Dofan Handbag Co., Inc.

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IN THE MATTER OF DOFAN HANDBAG CO., INC., ET AL.

CONSENT ORDER, ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COl\l\HSSION ACT Docket 8283. Complaint, Feb. S, 1961-Decision, Ma1l16, 1961 Consent order requiring New York City distributors to cease stamping the words "Leather Lined" upon some of their handbags which were, in fact, only partially leather lined.

fPLAIKT Pursuant to the provisions of t.he Federal Tra,c1e Commission Act ftnd by virtue of the authority vested in it by s id Act, the Federal Trade Commission, having reason to believe that Dofan Handbag Co" Inc., a corporation, and Zoltan .r. Grosz and Armand A. Grosz individually and as ofl-icers 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 t.he public interest, hereby issues its complaint stating its charges in that respect as follows: P ARAORAPH 1. Respondent Dofan Handbag Co., 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 33 East 3grd St.reet, in the City of York, State of ew York.

Respondents Zoltan J. Grosz and Armand A. Grosz are offcers of Dofan Handbag Co. , Inc. They formulate, direct and control the acts and practices of said corporation. Their address is the same as that of the corporate.e respondent. PAR. 2. Il.esponclents are now, and for several years last past have been, engaged in the advertising, offering for sale, sale and distribution of ladies' handbags to retailers for resale to the public. PAR. 3. In the course and conduct of their business, respondents now ca,use, and for some time last past have caused, said ladies handbags when sold to be shipped from their place of business in t.he State of :" ew York to the purchasers thereof located in other St.ates of the United States and maintain, and at an times mentioned herein have maintained, a substantial course of trade in said handbags in commerce, as ': commerce:' is defined in the Federal Trade Commission Act. The volume of business done by respond- Complaint 58 F.1-'C.

ents in said handbags in commerce is now, a,nel has been, substantial. PAR. 4. In the course and conduct of their business, respondents have stamped or imprinted upon some of their handbags "L€other Lined". Said handbags are, when sold to retailers, displayed to the purchasing public with the words stamped or imprinted "Leather Lined" affxed to said handbags.

PAR. 5. There is a preference on the part of many members of the purchasing public for products such as ladies' handbags made of genuine leather or lined with genuine leather over products not composed wholly of leather or wholly leather lined. PAR. 6. In truth and in fact the handbags stamped and imprinted Leather Lined" by respondents are not completely leather lined but are only partial11y leather lined.

PAR. 7. Respondents by means of the aforesaid acts and practices and by failing to adequately disclose that said handbags are only partially leather lined, furnished means and instrumentalities to others whereby the public is confused or misled as to the actual composition of said handbags or the linings thereof. PAR. 8. In the couyse and conduct or their business respondents are in substantial competition in commerce with corporations, firms and individuals engaged in the sale or genuine leather ladies' handbags and genuine wholly leather lined ladies' handbags. PAn. 9. The aforesaid acts and practices of the respondents and their failure to adequately disclose the composition or their ladies handbags have the capacity and tendency to confuse the public as to their composition and to mislead the public into the erroneous and mistaken belief that the linings of said handbags arc wholly genuine leathcr, and into the purchase thereof by reason of such erroneous and mistaken belief. As a consequence thereof substa.ntial trade in commerce has been unfa.irly diverted to respondents from their competitors and substantial injury has thereby been done to competition in commerce.

P AH. 10. The aforesa.icl acts and practices of respondents, as herein alleged, were and are a11 to the prejudice and injury of the public p-ncl of respondents' competitors and constituted, and now constitute, unfair and deceptive acts and practices and unfair methods of competition, in commerce, within t.he intent and meaning of the Federal Trade Commission Act.

ill?'. l1/cotton Nes7nith for the Commission. iiii. 11fYTon J. Kleban of Xew York for respondents. DOFA. HANDBAG CO, ) IKC. , ET AL. 783 781 Decision IXI'rIAL DECISION BY I-IERMAN TOCKER , HEARING EXAJ-finer The complaint in this proceeding, issued February 8, 1961, charged the respondents, Dofan Handbag Co., Inc., a New York corporation located at 33 East 33rd Street, New York, New York, and Zoltan J. Grosz and Armand A. Grosz, individually and as offcers of said corporation, and located at the same address as the corporate respondent, with violation of the provisions of the Federal Trade Commission Act, by misbranding ladies' handbags advertised, sold and distributed by them in commerce.

After the issuance of the complaint, respondents (with the advice of their attorney), and counsel supporting the complaint entered into an agreement, containing consent order to cease and desist, thus disposing of al1 the issues as to al1 parties to this proceeding. It was expressly provided in said agreement that the signing thereof 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.

By the terms of said agreement, the respondents admitted all the jurisdictional facts alleged in the complaint and agreed that the reeorc1 herein may be taken as if the Commission had made findings of jurisdictional facts in accordance with the a.negations. By said agreement, the parties expressly waived any further procedural steps before the hearing examiner and the Commission; the making of Gndings of fact or conclusions of Jaw; and all rights they may have to challenge or contest the validity of the order to cease and desist entereel in accordance therewith. R.esponclents agreed further that the order to cease and desist issued in acconlance with said agreement, shall have the same force and effect as if made after a full hearing. It was further provided that said agreement, together with the compla.int, shan constitute the entire record herein; that the complaint herein may be used in construing the terms of the order issued pursuant. to said agreement; and that said order may be altered, modified or set aside in the manner prescribed by the statute ror orders of the Commission.

The hearing examiner has considered such agreement and the order therein contained, and, it appearing that. said agreement and order provide for an appropriate disposition or this proceeding, the same is hereby accepted and, upon becoming part of the Commission s decision in accordance with Sections 3.21 and 3.25 of the Rules of Practice, shall be fied; a. , in consonance with the terms 784 FEDERAL TRADE COM:\ISSION DECISIONS Syllabus 58 F.

thereof, the hearing examiner finds that the Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents named herein, and that this proceeding is in the interest of the public, and issues the following order: ORDER It is ordered That respondents Dofan Handbag Co., Inc., a corporation, and its offcers, and Zoltan J. Grosz and Armand .. . Grosz 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 sale, sale or distribution in commerce, as "commerce" is defined in the Federal Trade Commission Act, of ladies' handbags, or other merchandise do forthwith cease and desist from representing directly or by implication:

1. That certain ladies' handbags or other merchandise are Jeather lined unless said articles are completely lined with genuine leather. 2. That certain Judie, ' handbags or other merchandise arc leather lined by affixing stampings or labels thereto that they are leather lined unless such articles are completely 1inec1 'with genuine leather. DECISION OF THE CO DnssIOX ND Order TO VILE HEPORT OF COJIPLIAXCE Pursuant to Section 3.21 of the Commission s Rules of Pnwtice the initial decision of the hearing examiner shall, on the lGth day of J\fay 1961, become the decision of the Commission; and, accordingly: It is ordered That respondents herein shall, "within sixty (GO) days after service upon them of this order, file \with the Commission 11 report in writing, setting forth in detail the manner and form in "which they have complied with the order to cease and desist. Commissioner Elman not participating.