Rugby Rug Mills, Inc.

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which they have complied with the order to cease and desist. IN Trm :MATTER OF RUGBY RUG :MILLS, INC., ET AL.

CONSENT ORDER ) ETC' IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE CO:lDIISSIO ACT Docket 7944. Complaint, Jnne 1960-Decision, Apr. , 1961 Consent order requiring' New York City distributors of rugs to retailers for resale to cease attaching to their rugs labels on which the "approximate size was almost invariably larger than the true dimensions. COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act ancl by virtue of the authority vested in it by said Act, the Federal Complaint 58 F.

Trade Commission, having reason to believe that Rugby Rug iills Inc., a corporation, and Herbert S. Rosenfeld and Helcnc M. Rosenfeld, individually and as offcers of said corporation, 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 would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent Rugby Rug Mils, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of New York, with its principal offce and place of business located at 10 ,Vest 33rd Strect in the City of New York State of New York.

Respondents Herbert S. Rosenfcld and Helene M. Rosenfeld are offcers of the corporate respondent. They formulate, direct and control the acts and practices of the corporate respondent, including the acts and practices hereinafter set forth. Their address is the same as that of the corporate respondent.

PAR. 2. Respondents are now, and for some time last past have been, engaged in the advertising, offering or sale, sale and distribution of rugs to retailers for resale to the public. PAR. 3. In the course and conduct of their business, respondents now cause, and for SOlllC time la.st past have caused, their products when sold, to be shipped from their place of business in the State of N ew York 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 of trade in saiel products in commerce, as "commerce" is defined in the Federal Trade Commis sion Act.

PAR. 4. Respondents, for the purpose of inducing the purchase of their products, have engaged for S01l1e time in the practice of attaching labels to their rugs, which, among other information, purport to give the size of said rugs. Said representations as to size are in almost all cases preceded by the term "approximate, thus connoting that the approximate, and not t.he actual, size of the rug is given. In almost all instances, and with constant consistency, the approximate size stated by respondents on their labels is larger than the actual size of the rug. By the aforesaid means respondents, over a course of years, have falsely represented the size of said rugs in that the cumulative effect of such representations has the tendency and capacity to create the erroneous and mistaken belief in the public mind that said rugs are sometilnes larger and sometimes smaller than the approximate size stated on labels. Whereas, in truth and in fact, said rugs are almost invariably smaller than the approximate sizes given.

RUGBY RUG MILI J INC. , ET AL. 571 569 Decision PAR. 5. By the aforesaid practices, respondents place in the hands of retailers means and instrumentalities by and through which they may mislead thc public as to the sizes of said rugs. PAR. 6. In the conduct of their business, at all times mentioned herein, respondents have been in substantial competition, in C0111111erce with corporations, firms and individuals in the sale of rugs of the same general kind and nature as those sold by respondents. PAR. 7. The use by respondents of the aforesaid false, Inisleading and de,ceptive st.atements representations and practices has had, and now has, the capacity and tendency to mislead members of the purchasing public into the, erroneous and mistaken belief that said statements and represEmtations were and are true and into the purchase of substantial quantities or respondents' products by reason of said erroneous and Inistaken belier. 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. PAR. 8. The aforesaid acts and practices of respondents, as herein alleged, were and are an to the prejudice and injury of the public and of rpspondents' competitors and constituted, and now constitute unfair and deeeptivc acts and practices and unfa.ir methods of compet:ition, in commerce: within the intent and meaning of the Federal Trode Commission Act.

OhaTtes W. O'Oonnell, Esq. for the Commission. JlfarC'l8 J. ed7r: Esq. of Kew York, K. Y., for respondents. IXITL\L DECISION BY ROBERT L. PIPER: ITF.ARING EXAMINER The Federal Trade Commission issued its complaint against the above-named respondents on June 15, 1960, charging them with having violated the Federal Trade Commission Act by misrepresenting the size of the rugs they sen in commerce. Respondents appeared by counsel and entered into an agreement, dated February 6, HHH, containing a consent order to cease and desist, disposing or all the issues in this proceeding without further heating, which agreement has been duly approved by the Bureau or Litigation. Said agreen1ent has been submitted to the undersigned, heretofore duly designated to act as hearing examiner herein, for his consideration in accordance with 83.25 of the Rules of Practice of the Commission. Hesponclents, pursuant to the aforesaid agreement, have admitted all of the jurisdictional allegations of the comphint and agreed that the rceord may be taken as if findings of jurisdictional facts had been made duly in a.cconlnnce with such allegations. Said agreement further provides that respondents waive all further procedural steps 572 FEDERAL TRADE C01vMISSIOX DECISlO Order 58 F.

before the hearing exa.lliner or the Commission, including the making of findings of fact or conclusions of law and the right to challenge or contest the validity of the order to cease and desist entered in flccorr1ance with such agreement. It h0.8 also been agreed that the record herein shall consist solely oT the complaint and said agree- Incnt, that the agreement shall not become a part of the offcial record unless and until it becomes a part of the decision of the Commission, t.hat said agreement is for settlement purposes only and does not constitute an admission by respondents that they have violated the law as alleged in the compla.int, and that said order to cease and desist shall have the same force and effect as if entered after a full hearing and may be altered, 111oc1ified, or set aside in the manner provided for other orders, and that the complaint may be used in construing the terms of the order. This proceeding having now come on for final considerat.ion on the complaint and the afores tid agreement containing the consent order a.nd it appearing that the order and a.agreement cover all of the allega tions of the complaint and provide for appropriate disposition of this proceeding, the agreement is hereby accepted and order filed upon this decision and said agreement becoming part of the Commission decision pursuant to 883.21 and 3.25 of the Rules of Practice, and the hearing examiner accordingly makes the follmving findings, for jurisdictional purposes and order:

1. R.respondent Hugby Rug Th1ills, Inc. , is a corporation existing and doing business under and by virtue of the laws of the State New York, with its offce and principal place of business located at 10 IV est 33rd Street, in the City of New York, State of X ew Yark. Respondents Herbert S. Rosenfeld and Helene I. Rosenfeld are offcers of the corpora.te respondent. They formulate, direct and control the acts and practices of the corporate respondent. Their address is the same as that of the corporate respondent. 2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents hereinabove named. The complaint states a cause of action against. said respondents under the Federal Trade Commission Act, and this proceeding is in the interest of the public.

ORDER It is ordered That respondent Rugby Rug Mills, Inc., a corporation. and its offcers, and respondents Herbert S. Rosenfeld and Helene M. Rosenfeld, individually and as offcers of said corporation, and respondents' agents, representatives and employees, directly or through any corporate or other device, in connection with the offering for :1e, sale or distribution of rugs or other merchandise, in com- PENICK & FORD LTD. , INCORPORATED 573 569 Complaint meree, as "com11erce ' is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

Misrcpresen6ng, directly or by implication, the size of their said rugs or merchandise to be of larger dimensions than is the fact. DECISION OF THE coj):BnssIOl' AND Order. TO FILE REFOR'!' OF COl\IPLL\NCE Pursuant to Section 3.21 of the Commission s Rules of Practice, the initial decision of the hearing examiner shall, on the 12th day of April 1961, become the decision of the Commission; and, accordingly: It i8 o?'dered That the above-named respondents 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.