if entered after a full hearing;

(3) The agreement shall not become a part of the oflcial record of the proceeding unless and until it beeomes a part of the decision of the Commssion;

(4) The entire record on which any cease and desist order llay be based shall consist solely of the complaint and the agreement; (5) The order may be altered, modified, or set aside in the manner provided by statute for other orders;

C. 'Waivers of:

(1) The requirement that the cleeision must contain a statement of finding of fact and conclusion of la,,; (2) Further procedural steps before the Hearing Examiner and the Commission.

In addition the agreement contains the following permissive provisions: A "aiver by the respondents of any right to challenge or contest the validity of the order entered in accordance "ith the agreement, and a statement that the signing of said agrcement is for scttlement purposes only and does not constitute and admission by respondents that they have violated the la" as alleged in the complaint.

Having considered said agreement, including the proposed order and being of the opinion that they provide an appropriate basis for settlement and disposition of this proceeding; the Hearing Examiner hereby accepts the agreement but orders that it shall not become a part of the oflcial record unless and until it becomes a part of the decision of the Commission.

The follo\ving jurisdictional fmdings are made and the following order1. issued:Respondents Hi-Gla Electronics Corporation rmd Sylvan Electronics Corporation are each corporations orga,nized, existing and doing business under and by virtue of the laws of the State of ::lichigan. Both have their offce and principal1 place of business at 5267 South State, Goodrich Iichigan.

2. Hespondcnt Leonard 1'1. Rozucr is an oileer of said corporate respondents. lie formulates, directs and controls the acts and practices of both corporate respondents. I-lis address is the same as that of the corporate respondents.

3. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents. 244 FEDERAL TRADE COMMISSION DECISIQXS Syllabus ;jS F. OP..lm It is ordered, That respondents, IIi-GIo Electronics Corporation a corporation, Sylvan Electronics Corporation, a corporation, and their officers, and Leona.rd 3.1. Hozncl' , individually and as an offcer of said corporations, and said respondents ' represcntati ves, agents and employees, directly or through any corporate or other device in connection with the onering for sale, sale or distribution of rebuilt tele"Fisioll picture tubes containing used parts, in C011111e1'Ce, as conul1erce ' is defined in the Federal Trade. Commission Act, do iorthwith cease and desist from:

1. Representing, directly or by implication, t.hat sajd television picture tubes are new.

2. Failing to clearly disclose on the tubes, on the cartons in which they are packed, on invoices and in advertising, that said tubes are l'eouilt conta.ining used parts.

3. Placing any means or instrumentalities in the hands of others "hereby they may mislead the public as to the nature and condition of their television picture tubes.

DECISION 01" THE COl\DlISSION AND ORDER TO FILE REPORT OF C01lPLIAXCE Pursuant to Section ;-L21 of the Commission s Hules of Practice the intial decision of the hearing examiner shall on the 1st day of Mareh, 1961, become the decision of the Commission; and accordingly:

It is ordered That the respondents herein shall within sixty (60) days after service upon them of this order, fie with the Commission a report in "rihng setting forth in detail the manner and form in